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Operator: Hello, everyone. Thank you for joining us, and welcome to the Genius Sports Limited Fourth Quarter 2025 Earnings Results. After today's prepared remarks, we will host a question-and-answer session. To withdraw your question, please press 1 again. I will now hand the call over to Brandon Bukstel, Head of Investor Relations. Please go ahead. Brandon Bukstel: Thank you, and good morning. Before we begin, we would like to remind you that certain statements made during this call may constitute forward-looking statements that are subject to risks that could cause our actual results to differ materially from our historical results or from our forecast. We assume no responsibility for updating forward-looking statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our annual report on Form 20-F, filed with the SEC on 03/14/2025. During the call, management will also discuss certain non-GAAP measures that we believe may be useful in evaluating Genius Sports Limited's operating performance. These measures should not be considered in isolation or as a substitute for Genius Sports Limited's financial results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to the most directly comparable U.S. GAAP measures is available in our earnings press release and earnings presentation, which can be found on our website at geniussports.com. With that, I will now turn the call over to our CEO, Mark Locke. Good morning, everyone, and thank you for joining us today to discuss our Q4 results. Mark Locke: On today's call, we would like to cover three topics. First, we will take a moment to highlight the strong Q4 and full-year results, which we preannounced last month. There are two main takeaways from our 2025 results. Revenue growth of 31% is our strongest annual increase since 2021, and our full-year 20% EBITDA margin is our highest annual margin. Second, both the betting business and the media business are on great footing, which enables us to reaffirm our 2026 guidance of continued top-line growth and margin expansion, exactly in line with what we communicated on the Investor Day in December and preannounced last month. And finally, I want to provide additional perspective on our recently announced acquisition of Legend, addressing directly the key questions raised by investors and discussing the confidence we have in the financial and strategic rationale of the transaction. I will come back to this later in the call. But first, I will turn to Bryan to discuss our financial results. Bryan Castellani: Thank you, Mark. First, we achieved group revenue of $669 million in 2025, representing 31% growth, as Mark said, our strongest annual increase since 2021. This translated to $136 million of group adjusted EBITDA, representing a 20% margin, also, as Mark highlighted, our highest annual margin as a public company. Group revenue growth was well balanced across betting and media. Betting revenue increased 33% in 2025, marking its strongest year since 2021, our first year with exclusive NFL data rights. Our strong betting revenue was primarily driven by growth with existing customers, who benefit from the increasing suite of innovative products such as BetVision, which is now available for NFL, Serie A, FIBA Basketball, and dozens of other soccer, tennis, and esports competitions. BetVision is consistently increasing engagement and driving greater in-play wagering for our sportsbook partners, so we are excited to continue expanding our coverage. 2025 marked another strong example of our ability to outpace the 24% growth of global online sports betting GGR, further demonstrating our consistent and predictable commercial model. Our Media business delivered a strong performance in 2025, increasing 37% to $144 million. This represents our strongest annual growth since 2022, supported in particular by execution in the second half of the year, where revenue nearly doubled compared to the second half of 2024. While our fourth quarter delivered exceptional results, we do not expect that exceptionally high growth rate to continue. The second half benefited from a combination of new partner launches and market conditions that created a particularly strong comparison period. As a reminder, we are also making certain changes in how we recognize revenue in the Media segment, transitioning some arrangements from gross to net reporting. This will impact reported top-line growth rates but is expected to improve our margin profile and better reflect the economics of those contracts. We continue to partner with some of the world's largest advertising agencies including PMG, Publicis, and most recently WPP. We are also partnering with the largest independent supply-side platform, Magnite. This partnership embeds our real-time sports signals directly into Magnite's platform, allowing advertisers to activate against official, real-time sports moments inside a scaled programmatic infrastructure. Importantly, this places Genius Sports Limited directly in the flow of billions of dollars in advertising spend. Additionally, we recently partnered with NBC Sports regional networks to power AI-driven augmented advertising across 600 live NBA games. Genius IQ turns real-time moments into premium, data-driven sponsorship inventory integrated directly into the broadcast. As you can see, Genius Sports Limited is deeply embedded in the media infrastructure, controlling several of the monetization layers within live sports, a category that has quickly become a priority for the biggest brands and agencies. Overall, we are encouraged by the momentum in media and the progress we have made in demonstrating performance outcomes for partners. And lastly, it is worth highlighting the diversified growth by geography. While the Americas accounted for most of our growth this year, up 41%, our established European markets also delivered strong performance, with growth exceeding 20% in 2025, up from 15% in 2024. We expect this momentum to continue into 2026. As we said last month, we expect the organic business to generate between $810 million and $820 million of revenue and $180 million to $190 million of adjusted EBITDA. This represents growth of 22% and 36%, respectively, right in line with the expectations from our Investor Day, and balanced across betting and media. On a related note, beginning in 2026, we will report revenue across two product groups, betting and media, which more closely reflects how we operate the business today. Our existing Sports Technology revenue will be allocated across these groups based on a thoughtful assessment of where each technology application is best suited to sit. To support this transition, we have included historical quarterly financials in the appendix recast under the new reporting structure. And finally, we expect the addition of Legend to be immediately accretive to this guidance post close in Q2 of this year. On an annualized basis, we expect the combined entity would achieve group revenue of $1.1 billion, group adjusted EBITDA of $320 million to $330 million, with group adjusted EBITDA margin of approximately 30% and free cash flow conversion of approximately 50%. This is an acceleration of our financial targets by two years. And on that note, I will now turn the call back to Mark to discuss Legend in more detail. Mark Locke: Thanks, Bryan. Before we conclude, I want to speak clearly and directly about our acquisition of Legend. Legend is not simply just a media business. It is a technology company that is built around large, loyal sports and iGaming audiences. Legend operates an audience monetization platform that is built off of two decades of technological investment. This is where the value of Legend's business is. Legend's tech engine captures how users engage with content in real time. This content is not static information pages. They are environments that are built for participation around live sports and gaming experiences. For example, a user may analyze real-time data in a community discussion around a major sporting event, repeatedly explore new online casino titles, demoing the ones that best suit their taste, or follow specific personalities tied to teams or games, celebrating the latest win or jackpot. These actions ultimately generate rich signals of intent inside environments designed for repeat interaction. Legend uses these signals to continuously upgrade the experience and recommend personalized transactions. When a user ultimately completes the transaction with a gaming operator or bookmaker, that outcome feeds back into the system. Over time, Legend's models get better at understanding which engagement patterns lead to action and Legend can rapidly optimize commercial models. That feedback loop is where long-term value is created. It is not about answering factual queries. It is about facilitating participation inside owned environments and continuously improving the economics behind it. This technology is the result of 20-plus years of and data training and over $300 million of invested capital. Outside of Legend's own properties, the application of this technology carries enormous value to third parties. In one example, a well-known brand in the gaming integrated Legend's software into its own digital properties and within six months experienced a 50% uplift in revenue from higher conversion. This plug-and-play model is also proven with brands like Sports Illustrated and Yahoo Sports, just to name a few. When combined with the reach and distribution of Genius Sports Limited's network across the sports ecosystem, this can potentially be scaled and replicated hundreds of times. More on this later when we would discuss revenue synergies. The value of this technology is further enhanced by engagement metrics on slide 12. Legend has created a natural, organic destination for high-quality users who deliver long-term value for operators. In fact, one of Legend's top customers, a well-known global operator, has reported that customers acquired through Legend have a 60% higher value after one year compared to all other customer acquisition channels. Because of the value that Legend delivers to its customers, they command premium economics. There are four key components of its commercial model. First is sponsorship and ad placement. Operators pay a premium to have prominent placement on Legend's properties because they want to be up front and center to reach high-intent users. Second is upfront commitments. When a user makes a first deposit, Legend gets paid. Third is revenue share. Legend delivers quality users with long-term value. Once acquired, Legend shares in the operator's revenue from those users every time that they play the casino or bet on sports, and in many cases, Legend shares its revenue in perpetuity through lifetime revenue share contracts. This results in high-quality, predictable, and recurring revenue. Next, I want to be explicit about the comparison to traditional affiliate businesses. We understand that the word affiliate has been the simple default comparison, but that framing misses what actually drives Legend's model. The key issue is not the monetization label. It is traffic durability and depth of engagement. Traditional affiliate models rely heavily on SEO and paid marketing, often spending between and 40% of revenue to sustain traffic. Legend spends approximately 5% because its traffic is direct and repeat. Engagement is technology-driven, optimized in real time, and built on owned environments. That creates durable economics. The metrics very clearly speak for themselves. Look no further than the data sourced from SimilarWeb comparing session depth and session time across Legend properties. As you can see, this level of engagement is more comparable to a booking.com or FanDuel rather than a simple odds comparison website or even the digital property of the most popular sports leagues. Again, we will revisit this when discussing revenue synergies. The last point that I would like to address is the risk of disruption from AI LLMs or changing search algorithms. This is yet another key difference from a traditional affiliate business, which often rely heavily on search engine. If search visibility changes, their traffic can disappear. Legend is different. Engagement is recurring. Revenue is diversified across operators and geographies and tied to lifetime value, not one-off clicks. The economics are built on participation, not page views. That participation takes place across a wide range of experiences, everything from tournaments to live dealer streams, community engagement, and more. These are all deep, immersive experiences that cannot be replicated by LLMs. So if you believe AI will make this kind of business obsolete, you should consider this. AI actually makes this model more valuable, not less. As LLMs commoditize information retrieval, competitive advantage shifts to owning environments where 118,000,000 users actively participate and to the proprietary intent signals that those interactions generate. Generic answers are free. Proprietary behavioral data is not. Over the past decade, digital businesses have moved from monetizing attention to capturing intent. Advances in AI accelerate that shift, enabling better prediction, deeper personalization, and more efficient commercial outcomes. In sports and iGaming, this transformation is now happening in real time. Legend operates at the precise moment when participation turns into action. Based on this, we are very confident in Legend's proven business model. Our 2028 guidance is underpinned by the predictable operating leverage and increasing cash flow that both Legend and Genius Sports Limited can achieve independently. The combined business is expected to sustain 20% revenue growth, strong EBITDA margins, and over 50% free cash flow conversion, and growing. A financial profile that is rare in public markets. And this is before we account for any synergies. We have identified four specific revenue synergies that we believe are executable immediately post close and capable of driving incremental upside beyond our 2028 increased guidance. The first is customer cross-sell. Genius Sports Limited's official data rights and product suite will sit alongside Legend's scaled, high-intent acquisition funnel. This unites premium content with proven customer intent. Upon closing, we can activate cross-sell across our sportsbooks and gaming relationships, improving acquisition efficiency and increasing customer lifetime value. Importantly, this positions Genius Sports Limited to participate in the large and growing iCasino market, expanding our total addressable market by approximately 70%. In addition, players who engage in both iCasino and online sports betting are estimated to be roughly 15 times more valuable to operators than sports-only bettors. This places Genius Sports Limited at the center of our partners' highest value customer acquisition efforts. Next is monetization of a combined audience asset. Legend will materially expand our first-party audience reach. Combined with Genius Sports Limited's proprietary data graph, this creates a scaled, privacy-compliant audience asset that can be activated across the advertising ecosystem. This is expected to drive higher yield on traffic already within our control and allows Genius Sports Limited to bring a unique and powerful audience graph to other leading ad-driven platforms. In other words, Legend further strengthens our value to brands and agencies. We know who the fans are, we know when, and we know where they are engaged, and we are activating them at scale through Fanhub and in partnership with large global agencies like Publicis, WPP, and PMG. Third is scaling Legend's technology across leagues and teams to monetize their underutilized digital assets. Legend's technology platform has demonstrated its ability to drive engagement and conversion across owned and operated properties. If you recall the SimilarWeb data, many of our 400-plus league and team partners face the same structural need to better understand and monetize their fan audiences. Applying Legend's platform across our rights portfolio will extend the Genius Sports Limited model from data capture and distribution into audience activation and conversion. This shift is from selling audience access to selling influence over identifiable individuals whose behavior and propensity are measurable. And, finally, we will be able to distribute Genius Sports Limited's data and products through Legend's channels. We have spent years embedding Genius Sports Limited's data and products across the global sports ecosystem, from BetVision to broadcast augmentation and integrity services. Legend will provide a scaled, high-traffic distribution service. Integrating our data and product suite will further strengthen Legend's acquisition funnel while expanding the commercial distribution of Genius Sports Limited's assets. As we execute, we will quantify the impact of these four opportunities with discipline. We are confident that this combination will enhance both the growth rate and the cash flow profile of the business relative to our standalone trajectory. In the meantime, I will leave you with this final thought. The future economics of sport will be determined by the infrastructure through which fan participation flows. At its core, that infrastructure is shaped by three elements: official data, authenticated identity, and intent at the moment of transaction. Together, Genius Sports Limited and Legend operate across all three layers. This acquisition is a deliberate acceleration of the strategy that we outlined at our Investor Day and have been executing for years. By integrating data, identity, and intent at scale, we are positioning Genius Sports Limited to capture a greater share of the economic value flowing through global sports and gaming. We have proven our ability to execute, and with this added scale and capability, we will have a business that we believe is built to continue that track record of execution and compound value for years to come. And on that note, now open the line to Q&A. Operator: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star 1 on your telephone keypad. To withdraw your question, please press star 1 again. Please pick up your handset when asking a question. And if you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Jordan Bender from Citizens. Jordan, we are just opening your line, and your line is now open. Jordan Bender: Thanks. I want to start on free cash flow. That was down in 2025. If we think through the standalone business, how much investment or one-time costs are in that number that might have held back free cash flow growth in the year? And just went through the Investor Day back in December. Can you remind us of the levers to organically increase free cash flow from here outside of the Legend acquisition? Bryan Castellani: Hey, Jordan. It is Bryan. On free cash flow, as we had announced that $281 million balance and our focus is growing that year to year. As we defined at Investor Day, we take EBITDA minus the cap software and CapEx and PP&E, as well as changes in working capital and taxes. And so for the year, that included some nonrecurring exceptional legal expense, or litigation related. If you exclude those, and I think you can see that was about a $30 million swing. The other thing we do adjust for is obviously M&A, like the Sports Innovation Lab acquisition, as well as the share raise. We do not want to take credit for that, nor on the M&A piece where those are longer-term strategic and so one year may have a bigger investment into that. But that is how we think about the free cash flow and those one-time nonrecurring impacted the year about $30 million. Jordan Bender: Understood. Thanks. And I want to switch over to the media business for a second. I assume you are not going to give us the actual numbers here, but maybe holistically, how much contribution did some of the new media agreements with, like, PMG and Publicis add to the total growth in media in the back half of the year? Bryan Castellani: Those scaled up, and they are early. We just announced those, and so they do take some time to ramp and work with them on onboarding clients and campaigns. So fairly muted, if any, impact on those. Jordan Bender: Understood. Thank you very much. Operator: Thank you very much for your question. Your next question comes from Jed Kelly from Oppenheimer & Co., Inc. Jed, your line is now open. Jed Kelly: Hey. Great. Thanks for taking my question. Can you give us an update on how partner conversations are going, particularly your media partners and media agencies, following the Legend acquisition? And then as my follow-up, you mentioned you expect some moderation of growth in the second half for the Media business. However, it seems there is going to be a decent amount of advertising around prediction markets given what the bigger players are saying. How much have you embedded that in your guide? Thanks. Josh: Sure, Jed. Let me take them in reverse order. On the prediction market piece, we are already seeing spend flowing through from advertisers activating in that space. That is through the historical Genius Sports Limited media business, and when Legend closes, we will have access to the activity they are running there as well. We expect to capitalize on the spend boom around prediction markets—we already have campaigns in market. Operators are talking about increasing spend on that activity, and we expect to be part of that. In terms of media partnerships and conversations, if you are keeping track of the big agencies, we have knocked a few down and there are a few more to go. All of those are progressing nicely. The Magnite announcement is a testament to the ecosystem buying into sports media and developing technologies on top of the Genius Sports Limited infrastructure. Our expectation is that we continue to see more of the ad tech and media community building on top of official data and our fan graph. Mark Locke: It might be worth taking a few minutes to explain that Magnite presentation in a bit more detail—how the economics work and why it is important. Josh: The way to think about our Genius Sports Limited sales channel for the media business is twofold. First, we go direct to agencies and brands with our own sales team, responding to large campaign briefs. Second, we are establishing a distributed sales channel through the ad tech ecosystem where we surface all of the Genius Sports Limited data and audience intelligence—what agencies are buying from us—inside platforms that already have scaled demand of billions of dollars. That allows our partners and their sales teams to take the Genius Sports Limited offering out to market. Operator: Thank you very much for your question. Your next question comes from Bernie McTernan from Needham. Bernie, your line is now open. Bernie McTernan: Great. Thanks for taking the question. At the Investor Day, there was a target of slightly more than half of the $500 million in total ad spend for media coming from self-service. How do you think this is going to break down between agencies and other ad tech players like Magnite? And are there any other buckets in there that are large that we should be aware of? And then I have a follow-up. Josh: It is hard to give an exact number right now because everyone in the industry works together. For example, we might be working with Coca-Cola—demand can come direct from the agency as part of a specific brief, but it can also come from other activity via the ecosystem. Our goal is to capture as much demand flow as possible across the ecosystem by covering both direct relationships with agencies and building into the ad tech ecosystem. We are indifferent where the spend comes from between those channels. Our goal is broad distribution. Over time, we will be able to get more accurate on exact splits across those sales channels. Bernie McTernan: Understood. Thanks, Josh. And as a follow-up, I believe the expectation is that betting tech revenue should grow faster in the first half of the year versus second half. Can you provide commentary on how we should expect rights costs to grow on a full-year basis and the sequencing between the first half and the second half? Bryan Castellani: On rights growth, you saw some of the year-to-year impact. Remember we onboarded or acquired Serie A and EPFL in late summer, so that influenced Q4 and will influence the first half. It is also the first year of our new term on the EPL, which impacts the first half as well as Q4. But that is all phasing and inside of the strong guide we have for 2026. Bernie McTernan: Okay. Understood. Thank you. Operator: Thank you very much for your question. Your next question is coming from the line of Ryan Sigdahl from Craig-Hallum Capital Group. Ryan, your line is now open. Ryan Sigdahl: Good day, guys. On March Madness—you have been partnered with TMCA for many years and had exclusive distribution last year—how are you thinking about March Madness this year from a betting standpoint and separately from a Fanhub ad tech standpoint? And is BetVision potentially an opportunity there? And then I have a quick follow-up. Josh: We see March Madness as a big opportunity. We expect consistency with what we have seen across the betting business in previous years on betting activity, in line with market growth. On the advertising side, the first major event where our moment engine is widely available is March Madness. It is early days, but we expect to pick up a few test campaigns this year, with us going harder next year. It is incremental revenue monetized across multiple distribution channels for us with no additional rights fees. Mark Locke: And from that point of view, it is a powerful endorsement of the strategy we have been outlining over the last few years. Ryan Sigdahl: For my follow-up, a quick one for Bryan—how should we think about litigation costs as we head into 2026, given that was a pretty big one-time in 2025? Bryan Castellani: We will update on any litigation-related activities as appropriate. Those are live, and I will not comment further here. As we say, we are focused on growing that cash balance year to year. Josh: And to the extent those drive swings, we will communicate that as such when we know it. Ryan Sigdahl: Fair enough. Thanks, guys. Good luck. Operator: Thank you very much for your question. Your next question comes from Clark Lampen from BTIG. Clark, your line is now open. Clark Lampen: Thanks for taking the question. Maybe we could take a step back around the media business and agency relationships. For a lot of us that are newer to this rapidly growing component of your business, could you give us a 101 on how these relationships work and evolve over time, and how they are augmented by things like augmented advertising? You are clearly going after the agency holdco ecosystem and already have relationships with two of the big five. How should we think about the practical workflow and impact on your business? Josh: Happy to. We are building our advertising business through two channels: direct to agencies and brands, and integrations across the ad tech ecosystem. Our ethos is the same across both: Genius Sports Limited is the infrastructure layer for sports media. Commercially, we take media packages to market as curated deals. A curated deal bundles our audience data—our fan graph and understanding of fans—with inventory. That inventory can be Genius Sports Limited-owned, like BetVision and augmented ads, or premium third-party inventory. On top of that sits our moments engine, which we historically used in-house but are now externalizing so anyone can transact on it. Workflow-wise, we bundle audiences, inventory, and our intelligence layer based on an advertiser brief, and provide a unique code or deal ID that agencies input into their buying platforms. Over time, you build a portfolio of curated deals, creating ongoing money flow from campaigns across the ecosystem, buying Genius Sports Limited audiences and inventory. Growth comes from two levers: more active deals tapping more demand flow, and expanding the share of unique inventory we control within those deals, which drives revenue and margin expansion. Mark Locke: It may also help to explain how media buyers actually operate and how that evolves. Josh: Buyers at agencies work across multiple platforms and advertisers. As they expand campaigns, they often duplicate campaigns, carrying our deal IDs across. That helps keep deals active. The Legend acquisition enhances this further: we gain new intent signals and audience data that can be fed into curated deals to improve performance and address a wider variety of briefs. And as we create more unique inventory with the Legend tech stack, we can feed that into deals with an instant monetization path. Clark Lampen: Really helpful. And as a quick follow-up on Legend, there are a couple of levers for revenue synergies: applying Legend tech to Genius properties, expanding properties, and backlog monetization. As we think about the second half of the year, which of those is most addressable or accretive in 2026? Josh: The most immediate impact will be cross-sell to the existing customer base. From a technology perspective, access to Legend’s audience data is next—expect that to flow into our moment engine as soon as the deal closes, like we highlighted in the Magnite announcement. The slightly longer-tail synergy is building hosted solutions with our league partners—those integrations take longer than plugging audience data into our platform. Mark Locke: One immediate application of the Legend engine is in BetVision. We get paid roughly three times more for in-play betting. BetVision is now knocking on the door of 25,000 events and growing. The Legend engine will optimize BetVision in real time to maximize commercial returns, increasing the proportion of in-play betting. We are a bit over 30% in-play in the U.S. today; Europe is 70%–80% in some cases. We expect to accelerate toward those levels, which compounds our revenue shares. Operator: Thank you for your question. Your next question comes from the line of Eric Handler from Roth Capital. Eric, your line is open. Eric Handler: Thank you very much. Good morning. Two questions. First, with regards to advertising inventory, you have a good amount of first-party inventory and some third-party inventory with Yahoo Sports and SI. Do you have enough inventory at this point to achieve your financial targets, or will you need more? And are you talking to any new leagues or teams about inventory? Second, on BetVision, you mentioned around 25,000 events. Over the next 12 to 18 months, how high can that number go, and which sports are next? Josh: On inventory, we always want more unique inventory because it provides a competitive moat. Do we need more to deliver our numbers? Not necessarily. The beauty of the moment engine is we can apply our models across our own inventory and third parties. Premium publishers are reaching out to run our moments engine across their inventory, which brings us into additional demand flow. So we have multiple commercialization paths without requiring more owned inventory. Mark Locke: And Legend gives us a massive amount of unique inventory that we own and control, further strengthening our position. Bryan Castellani: On BetVision, in the materials we mention a path to around 300,000 events. A big driver of that is esports competitions. We recently added tennis and continue to build out across FIBA and others. We are always looking for more ways to expand our owned and operated inventory. Esports was a relatively easy bolt-on and delivered a significant number of events. Eric Handler: Thank you. Operator: Thank you very much for your question. Your next question comes from the line of Trey Bowers from Wells Fargo. Trey, your line is now open. Trey Bowers: Hey, guys. Thanks for the question. Another BetVision question—any chance you could dig into what you learned from this most recent NFL season? Around engagement, interaction—how did that progress as the season went on? Any metrics you could provide would be helpful. Bryan Castellani: We continue to see year-over-year engagement improvement on NFL as we ramp implementations and users get more familiar with it. Session times and repeat visits are increasing as we add more events. We also saw a 32% increase in unique plays on NFL and 62% across soccer. Trey Bowers: Great. And a follow-up for Bryan: any early sense of potential one-timers for 2026 free cash flow so we are not surprised as the year progresses? M&A costs, etc.? Bryan Castellani: Not at this time. We are focused on continuing to grow the year-to-year cash balance. We have given the annualized impact of the pro forma business—reaching about 30% EBITDA margin with near 50% free cash flow conversion. It is too early to specify any one-timers for 2026 today. Trey Bowers: Thank you. Operator: Thank you very much for your question. Your next question comes from the line of Barry Jonas from Truist. Barry, your line is now open. Barry Jonas: Hey, guys. On Legend, can you talk more about the reaction of your league partners to the deal and specifically address Legend’s work in prediction markets and sweepstakes and the comfort level there? Mark Locke: There are two distinct parts. First, league partners are very positive about our ability to drive wider viewership and get messaging out to a much larger audience we control—that was a big attraction for us. If you are a league and want to access sports fans in North America, the chances are we have them, and we can talk to them for you. On prediction markets, that is separate from league partners—I would not conflate the two. We see the advertising opportunity in prediction markets as significant, and Legend’s role in capturing that marketing spend is clear. More broadly, ask whether prediction markets are increasing the number of people making wagers on sports in the U.S. If the answer is yes, that is good for our market and our business, increases TAM, and increases the requirement for data—both marketing and market-making. We are watching a rapidly evolving regulatory transition with what we think is an obvious medium-term outcome. We have seen this journey before. The value of our data to sportsbooks today is a multiple of what it was a decade ago. We see an interesting opportunity to distribute data to prediction markets as regulation evolves. Our data will be needed. Operator: Thank you very much for your question. Your next question comes from the line of Chad Beynon from Macquarie. Chad, your line is now open. Chad Beynon: Hi. Good morning. Great to see you continue to outpace the betting market. From partners, we have heard about high hold and lower volumes across NFL this season. What are you seeing from an engagement standpoint? Is there any concern that volumes have decelerated, and could that impact your 2026 betting guidance? And then a quick follow-up. Mark Locke: Short answer: no. If you look at our numbers, we are not seeing an impact and do not expect to. Remember, we are a global business—not just U.S. The South American market is growing quickly, Europe is still growing nicely, and there are many global opportunities. We see ourselves as the picks and shovels and somewhat immune to handle volatility. On your broader point, our global betting growth was 33% in 2025; U.S. betting growth was 50% versus roughly 30% for the U.S. market. That reflects additional products like BetVision and in-play, more content like Serie A and EFL, and pricing. These support a sustainable, stable, predictable business. Chad Beynon: Thanks, Mark. And as a housekeeping item, what are the final steps to close the Legend deal? You mentioned Q2—what remains? Mark Locke: Simply regulatory approval. Chad Beynon: Thank you very much. Operator: Thank you very much for your question. Your next question comes from the line of Jason Bazinet from Citi. Jason, your line is now open. Jason Bazinet: Thanks. Two quick ones. You mentioned migrating from gross to net revenue recognition. Can you confirm that was contemplated in the guide? And when does that go into effect, and what is the magnitude? Bryan Castellani: Jason, it is in the guide. We spoke about it at Investor Day. Some curated deals include placing our IDs and moments engine on third-party sell-side platforms. There we take a lower share of the overall campaign but at higher margins. That dynamic was implied at Investor Day and is reflected in the 2026 and 2028 guidance. Jason Bazinet: Thank you. Operator: Thank you very much for your question. Your final question comes from Gregory Gibas from Northland Securities. Greg, your line is now open. Gregory Gibas: Great. Thanks for taking the questions. First, could you provide color on Legend’s revenue breakdown—how much is derived from media/advertising placements versus revenue share and lifetime revenue share? And second, how did self-serve versus managed trend in Q4 versus prior periods? Mark Locke: Roughly 50/50 between media/advertising and revenue share, including lifetime revenue share. Josh: On self-serve versus managed, self-serve is still a smaller share today. Much of the incremental gross revenue we are adding is coming from building out the self-serve, curated-deal portfolio, which takes time. In Q4, we still had a decent amount of managed service as we picked up scatter budgets at year-end. Over the longer term, we expect steady growth by distributing curated deals and gradually shifting the mix toward self-serve. Operator: Thank you for your questions. There are no further questions at this time. This concludes today's call. Thank you for attending, and you may now disconnect.
Operator: Good morning, welcome to the Rayonier Advanced Materials Inc. Fourth Quarter 2025 Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, as a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mickey Walsh, Treasurer and Vice President of Investor Relations. Thank you, Mr. Walsh. You may begin. Mickey Walsh: Thank you, and good morning. Welcome again to Rayonier Advanced Materials Inc.'s Fourth Quarter 2025 Earnings Conference Call. Joining me today are Scott Sutton, our President and CEO, and Marcus Moeltner, our CFO and Senior Vice President of Finance. Last evening, we released our earnings report and accompanying presentation materials, which are available on our website at ryam.com. These materials provide key insights into our financial performance and strategic direction. During today's discussion, we may make forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially. These risks are outlined in our earnings release, SEC filings, and on Slide 2 of the presentation. We will also reference certain non-GAAP financial measures to offer perspective on our operational performance. Reconciliations to the most comparable GAAP measures can be found in our presentation on Slides 21 through 24. We appreciate your participation today and your ongoing interest in Rayonier Advanced Materials Inc. I will now turn the call over to Scott. Scott Sutton: Yeah. Thanks, Mickey. Good morning, everyone, and thank you for joining us. Since stepping into this role, I have interfaced with many Rayonier Advanced Materials Inc. employees and visited every site, and I will start with three things. First, I mean, what a great team we have. I am quite lucky to have the opportunity to hold hands with the Rayonier Advanced Materials Inc. employees and make us the absolute leader in cellulose and derivatives. Second, we have exceptional capabilities and adaptability to produce the broadest portfolio of cellulose products. Third, we have urgent work to do to get out of the ditch. I am going to keep my prepared remarks focused on Slides 4 through 7. As you can see on Slide 4, our free cash flow in 2025 was negative $88 million, and we also carry plenty of high-cost debt. That combination is not sustainable. So priority one on Slide 5 is simple: deliver positive free cash flow in 2026. Every group in the company is executing on priority one as a mission-critical activity. We are not just aiming to get out of the ditch. We are aiming to exit 2026 with significant momentum with a heavy focus on execution. That brings me to priority two: assert our leadership and lift our value equation in cellulose specialties. We are making great progress. Eighty-five percent of the specialties business is now arranged at an average price increase of 18% over 2025, with expected volume loss of about 20% compared with 2025. The other 15% is still in discussion and may not be decided until the back half of this year. If we are successful in those discussions, the remaining 15% will only come at an average price increase significantly higher than the 18% level. A great characteristic of Rayonier Advanced Materials Inc. is that everyone wants to contribute to our success, and that shows up in priority number three. You should expect every business to improve EBITDA in 2026 relative to 2025 through a broad playbook of leadership initiatives, active portfolio management—in other words, leveling up and leveling down market segment categories to maximize contribution profit—and new product commercializations across the portfolio shown on Slide 6. Slide 6 shows the new product work across the company. The point is that one business does not carry the load. The point is that we have multiple levers, and we expect every business to take a step forward. We will execute our way to the outcome shown on Slide 7. The summary is every business improves EBITDA over 2025. We bridge a near-zero EBITDA first quarter as our leadership initiative kicks in, and we deliver a full-year EBITDA substantially better than 2025, along with solid positive free cash flow. And we intend to hit 2027 running hard. That is the plan, and it is what we are executing right now. Operator, please open the call for questions. Operator: Thank you. We will now open for questions. If you would like to ask a question, please press star followed by the number 1 on your telephone keypad. To withdraw any questions, please press star 1 again. Our first question comes from Daniel Harriman from Sidoti. Please go ahead. Your line is open. Daniel Harriman: Hey, guys. Good morning. Thank you for taking my questions and Scott, congratulations on the new role. I have two questions that I will start with, and then I will get back into the queue. But, Scott, setting aside the near-term noise and the stock move following last week's AIP announcement, I am curious to know what you have observed internally that gives you confidence in the company's underlying earnings power and the long-term shareholder value that the company can produce. And then as you assert leadership in cellulose specialties, how should we think about a ceiling for pricing in that market? And do you think there is a point at which higher prices could invite some competitors to add capacity over time? Scott Sutton: Yeah. Okay. Thanks a lot, Daniel. You know, great to be here. Look, I mean, you know, I think early observations are that our best opportunity really comes from the team. I mean, look, the team here is incredible. They have been able to flip to an execution model almost overnight and really drive the free cash flow that we need. I know that the team is capable of more, and you should expect to see more. I would just say the other surprise, and I mean, it is really a positive surprise, is there is more value here than I thought. And we have significant opportunity to execute on that. We are updating our forward plans. You should expect to see more details about those forward plans on our upcoming earnings calls. And, you know, those plans will be built mainly around, you know, four themes. And hopefully, we get a chance to talk more about those four themes today. I think, Daniel, that was your first question. And the second one, you know, the price increase question and how much might be too much. I actually think the best question is maybe what kind of price increase is necessary just to keep really the remaining domestic producers of cellulose specialties in business and healthy. Because if you think about it, before we have achieved this 18%—which, by the way, leaves us far, far short of reinvestment economics—but before we achieved that, if you look at the last four years, you have seen specialty sites and businesses shut down in the state of Washington. They shut down in Tennessee. They have shut down in Florida. We also permanently ceased production of dissolving wood pulp in our Temiscaming facility. So you are really left with two domestic sites, and those two sites are both Rayonier Advanced Materials Inc.'s. We have the capability to fully supply the whole domestic market, but we are not. In fact, we are kind of set up now as an export facility, and it is really because of so many subsidized imports coming in. So I guess that is a long way to say that we have got a long way to go before we get to reinvestment economics, and really encourage anybody else to expand or enter the market. Daniel Harriman: Really appreciate that color, Scott. Thanks again. Scott Sutton: Sure. Operator: Next question comes from Matthew McKellar from RBC Capital Markets. Matthew McKellar: Hi, good morning. Thanks for taking my questions. I would like to ask first, just—I mean, recognizing that the process seems to have played out before you joined the company—can you maybe provide some perspective around the recent filing that indicated you would reject a potential offer and maybe with that, speak to why you see continuing to progress as an independent company as the superior option to that offer? Thanks very much. Scott Sutton: Yeah. Yeah. I mean, hey, Matthew. Yeah. You know, I am probably not going to comment on a specific shareholder or any specific offer, except what I will say is, you know, we have plans that will deliver substantially more value. I think a good reference point for you in terms of that target is maybe my inducement agreement, so that sets a place that, you know, I think—and the team thinks—that we can get to. You are going to hear more about those plans as we are updating them in upcoming earnings calls. I know I just answered Daniel's question by saying that it would be good to talk about some of those themes today, and we have four of them. Maybe I just outline them here since it has already come up twice. But those four themes are really based on the following. Number one, we are going to have leadership initiatives where we go out and extract the most value we can from the landscape that is there. Those are going to be a lot more sophisticated than what we are doing today. We are sort of using a blunt instrument to lift value today. Those will be more specific and sophisticated. Just like, you know, we will look at nitration grade cellulose into propellants, particularly for the U.S. That may be some initiative we work on, and you should expect to hear about playbooks set up around that. The second theme is that we are going to get a lot more skilled at leveling up and down across all our product groups. And if you think about the product groups across cellulose, you know, you are familiar with them. There is acetate grade, ether grade, nitration grade, and so on, but it also includes viscose grade, fluff grade, paperboard grade as well. And we are not going to keep our specialty capacity reserved and not operating while we go out and run an initiative, nor will we run it and just push material into a leadership market. So some of those areas have a 30% market share. Some of those areas, we have a 3% market share. But we are going to run our assets all the time and go in and out of those different market areas as necessary to maximize contribution. And you can almost think of it as—like, if you watch professional golf, you can think of it as a leaderboard. You know, if you like F1, the F1 leaderboard, NASCAR leaderboard, you know, you are going to see which markets we are going in and out of move up and down that scale as we fully run our assets all the time without damaging where we have a leadership position. So in other words, in those 30% market share areas. The third theme of that plan will be around new products, new cousins of the products we have, new tweaks on those products to deliver maybe what others cannot. And then finally, the fourth theme, you know, we will have a very active idea pipeline across the whole company that always offsets inflation. So those are the main themes of the plan that you should expect to hear more about. I mean, Marcus, anything to add or— Marcus Moeltner: Yeah. Matt, one other fifth that I would add that is very complementary to the items that Scott covered is, you know, that improved performance based on execution on those themes will position Rayonier Advanced Materials Inc. for a refi to really address the capital structure and drive down our interest expense and fixed charges. So very complementary in nature and fits well. Matthew McKellar: Great. Thanks for all the commentary. Very thorough. Marcus Moeltner: Did we answer your question, Matthew? Matthew McKellar: Yeah. That was helpful and thorough. Thank you very much. Maybe next for me, and then I will jump back in the queue. Could you just touch on demand conditions and, I guess, market conditions you are seeing in a couple of CS products? Maybe first in Ethers—one of your competitors, I think, recently called out seeing increased competition from Chinese CLP producers in European markets. Are you seeing something similar? And if so, can you speak to how significant this phenomenon is and how it is affecting the market? And then second, you mentioned nitrocellulose in your previous remarks. Could you just give us a sense of what conditions in that market are like with some of the geopolitical events we are seeing? Thanks very much. Scott Sutton: Yeah. Sure. I mean, look, ether grade cellulose is challenged a bit. It is particularly challenged in Europe, but it is mainly because of the ethers coming out of China. In other words, our customers' products are under attack, and therefore, their demand for ether grade cellulose is less. But I will say, even with that, we have still been able to achieve that near 20% price increase across ethers in Europe, which I think is quite different than what others have said. Again, it is just a demonstration that these products can command more value even when there is demand pressure and even when others may have said that pricing is actually going down. I mean, that is a testament to our team, I think. The other part of that—the nitration grade cellulose—yeah, there are lots of new inquiries around that, I would say. There is lots of demand coming from domestic producers of propellants as well. I would say that is an area where we have been able to achieve more than that 18% price increase that we quoted in the prepared remarks. Matthew McKellar: Thanks very much. I will get back in queue. Operator: Our next question comes from Dmitry Silversteyn, Water Tower Research. Please go ahead. Your line is open. Dmitry Silversteyn: Good morning, gentlemen, and Scott, welcome to Rayonier Advanced Materials Inc. Quick question. There has been some discussion about—not discussion, but you announced that you are not going to be participating in the energy project in Georgia. There have been some issues with Tardis plant, as far as skipping production and getting the raw material sufficient to produce the bioethanol business there. Can you talk a little bit about your strategy for biomaterials broadly? And then maybe more specifically, how these decisions are impacting the BioNova joint venture? Scott Sutton: Yeah. Sure. Hey, Dmitry. Good to meet you. Look, I would say just broadly across biomaterials, I mean, it is an important business for us today. It is an important part of our growth story in the future. But I would just say that it is really one contributor to our growth. If you think back to the slide that we had put in the earnings deck, you see new products or new cousins across every business. And that is what you should expect to see going forward. We are going to be talking much more about an integrated model across cellulose specialties, commodities, and biomaterials that gets run under the same value creation model. And all of those items will contribute to our growth. But here, if you go back to the leveling up/leveling down—in other words, like the NASCAR leaderboard that I just talked about before—by running Tardis much more and much stronger, not only are we able to get the value we want in specialties by being able to hold out and not push volume into that leadership market, of course, we are able to access other product groups like fluff. But at the same time, that provides an increased feedstock that goes into the biomaterials business, and in particular, it goes into BioNova there. And we sell more ethanol, and we sell more ligno—lignosulfonates as well. So we are actively working on a plan to run Tardis harder, have basically a crisis management team, and we are having success in doing that. Dmitry Silversteyn: Understood. Thank you. And then the second question, to follow up on your remarks about pricing getting so low that even an 18% price increase still does not put you at reinvestment economics. There has been an antidumping case that you filed against Brazilian and North European importers. I think that has been positively decided, but it has not been adjudicated yet. So can you talk about where you think or when you think the remedies are going to come in to allow you to restore pricing in North America? Scott Sutton: Yeah. I will. And by the way, we are going down a path of restoring prices with or without the antidumping and the countervailing duties case. It is just that success in those cases would certainly help us close the remaining 15% of business likely sooner than we otherwise would, and success in those dumping cases would also make our 2027 improvement and next steps in value likely better as well. But the situation around those—and I will just start with the countervailing duties case—there is likely there will be, we believe, a preliminary determination of those duty rates later this month. So, just as a reminder, that applies to exports out of Brazil from the subsidized state-sponsored producer that has sort of taken over the North American market. So those, we believe, will come in March. The antidumping duties are applicable to both Brazil and Norway, and we believe that there will be preliminary determinations of those rates in May. And by the way, those things are stackable. In other words, the countervailing duties and the antidumping duties can stack on top of one another, as could other things around tariffs as well if they were enacted. So that is the status of the duties. Dmitry Silversteyn: Understood. Thank you very much. I will get back into the queue. Operator: Sure. Our next question comes from Daniel Harriman from Sidoti. Please go ahead. Your line is open. Daniel Harriman: Just a quick follow-up. Scott, we have talked a good amount on specialties and biomaterials. But I am curious to know, with the new product initiatives and cost actions underway within the paperboard and high-yield pulp businesses, how do you see them fitting into the company portfolio longer term? And specifically, do you still see them as potential divestiture candidates? Or is there a role for them longer term in the Rayonier Advanced Materials Inc. portfolio? Scott Sutton: Yeah. No. Thanks for the question. I would just say across all of Rayonier Advanced Materials Inc.'s portfolio, we are not selling any business, and we are not closing any assets. All of them right now are certainly sources of improvement for us, and we expect to improve them all. Both the paperboard business and the high-yield pulp business—yeah, look, they are certainly challenged, and they are still absorbing new capacity, particularly in paperboard. But we have new products there that we are being successful at commercializing. So the source of improvement in 2026 over 2025 for paperboard will be those new products. One is associated with an oil and grease board, and the other one is a foldable freezer board, all of which can carry a unique set of printing and coatings on them. So that will be the source of improvement. We expect to do more volume in paperboard as that other capacity is getting absorbed. High-yield pulp, yep, there is a lingering oversupply issue there as well, but we also have a significant new product that is under customer testing, and we have sold some trial quantities there already. And we will expect to see price start to move back up as that oversupply issue gets addressed. Daniel Harriman: Okay. Thanks again, Scott. I really appreciate it. Scott Sutton: Yep. Sure. Operator: For any additional questions, please press star followed by 1 on your telephone keypad. Our next question comes from Matthew McKellar from RBC Capital Markets. Please go ahead. Your line is open. Matthew McKellar: Hi. Thanks again for taking my questions. Scott, you made an interesting comment there about a more integrated model across CS and even biomaterials. Could you maybe expand on that a bit? I think the current segmentation has helped make clear there are products with very different margins within the business. And that segmentation maybe masked to some degree that commodity pricing is very outside your control, and maybe you need higher CS margins still to justify continued investments. And I guess, would you even make an argument that maybe the commodity side has become structurally more challenging and what that—again, that kind of would suggest CS margins need to go higher. Scott Sutton: Yeah. Sure. I mean, look, our forward model is going to be one value creation model in this area. And, you know, you look at the scale and scope of our assets. We have got to be successful on every kind of product that can come out of those assets, whether it is the seven or eight market segments that we previously classified as specialties, or whether it is the three or four segments that we previously classified as commodities, or whether it is the four or five other segments that we have called biomaterials. So we are going to be setting those assets, and we are going to be setting our market participant strategy in whatever configuration gives us the most contribution at the time. So sometimes, we are going to be running more fluff and more viscose. That is just like today. I can tell you for 2026, our highest-volume product by far is cellulose fluff. And that is because we are going through this leadership initiative, and we are able to not rush that leadership initiative, not push production out into a market where we are trying to increase the value of it. So it is serving us very well in doing that. You also heard me speak about Tardis for the biomaterials—the coproduct or the black liquor that comes off the production of the other serves as the feed for that. So we can balance all that together instead of isolating those and showing isolated results. It does not really matter what we produced. We are just going to be showing a better and better result each time. Marcus Moeltner: Yeah. And Matt, as you know, our breadth in production capability, as Scott mentioned, we can make a myriad of products. We have got a sulfite and kraft process. We have got hardwood and softwood capabilities. We are just going to look to optimize that contribution margin across our footprint while driving down absolute fixed cost. Right? We must drive down fixed costs, be profitable across the footprint, and be more— Matthew McKellar: Great. Thanks very much for that perspective. Last question for me. It was interesting to see your paperboard volumes and prices increase sequentially in Q4. Would you attribute that mostly to the introduction of the freezer board product you mentioned previously? Is there anything else we should understand about your results in that business? And then, I guess, with the recently announced closure of a competitor's SBS mill in Northern Quebec, do you see opportunities to potentially win some attractive business there that could further support results? Thanks. Scott Sutton: Yeah. I think that—and maybe Marcus has a comment more. I mean, there is some mix issue there. We were successful with the freezer board new product introduction as well, because you are speaking about the third quarter of last year compared to the fourth quarter. Marcus Moeltner: Yeah. And I will add to that, Matt. There is an element of mix as it relates to quality as well. Better productivity and better quality at the plant results in less culls, so that is going to drive your mix as well. So we have seen the plant performance better and improved. Scott Sutton: Hey, Matt. Ask your second question. Matthew McKellar: Yeah. Sure. So I guess with the closure of a competitor's SBS mill in Quebec, do you see some opportunities to win business that could further support results in that—thanks. Scott Sutton: Yeah. Okay. Thanks. I think there are opportunities. But at the same time that is going on, we are having to absorb the new capacity up in the Northeast U.S. as well. So it is sort of maybe helping offset the negative from that. Matthew McKellar: Okay. Fair enough. Thanks very much. I will turn back— Scott Sutton: Alright. Operator: And we have no further questions. I would like to turn the call back to Scott Sutton for closing remarks. Scott Sutton: Yeah. Okay. Yeah. Thanks. I mean, there are just a couple things I would like to add here at the end, maybe things that did not really come up. We did comment that we still have 15% of the expected cellulose specialties business to place, and I just wanted to relay that I think we have options for that. Clearly, the first option is to get that in the specialties area. It is mainly a shortage in the acetate area, and it is mainly a shortage in the U.S. And all I would say there is it is going to take some time to be successful, but I would hate to really be the last demand standing there, like maybe the U.S. TOE producers are going to be. It is sort of like there is a game of musical chairs and someone is going to be left standing without a chair. And we are going to see where that goes. And that is why I made my earlier comments that the remaining 15% is only going to come at a higher price increase than the 18% that we have already achieved. The other option that we have if we are not successful at getting that remaining 15% is we will run our, you know, NASCAR leaderboard strategy, and we are already practicing at that some. We will level up and level down as necessary. And we will go do some more fluff business, where we only have a 3% or 4% global market share, and we can enter that market basically without damaging the pricing profile of it. So I think that is something that did not come up, but it is important because how we manage that is important to our EBITDA profile going forward through the rest of 2026. Okay. So look, with that, I guess I will just end where we began. And I will just say, look, what a great team we have. We have a lot of value here. But we have really urgent work to do. And our priorities are really clear. Deliver positive free cash flow in 2026. We are going to assert our leadership and lift value in cellulose specialties. And we are going to improve EBITDA across every business. We are executing on that now. We intend to exit 2026 with significant momentum and hit 2027 running really hard. You should also expect us to continue to update these plans where we hinted on the four themes that they will contain, and Marcus added a fifth very important value creation theme to that as well. And that is what we will be talking about in our upcoming earnings calls. So anyway, with that, I will just say thanks a lot for your questions, and thanks a lot for your interest in Rayonier Advanced Materials Inc. Operator: And this concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the Dycom Industries, Inc. fourth quarter 2026 results conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Ms. Callie Tommaso, Dycom Industries, Inc.'s Vice President of Investor Relations and Corporate Communications. Please go ahead. Callie Tommaso: Thank you, operator, and good morning, everyone. Welcome to Dycom Industries, Inc.'s fiscal 2026 fourth quarter and annual results conference call. Joining me today are Dan Peyovich, our President and Chief Executive Officer, and Drew DeFerrari, our Chief Financial Officer. Earlier this morning, we released our fiscal 2026 fourth quarter and annual results, along with certain outlook information. The press release and accompanying materials are available in the Investor Relations section of our website, including a new outlook expectation summary document which provides additional outlook metrics beyond what will be discussed on today's call. These materials, which we will discuss during today's call, include forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Our discussion and these statements reflect our expectations, assumptions, and beliefs regarding future events and are subject to risks and uncertainties that could cause actual results to differ materially. A detailed discussion of these risks and uncertainties is included in our filings with the SEC. Forward-looking statements are made as of today's date, and we undertake no obligation to update them. Additionally, we will reference certain non-GAAP financial measures during today's call. Explanations of these measures and reconciliations to the most directly comparable GAAP measures can be found in our press release and accompanying materials. Before I turn the call over, I would like to note an update to our segment reporting implemented during the fourth quarter. As a result of the recent acquisition of Power Solutions, we are now reporting our business in two reportable segments: Communications and Building Systems. This new segment reporting reflects how Dycom Industries, Inc.'s business is managed and the positioning of the company's strategies and expanding platform to provide comprehensive solutions as we address the growing demands for digital infrastructure. The Communications segment provides specialty contracting services for telecommunications providers, underground facility locating services for various utilities, including telecommunications providers, as well as other construction and maintenance services for electric and gas utilities. The Building Systems segment provides comprehensive building infrastructure solutions including electrical, energy management, security, and fire safety systems for data centers and other critical facilities. This segment includes the results of Power Solutions, following the closing of the acquisition on 12/23/2025. With that, I will turn the call over to Dan Peyovich. Dan Peyovich: Thank you, Callie. Good morning, everyone, and thank you for joining us. Dycom Industries, Inc.'s fourth quarter results are an excellent finish to a record year as we set new benchmarks across nearly every financial metric we track. We exceeded the high end of our annual revenue outlook, and our performance highlights our unique ability to capitalize on a diverse and intensifying demand environment. We delivered on the two pillars we set as priorities: meaningful margin expansion and improved operating cash flow. Our strategy and focus on scaled efficiencies strengthened our balance sheet and built a platform for sustained, high performance growth. Beyond our solid organic growth, we fundamentally broadened Dycom Industries, Inc.'s reach through strategic M&A. The acquisition of Power Solutions, which closed on December 23, positions us squarely at the intersection of digital infrastructure and the burgeoning data center market. Capitalizing on industry tailwinds, we are aggressively architecting our own trajectory, ensuring Dycom Industries, Inc. and our robust skilled workforce remain the indispensable backbone of the next generation of digital connectivity. I will start by covering our fourth quarter and full-year consolidated results, and then I will move to our fiscal 2027 financial outlook and our objectives for the year ahead. After that, Drew will provide further financial details and insights. For the quarter, we delivered all-time record fourth quarter revenue of $1,460,000,000, an increase of 34.4% compared to Q4 fiscal 2025. Of note, this was a Q4 record both in total and on an organic basis. Organic revenue increased 16.6% for the quarter, a testament to the strength of our backlog and the momentum going into the next year. Adjusted EBITDA was $162,400,000 and adjusted EBITDA margin was 11.1%. EBITDA margin increased by 41 basis points compared to Q4 fiscal 2025. Significant additions to our workforce position us well for next year's growth, but did have some impact on margins this quarter as they are working through the severe winter storms. Non-GAAP adjusted diluted EPS was $2.03, a 42% increase compared to Q4 fiscal 2025. DSOs were 101 days, an improvement of 13 days year-over-year, and operating cash flow increased 27.7% to $419,000,000 for the quarter. As I mentioned, the fourth quarter capped a year of exceptional performance for Dycom Industries, Inc. in which we capitalized on growth opportunities across our demand drivers, while also enhancing our underlying business to deliver stronger margins and improved cash flow. For the full year, we delivered all-time record revenue of $5,550,000,000, an increase of 17.9% compared to fiscal 2025. Organic revenue increased 6.5% for the year. Non-GAAP adjusted EBITDA was $737,700,000 and non-GAAP adjusted EBITDA margin was 13.3%. EBITDA margin increased by 105 basis points compared to fiscal 2025. Non-GAAP adjusted diluted EPS was $11.97, an increase of 29.7% year-over-year. We ended the year more than doubling free cash flow to $435,300,000. Fiscal year 2026 set new records for Dycom Industries, Inc., and importantly, positioned us for continued growth, margin expansion, and further cash flow improvement in fiscal 2027. Shifting to our backlog, our approach to the pipeline remains disciplined. We are optimizing for high-value engagement that balances risk with superior returns, as evidenced by our fiscal 2026 margin performance. Communications demand drivers remain robust, and we moved aggressively to expand our footprint. With the strategic addition of Power Solutions, we successfully entered a new high-demand sector with a distinct customer base, significantly broadening our total addressable market. In addition to diversification, we are capturing new territory, highly focused on digital infrastructure from a position of strength. Our year-end numbers confirm the velocity of our growth. We concluded the year with a record $9,500,000,000 of total backlog, of which $6,300,000,000 is expected to be completed over the next 12 months. Book-to-bill for the year was 1.3x in total and 1.2x on an organic basis, reflecting the increasing demand for our services. As we turn the calendar to the new fiscal year, Dycom Industries, Inc. is strategically positioned for strong growth across multiple demand drivers, led by significant increases in fiber-to-the-home deployments, as well as increasing demand for communications and building systems services to support data center and hyperscaler builds. For fiscal 2027, we expect total revenue between $6,850,000,000 and $7,150,000,000, representing year-over-year total revenue growth of approximately 23.6% to 29%, or approximately 6.6% to 10.3% on an organic basis. We also anticipate continued adjusted EBITDA margin expansion. In Communications, we expect modest adjusted EBITDA segment margin gains driven by operating leverage offsetting continued investment to support our growth. We expect Building Systems to deliver a mid-teens adjusted EBITDA segment margin as we scale the business to capitalize on favorable sector tailwinds. Our strategy remains focused on driving long-term value for our shareholders and providing industry-leading opportunities for our people. Our execution consistently sets the standard for our industry, and we are focused on continuously enhancing the solutions we provide to our customers as their businesses evolve. This operational foundation allows us to be disciplined in our growth. We are high-grading our pipeline and diversifying across robust demand drivers. Collectively, these demand drivers have never been stronger, and neither has Dycom Industries, Inc.'s positioning within. Our service and maintenance work remains the bedrock of our Communications business, delivering over 50% of our Communications revenue in fiscal 2026. This recurring base provides a scaled national footprint of facilities, equipment, and skilled workers, enabling us to aggressively pursue larger capital programs. Our unmatched local knowledge provides significant value for our customers as they plan their network builds across the country. While the growth rate for maintenance naturally trails our high-velocity build program, as it scales with new plant installations and geographic expansion, we will continue to grow this segment with purpose to lock in long-term recurring revenues as our customers' networks expand and densify. We see significant ongoing opportunities to further deepen these relationships and amplify Dycom Industries, Inc.'s role as a long-term partner in our customers' ecosystems. Fiber-to-the-home deployment remains the most mature and dominant driver of growth in our Communications segment heading into fiscal 2027. This quarter, our customers again either affirmed or raised their passing goals. With recently completed customer consolidation, we are seeing the same commitment to fiber infrastructure investment, further reinforcing our strategy. Current industry commitments represent nearly 6,000,000 additional fiber-to-the-home passings. Dycom Industries, Inc. is a leader in this deployment, and our large skilled workforce enables us to meet the growing demand for this critical infrastructure. Virtually, the passing is only the first phase of the revenue life cycle. We are also accelerating our work on customer drops, the lateral connections required if subscribers sign on to the network. Following the initial build, these connections typically take an average of four years to reach terminal penetration, the point at which most potential subscribers in an area are connected. This creates a powerful multiyear tail of quality work. Simply put, Dycom Industries, Inc. is well positioned to lead the fiber-to-the-home market for the next decade. We believe that our strategy, deep customer relationships, and proven performance will enable Dycom Industries, Inc. to be a leader in the BEAD program as it enters the funding phase. The NTIA has already cleared the large majority of states, representing more than $30,000,000,000 in total spend, and NTIA has moved over $17,000,000,000, or more than half of that amount, into the funding stage. Our teams are in active discussions at the state and subgrantee levels, which has translated to additional verbal awards with subgrantees, increasing the $500,000,000 of verbal awards we noted last quarter. We believe these verbal awards will begin moving to contracted backlog in Q1 or Q2. Our customers are choosing Dycom Industries, Inc. because they recognize that delivering on these massive individual programs requires a specialized, high-capacity workforce that only we can provide at scale. We continue to expect the first revenue opportunities in Q2, and we anticipate revenue to ramp as programs move from the planning phase into active construction. In the 2026 bill, the wireless equipment replacement program is transitioning into its next phase in accordance with the original build plan. While Drew will provide further details on this program, we remain ready to capture any future surge in network densification or new infrastructure initiatives. Shifting to the long-haul to middle-mile fiber opportunity. Recent hyperscaler announcements by Verizon, AT&T, Meta, and Corning confirm our thesis. Existing networks lack the capacity and latency required to support growing data consumption and AI inference. This quarter, hyperscalers collectively raised their CapEx guidance to nearly $718,000,000,000, representing an approximate 70% increase year-over-year, affirming both the need and the capital behind it. The $20,000,000,000 addressable market that we identified across long-haul, middle-mile, and inside-the-fence fiber infrastructure continues to grow as it progresses through the ecosystem. We are seeing more activity today than ever before, giving further confidence in the revenue opportunities now and in the future. As we have said before, these large programs have a longer planning phase than fiber-to-the-home or other programs. We see their pace ramping considerably for builds that would start in earnest in calendar 2028. Dycom Industries, Inc. is uniquely positioned for the long-haul, middle-mile, and inside-the-fence opportunity set. First, we believe we were first on the field executing Lumen's overpull program. Their program continues, with Lumen announcing that they received another $2,500,000,000 of awards this quarter to bolster their current build. We expect our revenue to continue to ramp this year as we look to deliver on Lumen's overpull program. Second, both overpull and new construction builds require massive foresight, geographic scale, and technical sophistication. Complexity favors Dycom Industries, Inc. While the incubation period from inception to construction is longer than fiber-to-the-home, these programs generate elongated build cycles that provide revenue visibility well into the next decade. Lastly, the surge in long-haul capacity must be matched by the fiber density inside the data center campus. We continue to secure new awards inside the fence, validating that hyperscalers require a strategic, scaled partner to sustain their build pace. Our strategy is to position Dycom Industries, Inc. as the indispensable partner for hyperscalers and carriers alike. We have deployed dedicated teams to work directly with customers and the supply chain, ensuring we proactively plan and precisely execute every program. Our recent acquisition of Power Solutions and entry into the data center space is one way we are leaning into those partnerships. Dycom Industries, Inc. now offers an extended suite of solutions across the digital infrastructure space, and we are already seeing opportunities to bring our Communications and Building Systems services together to meet the intensifying requirements of hyperscalers. Specifically, they are looking for Dycom Industries, Inc.'s breadth, scale, and proven execution, whether it is inside the four walls or interconnecting the fiber between data centers. We view this as a substantial growth driver and are executing a clear, disciplined strategy to capitalize on this demand. Since closing the Power Solutions acquisition just over two months ago, the business is performing well, and the integration has proceeded on schedule. We are leveraging their specialized expertise to sharpen our approach to the data center and digital infrastructure markets. The strong cultural and operational alignment between our teams has allowed us to hit the ground running, and we are very pleased with its initial contributions to our broader portfolio. As we look to the year ahead, we are focused on four core strategic priorities. First, talent and workforce development. We are investing heavily in our workforce, now over 19,500 strong, to meet intensifying customer demand. In the coming weeks, we will break ground on a new state-of-the-art training facility outside of Atlanta. While we operate numerous facilities nationwide, this center represents a major step in staying ahead of evolving technical demand. Designed to house employees for immersive, multiweek programs, the facility will provide hands-on training in real-world environments to ensure our teams consistently deliver the safety, quality, and expertise that define the Dycom Industries, Inc. brand. This investment is part of our overall strategy, which includes significant enhancement of our benefits package as we continue our efforts to remain the employer of choice in our space. As diverse demand drivers intersect and overlap, we anticipate an industry-wide shortage of skilled labor that will favor Dycom Industries, Inc.'s scaled workforce and proven execution. As a trusted partner, we maintain constant dialogue with our customers to build our talent ahead of the curve. Second, expansion of our Building Systems segment. With Power Solutions as our foundation, we are actively pursuing opportunities to drive their organic growth beyond their current footprint as well as pursuing additional complementary acquisitions, while remaining committed to our strict criteria and long-term debt leverage target. Third, margin expansion. We will continue to drive margin improvement through productivity gains and operating leverage. Our commitment to field efficiency is unwavering, rooted in our disciplined approach to safety, quality, and financial performance. This past year, we delivered significant margin expansion and are applying that same discipline to fiscal year 2027. Fourth, operating cash flow and fleet optimization. We have made significant strides in our cash position by improving internal processes and controls and sharpening our cash conversion cycle. We have driven significant improvement in our net DSOs, which are nearing a range we expect to remain relatively steady. We will continue to identify and execute on opportunities to further enhance operating cash flow. This includes capturing additional efficiencies within capital expenditures, as reflected in our reduced spend last year and our outlook for fiscal 2027. This reduction is a result of long-term strategic planning, not short-term cost savings. As a leading customer for many of our equipment suppliers, and the strategic decision to favor ownership over leasing, we hold a unique position in our R&D cycles. R&D partnerships have led to advanced telematics that provide real-time insight into usage, maintenance, and diagnostics. By leveraging these insights, we have optimized our fleet, allowing us to maintain high performance levels with a lower capital footprint. In summary, Dycom Industries, Inc.'s strength is rooted in the expertise of our large workforce and our proven ability to raise the bar for our customers. In striving to deliver at the highest possible level, we believe we are setting the industry standard for what focused scale and high-quality execution looks like. Our record performance and historic backlog are a direct reflection of the trust we have earned as an indispensable partner to the world's leading carriers and hyperscalers. As we move into fiscal 2027, we will continue to leverage our scale and technical sophistication to solve the industry's most complex challenges and meet commercial opportunities, from the massive fiber-to-the-home buildout to the critical infrastructure requirements of the data center and AI economy. We remain committed to the disciplined growth and superior execution that define Dycom Industries, Inc., drive long-term value for our shareholders, and long-term opportunities for our people. I would like to thank the entire Dycom Industries, Inc. team across all 50 states for your relentless commitment to safety and quality, and to delivering at the highest level for our customers and communities, as we pursue our vision to be the people connecting America. With that, I will turn the call over to Drew for a deeper look at the financials. Drew DeFerrari: Thanks, Dan, and good morning, everyone. We delivered record annual results in fiscal 2026 with strong revenue growth, significant margin expansion, and robust free cash flow. We executed well in Q4, and we are excited to welcome Power Solutions to Dycom Industries, Inc. Together, we are positioned at the center of the powerful secular trends driving growth in digital infrastructure services. For the fourth quarter, we delivered strong growth in revenue, adjusted EBITDA, and adjusted EPS. Consolidated total contract revenues were $1,458,000,000, a 34.4% increase over Q4 2025. Organic revenue exceeded the high end of our expectations, growing 16.6% after excluding the acquired revenues from Power Solutions of $95,800,000 and the extra week in our 53-week fiscal year. Consolidated adjusted EBITDA of $162,400,000 increased 39.6% over Q4 2025. Adjusted EBITDA margin of 11.1% was within our range of expectations and increased over 40 basis points compared to Q4 2025, even as we increased our workforce to meet the growing demand for our services and experienced severe winter weather at the end of the quarter. Consolidated adjusted net income was $60,500,000, and adjusted diluted EPS was $2.30 per share. These results are adjusted to exclude nonrecurring acquisition-related items and the amortization of intangible assets. For the segment results, Communications revenue was $1,362,000,000, driven by continued execution of fiber-to-the-home programs, wireless activity, fiber infrastructure programs for hyperscalers, and maintenance and operations services. We are pleased with the strength of our relationships and diversification across our customer base. AT&T and Lumen each exceeded 10% of total revenue for the quarter, contributing $350,500,000 and $147,700,000, respectively. Following Verizon's acquisition of Frontier during our fourth quarter, their combined revenue was $205,600,000, also exceeding 10% of total revenue. Customers exceeding 5% of total consolidated revenue for the quarter were BrightSpeed, Charter, Comcast, and Uniti. Adjusted EBITDA for Communications increased 30% to $151,300,000, or 11.1% of segment revenue. The Building Systems segment includes Power Solutions results from the date of acquisition on December 23 through January. Revenue was $95,800,000, and adjusted EBITDA was $11,100,000, or 11.6% of segment revenue, with results impacted by several seasonal holidays during the abbreviated operating period. This acquisition fundamentally broadens our reach into the data center market. The integration is proceeding on schedule, and the business is performing in line with our expectations. Backlog at the end of Q4 was $9,542,000,000, including $8,333,000,000 of Communications backlog and $1,209,000,000 of Building Systems backlog. Backlog expected in the next 12 months was $6,358,000,000, including $5,250,000,000 from Communications and $1,108,000,000 from Building Systems. Strong cash flows remain a primary focus, and we delivered excellent results. Operating cash flow totaled $642,500,000 for the full fiscal year, and free cash flow increased 216% to $435,300,000 after capital expenditures net of disposal proceeds. The combined DSOs of accounts receivable and contract assets, net, improved to 101 days, a 13-day improvement over Q4 2025. We made solid progress improving our cash conversion cycle in the Communications segment and of the newly acquired business, which is further bolstered by the lower DSO profile in our Building Systems segment. I am pleased to report that our ERP implementation is on track, and we are actively deploying additional phases during fiscal 2027, further enabling future operational efficiencies. As we previously disclosed, the $1,950,000,000 acquisition of Power Solutions was completed in the quarter on a cash-free, debt-free basis, subject to working capital and other post-closing adjustments. The purchase price consisted of approximately 1,000,000 shares of Dycom Industries, Inc. common stock, with the remainder of consideration paid in cash. The net cash payment at closing of $1,630,000,000 was funded with a mix of proceeds from a $1,100,000,000 senior secured term loan A facility, a $600,000,000 364-day bridge loan facility, and cash on hand. During January, we raised $800,000,000 of senior secured term loan B, repaid the bridge loan facility, and added the remaining net proceeds from the debt issuance to cash on the balance sheet. We ended the quarter with cash and equivalents of $709,200,000 and total liquidity of $1,460,000,000. The maturity of our senior credit facility has been extended to December 2030, and we had a total of $1,540,000,000 term loan A outstanding and an undrawn $800,000,000 revolving credit facility. The term loan B balance was $800,000,000 outstanding with a maturity in January 2033. Additionally, we have $500,000,000 senior notes outstanding that mature in April 2029. Pro forma net leverage at the end of the quarter was approximately 2.3x adjusted EBITDA, and we see a clear path to delever further to approximately 2.0x net leverage over the next 12 months, in line with our expectations at the time of the transaction and maintaining our financial flexibility for continued strategic growth and investment. Going forward, we remain committed to our capital allocation priorities of investing in organic growth, pursuing strategic M&A, and opportunistically repurchasing shares. We continue to observe strong demand across a diverse set of drivers, creating significant opportunities for continued strong growth and performance. For fiscal 2027, we expect total contract revenues to range from $6,850,000,000 to $7,150,000,000. For the Communications segment, we expect contract revenues to range from $5,700,000,000 to $5,900,000,000, increasing approximately 6.6% to 10.3% organically when compared to $5,350,000,000 of fiscal 2026 Communications revenue after excluding the extra week in our 53-week fiscal year. For the Building Systems segment, we expect contract revenues ranging from $1,150,000,000 to $1,250,000,000. We also anticipate continued adjusted EBITDA margin expansion. For Communications, we expect modest adjusted EBITDA segment margin improvement as operating leverage offsets continued investment in our workforce to meet growing demand. For Building Systems, we expect a mid-teens adjusted EBITDA segment margin as we scale operations to capture increasing market opportunities. To highlight some of the expectations driving our outlook range for fiscal 2027, within Communications, we expect continued strong demand from fiber-to-the-home programs, increasing demand from long-haul and middle-mile fiber infrastructure builds, growing inside-the-fence opportunities, and modest growth in our service and maintenance business. We expect revenue from wireless equipment replacements to decline by approximately $100,000,000 in fiscal 2027 as the program transitions into its next phase, in accordance with the original build plan. We expect a further step down in fiscal 2028 as this program moves towards completion. Our strategy positions us well for future wireless opportunities, whether other equipment upgrades or overall densification. And for the Building Systems segment, we expect exceptional demand for electrical services in a growing data center market. We expect annual capital expenditures, net of disposal proceeds, to range from $210,000,000 to $220,000,000 for fiscal 2027 as we efficiently utilize our fleet of assets and strive to continue to reduce our capital intensity. For Q1, we expect total contract revenues of $1,640,000,000 to $1,710,000,000, adjusted EBITDA of $200,000,000 to $220,000,000, and adjusted diluted EPS of $2.57 to $2.90 per share, excluding the impact of intangible amortization expense. Dan Peyovich: We encourage you to review the outlook summary document newly available on the company's Investor Center website for additional metrics. With a record fiscal 2026 behind us, Dycom Industries, Inc. enters fiscal 2027 with solid strategic positioning and a strong financial foundation. We remain focused on the disciplined execution necessary to convert robust industry demand into long-term value for our shareholders. Operator, this concludes our prepared remarks. You may now open the call for questions. Operator: Thank you. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. We will now open for questions. Our first question will come from Sangita Jain from KeyBanc Capital Markets. Your line is open. Sangita Jain: Good morning. Thank you for taking my question. Dan, can you talk a little bit about how you plan to increase the scope of work that you are doing inside Power Solutions? I know Dycom Industries, Inc. has telecom expertise, so maybe you can expand into cabling or something else that you are currently not doing there? Any color there would be helpful. Dan Peyovich: Good morning, Sangita. First, I just want to say Power Solutions acquisition is going incredibly well. The integration is going just as we expected it to be. This is an incredibly strong, very deep leadership team that has been in that market for a very long period of time. So we are excited about how they are performing. We are excited about the opportunity set in front of them. And if you probably heard me say, the demand, especially in the DMV right now, is just off the charts. So plenty of opportunity there. As you can see, we are outlining significant growth for them this year. You know, with the range we gave is 15% to 25%. Really, that is about trying to ramp into that over the year and set us up for the future and what that looks like. So we are investing in that business. You know, we are certainly adding resources to that business. And then to your question, the cross-sell is quite frankly taking flight even earlier than we anticipated. The reaction from the hyperscalers has been fantastic. You know, where we can bring our inside-the-fence Communications work and couple that with what Power Solutions is doing inside the four walls, we think that is a recipe that wins over time. And again, with both of our proven expertise, the response has been fantastic. If you think about inside the four walls, one, I would point to how we named the segment. So Communications, obviously, for the Dycom Industries, Inc. business that is in the legacy side, but Building Systems, we wanted to be specific. So first, you know, we are really architecting Dycom Industries, Inc. around digital infrastructure. It is about both the compute of data and the transmission of data around the country, getting it all the way from the data centers themselves to the end consumer or to the end business. That is really our playbook. We want to be straight down the fairway as we are thinking about it. With Power Solutions, obviously, there are opportunities for organic expansion, and we are going to look into that. It is continuing to work on that over time. And we are also looking at M&A opportunities, and we have been vocal about that. That is not just limited, to your point, not just limited to electrical. We call it Building Systems for a reason. We are not thinking about civil infrastructure. We are not thinking about getting outside of digital infrastructure. But there are other opportunities inside the four walls at a data center that could make sense. And as everybody knows, it is a very active space right now. And, you know, we are optimistic. Again, we have got discipline around what we are looking for, strategy around what we are looking for. It has got to have really strong culture. It has got to fit, you know, with the growth opportunities that we see. But, yes, there could be other disciplines that we bring into the fold. Sangita Jain: Thank you for that, Dan. And then on the fourth quarter organic growth, which was especially strong given winter weather and the holidays, etcetera, can you talk a little bit about where you were most surprised versus your internal expectations? If there was any notable project pull forward that came in? Thank you. Dan Peyovich: No pull-forwards. And, yes, we are obviously very pleased with the overall performance, exceeding the high end of our range that we gave at the beginning of the year, giving that revenue outlook at the beginning of the year that we raised after Q1. But notably, for the fourth quarter, as you point out, one, we had to work through significant winter weather. What it shows really, one, the ability of our team to execute even in those conditions. We did get a little bit of margin pressure from that, but the ability to keep that going. But, importantly, the demand from our customers. The demand coming out of Q4 and the demand going into this year, you can see it in the guide that we gave for fiscal 2027. You can see it in the organic growth that we are talking about in the Communications side and the outlooks for 2027. So it really just shows all of these different demand drivers as they are coming through the business, and the opportunity set there. So nothing specific. Really, I would say, points to the overall demand. One thing I would point out, you know, we did have wireless that increased in Q4. And you do have to think about that. As Drew talked about, you know, we expect about $100,000,000 of deceleration in line with the original expectations of that program. But since we got that work and have been executing, we have talked about back half in the four years that it is going to start to taper off. So you do have to include that going the other direction. Sangita Jain: Thank you. Operator: Our next question comes from Eric Luebchow from Wells Fargo. Your line is open. Eric Luebchow: Great. Thanks for taking the question. Dan, I wanted to just ask about the long-haul, middle-mile, and inside-the-fence work. I know you quantified the $20,000,000,000 TAM a few quarters ago. Sounds like you are optimistic that that is going to prove conservative, and we have seen some interesting announcements from the likes of Meta and Corning recently. So maybe any kind of quantification on how that program is progressing? And where you think that addressable market ultimately goes? It sounds like $20,000,000,000 is just the start. Dan Peyovich: It really is, Eric. If we think about the $20,000,000,000, and remember that is back-half weighted because these programs are complex. They take a while to get off the ground. But what you have seen since the last quarter, and I think we put that number out a couple quarters ago, in this last quarter you saw a number of our customers now talking about it and talking about significant opportunities and appetite for hyperscalers. As recent as yesterday at some of the conferences, even more demand that they are seeing on their side. It does take time for that to get through the ecosystem, and that is what we tried to talk about early on when we identified the $20,000,000,000. You know, we really think that we were first on the field with what we have been doing for Lumen. Saw another nice increase to their PCF that they are going to continue to build on over time. And then you have the new construction work, which again just takes further time to come in. I would really think about ramping this year, continuing to ramp this year, continuing to ramp in 2027, and a lot of that really taking flight in calendar 2028. Is it more than $20,000,000,000? We strongly believe that. Is there going to be more that comes there? What I would tell you is today, we are getting more phone calls and seeing more opportunities than we saw even a quarter ago or, frankly, even a week ago, the demand is that strong. And it comes back to a little bit of what I talked about at the beginning. This is about a change in how they need to transmit this data. They need more capacity. They need ultra-low latency for these applications and for the future of AI. So we are excited that we can be a trusted partner there, and we really think that over time that is going to continue to grow, and we will continue to update as we see that move. Eric Luebchow: Great. Thank you, Dan. And maybe we could just touch on the BEAD program. You talked about it a little bit. Sounds like the verbal award balance is above that $500,000,000, but it also seems like it is taking a little longer for the funds to actually get dispersed. I think Louisiana is the only one that I have seen. So maybe you could just talk about the construction timelines there, when you think that is really going to ramp and kind of hit a more full run rate. Dan Peyovich: We still believe Q2 that we have some revenue opportunities to be putting work in place overall. But as we talked about, and really unchanged from what we have been saying for a bit now, if you really think about that in calendar 2027, it is getting some momentum. So it is great to see progress. You know, nearly all the states and territories are approved. So to your point, funding, this has pushed the funding down, and that continues to grow over time. We think that the addressable market is approaching $20,000,000,000, but it is going to take some time for those to get off the ground. You have got numerous states at different paces, the way that they are pushing it down to the subgrantees, and then those subgrantees also at different paces. Within that, I will just frame the context for you. If you think about a local cooperative where they own their own poles, they have probably already done the engineering today. As soon as they get the funding pushed down, they can hit the go button, and that is why we talked about something in Q2. But the bigger program, the longer duration build, those are probably going to come on much later in the year. So, again, great to see progress. We all wish it would go a little bit faster. Absolutely. But we have a lot of confidence in that coming through the supply chain soon. Eric Luebchow: Thanks, Dan. Thank you. Operator: Our next question will come from Joseph Osha from Guggenheim Partners. Your line is open. Mike Spressody: This is Mike Spressody on for Joe. Just to kind of follow up on that BEAD program, is it fair to say that the big guidance does not imply the full potential impact for this year? And then also, how do margins from this program differ from your traditional work? Are they more accretive or anything like that? Thanks. Dan Peyovich: Mike, I think you are breaking up just a little bit. I think you are referring to the BEAD program again and just how it is built over time. Mike Spressody: Yeah. Exactly. Thank you. Dan Peyovich: Yeah. First, on the margin profile, similar to all of our work. We think about everything on the Communications side very similarly. If it is taking the same type of skilled workforce resources, if it is taking similar types of equipment, then the margin profile and that return ends up in a similar range. So that does not mean every project is exactly the same, but it is in the same similar bandwidth. And we believe BEAD will play out that way over time. But, and I think this is an important point, you have got fiber-to-the-home demand that is really just reaching another level. And, again, I do want to point out, it has not peaked yet. You still have a ton of growth that is happening in that program. You have got everything going on with the hyperscalers and those long-haul, middle-mile builds that is significant. You still have a lot of activity on the wireless work today. We continue to add to our service and maintenance platform. When you put all those together and you start adding them up and showing the increases over time, without question, there is going to be pressure on labor. So if you think about skilled workforce, as you get later this year and really starting in calendar 2027, that is where we think Dycom Industries, Inc. is exceptionally well positioned. And we have been investing heavily in our workforce to make sure that if you think about BEAD and the needs that our customers can have there, when you already have these other programs going fast, we need to have been investing years ago. We need to be thinking about having a strategy that was very long term. You probably heard me in my prepared remarks talk about, and I am really excited about this, a new training facility that we are opening outside of Atlanta. This is something you are going to hear more about in the coming days, and we have numerous training facilities around the country. But this one is really taking it to the next step. So picture a Hollywood-style town where our folks can be working in the front yards and backyards of America in a simulated environment, where they are going to stay on site for a multiweek training curriculum so that we can get them very quickly oriented to the work, highly skilled to deliver at the level that Dycom Industries, Inc. is expected to do overall. I should point out, this facility is also not just what we are doing on the Communications side, but the Building Systems side as well. That is just another example of how we invest in front of programs to make sure that we will have the skilled workforce that our customers need, and that the partnerships that we have and the depth of those partnerships allow us to plan those very far into the future. So back to your original question on BEAD, just really think about it lightly coming in this year. It is just going to take a while for these programs to start. Again, we are excited about backlog that we have verbally awarded, and I want to point out that it is still verbal to date. We think those should transition to actual awards and move to backlog in either Q1 or Q2, with some activity starting in Q2. But think about calendar 2027 as really when those projects are going to come online. Mike Spressody: Thank you. Dan Peyovich: Thank you. Operator: Our next question comes from Frank Louthan from Raymond James and Associates. Your line is open. Frank Louthan: Great. Thank you very much. Can you comment on what the current growth rate is at Power Solutions today versus what it was when you acquired the business? And then secondly, can you characterize your exposure to EchoStar, any project that they have currently, and if you have removed any of that from your guidance? Thanks. Dan Peyovich: No exposure to EchoStar, so nothing to think about there for Dycom Industries, Inc. On Power Solutions growth rate, we talked about their trailing four-year CAGR at about 15%, Frank, and that is what we gave as we were doing the acquisition and announced it for folks to look ahead. Obviously, as you saw in the guide, we are looking at that really as the bottom end of the range, so 15% to 25%. But here is the really important point. This is an organization that is delivering across around 3,000 skilled workforce, so 3,000 electricians, over a billion dollars of revenue. That is a very large base. And when you think about growth as a percentage, remember, you add the skilled workforce by the person, and doing that on a much larger base is something that you really have to lean into. So, you know, if you think about how we are looking at the year, how do we continue to invest in Power Solutions, a fantastic business that has got great leadership, a fantastic strategy that they have proven over time, but we want to really lean in with them so we can think about future growth and future growth opportunities. And I just want to come back to Dycom Industries, Inc. as a whole. When we think about growth, there is a right way to do growth and there is a wrong way to do growth. We have had a ton of discipline around our backlog. You see that in our margin profile. You see that last year, not only did we significantly increase our backlog, not only did we continue to diversify our backlog, but we also improved our margin profile. And this year, as we look at the year out in front of us, we are telling you again that we continue to improve that margin profile as we continue to grow, but as we invest in the business to ensure future growth too. So just a couple important points there. Frank Louthan: Great. Thank you very much. Operator: Thank you. Our next question comes from Michael Dudas from Vertical Research. Your line is open. Michael Dudas: Yes. Good morning, Callie, Dan, and Drew. Morning. Maybe a follow-up on Frank's, you know, on your answer to Frank on the margin front. Maybe talk a little bit, you know, you are investing in the business for the future. How much relative to fiscal 2027 versus 2026? And I think just also on the Power Solutions side, historically, in their self-perform capabilities, have they, what has been their growth rate on the labor front? And is that within expectations on, you know, from hiring and getting folks in to execute the backlog, not just for this year, but for several years out? Dan Peyovich: Thanks, Mike. So on margin profile, you know, you look at last year, we grew over 100 basis points year-over-year. Very pleased with the overall results, and that has been a year of change and growth. We did a major acquisition, and I think, again, I would just point to how well Dycom Industries, Inc. is executing overall to be able to do all of those things at once. As you look towards this year, again, we have big ideas and big initiatives that continue our growth and continue that long-term strategy. What is really important, and to the point of your question, is that we have to continue to invest ahead of that. We added a lot of headcount for the Communications side in the back half of last year. We see that continuing as we continue to get ahead of these programs that I talked about early on that are starting to stack on top of each other. That takes an investment. We have to invest in training. We have to bring those folks on. They are obviously not as productive day one as they are six months in. So when we think about that and we add it into the growth profile of the overall enterprise, that is when we say, hey, we are going to continue to grow margin. But I would not set expectations to be going as fast as we did last year from a raw dollars or a percentage profile, but still to grow, to have that into our backlog when I think a lot of others, during periods of growth, maybe struggle with improving those margins. We feel really good about that. Going to Power Solutions, they are really about labor. A lot of people know the hyperscalers buy all the big electrical equipment directly. That does not come through the P&L of Power Solutions. So it really is about workforce. So if you think about 15% to 25% growth that we are projecting for this year, you are growing labor in a very similar range to that. And as I mentioned to Frank, you think about that on a raw number of skilled workforce headcount, when you get to the size of Power Solutions, they are working on dozens of data centers. Those are really big numbers in the DMV. We are partnered with the local union. We are getting well in front of that. But at some point, again, this goes back to responsible growth. You want to grow at the right rate where you continue to deliver and, quite frankly, differentiate the level of service that we deliver to our customers over time. And that is what you see in the outlook. Michael Dudas: I appreciate it. It makes sense. And just my quick follow-up. You mentioned a little bit about acquisitions in some of your prepared remarks in response to questions. Maybe you could share a little bit on the timing on getting to that 2.0 level, the size, the cadence, you know, what should we anticipate maybe over the next 12 to 18 months? I am assuming maybe there is another Power Solutions out there. I am thinking a bit more modest in cadence and size. Dan Peyovich: I think it is important to go back to the long-term strategy that we operate and talking about long-term returns for our shareholders and long-term opportunities for our people. Obviously, we did the Power Solutions acquisition. That was a very large acquisition for Dycom Industries, Inc. historically. But what we did well ahead of that, Mike, we were very intentional to drive our net leverage down before we did the acquisition. I do not remember the exact number, but I think it was about 1.2x, maybe 1.2x and change when we did that. And then we talked last quarter about our ability to bring that net leverage down quite quickly. We talked about 12 to 18 months, but really what you heard Drew say earlier was to do that inside of 12 months. To finish the year with a very strong cash position and already get that down to 2.3x, pro forma. We feel really good about the opportunity set that allows us to think about from an M&A perspective. Long-term strategy includes improving our cash flow. And if you look at our free cash flow, I am incredibly proud of what our team was able to accomplish there. Our free cash flow increased 216% year-over-year, and I would point to these are durable changes that we have built into the business. These are not simply pulling a lever or taking a one-time thing. This is really about how we change, one, how we collect cash, we change our operating cash collection profile and how we are thinking about that. So, again, durable. On the free cash flow side, you heard me talk a little bit about how we are thinking about our fleet differently and using technology differently there, so we can optimize that as well. And what that does is it positions us in a place where those are big changes in cash position overall, sets us up much better when you think about M&A. So those are things that we set in motion quite some time ago to enable us to be able to continue the path that we are on today. When it comes to size, again, we have got a strategy around it. We are looking for very specific cultural fit, very specific growth opportunities. It could be something else in a factor range of the size of Power Solutions, and there could be other opportunities that are much smaller than that. It is really going to depend on, and there is obviously no guarantees about timing or how these work out. We are going to be patient, but we are seeing some attractive things in the space. Michael Dudas: Understood, thanks, Dan. Dan Peyovich: Thank you. Operator: Our next question comes from Judah Aronovitz from UBS. Your line is open. Judah Aronovitz: Hey, good morning. Thanks for taking my question. On for Steven Fisher. Just on the Building Systems margin guidance, can you talk about how you are thinking about the margin potential in that business, and how quickly can you improve kind of the mid-to-high teens level that you have talked about? And related to that, what investments need to be made, and if you can quantify the margin drag from those investments in 2027, that would be helpful. Dan Peyovich: This is really, again, about having a long-term strategy to do this. So when we think about that business, we did talk about mid-to-high teens margin profile that they have delivered historically. Mid-teens is really the right way to think about it today. We are talking about significant growth opportunities. We want to do that right, maintaining the level of service that they have proven over decades is so imperative in a market where the demand is surging at the level that it is today. We are going to have that discipline. We are going to have that patience. We are very pleased, obviously, with the growth profile for 25% from a revenue perspective. But we feel like mid-teens is a very strong return in that space. And I think if you look, comparatively, you would see that as well. So we feel very pleased with that. Over time, obviously, we are going to, just like we are on the Communications side, work to improve that. But right now, I think that is a really good starting point. Judah Aronovitz: Thanks. And then I was just curious about SG&A as a percent of sales in Q4. A bit higher than it has been in quite some time, and I assume that is reflective of the headcount you are adding, but I was wondering if there is anything else in there, maybe something related to Power Solutions mix or anything else? And then what is the expectation kind of going forward? Thanks. Drew DeFerrari: Yeah. Judah, thank you for the question. This is Drew. I would just point out we did have some transaction costs that we called out in the quarter, and that was in G&A, so over about $18,000,000 in there. And then as we think about the Building Systems segment, the G&A profile does come into the business as well. So if you are looking at the just total overall dollars, there will be some increases there as well. Judah Aronovitz: Thank you. Operator: Our next question will come from Richard Cho from JPMorgan. Your line is open. Richard Cho: I just wanted to get a little bit on the hyperscale opportunity. As we look through this year, and then into next year and 2028, it seems like there is a lot of this build that is coming back-half weighted, and it could be a big change. But what is kind of driving the near-term hyperscale revenue, and how should we think about its growth for this year and then into next? Thank you. Dan Peyovich: So today, you have, obviously, the Lumen overpull that does not have the same kind of new construction logistics or permitting around it. So that program that we have been working on for over a year now, that is going to grow this year. I would think about that first, Richard. And then you do have smaller legs. You know, the way that these long-haul, middle-mile routes are working, there are some very big programs like Lumen is talking about, there is everything in between, and then there are some that are just, you know, 100 or 200 miles. Those much smaller distances can be added in more quickly, obviously. But when you are looking at routes that are thousands of miles or much longer, those are the ones that are going to push further on duration. And then, as you would expect, there are also the pricing dynamics. So routes that are easier are going to cost less, so those can come online a bit quicker. The more expensive routes are going to take time and have higher revenue profiles, those out years of 2027, 2028. Richard Cho: Got it. And the clarification on the acquisitions, are you looking in the DMV area for acquisitions, or could this be a new geographic location? Dan Peyovich: So we are nonspecific just to DMV. You know, there are obviously a number of other markets. But I would say what was important to us with the Power Solutions acquisition was starting in a market that has been there for a very long time. This is a market that has been around for decades. It has sustainability, it has a future build profile. With that now, we can certainly be thinking about some of these frontier markets or markets that are newer and ramping up considerably. They are all on the table as we think about it going forward. Richard Cho: Yeah. Those markets seem like they are going to be building for a while. Thank you. Dan Peyovich: Thank you. Operator: Thank you. Our next question comes from Adam Thalhimer from Thompson Davis. Your line is open. Adam Thalhimer: Hey, good morning, guys. Dan Peyovich: Good morning. Adam Thalhimer: Also had a question on the M&A pipeline. Dan, is that all within the Building Systems segment, and then what should our expectations be on timing? Dan Peyovich: Yes, we are predominantly looking in the Building Systems segment, and that is mostly, Adam, as you know. Dycom Industries, Inc. has been a major acquirer and consolidator of the Communications space. There are still some opportunities out there, but, quite frankly, when you are in all 50 states and you are across the same kind of customer base that we have today, we do not need to do those from an M&A perspective. Those are places where we can and have shown we can grow organic. So thinking a lot more about the Building Systems space, as I mentioned in response to Sangita's question earlier, it does not just have to be electrical. There are other systems that happen in that digital infrastructure space or inside the data center. From a timing, you know, these things do not pace out some particular way you want them. I mean, we closed Power Solutions two days before Christmas. This is how things time out. We are active in the space. There are a number of opportunities that are out there. There are a number of really strong businesses that are coming to market for all the reasons you would expect. Sure, the multiples are higher, but the businesses are more valuable and the growth profile is stronger. So we are optimistic, but, you know, there is no guarantees on time. We are going to be patient and make sure it fits. Adam Thalhimer: Good color. And then I think you mentioned Power Solutions geographic expansion. Just curious what you are thinking there. Does that mean just starting to pick up some work in West Virginia, North Carolina, sort of building out from the DMV? Dan Peyovich: Exactly. They are not in every space. Even if you think about the DMV itself, you know, you could still continue to expand. And as everybody knows, that space itself is expanding. You mentioned West Virginia; there are other markets that are really kind of coming online more in that territory. So today, you know, we feel really good about the growth profile they have. There are opportunities for future organic expansion. That group, because they have been around for a very long time, they have got a ton of talent. So those are all things we are thinking about as we layer that together with M&A. What I would just say is we are very optimistic in the continued growth of the Building Systems segment. Adam Thalhimer: Thanks, Dan. Dan Peyovich: Thank you. Operator: And our next question comes from Liam Burke from B. Riley Securities. Your line is open. Liam Burke: Thank you. Good morning, Dan. Good morning, Drew. Dan Peyovich: Good morning. Liam Burke: Dan, with your growing EBITDA and your growing cash flow, as you balance opportunities through acquisitions and managing the balance sheet, how are you balancing your current leverage ratios versus what you see in the potential acquisition pipeline? Dan Peyovich: Yeah. I think about it the same way as we always have. We are going to be very responsible on our net leverage. I think you have to think about it over time because we might do acquisitions that could come through that are going to push it up a bit when we know, just like we did with Power Solutions, that we can bring that down. And I mentioned, Liam, this is a strategy that goes back so that we have these improvements in the business. So we can do more M&A and stay ahead of it without really changing the way that we look at our overall net leverage profile. Liam Burke: Great. And when you are looking at the traditional business, when negotiating longer-term contracts, are you seeing more favorable terms of pricing now that the scale is getting bigger, projects are more complex, and you seem to be the leader in the space here? Dan Peyovich: Yeah. You know, I think we are the only ones that are across all 50 states, and we certainly have a number of customer relationships. If you think about the margin improvement last year, you think about the margin improvement this year, I do want to be really clear about this. This is not coming from us increasing pricing with our customers. This is coming from, obviously, operating leverage, but also internal efficiencies that we are improving. Now over time, can those pricing dynamics change? We will see as these different programs come online and ramp up. But right now, one, we feel really good with our return profile. You know, we have a long-term view with our customers. We want to deliver and execute for them across cycles, certainly across decades. We have shown that we can do that. But I would not think about it from purely us having an opportunity to continue to raise pricing. And, also, I would point out that we do not need that to continue the margin improvement that we are on. Liam Burke: Great. Thank you, Dan. Dan Peyovich: Thank you. Operator: Thank you. And I am showing no further questions from our phone lines. I would now like to turn the conference back to Mr. Dan Peyovich for closing remarks. Dan Peyovich: Thank you all for your time today. We look forward to talking to you again in around 90 days. Thank you all. Be safe, and be well. Operator: Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.
Operator: Good morning, and welcome to The Eastern Company Fourth Quarter Fiscal Year 2025 Earnings Call. At this time, all participants are in a listen-only mode, and the floor will be open for questions following the presentation. If anyone should require operator assistance during this conference, please note this conference is being recorded. Marianne Barr, Treasurer and Corporate Secretary at The Eastern Company, the floor is yours. Marianne Barr: Good morning, and thank you, everyone, for joining us this morning for a review of The Eastern Company's results for the fourth quarter and full year 2025. With me on the call are Ryan Schroeder, Chief Executive Officer, and Nicholas Vlahos, Chief Financial Officer. The company issued its earnings press release yesterday after market close. If anyone has not yet seen the release, please visit the Investors Information section of the company's website at www.easterncompany.com, where you will find the release under Financial News. Please note that some of the information you will hear during today's call will consist of forward-looking statements about the company's future financial performance and business prospects, including, without limitation, statements regarding revenue, gross margins, operating expenses, other income and expenses, taxes, and business outlook. These forward-looking statements are subject to risks and uncertainties that could cause actual results or trends to differ significantly from those projected in these forward-looking statements. We undertake no obligation to review or update any forward-looking statements to reflect events or circumstances that occur after the call. For more information regarding these risks and uncertainties, please refer to risk factors discussed in our SEC filings, including Form 10-Ks filed with the SEC on 03/03/2026, for the fiscal year 2025. In addition, during today's call, we will discuss non-GAAP financial measures that we believe are useful supplemental measures of The Eastern Company's performance. These non-GAAP measures should be considered in addition to, and not as a substitute for, or in isolation from, GAAP results. A reconciliation of each of the non-GAAP measures discussed during today's call to the most directly comparable GAAP measure can be found in the earnings press release. I will now turn the call over to Ryan Schroeder. Ryan Schroeder: Thanks, Marianne. 2025 is a year defined by two things: challenging end markets, particularly heavy truck and automotive, and significant operational progress that positions us well for the future. Our primary end markets remained under pressure throughout most of the year, though we began to see early signs of stabilization in November and December. At the same time, we were navigating tariff impacts and broader macro uncertainties. As a result, our financial performance reflects both the difficult environment and the actions we took to respond decisively. For the full year, revenue was $249 million, down 9% year over year. Adjusted EBITDA was $19.4 million, representing a 7.8% margin, compared to $26.3 million, or a 9.6% margin last year. Importantly, the performance represents roughly a 7% margin on reduced operating scale, which we view as a commendable outcome given the revenue pressure. Encouragingly, the fourth quarter showed sequential improvement. Revenue increased 4% from the third quarter, rising from $55.3 million to $57.5 million. Adjusted EBITDA improved by $1.1 million sequentially. That reflects a 50% margin on the incremental revenue in Q3, clear evidence that our cost actions are working and flowing through to the bottom line as volumes stabilize. While we could not control when the markets would turn, we made sure that 2025 would be the year we prepared The Eastern Company to win going forward. Here is what we did. In 2025, we made the decisive structural changes to The Eastern Company's cost base, portfolio, and operating model. As a result, The Eastern Company is leaner, more focused, and better positioned with a solid foundation for its next chapter of growth. First, we lowered our cost structure. We reduced our cost base, generating approximately $4 million in annual savings from restructuring and footprint optimization initiatives. At the same time, we strengthened leadership. We hired Zach Gorney to lead Everhard, promoted Emilio Ruffalo to lead Big 3, and added two strong commercial leaders to drive growth in both of those businesses. Second, we streamlined the portfolio. We divested the underperforming Centralia Mold division of Big 3, a business that was a drag on earnings. This allowed us to concentrate capital and management attention on our high-conviction core businesses. Third, we addressed tariffs head on. We neutralized approximately $10 million of tariff exposure, offsetting substantially all of the impact through pricing actions and supply chain cost reductions. We are also building more flexible and resilient supply chains, giving customers multiple sourcing options, both domestic and offshore, so we can pivot as the trade environment evolves. Fourth, we invested in future revenue. We executed a commercial realignment to strengthen our go-to-market capabilities going into 2026, expanding new customer relationships and targeting new end markets. We maintained our investment in product development throughout 2025, with output that will become increasingly visible in 2026 and beyond. Notably, our Asia business grew 25% year over year following the deployment of dedicated sales resources in the region, a geography where we see opportunity for incremental profitable growth going into the future. Fifth, we strengthened the balance sheet. We enhanced financial flexibility by refinancing our credit facility. The incremental capital supports organic growth, provides a buffer against macro uncertainty, and positions us to act decisively when the right M&A opportunity arises. Finally, we demonstrated capital discipline. We reduced debt by $8.7 million, returned $2.7 million to shareholders, and repurchased approximately 153,000 shares, or about 2.5% of shares outstanding. Our operating model demonstrated resilience. A 9% revenue decline resulted in only a 20-basis-point gross margin erosion in the fourth quarter. Sequential financial improvement and momentum in our sales funnel suggest the third quarter represented the trough. To summarize, we exited 2025 with a leaner cost structure, a more efficient operational footprint, a stronger balance sheet, and a leadership team that is action-oriented and focused on results. 2025 was the year we built the foundation. I will now turn the call over to Nicholas Vlahos to review our fourth quarter and full year financial results in more detail. Nick, over to you. Nicholas Vlahos: Thanks, Ryan. Before I review the company financial results from continuing operations for the fourth quarter and full year 2025, please note that fiscal year 2025 was a 53-week year with the fourth quarter spanning 14 weeks compared to 13 weeks in the prior-year period. Beginning with net sales, in the fourth quarter of 2025, net sales decreased 13.7% to $57.5 million from $66.7 million in the fourth quarter of 2024. This was due to lower shipments of returnable transport packaging products and truck mirror assemblies. For the full year 2025, net sales decreased 9% to $249 million from $272.8 million in 2024, also due to lower shipments of returnable transport packaging products and truck mirror assemblies. Our backlog as of 01/03/2026 was $81.1 million, a decrease of 10%, or about $48.0 million, from $89.1 million as of 12/28/2024. The decrease was primarily driven by lower orders for returnable transport packaging products. Gross margin as a percentage of sales for the fourth quarter of 2025 was 22.8% compared to 23.0% in the fourth quarter of 2024. This decrease was primarily due to higher material costs on lower sales volume. For the full year 2025, gross margin as a percentage of sales was 22.9% compared to 24.7% in 2024. The decline was attributable to the same factors. As a percentage of net sales, product development costs were 1.6% in the fourth quarter of 2025 compared to 1.7% in the prior period. For the full year 2025 and 2024, product development costs as a percentage of net sales were 1.6% and 1.8%, respectively. Our investment in new products remains disciplined relative to the revenue base during the year. Selling and administrative expenses in the fourth quarter of 2025 decreased $1.2 million, or 10.5%, compared to the fourth quarter of 2024. The decrease was driven by lower commissions, legal fees, and personnel-related costs. For the full year, selling and administrative expenses were essentially flat versus 2024, though 2025 included $2.5 million of restructuring charges, primarily related to the reduction in force in the second quarter and facility cost actions. Operating profit for the fourth quarter of 2025 was $2.2 million, or 3.8% of net sales, compared to $3.0 million, or 4.5% of net sales, in the prior-year period. Other income and expense for the fourth quarter of 2025 was $200,000 of expense compared to $300,000 of expense in the prior period. For the full year 2025, other expense was $500,000 compared to $400,000 of expense in 2024, an increase of $100,000. The increase was driven primarily by a one-time $500,000 write-off of unamortized deferred financing fees associated with the termination of our prior TD Bank agreement, recorded in the fourth quarter of 2025 in connection with our refinancing into a new $100 million five-year revolving credit facility with Citizens Bank. Partially offsetting this charge was a recovery of employment tax credits during the year. Interest expense in the fourth quarter of 2025 was $700,000, unchanged from the same period in the prior year. For the full year, interest expense was $2.7 million, essentially flat with $2.7 million recorded in fiscal 2024. Net income from continuing operations for the fourth quarter of 2025 was $1.2 million, or $0.19 per diluted share, compared to $1.6 million, or $0.26 per diluted share, for the same period in 2024. For the full year 2025, net income from continuing operations decreased 57% to $6.0 million, or $0.98 per diluted share, compared to $13.2 million, or $2.13 per diluted share, for 2024. Turning to our balance sheet, during the fourth quarter, we refinanced our credit facility. In October, we entered into a new $100 million five-year revolving credit facility with Citizens Bank, which supports our long-term growth and enhances our financial flexibility. As of 03/03/2026, we had $66.0 million of availability under the Citizens facility. At the end of Q4 2025, our senior net leverage ratio was 1.35 to 1, compared to 1.64 to 1 at the end of the third quarter of 2025 and 1.23 to 1 at the end of 2024. During the year, we returned $2.7 million to shareholders through dividends. We also repurchased approximately 153,000 shares, or about $3.7 million, of common stock under the repurchase program authorized by our board in April 2025. That completes my financial review. I will now turn the call back to Ryan Schroeder. Ryan Schroeder: Thanks, Nick. So turning to 2026, after spending 2025 doing the structural work, we entered the year with a leaner cost base, a strengthening commercial pipeline, and end market conditions that, while still evolving, are moving in the right direction. The leading indicators we monitor most closely, including order flow, particularly in November and December, OEM production signals, and the depth and quality of our opportunity funnel, are pointing in a more favorable direction than they were a year ago. We remain disciplined in our outlook, but we are cautiously optimistic that we are entering a more constructive demand environment. M&A continues to be an important component of our long-term value creation strategy. We are actively evaluating opportunities that meet our strategic and financial criteria. The pipeline of potential transactions has grown meaningfully over the past year. That said, our approach remains highly disciplined. We are focused on targets that are strategically aligned and immediately accretive. We will update shareholders when there is something meaningful to share. Before opening the call for questions, I would like to briefly address the board and governance matters. In 2025, we welcomed Chan Galvado to our board. Chan brings significant experience that is highly relevant to our end markets and long-term strategy. Earlier this week, we announced that Charlie Henry and Mike Marty will not stand for reelection. I want to sincerely thank both Charlie and Mike for their years of service and meaningful contributions to The Eastern Company. We also used this opportunity to thoughtfully reduce the size of the board, improving agility and decision-making effectiveness. In parallel, we conducted a careful review of our corporate bylaws and implemented several updates designed to enhance shareholder alignment and governance transparency. We will provide additional details in our upcoming proxy filing. With that, operator, please open the line for questions. Operator: Thank you very much. We will now be conducting a question-and-answer session. If you would like to ask a question, a confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For anyone using speaker equipment, it might be necessary to pick up your handset before you press the keys. Please wait a moment while we poll for questions. Just a reminder, it is star 1 if you would like to ask a question. I am not seeing any questions in the queue at the moment. There are no questions at the moment, Ryan. Ryan Schroeder: Thank you, Jenny, and thank you, everyone, for joining us today. To close, 2025 was the year that we built the foundation. We took decisive action to lower costs, strengthen our portfolio, reinforce our balance sheet, and invest for future growth, all while navigating a challenging market environment. As we enter 2026, we do so as a leaner, more focused, and more resilient organization. Early indicators are encouraging. Our commercial pipeline is strengthening, and our operating model has demonstrated its ability to perform across cycles. We remain disciplined, focused on execution, and committed to delivering long-term value for our shareholders. With that, I would like to say thank you for your continued support in The Eastern Company, and we look forward to updating you next quarter. Operator: Thank you very much. This does conclude today's conference. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation.
Operator: Good day, and thank you for standing by. Welcome to the Riskified Ltd. Fourth Quarter 2025 Earnings Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. You will then hear an automated message device and your hand is raised. To withdraw your question, please be advised today's conference is being recorded. I would now like to turn the call over to your speaker today, Chet Mandel, Head of Investor Relations. Please go ahead. Chet Mandel: Good morning, and thank you for joining us today. My name is Chet Mandel, Riskified Ltd.’s Head of Investor Relations. We released our results and are hosting today's call to discuss Riskified Ltd.’s financial results for the fourth quarter and full year 2025. Our earnings materials, including a replay of today's webcast, will be available on our Investor Relations website at ir.riskified.com. Participating on today's call are Eido Gal, Riskified Ltd.’s Co-Founder and Chief Executive Officer, and Aglika Dotcheva, Riskified Ltd.’s Chief Financial Officer. Certain statements made on the call today will be forward-looking statements related to, without limitation, our operating performance, business and financial goals, outlook as to revenues, gross profit margin, adjusted EBITDA profitability, adjusted EBITDA margins, and expectations as to positive cash flows, which reflect management's best judgment based on currently available information and are not guarantees of future performance. We intend all forward-looking statements to be covered by the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect our expectations as of the date of this call, and except as required by law, we undertake no obligation to revise this information as a result of new developments that may occur after the time of this call. These forward-looking statements involve risks, uncertainties, and other factors, some of which are beyond our control, that could cause actual results to differ materially from our expectations. You should not put undue reliance on any forward-looking statement. Please refer to our Annual Report on Form 20-F for the year ended 12/31/2024 and subsequent reports we file or furnish with the SEC for more information on the specific factors that could cause actual results to differ materially from our expectations. Additionally, we will discuss certain non-GAAP financial measures and key performance indicators on the call. Reconciliations to the most directly comparable GAAP financial measures are available in our earnings release issued earlier today, and also furnished with the SEC on Form 6-K and in the appendix of our investor relations presentation, all of which are posted on our investor relations website. I will now turn the call over to Eido. Eido Gal: Thanks, Chet, and hello, everyone. Ended the year strong, and this momentum positions us for continued success in 2026. Our fourth quarter non-GAAP gross profit of $57.3 million represented strong year-over-year growth of 16%, and our adjusted EBITDA of $17.7 million translated to a margin of 18%, demonstrating the scale and strength of the business. This quarterly amount alone exceeded our full-year adjusted EBITDA of $17.2 million in 2024. Our fourth quarter revenues of nearly $100 million were a record since inception, and contributed to our first ever quarter of GAAP profitability. These results are the culmination of consistent, high-quality execution across the year. In 2025, both annual dollar retention (ADR) and net dollar retention (NDR) improved year over year. ADR reached approximately 100%, up from 96%, and NDR significantly improved to 105% from 96% in 2024. Our go-to-market team had another successful year with particularly strong results in the fourth quarter of 2025. During the quarter, we won the highest quarterly amount of new business since our IPO, which represented approximately 55% of the total new business won for the year, and was driven by high competitive win rates of over 75%. This year, we won and onboarded several leaders across industries and geographies, including Aerolineas Argentinas, Abounds, Adastria, Ace Hardware, Bangsa, Qasem, David's Bridal, NetEase, Nintendo, Temu, TripAdvisor, and XTool. In addition, merchants such as Iberia Airlines, Meta, Fast Retailing, Viva Aerobus, Vivid Seats, and Zepz were all upsold in 2025, after landing on the platform over the past few years. We believe this demonstrates the power and ROI that our platform delivers to our merchants, once onboarded onto the Riskified Ltd. network. We have processed approximately $750 billion in GMV, and have over 1 billion unique customer interactions in our network since inception. I believe that this data moat has created a structural competitive advantage and that we are well positioned to capture even more of the large opportunity in front of us. That is why we are focusing our efforts on deepening our geographic presence, and growing faster in our newer verticals while identifying additional verticals to penetrate for continued market share gains. From a geographic standpoint, our non-U.S. regions collectively grew 22% year over year, driving faster, more diversified growth. Notably, APAC and LATAM were key regions of outperformance. We plan to expand further in these regions by developing localized products and features to boost pipeline generation. We have scaled our presence in the payments and money transfer category as evidenced by 66% growth in 2024, and 90% growth in 2025. Based on the current pipeline and the annualization of new business won in 2025, end-to-vertical I expect another strong year of activity in 2026. As we capture more data and payment types, leading to more refined models and bespoke features targeted to this vertical, I believe we are positioned to continue penetrating the significant white space. According to recent industry studies, there was a 27% year-over-year increase in fraud losses related to online transactions. The total losses attributed to fraud are expected to more than double in the next five years, well outpacing the expected growth of ecommerce. In addition, over two-thirds of U.S. companies experienced an increase in AI-related fraud attempts in 2025. We are witnessing escalating complexity of fraud schemes, which now target every touchpoint across the customer journey from account creation and stored value credentials all the way through the return, customer service, and dispute portals. Every part of the transaction process is at risk. Progress varies across payment types, including ACH, credit cards, digital wallets, crypto and stablecoins, agentic checkout, and other methods. We need to be prepared to support and manage risk across the full payment landscape. We are leveraging the capabilities of our AI ecosystem that has been continuously advanced for over a decade. This increase in fraud has further elevated Riskified Ltd.’s role, solidifying our positioning as a key partner for our merchants. I believe that the combination of a more pronounced and complicated fraud landscape, enhanced platform features and functionality, and a deliberate effort to expand the top of our front deal funnel has contributed to an increase in our new business lead generation of approximately 50% year over year. Furthermore, in line with our expectations at the beginning of the year, I am pleased that we generated nearly $10 million in aggregate annual revenues from Policy Protect, AccountSecure, Dispute Resolve in 2025. And we plan to continue to grow our revenues outside of our core fraud services in 2026. As we have expanded our offering, the benefits of having a platform are becoming even more pronounced. First, we saw an approximately 50% increase in the number of merchants who are now using more than one product during the year. This multiproduct approach has made us stickier. Second, each transaction processed across our suite of products strengthens our flywheel by expanding the breadth and depth of our datasets. This integrated dataset compounds across the network, enhancing our identity engine, and enabling us to develop dynamic components that can be utilized across the platform. Third, these cross-platform synergies lead to better performance for our merchants. This strong performance with differentiated capabilities allowed us to regularly outperform our competition. And fourth, merchants utilizing more than one product generally leads to higher contribution profit for those merchants. This is part of the reason why in 2026, we are focused on driving gross profit growth versus optimizing primarily for revenue growth. As Aglika will discuss shortly, we expect non-GAAP gross profit growth to accelerate double digits at the midpoint in 2026, demonstrating the continued leverage in our model. Now on to a very topical theme: artificial intelligence. Allow me to discuss how we are observing AI impacting the market and how Riskified Ltd.’s product platform and internal operations are positioned for success in this environment. There are two main dynamics that we are seeing. First is the increased utilization of agentic commerce through general purpose LLMs, but still primarily only for discovery purposes and not checkout. The second is the rise of merchant-native LLMs, which are advanced agents within a merchant's ecosystem designed to handle the full shopping journey from answering queries to completing the purchase, closing the loop completely within their ecosystem. Both flows present unique transaction risks that our platform aims to solve. In the first agentic flow, when customers do use general purpose LLMs for checkout, we have seen instances where fraudsters utilize AI to throw authentic traffic off script by generating synthetic IDs to bypass LLM verification. Our internal estimates indicate that approximately 30% to 40% of essential model features are lost when consumers transact through general purpose LLMs, increasing risk and escalating the prevalence of fraud like this. To combat this, we strive to help merchants by providing clear visibility into agentic traffic and emerging fraud MOs that they do not otherwise have on their own, proactively adjusting models based on low-signal environments, segmenting order flows, and rapidly developing features to identify emerging agentic fraud MOs. In the second flow, merchants are building out their AI shopping assistants to offer deep personalization and loyalty programs based on customer preferences. Riskified Ltd. provides a critical risk intelligence layer that helps make these transactions both smart and secure. This is especially critical when those interactions have financial implication. An example of this is providing merchant-native AI agents with real-time risk signals while they are in the conversation with customers to offer instant refund or exchange decisions, based on that individual customer's risk and eligibility. Because Riskified Ltd. analyzes the complete purchase history of the end customer across an expansive global network of ecommerce brands, including exact product list SKUs and cross-merchant behaviors, we can provide highly differentiated data that merchants cannot otherwise access on their own. We are able to provide a decision platform for their agents to make important and accurate financial decisions. We are excited about the continuous expansion and enhancement of our agentic commerce offering. Merchants are actively preparing and ready to support agentic commerce across its various forms and flows. Our ability to not only service the dynamic needs of an evolving market, but also to innovate in real time is generating an increase in merchant dialogue. I believe that this strategic engagement is a driver for our future business pipeline and growth. Internally, we continue to adopt AI to automate and scale complex business workflows across departments. This is intended to help drive operational efficiency and productivity, lower costs, improve response times, and enhance service delivery. For our engineering teams, AI has become a force multiplier. Our developers have moved from basic coding assistance to agentic systems that span the entire development life cycle, from discovery and requirements assessment to automated root-cause analysis for production alerts. In addition, by using agentic flows for code review and observability, we are reducing technical debt while increasing release velocity. The impact on productivity is measurable. Between Q2 and 2025 many of our engineers saw more than 2x increase in tickets completed. This enables us to focus on developing new product enhancements and features, and to test, train, and deploy them more efficiently, strengthening our relationships with the hundreds of enterprise merchants in our network. We are seeing similar functional leverage across the other business units. In finance and analytics, we have moved several initiatives into production to automate processes that reduce human error and manual labor to drive merchant inbounds, and the go-to-market team has found success utilizing LLMs in high-end queries. We have also developed agents that automate time-consuming cost-benefit analysis of merchant prospecting, minimizing manual work to drive quicker and more accurate outreach. And while we are getting leverage from general purpose LLMs in our own business, I do not believe that those same LLMs pose a true threat to our decision engine. In our view, LLMs lack calibration in the precise probability intervals required for fraud engines. Additionally, LLMs are optimized for text and image, while traditional AI fraud models like ours are much better at analyzing structured data inputs. The data we collect includes browsing behavior, account activity, checkout data, and post-fulfillment signals for every transaction. Our models learn from over 5 billion historical nonpublic merchant network transactions that have been labeled and tagged. With this data, we create, update, and continuously deploy features to be used by our models that solve the increasing complexities of fraud. To that end, as we announced yesterday, we have recently developed features to address this problem. Within our PolicyProtect Decision Studio, merchants are able to identify and apply business rules to manage the risk of order volume coming from their native AI shopping agent. This control will allow merchants to confidently deploy their branded conversational AI agents without exposing themselves to programmatic refund claim abuse, reseller arbitrage, or promotional abuse. We also expanded our AI agent identity signals, allowing a merchant's AI shopping agent to directly query the Riskified Ltd. identity graph to retrieve associated risk indicators and resolve an identity programmatically. The breadth and sophistication of our platform allows us to train, test, and deploy merchant- or payment-specific models. We also use this platform to retrain models with updated data, new features, and segment calibrations to protect from emerging fraud patterns across our network. All this helps us drive optimized merchant performance which, at the end of the day, is the key driver of merchant satisfaction. Our ability to rapidly adapt in the face of a shifting landscape does more than just protect our merchants. I believe it serves as the foundation for our sustained financial strength and disciplined execution. Over the past two years, we have repurchased shares representing approximately two-thirds of our current enterprise value. Based on our current expectations of improved free cash flow of approximately $40 million in 2026, we anticipate generating a free cash flow yield of approximately 10% relative to our current enterprise value. Looking ahead, I believe that our momentum remains strong. As a reflection of our confidence in Riskified Ltd.’s long-term trajectory, I am pleased to announce that our board has authorized an additional $75 million share repurchase program. This decision reflects our conviction in the fundamentals of the business, supported by strong free cash flow, a debt-free balance sheet, and a disciplined capital allocation strategy that we believe will prove beneficial for our shareholders. I want to thank our team again for their focus and strong execution against our 2025 financial plan. Our results reflected the top of our revenue and adjusted EBITDA guidance ranges, and we enter 2026 in a position to accelerate our performance even further. Now over to Aglika. Aglika Dotcheva: Thank you, Eido, team, and everyone for joining today's call. Unless otherwise noted, this discussion will reference non-GAAP financial measures. We have provided a reconciliation of GAAP to non-GAAP financial measures in our earnings release. We achieved fourth quarter revenue of $99.3 million and full year revenue of $344.6 million, up 65% year over year, respectively. And while we do not plan on reporting our billings going forward, our fourth quarter billings of $103.3 million grew 9% year over year. Our fourth quarter GMV of $46.7 billion was the highest quarter of volume reviewed in our history, and represented growth of 18% as compared to the prior-year period. For the full year of 2025, our GMV grew by 10% to $155.1 billion. During the fourth quarter, revenue growth was partially driven by strong performance in our travel sub-vertical, reflecting continued momentum from the third quarter. These gains were partially offset by softness in our tickets and live events sub-vertical which declined year over year, primarily due to tougher second-half comparable periods versus 2024’s record level of activity and larger live events. Overall, the total tickets and travel vertical was slightly positive in the period. Our money transfer and payments category grew 75% year over year driven by new business wins and upsell activity. Our fashion, cosmetics, and luxury vertical grew 8% year over year. This was primarily driven by new business and upsell activity, and 11% growth during the Black Friday through Cyber Monday period. This growth was partially offset by continued same-store sales pressure in our high-end and sneaker sub-verticals, similar to the first nine months of the year. That being said, for the second quarter in a row, we did see year-over-year improvements in some of our largest merchants in this category. Lastly, I am encouraged that we reverted to year-over-year growth in the home category as we have now fully lapped the dynamic that impacted the first nine months of 2025. For the year, our money transfer and payments, fashion and luxury, and tickets and travel categories were the largest contributors to our annual revenue growth. The combination of these verticals represented nearly 80% of total billings and are each expected to drive continued growth in 2026. For the full year, revenue in the United States declined 6% year over year primarily as a result of the contraction in our home category. Encouragingly, we continue to grow across all of our non-U.S. regions, with accelerated year-over-year growth as compared to 2024. During 2025, APAC grew 53% year over year, while Other Americas, which represents Canada and Latin America, grew approximately 13% year over year, primarily driven by the momentum in new business and upsell activity, with particular strength in the travel sub-vertical. EMEA grew approximately 18% year over year with the strongest performance concentrated in our money transfer and payments, tickets and travel, and fashion and luxury verticals, supported by both new business and upsell momentum. Our revenue derived from merchants headquartered outside of the U.S. was 46% in 2025, up from 39% in 2024. We believe that our continued international growth reflects ongoing progress in capturing global market share. During the fourth quarter, we achieved record quarterly gross profit of $57.3 million, up 16% from the prior year, and $180.3 million for the full year, representing a year-over-year growth of 4%. The full-year gross profit growth of 4% was driven by meaningful improvements in our core machine learning models with great performance in our money transfer and payments category, and within our 2024 cohort which delivered the most pronounced year-over-year improvement across cohorts. Our increased revenue from new products further contributed to our growth. This improvement was partially offset by the ramping of merchants in newer geographies, such as Latin America, and weaker performance in our 2022 cohort, which, while still maturing, has yet to reach the performance levels of the broader portfolio. As a reminder, I encourage you to continue analyzing our gross profit on an annual basis given individual quarters can vary due to the various factors, including the ramping of new merchants and the risk profiles of transactions approved. As it relates to 2026, for the full year, we are targeting non-GAAP gross profit growth of 7% to 12%, with each quarter at or near 10% growth at the midpoint. In addition, we estimate that each quarter in 2026 will approximate the same percentage of the total as they did in 2025. Moving to our operating expenses. We continue to manage the business in a focused and disciplined manner. Total operating expenses were $39.6 million for the fourth quarter, and $153.6 million for the full year, representing a decline of 2% from 2024. Our operating expenses as a percentage of revenue declined from 48% in 2024 to 45% in 2025, reflecting leverage in the business model. We ended 2025 with 617 global employees, a decline of 3% from the prior year. This was achieved through the increased utilization of artificial intelligence tools to maximize output and increase efficiency, and by strategically reducing headcount in areas that were less critical to our product development and growth strategy. Despite this nominal decline, we ended the year with an increase in our development capacity, which we believe is critical to advancing platform innovation, outperforming our competition, and improving product accuracy and customer service to deepen our merchant relationships. In 2026, we anticipate quarterly expenses to approximate $41 million to $42 million per quarter in the first half of the year, and $42 million to $43 million per quarter in the second half. The primary driver of the increase from 2025 relates to FX headwinds, mainly from the appreciation of the Israeli shekel compared to the U.S. dollar. The FX headwind is approximately 400 basis points to our annual adjusted EBITDA margin. On a constant currency basis, we anticipate relatively flat expenses year over year, as we continue to manage the business in a disciplined manner. We achieved adjusted EBITDA of $70.7 million in the fourth quarter, the highest quarterly amount in our history, which translates to an adjusted EBITDA margin of 18%. We believe that this quarter's results demonstrate that the business is positioned for continued adjusted EBITDA margin expansion and can achieve scaled performance like this over time. For the full year, our adjusted EBITDA was $26.7 million, representing a year-over-year increase of over 55%. On a GAAP basis, we achieved net profit of $5.8 million in 2025 as compared with negative $4.1 million in the prior year. I am encouraged about the progress that we have made on achieving profitability on both GAAP and adjusted EBITDA basis. Moving to the balance sheet. We ended the year with approximately $298 million of cash, deposits, and investments, and continue to carry zero debt. In addition, we continue to maintain a healthy cash flow model. In the fourth quarter, we achieved free cash flow of $10.7 million and $33.1 million for the full year. Looking ahead, I am encouraged that we expect our free cash flow to increase at least 20% to be approximately $40 million in 2026. During 2025, we repurchased approximately 22 million shares for a total price of $105.9 million, which contributed to a reduction of 8% in shares outstanding. Since the inception of our buyback program in 2023, we have repurchased approximately 52 million shares for a total price of $259.5 million, which helped contribute to a 17% reduction in shares outstanding over that time period. As Eido mentioned, I am excited to announce that our board of directors has authorized an additional $75 million of share repurchases, subject to the satisfaction of Israeli regulatory requirements. When combined with amounts that remain available under our existing share repurchase authorization, our total outstanding authorization is approximately $84 million. We believe that our strong balance sheet and liquidity position are strategic assets that provide us with the flexibility to navigate a range of operating environments. We intend to remain disciplined and thoughtful in how we deploy capital to create long-term shareholder value. On the topic of share-based compensation and earnings per share, share-based compensation expense of $51.6 million declined from $57.8 million in the prior year. As a percentage of revenue, this amount decreased approximately 300 basis points from 2024 levels. This was on top of a decline of 700 basis points over the prior two years. Looking ahead to 2026, we expect absolute share-based compensation dollars and as a percent of revenue to continue declining due to the gradual roll-off of expense associated with large grants made in 2021 and 2022 as the awards fully vest throughout 2026. Our total absolute share-based compensation dollars should approximate $40 million for the year. We expect our free cash flow generation to approximate our share-based compensation in the year. Our annual non-GAAP diluted net profit per share of $0.20 represents an increase of 18% in 2025. Now turning to our outlook. As we look forward to 2026, we currently anticipate revenue of between $372 million and $384 million, representing growth of 8% to 11%, with $378 million or 10% at the midpoint. Consistent with past years, we anticipate that our growth will continue to be driven primarily by new business activity, and at the midpoint of our guidance, we are forecasting a similar net dollar retention rate as in 2025. We currently expect all of the quarters in 2026 to reflect a similar percentage of the total revenue as they did in 2025, and growth to accelerate sequentially with each quarter throughout the year. The behavior of the microenvironment, our success in retaining our merchants, and the level of upsell activity relative to new logo wins will impact our net dollar retention rate and ultimately determine where we fall within our revenue range. In addition, we feel confident about the new business activity levels which is supported by a robust pipeline of new opportunities. Historically, the timing of when new merchants go live during the year can be difficult to predict, and may have an impact on our calendar year revenues. As always, we will continue to monitor the performance and health of our merchants, consumer spending and the broader ecommerce landscape, and the impacts on our results. Now let me discuss our adjusted EBITDA outlook. We currently expect adjusted EBITDA to be between $26 million and $34 million, or $30 million at the midpoint, representing a margin of 8%. This is inclusive of an approximate 400 basis points FX headwind to our adjusted EBITDA margin. Overall, I am encouraged by our AI advantage and market position, and I am confident that we can continue to execute on the elements within our operational control. We remain focused on identifying and executing on the many opportunities for long-term growth and our ability to deliver value to our shareholders. Operator, we are ready to take the first question, please. Operator: If your question has been answered and you wish to remove yourself from the queue, please press 1-1 again. Our first question comes from Terry Tillman with Truist Securities. Your line is open. Terry Tillman: Yes. Thanks for taking my questions, and congrats Eido, Aglika, and Chet. The first question, and hopefully you can bear with me because it is so topical around agentic commerce. It is a multiparter. And then I will have a follow-up question. As it relates to agentic, I appreciate kind of how you talked about two types of kind of agentic use cases. I am curious if you can quantify any early GMV from those two different scenarios. And then also, what would the monetization or take rate look like in transactions in that type of flow? And then how many merchants are you actually actively working with that are just trying this out at this point? And then I had a follow-up. Eido Gal: Sure. Hey, Terry. So I will take that. So maybe taking a step back. Right? We feel we are in a great position to talk to over 50 publicly traded companies and really understand what their agentic commerce strategy is. And the way they are laying it out to us is pretty clearly there are two main flows. The first flow, what we call the merchant-native AI agents, where they continue to own the relationship with the customer. And I think it shows a lot of promise in their mind. Right? And here, you would have an AI agent on their website that can support the entire life cycle from discovery to checkout to returns and customer support interaction, and this entire experience is happening on their website. So if they are a luxury fashion merchant, they can have the right type of images and product descriptions and flows and recommendations; if they are an OTA, they can have the right type of filters that are appropriate for traveling and routing. So I think they are putting a lot of emphasis on that area. What we are seeing there is, because LLMs are really—it is easy to challenge them and get them to move off script and make financial decisions that you did not intend them to make—we are serving really as this guardrail or intelligence layer that they are querying in real time to understand, hey, should I approve this transaction? What type of refund should I provide to this customer? And we are just really leveraging the entire network that we already have, making it even more unique, the value that we are providing in there. So that is kind of the merchant-native AI agent. The second flow is more kind of that general purpose LLM where it can either act as a good referral or do the purchasing on behalf of the consumer. There, to be clear, we are seeing predominantly referrals. Actually seeing agent traffic and purchasing is still extremely low and limited. From a take rate perspective, on the general purpose LLMs, we are seeing higher risk traffic there right now. So again, even if it is very small, whenever you have some of these newer flows, fraud tends to come in because there is more limited data. There is lack of experience. There is less control in those cases. And so I think on average, the take rate there would probably be higher right now, but over time, that might, you know, kind of shift. And to just a more general question around traffic, I think merchants are in a stage where they are trying to prepare and make sure that they are ready for the changes and put their best foot forward. But the traffic is probably not there yet. Terry Tillman: Very helpful. Thank you so much for that. And I guess just a follow-up, maybe for Aglika. It is helpful when you go through the different segments that you are serving and the growth rates. Money transfer and payments, it was another exceptional year of growth as you are onboarding strategic accounts, and they are growing. I am curious, though, do you see that outsized type growth continuing in your guide for 2026 on money transfer and payments versus the other end markets? Thank you. Aglika Dotcheva: Hi, Terry. So money transfer and payments was an amazing category for us this year. The growth was really, really strong. Kind of looking into 2026, we have a number of opportunities in the pipeline, and I expect the category to continue to grow, but probably just to normalize in terms of the total amount. Terry Tillman: Alright. Thank you. Operator: One moment for our next question. Our next question comes from Ryan John Tomasello with KBW. Your line is open. Ryan John Tomasello: Everyone, just following up on the agentic commerce topic. Can you talk about how you think about the potential for rising adoption there to either structurally reduce or increase the level of fraud in the system over the long run, notwithstanding kind of early days here? And then just your thoughts on the potential second-order impacts. There is a lot of talk on agentic AI agents utilizing alternative payments rails like stablecoins, you know, just how you view that also impacting, you know, structure of the system here. Thanks. Eido Gal: Right. Sure. Look. I think what we are seeing is that in order to be good at online commerce, and payments specifically, you need to be doing a lot of things well. And right now, something that is added is agentic, you know, kind of commerce. And you can add crypto and stablecoin. So if historically, you would need to be able to manage credit cards and credit card acceptance, you now need to be able to support ACH, and digital wallets, and crypto and stablecoins, and the agentic checkout. And with agentic, we are talking about a few different flows. And you know, you do not just need to think about the checkout. You also need to think about account creation and account login, and you probably have some stored value in the account that people can transfer in and out. You obviously have the checkout experience, but you also have all these various post-checkout flows—returns, refunds, leveraging the different discount codes and abusing that. You have the entire chargeback process, which is different between credit cards and ACH. It is not called a chargeback there; it is insufficient funds. You have issues around scams that are popping up. So I think we are seeing an increase in complexity. And I would just tie in the agentic checkout into that overall increase in complexity, and we are seeing an overall increase in losses within the merchant ecosystem. And I think that as merchants are trying to solve these different use cases and these various fraud patterns, it just becomes more complicated more quickly. So I think that is kind of a net benefit to Riskified Ltd. as we see this more complex environment increasing in the years ahead. On a bit more targeted and specifically on agentic, like we just mentioned, we do see an increase in fraud right now in agentic channels. Specifically when you have general purpose LLMs. It could be a combination because it is newer, and fraud, you know, tends to shift to that area, there is less control and gating there. So hard to say how that would kind of behave in the quarters and years ahead as it gains more traction. But as of now, it is probably, you know, kind of net incremental to general take rates. Ryan John Tomasello: Great. Appreciate that. And then you know, just an update if you can provide on the mid-market expansion strategy—how that plays into your 2026 growth and just broader investment plans in that category? Thanks. Eido Gal: Yeah. I think one of the unique things about Riskified Ltd. targeting the enterprises is that we are able to really customize to a high level the modeling and the performance for each individual merchant. As we have been getting much better at completely automating the life cycle of doing that, I think that is going to present opportunities to kind of continue and refine this model in more of a down-market and referral strategy. That is not something that is expected within our guide for the year. So the more we can accelerate that, that would be upside to current guide. Operator: One moment for our next question. Our next question comes from Will Nance with Goldman Sachs. Your line is open. Will Nance: First of all, I hope all the teammates in Israel are home and safe. I wanted to ask also on the agentic kind of topic of the day. I was wondering if you could just speak to status on integrating into some of the agentic protocols. So there are—you know, it is kind of—ICP, it is Stripe, GCP, Google, and any of the other relevant ones. I know a big part of the model is kind of taking all the different signals from the user behavior in those channels. So just maybe wondering if you could speak to that and maybe shed a little bit more light on kind of, like, the value of the data that might come through those protocols in detecting fraud vectors? Eido Gal: Yeah. Thank you for mentioning the team in Israel. We appreciate that. I think the issue right now that the market is seeing is, to your point, there are a wide number of multiple protocols and, you know, some of them, I think it is clear that they are already outdated. In the months, maybe quarters ahead, there will be new protocols that are probably even more updated than that. So, obviously, internally, we are doing everything we can to support everyone in that ecosystem, whether it is, you know, kind of AI agent-approved, AWS Marketplace, Google, you know, A2A protocol, just general RESTful APIs. We do see ourselves requiring to have that full spectrum to make sure we cover everything. Unfortunately, we do anticipate a somewhat continued fragmented approach here. So, you know, I think it is still early to say if there is anyone who is going to be a clear winner in that area. So there will probably need to be some optimization between the various protocols. Will Nance: Got it. That makes sense. And maybe just one for Aglika. The FX headwind on the margin is helpful quantifying that. Could you just remind us of the—it sounds like it is the FX exposure in the cost base that we should be thinking about there, shekel and otherwise. I was wondering if you could just update us on major currency weightings as we try to fine-tune the model. Thank you. Aglika Dotcheva: I will. So, I mean, first of all, I am so excited about the quarter, the guide, kind of the returning back to double-digit growth. And when I think about the FX headwinds, we kind of spelled it out as approximately 400 basis points, or $14 million to adjusted EBITDA. And it is frustrating. I mean, over the years, we focused and we kind of ran on a flat expense base for a period of time, and this FX headwind is really obscuring some of the progress. But the truth is that the underlying business momentum is strong, and we will continue to focus on optimizing. We will continue to focus on growth. And I am just excited about 2026. Will Nance: Yep. Got it. Appreciate it. Thank you. Operator: One moment for our next question. Our next question comes from Chris Kennedy with William Blair. Your line is open. Chris Kennedy: Great. Thanks for all the details and for taking the question. I will just echo Will's comment regarding Israel. The revenues from newer products—Policy Protect, AccountSecure—doubled in 2025. Can you talk about kind of the opportunity for that set of products in 2026? Eido Gal: Sure. So maybe just to refer back to kind of Ryan’s question where we said, hey, we are seeing an increase in complexity of forms of fraud. We are seeing it across different channels like ACH, digital wallets, crypto stablecoin, the agentic checkout. We are seeing it happen in different parts of the, you know, kind of shopping experience—not just checkout, but also account creation and abusive policy rules and things around dispute management. All this to say, I think it is leading to an environment where there is kind of more demand and more value and just basically more necessity for merchants to leverage the wider product platform. So if I think about the revenue that we anticipate from, you know, kind of PolicyProtect, AccountSecure, Dispute Resolve, some of the non-guaranteed payment flows that we now work with merchants on, you know, anywhere from $15 million to $20 million in 2026, I think, is a good range at this point. Chris Kennedy: Right. Thanks for that. And then just one for Aglika. If you think about the 2024 cohort, the CTB ratio really improved. Can you give us a little bit more color on what drove that improvement there? Aglika Dotcheva: Yeah. Of course. I am very excited about some of the improvements in that cohort, and we can see already the result of that in Q4. So there are some merchants there that are specifically about the money transfer and payments category, and we were able to kind of do significantly better there. It is kind of evident in the cohort. I think it is a great base for some of the merchants that are in the pipeline there, and just continuing to kind of optimize incoming merchants as well. Chris Kennedy: Great. Thanks for taking the questions. Operator: One moment for our next question. Our next question comes from Timothy Chiodo with UBS. Your line is open. Timothy Chiodo: Thanks a lot for taking the question. This one, we have brought this up in the past, but I thought it would be a good one just to check in on to see if anything is different in the agentic channel. My guess is it is the same, but the question is really the services that you are providing to merchants, do you consider them and/or see them operating in addition to value-added services coming from the card networks or instead of value-added services coming from the card networks? Eido Gal: Hey, Tim. So sorry. Could you rephrase—our services in addition to the services from the card networks? Timothy Chiodo: Sure. So if a merchant is working with Riskified Ltd., are they using Riskified Ltd. in addition to some of the fraud-related value-added services coming from the card networks, or are they using Riskified Ltd. instead of some of the fraud tools that are coming from the card networks? Eido Gal: Okay. Thank you for clarifying. So, look, I think there is no direct comparable in the stack of the card service providers right now to the spectrum of Riskified Ltd. One of them has more data-related features—so I think Mastercard acquired Ekata; Visa probably has Visa Verify. So those are, you know, kind of what we consider data features. You know, one of them has a more older-generation scoring tool that we do not really view as competitive. No one has a policy product. Definitely, no one has, you know, kind of what we would consider a modern machine learning type solution for fraud prevention. I think the dispute product also—there is nothing comparable. On the account side, there is nothing comparable. If you think about support for ACH, crypto stablecoin, you know, kind of the fiat conversion and account storage, there is nothing comparable. On agentic checkout, there is definitely nothing that we have seen comparable to some of the releases we have recently made. So I think overall, on the Venn diagram, it is pretty distinct and different. There could be different services that they provide, you know, maybe more towards financial institutions—anything around tokenization and rails for 3-D Secure. That is not in our wheelhouse. But hopefully that gives kind of a good mapping of what we do that they do not do. Timothy Chiodo: Excellent. That is a great answer. Thank you so much. My follow-up is around—you were talking around some of the other forms of payment, whether it be account-to-account, stablecoin—basically, alternative payment methods in general. I know that it is early, but in your experience and with your position in the industry, do you have any reason to believe that card mix within the agentic channel would be any different than the card mix is in traditional ecommerce? So whatever you believe the mix is to be in traditional ecommerce, do you think through the agentic channel that it would be roughly the same—maybe the card mix is a little lower, maybe the card mix is a little higher—and what would be the reason that would lead you to believe the answer to the question? Eido Gal: Yeah. Thank you. I think that is a great question, and obviously, a lot of debate on that. I think there are specific industries—and probably payments, remittance, you know, kind of brokerages—which would probably see an increase over time on whether it is kind of stablecoins, crypto. Those are also direct ACH connections, just because, you know, exchange fees, FX rates, everything that we know. So I think there probably is the potential for more to migrate. You know, maybe with long-term as things like ACH and others become easier, maybe merchants would have an easier time transferring some customers for, you know, kind of various discounts to that area. But overall, by and large, in most categories, I would not anticipate a shift. I think that overall consumer preference for cards, for rewards, continues to be incredibly high. And I think merchants adapt to that. I do not see that changing based on, kind of, you know, the LLM channel or merchant-native AI agents. I think merchants already have the ability, you know, to capture with extremely low interchange fees, debit cards. I think when you think about things like, you know, reward cards, the customer gets so much value from that. They have a clear preference. I think, you know, large merchants also have the ability to issue their own reward cards and take a meaningful portion of that interchange fee, and usually through agreements with, you know, kind of network or the issuers also take some, you know, kind of potential float or value of, kind of, installments or late payments there. So from an ecosystem perspective, I think, you know, cards are still around to stay in most categories. But there are probably a few specific areas where we will see an increased adoption in alternative payments. And I do not see a clear difference between kind of general purpose LLMs or merchant-native AI that would make them specifically work on, you know, kind of stablecoins or anything else relative to the existing rails. Timothy Chiodo: Thank you so much. Really do appreciate that. Operator: One moment for our next question. Our next question comes from Reginald Lawrence Smith with J.P. Morgan. Your line is open. Reginald Lawrence Smith: Yes. Congrats on the quarter and in achieving GAAP profitability. I guess I have got another question about agentic as well. So, you know, I get it, and I appreciate that there is not a lot of transaction flow coming from, I guess, third-party LLMs today, and so it is early days. Definitely get that. But I am thinking about—someone asked earlier about, you know, like, how pricing may work here. I am curious just, like, how that would roll out in general. And specifically, like, would merchants need separate contracts for agentic? Would it just be rolled into their standard, you know, ecommerce that occurs on their website? And then, you know, kind of beyond that, as you think about, you know, this new surface and these new potential risks, like, does that give you any pause at all, or concern around, like, what early losses could be like and what kind of differentiates you there, given that you will not have, like, a 13-year head start or, you know, backtesting history that you do on the traditional commerce side. So I am just curious, like, how you are thinking about that and, like, practically how this could actually roll out to your customers. Eido Gal: Sure. Thanks, Reggie. That is a great question. So I think there are two ways this can go. One is with the client that is on various submission plans and not giving everything right now to Riskified Ltd., and usually they would proactively come and say, hey, we are opening up this agentic channel or we are seeing some initial, you know, kind of traffic, or maybe we are even reaching out to them, and then they say, you know, we would want you to manage this, definitely, because, you know, we are not prepared to do that. And we have seen some of the larger clients that we work with approach us proactively with that. We are also in contact, you know, directly with some of our other merchants. And the pricing there, it is just, you know, slightly more flexible pricing to start. I think merchants are very open to having higher price initially, both because they understand there is an increased fraud in this day one and also because the absolute dollar amounts are still so small. It is, you know, less of an issue. And, obviously, we would kind of better negotiate mutually the fees once we understand the actual risk profile and the volume there. So that is one instance. The other one is merchants that, you know, already are providing all their volumes to Riskified Ltd. Yes, it continues to be the case that we would just see this traffic, and, you know, based on the risk profile there, if there is a significant increase, we might need to have a discussion with the merchant what that means from a commercial perspective. As I think about, you know, how do we anticipate some of this fraud, you know, on the one hand, you are right to say that it is still early stage, and a single merchant might only see, you know, a single transaction. But by that same token, you know, we are seeing it across the network of the largest merchants, and we are seeing some of the newer fraud MOs happen. And if you think about our system overall, what is unique and great about our system is that we are able to see fraud MOs in real time in one place, and then adapt features or create new segments and deploy that relatively quickly to other parts in the model. So even though this is something that is, you know, kind of newer, our system really is adept at learning new fraud rings, new fraud MOs, and, you know, pushing updates to the rest of the system based on that. It is what we have done as we have expanded into LATAM, into, you know, kind of other APAC regions. And you can continue to see that. I think Aglika mentioned on, you know, some of the CPB cohorts, some of that continued quick improvements there. In agentic, you know, it behaves the same. Right? There is, like, new fraud trends. You need to stop bleeding there, and then solve it for the rest of the portfolio. Reginald Lawrence Smith: Got it. Okay. And if I can ask one quick one on kind of FX. I appreciate that you guys are paid in dollars, but I was curious, is there any FX benefit to GMV growth next year? Or is that in U.S. dollars as well? Like, FX is not my strong suit. So anything you could share there would be helpful. Thank you. Aglika Dotcheva: Alrighty. I will take this one. So, specifically, the way I kind of view the FX, the fluctuations over the years have been something that we were able to absorb. Specifically this year, where I see the FX impact and kind of isolated it in this 400 basis points effect on adjusted EBITDA is around the strengthening of the Israeli currency, the shekel, versus the dollar. And since half of our expenses approximately are in Israel, it is impacting it more materially. So that is the main kind of FX impact that I talked about and it is worth mentioning. Without this, as I mentioned, on a constant currency basis, our expenses would have been flat year over year. Reginald Lawrence Smith: Got it. So, I guess, just to put a finer point on it, will there be a FX tailwind to revenue from the dollar just being weaker in general? Clearly, you have isolated the expense side, but I am just curious. Like, is there anything we should think about, you know, at the revenue line? Aglika Dotcheva: The revenue line, it is probably much, much minor. I would imagine it is, if anything, probably from the euro, but that will be probably less than half a percent, and it is something that we have already incorporated in projections as kind of, like, we are basing our projections on what we see today. Reginald Lawrence Smith: Okay. No. That is fine. Thank you so much. Operator: One moment for our next question. Our next question comes from Clark Joseph Wright with D.A. Davidson. Your line is open. Clark Joseph Wright: Thank you. At the beginning—or I believe this actually might have been Eido—you spoke about the fact that your strategy is more oriented going forward on gross profit growth versus revenue growth. What does that mean from a go-to-market perspective and your risk tolerance for specific product categories? Eido Gal: Yeah. Thanks for that question. Look. We have seen internally—I mean, we have always focused as a management team on gross profit, profit dollars, gross profit dollar growth. But it has probably been more of a focus recently over the past few quarters and will be over the next few quarters, just because we are seeing more demand and more bundling strategies for the, you know, kind of wider product portfolio. And overall, you know, there is a different margin profile within those products. So for us, it is clear we really want to focus on the gross profit dollars and that growth. From a sales perspective, you know, anything from how they target accounts to how they think about—how we think about—commission structures is more oriented in this direction now. Clark Joseph Wright: Awesome. Appreciate that. And then just on another topic that was already discussed partially earlier, but just wanted to understand the penetration rate on the non-chargeback guarantee products and the assumptions that you have for the 2026 guide. You referenced the $15 million to $20 million, but what does that mean in terms of the overall customer base and their willingness to accept, or to adopt these offerings? Eido Gal: Yeah. I think we shared on the script that we were seeing good progress of around 50% kind of increase in adoption. We have not really spelled it out by the specific product or what dual product, what single product. We will think about the best way to represent that to make it easier for investors to follow. But right now, we think that, you know, kind of revenue is probably the best proxy for that. And like we mentioned, it went from, you know, I think it was really, you know, low single-digit millions to $10 million, and we think we can continue to grow that to $15 million to $20 million this year. Clark Joseph Wright: Got it. Thank you. Operator: And I am not showing any further questions at this time. I would like to turn the call back over to Eido for any further remarks. Eido Gal: Thank you. Just before I conclude, I want to send my support to our team members in Israel and their families, and thank everyone for their hard work. And with that, just thank you everyone for joining us on today's call. I look forward to continuing to update you on our progress throughout the year. Operator: Thank you, ladies and gentlemen. This does conclude today's presentation. You may now disconnect, and have a wonderful day.
Operator: Good day, and thank you for standing by. Welcome to the Altisource Portfolio Solutions S.A. fourth quarter 2025 earnings call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Michelle D. Esterman, Chief Financial Officer. Please go ahead. Michelle D. Esterman: Thank you, operator. We first want to remind you that the earnings release and quarterly slides are available on our website at www.altisource.com. These provide additional information investors may find useful. Our remarks today include forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ. Please review the forward-looking statements section in the company's earnings release and quarterly slides, as well as the risk factors contained in our 2025 Form 10-K. These describe some factors that may lead to different results. We undertake no obligation to update statements, financial scenarios, and projections previously provided or provided herein as a result of a change in circumstances, new information, or future events. During this call, we will present both GAAP and non-GAAP financial measures. In our earnings release and quarterly slides, you will find additional disclosures regarding the non-GAAP measures. A reconciliation of GAAP to non-GAAP measures is included in the appendix to the quarterly slides. Joining me for today's call is William B. Shepro, our Chairman and Chief Executive Officer. I will now turn the call over to William. William B. Shepro: Thanks, Michelle, and good morning. I will begin on slide four with our 2025 highlights. We are pleased with our full-year 2025 results. We grew service revenue, adjusted EBITDA, and GAAP earnings compared to 2024. These improvements reflect disciplined execution, lower interest expense, and strong sales wins across both business segments. The strong sales wins, including fourth quarter wins estimated to generate $13,200,000 in stabilized annual revenue, should put us in a strong position to mitigate the impact of anticipated legacy revenue losses, materially diversify Altisource Portfolio Solutions S.A.'s revenue base, and support our growth. We are particularly excited by the growth of our HUBZU inventory from recent sales wins. HUBZU's foreclosure auction and REO inventory grew by 137% since the end of the third quarter to 13,500 assets as of mid-February. Turning to slide five. Service revenue for 2025 increased by 7% to $161,300,000 with sales wins in both segments contributing to the growth. The business segment's adjusted EBITDA improved by $3,000,000, or 7%, to $47,600,000, and total company adjusted EBITDA improved by $900,000, or 5%, to $18,300,000, driven by higher revenue, partially offset by revenue mix and modestly higher corporate costs. Moving to slide six, we improved total company 2025 GAAP loss before income taxes to $14,100,000 from $32,900,000 in 2024. This was primarily driven by lower interest expense from the new capital structure, partially offset by $3,600,000 of debt exchange transaction expenses and a $7,500,000 loss from a legacy litigation settlement. 2025 net cash used in operating activities would have been close to zero if you exclude the debt exchange transaction expenses and $1,200,000 of higher first quarter cash interest expense related to the prior debt agreement. Adjusting for these items, net cash used in operating activities improved by approximately $60,000,000 over the last five years. We ended the year with $26,600,000 in unrestricted cash. Turning to slide seven. Fourth quarter 2025 service revenue was $39,900,000, up 4% from the fourth quarter of last year, driven by growth in the origination segment. Fourth quarter 2025 business segment adjusted EBITDA of $11,400,000 was flat to the fourth quarter 2024, while higher fourth quarter 2025 corporate segment costs resulted in total company adjusted EBITDA of $4,000,000 for the quarter. The corporate segment's costs were $700,000 higher than the prior year primarily from foreign currency fluctuations. Our fourth quarter GAAP loss before income taxes and noncontrolling interests improved to $8,100,000 from $8,400,000 in the fourth quarter 2024, primarily from lower interest expense partially offset by a $7,500,000 loss from a legacy litigation settlement. Before turning to the segment updates, I want to address developments related to Rithm. As we discussed last quarter, the cooperative brokerage agreement between Altisource Portfolio Solutions S.A. and Rithm, which I will refer to as the CBA, expired on 08/31/2025. Despite the expiration of the CBA, at Rithm's discretion, we continue to manage CBA REO assets and receive new referrals with limited exceptions. From a 2026 guidance perspective, which I will review shortly, we assume that this business will roll off during the first half of this year. With respect to Onity, Rithm provided notice in the fourth quarter that it is terminating its servicing agreements with Onity. As the service transfers occur, we expect a reduction in our foreclosure trustee, title, and field service referrals from Onity tied to these portfolios. Our 2026 guidance assumes that the Onity-serviced Rithm-owned MSRs transfer to Rithm during the first half of this year. Although we would prefer to retain this business, we believe that our sales wins, once stabilized, should more than offset the anticipated reduction in service revenue and EBITDA from the Rithm- and Onity-related changes. As a result, the midpoint of our 2026 guidance reflects service revenue growth and close to flat adjusted EBITDA, with Rithm and Onity representing a significantly smaller share of our revenue base by 2026. Turning to slide eight in our countercyclical Servicer and Real Estate segment. 2025 service revenue of $126,000,000 increased 5% from last year, reflecting a full year of the newer renovation business and growth across foreclosure trustee, Granite, and field services, partially offset by fewer home sales in the marketplace business. 2025 Servicer and Real Estate segment adjusted EBITDA increased by 6% to $44,600,000, with adjusted EBITDA margins higher due to revenue mix. Slide nine summarizes our Servicer and Real Estate segment wins and pipeline. In 2025, we won an estimated $20,600,000 in annualized stabilized service revenue wins, including $11,500,000 in fourth quarter wins. Two of the larger fourth quarter wins were in our higher-margin marketplace business unit, which we also refer to as HUBZU. The first was an REO asset management and foreclosure auction agreement with a residential loan servicer, and the second a CWCOT first-chance foreclosure auction agreement with an existing customer. We ended the year with a Servicer and Real Estate segment total weighted average sales pipeline of $19,300,000 on a stabilized basis. The pipeline includes a couple of larger opportunities for our trustee and title businesses that we are optimistic should close in the second quarter, if not sooner. Turning to slide 10 and our growing HUBZU inventory. We onboarded the two new HUBZU wins I just discussed and are off to a strong start. As of February 15, total HUBZU inventory stands at 13,500 assets, compared to 5,700 assets as of September 30. These two wins were significant contributors to this growth. We anticipate revenue from these customers to grow during the year as REO and foreclosure referrals proceed to sale. Moving to slide 11 and our Origination segment. 2025 service revenue grew 16% to $35,200,000. Adjusted EBITDA increased 19% to $2,900,000, with margins improving modestly. Service revenue growth was driven by continued expansion in the Lenders One business, including onboarding the forecasted $11,200,000 in third quarter wins. Due to these wins, the Origination segment service revenue growth accelerated in the fourth quarter, increasing 40% year over year. For 2026, we anticipate strong year-over-year service revenue and adjusted EBITDA growth for the Origination segment as recently won business continues to grow and scale, and we convert our sales pipeline to wins. Slide 12 outlines our Origination segment sales wins and pipeline. We secured an estimated $1,800,000 in wins, primarily in Lenders One, and ended the year with an estimated $14,900,000 weighted average sales pipeline. We are actively engaging with several large prospects and anticipate additional wins in 2026. Turning to slide 13 in our Corporate segment. 2025 corporate adjusted EBITDA loss was $29,300,000, reflecting a year-over-year increase in costs primarily related to nonrecurring benefits in 2024 and higher foreign currency expenses in 2025. We believe corporate costs should remain relatively stable as revenue grows. Moving to slide 14 and the business environment. We have been operating in a challenging environment with both low delinquency rates and origination volume, though recent indicators are improving. Ninety-plus-day mortgage delinquency rates modestly increased to 1.45% in December 2025. As of 12/31/2025, there were 560,000 late-stage delinquent mortgages, the highest level since February 2023. In 2025, foreclosure starts grew by 25% and foreclosure sales grew by 17% compared to 2024, although still significantly below pre-pandemic levels. We believe the increase over 2024 reflects the end of the VA foreclosure moratoriums, rising FHA delinquency rates, and a softening real estate market. We anticipate that borrowers may face additional pressure in 2026 given the fourth quarter implementation of the April 2025 FHA mortgagee letter that extends the time between loan modifications from every 18 months to every 24 months. For the origination market, total 2025 mortgage origination unit volume increased 19%, driven by a 92% increase in refinance volume, partially offset by a 2% decline in purchase volume. For 2026, the MBA projects 5,800,000 loans originated, or 7% year-over-year growth, with a forecasted 8% increase in refinance volume and a 6% increase in purchase volume. Turning to slide 15 and our 2026 outlook. We are forecasting service revenue of $165,000,000 to $185,000,000 and adjusted EBITDA of $15,000,000 to $20,000,000. At the midpoint, this represents 8.5% service revenue growth and close to flat adjusted EBITDA. Revenue growth assumptions include roughly flat industry-wide rates, the MBA's forecasted origination volume growth, and our estimated timing for the onboarding and ramp of sales wins, conversion of pipeline opportunities, and price increases for certain services, partially offset by the assumed loss of business related to the CBA and Rithm's termination of its servicing agreements with Onity. The projected adjusted EBITDA reflects forecasted service revenue growth and scale efficiencies, partially offset by product mix and modest growth in corporate segment costs. The forecast range for service revenue and adjusted EBITDA primarily reflects timing differences in the potential loss of business related to the CBA and Onity service transfers and the ramp in business from sales wins and pipeline conversion. At the midpoint of the guidance, we are forecasting to generate positive operating cash flow for the year. Moving to slides sixteen and seventeen. Our 2026 outlook is supported by momentum in the businesses we believe offer the greatest long-term growth potential: Lenders One, HUBZU Marketplace, foreclosure trustee, title, Granite, renovation, and field services. The anticipated growth of these businesses forms the foundation for Altisource Portfolio Solutions S.A.'s Project 45 strategic initiatives, our company-wide objective to achieve a run rate of $45,000,000 in adjusted EBITDA by 2028. While individual businesses and support group contributions to this initiative may vary, we believe the businesses we identify best position Altisource Portfolio Solutions S.A. for meaningful, diversified growth. Turning to slide 18. We believe we are positioned to diversify our revenue base, ramp newly won business, maintain cost discipline, and lower corporate interest expense in 2026. The Project 45 initiatives, supported by our 2025 sales wins, should help mitigate the impact from anticipated Rithm-related revenue losses and support a stronger, more resilient Altisource Portfolio Solutions S.A. I am proud of what the team has accomplished in 2025, and I am excited about our prospects for 2026 and beyond. I will now open up the call for questions. Operator? Operator: Please press 11 on your touch-tone phone and wait for your name to be announced. To withdraw your question, please press 11 again. Showing no questions at this time. I would like to turn the call back to William B. Shepro for closing remarks. William B. Shepro: Thank you, operator. We are pleased with our 2025 performance and believe we are set up well for continued growth. Thanks for joining our call today. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good day, everyone, and welcome to The Real Brokerage Inc. Fourth Quarter and Full Year Ended December 31, 2025 Earnings Call. At this time, all participants are placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to hand the floor over to your host, Alexandra Lumpkin, Chief Legal Officer at The Real Brokerage Inc. Ma'am, the floor is yours. Alexandra Lumpkin: Thanks, and good morning. Thank you for standing by, and welcome to The Real Brokerage Inc. conference call and webcast for the fourth quarter and full year ended 12/31/2025. We appreciate everyone for joining us today. With me on the call today are Tamir Poleg, our Chairman and Chief Executive Officer; Jenna Marie Rozenblat, our Chief Operating Officer; and Ravi Jani, our Chief Financial Officer. This morning, The Real Brokerage Inc. published an earnings press release including results for the fourth quarter and full year ended 12/31/2025. The press release, along with the consolidated financial statements and related management's discussion and analysis for the full year ended 12/31/2025 have been filed with the U.S. Securities and Exchange Commission on EDGAR and with the Canadian Securities regulators on SEDAR. Before we get started, I would like to remind everyone that statements made on this conference call that are not historical facts, including statements about future time periods, may be deemed to constitute forward-looking statements. Our actual results may differ materially from these forward-looking statements, and the risk factors that could cause these differences are detailed in our Canadian continuous disclosure documents and SEC reports. The Real Brokerage Inc. disclaims any intent or obligation to update these forward-looking statements except as expressly required by law. With that, I will now turn the call over to Chairman and Chief Executive Officer, Tamir Poleg. Tamir, please proceed. Tamir Poleg: Thank you, Alex, and good morning, everyone. 2025 was another transformational year for The Real Brokerage Inc., and our fourth quarter results provided a strong finish. In the fourth quarter, we grew closed transactions by 38% to nearly 49,000, significantly outpacing the broader existing home sales market. This volume drove revenue growth of 44% to $505 million and a 30% increase in gross profit to $39 million. Net loss narrowed to $4.2 million, while adjusted EBITDA was positive $14.2 million, a 56% year-over-year increase. Looking at the full year, revenue grew 56% to nearly $2 billion, while our gross profit growth of 44% significantly outpaced the 25% increase in operating expenses. This discipline resulted in a substantial improvement in our GAAP net loss to $8.1 million, while adjusted EBITDA reached $62.9 million, up 57% from last year. Furthermore, our model generated positive cash flow from operations of approximately $66 million, allowing us to return $39 million to shareholders through buybacks, while maintaining a debt-free balance sheet with $50 million in liquidity. We ended 2025 with 31,739 agents on our platform, up 31% year over year, and today, that number has grown to over 33,000. These results would be impressive in any environment, but are notable given the broader housing backdrop. Existing home sales remain well below long-term averages, transaction volumes across the industry remain constrained, and many market participants are waiting for macro improvement. Meanwhile, our growth continues to be driven by structural factors: a powerful agent-attraction flywheel, improving agent productivity, and ever-increasing agent engagement and retention on our platform. That distinction is important. At the same time, we continue to make steady progress expanding beyond brokerage into ancillary products and services tied to the housing ecosystem and transaction life cycle. To that end, OneReal Mortgage generated $6 million in revenue in 2025, up 50% year over year, driven by increased loan officer growth and productivity. In January, we were pleased to welcome Kate Gurovich as CEO of OneReal Mortgage and look forward to seeing accelerating growth and improved profitability under her leadership. OneReal Title generated $5 million in revenue, up 5% from 2024, as we began transitioning our model toward more scalable state-based joint ventures. Today, OneReal Title operates 13 joint ventures with operations across 17 states, and we expect to open three additional joint ventures in 2026. And RealWallet, which completed its first full year, generated nearly $900,000 of revenue with 77% gross margins, with its current run rate approximately $1.5 million. Importantly, today, more than 7,000 agents are actively using Wallet with approximately $23 million in deposits. We view Wallet not only as a revenue opportunity, but as a deeper integration point with our agents' daily financial workflows. While brokerage remains the core engine of the business, these ancillary services represent the next layer of value creation. They increase engagement and improve and expand revenue and gross margin per transaction. Over the past decade plus, we have been focused on building an integrated platform, aligning agent economics, investing in proprietary technology, and expanding our ecosystem of products and services. In 2025, we saw clear evidence that this model can scale while improving operating leverage. We are not managing a collection of disconnected tools or regional systems. We are operating one unified platform across North America. That consistency is what allows us to improve the system year after year. With that, I will turn it over to Jenna. Jenna Marie Rozenblat: Thanks, Tamir, and good morning. As Tamir noted, 2025 was another transformational year. Revenue increased 56%, gross profit increased 44%, and operating expenses increased only 25%. That operating leverage reflects the structural foundation of our business. Everything starts with Reason, which is our proprietary transaction management platform. Every transaction, every document upload, every compliance step, and every commission payout flows through that single system of record. With all 33,000 agents operating inside one platform, we benefit from standardized workflows and structured transaction data across our entire network. That unified foundation allows us to embed AI directly into live transaction workflows and deploy enhancements at scale. We are not layering standalone tools on top of fragmented systems. Instead, we are integrating intelligence into the core operating system of the brokerage. Let me give a few practical examples. First, agent productivity. LEO Copilot is our intelligent assistant embedded directly inside Reason. It provides agents real-time guidance on transaction status, commissions, next steps, and even marketing assets. Since its launch in 2023, agents have engaged with LEO over 700,000 times. It has become an essential part of their daily workflow. Second, support and compliance. Last summer, we made LEO the first line of support across email and phone. Since then, LEO has answered more than 20,000 support inquiries, or approximately 46% of total support volume. That success rate improves responsiveness for agents while reducing incremental support headcount as we scale. We also introduced LEO Voice Broker, an automated broker review to enhance compliance oversight. Automated broker review uses AI to review documents as they are uploaded, identifying missing information or inconsistencies before they reach a human broker. That reduces back and forth, shortens approval cycles, and allows brokers to focus on more complex issues rather than routine checks. Third, internal automation. Beyond agent-facing tools, we are increasingly deploying AI agents and workflow automations to replace repetitive manual tasks across brokerage operations, finance, transactions, support, and enablement. For example, we have automated significant portions of our ready-to-close transaction workflows, reducing manual intervention across a growing share of transaction types. And we have also standardized processes such as refund coordination, commission calculations, and bulk document retrieval, replacing multistep spreadsheet- and ticket-based workflows with structured, system-driven processes. While these initiatives may not be visible externally, they reduce friction, improve auditability, and prevent headcount from scaling linearly with transaction volume. Over time, these improvements compound. That is what makes the leverage durable. And last, but certainly not least, in the fourth quarter, we extended HeyLeo.com, our unified platform, to the consumer. HeyLeo is our AI-powered consumer portal where home buyers converse with intelligent agents to find their next property. This is not just a search site. It is a full AI Relationship Manager, or AIRM, that provides each of our agents with a customized web portal, a dedicated SMS phone line, and a dedicated HeyLeo email address. The power of HeyLeo lies in its Atlas skill layer. It is backed by comprehensive MLS data, 180 integrations today and a target of 400 integrations by July, and nationwide school and neighborhood insights. Whether a buyer is texting a question about a school zone or emailing about a kitchen layout, the AI provides instant data-backed responses. It can even schedule showings directly on the agent's calendar. By providing this 24/7, omnichannel engagement, we are giving our 33,000 agents a one-to-many scaling advantage. While HeyLeo remains in beta, it represents a critical link in our goal to streamline the entire transaction life cycle from the first consumer click to the final commission payout. Taken together—agent productivity, compliance, back-office efficiency, and now HeyLeo’s consumer engagement—we believe we have developed a structural advantage that is scalable, durable, and economically meaningful. I will turn it over to Ravi. Ravi Jani: Thank you, Jenna, and good morning, everyone. Our 2025 results reflect another year of significant growth and improving operating leverage, even as our results were impacted by a shift in our transaction mix. Consolidated revenue for the fourth quarter rose 44% to $505 million, contributing to full year revenue of nearly $2 billion, a 56% increase from $1.3 billion in 2024. This performance was led by our North American brokerage segment, where closed transactions increased 38% in the fourth quarter. This significantly outpaced the broader existing home sales market, which saw only a 1% increase in the same period. This performance was all organic and reflects our continued success in attracting high-producing agents and teams to The Real Brokerage Inc. platform. We also saw continued momentum in our ancillary businesses. Ancillary revenue in the fourth quarter rose 24% year over year to $3.2 million and reached $11.9 million for the full year. This includes RealWallet, which generated $339,000 in the fourth quarter, an 8x increase from its launch quarter a year ago. We believe the continued expansion of these services represents a meaningful long-term opportunity to diversify our revenue base and enhance our margin profile. Gross profit for the fourth quarter was $39 million, up 30% year over year, bringing our full year gross profit to $166 million, an increase of 44%. Our fourth quarter gross margin was 7.7% compared to 8.6% in the prior-year period, while our full-year margin was 8.4%. The year-over-year change is primarily a function of our evolving mix. In the fourth quarter, we saw a 400-basis-point increase in the proportion of transactions completed by agents who have reached their annual commission cap. While these post-cap transactions carry a lower margin for the brokerage, they are a core element supporting agent retention, evidenced by our revenue churn improving to 1.6% in the fourth quarter, down from 1.8% in the prior year. We believe maintaining a best-in-class retention profile is fundamental to our long-term competitive position. Based on our current outlook, we expect this transaction mix shift to continue in 2026; however, we anticipate margins will ultimately normalize as market activity improves and transaction growth becomes more evenly distributed across our broader agent base. Over time, we expect ancillary businesses and platform efficiencies to support further gross margin expansion. A highlight of our 2025 performance was the continued decoupling of our expense base from our revenue and gross profit growth. In the fourth quarter, operating expenses grew 22% to $44 million, while gross profit grew 30%. Operating expense in the quarter includes $750,000 related to an agreement to settle the CoinArc class action lawsuit on a nationwide basis. For the year, we limited operating expense growth to 25%, for a total of $175 million against a 44% increase in gross profit. The largest driver of our OpEx increase remains marketing—specifically revenue share and agent equity compensation—which scale directly with our transaction volume. As a percent of revenue, operating expenses improved by 160 basis points to 8.8% in the fourth quarter and by 220 basis points for the full year to 8.9%. Our adjusted operating expense, which is a non-GAAP metric that reflects our fixed cash overhead, improved to 4.3% of revenue, down from 5.7% in the prior-year period. On a unit basis, our adjusted OpEx per transaction declined 22% year over year to $440 in 2025, down from $565 in the prior year, further validating the scalability of our platform. Importantly, this operating leverage drove improvements across our profitability metrics. Operating loss improved to $5.2 million in the fourth quarter compared to $6.4 million in 2024, while full-year operating loss narrowed to $9.2 million from a loss of $25.2 million in 2024. Net loss improved to $4.2 million in the quarter and $8.1 million for the full year, compared to a net loss of $6.7 million and $26.5 million for the respective prior-year periods. Adjusted EBITDA rose 56% to $14.2 million in the fourth quarter and reached $62.9 million for the full year, a 57% year-over-year increase from 2024. The Real Brokerage Inc. generated $66 million in cash flow from operating activities for the full year and returned $39 million to shareholders via share repurchases, including $15 million in the fourth quarter. We ended the year with $49.9 million in unrestricted cash and investments, and we continue to carry no debt. Our capital allocation strategy remains disciplined, focused on maintaining ample liquidity to fund our organic growth while retaining the flexibility to return capital to shareholders and evaluate strategic M&A. Regarding our outlook, we are not providing formal guidance at this time. In the near term, as others in the industry have noted, January and February saw an unseasonably slow start to the year. Volatile weather and historic snowstorms across much of the country impacted transaction velocity during the first two months. Consequently, we expect Q1 revenue, operating loss, and adjusted EBITDA to decline sequentially from Q4 2025 levels. However, on a full-year basis, we expect the fundamental trends of organic growth significantly outpacing the broader industry to persist. We also remain confident in our ability to drive revenue and gross profit growth at a faster rate than operating expenses, which should result in year-over-year improvements in both GAAP and non-GAAP profitability metrics for the full year 2026. More details on our results and key operating metrics can be found in the earnings press release and investor presentation that accompany this call. I will now turn it back to Tamir. Tamir Poleg: Thank you, Ravi, and thank you, Jenna. Let me close with a broader perspective on the business we are building. Real estate is among the world's largest and most complex asset classes. A single transaction involves a convergence of buyers, sellers, agents, lenders, attorneys, regulators, and multiple sources of capital. It often involves leverage and requires compliance that varies across jurisdictions. And for most consumers, it happens only a handful of times in their lives. That combination—high value, high complexity, and low frequency—makes trust and infrastructure critically important. When we started The Real Brokerage Inc., our goal was not to build a better brokerage. It was to reinvent the model entirely—economically, technologically, and culturally. Traditional firms were built on physical infrastructure and overhead, with technology as an afterthought. We chose a different path. We aligned our economics with agents, built a unified system for the entire transaction life cycle, and we focused on culture by treating our agents as long-term partners. The brokerage was our starting point, but the platform is our destination. Our platform today encompasses a massive funnel of high-value transactions. By building a platform that productive agents never want to leave, we earn the right to serve them more deeply across mortgage, title, fintech services, and now consumer engagement. These are not opportunistic add-ons. They are integrated components of our flywheel: attract productive agents, process transactions with unmatched efficiency, improve infrastructure with every deal, retain through alignment and value, and ultimately capture more of the transaction life cycle as the ecosystem matures. What makes this model resilient is not just our code, but the compounding advantages of a scaled network, years of platform development localized down to the municipality level, and the massive volume of structured data we capture with every transaction. In 2025, we proved the model. We reached nearly $2 billion in revenue and over 185,000 transactions, all while generating meaningful cash flow, achieving our first quarter of GAAP profitability, and strengthening our balance sheet in a constrained housing environment. We cannot control the macro environment, but we can control our vision, our execution, and our discipline. We believe the opportunity ahead remains significant. Thank you to our agents, employees, and partners for your belief in The Real Brokerage Inc. We are still in the early innings, and we are building this to endure. Operator: Thank you. We will now open for questions. If you have any questions or comments, please press 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you are listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press 1 on your phone. Your first question is coming from Stephen Sheldon from William Blair. Your line is live. Stephen Sheldon: Hey, thanks. Good morning. First, I think I have probably asked this most times. I just wanted to ask about the agent recruiting environment and pipeline. There are a lot of changes in the industry, especially with the Compass-Anywhere merger. So are you seeing that create any more opportunity to attract agents, and are you seeing any pickup in agent interest to join since you announced some of the AI initiatives late 2025? Tamir Poleg: Hi, Stephen. There are a lot of moving parts right now in the industry and a lot of uncertainty for many agents. I think that when it comes to us, we still have a very strong pipeline. We have not tried to be opportunistic with approaching teams or agents that were part of some mergers in the industry. We believe in our value and believe that we should not rely on just occasions in the industry in order to attract agents. So the pipeline is strong. We think that there is an opportunity to double down even more on agent attraction, and in the coming weeks, we will announce some exciting things around that. We also think that the technology that we will be introducing later this year will help us attract agents even at a faster pace. So we are still very optimistic about our ability to continue and grow the way we have been in recent years. Stephen Sheldon: Got it. Good to hear. And then a follow-up on the title side, great to hear that you have more states opening. It sounds like three more on top of the current 13. How should we be thinking about the trajectory of title in 2026, especially as you move past the headwind from switching from team- to state-based JVs? Tamir Poleg: Sure. So 2025 was a transition year. We did a change in leadership at the beginning of 2025, and then we transitioned from team-based JVs to state-based JVs, and now we are starting to see the fruits of that labor. We are also doubling down on focusing on non-teams or any agent with 10 to 20 transactions within those 13 states. So we think that in the coming month and couple of quarters, we will see a significant movement. We are not happy with the performance in 2025. We understand that it was a transition year, but it is time for us to start seeing the signals of that growth. So it takes time, but I think that we have the right model and the right leadership in place, and we will start seeing the signs later this year. Stephen Sheldon: Good to hear. Thank you. Operator: Thank you. Your next question is coming from Naved Ahmad Khan from B. Riley. Your line is live. Naved Ahmad Khan: Great. Thank you very much. So, two questions from me. Maybe one just building on the title. Can you maybe quantify the drag from the transition that you had in the fourth quarter from transitioning from the old structure to the state-level JVs? And then I think on the last earnings, you had shared some data points about the attach rate that you were seeing in some of these markets that are transitioning over. Can you maybe share some color on how these are progressing? Are you seeing continued improvement in attach rate where markets have transitioned over? And the second question I had was on mortgage. Now you have more than, I guess, more than 100 loan officers, and you also introduced the consumer-facing video to help with driving attach for mortgage. What are the early results from these initiatives that you are seeing? Thank you. Tamir Poleg: Thank you, Naved. So on title, the attach rates that we have been seeing in the past couple of months are between 30% to 40% within the JVs. We want to see those percentages grow even further, and we also think that there is potential to expand those JVs and invite more agents and focus on the highest-producing agents, and those are efforts that are taking place right now. It takes a little bit of time to have those conversations with the agents and teams and get them signed up, and then earn their deals and move from there. This is why it is taking a little bit of time. But we would like to see the attach rates go beyond where they are right now in the short term. On mortgage, as you know, we brought in Kate as the new CEO of OneReal Mortgage a month and a half ago. We have a very strong pipeline of productive agents that are in the process of getting licensed as loan officers and, obviously, they will be a part of our loan officer base. So I think that within a couple of months, when they ramp up and start sending their deals, we will see an uptick in mortgage. We are very happy with the impact of Kate’s actions so far, and I think that they will have a very positive effect on revenue later on this year. So I think that mortgage is really on the right track. When it comes to LEO, what we are now doing is trying to experiment with AI technology that helps our agents nurture and convert leads in the background without them doing too much. And we think that will also help us drive mortgage and title. It is still in the early days. It is alpha tests, but it is showing very promising signs. So I am very optimistic about our ability to attach ancillary services through technology, and I think that LEO will become an integral and essential part of a transaction for many of our agents in the very near future. Naved Ahmad Khan: Okay. And then can you maybe just quantify the drag from the transition in the title side, moving from entity- to state-level JVs? Ravi Jani: Sorry, I can take that one. It was similar to last quarter. It was in the neighborhood of a couple hundred thousand dollars of revenue from JVs that existed in the prior year that were wound down and have not ramped back up. And importantly, on the point of how we expect title to grow throughout the year, we would expect to see growth reaccelerate as we lap some of those transitions. So we should be back to double-digit and solid double-digit growth as the year progresses. Jenna Marie Rozenblat: Excellent. Thank you. Naved Ahmad Khan: Thank you. Operator: Your next question is coming from Matthew Erdner from JonesTrading. Your line is live. Matthew Erdner: Hey, good morning. Thanks for taking the question. I know you touched a little bit on the capped agents and the roughly 400-basis-point increase. Where do you expect margins to normalize once we work through, call it, the slug of the market where a lot of the capped agents are winning transactions? Ravi Jani: Thanks, Matt, for the question. I think we are at a point where, while we expect this mix shift to probably continue in the first half, as we get into the second half of the year, some of the fee model changes we announced last year start to manifest, and we start to see ancillary reaccelerate, we should be at a point where we are seeing less or no drag on margins as we get to the second half. But just given where we ended 2025 and entered 2026, we expect to see this mix shift dynamic in the first half, and then that should level off. And I think the important thing to keep in mind is that while we are focused on the margin rate, we are also focused on the gross profit dollars and our ability to grow the gross profit dollars faster than we grow OpEx, which we proved throughout 2025. And so we are mindful of the margin, and we have taken corrective action on that front. But importantly, we are controlling what we can control on the fixed OpEx side as well, and so that should translate to improved bottom line. Matthew Erdner: Got it. That is helpful there. And then last one for me, I will keep it short here. What are you looking for in terms of greater adoption on the Wallet side and growing that overall deposit base? Tamir Poleg: It is a combination of a couple of things. We have about 7,000 agents on the Wallet, and we want to see more agents utilizing Wallet. We think that there are ways to push agents to adopt Wallet even further, and we are contemplating those actions. We will probably see them later on this year. At the same time, one of the biggest drivers of revenue to Wallet is Real Capital, and Real Capital expands to more and more states. I think that we are currently in 20 or 21 states, so we still have a long way to go there. As we see more states opening up and more agents having lines of credit available to them, we will see more revenue driving into Wallet. Matthew Erdner: Got it. That makes sense. Thank you. Operator: Thank you. Thanks, Matt. Thank you. And once again, everyone, if you have any questions or comments, please press star then 1 on your phone. Your next question is coming from Nick McAndrew from Zelman. Your line is live. Nick McAndrew: Hey, thanks. My questions—maybe one on the churn side of things to start. I think agent churn has improved pretty dramatically in just the back half of the year to the mid-single digits. I am wondering how much of that is attributable to ancillary products like RealWallet and maybe the credit lines that are creating switching costs for agents versus how much of this is simply better agent quality coming in the door? Thank you. Tamir Poleg: Thank you, Nick. It is a good question, and I think that our performance on agent retention is especially remarkable given all of the dynamics in the market and the fact that agents are really hurting right now. I think that everything that we release—LEO, Wallet, all of the features, all of the technology that we offer agents—adds an incremental way to value the platform. So the more services we offer, the harder it gets to leave the platform. Obviously, if you have a line of credit from The Real Brokerage Inc., it is really difficult to give that up. If you have LEO available to you, and you can ask questions and get immediate answers and get all of your files reviewed within seconds, it is really difficult to step away from that. So I think that all of those just add up to a platform that is really, really attractive for agents. Nick McAndrew: Thanks, Tamir. That is helpful. And maybe following up on that, I think there has been some level of multiple compression in a lot of software names across the space that has been driven by concerns around agentic AI disruption. I am curious if you can reiterate how you think about the tech stack relative to peers. But even more broadly, as AI tools become increasingly accessible, is there any risk that agents start building or adopting their own tools independently, or do you view all of these agentic AI developments as just a net opportunity for The Real Brokerage Inc. platform? Tamir Poleg: Obviously, we see that as an opportunity. And if you look at our financial performance, you can see that the numbers speak for themselves. At the same time, we also see a huge opportunity in the implementation of AI and the fact that a lot of the things that agents do can be helped with AI. I do not think that agents can figure all of that on their own. I think that it is important to have an integrated system where all of the information is in one place, and AI has access to all of your documents, all of your past performance, all of your financials, all of your conversations. It makes the AI substantially more efficient. And this is what we are trying to build. I think that agents on their own will never have the ability to build something as powerful as what we are building for them. So for us, we will continue to invest, and we just want to create an unfair advantage for agents, and it is starting to happen these days. Alexandra Lumpkin: Alright. Well, thanks for the question, Nick. Now that we have concluded the analyst portion of the call, Matthew, are there any more questions in the queue? Operator: Certainly. There are no further questions in the queue. Ravi Jani: Great. Well, now that we have concluded the analyst portion of the call, we wanted to address some of the questions we received from shareholders on the SAIT Technologies Q&A portal that was opened last week. We received a number of excellent questions, and so thank you to all who participated. First question for Tamir: When do you expect The Real Brokerage Inc. to turn a profit, and is there anything shareholders can do to help The Real Brokerage Inc. become profitable? Tamir Poleg: Thank you for the question. It is important to understand that for a company with our growth profile and capital efficiency, profitability is largely a strategic choice. Many of our peers are currently posting much steeper losses despite having significantly larger agent bases, which we believe validates the superior efficiency of our model. To give some context, our largest segment, North American brokerage, was nearly breakeven in the full year of 2025. The significant majority of our consolidated loss currently reflects our ancillary businesses, where we are deliberately choosing to invest today because we believe the long-term returns will be substantial. As for what shareholders can do to help, the most direct way to support our path to profitability is to engage with our ecosystem. If you are buying or selling a home, work with a Real agent, utilize a OneReal Mortgage loan officer, and choose OneReal Title for your escrow and title services. Increasing the attach rates of these services directly fuels our highest-margin revenue streams and significantly accelerates our timeline to consolidated profitability. Ravi Jani: Thanks, Tamir. The next shareholder question is: Do you anticipate stock-based compensation to continue to scale at around the same pace as cash flow, or will it level out or decrease at some point? I appreciate the opportunity to clarify our approach to equity. First, it is important to note that nearly all of our agents’ equity awards are tied directly to production, and so we do not write large upfront checks or offer guaranteed signing bonuses. Equity is primarily earned only when a transaction closes or an agent reaches their production-based milestone, such as hitting their annual cap or achieving Elite status. And we are already seeing some natural leverage in the model as we scaled. In the fourth quarter specifically, stock-based compensation as a percentage of revenue declined by 80 basis points year over year. As we continue to grow revenue and gross profit faster than our fixed headcount, we would expect this leverage to continue, reducing stock-based compensation both as a percentage of sales and free cash flow over time. You have seen that over the past few years. With all that said, we remain highly mindful of dilution, which is why we have a buyback program in place to offset it. And given where our stock is currently trading, we are pleased to be in a position where we have excess cash available to repurchase shares. Ravi Jani: Last shareholder question for Tamir: Can you talk about the growth in RealWallet and revenue growth specifically? How has it trended since the product launched? Tamir Poleg: Sure. RealWallet has been a standout success story for us. The business generated around $900,000 in 2025, and it is currently generating annualized revenue of over $1.5 million, which continues to grow on a month-over-month basis. We now have over 7,000 agents utilizing Wallet, as I mentioned, with our total deposit balance growing to over $23 million. On the lending front, we have extended over $8 million in lines of credit, and notably, our U.S. balances now exceed those in Canada. Beyond being an attractive high-margin revenue line, Wallet serves as a unique value proposition and a powerful retention tool that deepens our relationship with our most productive agents. Ravi Jani: Great. Well, that concludes the retail shareholder Q&A. If you have any more questions on today’s earnings release, please feel free to contact me and our Investor Relations team. Matthew, would you please give the conference call replay instructions once again and close the call? Thank you. Operator: Certainly. Ladies and gentlemen, today’s call will be available for replay. The replay phone numbers are (877) 481-4010 or (919) 882-2331. The replay code is 53464. And once again, the replay phone numbers are (877) 481-4010 or (919) 882-2331, and the replay code is 53464. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.
Operator: Ladies and gentlemen, thank you for standing by, and welcome. At this time, all participants are in listen-only mode. Following the presentation, there will be a question-and-answer session. Please be advised that today's conference call may be recorded. I would now like to hand the conference call over to Anne Marie Fields, Managing Director at PrecisionIQ. Please go ahead. Anne Marie Fields: Thank you, operator. Good morning, and welcome to Cellectar Biosciences, Inc.’s fourth quarter and full-year 2025 Financial Results and Business Update Conference Call. Joining us today from Cellectar Biosciences, Inc. are Jim Caruso, President and CEO, who will provide an overview of the company's progress before turning the call over to Chad Kolean, CFO, for a financial review of the quarter and the year. Following this, Jarrod Longcor, Chief Operating Officer, will give an update on the company's progress and plans for its promising clinical development pipeline of radiopharmaceuticals. Cellectar Biosciences, Inc. issued a release earlier this morning detailing the contents of today's call. A copy can be found on the investor page of Cellectar Biosciences, Inc.’s corporate website. I want to remind callers that the information discussed on the call today is covered under the Safe Harbor provision of the Private Securities Litigation Reform Act. I caution listeners that management will be making forward-looking statements. Actual results could differ materially from those stated or implied by our forward-looking statements due to risks and uncertainties associated with the business. These forward-looking statements are qualified in their entirety by the cautionary statements contained in today's press release and in our SEC filings. The content of this conference call contains information that is accurate only as of the date of this live broadcast, 03/04/2026. The company undertakes no obligation to revise or update any forward-looking statement to reflect events or circumstances after the date of this conference call and webcast. As a reminder, this conference call and webcast are being recorded. We will begin the call with prepared remarks and then open the line for your questions. Let me now turn the call over to Jim Caruso. Jim Caruso: Thank you, Anne Marie, and thank you all for joining us this morning as we review Cellectar Biosciences, Inc.’s progress throughout the year. 2025 was a productive and strategically meaningful year for Cellectar Biosciences, Inc. Across the organization, we executed with focus and discipline, advancing our lead asset, Iapocin, I-131, strengthening our regulatory position in both Europe and the U.S., and progressing our next-generation radiotherapeutic programs supported by our proprietary phospholipid drug conjugate platform. Let me begin with iapocene I-131, our late-stage in Waldenstrom's macroglobulinemia, or WM. As discussed in this morning's press release, we ended the year with regulatory alignment in Europe. Following guidance from the EMA's Scientific Advice Working Party, or SAWP, we remain on track to submit a conditional marketing authorization application in 2026, positioning iapopacine for potential approval in European commercialization as early as 2027. This EU regulatory clarity together with iaupopasim's PRIME designation underscores both the strength of the CLOVER-WaM dataset and the significant unmet medical need. As the full twelve-month follow-up data become available in early 2026, we are even more convicted on our plans to pursue an NDA under the accelerated approval pathway. These assumptions are supported by hypopacine's FDA Breakthrough Therapy designation for WM, and by our agency dialogue. In addition, we continue engagement and partnering conversations to support the program globally. Beyond iapofacine, we also made important progress across our broader PDC-based radiotherapeutic pipeline. We initiated the Phase 1b study of CLR125 in triple-negative breast cancer, or TNBC. CLR125 is an iodine-125 Auger-emitting agent designed for highly precise tumor targeting, and its initiation represents a key milestone for this second asset. The dose-finding study is ongoing, and we expect early interim data in mid-2026. We also strengthened the infrastructure supporting our alpha-emitting program, CLR225, through new supply partnerships with ITM Technologies and Ionectics, providing commercial-scale access to 225 and astatine-211 for future clinical development. Importantly, 2025 also marked significant expansion of our global intellectual property estate with new patents issued across Europe, Asia Pacific, the Middle East, as well as the Americas. These patents bolster the protection of ibuprofen I-131, CLR125, and the broader PDC platform. Finally, we raised approximately $15.2 million over the course of the year, extending our cash runway and enabling ongoing advancement of our pipeline, which positions us to achieve a number of value-creating milestones throughout the year. With that brief overview, I will now turn the call over to Chad to review our financial results. Chad? Chad Kolean: Thank you, Jim, and good morning, everyone. I will address our financial results for the year ended 12/31/2025. We ended the year with cash and cash equivalents of $13.2 million, as compared to $23.3 million as of 12/31/2024. In the fourth quarter, we raised $5.8 million and now expect that our cash on hand is adequate to fund budgeted operations into 2026. Turning to our results from operations, research and development expenses for the three months ended 12/31/2025 were approximately $11.5 million, compared to approximately $26.6 million for the year ended 12/31/2024. The overall decrease in research and development was largely driven by the conclusion of patient enrollment and declining patient follow-up for our CLOVER-WaM clinical study, modestly offset by increased activity in our preclinical development project costs. General and administrative expenses for the year ended 12/31/2025 were $11.5 million, compared to $25.6 million for the same period in 2024. The decrease in SG&A was primarily driven by deemphasizing pre-commercialization efforts and related personnel cost reductions. Other income was approximately $1.1 million for fiscal 2025, while in 2024, other income was $7.3 million. These amounts are non-cash and largely a result of the impact of issuing and marking to market certain warrants. The warrants we issued in 2025 were classified as permanent equity upon issuance, reducing the impact on the statement of operations in comparison to fiscal 2024. Net loss for the full year ended 12/31/2025 was $21.8 million, or $8.35 per basic and diluted share, compared with $44.6 million, or $36.52 per basic share and $41.89 per diluted share during 2024. Now I will turn the call over to Jarrod for an operational update, including plans for our pipeline of radiopharmaceuticals. Jarrod Longcor: Thank you, Chad, and good morning, everyone. As Jim highlighted, our regulatory and clinical progress in 2025 positions us well for important advances across our pipeline programs and for a milestone-rich 2026. Starting with iapobicine I-131, our EMA and FDA have provided us with clear, actionable regulatory paths. In Europe, we are planning to submit this conditional marketing authorization application later this year. In the U.S., we continue to make strong progress in our regulatory engagement as we work with the FDA on the accelerated approval pathway and the design of our confirmatory Phase 3 trial to support full registration. As requested by the FDA in November 2024, we have now collected twelve months of follow-up on all patients and, based upon further review of the data, agree that a confirmatory study evaluating iapocene I-131 in a post-BTKi treated patient population in the second-line setting is appropriate. Importantly, this earlier line more than doubles the potential addressable population in the U.S. As mentioned, we have been analyzing the more mature CLOVER-WaM dataset, including the full twelve-month follow-up for all patients, and are very encouraged that the results continue to demonstrate robust and durable clinical benefit over time in this salvage treatment setting where there are no approved drugs. In addition, new subgroup analyses, particularly within defined high-need patient segments, are emerging as especially promising. We look forward to sharing these findings with regulators as part of our ongoing discussions. Taken together, we believe the strength and consistency of these data provide a robust foundation for our U.S. and EU registration strategy. Over the remainder of the year, we intend to present our findings, including a minimum of twelve-month follow-up on all patients, updates on response data, duration of response, progression-free survival, and detailed outcomes in various patient subsets at major medical meetings. We expect these results to be highly compelling to both the clinical community and regulatory decision makers. Beyond WM, ibuprofen continues to show potential across multiple oncology indications. Prior data sets in multiple myeloma and diffuse large B-cell lymphoma demonstrated strong activity in these hematologic malignancies, and recently, I presented data at the AACR Special Conference on Pediatric Cancer from a study of iapopacine in relapsed/refractory pediatric high-grade glioma that showed IFOP seemed to provide meaningful improvements in progression-free survival and overall survival and to be well tolerated with a consistent safety profile. Iapofacine remains an asset with tremendous global market opportunity, and its success supports other assets in our radiopharmaceutical pipeline, including CLR125 and CLR225, and further validates our proprietary phospholipid delivery mechanism. Turning now to CLR125, our Auger-emitting asset for solid tumors, which has the potential to provide extreme precision targeted radiotherapy due to the short-distance Auger emission travel, meaning the isotope must be delivered within the cell and near to the nucleus. As Jim noted earlier, we initiated a Phase 1b dose-finding study in TNBC at two sites, and we will be adding additional sites in the second quarter. This study is evaluating three dosing regimens with an expansion arm planned once the recommended Phase 2 dose is determined. We anticipate a steady cadence of results throughout 2026, including early, interim dosimetry, safety, and preliminary efficacy data. For CLR225, our alpha-emitting asset, we completed IND-enabling work and are ready to initiate a Phase 1 trial pending available funding and continued strategic alignment with corporate objectives. Preclinical studies in pancreatic cancer models have shown compelling tumor inhibition at multiple dose levels, further demonstrating the potential of targeted alpha therapy within our platform. Across the pipeline, our expanded global patent estate provides long-term protection for ibuprofen, CLR125, and dosing regimens central to our PDC technology. Combined with strengthened isotope supply partnerships, we believe we are well positioned to build sustainable value. 2025 was a year of significant regulatory, clinical, and operational advancement, and we look forward to continuing this momentum throughout 2026. Jim, I will turn it back to you for closing remarks. Jim Caruso: All right. Thanks, Jarrod, for that overview. As you have heard today, 2025 was a year defined by meaningful progress across the entirety of our radiotherapeutic pipeline, with strong execution across the organization. We advanced iapoficine toward key regulatory submissions that would accelerate its market approval and get this much-needed therapy to patients. We initiated the CLR125 Phase 1b trial for triple-negative breast cancer, expanded our intellectual property, strengthened supply chain infrastructure, and extended our cash runway. We are entering 2026 with clear vision, strong momentum, and a pipeline supported by robust science and regulatory engagement. We expect multiple value-creating milestones in the months and year ahead, and remain focused on delivering transformative therapies to patients with difficult-to-treat cancers. I want to extend my gratitude to our outstanding Cellectar Biosciences, Inc. team whose commitment and hard work continue to drive our programs and the company forward. We remain deeply committed to the WM community and are grateful for their strong support and encouragement as we work to bring hypophasine to patients. We will now open for questions. Operator, we are ready to open the call for questions. Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the number one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the queuing process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Aydin Huseynov with Ladenburg. Please go ahead. Aydin Huseynov: Hi. Good morning, Cellectar Biosciences, Inc. team, and congratulations for the progress in 2025 and so far in 2026. A couple of questions I have regarding apofacine. So you are planning to submit in the third quarter for EMA. I am just curious to understand, can you use the same package that you will submit to EMA? Can you use exactly the same package for the FDA submission as well? And how long after you start the Phase 3 trial can you actually initiate that process of submission with the FDA? Jim Caruso: Sure. Aydin, first of all, thank you for participating in the call. As always, we appreciate that and your coverage of the company. Let me start, and then we will turn it over to Jarrod to provide some additional details relative to your question. As you may recall, we have already built out substantial portions of our NDA application, and although the format with the EMA is different, there are a lot of similarities in terms of the requested data. So a lot of the work that we have already done in preparation for our NDA submission, we can also apply to the EMA. Jarrod has been providing oversight on this process and I will turn it over to him to provide greater detail. Jarrod Longcor: Good morning. Great question. So the very short answer is yes. The data itself is essentially the same, and so it is all, obviously, it is all the CLOVER-WaM data. There will be some different, what I will call subset analyses, that the EMA may have requested that might be a bit different than what the FDA might request. So we are executing on that. And as Jim said, the standard packages are a little different, the ordering and how things come together for the EMA versus the FDA. The actual NDA is a little different from the CMA package development, but otherwise, it is all the same. So, as you said, that is pretty much largely taken care of at this point. And then your second part of your question was, I think, how long to submitting in the U.S. post the initiation of the confirmatory study? Is that correct? Aydin Huseynov: Yes. Yes. Jarrod Longcor: Okay. So the way we are doing that, just to share, back when we met with the agency in November 2024, where they basically outlined for us a handful of criteria that were necessary for us to achieve in order to be able to submit for the accelerated approval, part of what they shared was that, for an accelerated approval, a study must be initiated at the time of submission and ongoing, meaning enrolling patients, at the time of regulatory action. So what we have taken, or the way we are approaching this, is about a month or two post the initiation of the study, having a handful of sites open, we would then submit the NDA to the FDA. That should allow us to have enrolled one or two patients essentially at that point, and then, over the intervening six months, because we now have Breakthrough—remembering that we got Breakthrough designation in May 2025—we are now eligible and have the guaranteed six-month review under the accelerated approval pathway, and so we would then expect that that feedback would come in six months, and we would want to make sure that we had about 10% of the patients enrolled. Jim Caruso: So, Jarrod, to summarize that, within seven to nine months of initiation of the study, assuming we submitted the NDA a month or two post initiation, we would have a response from the FDA regarding the accelerated approval. And I think, Aydin, it is also important to point out that at that point in time they are not reviewing any data out of the confirmatory study. It is just a function of the study being initiated, is ongoing, and patients are successfully being enrolled. Aydin Huseynov: Understood and very helpful. And for the Phase 3 confirmatory study design, I mean, it seems like the design is okay with both U.S. and EU to get the full approval. But just for modeling purposes, you are getting into an earlier line of therapy, second line for BTK, and comparing this to rituximab and standard of care. I am trying to understand what it is that we should model in terms of the differences in PFS on evapofolcin versus the standard of care, and, you know, just to get a better sense in terms of what to expect down the road. Jarrod Longcor: Absolutely. And another great question. So, until recently, it was very difficult to give a definitive answer here because nobody had really evaluated any salvage therapy in a post-BTKi exposed patient population. However, earlier this year, or late last year, I guess early 2025—I have to remember we are in 2026 now—a group out of Italy, where the lead author's name was Fristauchi, produced data looking at seventy-eight post-BTKi patients, irrespective of what salvage therapy they got. So these patients received rituximab, chemo, combinations like RCD, or rituximab-bendamustine. They also received subsets of them also received pirtobrutinib, so a noncovalent BTKi. They also received proteasome inhibitors. They received venetoclax or BCL-2 inhibitors. So they basically got every alternative salvage therapy. In all cases, these patients, as a median, their PFS was eight months if they were a second-line patient, irrespective. And what you see is when it was RCD or any of the rituximab combinations, it was sub-eight months as progression-free survival. And so you can clearly model that number because it was a significant patient population, approximately seventy-eight patients again. Jim Caruso: I think, thank you, Jarrod. Very helpful. And I think I can provide some additional color relative to our data. Obviously, I cannot report because we have not publicly disclosed the updated twelve-month data, but it will include what we believe to be some very robust durability elements associated with the twelve-month data. So we are really excited about the data package. If everyone was impressed with our clinical data, Aydin, that we have put in play to date, I think the subsequent data based on the twelve-month follow-up is going to be viewed as very, very exciting. And the other element here, and you brought this up, is significant. As you recall, in the CLOVER-WaM study, on average, we were the fifth line of therapy, which means four lines of therapy prior to the utilization of ibuprofen on average. However, under Jarrod's leadership, the team has done substantial analysis, and we have really been able to segment, based on the latest data cut that occurred in December 2025, these patients and the variety of subsets, but also importantly, where they sat in terms of the number of prior treatments. And we will tell you that, as you would expect, as you advance further upstream, the data is more and more impressive. And, as you cited, second line in the U.S. the patient population is double that of third line plus. So it really not only does it create opportunities for clinicians to provide their patients with a meaningful treatment option, there are also going to be a lot more of them in the U.S. and globally benefiting from this treatment. Jarrod Longcor: And just historically, so that we do not lose that, currently, right now in the United States, and it is increasing in Europe, the BTKis are being predominantly prescribed in the first-line setting. Whether that is in combination with rituximab or as monotherapy, since the ibrutinib-rituximab study came out showing that potential in the first-line setting, most of the U.S. physicians have transitioned into a BTKi in the first-line setting in some form or fashion, which means the second-line setting is a BTKi patient population today. Aydin Huseynov: Thank you. Very helpful. And looking at your prior major response rate, they were already high, in our eighties, and you are going to move to the earlier line of therapy. And, typically, the responses increase in earlier lines of therapy. So just curious to understand your sort of benchmark in the earlier line of therapy, and whether this Phase 3 trial design will have some sort of top-line major response rates first before we see the PFS, maybe at some point one year after we start the trial. Jarrod Longcor: So the primary endpoint for the confirmatory study is progression-free survival. Obviously, a secondary endpoint is going to be major response rates or response rates as a whole, and, obviously, major response rate is one of them. What I would say is we will not be announcing data from a confirmatory study during enrollment because, obviously, that can result in bias being introduced into the study, and especially in a comparative study. And that would be problematic and would actually negatively impact the review eventually for full approval. Jim Caruso: And so, Aydin, I will add to that. You know, and it is going in a potentially different direction. Based on the primary endpoint, progression-free survival, in that confirmatory study, you can take a look at the Fristauchi data, and you will get a sense as to the progression-free survival there. And so this study is powered in such a way, as we introduce our PFS and durability performance for this drug out of the CLOVER-WaM study, I think it will very quickly determine that, the way the study is powered for the confirmatory study, we are setting ourselves up for a high probability of success, assuming the PFS remains consistent with all of the literature and data that we have seen. And best case there for PFS, as Jarrod discussed, was 8.1 months. So we feel very, very comfortable with PFS being the primary endpoint based on the literature. Aydin Huseynov: Thank you. Very helpful. And the last question I have regarding the current environment in post-BTK in U.S. and EU, what do you feel in terms of the enrollment speed and level of interest of PIs and among patients to be participating in this trial once you start it. Jarrod Longcor: I can say directly that, having spoken with every one of the PIs that were in the CLOVER-WaM study, the interest from the physician side is extremely high. I can say in a number of cases, when I have talked with them recently, they have all felt that the delay from a regulatory standpoint in getting to this point is largely unwarranted and that this drug absolutely has a spot in the marketplace and a significant need to fill. And so I think that that is important from that perspective. I think, again, as patients, this is a very active patient population. They are very engaged as a community and in looking at new therapies. I think as patients and these physicians get a look at the new data that is coming out later this year, as we were talking about, so over the remainder of this year, I think everybody is going to be very excited about the ability to participate and have the impact that ibuprofen can have for them and their disease in this setting. Jim Caruso: And I would add that, in addition to the thought leadership that are very excited about this because they are on the cutting edge, they understand and observe the performance of existing salvage therapies, especially just post first line. And as I think Jarrod cited earlier, BTKis are used predominantly now either as a monotherapy or in combination with rituximab in first line. So you are already, for many of these patients, in a salvage therapy mode in the second line. But interesting here, Aydin, in addition to key thought leadership around the globe really appreciative of the feature benefits that this product provides their patients as early as second line, this also tested extremely well with community-based physicians. So we really see this transitioning out of a controlled clinical environment at these world-class institutions or WM catchment centers. Because of the ease of administration and, quite frankly, the lack of artistry required here relative to other drugs—the four simple doses—our community-based physicians are as excited as the thought leaders as well. So I think all constituents, including nuclear medicine and radiation oncology that have a seat at the table in terms of the utilization of this drug, all constituents are really excited about the opportunity to bring this patient to the many patients that will benefit from treatment. Aydin Huseynov: Thank you. Super helpful, and congratulations with the progress so far, and we will be looking forward to seeing your twelve-month data later this year. Thanks so much. Jim Caruso: Thank you, Aydin. Operator: Thank you. The next question comes from Edward Andrew Tenthoff with Piper Sandler. Please go ahead. Edward Andrew Tenthoff: Great. Thank you, guys, for taking my question, and congrats—my congratulations too on the very hard work and steady progress. You guys deserve a persistence award for sure. I wanted to follow up, two questions if I may. So firstly, and I apologize if I missed this, but what would be the plans to distribute in Europe, and can you walk us through a sense of what that second line now in Europe—would it be second line too, or there it is actually a little different where you would be getting approved? And what does that patient population look like? Thank you very much. Jim Caruso: Thank you, Ted. Great to have you on the call. Appreciate your interest, your continued interest in the company. You have been very supportive, so we are appreciative of that. I will have Jarrod launch into this, and then I can fill in any blanks or provide additional color. Jarrod Longcor: Great, and thank you, Ted. From a distribution plan, the idea here is that, obviously, Cellectar Biosciences, Inc. itself, we will not really commercialize it ourselves in Europe. We are in discussions with various parties that we would partner with to actually do the commercialization in Europe on our behalf, in one way or another. So we are looking at partnership as the main thing. Just to give you a sense, we have set up our distribution of a radiotherapeutic in a global sense. I will remind you that the CLOVER-WaM study was run as a global study where we had approximately 25 sites in Europe. We had a handful of sites also in Asia and Australia. And so we have set up a logistical chain that allows us to ship and cover the globe easily with this product. And I will remind you, for folks that may have forgotten, that we have a unique competitive advantage in the marketplace that is often overlooked, which is our shelf lifetime. Most radiotherapies have a shelf life of about three to seven days max. Ours is 21 days. That allows us—and it is not cold chain; it is at room temperature. It allows us to more easily distribute this product globally and make sure that it is conveniently handled by the physicians and by the patients. So that sets up the distribution. Now, the second part of your question was really about, in Europe, where would the approval be, and what is the size of the market? So in general, just to give you a sense, the size of the European market is generally about 10,000 or so patients in total greater than the U.S. I would say that when we look at the second-line setting, the U.S. market is just a bit south of 12,000 patients. In Europe, its second-line setting is generally a bit over 12,000, approaching 13,000 patients, is what we have come to learn. And so it is a meaningful patient subset. Now, the conditional marketing authorization would actually be a later line utilization, so it would be a third line or later post-BTKi patient population. That is largely because still in Europe, they are transitioning. They are using BTKis more in a first-line setting, but they are more evenly split right now between first-line and second-line utilization of BTKi. So the median would likely be a third-line or later sort of position. Upon the confirmatory study, I think we would be shifting to a second-line setting in Europe. Edward Andrew Tenthoff: Great. That is very, very helpful color. Appreciate it. Thank you. Jim Caruso: Alright. Thanks so much, Ted. Operator: At this time, Jim will address questions sent electronically. Please go ahead. Jim Caruso: Alright. So if there are no other questions, I have some that are in the inbox. Jarrod, you up for another question, or—alright. I think I will decipher this one. What is the benefit of the twelve-month data cited in the press release versus your December 2024 data? Jarrod Longcor: Good question. So what I would say is that, reminding folks that in the December 2024 data, most of the patients that we had enrolled at that point did not have twelve months of follow-up data on them. They were still essentially shortly post their treatment segment and therefore did not have the twelve months. Since that time, we have all patients with at least twelve months of follow-up, and while the data presented at ASH was very good in 2024, I think, as Jim alluded to earlier, this follow-up data is even better. And what I mean by that is there are improvements in the response rates, there are improvements in durability, there are improvements in progression-free survival. So across the board, we are seeing depth and durability of the responses going out and looking stronger than they did in December 2024. Jim Caruso: Jarrod, could you elaborate on the benefit relative to the regulatory pathway with the FDA in the U.S. on the twelve-month data. Jarrod Longcor: So, in November 2024, the FDA laid out essentially a pathway for accelerated approval that really had two key components to it. One was that we needed to have twelve months of follow-up on all patients, which obviously we now have, which allows us to then take that next step. And the next step was really that we needed to have an ongoing confirmatory study in an earlier line of patients, so as to not be between our study and commercially available product. At the time, we were a little worried about moving to a second-line setting because we did not really have data that would say whether we would be better or worse in that line of setting or the same. Now, with the analysis and the twelve-month follow-up data, we now know exactly that we performed better in an earlier line of setting, as one might expect, but with the confidence now we have the data sets that show and validate that approach. And I think sets us up very nicely for both the confirmatory study, but then also the accelerated approval and moving forward. Jim Caruso: Alright. We have one more here. It is a layup, which means I will handle it. Will this data include durability, such as PFS and DOR? So PFS, progression-free survival, and DOR, duration of response, the answer is yes. Beyond the response data such as major response, complete responses, very good partial responses, the overall response rate metric, and clinical benefit rate, we will be providing progression-free survival and duration of response, not only in the broader population, but in important subsets like post-BTKi and refractory BTKi patient populations where this drug is, or appears to be, naturally falling post-BTKi based on the regulatory path both in the EU and here in the U.S. So with that, I will turn it back over to the operator. Operator: Thank you. We have reached the end of the question-and-answer session. Let me turn the call over to Jim Caruso, President and CEO, for closing remarks. Please go ahead. Jim Caruso: All right. Thank you, operator. Thank you, everyone who participated in today's call. We appreciate your time. Have a good day. Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
Christoph Barchewitz: Good morning, everyone and welcome to Global Fashion Group's Q4 and Full Year 2025 Results Presentation. I'm Christoph Barchewitz, CEO of GFG and I'm joined today by our CFO, Helen Hickman. I'll start today with an update on the strategic actions we have executed over the past 3 years, followed by an overview of our 2025 regional performance. Helen will cover results for the group and the outlook. Then we'll open it up for Q&A. To start, I want to briefly remind you of what underpins GFG's long-term potential. We hold leading positions across large fashion and lifestyle markets where online penetration continues to increase over time. We serve these markets with a tailored customer-centric approach that it reflects local needs and we maintain strong relationships with both global and local brands. These partnerships are supported by flexible business models that help brands grow in complex markets. We also have a unique operational footprint, supported by proprietary technology and scalable infrastructure, which enables us to deliver a fashion-specific customer experience efficiently at scale. With these foundations in place, we are on track to deliver profitable growth and positive cash flow across our markets. And we do so from a position of financial strength with a healthy balance sheet and a substantial net cash position. This long-term potential is underpinned by the work we have done to reset and strengthen the business. Looking back to 2022, 2 main events have shaped the challenges our business has had to navigate over the past 3 years. One, a difficult post-COVID macroeconomic and fashion e-commerce environment that significantly depressed consumer demand and led to a decline in our active customer base and order volumes; and two, the sale of our CIS business due to the Russian invasion of Ukraine, which significantly reduced the scale and profit of the group. This initiated a reset period for our business. We have successfully actioned this since 2023 by evolving our business model, strengthening our customer flywheel and driving cost efficiency. On business model evolution, we strengthened our brand partnerships and rationalized our offering. We took a prudent approach to inventory. And since the end of 2022, we reduced inventory levels by 43% on a constant currency basis. We curated our assortment by reducing the brand count by 26% as a result of removing long-tail brands from our platforms. On customer flywheel, we dedicated our attention to our high-value customers and increased gross profit per active customer by 14% on a constant currency basis. We delivered this step-up all while applying discipline with marketing costs remaining stable at 7% of NMV each year. Finally, on cost efficiency, we reduced and simplified everywhere across the group. From 2023 to 2025, we reduced our total cost base by EUR 106 million, a 16% reduction in constant currency and released EUR 88 million from working capital. So now let's look at how this reset period has translated into our financial results. As mentioned, we've been operating in a period of demand downturn, which resulted in EUR 168 million reduction in NMV from 2023 to 2025. FX devaluation against the euro accounted for about half of this reduction. Despite facing a lower top line, we substantially improved profitability and cash flow. Adjusted EBITDA improved by EUR 62 million since 2023. Normalized free cash flow improved by EUR 31 million since 2023. Let's now turn to our regional segment results. By executing with discipline across all aspects of our business, we have significantly strengthened our financial operating model. As a result, we delivered a positive adjusted EBITDA for all 3 regions and the group in 2025. This milestone was driven by a return to NMV growth for the full year in our 2 largest regions, ANZ and LATAM. While our reset actions have built stronger foundations group-wide, each region is currently at a different phase in their journey to profitable growth. Starting with ANZ, which now represents half of the group's NMV. ANZ has completed its transition and is now operating as our profitable growth engine. In 2025, ANZ's NMV grew 6% year-over-year in constant currency. Profitability was strong at EUR 26 million in adjusted EBITDA, marking a EUR 28 million improvement compared to 2023. ANZ has strong cash conversion and delivered a positive normalized free cash flow. LATAM represents 30% of group NMV and also delivered 6% NMV growth in 2025. LATAM has achieved a significant turnaround moving from a declining business with negative EUR 22 million adjusted EBITDA in 2023 to a positive EUR 3 million in 2025. Cash flow has improved materially as well with LATAM now near normalized free cash flow breakeven. As the initiatives we put in place continue to flow through, we expect LATAM to move toward the end of its reset phase and into a more profitable growth position. SEA is our smallest region at 21% of group NMV and continues to face a decline with NMV down 15% in 2025. Despite this backdrop and thanks to its strong cost discipline, SEA has remained resilient on profitability, delivering a positive EUR 3 million adjusted EBITDA in 2025 and was also near breakeven on normalized free cash flow. SEA's financial resilience is also partly attributable to its high Marketplace share and sizable Platform Services business. Let's look at that next. Evolving toward a platform-led model by scaling our Marketplace and Platform Services is a core part of our strategy. In 2025, Marketplace represented 39% of group NMV and Platform Services represented 4% of group revenue. Through our reset phase, all regions contributed to our progression toward our group goals of 45% Marketplace share and more than 5% Platform Services share. SEA is the most advanced in this evolution and is also the only region so far to offer a solution where we use a single stock pool to fulfill orders across multiple brand partner channels. This service is the main driver behind SEA's step-up in Platform Services revenue from 2023 to 2025. In ANZ and LATAM, we expect Marketplace to continue expanding, particularly following the rollout of Fulfilled by in 2023 and 2024, respectively. Additionally, our growing marketing platform service is expanding across these regions, serving as another key driver of profitability. Let's now take a closer look at ANZ's results. 2025 marked a clear step up forward -- step forward for ANZ as the region returned to growth and delivered stronger profitability. NMV and revenue steadily grew each quarter, including Q4 with NMV up 6% and revenue up 3% on a constant currency basis. Active customers also closed the year up 4% year-on-year. ANZ achieved a record full year gross margin of 49%, up 2 percentage points from 2024 and we held at the same level in Q4. This flowed through to adjusted EBITDA margin, which expanded 3 percentage points to 7%. ANZ's strong performance has been driven by 3 key areas: a scaling platform mix, more efficient infrastructure and stronger customer engagement. Looking at platform mix. We are strengthening our fashion proposition while shifting to a more inventory-light model. In 2025, more than 20% of NMV came from our own brands and exclusive partnerships, helping us differentiate ourselves. At the same time, our brand partners are participating in our partner offerings. Marketplace now makes up 36% of NMV and 115 brands are live on Fulfilled by since we launched it in 2023. This gives customers more choice and gives brands an efficient and reliable way to grow with us. Additionally, our marketing services revenue is up 36% since 2023, indicative of another great value add for our brand partners. The second major driver is our more efficient infrastructure. With our new order and warehouse management system and expanded partnership with Australia Post, we've had a delivery upgrade. About half of all orders are now delivered in under 48 hours across Australia and New Zealand. In Q4 alone, delivery speed in major cities improved by 10% year-over-year. In Australia, we are the only fashion player to have rolled out Saturday standard delivery at scale for East Coast metro areas. And in New Zealand, we have achieved a meaningful improvement by reducing delivery times by 15% and introducing express next day service for key metro areas. These operational wins support our profitable growth momentum and our third driver, customer engagement. Our Got You Looking masterbrand campaign continues to demonstrate strong results. Amongst the campaign's target audience, unprompted awareness is up 70%, customer trust has increased 62% and 57% of viewers take action after seeing our ads, meaning more visits to the ICONIC app and site. To further strengthen the ICONIC's customer flywheel, we launched the Front Row loyalty program in October last year. This program was co-designed with input from 50,000 customers and is built around ICONS, the loyalty currency members earn when they shop to unlock rewards, special offers and exclusive experiences. Members progress through 4 status levels with higher levels unlocking greater benefits and faster earning. The Front Row is helping us recognize and retain our highest value customers, which deepens loyalty and drives higher order frequency. This supports ANZ's growth agenda, which also includes greater geographic penetration and increased cross-category shopping. In parallel, we continue to drive profitability through scale, ongoing fulfillment optimization and leveraging technology and AI. Turning now to LATAM. 2025 was a year of continued recovery. NMV returned to growth for the full year and LATAM became adjusted EBITDA profitable. We did see LATAM's momentum moderate in the second half. This was partly due to slightly stronger year-over-year comparators and partly due to a more challenging market and competitive environment. Though active customers ended 2025 down 2% year-on-year, LATAM saw higher order frequency and average order value, which reflected our focus on higher-value customers. LATAM's margin profile strengthened with gross margin improving to 44%, up 1 percentage point year-on-year and adjusted EBITDA reaching 1%, up 5 percentage points. Next, we'll cover the strategic drivers for LATAM that have laid the foundation for profitable growth. First, we are changing how we engage with our customers. We have started to refresh our cash back program to increase customer loyalty. We're promoting Club Dafiti, which is where shoppers can access personalized rewards and exclusive promotions. It's highly effective in keeping our high-value customers engaged and coming back to Dafiti. Second, we are scaling our brand partner proposition. A major piece of this is our Fulfilled by offering, which launched in 2024 and now has over 60 brand partners live. We saw 4x more revenue from Fulfilled by in 2025. It is a true win-win where brands leverage our fulfillment network to grow while we monetize our automated fulfillment center capacity. Our partner services go beyond logistics. We have been growing our marketing services with revenue up 42% in 2025 and our revenue per session doubling in Q4. 2025, we also rolled out financing to support our partners' working capital needs while simultaneously optimizing our cash flows. Finally, we are deploying AI-generated product imagery at scale. This reduces our reliance on traditional studio photos and gets products online much faster. This new workflow is about 30% faster. And as we scale it, we expect it to cut production costs by around 2/3. All of these initiatives are building a more resilient and profitable foundation for us in LATAM. Let's now turn to SEA. In 2025, we continue to see the rate of decline steadily ease even as the top line remain challenging. By Q4, NMV was down 10% year-on-year compared to 15% in Q3. SEA's revenue declined less than NMV for both Q4 and the full year. This was a result of improved marketplace commissions and stronger contribution from platform services. Our SEA business is now operating with a more favorable margin mix and leaner cost base. As we work through our initiatives to stabilize demand, SEA is well positioned to translate any return to growth into stronger profitability. To drive stabilization, we are focusing on sharpening our customer proposition while driving simplification and efficiency to progress toward profitable growth. This includes focusing on our top-performing brand partners. In 2025, more than 60% of SEA's NMV came from our top 30 brands. To support this, we have refined our assortment. In retail, we have reduced our intake by 28% from 20% fewer brands since 2023. On our Marketplace, we have reduced long-tail complexity, resulting in a 20% increase in NMV per brand compared to 2023. Alongside our assortment strategy, platform services continue to scale and be an important growth lever for SEA. Our single-stop solution, which is part of our operations services has generated 48% higher revenue in 2025 versus 2023 on a constant currency basis as it enables sales for brand.com and other channels in 2025. An exciting recent development in Q1 is the launch of our Got You Looking in SEA. We took our learnings from ANZ and adapted the masterbrand for ZALORA. Got You Looking is now live across all of our channels. It is designed to demand attention and improve brand preference, drive higher quality traffic and ultimately rebuild a healthier, more profitable customer base over time. Finally, we are continuously driving simplification and efficiency across the business. We successfully reduced SEA's total cost base by 19% on a constant currency basis and released EUR 29 million in working capital since 2023. Altogether, these actions give us a solid foundation in SEA as we progress towards sustainable, profitable growth. I will now hand it over to Helen to take you through the group results and outlook. Helen Hickman: Thank you, Christoph and good morning, everyone. I'll start with customers. At the end of 2025, our active customer base was down 4% year-on-year as we continue to prioritize profitable customer acquisition, engagement and reactivation. This strategy includes engagement initiatives that encourage cross-category shopping, app usage and loyalty program participation. These initiatives in ANZ and LATAM have successfully offset headwinds in SEA to result in a 2.3% increase in group order frequency. In 2025, we generated over EUR 1 billion in NMV, with Q4, our key trading season contributing about 1/3 of the full year. Whilst our full year and Q4 NMV were broadly stable on a constant currency basis, our reported figures were significantly impacted by FX headwinds. Specifically, the Australian dollar and Brazilian real were weak against the euro in '25, both down about 7% year-on-year. With Australia and Brazil being our 2 largest markets, this translated to a lower euro reported value for our NMV and revenue. Our average order value increased in constant currency terms for both the full year 2025 and Q4, offsetting lower volumes in SEA, which drove the group year-on-year decline. The order value increase was driven by inflation, along with a combination of a higher price point assortment and regional mix. Now turning to revenue and margins. We increased our adjusted EBITDA by EUR 27 million against the backdrop of broadly flat constant currency revenue to turn the group full year positive for the first time within our current footprint. Now let's take a closer look at the 2 contributors to this milestone, gross margin improvement and ongoing cost and efficiency actions. Starting first with gross margin improvements. Over our reset period, we have successfully reduced our overall inventory position by 43% on a constant currency basis from the end of 2022 to the end of 2025. We've achieved a healthier inventory profile by reducing discount through a more relevant assortment, increasing inventory turnover and decreasing our share of aged inventory by 10 percentage points. This, combined with a steady increase in Marketplace and Platform Services share has resulted in a 4 percentage point increase in gross margin, rising from 42% in 2023 to 46% in 2025. The second key contributor to the significantly improved adjusted EBITDA position is ongoing cost discipline. Our cost efficiency programs have been a crucial part of our business reset and remain a core part of our strategy going forward. From 2023 to 2025, we've reduced our total cost base by EUR 106 million, representing a 16% reduction on a constant currency basis. This cost reduction has more than doubled the pace of our 7% NMV decline over the same time period. The largest saving came from fulfillment. 2/3 of the reduction was as a result of our own initiatives where we captured efficiencies, including from automation and the order warehouse management system, OWMS, that we implemented in ANZ last year. Another 20% was due to reduced volumes and the remainder related to external factors such as FX. We also delivered significant savings across tech and admin. We continue to streamline our organizational structure along with ongoing reviews and negotiations of all our non-people costs. Across all cost lines, we've reduced our headcount by over 40% over the past 3 years. Together, our 4 percentage point gross margin expansion and EUR 106 million cost reduction have enabled us to reach our milestone of becoming adjusted EBITDA profitable. Turning to our cash. Our normalized free cash flow improvement in 2025 was primarily driven by the EUR 27 million increase in adjusted EBITDA. Lease costs remained broadly stable year-on-year. Working capital moved towards neutral as we cycle the one-off timing benefits seen in 2024. We delivered a CapEx reduction of EUR 16 million following the completion of the OWS (sic) [ OWMS ] investment and ongoing rationalization of our broader technology spend. After adjusting for operational tax and interest, we had a normalized free cash outflow of EUR 32 million, representing a EUR 10 million improvement compared to 2024. In Q4, we generated EUR 46 million of normalized free cash inflow. As a reminder, our cash flow cycle is highly seasonal, generating significant cash flows in Q4, our key trading season and experiencing significant outflows in quarter 1. We closed 2025 with a strong liquidity position of EUR 185 million in pro forma cash and EUR 143 million in pro forma net cash. Pro forma net cash deducts our outstanding EUR 41 million convertible bond liability and other small levels of third-party borrowing. Throughout 2025, we strengthened our balance sheet by repurchasing EUR 13.8 million in aggregate principal amount of our convertible bond, bringing our total repurchase volume at a discount to 89% of the original issue. We have 2 significant funding events taking effect in quarter 1, which I'd like to overlay against our closing December 2025 cash position. Firstly, following bondholders exercising their right to redeem at par on the 16th of March, we will redeem EUR 31.8 million, which is about 3/4 of our outstanding convertible bond. This will leave EUR 9.1 million of the bond outstanding at an attractive terms of a 1.25% interest rate maturing in March 2028. After this redemption, based on the December 2025 balance, this will leave us with EUR 153 million in pro forma cash. Secondly, we increased our funding flexibility through a new credit line. In December, our ANZ business signed a EUR 17 million revolving credit facility to efficiently manage our seasonal working capital needs. When combined with our undrawn funds from our facility with HSBC, we have EUR 23 million in additional available funding. This brings our total adjusted available liquidity position for year-end 2025 to EUR 176 million. This represents a strong financial foundation and significant headroom we have to support our next phase. We're also pleased to announce this morning the launch of a EUR 3 million share buyback program. The repurchased shares are expected to be used to partially meet our ongoing share-based employee remuneration scheme. Now let's look forward to our outlook, starting with guidance for 2026. For NMV, we expect a range of negative 4% to positive 4% on a constant currency basis. As at December 2025 closing effect rates, this translates to EUR 0.99 billion to EUR 1.07 billion. The global macroeconomic environment remains highly volatile, compounded by ongoing geopolitical tensions with distinct macroeconomic factors impacting demand across the 9 countries where we operate. Specifically, our 2 largest markets face near-term headwinds. In Australia, weak consumer sentiment is driven by recent interest rate increases and persistent inflation. Whilst in Brazil, higher interest rates remain and the upcoming general election and World Cup add additional volatility considerations. Our NMV guidance reflects softer current trading and half 1 expectations as well as different half 2 trajectories to account for these dynamics. For adjusted EBITDA, we expect EUR 15 million to EUR 25 million, again at closing December FX rates, building on the EUR 9 million we delivered in 2025. CapEx and leases are expected to be broadly in line with 2025 levels. For working capital, we expect a slightly higher inflow than we delivered in 2025. Our strategy to deliver profitable growth remains unchanged and is built on 3 key pillars. Firstly, business model evolution. We continue to create our assortment across retail and marketplace while scaling our brand partner offerings through our platform, including expanding Operations by, Fulfilled by and Marketing by GFG. This platform mix shift continues to support our evolving business profile towards a gross margin in excess of 47%, 45% Marketplace share and 5% Platform Services share, whilst maintaining broadly neutral working capital. Secondly, the customer flywheel. We are continuously refining our customer strategy with a clear focus on quality and profitability. This means disciplined engagement initiatives, stronger adoption of our loyalty programs and using AI across the entire customer journey. These actions will drive order frequency growth and improve customer economics, whilst keeping marketing investment broadly stable at 7% of NMV. Thirdly, cost efficiency. We will remain focused on cost and capital discipline. As we grow, we create operating leverage from our existing assets, particularly our fulfillment network without requiring significant incremental investment, which keeps CapEx and lease costs broadly stable. Technology and AI are embedded in our operations, helping us execute faster, improve customer experience and remain resilient through market volatility. In summary, applying these 3 pillars through our research phase has established a stronger financial foundation. We will continue to execute this strategy to deliver NMV growth, adjusted EBITDA margin expansion and normalized free cash flow breakeven. We will now open the call to your questions. [Operator Instructions] Operator: [Operator Instructions] Our first question is from Anne Critchlow from Berenberg. Anne Critchlow: I've got 3 to start us off, if that's okay. First of all, please, could you comment on how much weaker trading was in January and February compared to Q4? And then secondly, if you could just comment on the behavior of customers in the last few days. I think in the past, we've seen a sudden drop-off in sales around sort of big global crises and then a return to normal. But just wondering if you're seeing the same pattern. And then also thirdly, on the gross margin outlook, the 30 basis points improvement in Q4 was a bit lower than we've seen looking backwards. Just wondered if that's the sort of trajectory you're looking at perhaps over the year ahead and how quickly you might reach your 47% gross margin target? Helen Hickman: Anne, I'll take the first one, pass to Christoph for the second and then come back to you, Anne, on the gross margin question. So as I mentioned, we have seen some softer trading in January and February compared to where we were in Q4. We've seen sort of a declining customer sentiment in Brazil and Australia at the start of the year. And also, we've also had the classic timing impact of some key seasonal events. So whilst the Q4 as a whole, there will be less of an impact within the months, we've seen a shifting of Chinese New Year and Carnival in Brazil, which also has an impact on January and February to date. Christoph Barchewitz: Yes. And just over the last few days, I guess you're referencing, obviously, the headlines and events in the Middle East. We haven't seen any substantial deterioration beyond what Helen just said. And also the year-on-year comparisons are impacted by the timing. So there's a bit of difficulty in really parsing through day-by-day numbers but there is no material drop off or something that we have seen in the context of past events around COVID or other major moments. So that is not happening. Helen Hickman: And then moving on to gross margin. So yes, obviously, our Q4 year-on-year improvement was softer than the full year as a whole, so the full year stepping forward 1.5 percentage points. We very much continue to expect gross margin expansion into 2026, albeit probably slightly lighter than the full year that we saw in 2025. And also I sort of caution that, that won't necessarily be equal improvements every quarter. But again, our strategy continues and we expect to see those improvements driven by increased marketplace and platform services participation and also continued focus around our retail and our assortment. Operator: Our next question is from Russell Pointon from Edison. Russell Pointon: Congratulations on the results. Three questions, if that's okay. First of all, you referenced the active customer declines in LATAM in Q4 and that's due to competitor activity. Could you just talk a bit more about that? Was it focused across certain categories? Or was it fairly broad-based? And my second question is for LATAM and Southeast Asia, you're highlighting that you're near cash flow breakeven. I appreciate that you're expecting EBITDA to improve in those regions over time. But are there other levers that can help you to generate more positive free cash flow? I assume there's still something to go on inventory. And my third question is finally just in terms of the medium-term guidance, it isn't in the presentations deck. So can you just reconfirm that the medium-term targets of 6% EBITDA margin and breakeven free cash flow? And perhaps looking back versus 12 months ago, how are you tracking versus what you probably expected 12 months ago? Christoph Barchewitz: Yes. Thanks, Russell. Maybe I'll start here and then Helen can build on that. So on the active customer, general comment, I would say is, it's obviously important to recognize, #1, it's an LTM number. So it's always a bit of a lagging indicator. And we've obviously seen that when you look at, for example, the ANZ evolution over time. And as we're going through, for example, the turnaround in Southeast Asia, we would expect to have NMV lead the recovery before it comes fully through in the active customer, partially because of the LTM and partially because of our focus on higher-value customers and the very disciplined approach around customer activation, both new acquisition and reactivation. So from a LATAM perspective, it is a function of our approach and the competitive environment and us being disciplined in protecting both the gross margin and the marketing cost at a level that we think is ultimately the optimum from a profitable journey going forward. To answer the second part of your -- or second question around LATAM and Southeast Asia, yes, we're near normalized free cash flow breakeven, which I think clearly indicates we're not doing much on the CapEx side, as you can see from the group number but it's particularly in those 2 regions, it's really a modest investment into technology. We have obviously the leases that go into a normalized free cash flow and we've been releasing a degree of working capital, in particular, in Southeast Asia to counter the decline in the top line. And the working capital will not repeat in that way. We think there's a bit more to go in Southeast Asia on that. We're very optimized in LATAM, if not maybe a little bit light on the working capital. We will continue to look at all ways of optimizing cash flow but the big driver is really the EBITDA at this point and that's where we want to push in those 2 regions to move higher. And then maybe coming back to the medium-term guidance question around margin. We still believe that we need somewhere around that 5%, 6% or so level of adjusted EBITDA margin. But I think we've chosen to kind of look at the building blocks slightly differently and really focus on the absolute EBITDA, the stable leases, the stable CapEx and generally neutral working capital, although as Helen said, this year, we do expect a bit of cash inflow from the working capital side. So maybe the nuance here is less driving this off the percentage margin and really more looking at the absolute building blocks into moving towards cash flow -- normalized free cash flow breakeven. Hope that helps. Operator: [Operator Instructions] And we have a follow-up question from Anne Critchlow from Berenberg. Anne Critchlow: So I've got 3 follow-ups, if that's all right. And firstly and what steps did you take to focus on higher-value customers? I'm just wondering what that looks like in practical terms. And then secondly, just an update on your AI strategy and the extent to which you're allowing bots on to your site and maybe supporting them to find information. I'd also be really interested to hear your thoughts on how marketplaces can remain relevant in an AI world, lots of discussion around that topic recently. And then finally, just on Southeast Asia. Just wondering what sort of time frame you're thinking about to reach profitability? Christoph Barchewitz: So I'll take the first 2 and then let Helen answer the SEA profitability question. So on the higher-value customers, what it really means is, like every business, we have a very broad range of customer base from people who shop with us literally every other week, very high frequency, very high loyalty, buy both full price and discounted during campaigns and have been with us for many, many years. We're very focused on retaining those customers and giving them value at every part of the journey. And the Front Row program in Australia is a way of doing that in a very tangible way. We have our ZALORA VIP program in Southeast Asia. We're working through a number of initiatives in LATAM around this as well. So this is really focusing on, let's say, the top 25% of the customer base where most of the value comes from in NMV but more importantly, a very, very large share of our profit is really generated. So that's one end of the initiatives. And the other end of the initiatives is to really look at the customers that are not profitable for us and within that to identify how we can either move them into a profitable position and levers there are around shipping fees, they're around the marketing channels that we use. They're around how we trigger conversion from first-time buyers to second and third purchase because we know that once we have 3 purchases, our loyalty forecast is very, very strong. And so it is really both ends of the distribution, if you want, where we're applying. And I think what we're not saying here is we're only going to focus on higher-value customers. We recognize there will always be a distribution but we're trying to tilt the distribution upwards. And as you can see, for example, from the gross margin per active customer improvement of 14%, this is also about moving those numbers forward. So there's a marketing side to this and a marketing efficiency side to this whole strategy but there's also a gross margin per active customer element to this and making sure that, in particular, our discounts are targeted at customers that are loyal or can become loyal versus just churning through and taking advantage of a deeply discounted product but are not actually staying on the platform. So I hope that gives you a bit of color around our customer strategy. The AI topic is definitely very, very high up on the agenda. Our strategy so far is to make sure that our visibility across all of the AI players is strong. We're digitally native. We have 15 years of history of optimizing for that visibility. We have a very large assortment. We have a very well-known brand. And in all of the searches that you can do on those platforms, we come up quite well when people are looking for fashion products, categories, specific trends, those types of things, we are doing already quite well but we're continuing to focus on that and making sure that we're ready for an increase in the traffic coming from those players. So far, this is a very low single-digit percentage across all of our markets. So we're still very early in actually seeing a change in traffic there in our category. How are we addressing the question around the role of platforms in an AI world? I think we generally believe that we are an AI winner, not an AI loser. And obviously, there's a lot of debate in the investor community around that. But we see ourselves as an AI winner. Why is that? #1, because we're digitally native and technology enabled. And so we have a 15-year history of adapting to technology, deploying new technology for the benefit of our brand partners and customers. And we are doing that currently. We've been doing that over the last couple of years. So this is our natural, let's say, playing field. #2, we think that we have always seen players up the funnel that are playing a role in customers coming to our platform. And frankly, this was a fairly concentrated universe of basically 2, 3 companies driving this in all of our markets. So to some degree, more competition in that, let's say, discovery layer is actually, we think, not a bad thing. And we will -- we are looking very actively at both deeper integration and deeper partnering with those players but also where we want to restrict and make sure that we protect our customer base, our organic traffic, those types of things. It's an evolving topic. We are all over it and very, very focused on it because it is a critical driver of the future. In the end, we're in fashion, which we think is a not purely transactional category but we're browsing, discovery, inspiration, entertainment plays an important role. And we have a very large physical component to delivering to the customer. And that side, I think, is very far away from being disrupted by any LLMs or other AI players. And so that side of building the assortment and then making it available with fast delivery, with easy returns, with a trusted player is something that we believe is very important. But just to be clear, we [ believe ] both the discovery funnel up to the checkout and the post-checkout experience is something that we will continue to own and benefit from the adoption of AI by our customers but also throughout our business. Helen, you want to cover the SEA question? Helen Hickman: Yes. Thanks, Christoph. And in your question, you asked when we think SEA will become profitable. So on an adjusted EBITDA basis, SEA turned profitable this year. So it stepped forward close to EUR 5.5 million year-on-year despite the full year NMV decline of 15%. So that's sort of a two-pronged approach around gross margin accretion and then also a disciplined focus around cost. We very much go into 2026 with that same approach, focusing around how we improve our gross margin within the region, also maintain a strong focus around cost discipline whilst we then work very much to turn the rate of decline in the region and to slow that and to ultimately move to growth within the region. Hopefully, that helps. Anne Critchlow: That does. And sorry, a quick follow-up on that. Could you comment also on free cash flow outlook for Southeast Asia? Helen Hickman: Yes. So like all of our regions, our focus very much is to continue to improve their cash position predominantly through improved sustainable profit. So the way Christoph, I think described to an earlier question with the overall structure, it's very much focused around how we improve profit whilst we maintain a disciplined level around CapEx, leases and a slightly favorable working capital position. SEA fits very much in that same framework as we see the evolution of the group. Operator: It appears there are currently no further questions over the phone. With this, I would like to hand over for any webcast questions. Unknown Executive: So we have a few questions about SEA, specifically, at what point do you expect the SEA top line to stabilize? And what is the competitive strategy against intensifying regional players as well as when do you expect the decline in customer numbers to turn around? So we'll start there. Christoph Barchewitz: Yes. So it's obviously hard to predict the timing. But I think from a NMV stabilization, we're looking at it sequentially. As you heard earlier, we have improved from the minus 15% in Q3 to the minus 10% in Q4 and that was clean in terms of the like-for-likes, in terms of the phasing. We now have obviously Q1 in which we have quite a few changes, like Helen mentioned around the real and the Chinese New Year seasonality. And so there's a bit of differences there but we are looking at it really from that perspective. We're planning conservatively for the year to make sure that we are not overstocked. But we do think that we are moving gradually towards a positive territory but that's definitely still a few quarters away given that we're coming from minus 10% in Q4. The active customer number will be lagging and it's also impacted by us focusing on the higher-value customers. So what we would expect is that you see improvements in NMV first and then the active customers kind of following that eventually but instead really driving order frequency and average order value as a way of returning to NMV growth. Competitive strategy is very much focused on our assortment differentiation. So the most relevant brands, driving exclusivity within the brands, so having access to segmented product, brands that are only available on our platform and the dot-com. We also have obviously differentiated experience on the app, especially relative to the general merchandise platforms, which are the main online competitors. And our overall customer engagement is obviously very fashion-centric. The Got You Looking campaign is really stressing that point of differentiation by really being about fashion, style in all aspects of life and about the emotional part of our product category, not focused on price or delivery promise or those types of more hygiene factors that's really dialing up the fashion credibility as a platform and that's a big part of our turnaround strategy here. Unknown Executive: Next, we have a few questions on costs. One for marketing. How much of your net cash position will be reinvested into marketing to reverse the declining trend in active customers? Overall, where do you expect to see cost reductions over the next year? And then also, could you address central costs? Do you expect this to stay flat? Or is there a specific plan to scale that down? And finally, on inventory, where do you expect to see these levels overall, those are the cost areas to cover? Helen Hickman: Okay. Thank you. So let's start with marketing. So we expect to see our marketing percentage of NMV to stay broadly stable at around 7%, which is a trend that we've seen for the past few years. Our focus very much is in investing in marketing with regards focusing on loyalty and profitable -- and attracting our profitable customer base. I think the second question was more about our general overall cost focus and we are expecting to see cost savings into 2026. The answer to that is very much yes, actually broadly sort of an initiatives level. So proactive things that we are doing at sort of at a similar level to that, that we've seen in 2025. Areas of focus continue to be fulfillment, which is a large cost base but we feel there's more efficiencies within the overall fulfillment network. We continue to optimize and streamline our corporate organizational structure. And also, obviously, activities that we implemented towards the back end of 2025 also flow through into an annualization benefit and we'll see the benefit of that coming into 2026. I think there was a specific question with regards our central costs, which are at an adjusted EBITDA level, about EUR 22 million. These consist of both corporate and admin costs, so people and non-people fees but also include our central tech teams of which the majority of the work and focus is supporting our regional platforms. So whilst it's included within our other segments, it's worth noting that they're purely for the benefit of the regional operations. We've seen these costs come down by about 20 -- 10%, sorry, year-on-year and over a 2-year basis, closer to 20%. So the same rigor around organizational structure and nonpeople cost review has been applied to the central costs as it has been, as you'd expect in our regional businesses. And then lastly, on inventory. So we've seen significant declines in inventory over the past 3 years. We expect that very much to stabilize into the future, especially as we then start to build the top line. So we will have to invest in inventory to build and rebuild an retail NMV. However, our focus very much is around efficient assortment. So how we manage the retail and marketplace mix, how we ensure that we've seen improved turns on our inventory and how we maintain that. And also how we keep our aged inventory at levels that we feel comfortable because, again, we've significantly reduced the proportion of our aged inventory over the last couple of years. Unknown Executive: The next question we have is, you say you can double NMV without material additional investment in infrastructure. What does that imply for incremental EBITDA margins? And is that the basis for your medium-term margin ambition? Christoph Barchewitz: Yes. So this is definitely one of the key opportunities. I think for anyone who's been following us for a longer time, we've been very clear that we have significant capacity in our infrastructure, especially in LATAM and in Southeast Asia, which we're obviously trying to leverage through growing the top line but also through shifting more to Fulfilled by and in Southeast Asia services for brand partners and sales that are not on our platform. We do expect that when -- if you were to get to the scale that is mentioned in this question, we would be definitely materially more profitable than we are today because the incremental flow-through from that NMV and that volume would help our fixed cost coverage in fulfillment but also in other aspects of the business quite materially. But equally, as you know from our guidance and the building blocks we've talked about, we are not saying that we need a couple of hundred million euro of incremental NMV to achieve normalized free cash flow. So just want to be very clear about that. We think we're on a good journey. Obviously, if we can get to the upper end of our guidance range this year, we would be closer to that. If we're at the lower end on top line and adjusted EBITDA, we'd be a bit further away from that. So I hope that gives you a bit of color of how we think about the path here. Unknown Executive: Next, we have a few questions around 2026 guidance, specifically on ANZ, is customer growth accelerating? And is that underpinning the top end of your guidance range? And then can you elaborate on the different H2 dynamics regarding NMV growth? If January and February are starting somewhat slower, should we be interpreting this as a warning sign for the year? Helen Hickman: Thank you. So let's firstly touch on Australia. So yes, we're expecting a continued positive trend in our Australia active customers and this being off the back of our focus around customer engagement. So the continued Got You Looking campaign and then the more recently launched loyalty program, Front Row, that was launched back end of the quarter 4 and that gaining momentum into 2026. With regards guidance and half 2, so our 2 largest markets do face near-term headwinds. So as I mentioned, in Australia, we're seeing weaker customer -- consumer sentiment that was driven by a recent interest rate increase and we're seeing persistent inflation. And in Brazil, we're seeing -- continue to see high interest rates and also is the uncertainty in the middle to back end of the year of the upcoming general election in Brazil. We've also got a general election in Colombia in May and the World Cup, which adds additional volatility. I would say that -- those scenarios are obviously built into our guidance of today of minus 4% to plus 4%. And obviously, it depends on both those big markets but also our rate of reduction or NMV decline and then this -- the rate of that turnaround in SEA also plays into the ability for us to achieve within that range or the pace with which we have achieved in that range. Unknown Executive: We have no further questions on the webcast. So thank you all for joining today. If you have any further questions, please reach out to the Investor Relations team directly.
Operator: Thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the WEBTOON Entertainment Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Soohwan Kim, Vice President of Investor Relations. Mr. Kim, please go ahead. Soohwan Kim: Good afternoon, and thank you for joining us. As a reminder, our remarks today will include forward-looking statements, including those regarding our future plans, objectives and expected performance and our guidance for the next quarter. Actual results may vary materially from today's statements. Information concerning risks, uncertainties and other factors that could cause these results to differ is included in our SEC filings, including those stated in the Risk Factors section of our filings with the SEC. These forward-looking statements represent our outlook only as of date of this call. We undertake no obligation to revise or update any forward-looking statements. Additionally, the matters we discuss today include both GAAP and non-GAAP financial measures. Reconciliation of any non-GAAP financial measures to the most directly comparable GAAP measures are set forth in our earnings press release. Non-GAAP financial measures should be considered in addition to and not a substitute for GAAP measures. Joining me today on the call are Junkoo Kim, Founder and CEO; David Lee, CFO and COO; and Yongsoo Kim, Chief Strategy Officer. With that, I will now turn the call over to our Founder and CEO, Junkoo Kim. Junkoo Kim: Thank you, everyone, for joining us today. I will make a few brief comments on our performance, and then David will provide more details on our results and outlook. For my first thought on the year, please refer to the shareholder letter posted on our Investor Relations website. We reported solid year 2025 results with revenue growth of 3.9% on a constant currency basis and adjusted EBITDA of over $19 million. We are pleased to see MPU growth turn positive in the first quarter, driven by growth in Korea and in Rest of World. We made significant progress advancing our personalization tools throughout the year. As we have become more proficient with AI, we are now making increasingly personalized content recommendations that are unique to our users. In Korea, where we have seen the most progress, we also increased the content diversity at the same time. We are seeing MPU growth as users need more titles and episodes as they get more relevant recommendations. We believe that we can take the learning from Korea and apply them to other regions. We are excited that following the end of Q4 on January 8, 2026, the Walt Disney Company and WEBTOON Entertainment announced that we have completed the previous announced strategic agreement, including both the development of an all new digital comics platform as well as Disney's approximately 2% equity investment in WEBTOON Entertainment. We are targeting a 2026 launch for this new platform. We have already launched a total of 12 format titles on WEBTOON's Mobile vertical-scroll format following the initial collaboration announcement with Disney in August 2025. These have included stories from Amazing Spider-Man, Star Wars and Avengers, and we look forward to introducing an original series later this year. This is a powerful next step for our growing global business and a strong foundation for even greater collaboration with Disney in the year ahead. Finally, we continue to advance our flywheel with IP adaptations, which further keep users engaged with our platform. And I would like to highlight just a few examples here. Animation continues to be a major initiative for us, and we are excited to announce that Amazon MGM Studio greenlit Lore Olympus to be developed into a new animated series from WEBTOON Productions and The Jim Henson company. In Japan, anime is a particular focus, and I'm happy to announce that we reached our target of 20 new anime projects in 2025. We are excited to have launched another anime series on Crunchyroll with DARK MOON: The BLOOD ALTAR this January. We are also seeing success with live action as Netflix announced that viral hit will be adapted into a Japanese live action series following the success of our anime adaptation in 2024. Overall, we believe these financial and operational results demonstrate that our flywheel and strategy are working. Our ecosystem of content, creators and users continues to drive the success of our business. That said, we acknowledge that we have an opportunity to accelerate our flywheel and realize our growth potential faster. We remain laser-focused on deepening engagement across our platform to foster a stronger, more vibrant fandom and look forward to sharing more about our plans in the quarters ahead. With that, I will now turn the call over to David. David, please go ahead. David Lee: Thank you, JK, and thank you, everyone, for joining us. For the fourth quarter, we reported revenue of $330.7 million, in line with our expectations. Our reported revenue was down 4.1% on a constant currency basis and 6.3% on a reported basis as paid content growth was more than offset by declines in advertising and IP adaptations. For the full year 2025, we reported revenue of $1.4 billion. Our reported revenue grew 3.9% on a constant currency basis, driven by constant currency growth in all revenue streams and grew 2.5% on a reported basis. We expanded gross margin by 100 basis points to 24.3% in the fourth quarter as we lapped a number of discrete items that were recategorized from marketing to cost of revenue during the year. We believe we can expand gross margin over time as we execute on our cross-border content distribution strategies and grow higher-margin businesses like advertising. Net loss was $336.5 million in the quarter compared to a loss of $102.6 million in the year prior, driven primarily by goodwill impairments. Net loss for the full year was $373.4 million compared to a loss of $152.9 million in the year prior. We exercised cost discipline through the quarter, leveraging our G&A and marketing expenses to deliver adjusted EBITDA growth. Adjusted EBITDA was $0.6 million in the quarter, exceeding the high end of guidance. This compares to a negative adjusted EBITDA of $3.5 million in the same quarter of 2024. For the full year, adjusted EBITDA was $19.4 million compared to an adjusted EBITDA of $68 million in the year prior. As a result, our adjusted EPS for the quarter was $0.00 compared to a negative adjusted EPS of $0.03 in the prior year and $0.15 for the full year compared to $0.57 in the prior year. Turning to operational health. We continue to focus on driving users to our app as well as converting them to paying users. While fourth quarter app MAU and webcomic app MAU declined 6.5% and 2.6%, respectively, year-over-year, we were pleased to have driven MPU growth of 0.7%, evidence that our personalized content recommendations are working. Importantly, our English platform webcomic app MAU was up 2.2% year-over-year. For the full year, MAU of 7.5 million declined 2.9% year-over-year. While app MAU declined 4.3%, webcomic app MAU grew 1.9% and English platform webcomic app MAU was up 12.8% for the full year. Global MAU declined 1.7% in the quarter. We estimate that global MAU benefited from roughly a 10 percentage point increase in Wattpad activity resulting from automated web traffic in certain noncore markets. While we saw a small increase starting in late Q3 2025, the web traffic peaked in Q4 2025, and we are seeing reduced impact in Q1 2026. Notably, this had no impact on app MAU and is not expected to have a material impact on our business. For the full year, total MAU of $157 million declined 7.1%. Now I'd like to provide an update on our revenue streams at a consolidated level. Starting with paid content. In the quarter, we posted 0.4% revenue growth on a constant currency basis. For the full year, we posted 1.5% revenue growth on a constant currency basis. While ARPU declined 0.3% in the quarter on a constant currency basis, we were pleased to see 4.6% growth for the full year. We believe we can continue to drive MPU growth as we refine our AI-driven personalized recommendation model. Advertising posted a decline of 10.3% in the fourth quarter on a constant currency basis year-over-year. In Korea, we saw similar declines from the same e-commerce advertising partners last quarter, but we experienced growth from other partners. Ad revenue from NAVER was relatively consistent with the fourth quarter of the prior year. For the full year, we posted 0.4% advertising growth on a constant currency basis. Finally, our IP adaptation business saw revenue decline 29.7% year-over-year on a constant currency basis in Q4. As we've shared previously, revenue recognition for IP adaptations can be volatile from quarter-to-quarter, depending on the timing of key milestones for various projects. For the full year, IP adaptation revenue was up 35.5% on a constant currency basis. We had a strong year of IP adaptations in Korea, particularly driven by the theatrical success of My Daughter Is a Zombie and The Trauma Code on Netflix. Now I'd like to look at our results in the context of core geographies. In Korea, during the fourth quarter, our revenue declined 9.1% year-over-year on a constant currency basis as growth in paid content was more than offset by a decline in advertising and IP out of patients. For the full year, we posted revenue growth of 5.9% on a constant currency basis. During the fourth quarter, while MAU of $24.3 million decreased 10.8%, we were pleased to see MPU of 3.7 million grow 3.3% and a paying ratio of 15.1%, reflecting an increase of 207 basis points compared to the fourth quarter of 2024. Korea ARPU on a constant currency basis was up 0.9% compared to the fourth quarter of 2024. For the full year, Korea MAU was $24 million, decreasing 11.1% year-over-year, while Korea MPU was $3.6 million, declining 5.3% year-over-year. Full year paying ratio was 14.8%, up 91 basis points year-over-year. Full year Korea ARPU grew 4.7% to $8.2 million on a constant currency basis. Moving to Japan. For the quarter, Japan revenue declined 1.0% on a constant currency basis. Japan saw a single-digit decline in paid content, offset by a single-digit growth in advertising and IP adaptations, all on a constant currency basis. For the full year, we posted 3.9% revenue growth on a constant currency basis. LINE Manga continued to be the #1 overall app for revenue, including mobile games for the quarter as well as the full year according to data.ai. Compared to Q4 2024, Japan's MAU of 22.2 million increased 0.5%. MPU of $2.1 million declined 6.9% and paying ratio of 9.5% was down 76 basis points year-over-year. Fourth quarter Japan ARPU of $23.30 grew 5.7% year-over-year on a constant currency basis. For the full year, Japan MAU increased 4.9% year-over-year to $23 million, while Japan MPU of 2.2 million declined 0.1% year-over-year. Full year paying ratio of 9.7% was down 49 basis points year-over-year and ARPU grew 3.4% on a constant currency basis. We expect to complete our infrastructure investments by the end of Q1 and redeploy engineering resources to support improvement across our personalized recommendation tools. We believe more personalized AI recommendations may drive MPU growth in Japan as we've done in Korea. In Rest of World, we saw revenue growth of 0.8% year-over-year on a constant currency basis in the quarter, driven by single-digit growth in paid content and triple-digit growth in IP adaptations, partially offset by a double-digit decline in advertising. For the full year, we posted a 2.1% revenue decline on a constant currency basis. Fourth quarter MAU was flat year-over-year after including the 10% growth impact in Wattpad activity resulting from automated web traffic. MPU grew 5.7% and paying ratio of 1.5% increased 8 basis points compared to the fourth quarter of last year. Fourth quarter Rest of World ARPU of $6.50 declined 5.1% year-over-year on a reported and a constant currency basis. For the full year, Rest of World MAU of $110 million decreased 8.4% year-over-year, while MPU of $1.7 million declined 1.5% year-over-year. Full year paying ratio of 1.6% was up 11 basis points year-over-year. Full year Rest of World ARPU increased 0.5% to $6.60 on a reported and constant currency basis. Turning to profitability. Gross profit for the quarter was $80.5 million compared to $82.3 million in the prior year. This resulted in a gross margin of 24.3%, which expanded 100 basis points compared to the prior year. Full year gross profit was $322.2 million compared to $339.1 million in the prior year, translating to a gross margin of 23.3%, which decreased 180 basis points compared to the prior year. Adjusted EBITDA for the quarter was $0.6 million compared to a loss of $3.5 million in the prior year, and full year adjusted EBITDA was $19.4 million compared to an adjusted EBITDA of $68 million in the prior year. On the cost side, Total G&A expenses for the quarter were $65.4 million compared to $77.8 million in the prior year quarter as we exercised cost discipline. Total general and administrative expenses for the full year were $259.5 million compared to $332 million in the year prior. Interest income in the quarter was $4.5 million compared to $6.0 million in the prior year, and other loss was $9.2 million compared to $6.2 million in the prior year period. For the full year, interest income was $19.2 million compared to $15.8 million in the prior year, and other loss was $9.8 million compared to other income of $6.5 million in the prior year. We had an income tax benefit of $18.4 million in the quarter compared to an income tax expense of $4.9 million in the prior year. Income tax benefit for the full year was $16 million compared to tax expense of $3.6 million in the prior year. Depreciation and amortization was $10.6 million in the fourth quarter compared to $12.1 million in the prior year. Depreciation and amortization for the full year was $35.4 million compared to $40.1 million in the prior year. Net loss of $336.5 million was driven by impairment losses on goodwill, the majority of which was attributable to Wattpad. This compares to a net loss of $102.6 million in the prior year quarter. Net loss for the full year was $373.4 million compared to net loss of $152.9 million last year. As a result, fourth quarter GAAP loss per share was $2.36 compared to a loss per share of $0.72 in the prior year period, and full year loss per share was $2.66 compared to a loss per share of $1.21 in the prior year. Adjusted EPS was $0.00 in the quarter compared to a negative adjusted EPS of $0.03 in the prior year period, and full year adjusted EPS was $0.15 compared to $0.57 in the year prior. Our balance sheet remains strong with a cash balance of $582 million and another $11 million of short-term deposits included in other current assets at year-end. We generated $11.2 million in cash flow from operations during the year. We have a capital-efficient business model, and we believe we have the financial strength and flexibility to invest for the long term. Before I wrap up, I'd like to spend a few moments discussing our first quarter outlook. For the first quarter of 2026, we expect to deliver revenue growth in the range of negative 1.5% to positive 1.5% on a constant currency basis. This represents revenue in the range of $317 million to $327 million based on current FX rates. We anticipate first quarter adjusted EBITDA in the range of $0 million to $5 million, representing an adjusted EBITDA margin in the range of 0% to 1.5%. We continue to believe in the fundamental health of our long-term strategy, underpinned by our powerful flywheel of creators, content and users. As we've shared today, we're making numerous investments across all 3 of these areas that we believe will support a return to double-digit year-over-year growth by the end of the year. In closing, I'm pleased with the progress we made in 2025. We're encouraged by the positive signs we see in key metrics like MPU, and we look forward to executing our strategy in 2026. With that, I'd like to turn it back to our operator to begin the Q&A session. Operator: [Operator Instructions] Our first question comes from the line of Mark Mahaney with Evercore. Mark Stephen Mahaney: Okay. Could I ask 2 questions, please? First, any more details on this launch coming up, the 2026 launch with Disney, the all-new digital comics platform? Just talk about what needs to be done in order to put that together, marketing plans, product plans? How far along is this platform to being launched? And then secondly, David, on this return to double-digit year-over-year growth by the end of the year. If that happens, could you just maybe give a little bit more color on that, either by region or by revenue segment? Like what are the factors most likely? Is it recovery in the rest of world market? Is it Japan or Korea? Or is it paid content? What are the factors most likely to get to that return to double-digit year-over-year growth by the end of the year? David Lee: Thanks, Mark. This is David Lee, and those are 2 good questions. Let me take them in turn. First, with regard to Disney, it has been some time since we last spoke to you. So I wanted to be complete. Since we last spoke, first, remember that Disney closed their investment in us on January 8 of this year, purchasing 2.7 million shares for approximately a purchase price of $32.8 million. It's also important that we've been hard at work with them. You'll note that we have launched already with their collaboration 12 reformatted titles, including 7 since the end of Q3. And while I don't think I need to list them all as you'll find them in the materials that we provided, I'm particularly impressed by the strength of those stories, stories that include Predator and Star Wars and even The Unbeatable Squirrel Girl, et cetera. But to your broader question, we've always talked about 2 elements: one, the ability to tell original stories that we have demonstrated success with in the past, new to the world stories. And in our disclosure, we noted we are committed to doing so at least one this 2026 period. I think that's important because I think new-to-the-world originals has powered a lot of the creator success as well as the consumer delight on our platform. The second is we've committed to launching the new consumer platform. Remember, we intend to build and operate completely this new platform in collaboration with Disney. We committed to launching that by the end of the year. You'll note that while I mentioned double-digit growth in revenue by the end of the year, I did not note any disclosed additional investment or burden on the company to achieve these outcomes with Disney. Let me turn to your second question because I think it's important. We recognize that in the guidance we provided, which is flat growth for Q1, that there may be a misconception. We're very confident in our platform. Our flywheel is healthy. We really will deliver double-digit growth by the end of the year, and it comes in 3 parts. First, you will see a return to the strong growth we have demonstrated in paid content, the core of our business. You'll note that we mentioned that in Japan, which has become a very large business for us, where we're still #1 in revenue when you include all consumer apps, including mobile games for 3 quarters running, that we had to take time to invest in infrastructure. While we complete that, we noted by the end of this quarter, Q1. And as a result, you could expect that will drive paid content growth towards the end of the year as one example. The other is advertising. Korea is our most mature business in advertising, and we've been clear now in the last 2 quarterly releases on the impact of a single discrete advertiser and e-commerce provider. We also talk about the health broadly in our ability to grow our legacy businesses and advertising in Korea and the upside future opportunity in Rest of World. This will also contribute to double-digit growth. And then finally, crossover IP, JK was very clear about some very compelling examples. There will be more to come. While this is only 8% of our total revenue in the reported quarter of Q4, the ability strategically for next-generation consumers, for example, in the U.S., where Yongsoo Kim has led growth in English web comic MAU and now you're seeing in MPU for them to see on the big screen or on the small screen, stories that they can discover not just on our platform. And I'll let the results come through the course of the year, but I think this is an important component of our growth by Q4 of 2026 as well. Yongsoo Kim: Mark, this is Yong Kim, the CSO of WEBTOON. Regarding the Disney app launch within this year, the most critical and time-intensive component is the development of the new product. Disney's best content library is already in place. The key is building a new app that delivers the best possible user experience around discovery and recommendation so that this library can be presented to the user in the most compelling way. Operator: Our next question comes from the line of Eric Sheridan with Goldman Sachs. Unknown Analyst: This is [ Julie ] on for Eric. Two, if I could. You talked a little bit about the progress made to your recommendation algorithm in Korea as being a driver toward improved user engagement. Could you talk and expand a little bit around the key learnings within that market and how we should be thinking about the application of various recommendation algorithms to other users or within other markets more broadly? And then on the creator side, you talked a little bit about content diversification coming from the rest of the world. Any updates on how we should be thinking about competitive dynamics for attracting and retaining creators, specifically within the English language markets? David Lee: Thanks, Julie. Good questions. Let me address the first. We are a tech company at heart. And with regard to our business in Korea, we're very pleased to see that in our original business, you're still seeing strong performance. There, metrics like MPU are very important, where we have approximately 50% household penetration in a market where we're an everyday household name, being able to see, as you saw, the total company delivered 0.7% increase in paying users, but Korea specifically in the breakout you saw delivered plus 3%. Because we have very strong awareness in Korea, product innovation and content presentation is an ongoing constant endeavor for us as a tech company. And this AI-driven and machine learning-driven personalization engine is particularly relevant for our most mature market because there's habit formation already in place. So we're pleased with that. And frankly, I think you're going to see more of it outside of just our original foundation market. In fact, we even disclosed that as we've completed our infrastructure project in Japan, we specifically tried to be clear in our script that you will see machine learning-based recommendation engines and CRM that we think will help drive and return the Japan business to the historic growth that you've seen in the past. You'll hear more about our intent to drive global innovation from one market across all markets, but AI is a proven tactic for us, and you'll see more of it as we roll out more results this year. Your second question was with regard to creator content diversification. And I think your question was particularly focused on the market here in the U.S. or what we call the English-speaking markets. So first, I just want to draw attention to the fact that we've intentionally kept our investments in marketing and in product innovation in what we call Rest of World, our English webcomic app MAU growth, which grew 2.2% and prior grew double digits, is now being accompanied with NPU growth. We didn't break it out for you at that level of disclosure, but I wanted to call it out qualitatively as I think it's a meaningful milestone for the company. In order to create a healthy opportunity for creators, it starts with creating a growing and healthy base of paying users, which I think you're seeing today. And then I'd point you to the ongoing comments by JK in his script, but also the shareholder letter, a number of the exciting crossover IP projects that we've talked about. We talked about Chasing Red, starring Riverdale star Madalaine Petsch. We talked about Lore Olympus being greenlit by Amazon. These represent not just great opportunities for us and shareholders, but this represent proof points for that creator who is an amateur, of the 24 million, who wants to be published globally and have a voice. I think there'll be more to come on this, but I think both the platform as well as the off-platform opportunities we'll pursue are reasons why our creator ecosystem remains strong. We are not seeing any pressure with regard to the strength of that part of our flywheel. We think it continues to be foundational and a point of leverage for us. Yongsoo Kim: Regarding the second question, in the U.S., we continue to focus on strengthening our English original content development, not only by bringing proven hits from Korea and Japan, but also developing strong original title locally. Following the success of Lore Olympus, we have seen promising momentum from titles such as Starfish late last year, Chip King earlier this year. Across all markets, including English market, we will continue to carefully manage the balance between globally successful IP and locally developed content. Operator: Our next question comes from the line of Benjamin Black with Deutsche Bank. Benjamin Black: First, a follow-up on the Disney platform. Can you maybe just dig in a little bit to the economics a little bit? How should we be thinking about the margin profile of the new joint platform compared to the core WEBTOON app? And then secondly, maybe a bigger picture question. If we sort of zoom out and look at the broader advertising opportunity for your platform, maybe speak to us a little bit about the investments that are still required to really sort of address that potential opportunity going forward. David Lee: Great. This is David, and I'll start, but Yongsoo will jump in shortly. With regard to what we've disclosed in the past, and here, I'm not going to speak on behalf of Disney. I'm going to focus more on our experience at WEBTOON. Remember, Benjamin, we have partnered with great companies in the past. And we've talked about the economics, the unit economics of when we have our own original, as Yongsoo just mentioned, or when we have a wonderful what we call reformatted title from somebody else's universal platform. When you take out the cost to produce great hits, the ongoing cost structure and margin from a great piece of content, whether they are created by us as an original or by our creators or from outside our platform, we've never disclosed a meaningful margin drainage or impact. And I think from that, you can infer that we're very excited about collaborating not just with Disney, but with anyone who can see us as the destination for this growth we're seeing amongst Gen Z and Gen Alpha here in the U.S. I don't want to go more into detail on Disney. Yongsoo can provide some color on the strength of that relationship. Let me briefly cover ads. When you look at our ads business, we are very careful to maintain the long-term proposition for Rest of World as we're quite early. And that includes actions we've taken to recently focus, for example, the Wattpad effort separate from our broader WEBTOON opportunity in the U.S. This is invest in the fundamental stage for Wattpad. And so I would love to be able to give you more milestones of progress, but we're just not yet there. We're much more focused on growing the paid content business in the U.S. with Global WEBTOON and putting in place the framework for advertising growth second. Let me turn to Yongsoo for any comments you may have. Yongsoo Kim: Yes. Regarding the new platform, as the operator of the new platform, WEBTOON will recognize all revenue and cost. With respect to the content and brand licensing fee, the structure has been determined in a manner that is totally consistent with our existing business. Operator: Our next question comes from the line of Doug Anmuth with JPMorgan. Dae Lee: This is Dae on for Doug. I have 2 as well. First one on your expectations to exit the year growing double digit. I appreciate the comment you gave on paid content versus advertising and by regions. But could you break that down a little bit more? And tell us if the excitement is more around what you're seeing on the MPU side? Or is it more on the monetization side? Because in 2025, the content growth appears to have been driven by ARPU growth. So just curious like how you guys are thinking about the drivers of the double-digit percent growth across those 2? And then secondly, I appreciate the IP adaptation revenue is milestone driven and lumpy quarter-over-quarter. But curious if you can share like how your 2026 pipeline look compared to 2025? And like how much of that or how much contribution from IP addition is baked into your double-digit percent growth exiting the year? David Lee: Good question, Dave. Thanks for them. First, with regard to the double-digit growth we expect by the end of 2026, I think I was careful to make sure that you understood that, that would be driven by both paid content and an improvement in our advertising business trends as well. When one looks at paid content, as you know, the different flywheels we have in Korea, Japan and rest of world are in different states. So let me have you recall what we've described in the past as I think they're important. In Korea, where we have a strong penetration and awareness, MPU and ARPU is critically important as product innovation that we just discussed, including innovations in AI as well as the rollout of content keep that market strong, and we're pleased with the strength of that market. In Japan, when one excludes the recent effort to create the infrastructure to persist in the growth we saw in the first half of 2025, that is a market where LINE Manga is the #1 app. And as you know, we've historically seen not just increase in ARPU, but also a fundamental increase in actual top-of-funnel metrics. So there, we're very early with arguably less than 20% household penetration in a market that is very accustomed to purchasing our digital format. So I would expect that in the mid- to long term, you should see Japan return to healthy growth, not just in ARPU, but also in more mid- and top-of-funnel metrics. And then in Rest of World, we are very early. It's our largest addressable market. We're pleased to have noted the MCU year-on-year growth disclosed in the quarter and the previously disclosed for the last 2 quarters growth in top-of-funnel web comic app MAU in English, but we have not yet committed to significant at-scale revenue growth as we are preparing that market given its potential size for mid- to long-term opportunity in revenue. With regard to advertising, as I mentioned, Korea represents one of our larger opportunities in advertising and a discrete reliance on one e-commerce provider accounted for some of the noise in the numbers in Q4 as disclosed. We believe we have a healthy business and a strong team in more mature markets, and we believe it's very early days for the growth in Rest of World. Japan, as we've described in advertising, has consistently been an area of strength for us, particularly in rewarded video, and I would expect us to return to that strength by the end of this year as well. With regard to the IP pipeline. First, despite the quarterly shifts that you hear us discussing, I want to review the fact that IP adaptation revenue for all of fiscal 2025 grew a whopping 35.5%. So this is a very healthy business, not measured in the swing between one quarter or the next, but zooming out more broadly as a lever point for us to create faster adoption. Qualitatively, I would say we are very pleased with our pipeline in 2026, but we are cautious about promising a specific quarterly impact from that pipeline as we all know that 1 quarter can shift when you are producing great IP hits. And turning it over to Yongsoo now for a comment. Yongsoo Kim: Regarding the end of year growth, the growth of our weapon platform business typically follows a pattern where MAU increased first, followed by MPU growth, which then drives revenue expansion. Last year, we shared updates on MAU growth for our English WEBTOON platform, and we are now seeing that momentum translate into MPU growth in the region with the MPU growth having resumed. In Japan, revenue growth was strong over the past 2 years, but MAU growth was somewhat stagnant. We believe we are now seeing the impact of that dynamic. In response, we are preparing initiatives aimed not only at driving revenue growth in Japan, but also at expanding the overall user base. We expect these efforts to begin delivering meaningful results in the second half of this year in Japan. Operator: Our next question comes from the line of Matthew Cost with Morgan Stanley. Matthew Cost: I guess on the 12 reformat titles of Disney content that are on the WEBTOON app, how is engagement with those titles going? Is it attracting new people? Is it driving new forms of engagement? I guess when you think about the goal of bringing the Disney content on to WEBTOON, what are your early learnings in terms of moving towards that goal from those titles that you put on the app? David Lee: Thank you, Matt. I appreciate the question. First, it is quite early going, candidly, in our collaboration with Disney. I think the pace that we're demonstrating is a reflection of just how large scale the opportunity set is for us in this area, this area, call it reformatted stories on our platform. So we're pleased to present the 12, including the 7 that we have recently announced since the end of Q3, but it's far too early for you to really have a meaningful sense on specific metrics. For us, I think this opportunity won't be measured in a quarter's performance. The collaboration with Disney was always intended for the long-term success of both enterprises, and we're very excited about that. So as Yongsoo mentioned, having an original this year and not just that, but being able to really build this consumer platform he mentioned right and launch it before the end of the year, these are the areas we're focused on versus on probably too early to give results on these important reformatted titles. Operator: Our next question comes from the line of Andrew Marok with Raymond James. Andrew Marok: Maybe one on advertising, if I could. As we're seeing kind of the broader advertising ecosystem take a shift toward more performance-oriented outcomes over brand-focused outcomes, I guess, how is that informing your investment road map, your product focus as you're building out your ad ecosystem? David Lee: Well, it's interesting. When you look at the business with regard to Korea, we have a long history of great products built by our team that are absolutely anticipating future trends around performance. And I'm not going to go through all of them, Andrew. We can do it in a follow-up meeting. But if you look at that business, we've set the pace in many ways for products that are very much tied to the publisher or the advertiser success on platform. I think rewarded video, but not just that. We talked to you about our off-platform deals with large e-commerce creators, one of which we just mentioned. When you look at our business in Japan and Rest of World, we're really just at the beginning stages of rolling out the infrastructure. You should anticipate in the Rest of World business here in the U.S. for us to have long-term success, but it will take us time to establish the direct ad sales force and to build for the North American market specifically, product offerings and advertising that are not just exported from our success in Japan and Korea. That's why we are very cautious about providing any short-term expectations for the business as we recognize we have to build for the market, and that will take us time. Operator: Thank you. Ladies and gentlemen, that concludes our question-and-answer session and today's conference call. We would like to thank you for your participation. You may now disconnect your lines. Have a pleasant day.
Steven Levin: All right. Good morning, everyone, and welcome to our 2025 results presentation. Before I start, we are all conscious with the very uncertain global political environment that we see, geopolitical environment. Across Quilter, our thoughts are with our colleagues and our clients in the Middle East right now. Let me get on to the results. I will start with a review of the year. Then I will cover our business highlights and talk through our flow performance. Mark will take us through the financials, and then I want to spend some time today talking about the growth outlook and the exciting opportunities that we see ahead. After that, we'll finish with Q&A as usual. I'm very pleased with our strategic and financial performance in 2025. We delivered another good year of strong profit growth from a very strong base in 2024. We saw excellent momentum in flows, taking market share in growing markets. Let me run through the highlights. Core net inflows were up a record -- to record GBP 9 billion, that's 75% higher than 2024. Our operating margin is at 30%, in line with our medium-term goal. Adjusted profit increased 6% to GBP 207 million that reflects higher revenues and good cost management, combined with increased investments. Earnings per share increased 4% to 11p and the Board has declared a dividend for the year of 6.3p, an increase of 7%. We've also announced the share buyback and a change in distribution policy, which Mark will cover later. Let's now drill down into the flows. This slide shows gross new business, outflows and net inflows for the last 2 years. New business flows on the left have continued to build momentum with sequential period-on-period improvement across both channels. Our flows in the middle temporarily picked up with a protracted speculation and uncertainty around the U.K. budget in November last year. But even so, we've seen consistent improvement in net flows on the right. And given the market share gains we achieved last year and the current level of net flows of around GBP 2 billion a quarter feels broadly sustainable. Our strong flows are no accident. It's the direct result of the strategic progress we've made. First, in distribution. We've delivered flows ahead of our targets. We've added to the number of advisers and adviser firms in our Quilter channel and we've increased their productivity. More than 100 advisers graduated from our academy, and they're now starting to build their books. In High Net Worth, we added investment managers and announced the acquisition of GillenMarkets in Ireland, building out our footprint there. Next, in propositions, our high-performing WealthSelect MPS is the largest in the market and is now on 6 third-party platforms. And early in the year, we launched smoothed funds with Standard Life. This is a unique product for clients nearing the accumulation or retirement. We've been working on our targeted support proposition, and I'll say more about this shortly. And in High Net Worth, we've added a private market proposition for those wanting alternative asset classes and a new decumulation offering for clients in retirement. In terms of becoming future fit, we've completed our simplification program, invested in our brand and progressed our advice transformation program. And we started rolling out AI productivity tools to advisers, as you will hear shortly. We've achieved a lot and we're doing it from a position of strength. We're already the U.K.'s largest single adviser platform and the fastest-growing of the large platforms. The vertical axis here shows gross flows of each platform in 2025. The horizontal axis is net flows as a percentage of opening assets and the size of the bubble is the total AuMA. We are clearly the largest and fastest growing. This gives us scale in a market where scale matters. Now what's especially gratifying is that we've been increasing flows onto our platform consistently month-on-month, year-on-year, as you can see here. The charts show cumulative monthly net flows with Quilter channel in green and the IFA channel in gray. As you can see, inflows onto the platform from the Quilter channel up 12% year-on-year, and net flows are around 18% of opening balances. Similarly, in the IFA channel, net inflows were up 92% year-on-year, and these are running at 9% of opening balances. The key to delivering results like this is providing a market-leading proposition to customers combined with excellent distribution, and that's been our focus over the last few years. Let's step back to 2020. Back then, we were only capturing around half the platform flows generated by Quilter Advisers. Following the successful migration to our new platform in 2021, we started focusing on adviser alignment and began reviewing the productivity of our adviser force and we streamlined where appropriate. As you can see on the top right, our adviser force is now smaller, more aligned and far more productive more than doubling the gross flows it generates onto our platform. In the IFA market, our focus since launch of our new platform was growing market share by deepening our share of wallet with existing relationships and winning new friends. And you can see the success of that in the black line in the bottom right, which combined with the improvement in total flows across the market has driven a trebling of gross flows over the period. There's also a slide in the appendix, which gives a helpful perspective of our performance against the market. So we've done well, and we've got real momentum, and we're continuing to invest where we see opportunity. There are 3 areas I'm focused on to drive our distribution even further. First, building the advice business of tomorrow. Our advice transformation program is giving advisers the tools to materially increase their productivity serving more customers and bringing in more new business. Quilter partner assets are also growing significantly, and these are assets that are both on our platform and in our solutions. Brand will also play an important role here. Second, on recruitment. We'll continue to add firms like the 6 we announced earlier this week, and the Quilter Academy will deliver a higher number of graduates this year. Our goal is for the Quilter Academy graduates to offset the natural attrition from adviser retirements so that all the recruitment into the advice business drives net adviser growth. Third, support. We'll continue to invest in the award-winning service and propositions which sit behind our platform and our solutions. This is key for our network and for the broader IFA community. Now let's turn to our Solutions business. We want to be recognized as the leading asset manager for advised flows. As you know, across the industry, we're seeing a move away from active management towards passive and blend solutions and a trend away from fund to funds towards MPS. That's reflected in what you see on the left. Our growth is biased towards our WealthSelect MPS as well as to passive and blend solutions with outflows in Cirillium Active. The regulatory environment is also encouraging advisers to focus on planning and to outsource investment solutions. And we've been clear beneficiaries of this. On the right, you can see our managed assets have increased from GBP 26 billion in 2023 to GBP 37 billion at the end of 2025. The strong performance and competitive pricing of our WealthSelect MPS means that it's now got over GBP 25 billion under management. It's recognized as the market leader and in direct response from requests from IFAs, it's now available on multiple third-party platforms. That means they can use it as their core investment solution across their entire client base no matter which platform those clients are on. Now to High Net Worth. Net flow growth improved year-on-year, and we continue to outperform our listed peers, as you can see on the left. We've broken down the flow picture by channel on the right-hand side, and you'll see good net flows from our own advisers in green. The more challenged picture from the IFA in the direct channel. This is generally a more mature book with higher natural redemption rates. It's also worth noting that the uncertainty caused by the pre-budget speculation was a notable concern amongst High Net Worth clients, which led to above-average outflows in Q4. This is a strong business with strong foundations, but we know it's got more potential. Over the last 12 months, we've made good progress. Advice and investment management permissions are now in a single entity. We've digitized a number of core processes, and we've launched a mobile app to provide a much better client experience. We've expanded our client solutions, and we've continued to deliver strong investment performance, but we still need to do more. So when John Goddard took over the reins in September, I gave him a clear mandate to grow the business. We are refocusing our distribution strategy across both our own advisers and the IFA markets. We've reviewed the fit of our own RFPs to deliver high net worth products and services more effectively, and we are realigning and rationalizing the team in some places. The advisers impacted by this change can explore options within our Affluent segment or exit the business. Once we've done that and enhanced productivity, we will grow the team. We're also leveraging our MPS capabilities. We're moving smaller-scale clients from DPS to MPS, which are more suited to their needs and come at a lower cost. This also frees up investment manager capacity, allowing them to concentrate on higher-value clients where discretionary solutions are more appropriate. We were the first U.K. retail wealth business to offer private market evergreen solutions, and we've led the way with decumulation offerings. It's important to offer a broader proposition range beyond the traditional DFM offering. We're aiming to attract a broader client base and as ever, distribution is the key. We intend to build a high-performance business. That means building out our digital capabilities, continuing to invest in proposition and distribution, and maintaining the strong client service and investment performance culture. We're working towards delivering mid-single-digit rate of net flows as a percentage of assets and operating margin in the mid-20s. Right. With that, let me hand over to Mark. Mark Satchel: Thank you, Steven, and good morning, everyone. Let me start by echoing Steven's comments that our business is in great shape. We delivered a strong financial performance in 2025. Let me give you my 3 key messages. One, we delivered revenue growth of 5% That included 7% growth in net management fees, partly offset by lower interest income on shareholder capital, which reduced revenue growth by around 1 percentage point. Costs are well managed and came in below our GBP 500 million guidance. We invested in initiatives such as our brand and Quilter Invest and absorbed higher national insurance costs. Our cost discipline and the remainder of our simplification initiatives contributed to 1 percentage point increase in our operating margin which has now reached 30%. And our balance sheet remains in very good shape. I'll cover the conclusions of our capital review later. Let's get into the details with my usual analysis of our P&L dynamics. Starting top left, net flows of GBP 9.1 billion were, as already covered, significantly ahead of 2024. Strong flows and positive markets meant that average AuMA was up 14%. Top right, you can see revenues grew 5% to GBP 701 million despite the impact of lower interest rates. Costs, bottom left, were up 4% to GBP 494 million, reflecting inflation and higher national insurance as well as planned business investment. As a result, adjusted profit increased by 6% to GBP 207 million. Positive [ draws ] gave an operating margin of 30%. We reported adjusted diluted earnings per share of 11p, an increase of 4%, with the difference in growth between EPS and adjusted profit attributed to a small rise in our effective tax rate. Now getting into the moving parts. Let's start with revenue margins, which are in line with guidance. On this slide, each chart shows the average revenue margin for the past 4 half year periods. The main point I'd like to draw out is the relative margin stability into the second half. In High Net Worth on the left, the overall margin was down 3 basis points from 2024, largely reflecting mix and changes to some fee structures. Touching on Steven's point earlier, in time, we expect the mix of DPS to NPS to result in a slight attrition in High Net Worth margin. That mix change will provide greater capacity for larger clients, which in turn will improve the operating margin. In Affluent, the year-on-year reduction in the managed margin largely reflected mix shift with Cirillium Active outflows offset by growth in MPS and other solutions, and this is in line with our previous guidance. I expect the managed margin to fluctuate around the low to mid 30s basis points level with the mix being the driver of movement. Given the success of our MPS solution, I expect that range to hold. And finally, our platform or administered margin was 23 basis points. Let's now turn to revenue by segment. Our High Net Worth revenues grew modestly. Higher net management fees and advice fees were offset by lower investment revenue with total revenue up 3%. In the Affluent segment, revenues grew 7%, a good performance. The main contributors were higher net management fees on both administered and managed assets and a stable contribution from advice fees. Turning now to costs. I'm pleased to report that while total costs increased 4%, that was lower than revenue growth, giving us positive operating leverage for the year. The waterfall on the right summarizes the main cost changes year-on-year. Increases came from inflation, higher national insurance and regulatory levies and the investments we've made. And these include bolt-on acquisitions such as MediFintech, brand building activities and the money needs a plan campaign, continued support to grow and develop Quilter Invest in the Quilter Academy as well as costs associated with cyber and technology functionality. Reductions principally came from our simplification program which I'm pleased to report is now completed, and I'll touch more on that shortly. With our large transformation programs now complete, many of you have asked how we expect our cost base to evolve. As a people and technology-focused business, the main drivers of our cost base are linked to salaries and technology contracts. So I previously guided to inflation plus a few percentage points. We do, of course, remain vigilant on costs and continue to focus on effective cost management to provide capacity for reinvestment in revenue-generating activities. Looking to 2026 with a significant growth opportunity ahead of us and the returns we have already seen, I expect the business to invest a bit more to support the growth opportunities we see for our business. These include costs associated with acquisitions, including GillenMarkets in Ireland. We plan to develop Quilter Invest proposition further, including targeted support. We will continue to grow the Academy to add new financial advisers. We expect to spend a bit more on technology, including AI capabilities, and we do intend to build our brand profile and we'll continue with the marketing campaigns that we kicked off in 2025. As some of this investment started in the second half of 2025, that level of cost run rate is a reasonable base to add inflation on to. And on the far right of the slide, you can see the first half versus second half cost split. So in terms of thinking about the outturn for 2026 costs, I would take the second half level, double it and add around 4% or so for inflation. That would get you to a figure somewhere between GBP 530 million to GBP 540 million, which seems a sensible base for your models with the actual outcome likely to be managed with an eye on market-sensitive revenues. I'll provide further updates on our cost expectations at the interims. I should underline that the current rate of investments, excluding acquisition activity, won't increase to this extent every year. And our longer-term guidance of inflation plus a few percentage points remains unchanged. While on the topic of transformation, I wanted to take a step back and reflect on what we've achieved with our cost programs since listing in 2018. Since then, we've done a huge amount. I won't run through it all and you can see it here on the slide. With savings coming across the business, particularly in the technology, estate, operations and support functions, while we've continued to invest in revenue generation opportunities. In total, we've delivered over GBP 160 million of savings. And this has enabled the operating margin we report today. And importantly, it also provides the foundations for efficient and disciplined growth as we continue to scale. So putting the segment revenues and group costs together, this slide shows the segmental contribution to group profitability. Affluent profit showed a healthy 14% increase to GBP 169 million, and High Net Worth delivered profit of GBP 47 million, broadly in line with the prior year. The operating margin declined marginally in High Net Worth, but improved by 2 percentage points in Affluent. As you've heard before, this part of our business is very scalable. So there's scope for further improvement here. Now let me turn to the balance sheet. As you'd expect, we've maintained a strong solvency ratio and cash position. You'll recall that last year, we raised a provision of GBP 76 million in relation to potential remediation for ongoing advice. We have now started our remediation program. And based on our current expectations of expected remediation and administration costs, we anticipate that this cost -- that this will cost us some GBP 20 million less to complete than we originally anticipated and we have, therefore, reduced the provision by this amount. You can see that come through as a positive contribution to the Solvency II ratio. Together with the utilization of the provision during the year, the provision balance at the end of 2025 was GBP 42 million. More broadly, the solvency ratio reduced marginally over the period, largely due to regular dividend payments and our proposed capital return, which I'll come to shortly. In terms of cash, you'll note the capital contributions into subsidiaries where we capitalized our regulated advice business to cover both the original GBP 76 million ongoing advice remediation provision, and provide funding for modest acquisitions to support our advice and high net worth businesses. The subsequent GBP 20 million provision release from the remediation provision is not reflected in the cash position and will be netted off against future capital contributions into the advice business. On the right, you can see we've got around GBP 270 million of cash available after payment of the recommended final dividend and the proposed buyback. That leaves us with a good buffer to cover contingencies, liquidity management and business investment while retaining balance sheet optionality. So our balance sheet is in good shape. The Board has recommended a final dividend of 4.3p per share, given a total dividend for the year of 6.3p, an increase of 7%. That was modestly ahead of earnings growth with the payout for the year at the midpoint of our current dividend payout range. The total cash distribution for the year was GBP 85 million. This next slide sums up our revised approach to capital allocation. Going forward, we plan to return 70% of adjusted post-tax, post-interest earnings to shareholders. And the other 30% will be retained to support growth, including funding bolt-on M&A as well as investments supporting business growth and development. Of course, we'll keep the amount of capital we have under review. If we do build up further excess capital, we will, of course, consider additional one-off shareholder distributions. As well as the distribution policy, the Board's capital review also looked at our stock of capital and concluded that given the strength of our balance sheet, we currently have around GBP 100 million of excess capital over and above what we are likely to need for the foreseeable future. So we'll return this to shareholders through a share buyback, which will start as soon as practical and which we anticipate will complete before year-end. And given the strength of our business, coupled with this high cash generation, we intend to switch from a dividend payout policy to a distribution policy. From 2026 onwards, we'll distribute around 70% of post-tax, post-interest adjusted profits to shareholders. Within this, we expect to see progressive growth in the ordinary cash dividend in sterling terms which, together with the reducing share count from share buybacks, will lead to progressive dividend per share growth. And starting from our 2026 full year results in March 2027, alongside the final dividend announcement, we'll also set out the amount of any buyback for the year. The buyback will represent the difference between the 70% distribution target and the dividend cost for the year. The interim dividend will be paid in cash and in normal circumstances, I expect this to represent 1/3 of the previous year total cash dividend measured on a per share basis. So for 2026, you should expect an interim dividend of 2.1p per share. Let me conclude with our usual guidance slide. Our expectation is for the operating environment to remain constructive and our margin guidance is unchanged. I spoke earlier in detail about cost expectations for the remainder of the year and dividends, distributions and capital I've already covered in detail. So let me finish by summarizing my 3 key points from our results. First, we delivered solid growth in overall revenue despite a lower interest rate environment. Second, costs are well managed, even as we stepped up the investment for future growth. And thirdly, our balance sheet remains in good shape which has given us the scope to announce the capital return plans I've set out today. And with that, let me hand back to Steven. Steven Levin: Thank you, Mark. I'm now going to talk about the opportunities that we see. We've successfully established the leading position in the advice market, and we're continuing to grow our market share. Furthermore, the market is growing driven by a need for advice in an increasingly complex tax environment, the need for individuals to invest more for their retirement and the demand for financial planning to minimize tax leakage on future intergenerational wealth transfer. As you know, there is a fundamental supply-demand imbalance. There simply aren't enough advisers to meet the overall need. Let me share some data that we've collected from Boring Money to give you a perspective. Our current adviser market is the circle on the left, around GBP 1 trillion of assets across about 4 million people. That's an average investment portfolio of around GBP 240,000. Beyond this, in the advice gap, there are a lot more people who need our help. We need to turn a nation of savers into a nation of investors. There is significant excess cash sitting in the banking system, generating subpar returns and being eroded by inflation. And there's a huge amount of wealth that will be transferred down the generations over the next 20 to 50 years. Work by Boring Money suggests they are around 12 million people with over $800 billion in assets who are currently unadvised and have got low confidence around investing. They need help, and that's the circle on the right. While the average wallet size across this portfolio is about GBP 90,000, that's smaller than our typical advise clients, they're also younger and still accumulating, so they have good long-term growth prospects. Policymakers have woken after the scale of the problem. Their response has been targeted support and a national advertising campaign on the benefits of investing. Both of these are constructive steps. We want to be recognized as a customer champion. A big focus is on breaking down the barriers to brighter financial futures for customers and unlocking the potential of their money. We believe advice and support is key to that. On the left-hand side, our customers with less complex needs that can benefit from prompts and edges from guidance and targeted support to help them make better decisions with their money. And as we move up the complexity spectrum, in the future, we expect simplified advice to reach more clients and at the far end of the spectrum, those customers with the most complex needs will continue to seek holistic personalized advice. With an additional 12 million potential customers, this is a huge market. At its heart, is the need to deliver better outcomes for customers and for society. And Quilter can be a home for clients throughout their financial life cycle from targeted support to simplified to full financial advice, and clients can move up the curve as and when it's relevant for them to do so. Importantly, we believe the role of advisers will remain critical for customers who recognize the value of having a personalized financial plan. There's been a lot of debate in the market recently about the role of AI in advice. Our view is that AI has an important role to play in making advisers materially more productive. But what AI won't do is remove the need for advice. Here's why. First, navigating the U.K. financial landscape is challenging. Each individual is different and most clients don't have the time or confidence to do it themselves, it is very complicated. The U.K. has an incredibly complex tax and pension system that changes on a regular basis. While AI may be able to provide the answers to basic planning questions or provide simple investment advice, when it comes to more complex situations, long-term tax planning, it's completely reliant on the individual knowing the right questions to ask. The role of the adviser is to help clients through the complexities of U.K. income tax, inheritance tax, trust and legacy planning and to provide the reassurance and help to make -- to let clients take actions at the key moments of their financial lives. Clients want the empathy and the coaching that an adviser provides. The more complex or vulnerable their financial situation, the more they want the help of a trusted experts. That human personal relationship and the trust that underpins it is something that AI just can't replicate. Critically, we give a regulated financial advice. This gives customers comfort and strong protections. With AI tools alone, there is no comeback. So how are we going to build on the power of AI for our adviser capabilities? We need technology and AI tools to deliver the propositions and the services needed at scale, and we need a strong brand that's recognized as a customer champion. Let me start with technology and AI. Advisers are crying out for tools that will make them more effective. The stats on this slide summarize some recent research by Next Wealth. Frustratingly, advisers say only 1/3 of their time is actually spent with clients. More than half of advisers say site compliance and regulation as their top challenge. They want streamlined compliance, automated onboarding and better system integration. Nearly half believe AI will positively impact their workload. We agree. So we spent the last 2 years working with advisers to deliver a solution to them to meet this need. As you know, driving up adviser productivity is something we've been working on for years. It started with ensuring adviser alignment and back book transfers. We've now rolled out market-leading AI tools, and I'll say more about this in a moment. The next part is a brand-new end-to-end adviser support system that we're in the final stages of development work with FNZ. It includes further AI capabilities. The aim is to help firms run more profitably, advisers to work smarter and service more clients for clients to have a smooth, intuitive digital advice experience. Our new technology will be all encompassing. We're already rolling out some of the elements ahead of full implementation in early 2027. The goal is full end-to-end technology integration between our platform and the tools that the advisers need to avoid them having to repopulate data fields across applications and allow seamless client data management. We see 3 high-impact ways in which AI will support further growth in our business. First, in enhancing productivity. We've already rolled out an AI solution for advisers that allows them to record, transcribe and summarize meetings and actions, work that took hours now takes 10 to 15 minutes. We expect it to materially expand adviser and paraplanner capacity over time, helping generate additional flows onto our platform and into our solutions, which is where we make our money. Secondly, improving client and adviser engagement through next best actions, client reporting and portfolio insights, helping advisers and investment managers to have higher-quality conversations; and thirdly, operational and process redesign, reducing the steps in the process and speeding up fulfillment while reducing operational costs. These tools will also enhance risk management by making compliance file checking and adviser oversight a lot faster. And a more efficient advice network brings greater scalability and operating margin potential. Of course, we've done all the testing and the research to make sure the systems we're giving to advisers are robust and their client data is safe and secure. Investment in AI is therefore critical to us, and it's incorporated in the guidance that Mark set out earlier. Let's now turn to brand. As we move to a world of digital delivery, it's important that the market knows who we are, and most importantly, what we stand for. So we're investing in the Quilter brand. We launched our brand awareness campaign late last year in conjunction with Quilter Nations series. The strapline is money needs a plan and the feedback has been extremely positive. This is the first step in what is a multiyear effort. We want Quilter to build on our position as a leading adviser brand to being a trusted consumer brand focused on retirement, advice and savings and investments. And ultimately, we want to be recognized as a customer champion. Let me return to our business growth plans and draw things together. Our 3 key profit drivers are platform, solutions and high net worth. We have clear goals for each, which I've summarized on the left. We know exactly what levers we've got to pull to enable us to deliver on them, and I've set these out on the right. Collectively, these will sustain our growth, deepen our competitive position and drive our operating leverage. So to conclude, we're really pleased with our performance in 2025, and we've started 2026 with strong momentum across our business. The messages I'd like to leave you with are: we operate in a large, fragmented and growing market helping us deliver sustainable growth. And there's a new nascent market opportunity that could be significant in time. Our propositions and the breadth of our distribution are both market-leading and they're delivering strong inflows. Our platform and solutions business allows us to generate scale efficiencies and operating margin progression. And through investment in technology and AI tools, we'll be able to augment these existing strengths to meet customer needs across a larger market and deliver faster growth over time. That's why we're excited about the future. All right. Let's open up for questions. We've got a mic in the room, and we'll go to the room first. Jacques-Henri Gaulard: Jacques-Henri Gaulard from Kepler Cheuvreux. The question is on cost. The way you've looked at your '26 guidance looks more like a multiyear program and don't view that negatively at all. It's more you're growing market share. It's working very well. You're going to need to invest probably more. Is there a section of your cash flow of your liquidity that you've just mentioned that you would dedicate the same way that you're dedicating part of your profits back to shareholders? I think it's a very important point because it's a bit ignored in the industry right now. Mark Satchel: Look, I mean, it's included within the overall guidance I provided. I'm not sure if you mean sort of part of the sort of the capital piece of it. I mean most of our costs -- capitalized are very little cost. So most of our costs, we expense as we incur them. So it's kind of driven through the P&L rather than necessarily through certainly the investment that we're making and that sort of stuff. When you look at our balance sheet, we've got very little capital builds up in IT and software development and that sort of stuff. Virtually everything is expensed. So the way that I like to or prefer to treat it is through the P&L, get it all out when it's incurred. Provides better flexibility later on. You don't have a recurring depreciation charge and things like that. So that's how we tend to look at it. But the reason why I've typically guided to inflation plus a few percentage points is there's a few percentage points are already there for that sort of stuff. And in different years, it will be different things and those sort of things. This year, it's sort of it's a slightly higher amount than normal. But if you think about it in overall terms, I mean, effectively -- and maybe if I sort of just maybe just a bit of a broader question on the cost side. I previously guided that I expect our costs to increase by inflation plus a few percentage points. Inflation this year for us is about 4%. That's what our salary increases are on average, et cetera, et cetera. You had a couple of percentage points of that you get into 6 percentage points. The actual guidance I provided today is the same as 8%. So it's really 2% higher than what my previous guidance has been in any event. 2% in our world is about GBP 10 million. And of that GBP 10 million, about half of it is in things like targeted support and Quilter Invest and the investment we're making there. The other half is kind of split between some of the acquisitions we made, so that's more inorganic add-on and a bit more going towards brand build and some tech investments. I mean in the grand scheme of things in pound million terms, it's relatively small amount. Unknown Analyst: Thank you. Three questions. The first one, just to clarify on the new dividend policy. You said that it will grow in absolute terms. Is that on both the per share and a total pound basis? The second question, you mentioned the opportunity in targeted support and simplified advice. Is it possible to give us a sense of where you think the margins on that may land and how long it will take to show in earnings? And the last question, you've had impressive growth in your NPS range in recent years. Any thoughts on competitors entering the market, for example, Vanguard willing to launch a low-cost product... Steven Levin: You take the first question, I'll take the other 2, Mark. Mark Satchel: First one very quickly, per share. Steven Levin: So in terms of targeted support and the margins, so one of the key things about the targeted support solution is that it will be Quilter-based funds. So actually, the margin should be pretty good because we'll get a platform margin, and we will be using our core Quilter Investment solutions. So that's good. It is -- you sort of asked about what would it do to earnings over time. I think one's obviously got to recognize it's a small business that's going to take time to build out and to grow out, and we've obviously got a very substantial business in our advice space. So I think it is going to be -- it is going to build out over time. And we look at this market and sort of say the targeted support market over the next 10 years could be very exciting. There's obviously not going to -- it's not really going to move the dial from a profitability perspective in the next 1, 2, 3 years. But from a flow perspective, hopefully, it will start picking up. And on a medium-term view, we think it's very important, but it should be a good operating margin business. In terms of MPS, our MPS range, WealthSelect is absolutely market-leading. It has got 12 years of first quartile investment performance, a phenomenal track record with a consistent investment philosophy, team approach, et cetera. I think we're quite a formidable competitor. You can see the growth that we've got. We also have -- our MPS is also very broad in terms of its options, possibly the broadest in the market. We've got -- we actually got 56 different portfolios within WealthSelect across different risk profiles, active blend, passive, responsible, sustainable, managed solutions. So a lot of people are coming up with they're launching quite simple offerings. We are very holistic in terms of the support we can provide advisers. And finally, the reporting and tools that we've got around WealthSelect are absolutely market-leading. So we're very comfortable that WealthSelect is in a very strong position and will continue to perform incredibly well. Yes, James. James Allen: James Allen from Berenberg. Could I ask 2 questions. First one, you've obviously done a really good job over the last 2 or 3 years of revamping the business, particularly in Affluent. But playing devil's advocate looking forward. So in revenues, you've still got the investment revenue drag from interest revenues coming down, interest rates coming down. The cost savings plan has now played out and the upsized shareholder returns policy is now out there in the market. So I guess if you're a new investor, where is the scope for outperformance going forward? Second question, just on the private market solutions. There's obviously been a lot of noise in the U.S. over the last few weeks around the kind of duration mismatch between wealth investors in stuff like private credit and real estate funds, which obviously have a much longer duration in their time horizons from an investment perspective. How do you plan to manage that, particularly around kind of redemption windows and things like that? Steven Levin: Sure. Thanks. So I think the first thing that is about our Affluent business is our business has got incredible operational leverage. I mean we have, as we've said before, both our platform and our asset management business, we can add a lot of extra assets without adding much in terms of extra cost to our business, and that will continue to drive strong profitability, and we would expect to see the Affluent operating margin continue to rise over time. So I think that is what is going to drive the sort of future upside as we talk about. The other thing is the size of the market and the size of the opportunity. I mean we've built up a significant market share. We still are focused on driving up our market share even higher and we believe we can. But actually, we look at the market and say we actually really see that the size of the market is continuing to increase. There's reports from independent companies who look and analyze the platform market, looking at the growth, Fundscape data on how much they expect the platform market to grow, for example. It is the place where people have to save and invest. We've got a nation, as I've talked about, of people who are oversaving and underinvesting and that is starting to change. We've got a nation where people have got to take more responsibility to look after themselves. The age of defined benefit pension funds is over. The contributions that people are typically making in this country into pensions through workplace arrangements is too little to reach appropriate replacement ratios. So this is a nation that's got to invest more, and we are incredibly well placed to do that. We are seeing improvements there, but there's more work to be done, including across all the industry, including with some of the government support. But I'm really pleased because we've got the dominant market share position in a business that's highly scalable, and we're going to continue to do things to make our business obviously more efficient. But I think there's a huge amount of upside for those reasons. Your question about private market solutions. So we've launched private market solutions. Ours are focused on private equity, not private credit. They have liquidity options. You are able to take money out in -- you have to give notice and you can take money out. There's a small 5% discount if you withdraw. But liquidity is managed. It's an evergreen solution. So we think it is appropriate. Obviously, we're not recommending clients to put large portions of their money in it. So you put sort of 5% of your portfolio and things like that. And now it is only appropriate for clients in our High Net Worth business, but it's something they have been asking for. And it's not obviously for every client, but we think it is a very attractive sort of thing to have in our toolkit. Yes, David. David McCann: David McCann from Deutsche Bank. Just 2 for me. Steve, maybe interesting remark, and obviously, we've seen it through the increased marketing that they want to resonate more with consumers rather than just advisers. Obviously, the business has come very much from an adviser-driven background. At what point does this potentially cause some kind of internal conflict in the business, particularly with the advisers if you are going down in more of the consumer channel for the reasons you've articulated around targeted support and so forth. And I guess what gives you the right to win in that area when there's a very well-established direct-to-consumer marketplace out there? And the second question, probably for Mark just more of a technical point here. You mentioned inflation exponation at 4% a number of times. Obviously, market expectations are close to 3% for that number. So I just wondered what is driving the 4% forecast for inflation rather than sort of the more market consistent 3-ish. Steven Levin: Thanks, David. Mark will enjoy that question. The -- so in terms of brands, so actually, advisers are very supportive of what we are doing in the brand. It helps them and the advice -- the brand campaign as you'll see is about money needs a plan. It is about people needing to have a plan. So it's very constructive towards advice. The plan doesn't only obviously need an advice, you need an adviser. You can do some of these things with a bit of targeted support. That's why we put those words quite carefully, but that still is a plan. You can't just sit and expect your money sitting in cash to perform for you. The -- we are not, though, looking to go and create a D2C business, just to be clear. We are working with advisers. Our targeted support proposition is about -- I talked about how clients can move through that spectrum. We've talked about how we're using targeted support, in particular through Quilter Invest to work with advisers to incubate clients for the future for them and things like that. So we're doing it very much in a way that is working to our advice core. I think that's one of the strengths that we have. Clients can start in that journey. And then if they need help, we've got one of the strongest adviser businesses and based on penetration in the IFA space to help them along the way. So that's how we look at it. We look at it as absolutely complementary and that is consistent with the feedback that we're getting from advisers as well. Mark, do you want to take the inflation question? Mark Satchel: No. David, thank you very much for that question. Just on the inflation, look, every report that we use to look at our own workforce inflation, which is about 60% of our cost base is salaries probably from about August last year was closer to 4% than it was to 3%. And that's why I'm using our numbers. It's about 4%. 4%, you'll see when our annual report comes out. This is what we're saying is the sort of average salary cost increase of our workforce across our business for this year, going from 25% to 26%, I'm referencing 4%. Using our numbers, that's what I'm getting it from. Steven Levin: Other questions in the room? No. Should we go to the lines or the web? John-Paul Crutchley: Yes. I think we just have nothing on the lines at the moment. We have one at the moment on the web from Mike Christelis at UBS. A 2-part question, one of which you partially answered, but he says, can you provide an update on New Wealth, Quilter Invest and the strategy for that business, which we've touched on it, but maybe I just want to just reinforce the points there. And then he also asked, how has the launch of the smooth managed fund being received by advisers? Steven Levin: Sure. I'm happy to take those. So Quilter Invest, the key thing that we're doing there is we are getting targeted support permissions for Quilter Invest. That is the business that we will be entering the targeted support market in. Those regulatory applications that just opened this week, and we submitted our application to be registered and authorized by the FCA to provide targeted support. So that's what we're doing and working on Quilter Invest. We're continuing to enhance the proposition and to gear up for that. We've built the capability now to do that adviser incubation that I've previously talked about. So advisers can refer clients to Quilter Invest. They can then track those clients and they can see what contributions they make. When those clients want to press a button, I want a bit of help, they go straight back to that same advisers, introduce them, et cetera. So that's the sort of stuff that we've been doing in Quilter Invest, both through our sort of adviser incubation strategy and as we're leaning into targeted support. And then the smooth managed fund that's only just very recently been launched. It was launched in January. And the feedback from the market has been very positive, but these things obviously do take a bit of time. You got it out there. We're doing -- our team out there doing lots of sales presentations and explaining the funds to advisers. It is a lot more transparent than some of the other smoothed managed funds out there, which I think has been very well received by advisers. So we're optimistic about the future there. John-Paul Crutchley: We've got a call on the line from Gregory Simpson from BNP Paribas. Steven Levin: Go ahead, Greg. Operator: We have a question from Gregory Simpson. Gregory Simpson: Just 2 questions. Firstly, on targeted support. I'd imagine a lot of the assets in bank accounts and workplace pensions. And so I'm wondering if you can outline how you access the 12 million adults if you're not a bank or workplace pension provider and don't have that direct relationship with what might be quite unengaged customers. That's the first question. And then secondly, just on AI. Do you think there's an opportunity on Quilter's own cost base from leveraging AI. There's GBP 220 million or so base costs, a lot of support staff. And you talked about inflation plus cost growth in the medium term, but why couldn't that be better if you can leverage AI to sort of manual processes? Steven Levin: Sure. So in terms of support, there is a few things to say. It's obviously a very big market. We think that there are lots of different companies that are going with different strategies. I'm sure the banks are going to participate in the targeted support market as well. But we don't look at this and sort of think there's only one model that is going to work. We've got a different model to the way I think some of the other players are going to participate through our close tie and link with advisers. And we think that gives us a really interesting angle. We are also working in our -- we've got a workplace channel as well, where we do provide support in workplaces and targeted support will also be used there. So we have got a range of distribution strategies, and we think it is an exciting market that there's going to be a lot of people that participate in it and a market of 12 million people is a significant market. In terms of the AI -- the cost base and AI, we are obviously looking at and we are implementing AI solutions across our business. We're implementing things in our call center, in our back office, in various of our -- in our middle office functions, which will look to improve productivity, reduce cost and improve efficiency, et cetera. So we will -- we are looking to things like that. We haven't changed our cost guidance as a result. But obviously, we are looking to make sure that we run our business as lean and efficiently as we can, and AI is one of the tools that we are deploying. Do you want to add anything to that, Mark? Mark Satchel: I'd probably say, Greg, look, I think there is potential in time from getting cost reductions coming from AI efficiencies. But I think given the relative immaturity of all of that at the moment, it's still a little early to actually sort of pinpoint sort of precise numbers or targets or anything else like that on it. I think it's something that will play out in the more medium term rather than having sort of a more short-term impact right now. Steven Levin: Okay. I think we're done. Thank you, everyone, for your time.
Operator: Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the Stevanato Group Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Lisa Miles, Chief Communications Officer. Please go ahead, madam. Lisa Miles: Good morning, and thank you for joining us. With me today is Franco Stevanato, Chairman and Chief Executive Officer; and Marco Dal Lago, Chief Financial Officer. You can find a presentation to accompany today's results on the Investor Relations page of our website, which can be located under the Financial Results tab. As a reminder, some statements being made today will be forward-looking in nature and are only predictions. Actual events and results may differ materially as a result of the risks we face, including those discussed in Item 3D entitled Risk Factors in the company's most recent annual report on Form 20-F filed with the Securities and Exchange Commission. Please read our safe harbor statement included in the front of the presentation and in today's press release. The company does not assume any obligation to revise or update these forward-looking statements to reflect subsequent events or circumstances, except as required by law. Today's presentation may contain non-GAAP financial information. Management uses this information in its internal analyses and believes this information may be informative to investors in gauging the quality of our financial performance, identifying trends in our results and providing meaningful period-to-period comparisons. For a reconciliation of these non-GAAP measures please see the company's most recent earnings press release. And with that, I will now hand the call over to Franco Stevanato. Franco Stevanato: Thank you, Lisa, and thanks for joining us. Today, we will review our 2025 performance, address current market dynamics, discuss our fourth quarter results and provide 2026 guidance. We finished fiscal 2025 with another solid quarter that led to positive full year performance and positive momentum as we start 2026. For the fiscal 2025, total company revenue increased by 9% at constant currency rates and 7% on a reported basis compared with 2024. This growth was consistent with our expectations and reflects the execution of our strategic priorities throughout 2025. The biopharmaceutical and Diagnostic Solutions segment delivered another solid year with double-digit top line growth for fiscal 2025. This offset the expected revenue decline from the Engineering segment. Revenue growth in the BDS segment was driven primarily by strong market demand for high-value solutions, which increased 29% in fiscal 2025, and represented 46% of the total company revenue for the year. The strong performance in High Value Solutions was also the main driver for margin expansion in the year with gross profit margin rising by 160 basis points compared to 2024. These results demonstrate the company's ability to execute against our strategic priorities and to grow our innovative premium offerings positioning the business for sustained success in the evolving market environment. At the same time, as we continue to move up the value chain, we are pivoting away from certain non-high-value product categories that we consider not aligned with our strategy, and we may consider additional action in the future. Since our IPO in 2021, we remain committed to meeting customer demand for high-value solutions, which meant investing in key projects in Fishers, Indiana and Latin Italy to spend capacity for high-value syringes. In 2025, the Nexa syringe was our fastest-growing product driven primarily by growth from GLP1s. This should come as no surprise as the syringe is by far the most prevalent format for GLP-1s in United States today. There's no doubt that we've been successful in winning our fair share of the GLP-1 market. This success is rooted in our long history of being a trusted partner to customers. Our global footprint, which provides supply chain security and the quality of our products, which have a characteristic that resonate with our customers. For example, our Nexa platform feature high mechanical resistance. It can be produced at scale, and it is ideally suited for an auto-injector. In fiscal 2025, our revenue from GLP-1s accounted for approximately 19% to 20% of total company revenue. growing more than 50% compared with 2024. We currently expect that the GLP-1s will serve as a meaningful tailwind as special demand continues to grow in the years to come. With the launch of the Wegovy pill, patients now have more options for GLP treatments. The general consensus among industry experts and our customers is that injectables are expected to be the preferred format for treatment lost while our GLPs will enable market expansion and support patients with specific needs. We also anticipate the market for GLP-1 will continue to evolve over the next decade, primarily driven by the different commercial and supply chain strategies among the originators, biosimilar launches, the expected expansion of treatment indications and next-generation [ incretin ] still in clinical phases. We are already seeing some of these dynamics play out in the market today. As we noted on prior calls, recent demand for cartridges has outpaced our prior expectation, and we are expanding our capacity to satisfy demand. We see this trend aligned with the introduction of new pen injector formats with various treatment plants as well as the expected growth of biosimilars, especially in APAC. We currently expect that we will continue to benefit from GLPs in the future. We also believe that the market will continue to evolve and mature. We see a pipeline of opportunities where we are well positioned with a deep expertise, a global footprint and a comprehensive portfolio of products from primary packaging to our platform drug delivery devices. While GLPs represented the largest top line growth contributor in 2025, we continue to increase our participation in other injectable biologics with our premium best-in-class high-value product portfolio. In fiscal 2025, we realized a 40% increase in the number of customers ordering premium ranges, both Alba and Nexa platforms for biologic application that were unrelated to GLP-1s. These 2 customer projects are expected to play an important role in the future growth. We continue to expand our participation in the broader set of biological applications with new customer programs, unlocking incremental value and setting the path for sustainable growth in the coming decade. As a result, in fiscal 2025, Biologics represented 41% BDS revenues, up from 34% in 2024. Third, to the next slide for an update on our strategic growth investments. In Latina, the past year was dedicated to the installation and production of syringe capacity and customer validations all of which will continue in 2026. The next phase in Latina is devoted to increasing capacity for EZ-fill cartridges to meet rising global demand. Turning to Fishers throughout 2025, the teams were focused on core activities, including the ongoing line installations. In parallel, customer validations and audits continue and in 2025 we doubled the number of customers that are now validated in features. Looking ahead, line installations and customer validation activities are expected to continue all year. We continue to advance the build-out for contract manufacturing activities in support of a couple of large device programs for a key U.S. customer the build-out is going well. Nearly all of the injection molding machines are installed, and we started producing components for qualification activities. The first phase of new clean room is completed. We still expect the commercial activities to begin at the end of 2026 or early 2027 for the first device program. Please turn to the next slide for a status update on the Engineering segment. Over the past 12 months, we've made meaningful progress advancing our optimization efforts and improving execution. In 2025, we rightsize operations streamline processes and increase standardization across delivery teams. We reinforce our project management office, driving improvements in project planning, process harmonization, contract management and customer engagement. We also consolidated offices in Denmark, move the visual inspection activities to Italy and acquired a new location in Bologna to access strong technical talent. This section have contributed to double-digit growth in site acceptance rates, an important KPI. Nevertheless, our 2026 guidance assumes a revenue decrease from the Engineering segment due to lower order intake in the prior months. While our efforts in 2025 were focused on execution we recently stepped up our sales and marketing efforts, which has led to a more robust opportunity pipeline. Converting opportunities into new firm orders has been slower than we anticipated. But our pipeline is especially strong in pharmaceutical visual inspection, underpinned by innovation and superior technology. All in all, getting the business back to historical performance is taking longer than we expected and we're working to best position the segment for long-term success. In summary, 2025 was a successful year, characterized by robust top line growth, a favorable mix and ongoing margin expansion. Double-digit growth in our BDA segment more than offset the expected revenue reduction in engineering and enable us to navigate the favorable effects from foreign currency. High-value solutions were the primary driver of revenue growth and margin expansion, reflecting our ability to scale our main investments and perform in full alignment with the strategic direction set at the time of our IPO. We expect that GLPs will remain an important tailwinds, having anchor our position as a market leader in high-value products. Importantly, our best product set enable us to achieve strategic position beyond GLPs, allowing us to participate in the broader global market for injectable biologics and biosimilars. Looking ahead, we will continue to execute our strategic priorities, including aligning growth investments with customer demand trends. I will hand the call over to Marco Marco Dal Lago: Thanks, Franco. Before I begin, I want to clarify that all comparisons refer to year-over-year changes unless otherwise specified. Starting on Page 10. We ended fiscal 2025 with positive financial results for the fourth quarter. Total company revenue grew 7% at constant currency and 5% on a reported basis to $346.5 million for the fourth quarter of 2025. Foreign currency translation was a headwind throughout fiscal 2025 with an higher impact in the second half of 2025 due to a weaker U.S. dollar. Our BDS segment delivered another solid fourth quarter with revenue increasing 13% at the constant currency and 10% on a reported basis. This offset the expected 23% revenue decline in the Engineering segment. For the fourth quarter of 2025, revenue from high-value solutions grew 31% to EUR 171 million, represented approximately 49% of total company revenue in the quarter. The strong performance was driven by continued growth in our premium performance Nexa syringes and, to a lesser extent, EZ-fill cartridges. For the fourth quarter of 2025, gross profit margin increased 120 basis points to 30.9%. This was mostly driven by 3 factors: first, a favorable mix of high-value solutions. Second, the year-over-year improvements in Latin and Fishers as we scale production in our new facilities. But together, they remain dilutive to the corporate margin. And third, the improved market landscape for vials which led to higher vial production and better utilization. This was partially offset by tariffs and unfavorable effects of foreign currency. For the fourth quarter of 2025, operating profit margin was 20.2%. As a result, net profit totaled EUR 47.6 million and diluted earnings per share were EUR 0.17. On an adjusted basis, net profit was EUR 49.8 million and adjusted diluted EPS were EUR 0.18 for the fourth quarter of 2025. Adjusted EBITDA increased 7% to EUR 97.7 million, and adjusted EBITDA margin increased 70 basis points to 28.2%. Let's review segment results on Page 11. The BDS segment finished strong with double-digit growth in the fourth quarter. Revenue grew 13% at the constant currency and 10% on a reported basis to EUR 307.1 million. Segment growth was led by a 31% revenue increase from high-value solutions to EUR 171 million, which accounted for 56% of segment revenue. This offset the 9% revenue reduction in other containment and delivery solutions as we prioritize the production of premium products. For the fourth quarter of 2025, gross profit margin for the BDS segment improved 50 basis points to 31.6% led by a favorable mix, operational gains in our new facilities as we scale commercial production and an improved vial market. These positive trends were offset by the unfavorable impact of tariffs and foreign currency translation. This resulted in an operating profit margin of 23.8% which improved 50 basis points in the fourth quarter of 2025. The BDS segment continues to perform well, reflecting the successful execution of our strategic priorities and a strong position to capitalize on future opportunities. For the fourth quarter of 2025, revenue from the Engineering segment decreased 23% to EUR 39.4 million due to lower revenue in glass conversion and assembly, offsetting growth in pharmaceutical visual inspection. For the fourth quarter of 2025, segment gross profit margin decreased to 15.8%. And as a result, operating profit margin was 9.1%. Ongoing efforts under our business optimization plan have yielded the improvements in execution and meaningful operational progress. However, the unfavorable portfolio mix coupled with low order intake continues to put pressure on margins. The team has been very focused on securing new orders which will help refresh and reposition the portfolio for long-term success. Please turn to the next slide for a review of balance sheet and cash flow items. We ended the year with cash and cash equivalents of EUR 130.6 million and net debt of EUR 337.7 million. With our current cash on hand, cash generated from operations, available credit lines and our ability to access additional financing we believe, we have available liquidity to fund our strategic and operational priorities over the next 12 months. For the full year 2025, capital expenditures totaled EUR 294.9 million, of which approximately 89% were deployed for growth projects to support customer demand. These investments are related to capacity expansion for high-value solutions and supporting future DDS commercial activities. For the full year 2025, cash from operating activities totaled EUR 286.1 million. Cash used in the purchase of property, plant, equipment and intangible assets was EUR 275.1 million. The combination of increased cash flow from operations and lower CapEx and drive a significant year-over-year improvement in free cash flow, and we exited fiscal 2025 with positive free cash flow of EUR 18.4 million for the full year. Lastly, turn to the next slide, we are establishing 2026 guidance. We expect revenue in the range of EUR 1.260 billion to EUR 1.290 billion. On a constant currency basis, revenue will range between EUR 1.278 and EUR 1.308 billion. Adjusted EBITDA in the range of EUR 331.8 million to EUR 346.9 million, and adjusted diluted EPS in the range of EUR 0.59 to EUR 0.63. Our 2026 guidance considers headwinds and tailwinds, and we have assumed the following factors: revenue will be stronger in the second half of 2022 and compared with the first half. The effects from foreign currency translation are expected to be a headwind of approximately EUR 18 million for fiscal 2026 with an impact of approximately EUR 10 million in Q1. As a result, in the first quarter, we expect mid-single-digit revenue growth on a reported basis compared to last year based on the midpoint of our guide. For the full year, the BDS segment is expected to grow on a reported basis, high single to low double digits and double digits on a constant currency rate. Engineering is expected to decline by mid-single digit to low double digits. For fiscal 2026 High-value solutions are expected to range between 47% to 48% of total company revenue. And in 2026, we are assuming a tax rate of approximately 26.8%. And finally, capital expenditures and free cash flow. We have assumed CapEx in the range of EUR 270 million to EUR 290 million before customer contributions and prepayments. Net of contributions and payments is expected to range between EUR 240 million and EUR 260 million. Regarding free cash flow in 2026 we are modeling breakeven to positive free cash flow of approximately EUR 20 million. I will hand the call back to Franco. Franco Stevanato: Thank you, Marco. In closing, we remain focused on executing our key priorities supported by strong business fundamentals. We operate in attractive growing end markets. with favorable secular tailwinds, innovation across the industry continues to advance patient care, and we remain mission-critical to the delivery of biologics supporting new therapeutic areas, expanding global access to treatments and improving standards of care. Demand for innovative drug products remain strong. There are more than 9,000 injectable assets in the global drug pipeline undergoing clinical evaluation or being registered and more than 60% are biologics. We believe we are well positioned to serve this demand through our integrated value proposition, differentiate the portfolio and long-standing commitment to science and technology-driven innovation. Biologics, our fast and growing segment is expected to remain a key driver of top line growth and margin expansion as we continue to move up the value chain. At the same time, we're making meaningful operational progress, and we expect to increasingly benefit from new capacity coming online, productivity gains and improvements within our Engineering segment. Together, we expect that these efforts position us to deliver long-term sustainable growth and shareholder value. Operator, we are ready for questions. Operator: Thank you. This is the Chorus Call conference operator. [Operator Instructions] First question is from Michael Ryskin, Bank of America. Michael Ryskin: Great. Congrats on the strong end of the year. I want to start on sort of parsing out your guide for 2026. I appreciate you provided a lot of color in the deck and in your prepared remarks. I'm curious if you would comment on your expectations for GLP-1s in 2026. I think you said for 2025, it was up to 19% to 20% of revenues and grew 50% year-over-year. So at the midpoint of your guide for 2026, what is your assumption for GLP-1 growth next year? And I have a follow-up. Franco Stevanato: Thank you, Franco speaking. Revenue from the GLP1s accounted in 2025, approximately between 19% to 20% and we have delivered our growth in 2020 compared to the '24 about 50%. If you do an estimation and look at our outlook of 2026, we think that will be a growth in the range of mid-teens. Michael Ryskin: Mid-teens. Okay. That's great. And then a follow-up on the Engineering segment. I mean, on the one hand, encouraging, it sounds like you're making a lot of progress in terms of the operational plan, the optimization moving to the facilities around rightsizing operations. All of that is encouraging, but then the guide for engineering for 2026 and the color on low order intake that's a disappointing update. So on the order intake side, we just love to -- this is engineering specific, I would just love to get a better sense of what you think is behind that. Is that some weakness in the market? Is it as simple as you guys were so focused on getting the operational things right, that you missed a few opportunities? Just get a sense of why that suddenly turned bad in the second half of 2025 and how quickly can you regain the momentum on the commercial side of things? Franco Stevanato: So first of all, the pharmaceutical market, in particular, biologics, is also robust in terms of demand for new machines that need for spectrum machine, assembly technology is very robust today. Most of the biologic market is it will move to injection and when there is also self administration and it's going to require a new special machine. So today, the order intake and the pipeline that we have in the engineering is healthy, is [indiscernible] what is the big -- nice KPI is the fact that there are repetitive orders with our historical bigger clients. So what was the same point is the fact that the sales cycle because of technicality of this line is taking a little bit longer than was expected, translating water instead to maybe receive the order, the confirmation of the order in January, February can be easily postponed a few months. This is going to -- there is why we took some more prudent approach. Another important element that we'll have to underline in 2025, the big focus of the engineering division is really to make a strong operational progress in terms of management and execution and the good KPI that we can translate to share with you is the number of site accepted tests that increased more than double in 2025 compared to 2024. This is extremely important. At the end of again, the company '25 focus our attention to execute and deliver this line. Now we are entering the new ways to new orders, repetitive orders with our clients. This take a little bit more muted what are our expectation. But the outlook in the medium term is strong growth in the engineering division. Operator: Next question is from Patrick Donnelly, Citi. Patrick Donnelly: Maybe one on the high-value solutions side, it seems like you guys are guiding 47%, 48% of revenue for that segment. Can you just talk about where we are on kind of the utilization capacity side? I know you guys are ramping Fishers you're renting Latina in terms of utilization. Are you still capacity constrained with the high value side? Just wondering where we are on the capacity side versus the demand? Are there areas where demand is outpacing capacity would be helpful just to talk through that piece? Franco Stevanato: So capacity in Stevanato Group in particular for prefilled syringes through the format of Nexa syringes, Alba syringes and cartridges to play a role in 2025, practically, we run approximately full capacity intervenor. And also this is translating the ramping up that we're doing in Latin in particular with good success, the ramp-up that we are doing in Fisher. So also in 2026, we will follow this nice positive momentum where the demand is robust, practically in all our high-value product, but the capacity have played a role '25. It will play a role also in 2026 for Stevanato Group. Patrick Donnelly: That's helpful. And then maybe one for Mark. Just on the margin expansion here. Again, obviously, the mix helps to degree within the high-value stuff that is helpful here with GLP growth. Can you just talk about the moving pieces on the margins the right way to think about the path forward here as high value becomes a bigger and bigger piece of the pie? And then I guess, flowing that into just the cash flow piece, how you continue to drive an inflection there? It seems like a little bit positive this year. Lisa Miles: Patrick, just to clarify, I think you're asking about '26 or are you asking about '25? Patrick Donnelly: Yes. '26 margin expansion and just the drivers of cash flow into '26 as well. Marco Dal Lago: Yes. Thanks for the question. So overall, Stevanato Group level, we are assuming in our guidance as mentioned, the center point of the guidance, 7.5% revenue growth and 8.3% on a constant currency basis. About margin, we see margin expansion from 0 to 30 basis points on a consolidated level. Operating profit margin ended 50 basis points at the center point of our guidance and adjusted EBITDA margin expanding for approximately 150 basis points. Gross profit margin, we can put together some headwinds and tailwinds. On the headwind side, for sure, we can mention higher depreciation were compared with 2025, we expect approximately 150, 170 basis both more in depreciation on industrial business. We have currency headwind embedded in our guidance. And on the positive side, instead, we have on top of the 2 new facilities where we can see quarter after quarter, the financial performance is improving, both in Latina and Fishers. So we are on the right track there to keep on expanding profitability -- and that's briefly also engineering. Frank already mentioned the market and revenue guidance. What I can tell is that we anticipate better margin in 2026 compared to 2025, mainly driven by the project mix. We are targeting more textile contracts with respective customers. So not really customized mines as we did in the past. And also, we will leverage the optimization plan we executed in 2024 and 2025. So we have -- this is embedded in our model and in our guidance for 2026. Operator: Next question is from Doug Schenkel, Wolfe Research. Douglas Schenkel: Good day, everybody, and thank you for taking the questions. I have 3, I'll just throw them out there and then listen to your answers. So one, is there any change in how you're thinking about the long-term growth outlook for GLP-1s for your business? Two, more near term, how strong is your visibility on demand pursuant to the assumption you embedded into guidance for GLPs, which I think is high teens growth in 2026. And then third, thinking about Lilly's multi-dose quick pen format, how do the economics differ between formats for Stevanato and really getting at vials versus cartridges? Franco Stevanato: What is related to the GLP-1 in 2026, practically were just executing the foreign cast that we share with our clients today and have already everything is embedded in our guidance that we are sharing with you today. We have already all the problem that was clear our clients. So what is beyond the 2026 it's a little bit too early to make any type of grand because there are a lot of moving pieces in the GLP-1. We see the big originator that are moving between, also the pen injector, they're launching also cartage new requirement, thanks to their fixed dose span. -- also, we see a lot of biosimilar in the market that continues to be very, very active to put capacity both for syringes, for cartridges, also from the devices. So the GLP-1 in the next decade, it will continue to be a powerful tailwinds for Stevanato, for all the industry but it's a little bit too early to understand what to be the final configuration between originator, biosimilar pen versus out injector. Lisa Miles: I think that answer covers all of your questions, just to confirm. Douglas Schenkel: Yes. I think the only thing, Lisa, was just the economics of the different formats. Lisa Miles: In terms of syringes, cartridges vials, so on and so forth. Douglas Schenkel: Also here, sorry. Franco Stevanato: Most of the GLP-1 products are under syringe Nexa that's a high-value product or cartridge is to feed that is also a high-value product. We have biosimilar a lot of requirement through our Alina's a high-value product this is practically the tendency is to answer to you that GLP-1 is going to be in a configuration of high-value products because of the EZ-fill or through Alina for Stavanato Group. Operator: Next question is from David Windley. David Windley: I just wanted to clarify definitionally, when you are talking about GLP-1s, are you including the full gamut of mechanisms that are kind of pursuing obesity. So GLP-1 glucagon non-incretinglucagon. Are we kind of generally bucketing all of that together for definitional purposes? Franco Stevanato: Correct. I confirm. David Windley: And then as you think about -- I think you talked about Nexus syringe being the strongest driver of growth in '25. Franco, you just commented to Doug's question about the kind of '27 and beyond outlook being a little less clear because of the transition, I guess in '26 on that guidance that you're giving for this GLP-1 or obesity category, is that still driven by Nexa syringe or do you see that start -- you mentioned in the prepared remarks some uptake in capacity in cartridge in your next phases of capacity, is cartridge kind of overtaking the growth lead as we move into '26 and beyond? Franco Stevanato: In 2026, Nexa syringes, it will continue to play an important role in the GLP-1s, David. Beyond the 2026 is also true that we are building a lot of capacity on the cartridges to fill, still minor compared to syringe Nexa but we are starting also to see that the customer originator and also biosimilars, they're starting to put new capacity not only on syringes but for cartridges in the next year to come beyond '26. David Windley: And if I could just sneak in a follow-up on the margin question. Would you be able to size -- maybe this is a Marco question, but size the tariff and FX headwinds to margin so we kind of understand what the gross improvement was from the mix shift to HBS, but offset by tariffs and FX, please? Marco Dal Lago: Yes. Sure. We mentioned the top line about EUR 20 million currency headwind, assuming our model, EUR 1.20 exchange rate that you know in the last days there was volatility, but this is what we have in our model. You can assume about 30% of that is impact in margins for 2026. About tariffs, we have been able to have a good dialogue with our customers, mainly predominantly transferring the effect of tariffs to customers in 2025, we had about 4 million headwinds, but it was mainly related to supply chain and the time to transfer the different scenario. So we are assuming limited impact from tariffs in 2026. Operator: Next question is from Paul Knight, KeyBanc. Paul Knight: Franco, after the 50% growth in GLP-1 last year, your mid-upper teens guide on '26 seems a bit conservative. Is it because Fishers is just ramping or what's behind this guide on GLP ones for this year? Franco Stevanato: No, I think it's core because the pharmaceutical industry, in particular, all the originators, the launch the product on the market in 2025. There was a massive preparation of the supply chain. Now to have a mid-teens growth in this in this category of drugs is still very important. I think it is a realistic number, Paul. When there is a takeoff of the product, when starting the product as to really go commercial. So this is what we see through our originator also to our biosimilar clients. Lisa Miles: Paul, perhaps it's best to think about it of an initial surge, followed by a period of normalization where growth slows a bit. Paul Knight: Yes. And then you had mentioned earlier a 45% increase in customers using high-value product. What's driving that? Is it share gain is [ NX1 ] regulations? Is it recent approvals that have been the right ones for you? What's behind that 45% customer gain? Franco Stevanato: On the non-biologic, you mean? Yes, this is our most important KPI in Stevanato Group. So the strategy that we're building since the day of the IPO of Stevanato Group is to become the partner of the pharmaceutical industry and everything that is around biologic where the good news that more than 60% of biologic, it will be through injection through a certain indication for devices. This has to become our big #1 strategy. And this is exactly what we are executing. Today, we are deeply engaged on Nexa syringes program. We are deeply engaged on Alba program. Syringes can move from 1 ml to 2.25 ml to 3 ml to 5 ml cartridge is the same format because both cartridges and syringes are going to be inserted on pen on auto-injector. Also, we are heavily investing in capacity for device space to our Alina clean room that we are building up in Germany and also for other selective program of [indiscernible] in Germany. Also, we have a big contract with American client in Fisher. So everything is going to summarize that where there is an injection want to be in. The real future in the next 1, 2, 3, 4, 5 years are the incremental value that we'll be able to generate spread through several tens of hundreds of programs worldwide through biologic and biosimilar, mostly United States, in Europe and also is growing rapidly. This is a big long-term strategy of Stevanato. Operator: Next question is from Calum Times, Morgan Stanley Unknown Analyst: Beyond GLP-1s, I'd love to get a better sense of what you're seeing across the biologic category today. I realize there's a lot of GLP focus just given the relative growth profile. But curious how other biologic categories have been performing, how customer discussions have been trending? Any positives? Any pressure points? And then what's just being assumed from these categories in the guide for. Franco Stevanato: So the category are practically monoclonal antibody. We have a wide range of biosimilar spread in a different region of the world. We are focused on mono infirmatory rare disease, all products that are going to require an injection or a certain medication. So there's a combination for Stevanato over Nexa syringes, [indiscernible] fill with at or injectors will be great to a little later thought as well on U.S. onshoring. Unknown Analyst: Obviously, Fishers should be well positioned for that. Any early discussions or insights you could share with us to just better understand the time lines for benefits here and when we could expect something to appear in the P&L. Do you want to say sure you mean? Franco Stevanato: Yes. Today, the price of Fishers play an important role when we decide in 2002, and we started to develop these plans -- this was really the purpose to be the campus that was going to mirror exactly the same capability that we have in Europe in particular for easy-fitchnology. -- with a different range of syringes, vary to files for devices. Today, what we see that many clients that are addressing their supply chain in United States and the fact that we are present in future with this why the capability is play all translating water, we can really accelerate additional opportunity for customers on to utilize the supply chain. Operator: Next question is from Larry Solow, CJS Securities. Lawrence Solow: Great. I guess just lots of information GLPs and all that. I really appreciate it. I guess from your seat today, and I won't hold you to this, but as we look out over the next 5 years, do you think the GLPs in summary, will, in aggregate, will still be driving 10% plus growth to Stevanato on a top line basis? What's your confidence level on that? Franco Stevanato: So we -- I think it will be -- continue to benefit on the GLP-1 in the future like a tailwinds. So the good news of the GLP-1 is this is information that we share constantly with our clients. We see quarters after quarters that the number of patients are going to increase and the large. So this is the good news. So from the moment that they launched, we also all our clients that they see more upside downside a number of the new customers. More and more, what we see that there are new opportunities for Stevanato on Nexa syringes, the opportunity for cartridges to fill and also for our device space. So I can see that it will be a long always for Stevanato that we help to further boost our biological revenue I don't know if after 5 years, it will continue to be in double digit because in [indiscernible] is also rapidly growing in other therapy that is so-called biologic. And this is are all high-value product like albacore our pen Liana or high format on cartridges. Lawrence Solow: That's all fair. What about just the RTU vials you mentioned 2025, obviously, had a nice rebound 24 down years. What can you give us a little more granularity on sort of how the year finished up and your outlook for '26 in that market? Marco Dal Lago: Yes, Marco speaking. As forecast, let's say, we went up about 6% in 2025, predominantly, we grew in asteric ratio. And this is where we see more traction also for 2026 where we expect a mid- to high single-digit growth, predominantly driven by the configuration. Another other point, orders intake in '25 was double digit higher than 2024. So we see the to is not a sharp increase, but we see increasing [indiscernible] demand. Lawrence Solow: Got you. And then if I could just squeeze one more in. Just Latina Fishers the trajectory of profitability. Where do we kind of stand? And I know Latin is a little bit ahead and Fishers is larger. But where do we stand and when do we kind of hit full run rate profitability? When do you think we can start closing in on that? Marco Dal Lago: We are going to the right direction. We see quarter-after-quarter better financial performances, the side operational performance, and we are growing quantities and that leverage our fixed expenses. We are very well positioned in Latina, where we are getting close to our average gross profit margin. Fishers, we are a little bit behind, but we see steady improvement of Fishers. That's difference as mentioned many times between the 2 plants. Latina is a smaller plant is about field, and we ramp up more rapidly than in Fishers. Fishers is a more complex plan with different type of products, syringes, vials, [indiscernible] , the drug delivery system. So we are progressing. We are improving going to the right direction, but it will take longer compared with Latina. Today, the gross profit margin is positive on the combination plants still dilutive compared to the average of the company and the average of this segment. Franco Stevanato: If I can give a sort of business angle. In Latin, we have continued the installation of the line for high-speed line for syringe. We are continuing to orient our regional customers to national customers. And this year, we're going to install the first high-speed line forecast is way to fill, but the goal is to do the validation is yet to start to do commercial revenue in the beginning of 2027 and in Fisher continues to perform audit to our big international clients in order to become particular domestic United States. In fact we have doubled the number of audit validation in 2025. Important milestone that we are advancing with the build-out of this bigger apartment production that is still expected to produce out in get for one big U.S. client at the end of this year. Operator: Next question is from Matt Larew, William Blair. Matthew Larew: The first is starting on GLPs, maybe the question on historically Lisa Miles: I'm sorry. We cannot hear you at all. Can you speak up a little bit? Matthew Larew: Sure. Can you hear me now? Lisa Miles: A little bit better. Matthew Larew: Okay. So you've historically said that you expect orals to be about 30% or 1/3 of the market. And I would say, investor expectations on that metric have moved quite a bit since the oral [indiscernible] launch. So you've addressed GLP growth for next year and reference for the next couple of years, but how do you feel about that metric? And I guess, in discussions with your customers, how are they viewing that metric? Franco Stevanato: Yes. So for sure, this is -- we are putting a lot of attention on this evolution of the pie, and we have a lot of point of contact with our clients, both the originator and the biosimilar. We look at what are the key opinion leaders are sharing. Our peers are customers also, I know that all the banks are very well prepared on this. [indiscernible] we are going to confirm that the share between injection spread between cartridges or syringes, which we represented the majority in the range of 70% and oral to be the minority in the range of 30%. Now what also we see, like I also mentioned to all of you before, we see this is information that we receive from the market the number of total patients worldwide, it will continue to increase month after month. And we don't see cannibalization between injection to the order because they are targeting to different type of patients today. So this is our internal estimation. From a supply chain point of view, what do we do because this is another important [indiscernible] if you look at the number of lines that the pharmaceutical industry is installing for syringes, for cartridges, and the number of lines for assembly technology for pen injector both into the originator into the biosimilar and to the CMO is still high. There's a big program of massive investment for injection in the next year to come on a worldwide basis. Matthew Larew: Okay. And on non-GLP biologics, sort of backing into maybe that being up mid-teens. Does that sound right? And then you referenced in the deck large global pipeline, I think, 60% of the 9,000 molecules. So what's your expectation for non-GLP biologics going forward. And I think that's generally speaking, all high-value demand. I guess if you could confirm that as well. Franco Stevanato: Usually, this non biologic product are a very rich that are maybe not in big size, it's difficult that to go in the range of hundreds of millions, in the range of tens of millions. They're looking -- because of the specific of this large molecule, they're looking for particular drugs, particular primary packaging with particular coating, particularly, for example, we are engaged with our Alba syringe because they have a special plasma coating. We are engaged with particular [indiscernible] silicon syringes with particular Nexa syringes and also different format. We see more and more moving to 3 mls to 5 today. That's something that is a little bit new on the market, usually the autoinjector pen used to stop at 3ml. So all overall, we see several hundred of programs spread to many customers meet the top 25 customer and some hundred of biosimilars that are extremely active to build capacity in this way. So what we are doing in Stevanato Group, we are building a supply chain through our engineering division, with particularly line dedicated to be able to be fast and flexible to serve these customers. So we want to keep a few [indiscernible] Latina in particular United States to be able to serve this wide range of products that are moving from syringes to [indiscernible] fee through our device colleagues. We are ready with our out injector, in particular also with our pen Alina or in a selective way when we already serve the syringes of the cartridges, we afflict CMO. So I want to reiterate our real strategy in Stevanato is really to say where there is an injection, self-administration, we want to be always on the #1 on the #2 for this product. Matthew Larew: Okay. And just one follow-up. You referenced the contract manufacturing opportunities and maybe that will be ramping end of this year into next year. How do you expect the economics of that business to look for you relative to the BDS business and your engineering segment? Marco Dal Lago: So we are not classifying the CMO as IPO. Nevertheless, we see the specific projects in a high range of normal value solutions. And as mentioned many times, we are taking here a selective approach with customers, leveraging this particular case, the integration between syringes and injectors, all the capabilities we have tool with very important customers. So we are using this strategy, taking a selective approach, especially where we can leverage integration. Operator: Last question is from Curtis Moiles BNP Paribas Exane. Curtis Moiles: Great. I think you've already given a lot of color here. But on the High Value Solutions guidance for 47% to 48% of revenue, I just wanted to clarify, are you thinking that will be primarily driven by GLP-1s? Or maybe can you separate the contribution from syringes versus kind of files and cartridges? Marco Dal Lago: It's a level of detail we don't provide. What I can tell you is that we are increasing our high-value solution next year double digit -- low teens if we consider constant currency rate. So we are growing both and other biologics next year. Curtis Moiles: And then also just I think earlier in the call, you mentioned that you could consider some additional actions around permitting away from the non-HPS categories. Can you maybe give a little color about what you're thinking about there? Lisa Miles: I'm sorry, Curtis. We missed a portion of your question as you were dropping out. Can you please repeat? Curtis Moiles: Sorry, Yes, of course, I think in the beginning of the call, you mentioned that you could consider actions around pivoting away from non-high-value solutions categories in the future. I was just wondering if you can comment on what you're thinking about there. Lisa Miles: Yes. Thank you for clarifying that. Franco Stevanato: Yes. Today, the focus in Stevanato Group also the investment or the attention of all our colleagues is on building capacity and to become the partner of this biologic market for high-value product and this is a while, for example, what you had to do to select, we are going maybe to the privatized the [indiscernible] for example, this historical product is good to produce in certain regions of the market, but in particular, in your United States, the goal is to focus to become the #1, #2 in the new product. Or for example, another example, in Germany, we have built this new big [indiscernible] room in order to host the production for line originally in this screen room we used to produce a standard in [indiscernible] forecast. We have decided to use this space, important space this now how to start to ramp up in the next years Salina the type of the prioritization that we are looking in the next year's focus on biologic high-value products. And when there is no strategic customer behind the strategic market, we try really to do some [indiscernible] Operator: Ms Miles, gentlemen, there are no more questions registered at this time. Lisa Miles: Thank you, everyone. That concludes today's call, and we'll be seeing you shortly. Have a good day. Operator: Ladies and gentlement, thank you for joining. The conference is now over. You may disconnect your telephones.
Operator: Greetings and welcome to Fuel Tech, Inc.'s 2025 Fourth Quarter and Full Year Conference Call and Financial Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Devin Sullivan, Managing Director at The Equity Group. Thank you. You may begin. Devin Sullivan: Thank you, Rob. Good morning, everyone, and thank you for joining us today. Yesterday, after the close, we issued a press release, a copy of which is available at the company's website, www.ftek.com. Our speakers for today will be Vincent J. Arnone, Chairman, President and Chief Executive Officer, and Ellen T. Albrecht, the company's Chief Financial Officer. After prepared remarks, we will open the call for questions from our analysts and investors. Before turning things over to Vince, I would like to remind everyone that matters discussed on this call, except for historical information, are forward-looking statements as in Section 21E of the Securities Exchange Act of 1934, as amended, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and reflect Fuel Tech, Inc.'s current expectations regarding future growth, results of operations, cash flows, performance, and business prospects and opportunities, as well as assumptions made by and information currently available to our company's management. Fuel Tech, Inc. has tried to identify forward-looking statements by using words such as anticipate, believe, plan, expect, estimate, intend, will, and similar expressions, but these words are not the exclusive means of identifying forward-looking statements. These statements are based on information currently available to Fuel Tech, Inc. and are subject to various risks, uncertainties, and factors including, but not limited to, those discussed in Fuel Tech, Inc.'s Annual Report on Form 10-K’s Item 1A under the caption of Risk Factors and subsequent filings under the 1934 Act, as amended, which could cause Fuel Tech, Inc.'s actual growth, results of operations, financial condition, cash flows, performance, and business prospects and opportunities to differ materially from those expressed in or implied by these statements. Fuel Tech, Inc. undertakes no obligation to update such factors or to publicly announce the results of any forward-looking statements contained herein to reflect future events, developments, or changed circumstances, or for any other reason. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including those detailed in the company's filings with the SEC. With that said, I would now like to turn the call over to Vincent J. Arnone. Vince, please go ahead. Vincent J. Arnone: Thank you, Devin. Good morning, and I would like to thank everyone joining us on the call today. 2025 was a year of multiple achievements for Fuel Tech, Inc., marked by an expanded opportunity set in our Air Pollution Control business segment driven largely by anticipated growth in data center development and construction, a resurgence in revenue for our FUEL CHEM operations, revenues for the year exceeded our expectations and reached their highest levels since 2018, and tangible progress at our Dissolved Gas Infusion business. We maintained a strong financial position with cash, cash equivalents, and investments of nearly $32,000,000 at year end and no debt. Our FUEL CHEM segment ended an already strong year on a high note. Across the country, the useful life of coal-fired units is being extended to satisfy growing energy demand, and many of these units were dispatched at levels that have not been realized in several years. Our results for the FUEL CHEM segment benefited from this phenomenon, in particular for our legacy units. In addition, 2025 results were favorably impacted by the full year performance of a U.S. commercial unit that we added late in 2024 and from a new U.S. customer that is currently operating with us under a six-month commercially priced demonstration program that commenced in 2025. As we have discussed previously, the annual revenue potential from this commercial opportunity, should it convert from a demonstration, is expected to be approximately $2,500,000 to $3,000,000 based on the customer running the program full time, with the revenue expected to generate historic FUEL CHEM gross margins. I want to share a bit of additional color regarding our FUEL CHEM demonstration program. This customer was interested in our program as a means to improve boiler availability and reliability, and to reduce maintenance downtime for offline boiler cleaning, in particular during periods of high power generation demand. This customer utilizes a source of coal that is high in sodium and is prone to extensive slagging and fouling. To date, the customer has realized a material reduction in downtime and maintenance costs due to a reduction in offline cleaning, which bodes well for a successful demonstration. Revenues generated by our APC segment rose in the fourth quarter but declined annually reflecting customer-driven delays and project award timing. We secured $8,800,000 of APC awards during 2025 from new and existing customers in the U.S., Europe, and Southeast Asia. Our near-term sales pipeline of APC contracts, exclusive of data center opportunities, is between $3,000,000 and $5,000,000. While we had hoped to close on these opportunities by year end, discussions remain active and we expect to close before the end of the current second quarter. Even with these delays, we ended the year with a consolidated APC segment backlog of $7,000,000, up from $6,200,000 at the end of 2024. As we announced last quarter, we expanded our APC portfolio through a small strategic acquisition of complementary intellectual property and customer-related assets from Walco Inc., a well-established environmental equipment and services company with several hundred project installations worldwide. As we continue to integrate WALCO's operations, we have been encouraged by the pace of project inquiries from their client base and others, including a number of near-term needs. The value proposition for us in acquiring WALCO was in securing these high-value assets at a modest price, strengthening our technology portfolio, and attracting a broader base of potential customers. This proposition seems to be playing out thus far. With respect to the data center opportunity, these facilities will potentially require emissions control solutions to mitigate their environmental footprint, comply with federal, state, and local regulations, and align with corporate sustainability mandates. Our sales pipeline for these opportunities remains strong and approximates $75,000,000 to $100,000,000 per project integrating our SCR technology with power generation sources. Please note that the value of the pollution control scope of supply represents a very small fraction of the estimated total AI infrastructure spend. I want to provide a little more information about our data center opportunity. First, think that we have been clear that any material near-term growth for our company will likely derive from our success in addressing this opportunity. As such, we have been, and continue to, devote substantial internal and external resources to position Fuel Tech, Inc. with data center developers, and turbine and engine providers, to deliver NOx reduction technologies as part of a data center's power generation platform. One point that I want to highlight is that Fuel Tech, Inc. is a subcontractor in the data center ecosystem. In all instances, we are a subcontractor to the data center integrator or to the turbine or engine OEM. This relationship limits our knowledge of the development of the data center opportunity, its funding, its phase of approval, and its timing. Our role remains the support and education of our direct customer regarding the design and delivery of a pollution control system that can best fit the application. This does not dilute the opportunity landscape or temper our enthusiasm in any way, but it does make providing specific insights with respect to the timing of awards more challenging. This is what we can currently share about the opportunity. At present, we are in various stages of participation in project opportunities with more than ten different data center integrators and turbine and engine OEMs, including some of the largest companies in the industry. All of these inquiries are for pollution control systems, primarily SCR, in support of the development of on-site power generation. The size of these projects runs the gamut, as little as two to five units per project to as many as 30 to 40 NOx reduction units, with pricing predominantly in the range of $1,000,000 to $2,500,000 per unit. Regarding timing, the earliest we expect any of these inquiries to convert to a commercial award based on our conversations with the various parties involved is Q2 2026, as the schedule requirements for at least two of the projects would necessitate the receipt of an award by then. The remainder of the inquiries will develop further as we move throughout the year. To the best of our knowledge, with just one exception, none of the inquiries that we are currently involved with have been awarded. More specifically, we are still very much in the running to capture our share of these opportunities, and we remain optimistic about our prospects for 2026. On the regulatory front, we have seen that the current administration is currently pursuing both the rollback of specific regulations that had been put in place previously and the implementation of new regulations that are less restrictive than those currently in place. Regarding the rollback of regulations, EPA announced the rescission of rules related to the reduction of greenhouse gases. Regulation of these emissions started in 2009 with the EPA endangerment finding based on a 2007 Supreme Court ruling. EPA has also announced the repeal of the 2024 mercury and air toxic standards for coal-fired units. It is important to note that both of these proposed rollbacks do not loosen the nitrogen oxide emissions reduction requirements for any sources and could potentially extend the life of some coal- and natural gas-fired units that may not have to reduce their emissions profile. We will take the opportunity, where applicable, to offer retrofit and maintenance solutions to accommodate the extensions of useful life. Now, regarding the implementation of new rules, earlier this year, EPA issued new source performance standards, also known as NSPS, for new gas turbines, which were published in the Federal Register on January 15. The NSPS was required per EPA consent decree with Sierra Club and the Environmental Defense Fund and were in response to the proposed rules that were issued in November 2024. A new category of gas turbines was created called temporary power turbines and is applicable to units below 85 megawatts installed to run for 24 months or less. These units will be required to achieve NOx levels of 25 ppm, which in some cases may not require SCR for all turbines. Turbines greater than 5 megawatts with high operating capacity will need to meet 15 ppm of NOx, which will likely require SCR, and turbines greater than 85 megawatts will need to get to 5 ppm NOx, which will require SCR in almost all cases. So what is the impact of the new regulation? First of all, several organizations including the Clean Air Task Force, Sierra Club, and the Environmental Defense Fund have filed a petition for reconsideration with the EPA, and the hard deadline to file a formal lawsuit challenging these amendments in the U.S. Court of Appeals for the D.C. Circuit is March 16. It is certain that lawsuits will be filed. And second, with this rule in place, power generation developers will need to decide how best to proceed with their pollution control solutions for their new sources of power generation. Based on the discussions that we have had with our potential client base, we are not aware of this new regulation having a significant negative impact on decision-making regarding the implementation of pollution controls. It is important to note that state-specific permitting requirements can vary from the new federal regulation. And it is also important to note that, outside of the NSPS requirements, the use of multiple gas turbines working together classify them as a major source for NOx. Major sources are governed by other regulations and are often required to meet more stringent NOx emissions which would require SCR. We continue to pursue additional new awards driven by industrial expansion globally and by state-specific regulatory requirements in the U.S. We are continuing to monitor the progress of the EPA's rule for large municipal waste combustion units. This rule reduces the nitrogen oxide emissions requirements for up to 150 large MWC units across the country. Fuel Tech, Inc. has had a long history of assisting this industry in meeting its compliance requirements, and we have had discussions with customers in this segment to support their compliance planning. The final rule is currently in the White House Office of Management and Budget and is expected to take effect before March, with NOx emission levels likely requiring advanced SNCR technology to meet compliance deadlines three years from the date of issue. Moving over to DGI. We are continuing the extended demonstration of the technology at a fish hatchery in the Western U.S., which remains on track to conclude in the second quarter of this year. The system is performing well, meeting customer expectations for the precise delivery of concentrated dissolved oxygen and generating positive results in terms of reduced operational costs and improved fish growth. A second trial that commenced at a municipal wastewater site in the Southeast U.S. was successfully completed in January and converted to a six-month rental contract that is expected to run through the beginning of the third quarter of this year. Our DGI system is delivering the designated volume of oxygen, and the client reports that odor-related complaints in the areas surrounding the plant have been dramatically reduced. We are currently in discussions with multiple other end markets of interest for DGI, including pulp and paper, food and beverage, petrochemical, and horticulture. We have been supported in these efforts with the addition of representative firms with end-market expertise. As we look ahead to 2026, we are optimistic about our potential financial outlook. Our FUEL CHEM business is expected to continue to perform well, driven by the performance of our base accounts and by the expectation that we convert another demonstration account to commercial operation. Our APC business development activities, including our standard opportunities, those associated with respect to the Walco acquisition, and potential tailwinds from data center opportunities, are at the highest level that we have experienced in several years. And regarding DGI, based on progress at our demonstrations, it is expected that we will have our first commercial contract in 2026. Overall, we expect that revenues for 2026 will exceed the level of 2025, with FUEL CHEM approximating 2025 revenues and APC exceeding 2025 performance, without considering the benefit of data center awards, which would be additive to the forecast. Before turning things over to Ellen, I want to thank the entire Fuel Tech, Inc. team for their dedication in advancing our strategic objectives and our shareholders for their patience and support. Now, I would like to turn the call over to Ellen for her comments on the financial results. Ellen, please go ahead. Thank you. Ellen T. Albrecht: Thank you, Vince, and good morning, everyone. I will start off today by reviewing our fourth quarter results. For the quarter, consolidated revenues rose 37% to $7,200,000 from $5,300,000 in the prior-year period, reflecting growth from both our APC and FUEL CHEM segment revenues. APC segment revenue increased 37% to $2,400,000 from $1,800,000, primarily related to timing of project completion. FUEL CHEM had a very strong quarter, generating a 37% increase in revenue to $4,900,000 from $3,500,000, reflecting contributions from our legacy portfolio and the six-month commercially priced demonstration program that commenced in early November. Consolidated gross margin for the fourth quarter rose to 45% of revenues from 42% in last year's fourth quarter, with APC and FUEL CHEM each producing higher margins for the quarter. FUEL CHEM gross margin increased to 46% from 45% in 2024 due to the increase in the revenue base. APC gross margin expanded significantly to 42% in the fourth quarter compared to 36% in the prior-year period as a result of project and product mix. Consolidated APC segment backlog on December 31, 2025 was $7,000,000, up from backlog of $6,200,000 on December 31, 2024. Backlog at 2025 included $3,400,000 of domestically delivered project backlog and $3,600,000 of foreign-delivered project backlog, compared to $1,900,000 of domestic-delivered project backlog and $4,300,000 of foreign-delivered project backlog at 2024. We expect that approximately $6,000,000 of current consolidated backlog will be recognized in the next twelve months. SG&A expenses were $4,200,000 in the fourth quarter compared to $3,900,000 in the prior-year period. As a percentage of revenue, SG&A expenses declined to 57% from 75%, reflecting higher consolidated revenue in the current period offset by the timing of certain expenditures. Research and development expenses for the fourth quarter rose to $504,000 from $405,000 in the same period a year ago, mainly attributed to our commercialization efforts for our DGI technology. Our operating loss narrowed to $1,400,000 compared to a loss of $2,100,000 in last year's fourth quarter, reflecting higher revenue and margin contributions from our operating segment. We continue to take advantage of the favorable interest rate environment and, as of December 31, 2025, have invested a majority of our $31,900,000 in held-to-maturity debt securities and money market funds. This generated $288,000 of interest income in the fourth quarter and $1,400,000 of interest income for 2025. Moving to the results for full year 2025. Consolidated revenue rose 6% to $26,700,000, in line with our most recent guidance provided in November. The increase in full year revenue was driven by a 28% rise in FUEL CHEM segment revenue to $17,800,000, exceeding our guidance for the year. This increase in revenue was partially offset by a decrease in APC segment revenue. Consolidated gross margin for 2025 rose to 46% from 42% in 2024, with higher margins for both the FUEL CHEM and APC operating segments. SG&A expenses for 2025 modestly increased to $14,100,000 from $13,800,000 in 2024, within the guidance range we provided at this time last year. The increase was mainly attributed to employee-related expenditures. As a percentage of revenue, SG&A decreased to 53% from 55%, reflecting higher consolidated revenue. For 2026, we expect SG&A expenses to increase modestly from those in 2025. Research and development expenses for the year were $2,000,000 for 2025, compared to $1,600,000 in 2024. As we move closer to fully commercializing our DGI segment technologies, in addition, we also continue to invest efforts related to our legacy technologies as necessary. Operating loss narrowed to $3,700,000 for 2025 compared to a loss of $4,700,000 in 2024, reflecting higher segment revenues and relatively flat total costs and expenses. Net loss for 2025 was $2,300,000, or $0.08 per diluted share, compared to a net loss of $1,900,000, or $0.06 per diluted share, in 2024. Adjusted EBITDA loss was $2,700,000 in 2025, compared to an adjusted EBITDA loss of $2,200,000 in 2024. Lastly, moving to the balance sheet. Financial condition remains very strong. As of December 31, total cash and cash equivalents, total cash and investments was $31,900,000, comprised of cash and cash equivalents of $11,900,000 and short- and long-term investments of $20,000,000. Net cash provided by operating activities was $3,000,000 for the year as compared to a use of total cash of $2,800,000 in the same period last year. Shares outstanding at quarter end were approximately 31,100,000, equating to cash per share of $1.03. Working capital was $25,700,000, or $0.83 per share. Stockholders' equity was $40,000,000, or $1.29 per share, and the company continues to have no outstanding debt. We remain fully confident in our ability to uphold a strong financial condition and continue funding both short- and long-term growth initiatives across FUEL CHEM, APC, and DGI. I will now turn the call back over to Vince. Vincent J. Arnone: Thanks very much, Ellen. Operator, let us please go ahead and open the line for questions. Operator: Thank you. At this time, we will be conducting a question-and-answer session. Before pressing the star keys. Our first question comes from Sameer Joshi with H.C. Wainwright. Please proceed with your question. Sameer S. Joshi: Hey, good morning, Vince, Ellen. Thanks for taking my call. Good morning. So first, the data center opportunity should be significant for the company. You mentioned you are reliant on these integrators or OEMs for getting the final order. My question is, are you already designed in with these participants or is there further sort of competition once those guys get the orders from data center? Vincent J. Arnone: I cannot say that we are specifically designed in for these operators at this point in time, Sameer. What we are doing is, we would obviously like to be at the point whereby we are designed in with an integrator or operator that is looking to build several sites. But right now, at the beginning phase with some of these operators, what we are doing is establishing ourselves as a potential trusted partner to be able to do the design pollution control system for them. A lot of the parties that are coming to us are not necessarily very familiar with pollution control requirements. So we are definitely playing an education role as we work with some of these parties at this point in time. But we are hoping that the upfront time that I mentioned that we are investing with these opportunities is going to pay off a little bit longer term as these projects actually do come through their evolution and are ultimately awarded. So that is where we stand today. And the situation I would say is slightly different across the different parties that we are dealing with. Sameer S. Joshi: Got it. Understood. And I do not want to conflate this, but the requirements for the less than 85 megawatt plants and short term working less than 24 months, does that in any way affect or impact these data center opportunities? I just do not want to conflate those, but is there any relation? Vincent J. Arnone: Right. Ultimately, on a long-term basis, should not have an impact, Sameer, because most of the projects that we read about, most of the projects that we are having discussions about, are intended to be long-term power generation solutions for that particular data center, right? It would only be in the instance whereby a potential operator or integrator needed that to meet perhaps a very specific startup date and they had the ability to have some power generation equipment up and running for a short period of time to meet that startup date. Again, perhaps, right? But again, from our perspective, the people and party that we are dealing with, they are looking at long-term power generation solutions that are indeed not temporary in nature because they are looking to support that data center long term, not just for less than 24 months. Sameer S. Joshi: Got it. Sticking to sort of regulatory environment, with the PPA declaring carbon dioxide not a pollutant and you talked about the mercury's doctrines, and it indirectly helping you because it does not require NOx reductions, and so existing plants may have extended life because of the other reductions in requirement or loosening of requirement. Are you already seeing any increased activity as a result of this where some of the plans that may be on the way to shut down are now saying that, hey, we can continue to function, and reaching out to you? Vincent J. Arnone: At this point in time, Sameer, it is a little bit too early to assess the impact of those relatively recent rollbacks. We just wanted to point out very specifically that those rollbacks do not impact Fuel Tech, Inc.'s opportunity to capture prospective awards that are specifically related to nitrogen oxide reduction opportunities. So we just want to ensure that there is not confusion related to those rollbacks which are not going to impact Fuel Tech, Inc. business opportunities. Longer term, those rollbacks, they could indeed have the impact of possibly extending the useful lives of some facilities. Sameer S. Joshi: Got it. Moving to FUEL CHEM, it is nice to see the six-month sort of trial order and likely because they are seeing the results likely to convert. Are there more such potential customers that you have in the pipeline or are at least talking to in terms of getting because each additional customer could bring two plus million or almost four plus million in orders annual recurring revenues? Vincent J. Arnone: So at this point in time, yes, we are very optimistic about converting this demonstration to a commercial contract. Hopefully, that will bode well for us here in 2026. But incrementally, as I have said on prior conference calls, the coal-fired base-loaded unit, just call it phenomenon, it is not as robust as it used to be a decade or fifteen years ago. So many coal-fired plants being shut down. We are looking for these pockets of opportunity whereby we can, on an incremental basis, add these one-off opportunities for us. Sameer S. Joshi: Okay. Vincent J. Arnone: And we need to be a little bit careful about saying that each unit is going to be between $2,000,000 and $3,000,000 per opportunity in revenue, because it does vary by unit size and the specific runtime of that unit. I just wanted to qualify that. So to specifically answer your question, we do not have anything of what I would call specifically that we are looking for imminent demonstration, but we are looking at some other opportunities that could be for us, and perhaps with the same body of plants that we are doing business with today, to add another unit or two at plant sites. So there is opportunity there, but again, as I have said previously, we have not looked at FUEL CHEM as being what I would call a material growth opportunity for the past several years. What we are seeing here in the recent term, we are very, very pleased with. We finished 2025 at just under $18,000,000 revenue, which if you would have asked me that question five years ago, I would have said it would not have been possible. So we are very pleased with where we are. And there is some, I will call it, moderate upside opportunity. Opportunity, but it is moderate. Sameer S. Joshi: I am guessing this outlook for 2026 where FUEL CHEM is expected to be at same level as 2025 does not include this incremental opportunity that may convert into, like, from trial to full time. Vincent J. Arnone: Yes. We are looking at it right now very, very conservatively, Sameer, without knowing exactly what the outcome is going to be as we sit here today. We will have more information to share in early May when we have our first quarter conference call. Sameer S. Joshi: Yes. That is fair. And just squeezing in one last one on DGI. It seems this municipal wastewater is working well as well as the fishery seems to be working well. Should we expect revenues from DGI during 2026? Because on the outlook, you did not mention any of that. Vincent J. Arnone: Right. So we are going to recognize, hey, a small dollar value of revenue from the rental of the system at the municipality. That is only $10,000 per month. As we look at the remainder of the year, we are hoping to have a system sale between now and the 2026 of one of our DGI units. It is not going to be material to our overall results. But what is important regarding that activity is it sets the platform for us to be able to further and go ahead and discuss a success story specifically with the end markets that we are looking to chase. And we have not had the opportunity to do that yet. So that moment is extremely critical for us as we look to further develop and commercialize DGI. Sameer S. Joshi: Thanks, Vince, for taking my questions. Congrats on a strong year and good luck. Vincent J. Arnone: Thanks, Sameer. Operator: Our next question comes from Adam Waldo with Lismore Partners. Your line is now live. Adam Waldo: Good day, Vince. I hope you can hear me okay. Your stock trades at $1.20 to $1.25 a share. You have about a dollar a share in cash on your balance sheet. You have reasonable prospect of being cash flow positive in 2026, and you articulate a sizable new business pipeline in the data center area. I would argue that with your stock trading where it is, the market does not believe you are going to close any of that pipeline. You are very optimistic that you can. Over the balance of 2026, and you were optimistic in the 2025 as well. The timing of these projects is very hard to predict. What gives you so much confidence and optimism that you are going to close, you know, a sizable number of data center projects over the next twelve to eighteen months. Vincent J. Arnone: Adam, thanks very much for the question. Yes, you are correct. I mean, we are in a position whereby, yes, we are trading just a little bit above cash value today. We as a company have not been able to go ahead and bring to the table any material award as of yet as to the data center opportunity. So in response to your question, my level of confidence lies in a couple of areas. First of all, as we have seen this opportunity develop, and literally over the past nine to twelve months because it is still what I would call a new opportunity and it is one that we do not believe for Fuel Tech, Inc. is a short-term opportunity, it is one that is going to develop over the next five to ten years. But what we have seen over this past nine to twelve months is more and more players, if you will—players defined as data center integrators, parties that have access to power generation equipment in the form of turbines or engines—and just then the OEMs of those turbines or engines themselves. There have been more inquiries come our way literally over this past three months than we saw come our way over the initial six to nine months, relative to parties seeking to take advantage of the opportunity to provide a power generation solution to the data centers that are going to be built out. Okay. So point number one is just the volume of activity, the different types of parties and players that are coming to the table, and also what I would call the caliber of the parties that we are dealing with as well, in terms of them being in some cases multinational organizations with scale and capability, that give us the confidence that at some point in time here, just given the demand, that Fuel Tech, Inc.'s products and solutions are going to be pulled into this ultimate data center solution. Okay. So number one, the volume of activity gives me a very high level of confidence. Point number two is my confidence in the Fuel Tech, Inc. team to be able to go ahead and basically assimilate all of the inquiries that have been coming our way and determine our best path with these data center integrators and/or engine or turbine suppliers to be able to position us well with those organizations and give these organizations the confidence that we, as Fuel Tech, Inc., can deliver on our air pollution control solution for them. So it is twofold. And yes, I am optimistic. I mean, the level of inquiry is indeed extraordinary. And so it is up to us to capitalize on it, and we are doing everything that we can to do so at this point in time. I hope that answers your question. Adam Waldo: Thank you very much. Vincent J. Arnone: Thank you, Adam. Operator: We have reached the end of the question-and-answer session. I would now like to turn the call back over to Vincent J. Arnone for closing comments. Vincent J. Arnone: Thank you, operator. In closing, I want to thank, obviously, our Fuel Tech, Inc. team for their continued support and dedication. Thanks to all of our stakeholders, again, for your patience. We are doing what we can to create shareholder value. And we have an opportunity landscape in front of us today that we know we need to capitalize on, and we are going to do everything that we can. Thanks to our Board for support as well. With that, I want to wish everyone a good day, and thanks for participating in the conference call. Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Good morning, and welcome to Advanced Flower Capital Inc.'s fourth quarter and fiscal year 2025 earnings call. At this time, all participants are in listen-only mode. Later, we will conduct the question-and-answer session and instructions will be given at that time. As a reminder, this call is being recorded. I would now like to turn the call over to Gabriel A. Katz, Chief Legal Officer. Please go ahead. Gabriel A. Katz: Good morning, and thank you all for joining Advanced Flower Capital Inc.'s earnings call for the quarter and fiscal year ended 12/31/2025. I am joined this morning by Robyn Tannenbaum, our President and Chief Investment Officer; Daniel Neville, our Chief Executive Officer; and Brandon Hetzel, our Chief Financial Officer. Before we begin, I would like to note that this call is being recorded. Replay information is included in our 02/10/2026 press release and is posted on the Investor Relations portion of Advanced Flower Capital Inc.'s website at advancedflowercapital.com, along with our fourth quarter and full year earnings release and investor presentation. Today's conference call includes forward-looking statements and projections that reflect the company's current views with respect to, among other things, anticipated market developments, portfolio yield, and financial performance in 2026 and beyond. These statements are subject to inherent uncertainties in predicting future results. Please refer to Advanced Flower Capital Inc.'s most recent periodic filings with the SEC, including our Annual Report on Form 10-K filed earlier this morning, for certain conditions and significant factors that could cause actual results to differ materially from these forward-looking statements and projections. During this call, we will refer to distributable earnings, which is a non-GAAP financial measure. Reconciliations to net income, the most comparable GAAP measure, for distributable earnings can be found in Advanced Flower Capital Inc.'s earnings release and investor presentation available on our website. Today's call will begin with Robyn providing a high-level recap of our 2025 fiscal year, including the conversion to a BDC. Dan will then provide an overview of our portfolio. Finally, Brandon will conclude with a summary of our financial results before we open the lines for Q&A. With that, I will now turn the call over to our President and CIO, Robyn Tannenbaum. Robyn Tannenbaum: Thanks, Gabe, and good morning to all our investors and analysts that have joined us today. Looking back on 2025, Advanced Flower Capital Inc. was focused on, one, reducing our exposure to underperforming credits through active portfolio management, and two, converting from a real estate trust to a business development company, or BDC, to expand the universe of transactions Advanced Flower Capital Inc. could invest in. We continue to focus our portfolio management efforts on underperforming credits in order to preserve capital. We believe that as we begin to get repaid on some of these underperforming assets and reinvest that capital into performing credits, we may unlock future earnings potential. I am pleased to announce that we received $117,000,000 of paydowns from performing and underperforming credits from the start of 2025 through today. During fiscal year 2025, Advanced Flower Capital Inc. originated $53,000,000 of new commitments, and subsequent to year end, we have closed on $89,700,000 of new commitments in the lower middle market, which Dan will describe in further detail. Turning to our conversion to a BDC, as of 01/01/2026, we completed our previously announced conversion from a REIT to a BDC. Our conversion expands Advanced Flower Capital Inc.'s investment flexibility to pursue opportunities beyond real estate-backed loans, including a broader universe of operating businesses aimed at enhancing long-term shareholder value. Before turning the call over to Dan, I want to touch upon our earnings for the quarter and fiscal year. For the quarter and full year ended 12/31/2025, Advanced Flower Capital Inc. generated distributable earnings per basic weighted average share of negative $0.12 and positive $0.39, respectively. Primarily due to realized losses from two underperforming credits recognized during the year, our 2025 dividends were characterized as a return of capital, making the 2025 distributions to our shareholders tax-free. Future dividends may receive similar treatment if Advanced Flower Capital Inc. recognizes additional losses in 2026. Looking ahead, the Board of Directors has declared a first quarter dividend of $0.05 per share, which will be paid on 04/15/2026 to shareholders of record on 03/31/2026. With that, I will turn it over to Dan, who will discuss our portfolio management efforts, strategy expansion, and new deals we have recently invested in. Daniel Neville: Thanks, Robyn, and good morning, everyone. I will begin with an update on our portfolio, then turn to our expanded strategy and deals we recently completed. Looking at our existing portfolio, from 2025 through today, we received $117,000,000 in paydowns. This includes the repayment of two loans subsequent to year end at par plus accrued, with an additional $1,800,000 in prepayment and exit fees from those two loans. We currently have three loans on nonaccrual and are focused on receiving paydowns on those loans to redeploy that capital into performing credits that should contribute to current income. We have continued the liquidation process for Private Company A. From 2025 through today, we have received $6,300,000 of paydowns. The borrower is still in receivership, and the distribution of proceeds needs to be approved by the court. We currently have a pending motion for an additional distribution of $6,400,000 in proceeds. While we are frustrated by the pace of distribution to date, I am happy to report that all of the operating assets of the estate are under agreement, and we expect distributions will continue to flow in over the course of 2026 as regulatory approvals and other milestones are met. Regarding Private Company K, two of the three Massachusetts dispensaries have signed purchase agreements approved by the court and are awaiting regulatory approval to effectuate the sale. We expect the sale of all of the collateral of Private Company K to be completed sometime in 2026. Lastly, we wanted to take a minute to touch on Justice Grown. In February, one of Justice Grown's claims was dismissed in the New Jersey action, and we also had oral arguments on the appeal of the preliminary injunction. We expect a ruling on the appeal in the coming months, and the Justice Grown mature loan matures on 05/01/2026. We continue to actively manage these positions to preserve shareholder capital and maximize recovery value. Our earnings may continue to be affected by the underperformance of some of these legacy loans and any realized losses we take on assets. However, as we begin to get repaid on some of these loans on nonaccrual and reinvest that capital into performing credits, we may unlock future earnings potential. Since expanding our investable universe, our active pipeline remains strong, with over $1,400,000,000 of deals as of today. We are focused on sourcing deals and backing companies in the lower middle market across a variety of industries. We are primarily focused on providing loans to cash-flowing borrowers with $5,000,000 to $50,000,000 of EBITDA. These financings are often used for expansion capital, acquisitions, refinancings, and recapitalizations. Turning to our activity after converting to a BDC, I would like to discuss two loans that we closed in Q1 2026. In January, Advanced Flower Capital Inc. closed a $60,000,000 senior secured credit facility to support the combination of Stat and the Morsby Group, which is backed by Cambridge Capital. Stat is a leading revenue recovery specialist servicing the Walmart, Target, and Amazon ecosystems. Morsby is a procurement specialist that focuses on long-tail supplier negotiations and savings for Fortune 1000 clients. Advanced Flower Capital Inc. provided the $60,000,000 to finance the acquisition of Morsby and refinance existing indebtedness. In February, Advanced Flower Capital Inc. committed $30,000,000 to a $60,000,000 senior secured term loan to support the acquisition and growth of a leading healthcare benefits platform tailored toward hourly and sub-$50,000 salaried employees, which is a large and underserved segment of the workforce. At closing, Advanced Flower Capital Inc. funded $20,000,000 of this commitment supporting a top-tier sponsor. In closing, we remain focused on unlocking value from underperforming loans and are excited about the new lending opportunities that we are seeing. Now I will turn it over to Brandon to discuss our financial results in more detail. Brandon Hetzel: Thank you, Dan. For the quarter ended 12/31/2025, we generated net interest income of $5,200,000 and distributable earnings of negative $2,800,000, or negative $0.12 per basic weighted average common share, and had GAAP net income of $900,000, or $0.04 per basic weighted average common share. For the full year ended 12/31/2025, we generated net interest income of $24,600,000, distributable earnings of $8,700,000, or $0.39 per basic weighted average common share, and had a GAAP net loss of $20,700,000, or $0.95 per basic weighted average common share. As previously mentioned, we believe providing distributable earnings is helpful to shareholders in assessing the overall performance of the business. Distributable earnings represents the net income computed in accordance with GAAP, excluding noncash items such as stock compensation expense, any unrealized gains or losses, provision for current expected credit losses, also known as CECL, taxable REIT subsidiary income or loss net of dividends, and other noncash items recorded in net income or loss for the period. We ended 2025 with $317,400,000 of principal outstanding spread across 15 loans. As of 02/25/2026, our portfolio consisted of $366,400,000 of principal outstanding across 15 loans. During the quarter, we repurchased $13,000,000 of our unsecured bonds. Currently, $77,000,000 of our unsecured bonds remain with a maturity in May 2027. We continue to evaluate and explore options to refinance that bond prior to maturity. As of 12/31/2025, the CECL reserve was $46,100,000, or approximately 18.2% of our loans at carrying value, and we had a total unrealized loss included on the balance sheet of $27,700,000 for our loans held at fair value. As of 12/31/2025, we had total assets of $275,600,000, total shareholder equity of $175,600,000, and our book value per share was $7.46. Lastly, on 03/02/2026, the Board of Directors declared a first quarter dividend of $0.05 per share, which will be paid on 04/15/2026 to shareholders of record on 03/31/2026. With that, I will now turn it back over to the operator to start the Q&A. Operator: We will now open for questions. To ask a question, please press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. Our first question comes from Aaron Thomas Grey with Alliance Global Partners. Your line is open. Aaron Thomas Grey: Good morning. Thank you for the question. This is John on for Aaron. So the active pipeline increased meaningfully with $1,400,000,000, up from last quarter's $400,000,000. Could you provide some color on the key factors that led to this increase, and how quickly you believe this could potentially translate to closed originations? Robyn Tannenbaum: Sure. Thanks for the questions. Daniel Neville: So, the pipeline increased meaningfully. That is primarily a function of our conversion from a REIT to a BDC. As you know, and as we have discussed, the investable universe within a REIT-only framework and the associated restrictions on real estate coverage was limiting to the loans that we could do within our portfolio. Upon converting to a BDC, that investment universe has been expanded beyond cannabis, which happened in August, but also allows us to invest in cash flow loans that are not fully covered by real estate as they were under the REIT framework. Aaron Thomas Grey: Great. Thanks. And then is there a split you could provide between the cannabis and non-cannabis pipeline, and what the expected yields for the non-cannabis, how those would compare to the legacy portfolio? Robyn Tannenbaum: Sure. So this is Robyn. We view the active pipeline as an active pipeline for lower middle market companies regardless of industry and spreads across a few. We are not going to break out what industries those are associated with, including cannabis. And as for yields, I would point you to page 14 in our deck. Yields that we have invested in are obviously not indicative of future yields, but Private Company X and Private Company Y were the last two loans that we did, which were in the lower middle market. One loan's yield to maturity per the deck is 14%, and one is 19%. Aaron Thomas Grey: Great. Thanks. I will jump back in the queue. Operator: Thank you. As a reminder, to ask a question, please press 1-1. Our next question comes from Pablo Zuanic with Zuanic and Associates. Your line is open. Pablo Zuanic: John, can I just follow up on—you gave good color there? About the loans on nonaccrual. In the case of Private Company A, what is left then is $4,400,000. There is nothing else to recover, right, if you can confirm that? In the case of Private Company K, you said two dispensaries are in the process of being sold. The third one, I guess, is still pending. The principal is over $12,000,000. Can we assume that when you are talking about process that you will recover and redeploy, that for Private Company K you will be getting the $12,000,000? And then any further color you can give on Justice Grown? From our start, it seems unlikely that you will be paid $78,000,000 or $79,000,000 principal in May. But if you can just give me—give color—correct me if I am wrong in my assumptions. Thank you. Robyn Tannenbaum: So this is Robyn. I will let Dan answer a few. On Private Company A, I believe what Dan was referring to is the amount that is currently pending in front of the receiver, not the total amount that we expect to get over time. Okay, and then I will let Dan take Private Company K. And then in terms of Justice Grown, we commented all that we are going to comment, and that is we really do not have anything to expand upon there aside from the loan is due in May. Daniel Neville: Yeah. So just to elaborate on Company A, we commented on the amount that was distributed in 2025, which was, I believe, $6,800,000. We have a pending motion for $6,400,000 that we expect to be distributed in the coming months. And then there were various other assets within the estate, both operating assets and financial assets, that will be monetized over time, and as those proceeds come in, we would expect additional distributions. We did not make a commentary on what the expected amount of the proceeds from the balance of the assets would be relative to what you see in our disclosures. Regarding Private Company K, which is the Massachusetts operator, as I discussed, two of the dispensaries are under APA and have court approval to effectuate those sales. Both are pending regulatory approval in front of the CCC, which typically is a three- to four-month process, although it can be longer, can be shorter. And then the third dispensary, we are receiving final LOIs in the coming weeks and expect that sale to also be effectuated in the 2026 timeframe. We do not break out reserves with respect to individual loans, but I would say that we believe that we are appropriately reserved on our portfolio as everything stands today. Pablo Zuanic: Thank you. That is good color, Dan. And then just, I know you are not going to guide for future loans, but is the first quarter pace based on the two facilities you extended to low middle market companies—is that cadence, call it $100,000,000 per quarter, is that something that you think can be sustained for the rest of the year? And just remind us how that would be funded in terms of your credit facilities and, of course, the proceeds you may receive. Daniel Neville: Yeah. So, Pablo, I think you can look at cash on the balance sheet and the capacity of our credit facilities. As it stands today, the $100,000,000 per quarter pace is not something that we currently have capacity to sustain outside of—obviously there are some loans that are on nonaccrual today, and we could receive proceeds from those loans over time, but it is very difficult to predict. But I would say that we are pleased to come out of the gate and start the year on a strong footing with two solid loans in the lower middle market to sponsors that we like and companies that we like at attractive yields. And I think, again, as Robyn said, I would point folks to page 14 of the deck and some of the terms associated with those loans, and that is the kind of deal that we would like to do going forward as we deploy capital over the course of 2026. Pablo Zuanic: Thank you. And then just two more if I may. One, again, I know you are not going to give guidance in terms of pipeline between cannabis and non-cannabis, but given everything that is happening on the regulatory landscape, do you foresee making any new loans in cannabis this year? I mean, I think the fourth quarter activity in terms of new loans was minimal in cannabis, right? So just your macro outlook in cannabis and whether that indicates that there would be opportunities to make loans in cannabis or not. And then the second question, which is unrelated, but does the whole Blue Owl Capital situation—how does that—obviously it does not affect your performance directly, but it does affect sentiment. Do you want to make any comments on that in terms of how investors should think about that situation relative to Advanced Flower Capital Inc.? Thank you. Daniel Neville: So in terms of the cannabis loans and the question regarding that, I think it is something that is in our pipeline that we continue to evaluate. But as we have said previously, the bar is very, very high for making any new loans into cannabis. Unfortunately, the regulatory approval that everyone is talking about first happened in August 2023, and there really has not been a ton of incremental progress since then. And so while we are hopeful and optimistic that there is regulatory approval, I think the lack of equity capital in the industry over the last three years, combined with the burgeoning tax liabilities that some of these companies are carrying, make it a very difficult sector for us to deploy fresh capital into. Robyn Tannenbaum: And then in terms of the BDC question, I think that each BDC speaks on its own credit performance and credit portfolio, just as we have. The middle market loans that we have made are new, and we feel good about those loans and where we invested. I am not going to speak on the industry or any other companies. They know their book a lot better than we do, so I will leave it to them to discuss on their earnings call. Operator: Alright. Thank you. This concludes the question-and-answer session. I would now like to turn it back to Daniel Neville, CEO, for closing remarks. Daniel Neville: Thank you for joining us today, and we look forward to talking to you on future earnings calls. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Hello, everyone. Thank you for joining us today for the Mayville Engineering Company, Inc. fourth quarter and full year 2025 results conference call. My name is Sami, and I will be coordinating your call today. During the presentation, you can register a question by pressing star to remove yourself from the question queue. Your host, Stefan Neely with Valem Advisors, to begin. Please go ahead, Stefan. Stefan Neely: Thank you, operator. On behalf of our entire team, I would like to welcome you to our fourth quarter and full year 2025 results conference call. Leading the call today is Mayville Engineering Company, Inc.’s President and CEO, Jagadeesh Reddy, and Rachele Lehr, Chief Financial Officer. Today’s discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today’s forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the Securities and Exchange Commission. Except as required by law, we undertake no obligation to update our forward-looking statements. Operator: Further, this call will include the discussion of certain non-GAAP financial measures. Stefan Neely: Reconciliation of these measures to the closest GAAP financial measure is included in our quarterly earnings press release, which is available at mechinc.com. Following our prepared remarks, we will open the line for questions. With that, I would like to turn the call over to Jagadeesh. Jagadeesh Reddy: Thank you, Stefan, and good morning, everyone. The fourth quarter represented a transitional period for Mayville Engineering Company, Inc. While demand in our legacy end markets remained muted during what is typically a seasonally softer quarter, our team remained focused on positioning the business for successful execution and growth as we enter 2026. Over the past six months, we have experienced robust and sustained demand momentum within our data center and critical power end market. In response, we have proactively reallocated available capacity and resources to support successful project launches and meet the evolving needs of our OEM customers in this market. As a result of these actions, our fourth quarter margin performance was pressured. We incurred and retained cost that would typically be flexed with softer demand, reflecting deliberate investments to support program readiness and execution. Importantly, this margin pressure is primarily driven by early-stage project inefficiencies and project launch costs as we prepare for higher-volume programs rather than pricing or structural cost challenges. As these programs ramp and utilization improves, we expect margins to normalize in line with our long-term expectations. These margin dynamics are transitory in nature and, importantly, position Mayville Engineering Company, Inc. to deliver profitable growth in 2026 and beyond as we capture demand in the rapidly expanding data center and critical power market. In addition, we remain focused on executing our MBX operational excellence framework, driving disciplined process improvements across our plants, and advancing initiatives to optimize and rationalize our manufacturing footprint, which we expect will further enhance operating leverage as end market demand recovers. Now turning to a review of our key markets and the respective end market outlooks. Starting with commercial vehicle, we continue to see net sales to this end market declining approximately 19% versus the prior-year period. In their most recent report, ACT has revised its full-year 2026 outlook upwards, now projecting a 3.4% increase in Class 8 production in 2026. This improved outlook reflects greater clarity surrounding the 2027 EPA emission standards, resulting in anticipated pre-buy activity and improved macroeconomic conditions. In contrast, our construction and access market revenues increased approximately 15% year over year during the quarter. This is supported by the AccuFab acquisition and strong nonresidential activity. Organic net sales growth in this market was approximately 11% in the quarter. In the powersports market, net sales grew approximately 20% year over year, driven by the impact of incremental volumes from new business wins and stabilized customer production schedules, as dealer inventory levels are now in line with current demand. This was partially offset by a decrease in sales within the marine propulsion market. Net sales in our agriculture market were approximately flat year over year amid signs that demand is reaching a cyclical trough. Within our data center and critical power end market, our business saw growth of approximately 13% year over year, supported by legacy OEM demand growth and early project launches on AccuFab-related cross-selling opportunities. Overall, demand from OEM customers in the data center and critical power market remains strong. Our qualified opportunity pipeline now exceeds $125 million, and the value of projects scheduled to launch in 2026 is approximately $40 million to $50 million. Combined with organic growth from our legacy OEM customers, we expect data center and critical power to represent more than 20% of our revenues in 2026. Looking ahead, we expect this end market to remain a consistent growth opportunity for Mayville Engineering Company, Inc. Based on recent market studies, we estimate our serviceable addressable market to range from $115 million to $185 million per gigawatt of new data center capacity installed. Given the number of new data centers expected to come online in the U.S. in 2026, this represents a total market opportunity of approximately $3.2 billion. We expect this market to grow at a compound annual rate of approximately 16% from 2026 to 2030. Please note these estimations exclude server racking opportunities, which represent additional incremental upside. While we will continue to take a balanced approach to allocating capacity to this end market, the robust demand growth allows us to proactively manage our commitments. This approach ensures us to maximize footprint utilization, deliver consistent profitable growth through the cycle, and continue to invest in growth initiatives that unlock long-term value. Before turning the call over to Rachele, I want to highlight several areas of commercial momentum that give us confidence in our growth trajectory for 2026 and beyond. Across all of our end markets, customer engagement and bidding activity remains strong. During the fourth quarter, we secured approximately $15 million in new project awards with data center and critical power customers. Year to date, total awards across our legacy markets were more than $108 million, exceeding our annual target of $100 million. Looking ahead to 2026, we expect total bookings across our end markets to be approximately $140 million, supporting profitable growth as our legacy markets move toward a cyclical recovery exiting 2026. Within our legacy end markets, we have continued to expand our share with our commercial vehicle customers as they launch new products heading into the 2027 EPA regulation changes. These products support future growth and are scheduled to begin production in late 2026 and 2027. In addition to the future expansion in commercial vehicle revenues, we secured new agriculture business on new model introductions and additional service business for a military customer. Within the data center and critical power market, approximately $15 million of awards secured in the fourth quarter were primarily driven by demand from major AccuFab customers. These substantial scopes of work span power distribution units, static transfer switches, busway components, and data center cooling. Turning to capital allocation. We closed 2025 with strong free cash flow generation. While we expect free cash flow to be softer in the first quarter, we continue to anticipate full-year free cash flow conversion of approximately 50% to 60% of adjusted EBITDA. As we progress through the year, our primary use of free cash flow will remain focused on debt reduction. As we progress toward our long-term target of 2.5 times leverage, we expect to become increasingly opportunistic deploying capital towards M&A, with an emphasis on further diversifying our end market exposure and supporting consistent profitable growth. In the meantime, our priority remains disciplined capital deployment, ensuring that growth investments are targeted, return-driven, and fully aligned with maintaining balance sheet strength. With respect to guidance, to provide investors with greater visibility into our business trends, we are introducing quarterly financial guidance in addition to our full-year outlook. This is due to the fast-moving data center and critical power environment and developing improvements within our legacy end markets. Rachele will cover our guidance in more detail, but I would like to highlight a few key elements of our expectations for 2026. Inclusive of a full year of AccuFab and associated data center and critical power cross-selling synergies we expect to realize in 2026, we anticipate full-year net sales to increase relative to 2025, along with margin expansion and improved free cash flow. These expectations assume an improvement of our legacy end markets primarily during the second half of the year. In summary, Mayville Engineering Company, Inc. is entering an important transitional year, one that is shaping the next phase of our growth and value creation. While we are intentionally investing both capital and operating resources ahead of anticipated demand, we believe the foundation for sustainable growth and improved profitability is firmly in place. With disciplined execution and a clear strategic focus, we are well positioned to deliver long-term value for our shareholders and our customers. With that, I would like to turn the call over to Rachele. Thank you, Jag. Rachele Lehr: Good morning, everyone. Total sales for the fourth quarter increased 10.7% on a year-over-year basis to $134.3 million. Excluding the impact of the AccuFab acquisition, organic net sales declined by 5.3% compared to the prior-year period. Our manufacturing margin rate was 6.6% for the fourth quarter of 2025, compared to 8.9% for the prior-year period. The decrease in our manufacturing margin rate was due to $1.2 million of data center and critical power-related project launch costs and $1.7 million of early-stage project inefficiencies on a commercial vehicle project. This was partially offset by higher-margin net sales contribution from the AccuFab acquisition. Excluding these temporary launch phase dynamics, our manufacturing margin rate would have been approximately 9% during the quarter. Other selling, general, and administrative expenses were $9.7 million, or 7.2% of net sales, for the fourth quarter of 2025 as compared to $7.9 million, or 6.5% of net sales, for the same prior-year period. The increase in these expenses primarily reflects $200,000 in nonrecurring costs and $1.1 million in incremental SG&A expense, each associated with the AccuFab acquisition. Interest expense was $3.8 million for the fourth quarter of 2025, as compared to $2.0 million in the prior-year period. The increase was driven by higher borrowings resulting from the AccuFab acquisition, partially offset by lower SOFR base rates relative to the prior-year period. Adjusted EBITDA margin was 4.7% for the quarter, compared to 7.6% in the prior-year period. The decrease reflects lower legacy market volumes and $2.9 million of project launch costs and early-stage project inefficiencies, partially offset by the benefit of the AccuFab acquisition. Excluding these items, adjusted EBITDA margin would have been approximately 7%. Turning now to our cash flow and the balance sheet. Free cash flow during the fourth quarter of 2025 was $10.2 million, as compared to $35.6 million in the prior-year period. The year-over-year decline primarily reflects the receipt of $25.5 million in settlement proceeds in the fourth quarter of last year related to a former fitness customer dispute. Excluding this item, free cash flow was approximately flat year over year. During the fourth quarter, we used available free cash flow to repay approximately $10.0 million in debt, resulting in net debt at the end of the quarter of $205.3 million, up from $82.1 million at the end of 2024. Our increased debt resulted in a net leverage ratio of 3.7 times as of December 31. Now turning to a review of our 2026 financial guidance. As Jag previously mentioned, we are introducing quarterly guidance in addition to full-year guidance. For the first quarter of 2026, we currently expect net sales of between $137 million and $143 million and adjusted EBITDA of between $5 million and $7 million. Our first-quarter outlook reflects continued project launch costs and margin pressure ahead of the majority of data center and critical power project ramps, which begin in the second quarter. Additionally, free cash flow is expected to reflect normal seasonal working capital usage, incremental working capital investments to support the data center and critical power ramp-up, and planned capital expenditures of $3 million to $5 million. For the full year, we expect net sales of between $580 million and $620 million, adjusted EBITDA of between $50 million and $60 million, and free cash flow of between $25 million and $35 million. This outlook reflects a full year of AccuFab ownership, $40 million to $50 million of incremental cross-selling revenue, and a gradual improvement in the legacy end market demand, primarily in the second half of the year. Additionally, embedded within our 2026 adjusted EBITDA guidance is $2 million to $3 million of cost improvements driven by our NBX operational excellence and strategic value-based pricing initiatives, net of inflationary pressures. As it relates to free cash flow, we expect our free cash flow conversion for the full year to be between approximately 50% to 60% of adjusted EBITDA, coupled with full-year capital expenditures to be between $15 million and $20 million. Given this outlook and our priority of repaying our debt, we expect to achieve a net leverage ratio of three times or lower by the end of 2026. Again, 2026 will be a transitional year for us. We believe that our cost structure and working capital discipline will position us for profitable growth, strong free cash flow yield, and improved adjusted EBITDA margins as we enter a phase of cyclical recovery and growth across our legacy end markets, supported by elevated growth in our data center and critical power end market. With that, operator, that concludes our prepared remarks. We will now open for questions as we begin our question-and-answer session. Operator: Thank you very much. To remove yourself from the question queue, please follow the prompts. Our first question comes from Michael Shlisky from D.A. Davidson. Your line is open. Please go ahead. Linda (D.A. Davidson): Yeah. This is Linda. My first question, starting with the commercial vehicle market. In your remarks, you noted the revised ACT outlook, and from the data we got overnight, it shows that Class 8 truck orders for February were one of the top ten months of all time. Does this change your view on 2026, and do you think any of it pulls from 2027 orders if this is just an emission-related pre-buy? Jagadeesh Reddy: Yeah. Great question, Linda. And I was expecting that question this morning. You know, I did not see the ACT report until I got up this morning. Right? So, obviously, it is fresh off the press. I was not surprised by the increase in orders in February, but, obviously, we were surprised by the magnitude of increase of orders in February. We have seen signals from our OEMs in the last month or so inquiring us and other suppliers about capacity, utilization, and we have seen signals from them of potential build rate increases. What I can tell you is we have not seen any of those signals translate into demand yet. Having said that, we expect again, given this morning’s news, we expect some of this demand to accelerate the build rate increases from our CV customers, and we expect that to start showing up in mid to late Q2. Usually, for most suppliers, there is a six-week lead time, and hence, we have not seen that yet in our EDI feeds. But we do expect that. So with that in mind, you know, we came into this call expecting approximately a 230,000 build rate. We will have to wait and see if that estimate changes in the coming quarters. And that is one of the reasons why we came out with our quarterly guidance, which is new for us. These are fast-moving developments in our legacy end markets. We are seeing similarly green shoots in construction and small ag as well. So with all of that, we wanted to be more nimble, not only internally, but also externally in how we are communicating with our shareholders. Linda (D.A. Davidson): Great. Yeah. I appreciate the color. That is very helpful. Then, switching to ag, we keep hearing about ag getting better, whether that is from John Deere or other suppliers getting a little more bullish. Do you see any light at the end of the tunnel on that end market? Jagadeesh Reddy: As some of our customers have indicated, the large ag will still be down this year, double digits. That is our customer forecast, what they have publicly communicated. But we are seeing signs of improvement in small ag, lawn care, turf, and forestry equipment. So we do see some green shoots, as I mentioned, in the ag business. I also want to remind you that our ag business is close to 5% of our overall sales, as much as it used to be a much larger piece of our business. With our data center business and other end markets continuing to grow and ag continuing to stay down in the last 18 to 24 months, it is now a much smaller piece of our business. Linda (D.A. Davidson): Got it. And then, my last question will be on critical power. You mentioned some launch cost in critical power providing a margin headwind in 2026. Do you think that would be complete by 2027, and what kind of margin tailwind might that be next year? Rachele Lehr: Linda, this is Rachele. Just, you know, as we look ahead into 2026, we really see that being ahead of the program launches. And we really expect and anticipate most of that to start taking place, to be at full run rate at the end of the second quarter. So we really expect to be at full run rate for the second half of the year. So we expect to incur more of those costs having the margin pressure in the first half. We do anticipate a little bit trailing into the second half of the year, but it is really going to be a first-half impact. Linda (D.A. Davidson): Got it. Thank you so much. Thank you for your time this morning. Jagadeesh Reddy: Thank you, Linda. Operator: Our next question comes from Greg Palm from Craig-Hallum. Your line is open. Please go ahead. Greg Palm: Yeah. Thanks. Good morning, everybody. You know, you incurred more cost and recognized lower margins than expected back from the November call. So I guess, looking back, what surprised you relative to that outlook? And then maybe you can just help unpack the EBITDA guide specifically for Q1 and maybe more specifically, what that margin progression looks like in sort of the Q2 to Q4 time period. It sounded like there are going to be some costs that you incur in Q2, and those mostly trail off in the second half. So just wanted to be sure we understood that right. Jagadeesh Reddy: Yeah. Let me start first, Greg. The headline really for us is we have won more business in data centers than we anticipated coming out of our November call. We expect our Q1—we are not obviously talking about Q1 bookings here—but our Q1 bookings for data centers will be significantly higher than what we have seen in the second half of last year after the acquisition. So in preparation for those, we are in the middle of many of those launches already. The business we have won in Q1. So we had to bring on significant resources online, not only in December, also in Q1 as we sit here. And that is the primary reason why we are showing the margin profile that we are showing in Q1. Rachele Lehr: And I would add, you know, our legacy business, we always had product launches, but we are doing that over, you know, 12 to 18 months, a much longer time, and we are able to do that. This, you know, this business is 8 to 12 weeks. And so we have had to expedite that and really make investments. We have a product launch team specific to this, more than we have ever had before, because of the speed and the intensity of which our customers are asking for things. Again, as Jag mentioned, this really did exceed our expectations and what we are winning. We first acquired this business, you know, we have said, hey, it is going to be $1 to $2 million in cross-selling synergies in 2026, and here we now are at $40 to $50 million. So we have just had to invest more, and we are seeing that continue into Q1 because a lot of these will not be at their full run rate until the end of the year, but we want to nail it and want to make sure we hit it out of the park with these new customers in our locations. Jagadeesh Reddy: And we are retooling six of our legacy plants—Mayville Engineering Company, Inc. plants. That is a significant effort to put data center work, not only what we have won so far year to date and last year, but what we are anticipating in 2026. Right? So it is great news, obviously, for the rest of the year and long term, that we are able to quickly convert six of our facilities for cross-selling synergies. Greg Palm: Okay. That is great color. And you already mentioned you are expecting that end market to represent more than 20% of revenue. I am just curious, as we sit here today, what kind of visibility do you have into that, you know, call it a $125 million revenue number if you want to use that. And, you know, there is a sentence in the press release that talks about pipeline and multiple large opportunities. Are these multiple large opportunities within that $125 million number, or is that something separate? Jagadeesh Reddy: So I would say with very good confidence that we have good line of sight to that $120 million worth of data center business for the year. So that is number one. Number two, very little of significantly large opportunities are in that qualified pipeline number we put out. Greg Palm: Sorry. Say that one more time. Jagadeesh Reddy: So some of the significant and large opportunities that we are pursuing, those are either—it is, you know, one or zero, right? So we did not want to take into account those opportunities—we do not want to inflate our pipeline with those large opportunities. Right? So when we talk about the $125 million of qualified pipeline, most of that is visibility and greater than 50% confidence that we could win those opportunities. So we are excluding some significantly large opportunities in that qualified pipeline. Greg Palm: Okay. And just to be clear, like, is there—when you talk about expectations for the year, if you were to, you know, win more small business or win, you know, one or a few of these large— is that something that could translate into more revenue this year above and beyond that $120 million number, or should we think of that more like a 2027 event? Jagadeesh Reddy: Yeah. It is possible, Greg, and hence our effort at quarterly guidance here. This is a fast-moving end market, and we do know, though we laid out $40 to $50 million cross-selling synergies, our expectation is that if we continue to win at the existing win rates in this end market, right, there could be upside to that number. Greg Palm: Okay. Perfect. Alright. I will leave it there. Thanks. Jagadeesh Reddy: Thank you. Operator: Our next question comes from Ross Sparenblek from William Blair. Your line is open. Please go ahead. Sam Carlevon: Good morning. This is Sam Carlevon for Ross. Thanks for taking my question. Jagadeesh Reddy: Hey. Morning, Sam. Sam Carlevon: Maybe starting with Rachele, can you help us parse out some of the moving pieces within the EBITDA guidance? I mean, how should we build to just an $8 million year-over-year step up considering 2026 includes a full year of AccuFab and incremental $40 million to $50 million of margin-accretive cross selling. Rachele Lehr: Sure. I think there are a couple of things to take into account here. One is our legacy business. The volumes continue to remain muted as we budgeted today. Now, of course, we just talked a little bit about what we learned on CV overnight—that there is some upside there. But as we look through the year, our customers are saying, our guidance is saying, that we expect most of those to start to rebound sometime in the second half of the year. So we have that pressure continuing on that piece of our business. We have a high fixed cost—55% of our costs are fixed—and so when we have that lower utilization, we really have ongoing under-absorption associated with that. The other piece is preparing for that legacy rebound. We are carrying some talent that we continue to hold on to because it is coming. And then the third piece is those launch costs. We, like I said, really want to make sure we hit it out of the park. The speed is faster. We are ramping up talent. We are learning as we go with this, and it is exciting to see the growth that we have with that, but we really need to be focused on delivering that. So first half is really pressured by the absorption, the launch cost, and getting ready for the rebound. Sam Carlevon: Got it. Have you given kind of what those launch costs are expected to be for the full year? Or just any sort of range there would be helpful. Rachele Lehr: Not full year, but we expect the first quarter to be very similar to the fourth quarter of launch costs for data center and critical power—$1 million to $1.5 million. We expect that to taper down through each of the quarters of the year. Sam Carlevon: Okay. Got it. I guess switching gears then. I mean, the $40 million to $50 million of in-year revenue synergies sounds like that is back-half loaded. I mean, it seems like that implies a pretty healthy exit rate exiting 2026. So I do not know if you could kind of help us size that ramp and kind of what that means as we enter 2027 of the business you guys have already won? Rachele Lehr: Yeah. I think, you know, as we look at—and we are seeing—by 2026, data center and critical power could be 20% of our total business, so that is significant. The adjusted EBITDA margins on that business are between 20% to 22%. So when you take that into account, knowing that the majority of that $40 to $50 million is going to come in the second half of the year, we will be exiting with margins in excess of our historical. If our historical business continues to come up, that will only additionally be upside. Sam Carlevon: Okay. From a revenue perspective, though, if we say, call it, you know, $20 million in the third quarter, $20 million in the fourth quarter, something like that, that implies an exit rate of, like, call it $80 million. Is that the right way we should be thinking about it into 2027? Jagadeesh Reddy: Yeah. That is, I think, a pretty good assumption, Sam. Sam Carlevon: Okay. Got it. That is what I thought. That is helpful. I will leave it there. Thanks, guys. Operator: Thank you. Our next question comes from Andrew Kaplowitz from Citi. Your line is open. Please go ahead. Natalia Bak: Alright. Good morning. This is Natalia on behalf of Andrew Kaplowitz. Jagadeesh Reddy: Morning, Natalia. Natalia Bak: Maybe just first question on data centers. As data centers and critical power segment grows and represents more than 20% of revenue, should investors expect more customer concentration to increase as well? Or is the opportunity pipeline diversified across multiple customers within that end market? Jagadeesh Reddy: Yeah. Within that end market, it is reasonably diversified. You know, not only are we working with some of the blue-chip names in the critical power end market, we also are working with the next tier of OEMs within that end market. So I do not expect a significant concentration in that end market for us. Natalia Bak: Got it. That is helpful. And then just maybe switching over to your access end market and then the recovery as well. You are expecting a modest recovery driven by infrastructure spending and potential rate cuts. But are you already seeing early signs of improvement in customer order patterns or conversations, or is that recovery more of a second-half expectation at this point in time? Jagadeesh Reddy: In the construction portion of that end market, we are already seeing the build rates increasing. You have seen public comments from our customers that are bringing back capacity online, bringing back employees online. Right? So we are seeing that already hitting our demand and EDI rates. In access, there were some, you know, starts and stops, if you will, with particularly the rental houses increasing their demand in Q4, but then, you know, some softer commentary from our customers on the access side of the end market. So we will have to wait and see and watch how access develops. But, you know, in general, we are positive on the construction and access end market. Natalia Bak: Great. Thank you. Appreciate it. That is it on my end. Jagadeesh Reddy: Yep. Thank you. Operator: Our next question comes from Ted Jackson from Northland Securities. Your line is open. Please go ahead. Ted Jackson: Thanks. I came in with 10 questions to ask and checked every one of them off. So, anyway, here is a couple for you, Jag. With regards to the 20% of revenue for ’26 that could be coming from data center and power, will that—are you going to be turning down in your legacy business to be able to ramp and hit that, or is that just on top of what is going on within the footprint that you have? For a lot of your legacy businesses, you know, then going even a little further, it is like, if we do see a stronger turnaround in, say, commercial vehicles, which, you know, my personal opinion is that we will, you know, will that preclude you from being able to get any additional business? And then I have got a couple more. Jagadeesh Reddy: Yeah. At this stage, Ted, we believe we have enough capacity to be able to ramp up data center business while we see improved run rates within our legacy business. It is not a question for 2026, I believe. It is really for us to figure out a way to continue to expand our capacity as we go into 2027. Our teams have been working feverishly for the last couple of quarters using our MBX framework to increase throughput, increase productivity. We are bringing on additional shifts in some of our plants. We are hiring more employees in some of our locations. So we are planning accordingly. And at this point, we are not going to have to turn down any of our legacy customer business. But that is something that we will continue to watch. And it also presents us some choices as we go into 2027, not necessarily for capacity reasons, but perhaps for margin and pricing reasons. Right? So we will continue to evaluate those opportunities as we go into 2027. Ted Jackson: I think the adding shifts is interesting to me. I mean, and, obviously, employees too. You know, I recall in the past, some of your locations, you only were running at one shift. And, honestly, adding additional shifts was kind of difficult because of labor constraints. You know, where are you in terms of, you know, kind of current utilization? You know, where are you in terms of kind of adding production shifts, and what are some of the hurdles you are having to overcome to make that happen? Jagadeesh Reddy: Yeah. Without the two AccuFab facilities, right—if you exclude them for a second—I would say we are still around 55% on a 24/7 equipment capacity basis. Right? So as we ramp up some of these volumes in our legacy factories, we are looking at automation. We are looking at, you know, extending our shift schedules. Not all, but many of our plants coming out of COVID went to two 10-hour shifts for four days a week. Right? So that is 20 hours a day, four days. But what we are doing is standardizing our shift schedules across the company. Now we are going to three eight-hour shifts, five days a week. That is one way we can immediately increase our run capacity in these plants. We are looking at automation, as I mentioned. We are looking at weekend shifts. We are looking at third shifts in some of our plants. So, you know, it is a mix of different strategies depending on where we see capacity needed and where we see demand coming in. Ted Jackson: Okay. Going over to when you talk about, you know, having to put resources to ramp up and incurring margins—so we are kind of dancing around all this—so it is people, you know, more labor cost. Is there—what other things go into, you know, the resources needed to position yourself to capture this growth that is impacting margins beyond, you know, obviously, the order of additional— Jagadeesh Reddy: Right. You know, as we mentioned earlier, our traditional program launches would have taken 6 to 18 months in many cases. Now we are having to launch these new programs on a 6 to 12 week basis. I will give an example. We have one data center customer that in January came to us and then essentially quadrupled their demand for one of the product lines we used to make in Raleigh. So we had to shift that product line to Defiance, Ohio, one of our, you know, traditionally commercial truck plants, and we went in full force. You know, I was part of a 15-member Kaizen team. I was on the plant floor for a full week figuring out how do we, you know, quadruple our output in that plant for that customer. So, you know, we are rethinking how we assemble components. We are rethinking how we do product flow through the factories. We are rethinking logistics. Right? We are having to rethink everything from scratch compared to what we used to do in any of our previous operations. Right? So that needs project management resources. That needs engineering resources. That needs MBX resources. So all of this, we are trying to do at six different locations, as I just mentioned, as we ramp up data center work. Right? So that is the initial investment we are making. We are obviously having to put in some additional capital to improve productivity. We have most of the capital needed to produce these parts, but sometimes additional capital—new types of machines or automation—improves throughput and product. We are also thinking about how do we get more volume out of our factories as well for these customers. So those are all the things that we are doing. And all of that is investment we are making upfront. Ted Jackson: Okay. And then my last question, which is kind of a silly one, but just to make sure—I want to make sure I understand what the term revenue synergies mean. So when you say that, you know, you are going to have $40 to $50 million in the revenue synergies in 2026, can you just give me a quick definition of what that— Rachele Lehr: Yeah. Jagadeesh Reddy: Anything from a data center customer that is going to be made in a legacy Mayville Engineering Company, Inc. plant. That is how we define that. As we mentioned, you know, last year, the two AccuFab plants we acquired were at capacity when we acquired them. So we are, of course, trying to drive additional throughput through those two plants, and that is not considered in the cross-selling synergies. That is just productivity improvement at those two plants. But anything we are moving out, increasing volume, and, you know, new programs from data center customers that we are putting into Mayville Engineering Company, Inc. plants, you know, that is where we consider cross-selling synergies. Ted Jackson: Thought I had it right. Just wanted to make sure. That is it for me. Thanks a lot, Jag. Jagadeesh Reddy: Thank you, Ted. Operator: We currently have no further questions, so I would like to hand back to Jag for some closing remarks. Jagadeesh Reddy: Before we conclude, I want to again thank our employees for their continued strong focus and execution, and our shareholders for their ongoing support. While we recognize the near-term challenges in several of our legacy markets, we are confident in the progress we are making to position Mayville Engineering Company, Inc. for durable, higher-margin growth in the years ahead. We look forward to sharing our continued progress with you. Thank you for joining us today. Operator: This concludes today’s call. We thank everyone for joining. You may now disconnect your lines.
Operator: Good morning. And welcome to Orion Group Holdings, Inc. Full Year 2025 Financial Results Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Margaret Boyce, Investor Relations for Orion Group Holdings, Inc. Please go ahead. Margaret Boyce: Thank you, operator, and thank you all for joining us today to discuss Orion Group Holdings, Inc. full year 2025 financial results. We issued our earnings release after the market last night. It is available in the Investor Relations section of our site at oriongroupholdingsinc.com. I am here today with Travis J. Boone, Chief Executive Officer of Orion Group Holdings, Inc., and Alison G. Vasquez, Chief Financial Officer. On today's call, management will provide prepared remarks and then we will open up the call for your questions. Before we begin, I would like to remind you that today's comments will include forward-looking statements under the federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts are forward-looking statements. Our actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of the factors that could cause our results to differ materially from these forward-looking statements are contained in our SEC filings, including our reports on Form 10-Q and 10-Ks. With that, I will turn the call over to Travis. Travis, please go ahead. Travis J. Boone: Thank you, Margaret. Good morning, everyone. Thank you for joining us today to discuss our 2025 results and 2026 guidance. Before we begin, I want to acknowledge the ongoing conflict involving Iran and the Middle East. We extend our sincere appreciation to the men and women bravely serving our country. We recognize the situation remains very fluid, and we are actively monitoring developments and evaluating any potential impacts on our business and markets. Now on to my prepared remarks. 2025 was a year of strong operational execution and meaningful advancement of Orion Group Holdings, Inc.'s long-term strategic priorities. We drove both top- and bottom-line growth and generated good free cash flow. Across the organization, our team delivered with predictable excellence, executing projects safely and profitably, strengthening our balance sheet, and taking important strategic steps that position our company for continued growth ahead. Over the past several years, we have been very clear about what we set out to do: improve execution, strengthen margins, professionalize the organization, and build a platform capable of capturing the significant opportunities across mission-critical marine infrastructure, defense, and concrete construction. In 2025, we translated that strategy into results. Importantly, we took decisive strategic actions that advanced our long-term growth plan. In December, we closed a new $120,000,000 senior credit facility that improves our liquidity, lowers our cost of capital, and provides flexibility to support both organic growth and accretive acquisitions. We also purchased a derrick barge in December to further increase capacity and execution flexibility. As many of you are aware, we have been on the hunt for a large Jones Act derrick barge that will enable our team to pursue a broader range of marine and defense-related work. The barge is currently undergoing some refurbishments, and we expect to deploy it into our operations later this year. Last month, we completed the acquisition of J. E. McAmus. The transaction greatly enhances our marine platform, particularly in complex jetty and breakwater construction where McCamis has deep, proven expertise. Their strong Pacific footprint, experienced workforce, and high-quality equipment fleet expand our ability to execute large, technically demanding projects. Integration is well underway and we are very encouraged by the strong cultural alignment and the collaboration we are seeing across the combined organization contracts awarded to McKamis over the last several weeks. In 2025, we consolidated our Houston footprint into our new headquarters office, implemented a modern project management platform, favorably settled multiple litigation matters, and monetized non-strategic real estate. Collectively, these deliberate actions improve our readiness for the next wave of large-scale, mission-critical marine and concrete infrastructure opportunities and reflect tangible progress for our strategic plan. While most aspects of our performance met or exceeded expectations in 2025, backlog was the one area where results were not as we anticipated. Even though our win rate in 2025 improved over 2024, for the year, we booked just over $763,000,000 in new contracts and change orders across the company, which represented a 0.9x book-to-bill. Customer decisions moved to the right, primarily due to tariff-related uncertainty in the private sector at the beginning of the year, followed by the prolonged U.S. Government shutdown later in the year, which delayed public sector bidding and awards. Importantly, we believe this is only a timing issue, with the work simply moving to the right as opposed to going away. We remain confident in our strong demand outlook, which is supported by the tailwinds we are experiencing across our markets. In addition, recent developments in the Middle East may accelerate the government to approve additional defense funding. We remain bullish on our backlog trajectory and long-term growth outlook, with a vibrant, growing pipeline that is currently at $23,000,000,000, which includes the J. E. McAmus pipeline of $1,400,000,000. Our marine opportunity pipeline increased $3,000,000,000, or 21% sequentially, to over $19,400,000,000 as of December 31. This does not include the McAimis acquisition, which we closed on in February. This growth reflects building demand and urgency across both public and private sector clients, and we are pleased with the 2026 funding for the Department of War Pacific Operations. Across our operating regions, we have a healthy volume of opportunities expected to be awarded throughout the year for clients spending in the U.S. Navy, the Coast Guard, regional port authorities, state departments of transportation, and private energy and chemical clients. Moving on to concrete. Our opportunity pipeline grew to over $2,400,000,000 at the 2025. Over the last several years, our team has built a strong and expanding position in data centers and the mission-critical construction market. The team produced good bookings throughout 2025, increasing year-over-year backlog by 10% with recent awards spanning data centers and other commercial structures. Our expansion into Florida and Arizona is paying dividends, fueled by a growing project pipeline and solid execution. I would like to drill down into our data center work, a real highlight in our concrete business that is improving literally by the day. I spent a good amount of time with the team last week and let me tell you, they are killing it. Today, our data center count stands at 46 projects, either completed or in progress across Texas, Iowa, and Arizona. We are seeing a shift toward larger campus-style developments for which execution and schedule certainty reign supreme. And our team has earned an outstanding reputation as a reliable delivery partner on mission-critical programs. In addition to construction of the buildings and foundations, we are increasingly engaging with key clients earlier to address constructability concerns and to implement targeted design improvements. To support these strategies, we have recently expanded into site civil and earthwork to strengthen execution certainty for our clients and also to broaden Orion Group Holdings, Inc.'s scope of services. We expect to see data centers contribute even more significantly to our concrete business this year, with some large opportunities developing in our markets. In closing, as I reflect on the year, I am excited about the deliberate execution of our strategic priorities buoyed by building momentum in our key end markets. With a $23,000,000,000 pipeline inclusive of Mecamis, a healthy balance sheet, and the best client-centered execution team in the business, we have an excellent runway for 2026 and beyond. I will now turn the call over to Alison to talk through our financial results and our 2026 guidance. Alison? Alison G. Vasquez: Thanks, Travis. We were pleased with the financial and operational progress we delivered this year, reflecting disciplined execution across the organization and continued focus on profitable growth, cash generation, and balance sheet health. For the full year 2025, revenue increased to $852,000,000, operating income to $15,000,000, adjusted EBITDA to $45,000,000, and adjusted EPS to $0.25 per share. I am also very pleased to report that we generated full-year operating cash flow of $28,000,000 and free cash flow of $14,000,000. Across all metrics, these results were a notable improvement over last year. From a segment perspective, in 2025, Marine delivered $545,000,000 of revenue, a 4.5% annual growth, and more than doubled its adjusted EBITDA to $56,000,000 for the year. This represents a 10% adjusted EBITDA margin compared to about 5% in 2024. The improvement in adjusted EBITDA was driven by favorable revenue mix, excellent execution, favorable equipment utilization, and positive project closeouts. For reference, Marine's contribution adjusted EBITDA margin for the year was 15%. In 2025, Concrete revenues increased 12% annually to $307,000,000, and Concrete reported an $11,000,000 loss in adjusted EBITDA. The reported adjusted EBITDA loss is primarily attributable to the impact of corporate allocations in 2025 and favorable project closeout benefits in 2024 that did not reoccur this year. Concrete's contribution adjusted EBITDA margin for the year, excluding corporate, was 4.5%. To provide increased transparency on segment operating margins, we plan to update our reportable segments beginning in 2026. Specifically, we plan to break out corporate expenses separately as a non-operating segment and will no longer allocate those costs to Marine and Concrete for external reporting purposes. This change is intended to increase transparency of our operating segments' results. Moving on to the balance sheet. As many of you are well aware, late in the fourth quarter, we entered into a five-year $120,000,000 credit agreement with UMB Bank. This facility meaningfully improves our liquidity, reduces borrowing costs, extends maturity by two years, and positions the balance sheet to fund future investments. It includes a $60,000,000 revolving line of credit, a $20,000,000 equipment term loan facility, and a $40,000,000 M&A term loan. It also includes an additional $25,000,000 uncommitted accordion to fund future growth. The UMB facility refinanced and replaced our previous $88,000,000 credit agreement, which was scheduled to mature in May 2028. Borrowings under the UMB credit facility bear interest at a rate of SOFR plus 2.5% to 3%, a 40% reduction in our borrowing cost compared to the prior credit agreement. A big shout out to our treasury and legal teams for getting this across the line. In connection with this refinancing, we paid off our $23,000,000 term loan and ended the year with net debt of just about $6,000,000. I would like to point out that subsequent to year-end, in February, we increased our senior borrowings by $47,000,000 to fund the McCanis acquisition. I will wrap up with our guidance update for 2026. We are very pleased to provide our full year 2026 guidance as follows: revenue in the range of $900,000,000 to $950,000,000, a 9% increase from 2025 at the midpoint; adjusted EBITDA in the range of $54,000,000 to $58,000,000, a 24% increase from 2025 at the midpoint; adjusted EPS in the range of $0.36 to $0.42, a 56% increase from 2025 at the midpoint; and capital expenditures in the range of $25,000,000 to $35,000,000, consistent with last year. That is it for me. Back to you, Travis. Travis J. Boone: Thank you, Alison. We are very proud of what we accomplished in 2025, and we view this year as a bridge, not a destination. Over the past twelve months, our operations team executed projects safely while growing revenues and adjusted EBITDA. Meanwhile, our corporate team sold the East West Jones property, restructured our credit facility, purchased the derrick barge, and acquired J. E. McAmus. None of this progress would have been possible without the hard work, dedication, and commitment of our people, and I want to thank them for their outstanding efforts. With a strong operating platform, expanded capabilities, and favorable market tailwinds, we are excited about the opportunities ahead and believe Orion Group Holdings, Inc. is well positioned as we look to capture more work and continue to execute for our employees, clients, and shareholders in 2026 and beyond. We will now open for questions. Thank you. We will now begin the question and answer session. The first question will come from Tomo Sano with JPMorgan. Please go ahead. Tomo Sano: Hi, good morning everyone. You talked about some of the delay of the revenue recognitions for awarded projects and could you talk about the impact your reported sales and margin in Q4? And could you specify which segments or projects experienced that delay and quantify the revenue and margins impact in 2026, please? Thank you. Alison G. Vasquez: Sure, Tomo. I will start, and Travis, feel free to add in. From a Q4 perspective, the fourth quarter came in generally in line with what we expected. We did not see a lot of softness in the quarter, and it was generally in line with what we were targeting and the guidance that we had set out for the full year. I will say that things do typically, in construction, move around a bit in terms of timing and cadence. You probably saw some of that in terms of margin profiles for the individual segments. But from an overall perspective, things came in in line, including from a corporate perspective. There were a few opportunities that— Travis J. Boone: That split out in Q4 that we were pursuing, but that is more on the pipeline side of things. Tomo Sano: Yep. Thank you. So could I double click on your commentary about the margins? Alison, if you could talk about the 2026 outlook by segment in terms of the margin expansions from 2025 to 2026? Alison G. Vasquez: Sure. I would be happy to. We are continuing to expect that we will have modest margin expansion across the business, both from the favorable impacts of blending McCamis into the Marine business. As you probably well recall, McCamus operates at a meaningfully higher margin than the rest of Orion Group Holdings, Inc., so we are expecting to see some favorable blend associated with that acquisition and the incorporation of their results. And then from a Concrete perspective, we do expect that Concrete will deliver margins in the mid-single digit for the year. In 2025, Concrete delivered margins of right around 4.5%, and we do expect to nudge that up in 2026 just as a function of some favorable demand signals that we are seeing in terms of the work that we are bidding on, the work that we are winning and bringing into backlog, as well as just continued growth and scale, which benefits our Concrete business pretty meaningfully. Tomo Sano: Thank you. If I may squeeze one more on data centers, Travis, you talked about data centers. Could you quantify the impact in 2026, in terms of the revenue compositions as well as some competitive advantages in data center projects for Orion Group Holdings, Inc., please? Travis J. Boone: I am not sure if I am ready to point to the fence yet on where we are going to land with data centers. As Alison just mentioned, we are seeing a large amount of opportunities that are lining up well with our capabilities and relationships. We have started doing site civil work on some of these data centers, which has been very well received, and we are doing well with that work. I think that will expand and continue. And I think we are going to keep seeing just a large amount of data center work happening. Right now, it is about 40% of our Concrete business. I expect that to probably go up a little next year. Tomo Sano: Thank you. I appreciate it. Travis J. Boone: The next question will come from Aaron Michael Spychalla with Craig-Hallum. Please go ahead. Aaron Michael Spychalla: Yes, good morning, Travis and Alison. Thanks for taking the questions. Maybe first for me, just on the pipeline, can you talk a little bit more about that? It sounds like the expansion is pretty broad-based. Any thoughts on kind of timeline, conversion to orders? I know you have had a slide that kind of has laid out timing potential there. And then just maybe talk about the kind of market and margins you are seeing—quotes and kind of backlog-wise? And then, you know, outside of McCamish, on margins as you are going to bid projects, how is that looking? Travis J. Boone: Yeah. So the pipeline has expanded. Some of that has been because things have slid, right? So it is kind of building, but there is also some things sliding, which makes it look like it is getting even bigger. But we have quite a few near-term opportunities, as in 2026, that are $100,000,000-plus projects. More than a dozen very real opportunities that are over $100,000,000 in size, which gives us a lot of confidence even though our backlog is down. We are one project win away from the backlog being in good shape. So we are not worried. We are bidding projects in the near term here that we feel good about. With our Marine business, and our Concrete business pipeline is growing and looking really strong. As you may recall, our Concrete pipeline is typically fairly small because there is a lot of book-and-burn, and it is private sector opportunities which are not super visible long in advance. So we are excited to see the Concrete pipeline creeping up, as well as the Marine pipeline continuing to expand, and then we added in McCamis that gives us even more opportunities to pursue. On the McKayman side of things, nothing has changed as far as the margins, bid margins, and things like that. They are going to continue pursuing projects as they have and— Alison G. Vasquez: And then on the rest of the business— Travis J. Boone: The rest of the business looks good. We are not seeing any downturns. In fact, I would say more the opposite in several of our markets. Aaron Michael Spychalla: Good. And then, you know, maybe second, on the data center side of things, you kind of talked about an expansion—site and civil and earthwork. Any thoughts high level what that means for maybe average project size or how quickly these projects can continue to turn with that dynamic? Travis J. Boone: Probably not going to give too much information just for competitive reasons, but I think it depends on where the data center is and how much infrastructure and dirt work needs to be put in before the concrete and foundations happen. There can be fairly significant amounts of work that go into that, and it gives us something else to sell to our customers. And as many of them are shifting to bigger campuses, sometimes those get to be much larger. Even though it may be a really large data center, they kind of go a little piece at a time—one little piece and another little piece—and then you look back six months later and you have done a ton of work over a period of time. So these things turn from a $500,000 task order, and next thing you know, you have done $50,000,000 worth of work—a little at a time, but very quick. Alison G. Vasquez: Yeah, and I think the other important thing there is, because our team has such a high level of credibility in this really critical aspect on the critical path of these projects in terms of building the structure—the infrastructure to support all the really important internal things—we are being engaged earlier in terms of some of the constructability concerns and the things that we have seen over the now 46-and-counting data centers or campuses that we have worked on. Incorporating those lessons for our clients is a really valuable level of expertise that we bring to the table, which means we become a trusted partner in this aspect of the building and the construction. So it is a pretty exciting time. My hat is off to that team who built very strong relationships with a number of key players. Aaron Michael Spychalla: That sounds great. Thanks for taking the questions. I will turn it over. Alison G. Vasquez: Thanks, Aaron. Travis J. Boone: Next question will come from Gerry Sweeney with ROTH Capital. Please go ahead. Alison G. Vasquez: Good morning, Gerry. Travis J. Boone: Hi, Gerry. Gerry Sweeney: Just a couple of follow-up questions maybe, but looking at the Marine side, obviously, pipeline is growing, you said some of the projects pushed to the right per se. But are you hearing any—or do you have any anecdotal commentary on maybe when some of these projects may come to fruition? Obviously, they are quite large, complicated. We have had a government shutdown, and then we have, you know, escalating in the Middle East. But all that said and done, just curious as to maybe some of the anecdotal items that you are hearing on those opportunities. Travis J. Boone: We are bidding a nice project this week. There are things moving forward now. There is not a single theme for why they moved—different reasons in different cases—but they are just shifting to the right. It is not a never-ending shift. They are actually coming to roost at some point, like the one I just mentioned that was originally supposed to be last year and we are bidding it this week. We are bidding quite a few jobs in the next six months—pretty nice ones—along with the normal run-of-the-mill projects that we always go after. I do not know if I answered your question, but— Gerry Sweeney: Yeah. Was talking to you. Yeah. Sorry. Go ahead. Alison G. Vasquez: I would just add, Gerry, that as we look at the pipeline, it continues to be very robust. We continue to have good line of sight into $8,500,000,000 of opportunities that we expect to be awarded in 2026. That is pretty normal. We have seen some clients really engage in a more meaningful way, which to us signals that decisions are likely going to be made in the near term. The pipeline sets up to be probably about a 40/60 split in terms of awards in the first half versus the second half, which is pretty normal—there is usually a spike in the federal government’s third fiscal quarter. We also often talk about the number of opportunities where we have provided all information and are just awaiting award from the client, and that number continues to sit at right around $1,000,000,000. That is a little bit higher than normative, but it has been consistently at that $1,000,000,000 mark throughout 2025 and continues to be around $1,000,000,000 now. That might just be the new norm in terms of holding the pipeline a little longer. We are seeing some awards, some clients moving and being more active. Gerry Sweeney: Gotcha. And at some point, that building kind of breaks loose, which is positive, obviously. Right? So— Travis J. Boone: That is right. Gerry Sweeney: Okay. That is it for me. I appreciate it. Thanks. Alison G. Vasquez: Thanks, Gerry. Travis J. Boone: The next question will come from Alexander Rygiel with Texas Capital. Please go ahead. Alexander Rygiel: Travis, your historical win rate on bids is sort of in that mid-teens range. Is there any reason to believe that historical win rate will be any different going forward? Travis J. Boone: No. We saw that win rate tick up between '24 and '25. Even though our backlog was down, our win rate was up, which tells you that things were sliding. We have seen it head in the right direction by a percent or two. I do not expect it to change much. It might continue to go up a little, but I do not expect any large jump up or down. We like to be in that 15% to 20% win rate sort of range, and that is where we are. We feel pretty good about it. Alexander Rygiel: And then, as it relates to your adjusted EBITDA guidance of $54,000,000 to $58,000,000, can you bridge that delta from the $45,000,000 you just reported and help us to understand what is organic versus inorganic? And as it relates to the organic, how that is broken out by segment? Alison G. Vasquez: Sure. I will give some high-level commentary. We are always gearing the business toward what we view as good organic growth—first and foremost investing to position the company for organic growth. Organic growth in 2026 is good; stepping back, it is probably in the upper single- to low double-digit range from an organic perspective, just because some opportunities are moving a bit to the right, specifically in the Marine business. We do think that Concrete will grow very favorably in 2026. We have signals that that is happening, and that is real. For Marine, those opportunities take time to get through the pipeline and the client’s process to bring them to market and ultimately get awarded. Some of those we expected in '26 have moved a bit to the right. That said, we do expect our Marine business to continue to grow in 2026. Will it be at the dynamic growth rates we anticipate with many things coming to market in '26 and '27? You will probably see that over the midterm, but that is not built into our 2026 guidance today. From a McKamath perspective, we have good line of sight into what we expect they will deliver, which is right in line with what we set out in the call back in February. They come with a highly qualified, reputable, credible group of people—a phenomenal team and leadership organization. We are very excited about bringing them into the portfolio and about some of the projects they have won recently. They continue to perform well, and we will look forward to bringing them into more of our opportunities and projects to make our pursuit teams even stronger as we look ahead. Alexander Rygiel: Very helpful. And then the outlook for backlog near term—I get a sense it is probably flattish to maybe trending a little bit down in the first quarter, but you expect a strong rebound in the third and fourth quarters. Is that a fair conclusion? Alison G. Vasquez: From a backlog perspective, we are gearing the organization around a book-to-bill that is greater than one. Our objective is to always be booking more than we are burning. Quarter to quarter, it is hard to predict backlog—it moves around based on burn, operational cadence, and what gets awarded within the quarter. From a full-year perspective, we expect to deliver good bookings that will elevate backlog balances. I will also say from a Concrete perspective, and from a dredging perspective as well, those businesses have a very quick book-to-burn, so they may have phenomenal years, but you may not see a lot of that manifested in the backlog at quarter-ends or year-end because of the amount of book-and-burn projects. Are we targeting elevated backlog through the year? Yes, absolutely, and we will track that through book-to-bill and how the organization is delivering on that. Alexander Rygiel: Thank you. Alison G. Vasquez: Thank you. Operator: The next question will come from Liam Burke with B. Riley Securities. Please go ahead. Alison G. Vasquez: Good morning, Liam. Travis J. Boone: Good morning. Liam Burke: Travis, you talked about closing on the derrick in late 2025. It is a fairly significant capital commitment—how quickly do you anticipate that investment turning into some sort of measurable return? Travis J. Boone: We have got some work being done on it for the next, let us say, six to eight months. Once it is in the condition and ready to go, we will get it busy and get it working somewhere in our business. As far as payback, we think we got a pretty good price on it, so I do not think it is going to be a long time to get a return on the investment. Liam Burke: Great. Thank you. And on the M&A front, the McCamish was opportunistic. Obviously, you do not have a pipeline of opportunistic acquisitions, but what does the acquisition pipeline look like? Travis J. Boone: It is a pretty active market out there at the moment. Lots of different things happening. It seems like acquisitions have really gotten pretty strong across all sectors—lots of different acquisitions and activity happening. We saw Great Lakes just recently get acquired and go private, and just lots of things happening out there that will potentially give us opportunities to do more in the next year or so. Liam Burke: Thank you, Travis. Operator: This concludes our question and answer session. I would like to turn the conference back over to Travis Boone for any closing remarks. Travis J. Boone: Thank you all for joining us today. We look forward to talking to you again soon. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good day, and welcome to the Dexterra Group, Inc., Fourth Quarter 2025 Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Denise Achonu, Chief Financial Officer. Please go ahead. Denise Achonu: Thank you, Betsy. Good morning, and thank you to everyone for joining the call. My name is Denise Achonu, Chief Financial Officer of Dexterra Group Inc. With me on the call today are Mark Becker, our CEO; and our Board Chair, Bill McFarland, who will provide some brief introductory comments. After a brief presentation, we will take questions with the call ending by 9:15 Eastern Time. We will be commenting on our Q4 and full year 2025 results with the assumption that you have read the Q4 and full year earnings press release, MD&A and financial statements. The slide presentation, which supports today's comments, is posted on our website, and we encourage participants to access the slides and follow along with our presentation. Before we begin, I would like to make some comments about forward-looking information. In yesterday's news release and on Slide 2 of the presentation that we have posted to our website, you will find cautionary notes in that regard. We do claim their protection for any forward-looking information that we might disclose on this conference call today. I will now turn it over to Bill McFarland for his introductory comments. R. McFarland: Good morning. Thank you, Denise, and thank you to everyone for joining the call today. 2025 was a record year for Dexterra, $123 million in EBITDA and net earnings of over $40 million and the completion of 2 strategic acquisitions, which significantly advanced our scale and competitive position by strengthening both our U.S. integrated facilities management platform and our industry-leading remote workforce accommodation footprint. We also increased our annual dividend by 14% to $0.40 per share during the year, reflecting the Board's confidence in the strength and sustainability of the business, strong free cash flow generation and our low leverage profile. Management's continued focus on disciplined execution and creating shareholder value was also rewarded by the market with over 60% appreciation in our share price over the last 14 months. As we move into 2026, Dexterra is in an excellent position with an experienced management team led by Mark Becker and a strong and engaged workforce. We will continue to focus on building the business for the long term with the support of our major shareholder, Fairfax, and have created a business that all of our shareholders and stakeholders can be proud of. With that overview, I would like to now pass it over to Mark Becker, our CEO. Mark Becker: Thanks very much, Bill, and let me start by saying what a year, and I just want to say how proud I am of the Dexterra team and what we accomplished together in 2025. Our 2025 results are the accumulation or culmination of hard work over the recent years and the strong execution of our strategic plan. It's been rewarding to see the market better appreciate our business and its future potential. So looking in detail on Slide 5, as I mentioned, 2025 was a very busy and successful year for Dexterra. We generated a record revenue of over $1 billion in revenue, adjusted EBITDA of $123 million that Bill mentioned. And we also delivered very strong -- really, really strong margins as well. We executed on our strategy and reinforced our commitment to creating long-term value for our stakeholders. I'd like to sincerely thank our dedicated employees across the organization, our clients, our business partners and our Board for their support in reaching this achievement. Our employees' commitment to servicing our clients and delivering operational excellence really made our progress possible. In addition to delivering another year of strong, sustainable and profitable growth, as Bill talked about, we completed 2 highly strategic investments in 2025, further strengthening our platform and enhancing our ability to execute our long-term strategy for both of our businesses. The addition of Pleasant Valley Corporation, along with the CMI acquisition, which we completed in 2024, significantly expands our growing U.S. facility management platform. The PVC distributed delivery model that we expect to leverage across North America is complementary to Dexterra's largely self-perform facilities management model. Our partnership with PVC is progressing very well with our collective efforts aligning on both FM and IFM growth opportunities. As well, the acquisition of Right Choice Camps & Catering also strengthened our leadership position in the Canadian workforce accommodations market by adding to our customer base and strategically located camps along with high-quality excess equipment, providing capacity for North American growth and enhancing our ability to take advantage of potential nation building and government infrastructure projects. We will have the Right Choice business fully integrated into the Dexterra platform within Q1, and the onboarding of people and clients has been seamless for us. Open camp optimization in the Montney/Duvernay region is also underway, and we expect to utilize the equipment fleet over the medium term in support of our new growth opportunities. More specifically, in terms of fourth quarter results, I'm pleased to report that we delivered another quarter of strong financial and operating results with robust market activity levels, strong margins across the business and contributions from our acquisitions, resulting in adjusted EBITDA of $33 million for Q4 and adjusted EBITDA margins expanding to 12% from 10.7% in the fourth quarter of 2024, primarily related to our mix of business. During the quarter, PVC and Right Choice contributed $2 million and $6 million, respectively, to adjusted EBITDA. As we continue to execute our plan to deliver reliable and predictable results and deliver value from our capital allocation priorities, we are pleased to see this reflected in the appreciation of our share price, which has increased significantly. We delivered a return on equity of 15% in 2025 and $34 million of free cash flow to our shareholders through dividends and share buybacks. With that, I'll turn things over to Denise to provide an overview of our segmented results and our financial position. Denise Achonu: Thank you, Mark. Turning to Slide 7. I'll begin with a detailed look at our business segments, starting with Support Services. Revenue in Support Services for the fourth quarter was $231 million, an increase of 12% from Q4 2024, driven primarily from strong camp occupancy and the positive impact of the acquisition of Right Choice. As a reminder, PVC is accounted for under the equity method. And accordingly, its revenue is not included in our reported results. Q4 2025 adjusted EBITDA for Support Services increased by 31% over prior year to $24 million, while adjusted EBITDA margins increased 10% in Q4 2025, up from 9% in Q4 2024. The improved profitability and increased margins were achieved despite the broader impact of tariffs, inflation and general economic concerns. This was the result of a focused effort on managing our supply chain, effective client contract management and driving operational efficiencies in the business. PVC contributed $2 million to adjusted EBITDA in the fourth quarter, while Right Choice contributed $4 million in what is typically the strongest quarter for its operations. Adjusted EBITDA margin, excluding PVC, were 9.6%. Support Services' revenue and adjusted EBITDA in 2025 increased 7% and 18%, respectively, compared to 2024, consistent with the same factors already mentioned earlier. Adjusted EBITDA in 2025 from PVC and Right Choice amounted to $3 million and $5 million, respectively. So on a same footprint basis, we increased EBITDA by 9% or $7 million in 2025 in a very challenging economic climate. Our 2026 pipeline of new sales opportunities remains strong across all areas of support services, including facility management opportunities on both sides of the border. And we expect adjusted EBITDA margins for Support Services to continue to exceed 9% in the long term. These margins reflect our team's discipline around finding the right new clients, where we can deliver profitable revenue growth. The partnership with PVC is progressing well and in line with our expectations. We anticipate our investment in PVC will be cash flow neutral in the near term, as we invest in the business and technology to drive strong growth in the U.S. Moving on to asset-based services on Slide 8. Revenue declined 2% year-over-year in the fourth quarter due to lower project revenue related to the timing of camp installation and lower access matting rentals. This was partially offset by the Right Choice acquisition, which contributed $6 million in revenue during Q4 2025. Adjusted EBITDA of $15 million increased 9% compared to Q4 2024, while adjusted EBITDA margin increased 37% in the fourth -- increased to 37% in the fourth quarter of 2025, up from 34% in the fourth quarter of 2024. The margin improvement is related to the change in business mix from higher workforce accommodation equipment utilization, which generates higher margins compared to lower camp installation project activity and the contribution from Right Choice. The timing of new camp installation activity varies based on the timing of new contract wins and client-specific timelines. We have a solid pipeline of future work and see good activity levels in oil and gas infrastructure projects, including the potential for Canadian nation building investment. In Q4 2025, access matting utilization was lower compared to the same period last year, which was at record levels. However, utilization in Q4 2025 did increase over Q3 levels and is expected to remain strong in 2026, similar to 2025 levels. ABS revenue of $173 million for 2025 compared to $192 million in 2024 with the decrease due to the reasons mentioned previously, partially offset by an $8 million contribution in revenue from Right Choice. Adjusted EBITDA for the year increased 9% to $61 million from 2024. Adjusted EBITDA margin for the year was 35% compared to 29% in 2024. Right Choice contributed $3 million in adjusted EBITDA in the year. On a go-forward basis, starting in Q1, we will no longer be reporting the Right Choice numbers separately as the operations will be fully integrated with the Dexterra workforce accommodation platform. We expect adjusted EBITDA margins for this segment to continue to remain between 30% to 40%, depending on business mix. Moving to Slide 9. Thanks to our strong profitability and asset-light operating model, we generated $60 million of free cash flow for the full year in 2025. Our adjusted EBITDA conversion to free cash flow of 49% was impacted by the delayed receipt of a customer receivable funded by the Canadian federal government, of which $11 million was collected subsequent to year-end. Our adjusted EBITDA conversion to free cash flow would have been 58% had that amount being collected by year-end. Our tax losses are also now almost fully utilized. And in 2026, we are required to make income tax payments and installments for 2025 and 2026. We expect to have adjusted EBITDA conversion to free cash flow in 2026 greater than 50% with Q3 and Q4 experiencing the highest conversion to free cash flow as a result of the seasonality of the Support Services business. Management of working capital remains a key focus area, primarily through actively working with our clients for prompt payment of receivables. Corporate expenses for 2025 were $26 million or 2.5% of revenue compared to 2.3% of revenue in 2024. The increase was mainly related to additional investments in sales resources to drive growth and enterprise information technology to manage the business effectively. We expect our corporate cost to continue to approximate 2.5% of revenue in the near term. Net earnings per share of $0.12 for Q4 2025 compared to $0.11 for Q4 2024. During the fourth quarter as well as full year, our net earnings were impacted by an increase in share-based compensation expenses related to the strong performance of our share price in 2025. Share-based compensation, which vests over a 3-year period, includes restricted share units and performance share units, which are directly tied to total shareholder return. As a result, in the fourth quarter, the year-over-year increase in share-based compensation expense was $2.1 million after tax. And for the full year, the after-tax increase was $4.2 million. Share-based compensation payments of $6.7 million were made in Q1 2026 related to units that vested in early 2026. To proactively manage this situation going forward, in early 2026, the corporation entered into a total return swap arrangement with a major Canadian financial institution to effectively hedge changes in share-based compensation expense against our share price. This program will help mitigate in the future the net earnings impact of changes in our share price to share-based compensation expense. Net debt at December 31, 2025, was 1.6x adjusted EBITDA or $200 million. The PVC and Right Choice acquisitions added approximately $115 million in debt in 2025, and we have entered into a collar swap on our U.S. dollar-denominated debt of $16 million to hedge against interest rate fluctuations. Our $425 million term loan matures in 2029 and has significant unused capacity for future M&A activity. In 2025, we purchased 1.5 million shares at a weighted average share price of $7.88 for a total consideration of $12 million, and we paid $23 million in dividends. We remain committed to maintaining a strong balance sheet over the long term and expect to use a portion of our free cash flow in 2026 to pay down debt. Finally, Dexterra paid dividends of $0.375 in 2025 and declared a dividend for Q1 2026 of $0.10 per share for shareholders of record at March 31, 2026, to be paid April 15, 2026. I will now pass it back to Mark for concluding remarks. Mark Becker: Great. Thanks very much, Denise. And before we open it up for questions, as usual, I'll provide some comments regarding our outlook and priorities for 2026 and beyond, which are highlighted on Slide 10. Our investment in our partnership with PVC continues to progress very well. As we continue to build on our shared strategic priorities, we're working jointly to leverage our complementary business models across our U.S. platform and grow our Facilities Management business. So that will continue to be a key focus for us in 2026 and into 2027. It's worth reinforcing, as part of our outlook, the potential opportunity associated with nation building and defense-related government investments is significant across Dexterra. With our well-established defense and government facility management capabilities, we are well positioned to support increased infrastructure and defense spending. Our Workforce Accommodation business is well positioned to benefit from increased nation building investments in energy, mining and various infrastructure projects. A key point for Dexterra business is our growth, and our upward trajectory is not dependent on this activity. These projects really present potential upside to Dexterra's current growth plans. We continue to monitor trade developments and broader economic conditions. Dexterra remains largely insulated from tariffs, direct impacts of tariffs as our labor force and the majority of our supply inputs are domestically sourced. And we are further strengthened by our supply chain through our expanded vendor programs. Renegotiation of the Canada-U.S.-Mexico agreement and ongoing U.S. trade actions present broader potential economic risks that could affect client demand, supply chain or inflation. We're closely monitoring these developments and are well prepared to adjust our strategies as needed to mitigate potential impacts. As we demonstrated throughout last year, we remain committed to our capital allocation priorities, which include maintaining our dividend, our increased dividend, supporting sustaining and high-return capital investments, pursuing additional accretive acquisitions in the medium term and paying down debt. I want to reinforce, though, our near-term focus, as it relates to acquisitions, is to realize the full benefit from the strategic acquisition investments that we talked about. Additionally, we expect to make strategic investments in sales resources and technology to drive innovation, operational efficiency and support organic FM growth. Overall, we're excited and confident in our path forward with our expanded business platform. Our overarching strategic focus remains the delivery of consistent and predictable results, profitable growth in our annual 15% return on equity for shareholders. This returns -- this concludes our prepared remarks. I'll turn the call back to Betsy for the Q&A portion of the call. Operator: [Operator Instructions] First question today comes from Mark Neville with Canaccord Genuity. Mark Neville: Mark, Denise, Bill, maybe first question, if I could just maybe just pick on asset-based business for a second, obviously, really good profitability, but it's been a couple of quarters now where revenues have been down. Obviously, there's some moving parts in the business and with Right Choice integration and maybe some consolidation of the business. Just trying to level set maybe expectations for 2026 around revenue trends. Mark Becker: Yes. Thanks. Thanks, Mark, for the question. And first of all, welcome to the party. We're glad to have you on board as part of our analyst community. I'd say, in general, and Denise talked about this as part of her remarks, ABS side of our business, I mean, there is some lumpiness. There is some timing related to our camp-based work within ABS. And what Denise had talked about was camp mobilizations versus ongoing turnkey contracts that we have in place and the timing of those kind of impacts the ABS revenue. It also impacts the EBITDA as well. I think the way I would look at it, generally speaking, and the other thing I'd mention, too, is the access matting part of our business as well, had a really strong utilization, record year in 2024 in Q4 or quarter. We still have strong access matting utilizations, and we expect that to continue through this year is what we're seeing from our clients. So strong utilizations there. But I think the way I would look at it is we try to talk about our overall growth of mid-single digits in the Support Services business over time. And we would say the same thing about ABS business, the low single-digit growth in revenue over ABS and then the 30%, 40% kind of margin yield, EBITDA yield, adjusted EBITDA yield in that business. I think we do see some lumpiness. We do see some variability in ABS around revenue and even ABS margins as well. I think sticking to the broad annual numbers, we would kind of see that broader guidance sort of play out is the way I would say it and the way I would look at it, just how things play out in terms of the Workforce Accommodations business. Mark Neville: Got it. If I can just ask a follow-up, just to change lanes here, just on capital, buyback activity is a bit muted in Q4. Balance sheet is in great shape. Just curious with the integrations ongoing, is the thought to maybe bring debt down a bit further? Or is there a thought to maybe get back on the market in terms of the buyback? Mark Becker: Yes. And I think we want to -- we'll stay opportunistic around share buybacks. I mean, our NCIB is still active and -- from what we've seen the share price appreciation in our stock. And I think the way we would continue to look at it is PVC second phase buyout is coming. And kind of post dividend, we got $25 million in free cash flow conversion, and that so far is going against our debt. All else being equal, and as we talked about, we want to focus on getting full value from the PVC investment and acquisition and the second phase buyout that is coming towards us, and also, the right Choice acquisition. Stay focused on that. So all else being equal and short of any other acquisitions, notionally, our -- we would be providing free cash flow that would work against our balance sheet, work down our debt in that period is the way I would look at it. Operator: The next question comes from Chris Murray with ATB Capital Markets. Chris Murray: Mark, maybe this is a bit of a broader question, but can we talk a little bit about the camps business, and how you think that, that's going to evolve over the next little while? And I guess the question is more around kind of your positioning in the broader both maybe Canadian and North American market. I think you previously told us that Dexterra had about 8,000 beds. Right Choice brought another 2,000. And you'd always alluded to the fact that the utilization was sort of north of 90%. So I guess a couple of pieces of this question. One, what kind of capacity do you have for some of these new opportunities? I know you've been able to redeploy some equipment from Western Canada to Eastern Canada and assume you do something similar with Right Choice. And does the size of the opportunity change your thinking at all about investing further in this segment? I appreciate it's got probably lower returns on capital, but I'm just trying to understand how to think about how you see the market evolving with what seems like a pretty big wave of demand with infrastructure and defense spending coming. Mark Becker: Yes. Chris, and good question, I think just to level set on the numbers, we got about 22,000 beds under management Canada-wide, of which our own assets it's actually more like 12,000 beds. So we were at 10,000. We picked up another 2,000 beds with the Right Choice acquisition. And we're about high 80s utilization combined with the Right Choice assets in play now. So kind of puts 90% or something a little bit north of 1,000 beds sort of available. The other thing I would point out is we do have long-term contracts. We do have camps that are on long-term arrangements. We also have project-based work that's happening that frees up equipment. So we generally kind of are looking forward. The pipeline is very strong for us -- across the board for us in the business, but workforce accommodations as well, including demand for camp assets. Part of the rationale around the Right Choice acquisition is the excess equipment that was available. We do want to bring that to bear. We're going to balance that out with what we have in terms of the equipment coming available. The other thing I would say, too, is there is the ability to procure market equipment as well as needed within our sustaining growth and capital spend within the year. So our goal is to really ensure based on the pipeline that we've got, what we see coming that we're going to be able to support our growth and the growth targets that I've talked about in terms of being able to have equipment available to support our growth. Chris Murray: Okay. And then maybe to ask another sort of related question is on kind of defense and infrastructure. You mentioned that for the Support Services group, you were looking to pursue some contracts additionally in there. You talked about -- I think the term you used was the pipeline was robust. Can you maybe describe what you're seeing in terms of the opportunity set may be more granularly? And would that get you into a growth rate? I mean, historically, we've talked about a growth rate in this business kind of in the teens or higher. But would that be something that you think is achievable over the next couple of years? And if there's any granularity you can give us on sort of like the -- where you're actually looking at some of these opportunities, that would be helpful. Mark Becker: Yes. So I think if I heard you right, I mean, you're asking about the government defense space for us, which really can feed into facility management contracts as well as even workforce combinations potentially. And we do have quite a history in Canada around defense and government support. What we've seen, and I would say through last year and continuing well into this year, is a lot of activity on that front around opportunities coming under development, I would say, opportunities that have been around for a while, some new opportunities that are coming, a lot of them Arctic-based, Arctic defense based infrastructure, Canadian forces-based defense infrastructure. So there's quite a bit of activity that we're seeing on that front. And I think it's really going to depend on how it all comes to fruition. There's a lot of activity around putting in proposals and supporting expanded projects. And certainly, we're well positioned, as you pointed out, to kind of support opportunities there. We feel really good about that. Again, our mid-single digit, I guess, sort of growth profile, I mean, obviously, I would agree with you that depending what we see there that could be upside to what we see in terms of growth. And we're just making sure we're really well positioned that we are getting our eligibility in and getting -- and we are eligible for these contracts and these projects kind of well in play because there's really a lot of opportunity for us on that front. Operator: The next question comes from Zachary Evershed with National Bank Financial. Zachary Evershed: Congrats on the quarter. On the investment in technology that you guys are talking about, will that be capitalized? And what's your CapEx budget looking like for 2026? Denise Achonu: Zach, yes, so the investments that we're making in technology, specifically this year, relate to around workforce management and human capital management systems. So really systems that will allow us to ensure that we're optimizing our labor performance on a go-forward basis, and therefore, optimizing margins because, as you know, labor are one of our most -- our highest cost, I would say. So as it relates to that system, no, we are expensing it. So we're not capitalizing it, recognizing that we are implementing it over a number of years. So this year, next year, we'll be experiencing that cost. Even though we're expensing it, we do expect, as I mentioned in my comments around corporate expenses, to remain within that 2.5% of revenue that I mentioned. So it is contained within that number. In terms of your other question around capital for 2026, again, expecting that to kind of remain within what we've said in the past, sustaining capital kind of 1% to 1.5% of revenue. So that's what we're expecting for 2026. Mark Becker: Probably, Denise, the only thing I would add is our investment in -- with PVC and PVC Connect, which is our client-facing technology. That's part of the key -- our partnership with PVC Connect around the distributed model. There's going to be investments in that, but that's going to be within the partnership as well. And I think somewhere in our MD&A, we are flagging kind of net neutral cash flow from PVC because we're going to be supporting that investment, which ultimately post-Phase 2 buyout will also be filling that software and it's a key part of the distributed model platform for PVC. Zachary Evershed: That's helpful. And then following up on maybe the margins in Support Services, it looks like the contribution from Right Choice in the Support Services segment was quite high on a margin basis versus the rest of the segment. Can you comment on what's driving that, please? Mark Becker: Yes. Open camps are high margin, right? So we do get kind of good -- if you look at Right Choice platform of activity that they had, and we're certainly taking advantage of the Montney to kind of optimize that between our camps and the Right Choice camps, but pretty much the entire Right Choice platform is kind of high-margin business. So we're going to see that contribution add to us and kind of blend out the usage of that equipment and other turnkey opportunities across our network of workforce accommodations, as we leverage those assets. Operator: The next question comes from Sean Jack with Raymond James. Sean Jack: So I just wanted to dig into the U.S. IFM a little bit more than the opportunity set there. We've been hearing some reports of private company hesitation, little bit of government funding headwinds out in the market, but we're also seeing some large publicly-traded FM peers finished the year quite strong. Do you guys have any comment on what you're seeing for client budgets and overall outsourcing demand? Mark Becker: Yes. Good question, Sean. Like high activity, I would say, we talk about this in a lot of our investor meetings and calls. The kind of outsourced services business in North America is like $275 billion and growing at 6% to 8% a year, which 90% of that is in the U.S. We, I guess, experientially see that in our pipeline with the platform that we have now around CMI within government services, PVC being distributed model, a lot more related to commercial and light industrial space. I would say we are seeing kind of a lot of activity, a lot of outsourcing activity, a lot of bidding activity, and we're excited about that. And I think we've -- it's about -- $50 million or 5% of our business is government, but still, we do see activity even within government. And certainly, as I said, within the commercial, light industrial, not really seeing any pullbacks yet at all. In fact, kind of more towards the opportunity that we're seeing that we've been flagging for kind of more broadly in terms of our U.S. growth profile. Sean Jack: Okay. Perfect. And then second one, just thinking about the fleet optimization that's happening with Right Choice and ABS at the moment, should we expect to see margins improve at all in the short term because of this exercise? Or is this just more about freeing up capacity for new projects? Mark Becker: I think a lot of it is freeing up capacity for new projects. I think we are seeing a lot of activity in the Montney and open camps, which, as I mentioned a minute ago, is high margin. So you've seen our margins be a bit higher because of workforce accommodations activity and occupancy, which a lot of that is within open camps. A lot of that is within turnkey camps, which tends to be higher margin. So that is kind of a key driver of what you're seeing overall in terms of our Workforce Combinations or Support Services margins. And from what everything we're seeing from clients, we expect that to continue. Sean, I'd really say having the equipment available, which we've talked about so much is kind of the key part of that. I think the activity levels and the industry activity levels, the size of our pipeline is really going to be the key driver of our margins within the remote business. Operator: The next question comes from Jonathan Goldman with Scotiabank. Jonathan Goldman: Just a couple of housekeeping ones for me. Can you give us an update on how big your camps business is in Support Services today? And how much of it is exposed to mining versus oil and gas versus infrastructure and others? Just curious how big that business is today. Denise Achonu: Jonathan, so just in terms of your first question, our camp business, so that would be the ABS as well as Support Services components of that is about $600 million. And of that, it kind of breaks down to about 40% of that energy, oil and gas, 30% mining and then about 30% infrastructure. Yes, over the last few years, we've really been diversifying. So if you looked at this a few years ago, it would have been probably a lot more, over 50% oil and gas. And we've been very deliberately kind of diversifying not only just East-West, but also across various industries as well. Jonathan Goldman: Got it. And secondly, how should we think about a normalized run rate for PVC equity income in 2026? Denise Achonu: So when we issued the press release and announced the acquisition, we did give some high-level historical numbers around revenues are about USD 170 million. Again, it's an IFM/FM business. So margins on that would be kind of in or around 8%, so using that with our 40% ownership can give you an idea as to what we're expecting. And you can build some -- a little bit of growth, obviously, because we're -- as we've mentioned, we're focused on growing our U.S. platform and partnering with PVC for that. So expecting some growth in 2026 on those numbers as well. Operator: [Operator Instructions] The next question comes from Zachary Evershed with National Bank Financial. Zachary Evershed: Just double-clicking on the nation building tailwind. Some of the workforce accommodation peers are indicating that those could hit the P&L later in 2026 or early in 2027. Can you comment on your pipeline, any RFPs that you're seeing right now in terms of timing? Mark Becker: Yes. I think it would be kind of across the spectrum is what I would say, Zach. I think we've got some near-term things, Ksi Lisims LNG project, PRGT pipeline, which I know you're well aware that they're flagging more near-term timing. We're seeing other things that are further out in timing. So I would almost say -- and again, you got to see these things play out. We got to see these things come to bear, but we've got kind of a spectrum of near term, meaning things that you might see some proceeds in 2026 and then picking up more in 2027, 2028. This is what we're seeing. But it's certainly kind of a full spectrum of projects, right, all the way from LNG, oil and gas pipeline as well as certainly mining for sure and then the government side as well. Zachary Evershed: Good color. And then, on the economics, what's it looking like for purchasing new build workforce accommodation equipment versus rack rates? Is it getting closer to making sense for new entrant? Mark Becker: Yes. I think we still have to -- new build is still a very expensive proposition in Canada. There is equipment available, and I flag it as part of my comments. There is market equipment available. And Zach, I think you know we can focus on higher-quality equipment. We're a higher-quality provider of workforce accommodations equipment. There is equipment out there that is higher quality that we can get through the market, a little bit of refurb that really just falls within our current numbers. We can bring that to bear. So I think for us, our first place we're going to go is kind of market equipment before we start looking at anything related to new build is what I would say. Betsy, are you there? Hello? Okay. I think we've got all of our questions covered, and I'm hearing there's no more questions in the queue. So we'll wrap it up today, and thanks, everyone, for joining us.
Fabrizio Ponte: All right. Welcome to the Norsk Titanium presentation. We are really happy that you are here today. My goal is threefold. So I will present to you, and I will -- we will discuss where is our market, where is Norsk Titanium today, but most importantly is where Norsk Titanium is going in the future. So without further ado, let me start with a very quick refresher about Norsk Titanium. So we are an additive manufacturing company with a very, very specific and peculiar technology, which is able to deliver additive manufacturing features with mechanical properties that are equal to the forging, which is really, really distinctive in the marketplace. We are qualified in aerospace and defense, and we have a full-scale production capabilities and 2 facilities, one in North America and one here in Norway in Eggemoen, okay? So really, really established to really capture the growth that is coming ahead. So let's talk about our market. We are targeting very technical spaces. So aerospace and defense are certainly our prime targets, including engines and a number of industrial opportunities. These markets are big and growing, okay? So -- and the drivers of this growth is basically driven by the fact that titanium supply is highly constrained. So there -- you have a number of OEMs that are looking for alternative solutions to support their build rates and growth plans, okay? So this is a very, very important factor. Another very important factor is that these people are trying to do the job, not just by finding alternative suppliers, but companies that can help them approach this in a very cost-efficient fashion. And through our technology, they can achieve that. There is a new factor that is developing. And I think these days, you can read it certainly in the news. There is defense that is coming very, very strong. Titanium and specialty alloys are widely used in defense. And today, there is a need in air, in space and in navy to develop parts much faster and in a delocalized fashion. Of course, additive manufacturing and Norsk Titanium are really well positioned on that space. So the market is big, and the market is growing. I mean, it's not just intact, but the market is really, really growing. And this makes us very, very excited. I'd like to bring in one of my customers and one of my lead targets, okay, so which is Airbus because the market is not just only growing and big, but we have customers and lead OEMs that are investing time, money and effort in order to in-source technologies in order to make that happen. And additive manufacturing is right there. I mean, what you see here is the Airbus web story, which came out, I think it was, late in January, if I remember correctly. And if you go in the article, you really understand what is the drive that Airbus has in order to put additive manufacturing and RPD, which is our technology at the core of their industrialization plan. And this is, of course, a very, very, very exciting for Norsk Titanium. We've been working with them for a long time, and we are in a position right now -- on a lead position there that is very fortunate, and it is going to help us to project ourselves in the future. All right. So are we starting from scratch? No, no, we've been working in the last decade to establish our position. So this has been certainly a long development cycle with a lot of work with OEMs, especially in the engineering and in the research departments. But we have established really a very good position for Norsk Titanium. So far, we have delivered over 2,000 parts between aerospace and defense with 0 defect, okay? Nobody can make this claim at this point in time. We have also developed and delivered the world's largest additive manufacturing structural parts, which is in flying and civil aviation. We are very, very proud of that. We are MMPDS listed. So MMPDS is the bible in aerospace and defense when it comes to material and processes. So today, an engineer can go to the handbook and can find all the data that he or she needs in order to design parts. So this is going to help us to translate parts into business in a much faster way. It's going to give us the credibility and the authority that is required by aerospace, defense engineer and industrial engineer to design parts on our data. Last, but not least, we are qualified by 2 U.S. primes, okay? So these are -- our technology is established in defense. It has been used in what we say low-rate production modules, and the challenge will be to go into high rate. So this is the position that today Norsk Titanium enjoys, and this is really our starting point for the future. How do we build that? I mean, as I said before, we really worked hard in the last decade to develop this position. And we worked with our customers, especially in the engineering and R&D department. But going forward, we need to make a step change, and we really need to change gear, as we said there. And how we're going to do that? I mean, we are going to build on -- we're going to -- building on what we already have, we're going to move forward, adopting a new operation -- operating model because at this point, we are in a very strong market growing. We have a very solid position. Now, we need to translate all of that into revenues and into commercial success. And how are we going to do that? We're going to do that with a really new operating model. So we're going to execute in a different way than we did in the past. For one, we're not going to target just engineer and R&D -- the R&D functions with our customers, but we're going to target the entire spectrum of constituencies. So we are now working with procurement. We are talking -- we are working with program. When I say program, I mean the A350, the A320, the Boeing 787. So you need to work with all the constituencies on those OEMs to make it happen. We are also very selective on who do we work with. We work with OEMs that are in markets that we consider very large opportunities. Again, aerostructures, engines, defense belong to that category. We work with OEMs that are pulling for our solution and RPD. They want to include RPD in their industrial platforms. And they have a plan with milestones that are agreed and shared with us. And at the end of the cycle, we have a line of sight to a price, which is going to be number of parts and revenues that Norsk Titanium is going to generate. So this is very, very different than in the past. But one thing is working with qualified and important customers. The other thing is how do we work with them. And we are going to really establish what I call the customer engagement team. So this is a team in Norsk Titanium that is going to be allocated and dedicated to every single lead OEM and it's going to work hand-in-hand with them to help them go through their industrial road map and make sure that we deliver on those shared milestones. These teams are made of also cross-functional within Norsk Titanium. So now, we have a commercial representative, which is keeping the relationship with the customer. We have the technical head, which is coordinating all the technical work that goes into helping them going through the road map. And then, we have program managers. Program managers are the people that internally in Norsk Titanium, when we win projects, they make sure that we can execute internally. They align operation, they align engineering, they align supply chain. It's complex, and you need people that are dedicated and really working in order to execute. So execution is really one of the new traits and one of the new focuses that we are going to have in Norsk Titanium. What do we expect at the end of the cycle? Of course, we expect to win, and we expect to have good chances to realize our future road map. So strategy-wise, which is also revenue-wise, I want to make it very, very simple, okay? So Norsk Titanium is going to follow 3 legs, okay? So as we said, we are going to stay focused on the core. So again, the 3 markets, aerostructures, engines and defense, we want to work with lead OEMs on that core space. Something very new, we are going to establish what we call the RPD ecosystem. So the RPD ecosystem is a deployment of our technology and our machines with those lead OEMs. So you can see the link between the core programs and the RPD. And last but not least, we are also going to focus on short-term opportunities. I mean, we are lucky to have a wealth of opportunities that always come in our door. We need to get better at winning those opportunities. So we have teams that are going to work on that. So now, let me walk you -- let me go a little bit more into the details of these 3 legs, okay? So leg #1 is our core. As I said, it's aerospace, aerostructures, engines and defense. What you see here is basically our development cycle. And we are at different stages depending on the different lead OEM, okay? So what you see here, I think -- I'm sure you can recognize Airbus and the 2 primes we are working with and where we are qualified, so Northrop Grumman and General Atomics. Here, we are really at the end of the development cycle. We are on the tipping point that is going to take us into the commercial area. Now, you go back over here, and you can see here that we are at the beginning of the journey in engines, and we are in launching with landing gear customers, okay? So this portion, which is also very important, will represent a very large opportunity going forward. So we want to make sure that, yes, we focus on the short term, and we realize the opportunity in the short term, but we don't forget that we want to get the full price that we have before us. We have also OEMs in the middle, people like Boeing. I have to say Boeing was a very important driver for us a few years back. We are now working in order to identify a new path to work with them. We are -- as you can see here, there is a lot of Boeing here. But here, we have some work that needs to be done to take this company at the level of this other company. But we have contacts, we have the network there, and we are going to do just that. So -- and again, the short term, the long term, and here, the medium term that needs to go also in the short term. So this is how we are working on our core. Let me go just very quickly into a couple of examples. One, of course, is Airbus. You can recognize possibly one of the slides that we used in previous additions. With Airbus, we need to do 3 things, okay? Number one, okay, we have qualified parts that are flying. We need to make them. We need to ship them, and we need to book them as revenues. This is number one. Number two, there are a lot of new parts. So we call it the Wave 3 that we need to convert into parts. So this is a big job that we need to do in order to make sure that we maximize the number of parts that will be converted to RPD. This is a lot of work that is going to take place in the near term. And last but not least, I'm hopeful that you read the latest press release. We are placing a machine in Airbus, Germany, in order to help us to really expand and set RPD as their core additive manufacturing technology. We are going to do that with a dedicated team, again, commercial engineering and program, and we're going to make sure that here, you have a whole bunch of milestones. We want to make sure that we are going to deliver on every single one of them. So what we do with Airbus is not going to be different than what we are going to do with General Atomics, okay? General Atomics is a very important defense prime in the U.S. We've been working with them for a long period of time. We are qualified. And now, we are in what we call the low rate production of certain devices. The challenge there using our customer engagement team will be to move from low rate to high rate. So we're going to work with General Atomics and other defense primes in order to go into their high rate productions, and we see that as a very large opportunity. So aerostructure and defense with Airbus and with a number of primes are really the biggest opportunity that we have before us in the next -- in the near term. All right. So let's talk about the second leg, which is what we labeled the RPD ecosystem. I can tell you what the RPD ecosystem is not, okay? We are not planning to start selling machines to whoever comes to us, okay? That's not what we are trying to do. What we are trying to do instead is working with lead OEMs to help them to in-source our technology in their ecosystem and design specific ecosystems around the RPD technology. So in the Airbus example, we're going to place the machine. And in the future, we're going to help them to really expand the use of RPD within their ecosystem. And we're going to work with them through placing machines, selling machines, licensing technology or whatever way is going to help them to really establish an ecosystem within their manufacturing universe in order to leverage our technology. We see this as a great opportunity. This is certainly a game-changer, and this is going to help Norsk Titanium to make a step change in market penetration, but also in revenues. I want to say that we are not starting from scratch. We already have between 3 and 5 express of interest from very different customers across multiple industries to source the technology through an ecosystem. They all want to establish ecosystems based on RPD. And that's great news for Norsk Titanium. Okay. I think this is what is happening in Airbus. I went a little bit ahead of myself. So we are placing a machine. The focus here is to help them to qualify the RPD process. So in the past, we've been qualified parts part by part. So every time there was a new part, we were working on the qualification of that specific part. What we are going to do now is qualify the process. And when you qualify the process, then you can qualify parts in a much faster way. And this is going to accelerate our go-to-market and our ability to convert parts into business. Okay. Yes, I think this was the main point. Okay. The last leg is leg #3, which is about converting the rich pipeline of short-term opportunities that we have into wins. Norsk Titanium, because of our technology, because of the features of our technology, receives a number of leads that want to use our technology. So what Norsk Titanium needs to do is become better at winning those opportunities. So we are using basically the same operating model that we are applying to the core, and we have established a dedicated team whose job is to jump on those opportunities, work them and win them, okay? So these are opportunities that are very different than the core. I mean, core typically, you have long-term programs, which are very complex and that requires quite a bit of time. Here, we are talking about opportunities that can be translated in 3 to 12 months, okay? So here, we have the opportunity to add to our revenue line in a relatively short period of time. Again, I always say Norsk Titanium is not in the business of tomatoes and potatoes, okay? So we always need to work hand on hand with the customer to qualify our material and to help them design the part. But in these type of industries, we are talking about energy, we are talking about semiconductor, but it is really a multitude and a very diverse industry base. It takes 3 to 6 months from start to finish. So we expect this work stream to help us increase our top line in a short period of time. The other beauty of this is going to help -- this is going to help us to build muscles, okay? Because by working on short cycle and really jumping on those opportunities with a different attitude and pushing our platform to win those opportunities, we're going to build muscles. It's going to help also on the core. So let me just -- I'm hopeful that I was able to give you a good view of what is the opportunity, where we are and what is our future. But I want also to give you an opportunity to understand what we are going to deliver and where you can measure Norsk Titanium. And we have 4 main milestones, okay? The first milestone is, of course, on Airbus. We -- as I said, we are very advanced in the discussion with Airbus. And this is, by far, the most important milestone that we have. What success is going to look like? I mean, we need to start to convert parts. We go back to the 3 points that I explained before. We need to be successful on placing the machine, and we need to bring this to the place that it needs to be, okay? So this is a very, very important milestone. Milestone # 2, we need to go from low rate in defense to high rate, okay? So we are qualified. Now, the challenge is to go hand-in-hand with a number of defense primes from low rate to high rate. We need to deploy the RPD ecosystem. I mean, in the next, let's say, 2, 3, 5 years, there is a lot of work that we need to do. We are starting with Airbus, but this is going to expand to other 2, 3, 4 other lead OEMs. So this is very important. This is going to be a game-changer for us. And we need to make sure that we have a very structured road map. We deliver all the milestones in that road map. And then last, but not least, we need to convert short-cycle opportunities. This is going to happen this year, next year and the year after. And I think we need to be able to demonstrate that we can not only get those opportunities, but win them and translate them into revenues. So this is the story about Norsk Titanium, about the market, about where we are, but most importantly is where we are going. And the difference is really about more traction from the market because I can tell you that, especially from aerostructures and from defense, we see -- and also from engines, we see really, really more traction than we saw before, especially from defense. Strong interest from our customers and from lead OEMs that have decided to include RPD in their industrial platforms. Now, it's all about execution and making sure that we make it happen. So having a new operating model that is going to enable that is fundamentally important. Thank you for today. And I think I did okay. I'm 22, 23 minutes in, so we have another 5 or 6 minutes for Q&A. Thank you. Ashar Ashary: Thank you, Fabrizio, for the presentation. So I guess we'll move over to the Q&A. Ashar Ashary: So before we begin, I would just remind everyone on the web that they can use the Q&A function if they want to ask any questions. So I guess, I'll start in the audience. So please raise your hand if you want to ask any questions. Unknown Analyst: Discussing these days with Airbus, I guess they all know your financial situation. So how do they kind of ask you, so how are you going to solve this? Fabrizio Ponte: Well, I think, yes, you are right. I mean, Airbus knows us very well. They've been knowing us for 10 years, and they know that we have important shareholders that have been there for us all the way. So this is certainly a guarantee for them, and they feel very comfortable with our situation. And hopefully, this is going to -- they're going to help us, too, because they are a very important part of our success. So we are certainly hopeful that in the next period, they will help us to be also financially successful, not only technically successful. Unknown Analyst: Then, to be convinced that you're going... Fabrizio Ponte: Survive. Unknown Analyst: Survive and succeed in this. Fabrizio Ponte: Yes. And as I said, I think they look at our history and what happened in the past, and they have a high confidence because they see that every time we need to help, we are lucky enough to have a couple of very important shareholders that believe that we are going to be successful, and they are always there to back us up. So we don't start from scratch. We invested $500 million in this company, and we have a very strong and solid position, and we have a very strong shareholder structure. So I think we were able to convince Airbus that we are solid -- we are a very solid concern. Having said that, we also need them to help us, okay? So -- and we made this very, very clear, okay? Ashar, I don't know if you want to add anything? Ashar Ashary: I think you said it perfectly. Fabrizio Ponte: Okay. Very good. Thank you. Ashar Ashary: To the web. So we have one here. What is fundamentally changing under the leadership of you, Fabrizio? Fabrizio Ponte: So what is fundamentally changing, I think, is first, I think I'm lucky enough to get to Norsk Titanium in the moment, which is really the tipping point, okay? So you can clearly see that customer, and tipping point, look at the Airbus web story, you can see that I arrived at the right moment. So I think I'm a lucky guy. But what I'm changing is really our operating model and how we are approaching our customer. I'm really designing a new organization, which is customer-centric that is working around the customer milestones and is there to help and support our customer reaching the milestone that will get us to the success. This is what is changing. And it's not just design around the customer, but it's grounded on execution. I mean, we need to execute. We need to be at best when it comes to execution. So we are working very, very hard to be good at that. Ashar Ashary: Okay. We have received a bunch of questions on the Airbus third production order, but I guess I will try to sum it up. How should we think about Airbus going forward? And is the placement of the machine, is that a step closer to a third production order? Fabrizio Ponte: Okay. So first of all, we've been working with Airbus on this for a long time. I mean, it's very difficult for us to precisely predict exactly when that is happening, and that's one of the reasons why we had to change guidance. I mean, it's very difficult to precisely predict that. We are confident that it's going to take place, but predicting exactly when and how is the challenge that we have. The machine placement, of course, I think anybody can understand, it brings us closer to Airbus, it's going to help in the future. I think it's going to help a little bit also on the conversion on the third production order, but it's more for the midterm than for the short term. The game for the short term is all done, okay? So now, we just need to bring it across the finish line. Ashar Ashary: Do you plan to transfer existing RPD machines to lead OEMs like Airbus? And if the machines are required, which partly is responsible for the CapEx for building them? Fabrizio Ponte: So right now, we -- yes, we are -- in the Airbus case, for example, we are moving an existing machine. So there's no CapEx required. We -- the bulk of the machines are placed in New York. And we'll see. I mean, we will evaluate case by case and decide case by case on what to do. But I think it's an opportunity that we need to evaluate very carefully and make sure that we do the right thing. But it's -- we feel stronger in that, too. Ashar Ashary: What is the current status of the Inconel development program? Fabrizio Ponte: So on Inconel, okay, we've been developing titanium parts for a long time. In Inconel, I think we started maybe 12 months ago, 18 months ago. So I think we made a lot of progress. We have a very, very strong pool from the navy on that material. And I think with their support, their interest, we will be able to really accelerate in closing this development very soon. That's one of our targets, for sure. Ashar Ashary: Sharing RPD machines with your main OEMs lead to any changes in the revenue model? Will this be a licensing revenue or part revenue? Fabrizio Ponte: Yes and yes. So the beauty of the RPD ecosystem is that it will be instrumental to a multitude of revenue streams, okay? Are we selling the machine? Are we licensing the machine? Are we asking for royalties on part by part? Are we going to sell the software? Yes, yes, yes and yes. So it's a beautiful way of expanding the use of RPD. Ashar Ashary: We're at the end, but I will try to squeeze in 2 more questions. What is the cost of relocation the machines to Airbus? And the last one is, do you have any new estimate for when breakeven could occur? So I'll start with the cost of the machine, so right now, the -- moving the machines that we're not going to do that on our own time. Obviously, we're working with the customer on that. So we will -- we have a model where we're cost neutral on placing the machine. It is more important for us to develop the process with them, as Fabrizio said. In terms of breakeven, we're not providing any guidance to the market as we said in our previous operational report, but fundamentally, we're going to work with the customers. We're going to see how this timeline is changing, how some things are coming forward, how some things are moving back. So as time goes by, as we get better milestones and better at controlling the milestones, we'll come back to the market with our plans. I guess, there's no new estimates for breakeven. No, yes. Thank you for the presentation. Fabrizio Ponte: Thank you very much. Ashar Ashary: Thank you to everyone watching in on the webcast and showing up here in person. Fabrizio Ponte: Thank you. Ashar Ashary: Thank you.
Operator: Good morning, and welcome to the MDA Space Ltd. Conference Call and Webcast. This call is being recorded on March 4, 2026, at 8:30 a.m. Eastern Time. [Operator Instructions] For those participating via webcast, please note that the company has included a presentation. Webcast participants can advance the slides by using the arrow seen in the presentation window. [Operator Instructions] I would now like to turn the call over to Jim Floros, Vice President of Investor Relations at MDA Space. Please go ahead. Jim Floros: Thank you, Kel. Good morning, and welcome to MDA Space's Fourth Quarter and Full Year 2025 Earnings Call. Mike Greenley, our CEO; and Guillaume Lavoie, our CFO, will lead today's call and share some prepared remarks before taking your questions. A couple of housekeeping items before we begin. Today's call is accessible via webcast on our Investor Relations website. All our disclosures, including the press release, MD&A and financial statements are available from our Investor Relations website as well as SEDAR+. I would also like to remind you that today's call will include estimates and other forward-looking information, which may differ from actual results. Please review the cautionary language in today's press release and public filings regarding various factors, assumptions and risks that could cause actual results to differ. In addition, during this call, we will refer to certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, these measures do not have any standardized meaning under IFRS, and our approach in calculating these measures may differ from that of other issuers and therefore, may not be directly comparable. Please see the company's quarterly report and other public filings for more information about these measures, including reconciliations to the nearest IFRS measures. And with that, it's my pleasure to turn the call over to Mike. Mike Greenley: Thank you, Jim. Good morning, and thank you to those joining us today to discuss our fourth quarter and full year 2025 financial results. Before we get into our update, I want to start by acknowledging and thanking the MDA Space team for delivering another exceptional year of performance, our best yet since the IPO. The level of growth we achieved this past year would not have been possible without your hard work, innovation and total mission focus. Our talented teams around the world are the reason we continue to be a trusted mission partner and leader in the expanding space and defense industry. In 2025, we delivered record results for both revenue and adjusted EBITDA. We grew revenues to $1.6 billion, an increase of more than 50% year-over-year and expanded our adjusted EBITDA to $324 million, up almost 50% versus last year. In addition, we maintained solid adjusted EBITDA margin of approximately 20% for the full year 2025. Our financial performance enables us to continue investing in our business as we deployed $242 million in capital expenditure to support our growth initiatives while also generating positive free cash flow of $165 million. Taking a step back, 2025 built on MDA Space's track record of consistently delivering growth over the long term. Since 2020, our backlog has grown 7x to $4 billion, underpinning a revenue growth CAGR of 32% over the past 5 years, exceeding our stated goal of 20% to 30%. Importantly, this growth has been profitable with demonstrated adjusted EBITDA margin of 20% yet again in 2025. A key driver of this profitable growth relates to the investments we've made to develop industry-leading products and capabilities. We have been deliberate in our focus on R&D as a differentiator for MDA Space. We were ranked 32nd within Canada's top 100 corporate R&D spenders this year. This is the third year in a row where MDA Space has been included in this ranking. In addition, MDA Space ranks within the top 20 Canadian companies when it comes to overall size of our portfolio of patent families and within the top 10 Canadian companies when it comes to the annual patent filings in Canada over the last 5 years. We leverage our R&D investments to deliver value to our customers globally, and we combine this with disciplined operational execution to convert top line growth into profitable cash-generating operations, resulting in a robust balance sheet and a conservative leverage profile. This provides us with flexibility to continue investing in our business to capitalize on growth in our industry as evidenced by the investments we are making in developing commercial and dual-use products and services, expanding our manufacturing capacity and increasing our vertical integration such as the acquisition of SatixFy. Looking ahead, I'm pleased to introduce our 2026 financial outlook. Our backlog of $4 billion at the end of 2025 provides us with strong revenue visibility. And for the full year, we expect revenues to be $1.7 billion to $1.9 billion, representing year-over-year growth of approximately 10% at the midpoint. We expect full year adjusted EBITDA to be $320 million to $370 million, representing year-over-year growth of approximately 7% at the midpoint, with adjusted EBITDA margin of 18% to 20%, in line with our original IPO guidance. We expect capital expenditures to be $225 million to $275 million to continue to support our growth initiatives. And lastly, we expect free cash flow to be neutral to negative for the full year due to normal working capital fluctuation on our existing programs and continued investments in growth CapEx. As we think beyond 2026, the team is energized by the strong momentum and positive trends we are seeing in our end markets, and MDA Space has the right technology portfolio to capitalize on the opportunities ahead of us. We continue to expect to deliver significant revenue growth on average over the next several years. All over the world, governments, defense agencies and corporations are finding new and valuable ways of using the capabilities of space with the benefits of space-based and dual-use solutions expected to grow significantly in the coming years. The space economy is estimated to have grown to USD 626 billion last year, according to Novaspace's Space Economy report and is forecasted to surpass $1.8 trillion by 2035 according to the World Economic Forum projections. A tenfold reduction in launch costs over the past 10 years, combined with more powerful satellite technologies supported a record 329 launch attempts in 2025 and 98% of those were successful. Demand for space-enabled global connectivity is expected to result in more than 43,000 satellites to be launched over a decade starting in 2025. Renewed interest in space exploration is expected to increase the number of missions by 185% over the next decade to 855 with a significant emphasis on establishing a sustained presence on the moon. And space is increasingly emerging as a mission-critical and essential military domain, complementing the traditional fields of air, land and sea. Over the past year, we have observed defense spending on space by the world's leading powers surge to unprecedented levels as space has become critical to safeguarding national interest in evolving geopolitical environment. In particular, the U.S. dedicated $175 billion to its Golden Dome space defense architecture, Germany pledged EUR 35 billion for next-generation satellite and space situational awareness capabilities. And here at home, Canada confirmed that space will be a core element of its current 2% of GDP NATO defense spending commitment with plans to increase this budget to 5% of GDP by fiscal year '35, '36. At 5% of GDP, this would translate to approximately $155 billion in annual spend for Canada, an increase of $90 billion compared to fiscal year '25, '26. And we expected a meaningful amount to be allocated to defense-related programs for which MDA Space is well positioned to deliver given our long-standing heritage of being a trusted contractor for both space and defense opportunities with the Canadian government for decades. And recently, we have demonstrated that MDA Space is in a strong position to participate in defense opportunities through recent announcements such as the strategic partnership with the Government of Canada's Department of National Defense and Telesat to develop and deliver military satellite communication capabilities in the Arctic, a $5 billion-plus program of record. In addition, we were awarded a contract on behalf of the Canadian Space Agency to procure long lead parts for the RADARSAT constellation mission replenishment satellite, part of government's $1 billion RADARSAT+ initiative. We have also been selected as an approved supplier by the U.S. Missile Defense Agency, receiving an IDIQ contract related to the SHIELD program and established an MOU with Hanwha Systems to explore opportunities to collaborate on the development of South Korea's sovereign K-LEO defense constellation. Supplementing this will be opportunities to participate as a key supplier of satellite subsystems similar to contracts we were previously awarded to support U.S. Space Development Agency missions. Beyond space, we are also in a strong position to be Canada's national defense champion. Leveraging our deep mission experience and complex defense capability that has supported Canadian and allied operations for decades, we recently launched 49North, a dedicated defense organization exclusively focused on delivering secure multi-domain C5ISR and mission-critical capabilities for Canada's national defense priorities outside the space domain. This launch reflects increasing demand for sovereign defense capability across land, air, maritime and joint domains. By bringing together proven defense and mission-critical systems expertise under a dedicated organization, we enhance focus, accountability and disciplined program execution. 49North will be focused on building a strong pipeline in non-space defense, actively partnering with domestic and global industry and investing in the capabilities required to support Canada's national defense priorities. All this activity bodes well for the continued growth of MDA Space as we are pleased to announce today that as a result of our annual pipeline review and strong market and customer demand, our pipeline contains $40 billion in cumulative opportunities over the next 5 years. Within this pipeline, $10 billion includes either opportunities with government customers that have downselected MDA Space or follow-on opportunities with existing customers. For opportunities where we have been downselected, this means we are now part of a narrow list of candidates who have moved on to the next stage with the contract award process. In addition, our pipeline is well distributed between government and defense and commercial opportunities. The geographic distribution is balanced between significant opportunities here at home in Canada and the United States with growing opportunities within Europe and other parts of the world, including Southeast Asia. This pipeline should allow us to continue to diversify our customer base and international footprint and combined with our backlog provides us with confidence to continue to drive profitable and stable revenue growth for years to come. I'll now spend a few minutes on each of our business areas. In Satellite Systems, we continue to see good momentum in the market with our teams working to advance multiple requests for communication satellite solutions and a growing number of constellation projects, both for commercial and government applications. We are also seeing strong activity levels from customers and our opportunity pipeline remains robust. Over the past year, our Satellite Systems business delivered year-over-year growth of 85%, a remarkable achievement. On Telesat the Lightspeed program, we continue preparations for the program's engineering and manufacturing development and continue to make progress on completing the final critical design review. We expect to begin delivering a small number of satellites in 2026 with deliveries ramping up in 2027. The team continues to work on the Globalstar next-generation LEO constellation. We achieved a significant milestone with completion of the critical design review. Work is being carried out through development activities on life testing of equipment and procurement activities are advancing with equipment deliveries taking place. We have also begun assembly and integration activities of the first satellites. We also continue to advance work on the initial Globalstar program, where MDA Space is the prime contractor to enhance Globalstar's LEO constellation through the addition of 17 satellites, which support SOS features and direct-to-device communication on certain Apple products. In Q4, the team continued to progress flight hardware production and advanced satellite integration and test work with 15 satellites currently on the shop floor in our facility with 8 satellites successfully completing functional acceptance testing. After experiencing some delays last year, we are tracking towards the revised time line established in Q4 for deliveries this year. We are also making great progress with our Montreal facility expansion, which will add 185,000 square feet to our existing satellite production facility. The manufacturing and engineering group that will support the new production lines have moved into new office space, and the new facility now contains printed circuit board production lines and is capable of producing flight hardware. Once complete, this facility will be one of the world's largest high-volume manufacturing facilities in its satellite class. Finally, we have entered into a termination agreement with EchoStar following the cancellation of the contract they awarded us last year, and we are turning our focus to the other opportunities we are pursuing within our pipeline. Moving to our Robotics & Space Operations business. We continue to see good traction and activity levels on both the government and commercial fronts. As the world leader in on-orbit space robotic operations and decades of experience in building and maintaining the current international space station, we continue to engage with commercial LEO destination companies to provide inputs to their design concepts for SKYMAKER robotics compatibility. MDA SKYMAKER is our commercial suite of robotics products specifically designed to be configured to suit a variety of mission applications, including space station assembly and servicing. While the International Space Station is currently slated to be retired by 2030, NASA is supporting the development of commercially owned and operated space stations in low earth orbit, which the agency, along with other customers can purchase services and stimulate the growth of commercial activities in microgravity. We expect NASA to release the procurement call for the next phase of CLD development in the coming months, and we look forward to continuing to support the CLD candidates in their system development and bids to NASA. This past December, we successfully demonstrated our autonomous lunar logistics capabilities through a prototype vehicle developed for the CSA's lunar utility rover. Using the CSA's analog train in Saint-Hubert, Quebec, the demonstration showed our capability to autonomously transport large cargo elements from a landing site to a habitat, robotically manipulate smaller payloads and have multiple autonomous vehicles coordinate motion and work together on tasks. These are key logistics capabilities pivotal to humanity's return to the moon, and we are proving that we can deliver. Lastly, our team continued to make progress on executing Phase C of the Canadarm3 program while ramping down on Phase B activities, conducting closeout activities throughout Q4. The team is focused on building and testing engineering models of the system elements while working towards critical design review. Moving to our Geointelligence business. In Q4, we were pleased to have been awarded a $45 million authorization to proceed contract by the Canadian Space Agency for critical long lead parts that are required to build a replenishment satellite for the RADARSAT constellation mission as part of the government's $1 billion RADARSAT+ initiative. Alongside this ATP contract, the CSA also announced its intention to further contract MDA Space to build, test and launch this replenishment satellite. In addition, we were selected to deliver a concept study to support the development of RADARSAT+ next-generation mission to eventually succeed the current RADARSAT constellation mission. In Q4, the team also continued to progress work on CHORUS. Our spacecraft electrical integration and testing activities progressed well through the end of the year and made solid progress in testing the full SAR antenna, which was well characterized on our near field test range. We started to validate some of our flight control procedures related to the ground segment and construction work continued for the new mission control center, and we continue to track to our launch window in late 2026. Before I hand it to Guillaume, I want to mention that Alison Alfers has resigned from the Board of Directors due to unexpected family circumstances effective March 3, 2026. Ms. Alfers has been a valued member of the Board since 2022, supporting MDA Space during this exceptional period of growth. We are grateful for her contributions and extend our sincere thanks and best wishes to her and her family. With that, I'll hand it over to Guillaume. Guillaume Lavoie: Thank you, Mike, and good morning, everyone. Overall, both Q4 and full year 2025 delivered record results with solid growth in revenue and profitability, combined with strong free cash flow generation and a solid backlog to end the year, positioning us well for 2026 and beyond. Total revenues for the fourth quarter were a record $499 million. This represents $153 million or 44% increase over the same period last year. The year-over-year increase is driven by higher revenues from our Satellite Systems business, including the impact of the EchoStar termination agreement. On a full year basis, total revenues were also a record, coming in at $1.63 billion, an increase of 51% over 2024. The year-over-year increase in revenues was primarily driven by higher volumes of work performed, again, primarily in our Satellite Systems business. By business area, revenues in Satellite Systems of $371 million in the fourth quarter of 2025 were $137 million or 58% higher compared to the same quarter in 2024. The strong showing was driven by the increase in volume of work on the Telesat Lightspeed program, the Globalstar next-generation LEO constellation program and the impact of the closure of the EchoStar agreement. On a full year basis, revenues for Satellite Systems increased to $1.1 billion, which represents an increase of more than $500 million or 85%, which is remarkable from the same period in 2024. And then again, this was driven by volume of work on the Telesat Lightspeed and the Globalstar next-generation LEO constellation programs. In Robotics & Space Operations, revenue of $66 million in the latest quarter were in line with the levels seen in Q4 2024 and in line also with our expectations for this quarter due to timing of revenue recognition on nonlabor costs. For the full year 2025, revenues were $309 million, translating into a year-over-year increase of $29 million or 11%. This increase is primarily driven by the higher volume of work performed on the Canadarm3 program as volume of work on Phase C activity increased throughout the year. Revenues in our Geointelligence business of $62 million in the latest quarter represents an increase of $15 million or 31% year-over-year due to volume of work on programs. For the full year 2025, revenues for Geointelligence were $214 million, representing a $12 million or 6% increase compared to 2024. Moving to gross profit. For Q4 2025, gross profit was $127 million, representing a $45 million or 55% increase over the same period last year. Gross margin in the latest quarter was 25.5% and compares to 23.6% for the same period in 2024. For the year, gross profit was $410 million, representing $128 million or 45% increase over 2024. Gross margin for the year was 25.1%, which compares to gross margin of 26.1% in 2024. The year-over-year change in gross margin is driven by evolving program mix. Adjusted EBITDA in the quarter was a record $96 million compared to $71 million in Q4 2024, driven by higher volumes of work as we continue to convert our backlog. Adjusted EBITDA margin was 19.3% in Q4 and the slight decline in margins compared to Q4 of last year is attributable to our evolving program mix. On a full year basis, adjusted EBITDA was also a record, coming in at $324 million, up from 2024 levels of $217 million, representing $107 million or 49% year-over-year increase. Adjusted EBITDA margin of 19.8% for the full year 2025 compares to 20.1% for 2024 and is driven by, again, an evolving program mix. Adjusted net income in the quarter was $59 million compared with $35 million in Q4 2024 and the year-over-year increase of $23 million or 67% was primarily driven by higher operating income. Full year adjusted net income of $190 million was up 71% year-over-year, also largely driven by higher operating income. And finally, adjusted diluted earnings per share of $0.45 in Q4 and $1.46 for the year were up 61% and 66%, respectively, versus the same period last year. Moving to our backlog. We ended the quarter with a solid $4 billion backlog, which is slightly below December 31, 2024, driven by continued conversion of our backlog into revenue. This is normal and is to be expected due to the order level in 2025, which will vary from 1 year to the other. We continue to expect that MDA Space will be a growing company, supported by our pipeline containing $40 billion in cumulative opportunities over the next 5 years. As mentioned by Mike, within this pipeline, $10 billion includes either opportunities with government customers that have downselected MDA Space or follow-on opportunities with existing customers. Moving to CapEx. We remain focused on making the right investments in the business to support our strategic growth initiatives. In Q4 2025, we spent $70 million on capital expenditures, up $61 million from last year. We continue to be on track with setting up production lines to ramp up high-volume satellite production, and we have virtually completed our investment in MDA CHORUS. In addition, we have started to capitalize work related to our space-grade chip following the acquisition of SatixFy. On a full year basis, our capital expenditure was $242 million compared to $198 million in 2024. We demonstrated once again this year that we can execute our investment plan to deliver sustainable and profitable growth in the future. Cash from operations during the quarter generated $51 million compared to $376 million in Q4 2024. The year-over-year decrease is primarily driven by normal program-related working capital fluctuations in the quarter. Free cash flow was slightly negative at minus $20 million in the quarter versus positive $315 million in the prior year. For the full year, cash from operations generated $407 million compared to a cash generation of $813 million in 2024. The year-over-year decrease in operating cash flow, again was driven by normal program-related working capital fluctuations, including higher advanced payments received in 2024. Free cash flow was a healthy $165 million in 2025, in line with our guidance of neutral to positive free cash flow for the full year and compares to prior year free cash flow of $615 million. Moving to our balance sheet. We ended the quarter with a strong financial position with net cash of $152 million, available liquidity of $669 million under our credit facility and a total available liquidity of $821 million. Our net debt to trailing 12-month adjusted EBITDA ratio was a healthy 0.4x. In the quarter, we strategically evolved our capital structure through the issuance of $250 million in senior unsecured notes due 2030 and with an amendment of our senior revolving credit facility of $700 million, extending the maturity to 2030 and also allowing for a $150 million accordion feature. Our strong balance sheet position provides flexibility and liquidity, allowing us to deploy capital on the right strategic opportunities to support our strong growth profile. In summary, this was a strong quarter to wrap up fiscal 2025, and we continue to be encouraged by the positive momentum we are seeing across our businesses. I also want to take the time here to recognize the work, dedication and passion of the MDA Space team. Without each employee's contribution, these outstanding results would not have been possible. Now let me turn to our 2026 outlook. As Mike noted, we are introducing our 2026 financial outlook, and we are well positioned to capitalize on strong customer demand and robust market activity, given our diverse and proven technology, including our product offerings. For the full year, we expect revenues to be between $1.7 billion to $1.9 billion, representing a year-over-year growth of approximately 10% at the midpoint of the guidance. This is off the back of extraordinary growth in 2025. When comparing the revenue growth between 2020 and the midpoint of our guidance for 2026. This represents a CAGR of close to 30%, which approaches the high end of our stated goal of 20% to 30% CAGR for the business. We expect full year adjusted EBITDA to be between $320 million and $370 million, representing a year-over-year growth of approximately 7% at the midpoint of the guidance and adjusted EBITDA margin of 18% to 20%. The adjusted EBITDA range is to provide flexibility for us to strategically scale up the business for future growth, particularly in R&D and in SG&A and aligns with our historical goal since the IPO and continues to represent very solid profitability. We expect capital expenditures to be between $225 million and $275 million in 2026 to support another year of investments related to expanding production at our Montreal facility, investments in chip development and investments to support commercial growth initiatives. Although we continue to invest in our future, our capital intensity as a percentage of revenues is reducing from an average of over 20% between 2021 and 2024 to now less than 15% in 2025 and 2026 at the midpoint of our guidance. Finally, we expect full year free cash flow to be neutral to negative, driven by normal program working capital fluctuations, combined with the CapEx required to support future growth. With this outlook, MDA Space is positioned to once again deliver a strong year of profitable growth with the vast majority of revenue for 2026 contained within our solid backlog. Looking beyond 2026, we are excited about the opportunities ahead, supported by our $40 billion pipeline. On our mission to grow the business, the team is focused on executing customer commitments and leveraging our capabilities and technology to win new business pursuits while remaining disciplined in delivering sustainable profitable growth. With that, operator, we are ready for questions. Operator: [Operator Instructions] And your first question comes from Doug Taylor from Canaccord Genuity. Doug Taylor: Congrats on a great close to 2025 and the outlook for '26. You've given more color to the pipeline, $40 billion. It's a staggering number and a big expansion from the last number you provided. Is it fair to characterize the expansion here as being more defense and intelligence related versus commercial communications? Would you provide some further color as to where you're seeing the most growth and opportunity? Mike Greenley: Yes, for sure, we can do that. This is like our annual update to pipeline. We're going to try to make sure that we gave the numbers last year and carried it through the year, and we're up -- we've scrubbed all the numbers at the start of every year and updated the pipeline expectations. So that's what we're doing here now. The growth in terms of the size of the pipeline has certainly been based on opportunities we collected through the year. There are a number of them, yes, that are defense and intelligence related, defense related, both in the space sector in addition to the non-space sector with the announcement of 49North and the focus there. The 49North also creates opportunities for us to, through 49North, take on some new non-space things. And so yes, both domestically and internationally, the defense side has some of the chunkier growth in the pipeline. Doug Taylor: Would you quantify just because you mentioned the 49North pipeline as being material within the context of this larger number? Mike Greenley: I don't know what the materiality number would be, but there's -- it's early days with 49North, but with the initiation of it as we started the year, it has immediately picked up some media opportunities as a defense prime in Canada. Doug Taylor: Okay. And then I'll just ask one more question on the pipeline as it relates to your guidance here, and you get this question every year at this time. So I guess what I'm asking here is the degree of coverage of the guidance you're providing for '26 that you're taking out of backlog. And I guess, I assume it's relatively high. And the flip side of that question was the amount of pipeline conversion that is baked into that guidance versus supporting '27 and beyond. Mike Greenley: Yes. Like certainly, '26 is, as I said, is a year of very high visibility on revenue from backlog. So we're executing a lot of backlog as we go through '26. We do expect some orders in the guidance that's been given. The pipeline is a 5-year pipeline. So it's from now through the next 5 years of specific named opportunities that we are pursuing. The pace at which those can come in is often based on customer activity. And some of that customer activity is in areas that are newly emergent such as the Canadian government's new defense industrial strategy, the creation of the new Defense Investment Agency. So we have a lot of new policy and new processes around an expanding defense budget, which assures opportunities in the pipeline, which are great, but there's a little less insight in terms of exactly how fast those things can move. And so we are definitely seeing procurements moving faster, especially strategic procurements in the sovereign defense capability areas identified in the Canadian defense industrial strategy. And so that's really great to see. But in terms of exactly how those will play out, we have to be a little bit cautious until we actually see some more examples of how these things are going to flow through the modified procurement processes. So they're there. Things can happen, both government and commercially as we go through the year, but the pace of those will be based on outside forces. Operator: Your next question comes from Justin Lang from Morgan Stanley. Justin Lang: Mike, you're quite bullish towards the end of the last year that we could see potentially another sizable commercial constellation order announced here in '26. Just curious if you're still hopeful that we could see a large order like that this year? Any color there would be great. Mike Greenley: Yes, it's still possible for sure. Like I say, that's all based on commercial customer activity as well and when and how they decide to move out on different opportunities. So we're still actively engaged, actively quoting people in the pipeline on the commercial side of things. So there's absolutely potential that, that could happen, but we'll wait and see how it rolls. But we still are behaving in a way that we are feeding customer with inputs to assure that they're comfortable to move forward. Justin Lang: Okay. Great. And then maybe just on the CapEx guide for the year. If we could just maybe put a finer point on where the investment is going in terms of what exactly is left to build out in Montreal and how much you'll be spending on this chip development effort? And then should we think about CapEx sort of stepping down materially from here into '27? Or is it more of a smoother downward glide path from here? Guillaume Lavoie: Thank you, Justin. I'll take that one. So really, the focus this year will be on the Lightspeed and Globalstar production line equipment. That's really the focus for us. We also have to continue to invest in office space and things like parking. I mean, we've been growing a lot. Our factory there in Montreal is virtually completed, like the building is completed, but we need a bit more investments to make sure that everybody can come to work comfortably. The facility has been expanding quite a bit. In terms of chip development, for sure, now we started to capitalize the work that we're doing there. It's intangible assets for the most part. And that's important within the midpoint of $250 million, but it's ramping up essentially in 2026. And finally, we have some commercial sort of opportunities where we see that we need to invest a little bit ahead of getting the business. And so those are really the areas of focus for us. I think if we look beyond 2026, I feel like we're going to still have a good year of spending in 2027. Too early to say if it will be lower than the midpoint we're guiding to this year in 2026. But beyond that, and when looking at the business for the future, I feel like a number of $150 million to $200 million would be a reasonable long-term number to assume now. We've been indicating in the past a bit lower than that. But really, the big driver here is that now we have chip capabilities. And so we're going to have to continue to invest on that front, but that's obviously strategic, and it has a lot of value for us. Operator: And your next question comes from Konark Gupta from Scotiabank. Konark Gupta: Just on the pipeline, maybe the $40 billion, obviously, it's an outstanding -- have you like figured out what's the incremental? You said defense obviously driving some of that. But in terms of segments, I'm thinking, is it more on the satellite side that you're seeing these incremental opportunities making satellites? Or is it more from the services side, whether it's geo intelligence or something else? Mike Greenley: I would say more on the -- certainly, there's really solid expansion on the satellite side, definitely in two types of satellites, in communication satellites and earth observation satellites. So there's definitely solid growth in contracting for and delivering satellites. There is some new capability offering type stuff in space that is being introduced as the space market continues to expand that can affect robotics and space operations. So that's really been good to see. And so those are the main driver areas. And then like I mentioned before, a little bit of a bump there in the non-space defense with the creation of 49North and the ability to take on defense prime contracts in an improved way. Konark Gupta: Okay. And on the $10 billion like BD pipeline seems like it's maybe up the pipe, the opportunities because you've been shortlisted by the governments and you're expecting some follow-ons. In terms of time line, then do you see -- like government orders can be lumpy, obviously, but do you expect some of these $10 billion worth of opportunities might be converting into contracts this year and next year? Or these are more sort of back-end loaded? Mike Greenley: No, I would think a lot of the shorter list ones would have -- there's a number of them that would have a chance within that bucket over the next 24 months. Like I said, the -- some of that is government related and therefore, it is going to be linked with the behavior of government under new defense procurement initiatives. But they're not all in some other government ones are just normal procurement processes. So there's some that could come this year and then definitely some that could come next year. Konark Gupta: And last one for me before I turn over. In terms of RFPs, I mean, your business has grown a lot. Your opportunity pipeline is expanding. Are you expecting to fill a lot of RFPs this year? Like can you provide some context historically, like how many RFPs typically you fill in a year? Mike Greenley: I don't have that number in my head. That's a new good one for me to get in my head, how many bids do we write a year. So I'll have to go and work on that. But it's steady. Let me just say that. For sure, our new business teams are very active. Constantly responding to requests for quotations and request for proposals. So RFQs and RFPs in the system, it is a constant activity. So we will definitely be responding to a number of those as we go through the year for sure. Operator: Your next question comes from Ken Herbert from RBC Capital Markets. Kenneth Herbert: Maybe, Guillaume, I wanted to see on the adjusted EBITDA guide for the year, a bit of a wider range than we would typically see, and I can appreciate some of your comments around the higher R&D spend. But can you give any more detail on maybe some of the puts and takes between the upper end or the lower end of the adjusted EBITDA outlook and maybe any more specifics on the areas of focus for R&D and other investments. Guillaume Lavoie: Yes. Thank you, Ken. So at the end of the day, we wanted to give ourselves some wiggle room here. And depending on the timing of the investments that we're contemplating to support our strategic growth, we will see potentially an impact on the EBITDA margin. Again, we've maintained a range of 18% to 20%. So we're going to be strategic about those investments. And it's going to also be sort of part of how we see the timing of revenue recognition. If top line comes in very strong, then we might invest a little bit more. And in an alternative scenario, then we might be a bit more prudent with our different investments. But at the end of the day, I think what's to be sort of highlighted here is that we're coming off a very strong year of growth again. We're now guiding to be a $1.8 billion company, and we were a $400 million company not so long ago. And so Mike and I were thinking about that a lot because we've been investing in our facilities and all of that, but we need to maintain our technological leadership. So that's why we feel like we have some investments to do in R&D. And also, we need to scale the rest of the business, rather if it's us working on making sure we're using AI or making sure that we have enhanced capabilities within finance, legal, HR and IT. And so I think we'll manage it prudently, but -- and we will always do that. We're very disciplined, as you know. But we felt like we needed the proper wiggle room to execute and deliver another good year here in 2026. Kenneth Herbert: Great. Guill, I appreciate all the detail. And then maybe, Mike, we think about your defense exposure today as maybe mid-teens of the business. If you're successful on some of these pipeline opportunities as you've leaned into this opportunity on the defense and national security side, what could defense broadly represent maybe of the revenue mix exiting '26 or into 2027? I mean, can you maybe just frame that opportunity for us? Mike Greenley: Yes. I think exiting '26, I wouldn't expect a big sudden change. I think '27, yes, if some things start to get contracted in these various forms of pipeline as we go through '26, then in '27, we could start to see some additional revenue lift from the defense side and then certainly in 2028. So these -- a number of these programs tend to be larger, and so they'll take time and then they'll have to ramp up. But the relative contribution in terms of your mid-teen estimate and how that might change, of course, will be dependent on what else has happened on the commercial side as well, which is still a significant part of the pipeline. And so -- but the defense portion will go up as we go through the next 24 months. That's our expectation. Operator: And your next question comes from Russell Stanley from Beacon Company. Russell Stanley: Congrats on the quarter. Maybe a follow-up on that last question around your revenue mix expectations. How should we think about the gross margins kind of on a midterm basis? I think people might generally assume that defense-related work must come at lower margins. Is that -- are you seeing that? Or do you expect that? Or are you more or less kind of expecting gross margins to be unchanged relative to the work you see on the commercial front? Guillaume Lavoie: Maybe I take that one, Russ, and give you some insights here. So 2026, 18% to 20%. We're very confident about that range for the business. We don't expect that to change in the near term. So I would expect that we could continue to deliver within that range for 2027. And then what's going to happen is two things. First, as we increase our production in Montreal, we might see some margin opportunities in terms of margin expansion in the future. Now with that said, when we look at defense contracts, they do typically come with lower EBITDA margin. It's too early to tell like what will our mix be. Today, it's about 70% commercial, 30% government and defense. And so we'll see how that evolves. But one thing to keep in mind is that we are seeing very, very large opportunities coming for us, given everything that we've been saying this morning. And so at the end of the day, if we would be in a position in a number of years where we would see a lot of big defense opportunity coming to us, we might see a bit of compression on the EBITDA margin. But at the end of the day, we don't take margin to the bank, right? And from my perspective, this would be still very good for our business because we would increase our earnings per share and absolute EBITDA number. But that's all the color that I guess we can give at this stage, and we'll continue to provide updates as things evolve over the next few years here. Russell Stanley: That's great color. And maybe my follow-up just around the backlog and given the pipeline and the huge growth you've seen there, this is a bit of a hood problem question, but how do you think about managing the backlog as a multiple of revenue, balancing wanting to keep the backlog as healthy as possible while managing delivery time lines and expectations for customers with a $40 million pipeline at some point, that might be a nice problem to have, but I'd love to hear how you're thinking about it right now. Guillaume Lavoie: Yes, I'll start. Maybe Mike can -- yes, sorry, Mike and I were not in the same location today. He's in Europe, and we're here in Toronto. So that's a great question, Russ. Like from our perspective, like we have a really good thing going on for us here because we've invested in a brand-new center of excellence right here in Brampton, Ontario. So we can take on a lot more work. And as I commented earlier, we're now very close to having a world-class high-volume satellite manufacturing facility in Montreal that can deliver up to 400 satellites per year. And so I mean, we've made all those investments, and now we're basically ready to convert more opportunities from our pipeline into our backlog and then continue to execute and generate revenue growth. Now we are obviously targeting a book-to-bill ratio above 1 compared to our revenue every year. This year, we were a bit below that. But if you look at the past 2 years, then we were above. So it's just going to be a matter of timing here. In our business, it takes a bit of time to convert pipeline opportunities into orders. But I think we're very well positioned here from an infrastructure and footprint standpoint to take on a lot more business. Maybe, Mike, if you want to add anything? Mike Greenley: No, I think that's great. Operator: And your next question comes from David McFadgen from ATF Cormark (sic) [ ATB Cormark ]. David McFadgen: A couple of questions. Maybe I'll ask one on the pipeline as well. So we've seen it double since Q3, and you now disclosed that $10 billion of the $40 billion is for follow-on orders or defense or I guess, a combination of both. Can you confirm that Apple Globalstar follow-on order would be in that $10 billion pipeline? Mike Greenley: We're not going to -- no, we don't talk about specific opportunities in our pipeline. But the -- the other thing is that it hasn't been like a -- it's been a jump over the next year. Like we're trying to make sure we update the pipeline annually and make sure that we give as part of guidance for the year, we give an update on pipeline. So we'll carry this pipeline number as we go through the year. We're not going to talk on a quarter-by-quarter basis about adjustments to the pipeline. Our order development and order cycle is such that we shouldn't be thinking about quarterly stuff. We should be thinking about annually stuff. So we'll be working this pipeline as we go through this year and give an update to it at the same time next year. And so there hasn't been like some huge swing just in the 3-month period. It's been building as we've been going through '25 and with all the changes that have occurred in the market and our changes to our position that have contributed to that. So -- but I don't want to comment on specific opportunities like that. David McFadgen: Okay. Do you know when NASA is going to announce this -- the award for this like over USD 4 billion RMS contract for the manned lunar train utility vehicle, it's just been over a year now delayed. Mike Greenley: Yes. It's been like -- people have been looking for that to be announced every month for many months. And so I think that it probably got slowed down as in the fall, which would be expectation was there as the new NASA administrator Jared Isaacman, came into his job and everybody has to confirm what all the priorities are. So I think that probably slowed down a little bit. And then you will have seen like a strong burst in the last little while about ensuring the return to the lunar surface and ensuring in the sort of mini space race that's going on here, maybe it's not too much of a mini space race, the space race that's going on here between the United States and China to be able to get humans back on the moon and start having habitats there and all that kind of stuff, there's a significant focus on that. So I think that probably in the architecture of their programs and which sequence of things need to be decided and announced in what order has probably been reshuffled a bit as the new administrator has come into his job. But in the background, people continually expect that as being one of the programs that could be announced at any time kind of a thing because the -- it's been -- we agree that the community has been waiting for a while for that announcement. David McFadgen: Okay. And then just on Lightspeed, can you confirm that the critical design review is complete and you started construction of those satellites? Mike Greenley: The critical design review, I think there's a few actions that are still being worked like the -- the critical design review process absolutely was conducted. And then there's a few odds and sods of things that people are following up on that always happens in the CVRs. In terms of being able -- talking about moving forward with the construction of satellites, certainly, that's all progressing because we owe a couple of satellites this year into Telesat. So we're leaning into that. David McFadgen: Okay. And then was the EchoStar payment, was that anything material in the quarter? Guillaume Lavoie: So maybe I'll take that one, David. So that contract termination process with EchoStar is now completed. We've received payments for all termination amounts that we were entitled to receive under the terms of the original contract. And the terms of that agreement with EchoStar, the termination agreement are confidential. And we are precluded from sharing details of the agreement, including the dollar amount that we were compensated for. But this is behind us. We're moving forward. We have a strong pipeline, and we're glad that this was completed in the fourth quarter. Operator: And your next question comes from Thanos Moschopoulos from BMO Capital Markets. Thanos Moschopoulos: With respect to Telesat and Globalstar, can you remind us when the first deliveries happen? Is that kind of Q3 time frame? Or when would that be? Mike Greenley: Globalstar from that first contract for 17 satellites, there will be deliveries through the first half of the year. And then with Telesat with Lightspeed, there'll be some deliveries near the end of the year. Thanos Moschopoulos: Okay. And then for the second Globalstar contract, would there also be deliveries towards the end of the year? Mike Greenley: I think I have to check on that in terms of the latest status for that in terms of whether it's late in the year or early in the next, but I'd have to check on that. There's lots of moving parts still on that program. Guillaume Lavoie: I think that's a good way to put it, Mike. We're very advanced with that contract. We started the construction. As Mike said, we have completed the CDR. And so it's just a matter of working with the customer here. We've always said that we would have some ramp-ups mostly in 2026 with a more significant year of production and delivery in 2027. But as Mike said, there's a lot of moving parts with the second contract here. So we expect that we'll start delivering either at the end of 2026 or in 2027. Thanos Moschopoulos: Great. And then, Mike, with respect to 49North, what would be some of the, I guess, more meaningful areas of opportunity that you call out? Clearly, you have a broad range of capabilities. You're already getting a lot of non-space work with the service combatants. But what would be some of the near-term or larger opportunities or buckets within non-space that you would hope for within the defense sector in Canada? Mike Greenley: Yes. In terms of areas where we've got a really strong history of past performance, one of the key areas would be on autonomous systems. We're a leader with the Canadian forces in the delivery and/or operation of autonomous air systems like drones for the military. And so that's an area of strength for us. Another area of strength would be in sensors. You mentioned the Canadian Surface Combatant, we're the River-class destroyer, where we're responsible for the integration of the electronic warfare suite and the sensors around that. And so these are -- those are example areas where we're historically strong. The -- we have strengths in things like submarine command training, for example, that will be a hot topic as we move forward into the future as Canada goes and buys new submarines. We're responsible for that today. So -- and then the -- there's some -- there'll be some large programs coming forward in integrated command control communications with sensors and the like, where we have strong secure systems integration expertise that can lead programs in that area. That will apply to a number of different programs that could come along. Operator: And your next question comes from Greg MacDonald from Stifel. Gregory William MacDonald: Mike, I know you don't want to talk about specifics on the pipeline, but the Golden Dome, I think most of us would consider a different risk profile than some of your other opportunities. Can you say -- are you willing to say whether there's anything in the Golden dome inside the pipeline? Mike Greenley: I think there could be opportunities related to that. Like you would have seen us get a -- we announced an IDIQ contract signature there with the SHIELD program with the U.S. Missile Defense Agency, which is really an opportunity to be able to be sort of inside the tent and able to bid on things. And so that creates some opportunity. And then some of the opportunities for Canada that are related to Arctic Defense, whether that's Arctic Defense Communication or Arctic Defense Surveillance, those types of programs that are Canadian programs would be eligible to be part of Golden Dome scope. And so I think that I have to honestly say that those things could absolutely be related to Golden Dome scope, but they would be Canadian programs. In the U.S., on the U.S. side of things, we would continue to have conversations with folks that could benefit from our space capabilities as they continue to advance their solutions for Golden Dome on the U.S. side. You would have seen us in the last number of years be providing satellite technology to all the satellite primes in the SDA LEO constellations. And so we've got a strong history of performance there delivering into U.S. primes when their programs ramp up. Gregory William MacDonald: Great. That's helpful. And then second quick question on 49North. To what extent -- you talked a lot about hardware. We know that Canada does and you do sensors well, systems integrations well. When you talk about systems integration, should we assume that includes software and in particular, kind of the command and control integration stuff and the AI prediction stuff? Or is that beyond the scope of what you guys are looking at? Mike Greenley: No, it could definitely include those types of things. We're strong in systems integration. That can include hardware and software integration to deliver a system for sure. And we have past performances of that in the 49North team. So we have strong capability there. So yes, that can definitely be part of that. In terms of AI, that's going to depend on the systems. These days, when you have sensors that are delivering data into an integrated system that you then need to determine what the current situation is and evaluate alternative courses of action from that information you're receiving. Of course, our artificial intelligence-related system elements can be logically part of that. And we see that on all of our programs, including our space programs these days. As you look at the road maps for the evolution of these technologies, AI has more and more of an opportunity all the time. And so that can definitely come up as part of a systems integration solution. Operator: And your next question comes from Michael Kypreos from Desjardins Securities. Michael Kypreos: I'll be quick here. Just any updates on capital allocation and how the M&A pipeline is these days? Mike Greenley: The pipeline is good. So I was just going to say from a pipeline perspective, the pipeline is good. So we keep an eye on all the same areas we ever talked about M&A. We talk about vertical integration. We talk about geographic expansion to open up bigger pipelines for ourselves around the world. Those types of thought processes absolutely continue, and we continue to look at and focus on targets, but I'll let Guillaume talk to capital allocation. Guillaume Lavoie: Thank you, Mike. Michael, so yes, I mean, focus for us is to continue to look for targets so we can expand geographically. And then obviously, the second priority is to execute our growth organic plan. And again, you saw the guidance this morning for this year. We're going to spend at the midpoint, $250 million into CapEx. And so those are really the 2 priorities, potentially doing some acquisitions and then focus on delivering on our investments that we need to support our growth. We're not thinking of introducing any dividends at this point or share buybacks or things like that. We're very focused on continuing to grow the company. Operator: And there are no further questions at this time. Mr. Mike Greenley, you may proceed with the call. Mike Greenley: Okay. Well, thanks, everybody. I appreciate all the questions and the discussion, and we will get back at it and look forward to talking to you again in the next quarter. Thanks a lot. Operator: This does conclude your conference call for today. Thank you very much for your participation. You may now disconnect. Have a great day.
Operator: Good day, and welcome to the Hyster-Yale Materials Handling, Inc. Fourth Quarter and Full Year 2025 Earnings Call. All participants will be in a listen-only mode. To ask a question, you may press star then 1 on your touch-tone phone. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the conference over to Ms. Andrea Saba. Please go ahead, ma’am. Andrea Saba: Good morning, and thank you for joining us for Hyster-Yale Materials Handling, Inc.’s Fourth Quarter and Full Year 2025 Earnings Call. I am Andrea Saba, Director of Investor Relations and Treasury. Joining me today are Alfred Marshall Rankin, Executive Chairman, and Rajiv K. Prasad, President and Chief Executive Officer. Yesterday, we filed our fourth quarter 2025 earnings release, which provides a comprehensive overview of our financial results and performance. The discussion in this script serves as a supplement to the earnings release, offering additional insights and context for our results. You can find the release and a replay of this webcast on the Hyster-Yale Materials Handling, Inc. website. The replay will remain available for approximately 12 months. Today’s call contains forward-looking statements subject to risks that could cause actual results to differ from those expressed or implied. These risks are outlined in our earnings release and SEC filings. We will be discussing adjusted results, which we believe are useful supplements to GAAP financial measures. Reconciliations of adjusted results to the most directly comparable GAAP measures are available in our earnings release and investor presentation. First, I will start with a brief overview of our fourth quarter and full year results before turning the call over to Rajiv to discuss the business environment and strategic outlook. During the fourth quarter, we saw several encouraging signs. Bookings in the fourth quarter strengthened significantly, increasing 42% sequentially and 35% year over year, which may signal the early stages of a demand recovery following an extended period of customer caution. Also, the first two months of 2026 continued this trend. Fourth quarter operating cash flow increased to $57 million, driven by meaningful improvements in inventory efficiency. We continue to make progress aligning production with demand, improving finished goods management, and reducing inventory levels, all of which support stronger cash generation. That said, market conditions remained challenging during the quarter. Fourth quarter revenues declined to $923 million, reflecting weaker shipment volumes across the business as customers continue to delay purchases until they have a clear need for new trucks. Tariffs remain a significant headwind, reducing both quarterly and full year revenue and operating profit. In the fourth quarter, the impact of tariffs, combined with lower volumes, resulted in an adjusted operating loss of $16 million. This includes $40 million in gross tariff costs. Looking at full year 2025, revenue declined to $3.8 billion and we reported full year adjusted operating profit of $16 million. This result includes approximately $100 million in gross tariff costs, underscoring the magnitude of the ongoing external pressure on our results. While 2025 reflected a difficult operating environment, our improved bookings, strong cash flow performance, and disciplined cost and inventory management position us well as demand begins to recover. With that foundation in place, I will now turn the call over to Rajiv. Rajiv K. Prasad: Alright. Thanks, Andrea, and good morning, everyone. I will start by sharing how we see the current economic landscape unfolding, how those dynamics are shaping customer behavior, and how we are positioning the company in response. After that, I will walk through our expectations for 2026, before turning over the call to Al for his closing remarks. The global lift truck market remained challenged in the fourth quarter, with year-over-year declines across all regions and truck classes. However, despite that broad pressure, we began to see an important divergence emerge late in the year. North America showed meaningful sequential improvement relative to quarter three. This uptick translated into stronger bookings and a noticeable improvement in customer engagement, as an encouraging contrast to EMEA and JAPIC, where demand contracted sequentially as customers remained cautious amid macro uncertainty. This brings me to the underlying customer mindset. Across all regions, customers are still heavily focused on cash preservation, higher financing costs, and fleet utilization. As a result, many continue to defer capital spending, especially for higher-duty equipment. This has suppressed ordering activity outside of North America. Against this difficult backdrop, our quarter four booking performance stood out as a meaningful positive development. Bookings increased to $540 million, up significantly from $380 million in quarter three and $400 million in the prior year quarter. The Americas drove most of this increase, with particular strong traction in core counterbalance Class 5 trucks in the 1 to 3.5 ton range. Looking at the first two months of 2026, we have seen the positive booking momentum persist. North America industry demand recovery is continuing, outperforming our expectations. The company’s own bookings are ahead of prior year, driven primarily by continued strength in our core counterbalance trucks and solid performance in the Americas. This reinforces our view that the underlying recovery is gaining traction as we enter 2026. But the more notable shift is why bookings have improved. Customers began converting quotes into firm orders at a materially higher rate, suggesting extended backlog delivery is now complete, greater clarity around their operational needs, rising urgency, and early signs that replacement cycles, which have been deferred, are starting to reengage. This shift, combined with the increasingly aged fleet and rising maintenance costs, supports our view that replacement-driven demand may be gaining momentum as we enter 2026. Stepping back, it is important to underscore that 2025 was a difficult year after two very good years, one marked by high tariff costs, softer industry demand, and heightened customer caution. Many customers were still taking delivery of equipment ordered during long lead-time windows, stretching fleet lives, and delaying normal replacement cycles. We now believe many are nearing natural replacement timing. This is a key element behind our cautious optimism going into 2026. As we exited the year, backlog totaled $1.28 billion, reflecting shipments outpacing new orders, especially within EMEA, where recovery will have lagged due to delayed orders and industry shifting towards lighter-duty, lower-priced products. Sequential backlog decline was driven primarily by lower unit volumes partially offset by higher average selling prices tied to material and component costs. Constant movement further reduced the translated value of backlogs. Now let me bridge that to what we are seeing in early 2026. Early-year bookings have been strong across all regions. Even though shipments began the year at lower levels than quarter four, if this trend continues—and we expect it will—bookings should begin to outpace shipments, allowing backlog to rebuild towards a more normalized three- to four-month level. This, in turn, supports more efficient production planning. Pulling these pieces together, we expect quarter one 2026 to mark the trough of the current cycle, primarily reflecting the lower order intake levels from earlier in 2025. As we move through the year, improving customer confidence, stronger bookings, and backlog building should allow production and shipments to expand gradually, with meaningfully stronger volumes expected in 2026. Even as volumes trend upwards, near-term margin pressure is likely to persist. Here is why. The market continues shifting towards lighter-duty, lower-priced models. Competitive pricing, particularly from foreign manufacturers in Europe and South America, remains aggressive, and this has reduced shipments in traditionally higher-margin categories. Despite the challenging backdrop, our approach remains consistent, focused on what we can control, and on making disciplined, forward-looking investments that position the company for transformation which will accelerate when the market turns. Our priorities remain the same: rigorous working capital management, tight operational discipline, accelerated technology and product development, and continuous data-driven monitoring of leading indicators across customers and suppliers. We have been through many market cycles, and that experience reinforces an important point: resilience and readiness matter. While we cannot control external forces, we can control how we operate. That is why we are concentrating on efficiency, productivity, innovation, and responsible cash management. To deliver on these priorities, we are executing transformation programs across several fronts. Product strategy. We have introduced new modular and scalable platforms to address these evolving segments. While these offerings strengthen our long-term competitive position, margins will remain pressured until they gain full market traction. Operational efficiency. We are streamlining operations, managing inventory more tightly, and improving working capital efficiency. These actions help generate cash, even when revenues and profits are under pressure. Manufacturing flexibility. Our modular vehicle platforms allow us to build the same models in multiple regions. This flexibility helps us adapt quickly to tariff changes, logistic challenges, or supply chain disruptions. Customer engagement. We are strengthening our relationships with dealers and end customers. By listening closely and co-developing solutions, we are aligning our product roadmap with the real challenges customers are facing today. Product innovation. We are accelerating new product launches and introducing technologies that improve performance, lower total cost of ownership, and help us stand out in the market. Market readiness. We are watching leading indicators closely so we can scale quickly when conditions improve. Our goal is to be a first mover as soon as demand begins to recover. Global optimization. We are aligning our manufacturing footprint and supply chain to improve cost competitiveness and responsiveness across all regions. These actions are helping us manage the current environment with agility and discipline. They are also strengthening our long-term structure, lowering our breakeven point, and improving product margins so earnings become more resilient over time. Our overarching goal is clear: Hyster-Yale Materials Handling, Inc. is the first mover when demand accelerates, enabled to scale quickly and capture profitable growth. To further support our long-term position, we have taken decisive action to lower our cost structure and strengthen resilience across market cycles, which include the VERA strategic realignment executed in 2025 that delivered $15 million of cost savings in 2025, and redeployed resources to higher-growth opportunities; a company-wide restructuring program launched in 2025 targeting $40 to $45 million of annualized savings beginning in 2026; and manufacturing footprint optimization initiatives that began in 2024 and are expected to deliver $20 to $30 million in benefit in 2027 with full annualized savings of $30 to $40 million by 2028. In total, we expect recurring annualized savings of $85 to $100 million by 2028 compared to the beginning of 2025 before inflationary cost increases. I will now move to discuss tariffs, which remain a major external factor. We have outlined our assumptions regarding tariff costs in the earnings release, which were prior to the IEPA decision. With these assumptions, forecasted tariff costs are expected to remain broadly consistent with quarter four 2025 levels throughout 2026. While we have implemented pricing, sourcing, and cost initiatives, we do not expect to fully offset tariff impacts. Benefits from mitigation actions are expected to increase beginning in quarter two 2026, so year-over-year comparisons will remain unfavorable early in the year. We are also monitoring recent legal developments related to tariffs. The Supreme Court’s ruling was limited to IEPA tariffs and did not invalidate other tariffs or address potential refunds, which, if required, would likely take years to resolve. Broader implications for trade policy remain uncertain, and additional tariff-related decisions will likely continue to be challenged in court. They could affect how certain tariffs are applied and how related costs or potential recoveries are recognized. These mitigation efforts should begin contributing more meaningfully in quarter two 2026, so early-year comparisons will remain unfavorable. Andrea Saba: Bringing everything together, we remain cautiously optimistic. Rajiv K. Prasad: Market conditions are still challenging, but improving bookings and aging fleets provide constructive signals, and volume recovery is expected in 2026. Based on these factors, for the full year, we expect moderate full-year operating profit, a small loss in the first half, followed by stronger revenue and profit improvement in the second half as volumes rise and cost actions take hold. As we move into 2026, the company remains committed to generating strong operating cash flow and allocating capital in ways that enhance long-term value. Management is executing targeted initiatives to improve working capital efficiency, with particular emphasis on aligning production and working capital practices with periods of reduced output. We expect meaningful progress on these initiatives during 2026. As production levels increase later in the year, the focus will shift from conserving working capital to supporting growth, while maintaining the inventory and production disciplines established during the current downturn. Together with continued cost optimization, these actions are expected to drive solid cash flow from operations supported by improving net income. Investment in modular development and critical capital equipment and IT capabilities remains central to the company’s ongoing transformation, enabling advances in new product development, manufacturing efficiency, and information technology capabilities. Capital expenditures for 2026 are expected to range from $55 million to $75 million, with the final level dependent on the pace of production improvements. Management will closely monitor spending throughout the year and may accelerate investment as production levels and market share improve as anticipated. As the company continues to generate cash, it will maintain its disciplined capital allocation framework, prioritizing debt reduction, pursuing strategic investments to support profitable long-term growth, and delivering sustainable shareholder returns. We have managed through cycles before, and we are confident in our ability to do so again by staying disciplined, strategic, and focused on long-term value creation. Now I will hand the call over to Al for his closing remarks. Thank you, Rajiv. As you have heard today, 2025 was a challenging year for our industry. Demand softened, tariffs were a significant headwind, and customers were understandably cautious. Alfred Marshall Rankin: Especially since they were still receiving trucks ordered in earlier years. But it was also a year in which we took decisive actions to strengthen Hyster-Yale Materials Handling, Inc. for the next phase of the cycle. We have used this period to improve the business fundamentally, lowering our cost structure, increasing operational flexibility, sharpening our focus on cash generation, and investing in the products and capabilities that matter most to our customers. These actions are not short-term fixes. They are structural improvements that position us to perform better across cycles. Importantly, we are beginning to see early signs that the market is stabilizing. Things have improved. Customer engagement is increasing, and aging fleets are driving renewed focus on replacement. While we remain realistic about the near-term environment, we are cautiously optimistic that 2026 represents a turning point, with stronger performance expected as the year progresses. Our priorities remain clear and unchanged: disciplined execution, proven capital allocation, and a relentless focus on the long-term value creation of our company. We are committed to maintaining financial flexibility, investing where we see durable returns, and positioning Hyster-Yale Materials Handling, Inc. to be a first mover as demand recovers. We have managed through many cycles over the years, and that experience gives us confidence, not complacency. We know success comes from preparation, discipline, and focus. Actions underway today are transforming our company by building more resiliency, higher profit, higher-margin growth, and a more competitive company. We believe this will all translate into improved earnings power and stronger returns over time. That concludes our prepared remarks. We will now open for questions. Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question for today will come from Chip Moore with Roth MKM. Please go ahead. Chip Moore: Hey, good morning. Thanks for taking the question. Rajiv K. Prasad: Good morning, everybody. Chip Moore: Wondering if you could perhaps expand on the pent-up demand dynamic and potential for fleets to get replaced. Just the conversations you are having, it sounds like things have continued to trend in the right direction here in 2026 so far. And any thoughts around mix and when we might see a bit of a shift to the more profitable list? Thanks. Rajiv K. Prasad: Yeah, Chip. I think, as we talk to our customers, they are transitioning from conserving to really ensuring that they will have what they need for their operations. I would not say it is particularly euphoric. It is still about what must they do, and we are talking about predominantly industrial customers. So, certainly, as I look at our bookings, it is heavy on counterbalanced trucks. So I think that is the nature of it. I would say people are doing it despite their concerns because of the need, and it is mostly industrial customers who are coming back to us. We are also promoting that by launching some programs that will help them do it, so that has been a bit of a catalyst to further engage our customers. Alfred Marshall Rankin: I think I would add just one thought to what Rajiv has said, and that is that the context here is that we have basically now delivered all of the long, high-backlog, early-order trucks. So the customers are now no longer receiving trucks, which they were, I think, Rajiv, just as recently as a month or two ago. So that dynamic changes, in a sense, the backdrop against which they are executing their own plans and thinking through what to do. So I think that is an important consideration. Chip Moore: Yeah, definitely. Thanks, Al and Rajiv. That is helpful. If I could ask one more, maybe can you just update us on new product launches and the pipeline there and, particularly, anything around automation as well? Thanks. Rajiv K. Prasad: Sure. So I think from a new product launch point of view, in fact, just this week, we are launching some new products to our customers. It is really part of our modular and scalable spreading of that platform into our electric counterbalance trucks and also starting to be implemented in some of our warehouse products. So these launches are being introduced to our dealers in the early part of the month, and they will be available for sale by the end of the month so they can go out and take orders. In terms of the automation solution, we have been working with what we would call friendly customers to install the automation as part of a pilot. Those have gone very well. We have started to get orders for the automated trucks, and then we are also now engaging some of our dealers into the selling process of these automated trucks. So I would say that will accelerate throughout the year. The actual official launch of the automated IDA truck is in April. So it is coming very soon. Chip Moore: Okay. Thanks very much. I will hop back in queue. Andrea Saba: Okay. Thanks. Operator: The next question will come from Ted Jackson with Northland Securities. Please go ahead. Ted Jackson: Thanks. Good morning. Good morning, guys. So first, I just want to summarize what I am hearing from you all just to make sure I am getting the message. I am a little slow today. So in the fourth quarter, bookings picked up, driven by North America industrial counterbalance. Outside of North America, bookings did not pick up. They were somewhat stable, but what you are seeing there is a shift towards smaller, more price-competitive product. Going into 2026, bookings continued to strengthen not just in North America, but also seem to be spreading to the rest of the world, although the rest of the world is still seeing smaller, more price-competitive product in terms of what is being booked. You expect your bookings to continue to strengthen as you roll through 2026 as you go through really a replacement cycle. But the mix of your bookings will be towards these smaller, more price-competitive products, which means that although I would expect to see a margin recovery, we will not see a full-blown margin recovery. So is that what I am hearing from all of the dialogue in the press release? And then behind that, if it is correct, then does it mean that it should be as we exit 2026 that we would see your margins move—gross margin—more to the mid-teens into the high-teens? That is my first question. Rajiv K. Prasad: Yeah. So I think that is directionally very correct, Ted. In terms of the margin levels, the 2023–2024 margin levels were out of the ordinary for us. We saw something in the low twenties. I do not think we will see that. We will see, depending on the product line, in that range between mid-teens to high-teens, which is where our targets are. So, yeah, I think that basically everything is normalizing. Our backlog is normalizing. Our margins are normalizing. The one thing that is happening in the market—and we kind of predicted it—is that there is a trend towards lower capability trucks because that is what the customer needs. And so those are going to be the primary path forward. Well, that was the whole point behind the effort to put the products out anyway. So you are absolutely positioned for it. But it is fair to expect, if this scenario plays out, that by the time we get out of 2026, your gross margins should be somewhere in the mid- to high-teens. Ted Jackson: If indeed we are seeing we are at the bottom of the cycle. Rajiv K. Prasad: I think that would be a fair estimate. Ted Jackson: Okay. And then I have a question just on CapEx. I thought that the CapEx guide was—at least the midpoint of it—would have been a little higher than I expected. Can you talk a bit about the thought process within your spend and where you are going with it and why you are ramping it up that much? Rajiv K. Prasad: Yeah. The vast majority of the CapEx is going into really three areas. It continues to be towards product. We continue to scale out the modular, scalable, and our technology solutions now, including automation and lithium-ion batteries and chargers that go with it. The second area is around really upgrading our IT infrastructure. Especially over the coming year, we are going to launch a new CRM system. We are going to really upgrade our data product lifecycle management system, and the parts business will move to a new ERP system. So that is quite a lot of IT-type programs that we are implementing in 2026 and in 2027. And then the last area is optimizing our manufacturing footprint. What that means is we are moving some production globally and putting additional capabilities in geographies that did not have it. So it gives us a full ability to source any type of truck from anywhere to anywhere. And I think, as we discussed in the past, the modular scalable platform was designed to be able to do that, but it does take some capital to spread that capability. The other thing we are doing in our operations is adding more automation—much more automation in the way we manufacture our lift trucks. Ted Jackson: Okay. Those are all worthy investments. And then my last question, just a little more in terms of markets and stuff. How about a little update on the efforts and the progress for the company in terms of penetrating the warehouse segment—the goal of taking some market share there? Can you give us some kind of color on what is going on? That is my last one. Thanks. Rajiv K. Prasad: Yeah. We have made some progress in that area, especially in North America. Our share has improved in the warehouse market. I think the big enablers and accelerators will continue to be some of the new trucks we are launching. We are in the middle of launching a new three-wheel stand, which is going to come with a lot of scalability and address parts of the market we have not been successful in in the past. We will continue to add our safety systems, such as our AI camera and our DSS system. This is to make sure to avoid pedestrian incidents and keep the operator operating in the right stability range, and then our automation solution and the energy solutions are all very targeted towards the warehouse segment of the market. So we think those will help customers and provide us an opportunity to discuss these solutions with customers we have not had a close relationship with in the past. And, in fact, a lot of that is going on as we speak. Okay. Well, thanks very much for the questions. We will talk to you soon. Andrea Saba: Thanks, guys. Operator: The next question will come from Kurt Lutke with Imperial Capital. Please go ahead. Kurt Lutke: Hello, everyone. Thank you. Thank you for the call. With respect to the order rates in the Americas, the pickup is very encouraging. Can you give us a sense for how orders trended by end market—directionally positive or negative—autos, e-commerce, that type of thing? Rajiv K. Prasad: Yeah. Typically, we do not break it down to industries, but I would say that a lot of the recovery has been in what I would term as industrials, and more on the heavy side. Generally, people who are manufacturing things—either equipment or capital goods like metals and paper and lumber, things like that. Hopefully, that gives you a feel. Obviously, that portion of the market were the ones most concerned about some of the things we got into in 2025, whether that was tariffs, and along with tariffs, the confidence in what is going to happen globally in these industrial materials and solutions. I think that has been the case. In the warehouse side of the business, it pretty much stayed steady—maybe a little bit of a dip, but nothing like the industrial side. Kurt Lutke: That is helpful. Thank you. You have mentioned automation a couple times. Sounds like maybe it is still early days, but can you give us a sense for how the shift toward autonomous and lithium-ion will impact the margins and to what extent? Rajiv K. Prasad: Yeah. I think both. The revenue will be higher because, typically, in the past, we have generally sold trucks without—even electric trucks without—batteries and lead-acid batteries. And certainly, when we sell internal combustion engine trucks, they have an engine but no fuel—we do not provide that. Whereas when we implement a lithium-ion solution, we provide a smart energy system. Now you need to put electricity in it to make it work, but the battery comes from us, and then the charger—because it is an intelligent charger—comes from us as well. So it is quite a bump in revenue. Now, for automation, there is a much larger bump in revenue because there are very high-capability sensors, software, and actuation systems in those trucks to automate them. So they are significantly higher, both from a revenue point of view and margin point of view. Kurt Lutke: Interesting. Is it 2x in terms of revenue per unit? Is it that much? Rajiv K. Prasad: Depends on the solution, but in that range, yeah. Kurt Lutke: Got it. And what kind of margin—are the margins higher as well? Rajiv K. Prasad: Yeah. Kurt Lutke: And what percentage of your sales in the Americas would you say is autonomous? It is tiny, right? Rajiv K. Prasad: Yeah. I mean, we are still in the pilot phase. It is tiny. But we expect that to grow over the next two or three years to become an important part of our business. Kurt Lutke: Got it. Excellent. And then, lastly, a follow-up on tariffs. I know you have some flexibility as to where you assemble product. Have all those moves been made? Rajiv K. Prasad: It is a constant juggle. As you saw, the Supreme Court really turned down the IEPA tariff that was having a big impact on where those products should be coming from. Now, the 122 tariffs have gone on, so that has had a bit of an impact on where we source from. But the key thing for us is that we have now the ability to do that. We have a forum within the company where we decide those—in fact, one of those meetings is straight after this call. So we are basically meeting monthly to make those calls, and the plants are being very responsive. Kurt Lutke: Got it. I appreciate it. Thank you very much. Operator: And this will conclude our question-and-answer session. I would like to turn the conference back over to Ms. Andrea Saba for any closing remarks. Please go ahead. Andrea Saba: Thanks to the participants for your questions. We will now conclude our Q&A session. A replay of our call will be available online later today, and the transcript will be posted on the Hyster-Yale Materials Handling, Inc. website. If you have any follow-up questions, please feel free to reach out to me directly. My contact information is included in the press release. Thank you again for joining us today, and now I will turn the call back over to the Operator. Operator: Thank you. The conference has now concluded. Thank you for attending today’s presentation. A replay of today’s event will be available shortly after the call by dialing +1 (877) 344-7529 or +1 (412) 317-0088 using replay access code 10205863. Thank you for your participation. You may now disconnect.