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As Operation Epic Fury triggers a leadership crisis in Iran, investors are facing massive swings in energy and equity markets. IBD news editor Ed Carson explains.
The Nasdaq and S&P 500 suffered another distribution day in the stock market Tuesday, although both indexes pared early losses.
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The Iran war risks escalating into a prolonged conflict with significant oil and gas infrastructure at stake. I think this is not yet priced by markets.
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With every passing day, the conflict in the Middle East expands to new fronts, but that's not scaring off investors.
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Investors are starting to brace for a prolonged Middle East conflict that could stoke fresh inflation fears, threaten economic growth and undermine the case for interest-rate cuts in coming months.
As I write on Tuesday afternoon, the market is staging a comeback. Earlier today, fear gripped Wall Street due to escalating tensions in the Middle East. All three major indexes were down more than 2% in a classic “sell first, ask questions later” session.
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Operator: Good afternoon. Thank you for attending today's Archer Aviation Company Q4 '25 Financial Results Conference Call. My name is Tamia, and I will be your moderator for today's call. [Operator Instructions] I would now like to pass the conference over to your host, Kate Kiewel, Head of Investor Relations. You may proceed. Kate Kiewel: Welcome to Archer's earnings call. This is Kate Kiewel, Archer's Head of Investor Relations. Today, we will be making forward-looking statements that are based on current assumptions. We don't undertake any obligation to update those assumptions as a result of new information or future events. Risks and uncertainties may cause our actual results to differ materially from those contemplated by these statements. For more information about potential risks and uncertainties, review the risk factors in our SEC filings. Today, we will also be discussing both GAAP and non-GAAP financial measures. A reconciliation of those measures is included in our shareholder letter and earnings release from today. Now I'll turn it over to Adam. Adam? Adam Goldstein: Thanks, Kate. At Archer, we are building a next-generation aerospace company with civil and defense applications. We have formed an ecosystem with some of the best partners in the world from Anduril to SpaceX to NVIDIA. We have great momentum, and I'm excited to walk you through it today. I published a more detailed shareholder letter that I encourage everyone to read. I'm going to keep my remarks relatively brief and dedicate most of this call to Q&A from analysts and retail investors. Last year, our pilots took Midnight through its CTOL campaign, flights over 50 miles, over 30 minutes of flight time at altitudes above 10,000 feet and speeds exceeding 150 miles per hour. And we have now begun Midnight's piloted VTOL flight test campaign. We will continue to expand our piloted Midnight fleet and the flight envelope throughout 2026, enabling us to begin TIA activities with the FAA as soon as this year. As we expand our flight test program, we are simultaneously preparing to be ready for air taxi operations. We are on track to begin deploying Midnight this year, both in American cities as part of the White House's eVTOL Integration Pilot Program, or eIPP, and in the UAE as part of our commercial launch program. Before we go into our plans for the UAE this year, I want to acknowledge the current geopolitical situation in the Middle East. Our team and partners in the region are in our thoughts, and their safety will always be our top priority. We will continue to monitor the situation closely. Despite that current uncertainty, we remain focused on rapidly progressing our commercialization strategy in the UAE. I am pleased to share that Archer is the first eVTOL manufacturer to establish a Restricted Type Certificate program with the GCAA, which sets us up to deliver additional Midnight aircraft to the country this year for piloted and passenger carrying operations, while simultaneously building out our network of certified vertiports across Abu Dhabi. While our team is hard at work commercializing the United States and the UAE, our global backlog continues to grow. Our order book is in the billions with 7 of the world's largest airlines choosing to partner with us. Some new partners include Saudi Arabia's PIF and the Serbian government. The commercial momentum is real, and it is built on a certification strategy that we've been executing against for 7 years. This quarter, the FAA confirmed its final acceptance of 100% of Midnight's Means of Compliance. I believe this makes us the first eVTOL company to achieve this level of progress with the FAA. Completing Midnight's Means of Compliance unlocks the ability to finish the next phase, finalizing its remaining certification plans. We expect those to get there in the coming quarters, clearing the path for TIA work to begin on the program as soon as this year. Our partnership with Anduril is central to our defense strategy. We are designing an autonomous, hybrid-electric VTOL aircraft built for dual use, a loyal wingman for defense, and cargo or medevac for commercial customers. We remain optimistic about winning a major defense contract this year. We are always looking for opportunities to apply the proprietary technologies we have developed for our commercial aircraft to other adjacent applications. In November, we announced our first third-party powertrain deal with Anduril and EDGE Group to power their Omen autonomous air vehicle. Anduril spent 5 years searching for a propulsion solution for Omen, and I'm proud they chose ours. Beyond commercial aircraft and defense, we see a third opportunity, software. We partnered with Palantir for next-generation air traffic control, movement control and route planning. We are working with NVIDIA to integrate their IGX Thor platform into Midnight for safety-critical autonomy applications, and we are working with SpaceX's Starlink to bring high-speed, low-latency connectivity to our aircraft. We plan to unveil our first software product in this category later this year. Executing across all of these fronts requires exceptional leadership. I want to highlight Benjamin Lyon, who has integrated fully into his role at Archer as President of Aircraft OEM. Benjamin is a long-time pilot who spent decades at Apple, shaping some of the most complex hardware programs they ever built, then served as CTO at Aptiv, one of the world's leading industrial technology companies. He is exactly the kind of operator you want driving a program towards commercialization, and his impact on our engineering, manufacturing and certification velocity is tangible. Tom Muniz continues to support the Midnight program, but has now taken a leadership role in developing our hybrid aircraft. Together, Benjamin and Tom represent exactly the caliber of leadership the opportunity requires. We ended Q4 with approximately $2 billion in liquidity. While this is a strong position, I try to be ruthless about cutting anything that does not earn its place. My job is to drive execution, fly aircraft, deploy them in cities, complete certification, scale manufacturing and deliver to the customers who are waiting. Thank you to our team, our partners, the government agencies and our shareholders that all play a part in our success. Deep tech is extremely challenging, and you give us the ability to pursue it. I do not take your support for granted, and we will work every day to continue to earn it. With that, I'll hand it over to Priya. Priya Gupta: Thanks, Adam. On today's call, I'm not going to walk through all the detailed financial results as those are set out in our earnings release. Instead, I'll briefly discuss the key highlights, our liquidity position, capital allocation priorities and overall financial discipline. First, with respect to liquidity, as Adam highlighted, we closed the quarter with a very strong balance sheet and total liquidity of approximately $2 billion, which is the highest watermark in Archer's history. Our financial strength allows us to think and act beyond a single program. With respect to our priorities for deploying capital, it is very straightforward. In the near term, commercializing Midnight remains our #1 priority. This includes progressing certification activities, scaling manufacturing and advancing market launch efforts. Beyond the Midnight platform, as we position Archer as a category leader, our next investment priority is in adjacent opportunities such as the hybrid aircraft program and our software platform. These efforts meaningfully expand our long-term optionality and total addressable market. Our focused capital allocation carries through to day-to-day execution, with Q4 spending tightly aligned to the guidance we outlined in the last earnings call. We are moving steadily towards industrialization and market entry. That naturally requires increased but disciplined spend. For Q1, we estimate our adjusted EBITDA loss to be in the range of $160 million to $180 million. The step-up in investment is deliberate and is a direct reflection of the meaningful progress we are planning for the year. We will continue to provide transparency on spend trajectory and liquidity as we continue to execute against our key priorities. And with that, I will turn it back over to Adam. Adam Goldstein: Thanks, Priya. I want to first start by addressing some of the retail questions. And the first question is, how is the pathway for Archer to be the main air taxi service for the Summer 2028 Olympics? Well, the Summer 2028 Olympics is the most important commercialization milestone for Archer, because it represents an unslippable date for us, and it's driving the regulators and it's really driving us towards making decisions and ultimately making progress. But it's not just certification that has to be ready for the launch, it really is all about the infrastructure, the supply chain, the technical progress, all just converging at the same time. And just last quarter, you saw us invest in the Hawthorne Airport, and our team is on the ground every day there working through initial flight operations, pilot training. And so this is a very important event for the administration. And so we are coordinating at the highest levels to make sure that this goes off smoothly. And with that, I'll turn it back to the operator to open up for questions. Operator: [Operator Instructions] The first question comes from Edison Yu with Deutsche Bank. Xin Yu: I want to start off on eIPP. Can you give us a sense of what the next milestones are and the sequencing of events that need to happen before you start to fly the aircraft? Adam Goldstein: Sure. Thanks, Edison. So just to take a quick step back on the eIPP program, we view this really as a big moment for the industry. I'd like to call it our Waymo moment. If you think about like the first time you saw a Waymo, it felt like science fiction to you, but now the goal is to have 0.5 million people in the biggest cities in the country start to see these aircraft as part of your everyday commute just like they started to see Waymo every day. And that's what I think the eIPP has the power to do for air taxis. So seeing new aircraft flying over major cities will be exciting at first, but we do need to get people comfortable with them and ultimately accept them as an everyday outcome. And that is how we're going to drive consumer acceptance across the industry and in turn, regulatory approval. And so all that is on track, and Archer is on track to participate in that event. For the eIPP, we've had a lot of inbound interest from the municipalities. And then ultimately, we've submitted the applications, and there's roughly a dozen or so municipalities that we partner with, including Southern California, Texas, and Florida. And now we are looking forward to the DOT announcing the finalist later this month. And then once the finalists are announced, we'll begin working directly with the selected localities to establish the initial operational plans, and then we'll focus on public flights as soon as the second half of the year. So it's really back to the DOT's hands at this point. We're waiting for them on next steps. Xin Yu: Understood. And then in terms of the piloted vertical for transition, I think in the letter, you mentioned kind of the next few months are the test campaign. I guess what is the, I guess, broader plan for the number of aircraft for the levels of flying that you will do for the rest of the year? Thomas Muniz: Edison, this is Tom. Well, just maybe to take a step back, as we mentioned earlier, we're now in the piloted VTOL and transition part of our flight test, and that's all kind of in support of and on track for the eIPP work that Adam mentioned earlier on the call. And just to kind of remind everybody, this comes on the back of all the VTOL flying we've done on Midnight without a pilot on board over the last several years and the extensive CTOL campaign that we did last year. So we believe we're in a strong position with the testing that we've done. We also are really glad we invested time in that detailed CTOL campaign, as having the ability to do both those conventional takeoffs and landings and vertical takeoffs and landings, we think is a huge advantage for the product and a big differentiator, obviously, for the business case, safety case, things we've talked about. So our goal is, with this aircraft and the others that are coming online, to efficiently get through the transition testing in support of eIPP, but then we'll get right into TIA activity, all of this with the goal of being certified for the Olympics. Xin Yu: Understood. And if I could just sneak one in on the -- I think you mentioned the first one to get 100% on the MOC. Can you just maybe walk us through maybe the last couple of kind of percentage points? It seems like the industry in general has struggled a little bit to get to those last pieces. What do you think held that up? And why were you able to get through that? Thomas Muniz: Yes. So it's a good question. So I would say it's definitely fair to say the last few percent were the hardest to close. But I think the fact that we've, from the very beginning, taken really best practice approaches or conventional approaches to topics like lightning strike, gust loads, occupant protection, those sort of things, that are all enabled by us having a larger heavier aircraft meant we were able to get through those topics with the FAA. And we did that instead of by sort of pushing back, we were able to just accept sort of the, again, the best practice approach. So I think that's what enabled us to get through it. Operator: The next question comes from Savi Syth with Raymond James. Savanthi Syth: Can I ask -- I'm sure it really depends on all the activity that you plan on doing this year. But just curious at a high level, maybe where that EBITDA can step up as you go through the year? And maybe any kind of commentary on CapEx expectations for 2026. Priya Gupta: Savi, thanks for the question. It's Priya. So you know that we don't give annual or multiyear guidance, but I'll walk you through the flavors of where spending is going towards. So at the core of which, we're investing in 3 focused areas. The first is, as you can expect, the supply chain readiness and manufacturing capacity, and that's to ensure that we can aggressively ramp up Midnight production and deploy it. Second, as we've talked about, in development of our dual-use hybrid aircraft, as we believe the opportunity is now to win contracts from the U.S. and its allies as they pursue this new vertical lift form factor. And third, of course, is our development of AI autonomy software platform. So while all these 3 result in spending being elevated in 2025, we think there are a lot of near-term opportunities to win awards on the defense side that could offset some of the spending or early revenues on the software side and the air taxi side as part of our Launch Edition program. So the goal really long term here is to have a diversified set of opportunities that can allow us to get to meaningful long-term sustainable revenue. And as and how we progress through the quarters, we'll keep providing our quarterly guidance. But hopefully, that gives you again a framework to think about where are we deploying capital. Savanthi Syth: That's helpful, Priya. And then just on the GCAA side, could you explain a little bit more about what the key features are of a restricted flight approach? Like what is and isn't included in that versus kind of a full certification? Adam Goldstein: Sure. Savi, this is Adam. So our progress in UAE is obviously continuing. And given the kind of current geopolitical situation, we're just mindful of it and how fast to push and how to support our partners best over there. And obviously, safety for our people is going to be important, safety for our partners over there is going to be really important. But with that as a backdrop, we aligned with the GCAA on a pathway for commercialization. And we chose the Restricted Type Certificate really because it was more of a recognized alternative than some of the other choices such as like a type qualification. And it just really gives you broader operational flexibility and a scalable foundation to bring Midnight to market in the Middle East. But we really have to kind of wait and see how all that plays out here. And I think there's more details to come on that. Operator: The next question comes from Andres Sheppard with Cantor Fitzgerald. Andres Sheppard-Slinger: Congratulations on the quarter and all the great progress. Adam, I wanted to maybe circle back to eIPP for a minute. Obviously, with the projects now in the application stage, I'm just curious, like how are you thinking about those projects? Like what would you call a success? And particularly the California project, is that maybe where most of the attention is focused on? Or just kind of how are you thinking about winning those projects? And what would you characterize as a successful eIPP entry? Adam Goldstein: Thanks, Andres. I think the eIPP kind of win will largely be an industry win where we have lots of aircraft flying around in multiple cities and getting the general public comfortable with what we're doing. So I think that's really the #1 takeaway that can come from this. There are a lot of very interesting cities and states that have applied. And so I'm hopeful California and Texas and Florida ultimately get picked. But of course, we have to wait and see what happens. Any one city or location is not going to necessarily determine a success or failure of this. So we have lots of options here that can get picked. Of course, we are hopeful that the Huntington Beach location does get picked given our plan to ramp operations ahead of the Olympics. But there are lots of great opportunities across many other cities that we think will also be great opportunities as well. So I would say showcasing the aircraft, showing what they can do, having multiple operators doing this, getting the general public comfortable with this and ultimately, getting everybody comfortable with this industry just as they have gotten comfortable with Waymo in their cities. Andres Sheppard-Slinger: Got it. That's super helpful. I appreciate all that detail. And maybe just as a quick follow-up. I wanted to touch on -- so I see that you recently conducted a piloted VTOL flight on the new aircraft. And apologies if I missed this earlier, but can you maybe just walk us through your flight plans for this year and kind of how you expect to ramp up those flight hours throughout this year and again, ahead of eIPP and UAE? Thomas Muniz: Andres, it's Tom. So yes, we're super excited that we're now in that piloted VTOL phase. So what you expect to see over the coming weeks and months is just additional flying working out towards full piloted transition. Obviously, after that, then we get into TIA and on with certification, but also in support of the Olympics. Adam Goldstein: And maybe this is a good chance for Benjamin to comment here. There were a lot of lessons that we've learned in flight test, and I think it would be good for Benjamin to comment on some of those. Benjamin Lyon: Thanks, Adam. One of the learnings we got from the CTOL campaign was that it was actually the software update cycle that paced our progress. And that's because for our first piloted campaign, we wanted to stick with a well-understood path. So we used traditional aerospace methods. And we learned along the way that about half the time taken was due to manual steps that could actually be easily automated using best software practices from Silicon Valley. So as part of preparing for the VTOL campaign, we actually made updates to our software infrastructure. Like one such example is we now automatically deploy software updates to the Midnight aircraft. And as you can imagine, the team is very proud of having reduced multi-month long cycles and often just a few days, while maintaining the highest standards of safety. Andres Sheppard-Slinger: Congrats again on the recent success. Operator: The next question comes from Amit Dayal with H.C. Wainwright. Amit Dayal: So Adam, just can you provide any color on how many aircraft will you have available for the certification and testing and then for the eIPP program? Adam Goldstein: Sure. I'll give you a flavor of that, Amit. Thanks for the question. So we're in the late stages of building that initial fleet of Midnight aircraft that we've talked about, and we're going to deploy those in '26 and '27 for our flight testing, our TIA activities and then also as part of our eIPP and the international launch program. And so the focus of those aircraft is really to get us through the piloted VTOL transition testing and then ultimately to demonstrate air taxi ops under the eIPP and launch programs. And then, of course, we need to use that to get to TIA and then ultimately type certification. But in parallel, we're also really stepping up our manufacturing and supply chain capacity to put it in a position to allow us to aggressively ramp aircraft builds as we get into '27 and '28 as we're ready for the commercial ops in Los Angeles for the Olympics and beyond. Amit Dayal: Understood. That's where I was going next, Adam. So from a manufacturing perspective, what else needs to be sort of put in place for you guys to be ready to sort of meet the time lines you just talked about? And any color on how much CapEx is going towards that effort? Adam Goldstein: Yes, it's a good question. And so as we go through the certification process, we are really focused on making sure we have the right aircraft that's designed for a great consumer experience, very, very safe and that can carry the appropriate amount of payload, but can also be mass manufactured. And I talked a little bit about that in the shareholder letter. It's very challenging balancing the performance, the certification side of it, as well as manufacturing ramp. So the good news is we've already stood up Georgia, the Covington plant. We've invested pretty heavily in CapEx, pretty heavily in a lot of the NRC and tooling. And so while our spend has been elevated here, I think we are in a pretty good position here to actually ramp once we get through the certification program. Operator: Next question comes from Austin Moeller with Canaccord. Austin Moeller: So just my first question here, does the 100% means of compliance completion on the FAA side, does that mean that you're essentially close to or through critical design review, and we shouldn't expect any more aircraft changes? I know that you had changed the landing gear last year. Thomas Muniz: Austin, this is Tom. I mean the reality is, I can't say we won't make any further design changes until we get through all the cert testing. And the reality is there's pros and cons there. It's actually an opportunity for us to make improvements where we have time and bandwidth in the program. But like that being said, we're really comfortable with the architecture of the aircraft, and we don't see any technology issues today. One thing I can also say is, the approach to design for certification from the very beginning, like I mentioned, it's meant we have a larger and heavier aircraft than some of our competitors. It's really positioned us well. And so Adam kind of touched on this earlier. The challenge here is making sure that the design has the right performance, the right cert path and the manufacturing path to actually launch the product, and we're really comfortable with where those are coming together. Austin Moeller: Okay. And if we just think about the Iran operation and the first use by the Pentagon of one-way attack drones, should we think about a Midnight rotorcraft drone as potentially competing on future phases of like the drone dominance program? Or do you think it would be more in line with like a collaborative combat aircraft-type program, specifically set aside for rotorcraft where they're looking for something credible? Adam Goldstein: Yes. I think the conflicts have really reinforced what's always been true, Austin, which is that air dominance is just the decisive factor and it's key to military superiority. And so what we're seeing now, what you're asking about is really the beginning of a generational shift in how nations are thinking about aerial warfare. And that shift, we think, will play out over a multi-decade period of time. But I think one thing is clear is that simply hybridizing an air taxi to get some additional range or payload, it may get you some short-term win, but it's divergent from what the administration really and what Americas allies want and what they're demanding. And so that's why we partnered with Anduril to build an autonomous hybrid VTOL aircraft with dual use capabilities for both civil and defense applications. But on the military side, we think the demand is going to be for a loyal wingman, and that's for armed reconnaissance attack helicopters. And so due to the sensitive nature of it, though, I can't share much more details at this point. But our hope is that we can show the aircraft this year, which will translate into some really key wins. And to really help accelerate our progress there, we opened up a new hub in Bristol, U.K., where we've already hired 20-plus seasoned engineers. Operator: The next question comes from David Zazula with Barclays. David Zazula: Adam, in your first question response, you said that the Olympic 2028 date was driving the regulators. Maybe if you could unpack that statement a little bit. What do you mean? Do you mean resource allocation? What was kind of behind that statement? Adam Goldstein: Sure. Back in 2022, the FAA was the one that put out the goal of being able to fly eVTOL aircraft in mass in one city at the LA '28 Olympic Games. They called it Innovate 2028. So it really wasn't an FAA program kind of concept to begin with. Since then, you've seen this administration be heavily leaned into the Olympics, wanting to show all the great things America has done, the reindustrialization of America, America's leadership in aviation. And so it's become a big, I think, selling point for the Olympics in general. And so it really has been, one, I think, an exciting thing for everybody to rally behind and people to be proud in America that we're leading in aviation, and also an important point for the administration to make sure that we get this done. But what it did was create an unslippable date. And so it's a date that everybody knows things have to be done by. And so in this industry, it's tricky, right? We've had some companies that have been around for a long time, and they keep putting out dates and us, too. And the challenge is how do you get anybody to sort of stick to these dates. The way to do that is to align everybody to some unslippable date. And I think the Olympics has done that. It's really just forced everybody to get moving to make sure that all these challenging things that we have to get done are getting done. So hopefully, that gives you a perspective, but I think a lot of it has to do with the culture and really the excitement that is around the games. David Zazula: Helpful. And then you got asked a little bit about deployment earlier. Maybe specifically for what you have in production right now, can you just give us the breakdown of what you expect to be kind of UAE-based versus what U.S. based on the testing plan for this year? Adam Goldstein: Sure. I think it's a little bit difficult for us to predict too much stuff in the UAE right now, just sort of given the ongoing conflict. Our goal is to keep getting through some of the testing and the certification progress over there, as well as the certification process testing and eIPP over in the U.S. So I think we'll have to wait and see kind of how that plays out to determine the volumes that we're going to put it in each of the different locations. So I would say let's wait and see how that turns out. Operator: The next question comes from Chris Pierce with Needham. Christopher Pierce: Just one quick one on eIPP and then one on design. I guess if we think about the applications that you put out there, is CTOL involved? Or should we only expect you guys to see VTOL flights? And is there a possibility we could see VTOL flights up, down, even though we don't have full transition at that time, and that's enough to help sort of move the industry forward. I just kind of want to make sure be on the right page of what we might be looking for later in this year. Adam Goldstein: Chris, we do expect to be through the full flight envelope at that point. And so I would expect us to certainly see VTOL full transition flights. But because the aircraft was designed to do both VTOL and CTOL, we have the capability to do both. I think that's what's unique about the aircraft. And so there's an opportunity to do both. Christopher Pierce: Okay. And then the letter talks about the benefits of 4-bladed design. And I know you had a 2-bladed design prior. Is it just that you didn't know what you didn't know? And I guess, you talked about software before, like is there some sort of 4-bladed design give you increased confidence in transition flight? Or is that the wrong way to think about it and those aren't that correlated? Adam Goldstein: I think it goes back to just the broader philosophy of trying to balance performance certification and manufacturability. And so that is what is -- well, that's where all the work of the industry is going into right now. And I think it's very doable to build an aircraft that can fly really far or fly really high or fly really fast. But once you try to certify that, a lot of the case falls apart because the FAA is extremely rigorous in terms of the standards that they make you have. And so what we do is we look at different trades. And so all 3 are possible and can be done. You can use a 2-bladed propeller, a 3-bladed propeller, or a 4-blade propeller. You can even probably use a 5-blade propeller. They just all come with different trades. And so what we mentioned in the letter was, a 2-bladed propeller had more of a weight penalty on the trade versus a 4-bladed propeller had more of a drag penalty. So one gives you more range, one gives you more payload. We optimize around payload, which is why we chose the 4-bladed propeller. And we just use that as an example to help show there are literally thousands of trades that go on like that throughout these programs. And so some could be design trades, where there are industrial designs for like better looks where it can look, but it might picture performance. Some might be payload, some might be range, some might be speed. So those are just trying to give you a flavor for how we think about design here. But any of them are possible, we went with the 4-bladed option because we thought it optimized for what we needed to make sure we can build a proper business case around. Operator: There are currently no more questions at this time. So I'll pass it back over to the team for closing remarks. Adam Goldstein: Well, thank you very much for attending the call. We certainly have a lot of work ahead of us, but I could not be more excited about where we are headed. Every day, our team shows up with the same urgency that we had on day 1, and that is not changing. I do not take your support for granted. We will keep earning it every day. Thank you very much. Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect your lines.
Operator: Good afternoon, everyone, and welcome to Grupo Bimbo's Fourth Quarter and Full Year 2025 Results Conference Call. If you need a copy of the press release issued earlier today, it is available on the company's website at grupobimbo.com. Before we begin, I would like to remind you that this call is being recorded and that the information discussed today may include forward-looking statements regarding the company's financial and operating performance. All projections are subject to risks and uncertainties, and actual results may differ materially. Please refer to the detailed note in the company's press release regarding forward-looking statements. I will now turn the call over to Mr. Alejandro Rodriguez, Chief Executive Officer of Grupo Bimbo. Please go ahead, sir. Alejandro Rodríguez Bas: Good afternoon, everyone, and thank you for joining us today. Connected on the line today are CFO, Diego Gaxiola; BBU President, Greg Koehrsen, along with several members of our finance team. I'm very excited and deeply honored by the opportunity and the trust placed to lead this extraordinary company as CEO. I would like to extend my sincere gratitude to Rafael Pamias for his leadership and dedication to Grupo Bimbo. Under his guidance, the company strengthened its strategic positioning and operational discipline, always driven by a long-term vision. My commitment is to build on this trajectory and continue positioning Grupo Bimbo as a beloved company in households around the world by driving growth through our powerful brands and expanding our global presence. Together with the leadership team, we will maintain a constant focus on our associates, customers and consumers while preserving and strengthening our culture and philosophy of building a sustainable, highly productive and deeply humane company. Before we move forward, I would like to recognize the recent retirement of Tony Gavin and Mark Bendix in the near future. Tony served as President of Bimbo Bakeries U.S.A, completing an extraordinary 42-year career with the group. And Mark will be concluding more than 12 years in the company, serving most recently as Executive Vice President of Grupo Bimbo. We're deeply grateful for their leadership, commitment and lasting contributions to Grupo Bimbo. As part of a planned leadership transition, Greg Koehrsen was appointed President of Bimbo Bakeries U.S.A and joined our Steering Committee in January 2026. Greg brings more than a decade of leadership experience with Grupo Bimbo. He has held several senior positions across the organization, most recently leading BBU's transformation journey. We're pleased to have Greg leading the continued evolution of BBU. He will join us on all future conference calls and will be available to address questions regarding the North America business. Now turning into the year in 2025. We proudly celebrate our 8th year anniversary. Over these 8 decades, we have grown from a small bakery in Mexico into the world's largest baking company and a relevant player in snacks with a global footprint and deeply humane culture that continues to define who we are. As part of this milestone, we inaugurated MiBIMBO in Mexico City, an interactive museum that honors our journey and brings our story closer to the community. We warmly invite everyone to visit. Celebrating our history also reinforces our commitment to innovation, long-term value creation and to nourishing a better world over the next 80 years. In 2025, we advanced these commitments through discipline and execution and deliberate actions. Despite the complex global environment marked by macroeconomic volatility, inflationary pressures and shifting consumer behaviors, our performance demonstrated underlying strength and resilience of our business model. We delivered record financial results and market share gains across multiple categories, supported by continued investment in our brands, expanded distribution and a robust innovation pipeline. We also achieved solid profitability gains driven by disciplined operational performance across regions, further supported by productivity gains in North America, where we're capturing the early benefits of the transformation initiatives launched in 2024 with notable efficiencies across manufacturing, administrative and logistics operations. As a result, we achieved margin expansion for the full year, all while continuing to execute with discipline [indiscernible] strategic bolt-on acquisitions in attractive high-growth markets, including Eastern Europe. These actions strengthened our global footprint, expanding our presence to 93 countries, enhanced our capabilities and improved our ability to serve evolving consumer needs. Building on this foundation, as consumption habits and occasions continue to diversify, innovation remains key to our strategy. Our innovation rate now exceeds 12%, reflecting our ability to translate consumer insights into differentiated offerings. By leveraging the strength of our trusted brands, together with the prior CapEx investments, operational excellence initiatives and recent acquisitions, we have reinforced our competitive position to further strengthen our market leadership. This integrated approach provides a strong platform for the long term, sustainable growth, supporting incremental volume gains, enhancing profitability and creating enduring value across our markets. On our ESG journey, 2025 marked a milestone year in advancing our commitments, aligned with our purpose of nourishing a better world through our Baked For You initiatives, 98% of our bread, buns and breakfast portfolio deliver positive nutrition. We remain on track to eliminate all artificial colors by 2026 and continue to strengthen our core portfolio with around 48% of sales meeting or exceeding the 3.5 star benchmark under The Health Star Rating System, demonstrating optimal nutritional quality in every bite. Our environmental agenda through our Bake for Nature initiatives have achieved 100% reuse of treated water versus our 2020 baseline, while exceeding our generic agriculture target with more than 500,000 hectares cultivated under these practices. We also reached 99% recyclable packaging. We continue to progress in renewable energy and fleet electrification with more than 40,000 electric vehicles. Looking ahead, we remain fully focused on advancing our medium- and long-term ESG ambitions. While challenges remain, celebrating Grupo Bimbo's 80th anniversary with record results and the ongoing commitment of our people highlights the strength of our operational model and culture with disciplined execution at the core of all our efforts. We are well positioned to continue delivering consistent performance, driving profitable growth, enhancing returns and creating sustainable value in 2026 and beyond. Now taking a look at the regional results of the fourth quarter. In Mexico, we delivered 4.8% sales growth, reaching an all-time high for a fourth quarter. This solid performance reflects our ability to grow despite a softer consumer environment, delivering positive results across all categories with particularly strong performance in sweet baked goods, cakes and buns and rolls. Results were also driven by favorable product mix and positive execution across all channels with convenience standing out positioning double-digit growth. This positive momentum accelerated towards the end of the quarter, including a record sales week in December, marking the strongest weekly performance in the region's history. This robust top line growth, combined with the distribution efficiencies, productivity gains and disciplined cost control resulted in an adjusted EBITDA margin expansion of 40 basis points to robust 22%, reflecting the strength and flexibility of our operational model. Looking ahead, we remain encouraged by the resilience of our portfolio and the strength of our commercial execution. Through initiatives focused on prioritizing volume performance and delivering an attractive value proposition across both price and product mix, supported by innovation, we expect to maintain positive momentum. In North America, excluding FX, fourth quarter sales declined by 3%, reflecting a still soft consumption environment. That said, our top line trends continue sequentially, supported by the actions taken throughout the year to strengthen revenue growth management, a more refined price pack architecture and bring differentiated innovation to market, all to enhance our value proposition to consumers. We are particularly encouraged by recent innovation launches that address evolving consumer needs, including Sara Lee half loafs designed to serve smaller households and more accessible price points and Thomas Protein bagels, which resonate with health-conscious consumers. Our actions in 2025 are reinforcing our confidence that we have and continue to improve a portfolio of attractive consumer-centric products that positions us well to drive sustainable growth. Our efforts have resulted in market share performance improvements across all branded categories with positive gains in buns and rolls, mainstream bread and salty snacks. On profitability, thanks to the record productivity benefits captured throughout our transformation initiatives, we delivered a strong 330 basis points EBITDA margin expansion to 9.2%. This performance demonstrates how our team's discipline and focus are translating into structural improvements, strengthening efficiency and competitiveness across the operation. Looking ahead, while external headwinds remain, the improving momentum across key categories, coupled with the operational strength built throughout the transformation initiatives position us well to continue progressing and to support a more balanced path toward growth and profitability over time. Moving on to Latin America. Excluding FX effect, net sales grew 15.4% to a record fourth quarter level, driven by positive momentum across every organization as a reflection of a strong focus on execution and effective price/mix strategy. Sales results also benefited from the acquisition of Wickbold completed in October 2025. Wickbold is a leading bakery player in Brazil that complements our brand portfolio and expands our presence in key categories, further strengthening our leadership position in the market. This acquisition offers meaningful synergy potential, including commercial opportunities and scale efficiencies that will enhance profitability over time. During the quarter, integration-related expenses led to a contraction of 420 basis points on the EBITDA margin. These investments are focused on capturing future synergies and strengthening the long-term value of the business, while additional integration costs are expected in the coming quarters. They are strategic in nature and aimed at unlocking efficiencies and commercial opportunities. As integration advances, we expect margins to progressively improve. Excluding integration expenses, adjusted EBITDA margin for Latin America contracted 180 basis points due to higher raw material costs in Brazil attributable to the FX impact as well as increased general expenses from strategic investments for future growth, mostly related to improvements in Chile's commercial operating model across the supply chain, including benefits from the transformation project in North America and past accretive acquisitions. In Europe, Asia and Africa, excluding FX effect, sales increased 17.8%, reaching an all-time high. This performance was primarily driven by the consistent strength of Bimbo QSR Romania, U.K. and India, which posted double-digit growth rates, coupled with the contribution from the acquisition completing during the year, including Karamolegos in Romania and London in the Balkans. The remarkable adjusted EBITDA margin expansion of 420 basis points resulted from the solid sales performance, productivity initiatives, lower administrative and restructuring expenses related to last year's bakery closure in Spain and the accretive contribution from the past acquisitions. This performance led to a record double-digit margin of 13.8%. With this, I would like now to turn over the call to Diego, who will walk you through our financials. Please, Diego, go ahead. Diego Cuevas: Thank you, Alejandro. Good afternoon, everyone, and thank you for joining us today. 2025 demonstrated the value of our diversification, disciplined execution and long-term view. Despite the challenging operating environment, we not only met our guidance, achieving record levels of sales and adjusted EBITDA, but exceeded our profitability outlook, driven by a better-than-expected fourth quarter performance. As a result, adjusted EBITDA margin expanded by 30 basis points to 13.9%, the second highest annual margin in our history. Across our operations, performance was underpinned by notable strengths. Our EAA region substantially increased profitability, reaching a record double-digit margin. Significant contribution came from our operations in Mexico, posting sustained growth and an all-time high adjusted EBITDA margin of 20.4%. These achievements helped offset the softer consumption environment in North America and short-term headwinds that we face in LatAm. Furthermore, we continue to capture record productivity benefits from the transformation project in North America, driving a margin expansion of 60 basis points to 9% for the year, reinforcing our confidence in the path we have set. Alongside these efforts, enhanced revenue growth management capabilities, lower raw material costs and disciplined strategic investments also helped us surpass our original profitability outlook despite continued volatility in the global operating environment. From a capital allocation perspective, the $1.2 billion in CapEx that Alejandro mentioned for 2025 came below both prior year levels and our initial guidance of $1.3 billion to $1.4 billion. Although investments were lower than expected, our capital allocation priorities remain unchanged, centered on productivity, growth initiatives and long-term value creation. This same approach guided the acquisitions completed during the year, strengthening our platform in attractive markets and supporting long-term returns. In addition, we also distributed MXN 5.6 billion through dividends and share buybacks. Moving on to the balance sheet. Our total debt closed at MXN 154 billion. The increase compared to 2024 reflects the financing for CapEx and strategic investments, partially offset by the 11% appreciation of the Mexican Pesos. While we had originally anticipated a gradual deleveraging phase to start in 2026, our strong operating results, our focus on cash flow discipline allow us to start the beginning of this deleverage process in 2025 with our net debt to adjusted EBITDA ratio declining 0.2x as compared to 2024, closing at 2.7x. Also 3 weeks ago, we issued MXN 12 billion in Mexican bonds in 2 tranches, 4 and 9 years. It was a success. It attracted a remarkable demand of MXN 19 billion, which underscores the confidence investors have in our strategy, financial profile and long-term objectives. Now, I would like to provide some visibility of what we are expecting for 2026. First, regarding top line, excluding the effect of the appreciation of the Mexican peso, we anticipate sales to increase in the low to mid-single-digit range, driven by growth across all regions in local currency, supported by continued investments behind our brands, value-accretive innovation for consumers and a strong frontline execution. We also foresee a gradual improvement in the consumer environment, particularly in North America. Now incorporating our exchange rate assumption, where we are estimating an appreciation of the Mexican peso in 2026 as compared to 2025 of MXN 1.50. And given that approximately 2/3 of our sales are generated outside of Mexico, this appreciation represents an impact of more than 500 basis points on our expected top line growth. As a result, we expect net sales in peso terms to be flattish. Regarding our adjusted EBITDA margin, we expect a slight margin expansion, driven primarily by operational leverage and efficiencies across the supply chain, including benefits from the transformation project in North America and past accretive acquisitions. As for our raw material costs, we expect stability to a slight tailwinds throughout the year as some commodities have experienced decreases. Finally, we expect CapEx investments to range between $1.2 billion to $1.4 billion, reflecting the carryover from 2025 as we close below the plan. This is just a timing effect as we continue to follow a focused and prudent investment approach centered on returns, efficiency and strategic growth. As we look to 2026, we do so with confidence, supported by exceptional teams, a resilient business model and a globally diversified platform that continues to deliver solid results. The progress achieved in 2025 has strengthened this foundation, positioning us to continue advancing on our long-term value creation path. Thank you all for your time. We can now proceed with the Q&A session. So please go ahead. Operator: [Operator Instructions] The first question will come from Ricardo Alves with Morgan Stanley. Ricardo Alves: Impressive performance in Mexico, particularly on the profitability. Congrats on that. Now, it beat at least our numbers, mainly on SG&A. We noticed in the release and I quote efficiencies in distribution productivity across the value chain and lower admin expenses. Can you expand here? What's striking to us is that you'd find ways to cut costs in such a high-performing division already. So I think it's worth exploring what were those low-hanging fruits, those initiatives that you still found perhaps in Mexico, how sustainable that could be? And I think that, that would help us model the division a little bit better. So just more thoughts on the Mexico profitability. My second question is quicker. I think that this one is probably to Diego on financial expenses. Financial expenses were higher than what we expected a bit. I think that in the release, you're making reference to energy hedges and higher leverage in rates. So just wanted to hear a little bit more details as it pertains to the magnitude of each effect. It's not 100% clear to us what would be cash in nature, for instance. We did notice that there is an FX component, an FX loss component, but it's too small to explain. So if you could elaborate a little bit more on those other issues, Diego, that would be super helpful. Alejandro Rodríguez Bas: Thank you very much for your question. So we drove EBITDA margin expansion through solid top line growth. But as you asked, we also worked in 3 fronts. So the first one was distribution efficiency. So despite that we seem to be mature, we have worked with our commercial execution and route-to-market model that expanded customer reach and improved selling efficiency. So like you said, it's a mature model, but we will continue to work on it. Productivity gains, we're working on food waste reduction as we have had. We're just doubling down on it and improved finished goods control. And finally, a disciplined cost control, enabling savings across administrative and operational expenses. For instance, we're using AI in administrative tasks to look further for optimization. Diego Cuevas: Ricardo, thank you for joining the call. Well, let me explain a little bit more details on the financing cost for the full year, if I got your question correctly, right, not just for the quarter. Ricardo Alves: The question was a little bit more on the quarter, but that's totally fine also. Diego Cuevas: No problem at all. I can jump to the quarter. No problem, no issue. So basically, yes, as you mentioned, we have an important increase of a little more than 20% for the fourth quarter, which is mainly driven by the impact of energy cost hedges, which I will probably get into a little bit more details to provide the right visibility and understanding of this movement. We also have higher interest expenses from an increased debt position. And finally, and less material, a higher foreign exchange loss. Now what happened also it's a comparable basis. What we have related to the VPPA, a Virtual Purchasing Power Agreement, which, as you know, is a financial contract with a renewable energy developer that allows to support the renewable energy generation without physically receiving the power has some fluctuations on the P&L depending on the price as compared to what we have in the agreement. So what happened last year is that we had a movement on the cost of energy where the fixed price was lower than the projected energy prices, which made us to recognize a benefit in the income statement. And of course, conversely, if the fixed price is higher than the projected prices, then we will have an impact in our results. So maybe this quarter wasn't a big movement. What happened is that in the comparable quarter 2024, we did have a positive impact. So that is basically the VPPA. And then the other, as I mentioned, I think it's very clear, we have a higher leverage in absolute terms, although we were able to deleverage the company before our expectation. Remember that we had for the full year a guidance of a slight improvement to a flat leverage ratio. So seeing today, the leverage of the company at 2.7x as compared to 2.9x, it's a very good news. We were able to anticipate the deleverage, as I mentioned, by being very careful on the CapEx. We ended below the expectation, but also a better operating performance, as you noted, basically across all different segments. Operator: The next question will come from Ben Theurer with Barclays. Unknown Analyst: This is Reeve filling for Ben. Sort of 2 here. Firstly, as there's been more discussion around GLP-1 adoption and potential implications for food consumption. Have you seen any measurable impacts over 2025 in volume or mix, particularly in North America and more developed markets such as Europe? And how do you materially view this as a factor today versus something that's still more of a longer-term consideration? And secondly, EAA saw a meaningful step-up in profitability this quarter. Can you break down the key drivers of the margin expansion and discuss how much of this is sustainable versus one-off? Sort of how should we think about the margin progression in EAA over the next few quarters? Alejandro Rodríguez Bas: Thank you, Ben. I will take the first one. So the impact from Ozempic GLP-1, we have a greater understanding of the phenomenon now and its consequences, and we have detected some changes in consumer behavior among users. We're actively working on enhancing our portfolio, and let me share with you 4 initiatives. One example, we're making products with a higher fiber and protein content. We believe this trend is here to stay, and we will continue to ride on it as protein bagels or within the Thomas brand, and we're also around the world developing products in our big breakfast category. So we expect to see more innovations like these ones. The second one is we're also offering smaller portions in snacks with a minimum nutrition density. And by bringing smaller portions, we accompany this kind of adopting consumers. The third one is we have been developing sugar-free recipes and increased innovation in premium products. The premium products that will overall maximize the experience of this seeking a reward, but at the same time with a lower or non-sugar content. And finally, we will continue to transition into simpler and more natural recipes. By this, we will provide options for these emerging consumers. So as I said, more grains, higher fiber, more protein-based solutions and continue to innovate in that space. Diego Cuevas: Yes. So now for the question regarding the improvement in the margin. I mean 2025 was a record year for EAA. It's a reflection of an exceptional performance driven by both, one, solid organic growth, but also the contribution from accretive acquisitions, particularly the last one that we did in the Balkan that as we mentioned when we concluded this acquisition, it is accretive in all points of view to the profitability of the company. We feel confident that this margin is not only sustainable, but that we can continue to improve it in the future. Specifically, EAA has been a region that has outperformed. In 2025, we achieved a 12%, 5-year compounded annual growth rate in sales, and reached the record annual margin of 10.8% with more than a 300 basis expansion for the year. So we're very happy with the performance, but also we're very confident for a positive future for this region. Operator: The next question will come from Alvaro Garcia with BTG. Alvaro Garcia: My question is on North America. You mentioned you foresee a gradual improvement in the consumer environment there. You also made some comments on sort of where the transformation project is in the context of your margin guidance. So yes, any color on sort of the factors driving that potential gradual improvement? And any commentary on margins, specifically for North America in '26 would be very helpful. Alejandro Rodríguez Bas: Thanks for the question. I'll talk a few points on trends, and then you also asked about our transformational efforts. So as it relates to trends, you saw in our prepared comments and it's pretty clear and syndicated data that the total category continues to be somewhat pressured we are seeing sequential improvement in the category quarter-over-quarter in 2025. And beyond that, we've seen improvement quarter-over-quarter in our share performance over that period of time. We're particularly excited about our performance in mainstream bread, in buns and rolls and in salty snacks, where we've seen positive share gains in the fourth quarter, and those have candidly continued on even at the beginning of this year. So the thing I would leave you with is that the consumer continues to be bifurcated across the market, value mainstream and premium and our response is to make sure that we are innovating into those spaces appropriately to move where our consumers are going for each of the cohorts. So that's how I might think about the trends. In terms of our transformation journey, I would say we've made significant progress in 2025. As you could imagine, we looked at every area of our business from a cost perspective, manufacturing, logistics, procurement and our G&A spend. And I just want to thank the team for the progress that they've made together over the course of time. I would expect us to continue to be very inspecting all areas of our cost base. We will continue to do that. The other area that I think is important is that our price and promotion. We looked at our pricing and promotion very carefully over the last couple of quarters. We're going to continue to look at our pricing and promotion activities very carefully to make sure that we're doing so in a way that is beneficial to our customers. And we will continue to have rational and disciplined pricing and promotion activities as we go forward as well. So I think that's important to understand as we think about our transformation journey. Operator: The next question will come from Antonio Hernandez with Actinver. Antonio Hernandez: Just a quick one regarding Latin America. What are your expectations there, especially in Brazil? I mean you have now this new acquisition and an interesting year because of elections. So the overall outlook in the region and more specifically in Brazil. Diego Cuevas: Antonio, we weren't able to hear the last part of your question. So do you mind repeating, please? Antonio Hernandez: Sure. My question is regarding your outlook in Latin America and more specifically in Brazil, given the recent acquisition, an interesting year there in Brazil because of elections as well. So overall outlook in the region. Diego Cuevas: Yes. I mean, we feel confident for the region also that we will start to see positive trends as we believe the fundamentals for sustained growth are in place. Now I want to be very specific that in the fourth quarter and in the coming quarters, we will still have some extraordinary expenses for the integration of the Wickbold acquisition. That, of course, I mean, it was a project that took a lot of time to be approved. And it's a project that has the potential to create synergies, but we need to invest a lot and many of these investments are going to be reflected through the P&L. So that can put some pressure in the short term. But again, now with a more long-term view, I think that the region will start to go back to previous margins. And now with the acquisition and once we end the integration, we feel confident we're going to be able to surpass even the level of margins that we had in the past. Operator: The next question will come from Froylan Mendez with JPMorgan. Fernando Froylan Mendez Solther: Can you hear me well? Can you hear me, sorry? Diego Cuevas: Yes. Yes. We can hear you. Fernando Froylan Mendez Solther: Perfect. Excellent. Regarding the evolution of the project in the U.S., how far are we from stabilized margins? How far can they go? And could you share a little bit more color on the outlook on a per region basis, both top line and margins, if possible? Alejandro Rodríguez Bas: Yes. Thanks for the question. I would say in terms of where we are in the transformation journey, we've made significant progress, as you can see in the results in 2025. To reiterate, we will continue to look at every area of the business. We expect that our -- the gains that we made in this past year, we feel good about how they will carry on into the future. And short of giving specific guidance, I would say that we will continue to look at every area of the business as we have done and will continue to do. Diego Cuevas: Yes. And regarding the guidance or the outlook for the different regions, we do not provide that specific guidance. What I can tell you without being specific is that, of course, we feel confident that it's going to be a positive year in local currencies. So organically, we're going to be able to see some growth. And also, as I mentioned, for Grupo Bimbo, we expect a slight margin increase, which is, of course, the consequence of improvements in the different regions. Fernando Froylan Mendez Solther: Well, maybe if I can then add a little bit on the U.S., in the U.S., where do you base your, let's say, view that there should be an improvement? Is this more on your side, regaining share? Or is it more of a consumer recovery that you're seeing or expecting? Alejandro Rodríguez Bas: Yes. Maybe a couple of things. Again, I think we see moderate improvement in the category, but it's a category that continues to be pressured. There are certainly pockets of growth. And for us, it's really about making sure that we are being disciplined about innovating in the right spaces for our consumers. I would say, too, as we continue to be rational and disciplined as it relates to pricing and promotion, I do think that, that will continue to be positive for the entire category in 2026. Operator: The next question will come from Matteo Bessada with TRG. Mateo Besada: Congrats on the results. I don't know if you already touched on this, sorry if you did. But I wanted to know if you could provide a little bit more color on what drove the margin improvements in Peru, see if there were any unusual tailwinds or if it's fair to expect this type of structurally higher margins from now on like consistently on the double digits. Diego Cuevas: We had a strong operating performance in many markets. You know the LatAm region is the composition of several countries. Peru, Ecuador, Chile, there are many markets that had a very good performance. And again, that, we still believe that we can continue to have an improvement in the margins. Of course, we do not disclose not only the guidance, but the specific margins by country. Now the -- for the quarter, the region had what we mentioned, the impact, particularly from the operations of Brazil because of 2 things. One, the pressure that we had from the cost of sales due to the hedges that we had for the FX and also the onetime expenses related to the integration of Wickbold part of the [indiscernible] Brazil business. Mateo Besada: Sorry, guys, I don't know if I said LatAm. I wanted to hear about Europe margins. Diego Cuevas: Europe? Sorry. I thought you were asking about Peru. So I probably made -- it wasn't very clear. So for Europe, I think that this was also previously asked. In Europe, we had a record year. We had an organic growth, but also the positive contribution of the acquisitions that we did enter into new -- 4 new markets through the acquisition of Don Don in the Balkans. This has helped also the margins of the regions. It was a very accretive acquisition. We believe that this margin is not only sustainable, but we have room to see a continuous improvement. Operator: The next question will come from Renata Cabral with Citigroup. Renata Fonseca Cabral Sturani: I have 2, actually are follow-ups. One is related to the transformational project in the U.S. I wonder if you could share some color of the advancement in terms of operation that you achieved so far? And for 2026, what should be the top priority within the products, for instance, the distribution of the salt or the sweet snacks, you see more opportunity in one or in the other or both if the -- all the logistics capabilities are already in place. If not, where do you see some opportunities to tackle in 2026 would be really helpful. And another one is a follow-up on margins in the U.S. because we are seeing some transformation in the markets that the company operates. From one side, we have the increase in the portfolio of the private label. On the other hand, we have the new transformational projects. So both interacting will end up maybe in 3 to 5 years in a different margin for the company. So not asking for guidance here, but more direction in terms of what do you think the margin from U.S. will go towards the next couple of years? Unknown Executive: Thank you for the question. I'll start, and then I'll turn it over to Diego for the second part of the question. As it relates to the transformation journey, I would think about 2026 as sort of deepening our efforts on almost every area that we've already talked about. So logistics, manufacturing, our pricing and promotion disciplines, all of those we're going to continue to work along. If there's one thing I would maybe add to the discussion, and Alejandro already mentioned this in his prepared comments, is using AI as an enabler across all of those different areas. So demand forecasting, network optimization, et cetera, those are areas that we believe that AI can be utilized within our organization in order to make it even better in the future. So that might be one area of color that would be additive to the conversation. For the rest of it, I'll turn it to Diego. Diego Cuevas: Thank you, Greg. Well, let me give you a little bit of color. I'm going to go back a few years. We used to operate in North America, and this, of course, is past history in the low double digits. So 2022 was 11%. Then in 2023, we had a 50 basis point contraction. And then as everybody knows, we had a very complicated second half in 2024, and we ended the year in 8.4%, 8.5%. Now what we're seeing in 2025, I think it's outstanding, more considering that we still haven't seen a recovery in the consumption environment as we already talked about. Unfortunately, we're still seeing a decline on volumes. But even though we're facing that complicated consumer environment in the U.S., we were able to deliver, I would say, an impressive and above our expectation margin expansion, not only in the fourth quarter, but for the full second year. I perfectly remember when we provided the guidance last year that we were very specific that still for the first half of 2025, we were expecting a margin contraction, and that exactly happened. Now what we feel very happy about is to see how sequentially the margin contraction in North America started in the first quarter with 130 basis, then negative 70 basis. Then we were able to achieve 90 basis points expansion and of course, this quarter, 330 basis. So we were able to end the year with a positive margin expansion in North America, 60 basis. Now consider that first, volumes were not necessarily on an optimistic environment. And second, that we have a lot of onetime expenses in the year. A lot of expenses that have to do with the transformation that we have talked a lot about and that Greg explained, and that is putting some pressure to the results. So now are we going to continue to have expenses, definitely, because we haven't ended this transformation. Is this going to create some pressure? Yes, not necessarily more than the one that we already have in 2025. That on the side of the expenses. What is, I would say, encouraging is to think that we will start to see and capitalize on these past investments. So I think that more than a specific comment on the guidance for 2026 or 2027, I will definitely say that we're on the right path to go back not only to the margins that we had in the past, but even to end having a company with a higher profitability than the one that we had some years ago. Operator: The next question will come from Felipe Ucros with Scotia Bank. Felipe Ucros Nunez: Alejandro, I think you just took one from me on where long-term margins could go in the U.S. and whether you would get back to levels. I had a second one, which had to do with the market share gains. You discussed this quite a bit in your remarks and also in the release. I know there's been a little bit of innovation, but I imagine those categories are still small. Wondering what you think was the main driver in getting those shares back up? Any color you can give us on those would be great. Unknown Executive: Yes. Thanks for the question. And I'm assuming that the market share gains that you're talking about were -- I'll at least speak to North America. And if there's a question beyond that, I'll let Alejandro take it. As it relates to North America, I would say a couple of things. First, the innovation is -- has been successful. So -- and Alejandro talked about both of the ones that I'd like to highlight. Small loafs, which really go to shrinking overall households in terms of number of people and then our protein efforts, Thomas' Bagels being one example of that, where we are reaching to not only new consumer cohorts, but also existing consumer cohorts that are changing their purchasing behaviors and their consumption behavior. So you can expect us to continue to innovate along those lines because those have both been successful, and we expect to do more innovation like that in the future. I would also add that part of our transformation efforts has been around sales execution. And with that, that's around all of our DSD disciplines. And we've seen improvement in our DSD disciplines, thanks to the fine efforts of our frontline associates that are in the field every single day. And that goes to our ordering patterns. It goes to executing at a high level on our innovation when we do launch it and then also executing at a high-level, our promotional activities when we partner with customers in order to do something exciting within the consumption environment. So I would say execution has been part of our improvement as it relates to our share gains. So innovation and execution would be where I would underline. Felipe Ucros Nunez: And the question was mostly for the U.S. So that covers it. Operator: The next question is a follow-up from Ricardo Alves with Morgan Stanley. Ricardo Alves: It's on snacks. We noticed 2 divergent sales trends more recently. In sweet snacks, Entenmann seems to be losing a little bit of share on the margin. So I just wonder if there is any update on the competitive environment in the U.S., specifically around Entenmann and your main competitors? Any pricing or discount that we should be aware or I don't know, maybe packaging or channel issues. On the flip side, as I said, diverging trends. Salty snacks, super strong. So I wonder what's up with Takis. What is the latest double-digit growth in the fourth quarter? So just wanted to see the industry is still kind of flattish. So anything that you could do. If you could zoom a little bit further into those 2 subcategories, that would be helpful to understand what's going on. Unknown Executive: Yes. Great. Thanks for the question. Appreciate it. I'll answer the question as it relates to sweet snacking, and then I'll turn it over to Alejandro, who can probably talk more broadly about salty snacking. Yes, as it relates to sweet snacking, I would say it's always -- it always has been and continues to be a very competitive environment. It is a subcategory that has been under probably a little bit more consumer pressure than most subcategories. So there's certainly that component of it. I would say as it relates to the competitive environment, we're continuing to take a hard look at the intimates business specifically and our Sweet Baked Goods portfolio in general. We believe that there are innovation that we can bring to the -- to those brands and to the category that we think will be helpful to the consumer who is still very interested in those offerings. So there's some work to do, I would say, on Sweet Baked Goods, but we're actively working on that as we go forward. Alejandro Rodríguez Bas: Thank you, Ricardo. And as you know, I used to be the leading person of the salty snacks globally. So I think our success in the U.S. in this fourth quarter has been the result of what Greg was talking. It's all about execution. It's focusing in what we know what to do, and we're just doing it better. Our product is awaited. It's awaited everywhere, and we're just being able to drive through more product and the response of consumers has been very good, as you have seen.
Operator: Welcome to today's Pacific Basin 2025 Annual Results Announcement Conference Call. I am pleased to present Chief Executive Officer, Mr. Martin Fruergaard and Chief Financial Officer, Mr. Jimmy Ng. [Operator Instructions] Mr. Fruergaard, please begin. Martin Fruergaard: Yes. Thank you, and welcome, ladies and gentlemen, and thank you for attending Pacific Basin's 2025 Annual Results Earnings Call. Assuming you have already gone through the presentation, we will highlight key points discussed in it before we proceed to Q&A. Please turn to Slide 2. 2025 was a year with various evolving geopolitical and market challenges. 2026 has begun with an escalation of these challenges, not least the outbreak of war in the Middle East over the weekend. However, it was gratifying to see that our integrated platform again demonstrated agility and resilience, leading to a solid financial performance in 2025. During the year, we generated an EBITDA of USD 263.1 million, underlying profit of $39.2 million and net profit of $58.2 million. Our balance sheet remains strong, and we closed the year with a net cash of $134 million and an undrawn committed facility of $485.5 million, illustrating our strong liquidity. All in all, we delivered solid shareholder value in 2025 with a total distribution of $19.5 million through share buybacks and dividends declared for the year. Total shareholder return for 2025 was 46%. Please turn to Slide 3. We remain committed to returning value to our shareholders through both dividends and share buybacks. The Board has declared a final dividend of HKD 0.06 per share, which together with the interim dividend of HKD 1.6 per share distributed in August 2025, amounts to approximately USD 51 million or 100% of our net profit for the year, excluding vessels disposal gains. In addition to the dividend we completed in 2025, our announced share buyback of $40 million. All in all, our committed distribution reached 179% of 2025 net profit, excluding vessels disposal gains. This demonstrates our ongoing commitment to return meaningful value to our shareholders. I will now hand over to Jimmy for a quick overview of 2025 performance and financial review. Chi Kit Ng: Thank you, Martin. Good evening, ladies and gentlemen. I will share with you some observations on the market and a snapshot of our financial performance for the year. Please turn to Slide 5. The industry faced significant macro headwinds in 2025. Geopolitical risk has remained elevated at the start of 2026 and heightened with the situation in the Middle East developing over the past few days. Market freight rates fell significantly in the first half of 2025 as supply outpaced demand and then gradually picked up in the later part of the year. During the year, market spot rates for Handysize and Supramax vessels averaged about $10,570 and $11,610 per day, representing a decrease of 5% and 10% year-on-year, respectively. However, the FFA saw an uplift since the beginning of 2026. Average at $13,730 per day for Handysize and $15,580 per day for Supramax. FFA for the remainder of 2026 points to a stable outlook. There is no suggestion yet that the most recent increases in FFAs are due to the war in the Middle East. The conflict could tighten markets by creating new efficiencies -- inefficiencies. But equally, it could lead to cargo cancellations and discounted vessels. Please turn to Slide 6. In 2025, our average daily TCE earnings of $11,490 for Handysize and $12,850 for Supramax represented 11% and 6% decrease as compared to the rates in 2024, respectively. Despite the decrease year-on-year, our TCEs continued to outperform the average spot market rates by $910 per day for Handysize and $1,220 per day for Supramax. For the first quarter of 2026, we have covered 88% and 100% of our committed vessel days for our Handysize and Supramax core fleet at $11,890 and $14,450 per day, respectively. These rates are higher than the current market spot rates as well as the FFA. Our operating activity margin also improved and contributed $22.9 million in 2025. Operating activity days increased 1% year-on-year to 27,850 days and generated a margin of $820 per day, which represented a 30% increase year-on-year. Please turn to Slide 3. In terms of vessel costs, we continue our leading position in cost efficiency. Our core daily operating costs for both Handysize and Supramax vessels remained well controlled. Average daily OpEx for both segments were broadly stable at around $4,780. Depreciation costs rose slightly by 2% for Handysize and 6% for Supramax, respectively, mainly reflecting drydocking and fuel efficiency upgrades. Average daily finance costs decreased by 13% to around $130, mainly due to lower average borrowings. Long-term chartered vessel daily rates also improved. Cost for Handysize remained substantially unchanged, while Supramax were 12% lower, mainly attributable to the redelivery of vessels that have been chartered at higher rates. Overall, our costs remain stable with our own fleet breakeven at approximately $4,820 per day for Handysize and $5,020 per day for Supramax. Please turn to Slide 8. Overall 2025 freight market was softer than last year, but our performance has been resilient. Our top line decreased due to the softer market, and our owned vessel costs were lowered by 3%, mainly due to the disposal of 8 older vessels. A 24% improvement in chartered vessel costs was due to the weaker freight markets. And as a result of the changes in revenue and cost items, our operating performance before overheads decreased by 28% year-on-year to $142 million. One-off items also had an unfavorable change in 2025, mainly due to expenses related to the structural changes we implemented during the year for compliance with USTR. Profit attributable to shareholders was $58.2 million for 2025. Please turn to Slide 9. We continue to be disciplined with our capital allocation and remain debt-free on a net basis with a net cash position of USD 134 million. We have available committed liquidity of $756 million at the end of 2025. The total net book value of our 107 vessels was $1.6 billion, while the estimated market value was higher at $1.96 billion, reflecting a healthy buffer above book values based on composite broker valuations. The financial flexibility is further enhanced by the new $250 million sustainability-linked facility secured in July 2025. The facility helped strengthen both our liquidity position and also our ability to respond quickly to market developments. Please turn to Slide 10. Our strong balance sheet, high liquidity and fleet optionality positioned us well to continue executing our strategy and capturing opportunities in a dynamic market environment and we're confident that this will continue in the current disruptive environment. Our operating cash flow for the year was $229 million, inclusive of all long and short-term charter-hire payments. We also realized $66.8 million from the sale of 5 older Handysize and 3 Supramax vessels. During the year, we closed a new $250 million revolving credit facility, as mentioned on the previous page. Our CapEx amounted to USD 116 million, which included $59 million for 3 Handysize vessels delivered into our fleet in 2025 and one Ultramax vessel purchase options exercised in late 2025, which subsequently delivered in January 2026, along with $57 million for dry dockings and other additions. We paid a total of $44 million in dividends, which included the 2024 final dividend of HKD 0.051 per share, totaling $33.4 million. and also the 2025 interim dividend of HKD 0.016 per share, totaling USD 10.7 million. We also spent USD 40 million to repurchase our own shares under our buyback program announced last year. And our net cash outflow from borrowings was USD 97 million in 2025. The strong cash generation ability allowed us to have an improved liquidity for any future opportunities. Please turn to Slide 11. We will continue to focus on maintaining a robust balance sheet and optimizing our cost structure. The Board has conducted a review of the company's long-standing dividend policy of paying out at least 50% of net profit excluding disposal gains and having considered the needs of the business and the best practice capital allocation, the Board has decided to expand the policy to enhance shareholder returns. So with effect from 2026, the company's amended dividend policy is to pay dividends of 50% of annual net profit, excluding disposal gains and increasing up to 100% of annual net profit also excluding disposal gains when the company is in a net cash position at year-end. The Board may also decide to make additional distributions in the form of special dividends and/or share buybacks. We will continue with our share buyback program and to purchase up to USD 40 million worth of shares in 2026, subject to market conditions. I will now hand you back to Martin to run you through the market dynamics and update on our strategy. Martin Fruergaard: Yes. Thank you, Jimmy, and please turn to Slide 13. So before running through the -- through last year's volumes, we should say that ports and countries within the Strait of Hormuz accounts for approximately 2% of total dry bulk cargoes. Taken together with the Red Sea and Suez Canal, 5% of dry bulk shipping transits these choke points. This is lower than in the tanker and container shipping sector, but it's still enough to create significant new sources of market inefficiencies if voyages are diverted. Pacific Basin's own fixtures in 2025, 3.6% of our total cargo volumes loaded first -- loaded within the Strait of Hormuz and 1.3% of our total cargo volumes discharged in the region. In 2025, minor bulk demand remained resilient, ton mile demand grew 4% as supported by China's export of cement and fertilizer and it's important -- imports of minor metals, ores and concentrates. Flows of semi-processed materials from China to developing market continued to rise sharply supported by China's structural production surpluses and ongoing demand from Build and Road partners' economies, leading to more parceling and longer loading discharge times. Grain loadings decreased 6% year-on-year, mainly due to the sharp reduction in exports from Ukraine and Russia. At the same time, major exporters such as the U.S., Brazil and Argentina entered 2026 with strong momentum with forecasting agency predicting large harvests ahead. Coal loading also decreased 6%, reflecting changes in China's policy targets and a shift in stockpiling dynamics. India has become the world's largest buyer of metallurgical coal and with its steel sector aiming to nearly double its output by 2030, it is expected to play an increasingly important role in future coal demand. Iron ore loading fell 2%, impacted by weather-related disruptions in Australia early in the year. Looking ahead, volumes are expected to be supported by the ramp-up of Simandou in Guinea from 2026, which could displace high-cost production in China and Australia and extend average sailing distances adding to shipping demand. Please turn to Slide 14. We continue to adopt a disciplined approach to fleet growth and renewal, seeing increasing vessel values and strong market interest in modern efficient tonnage. The chart on the left shows the upward trend in both newbuildings and secondhand values for Ultramax and Handysize vessels, reflecting healthy sentiments in the asset market. As at 31st December 2025, our core fleet stood at 120 vessels, comprising 107 old vessels and 13 long-term chartered. Throughout the year, we actively renewed and optimized the fleet by selling 3 Supramax and 5 Handysize vessels while exercising 3 Handysize process options and took delivery of 3 long-term time charters in TC newbuildings from Japan. For 2026, we will have delivery of additional long-term TC newbuildings and our own 8 newbuildings to be delivered in 2028 and 2029. We also retained additional purchase options on a number of our long-term TC in Handysizes that can be exercised or extended subject to market conditions. Please turn to Slide 15. In December 2025, we committed to the acquisition of 40,000 deadweight Handysize newbuildings for a total consideration of USD 119.2 million with delivery scheduled for first half of 2028. These competitively priced ships with early delivery will add meaningful value to our fleet. They incorporate the latest fuel efficient designs, including open hatch and logs fitted configurations with enhanced tank top and deck strength. This provides great flexibility and upgraded cargo handling capability which allow for a more triangulated trading, support stronger utilization and TCE outperformance. In addition, these vessels are significantly more fuel efficient than the older single-fuel vessels, they will replace, and we secured them at competitive pricing with early delivery slots. Looking to our order book, we have 4 Handysize vessels to be delivered in 2028, 4 Ultramax LEV vessels scheduled between late 2028 and '29. And at the moment, 14 long-term chartered vessels with purchase options stretching to 2032. Altogether, this represents 22 potential additions to our core fleet over the next few years. Please turn to Slide 16. Looking ahead, our segment has proven resilience with stable growth in demand to the recent market disruptions. War in the Middle East could tighten the market if ships are diverted, but equally, it could lead to canceled cargoes in the area. Our focus cargoes are estimated to rise by about 3.5% in 2025 and a further 2.5% in 2026, reinforcing the structural demand support for our segment. Overall dry bulk market in the coming years will be affected by geopolitical and energy transition, but we expect our segments will remain resilient. Please turn to Slide 17. In 2025, global dry bulk net fleet growth remained steady at 3%, with Handysize and Supramax supply at roughly 4.1%. Handysize and Supramax newbuilding deliveries were up year-on-year. Total dry bulk newbuilding deliveries increased 7% year-on-year, and supply growth peaked in 2025. New ordering has slowed and the combined Handysize and Supramax order books remained manageable at around 11% of the fleet. The scrapping pool continues to increase. Around 50% of Handysize and Supramax capacity is now over 20 years old. Total dry bulk and minor bulk supply growth is expected to exceed demand growth in 2026 driven by higher newbuilding deliveries and limited scrapping activity. This was also the case at the same time last year. Please turn to Slide 18. The IMF expects global GDP to grow 3.3% and China at around 4.5%. But tariffs, political uncertainty and shifting geopolitics will continue to affect trade flows. If the war in the Middle East proves protracted, a sustained rise in global energy costs could hamper economic activity and create downside risk to the base case scenario, particularly for those countries -- for those economies that are more dependent on energy imports. On the commodity side, geared bulk segment should benefit from steady growth in minor bulk and grains, supported by green energy infrastructure and urbanization in developing markets. Chinese export of semi-processed materials under the Build and Road Initiatives also remain an important driver. From the fleet perspective, around 50% of the Handysize and Supramax fleet is now over 20 years old, though, high delivery volumes and limited scrapping means supply is expected to outpace demand in 2026. Overall, ton mile demand is forecasted to rise by about 2.1% for minor bulk and 1.9% for total dry bulk against a net fleet growth of 4% and 3.5%, respectively. But ton-mile demand rise will be impacted by the ongoing disruptions that continue to impact trade routes. Freight forward agreements indicate a healthy market going forward with FFA curves over the next 2 years being at or near 12 months high. Yesterday was the first trading day since the war in the Middle East started and FFA rose further. So overall, the current spot market is strong and outlook appears positive despite the war and supply seeming outgrowing demand during 2026. Please turn to Slide 19. Against this market backdrop, our strategic priorities for 2026 remain very clear and focused on areas where we can drive the most value. We will continue to renew and expand the fleet selectively and in a disciplined way through modern secondhand vessels, targeted newbuildings, long-term charter with purchase options that are accretive opportunities that offer a strong strategic fit. We continue to focus on improving our cost structure and leveraging our productivity tools and initiatives to further improve our cost competitiveness while striving to grow our fleet. As the decarbonization rules will drive the gradual transit to green fuels, we are transforming our fuel team into a sustainable energy solution team to drive further decarbonization as well as monetizing of our investments. We will continue to build on our excellent progress in respect to digitalization and our AI-enabled technologies to further ramp up our fuel and voyage optimization drive for improved efficiency cost savings, TC outperformance and sustainability. And finally, we will continue to reinforce strong performance management, leveraging our integrated platform and strong balance sheet to grow our business, improve customer service and maximize total shareholder return. Please turn to Slide 20. Our platform is well positioned to deliver sustainable shareholder value. We operate one of the world's largest modern Handysize and Supramax fleets with 250 vessels, [indiscernible] global commercial platform and supported by a diverse base of more than 600 industrial customers. Over the years, we have continuously delivered outperformance with the support of our strong platform, disciplined capital management and sector-leading cost efficiency. As Jimmy noted earlier, we have expanded our dividend policy effective from 2026. The improved policy will enable us to deliver better shareholder return. Here, we'd like to conclude our 2025 annual results presentation by thanking our colleagues at sea and ashore for their contribution to our results. I will now hand over the call to the operator for Q&A. Operator: [Operator Instructions] Our first question comes from Nathan Gee. Nathan Gee: [Audio Gap] returns. Can you talk about the thinking behind sort of proceeding with another $40 million buyback? We like the buyback, but just help us understand the thinking given that your market cap, I think, is now above NAV. So that's the first question. Second question, just in terms of outlook. Just help us reconcile the strong rates that we're seeing right now versus those headlines of supply likely exceeding demand. So maybe a little bit more just in terms of the disruptions that are sort of helping the market despite some of that headline demand supply. Martin Fruergaard: Yes. If I try first and Jimmy can add to it. First, Nathan, thank you for the questions. Thank you for listening in. First, in respect to the up to $40 million buyback that we announced, I think the key word is up to. So I think the other years, we were a little bit more precise that we would do that investment. This time we say up to. We agree that if you make the calculation, we are trading above fair market NAV. But on the other hand, we also think our platform has some value and of course, we also want to signal that we still believe -- we believe in our business and in our market. And if we find that it's a good time to buy, we will definitely buy that. So we're also trying to signal a little bit to you that we are ready to buy if and when we think it's the right thing to do. I think the buybacks we've done in the last 2 years has been very good actually, but we are ready to do more. But I think the key word is up to $40 million on that part. And then you asked a little bit about the outlook, it's -- I feel a little bit because it was a little bit the same last year. I think 4% growth in supply and 2% growth in demand. These, of course, are Clarksons figures. And I would also say this year, it's -- that's the base that we have. But -- and again, when you look at the disruption and, of course, the disruption we just saw this weekend, when you look at the FFA market, also going forward, of course, the market looks much better I must say at the moment. And I think if you look at our -- we, of course, covered for first quarter and we covered a little bit for the short term, but we do have quite a bit of open tonnage going, open days going forward. So I definitely hope that the market will continue to improve. I think we'll have to see a little bit the impact of the Arabian war and how long it will last and all these things before we sort of conclude on that part of it, but right now, it looks very positive, I must say. Operator: Our next question comes from Deepak Murali Krishna. Deepak Murali Krishna: I hope I'm coming through well? Martin Fruergaard: You are. Yes, absolutely. Deepak Murali Krishna: So when we look at the dry bulk market, right, we've seen that the TC rates have held up pretty well. And as you alluded earlier, right, last year also, we had about 4% to 5% supply growth in the sub-Cape segments and about 2% to 2.5% growth in the demand side. And something like that is also happening this year, where supply is at around 4%, but the demand growth is likely slowing down based on the slide which you shared for the minor bulk ton-mile. So in that context, what is it that is holding up the rates in your view? And how sustainable is it? Martin Fruergaard: I think in the predictions that we are using that come from some of the big broking houses and they also struggle, of course, with predicting the disruptors, it's nearly impossible. And I think to a certain extent, they also maybe had expected that the Red Sea would open up and ships could start proceeding through the Red Sea. I think there was some, at least on the container side, that had started that part of it. That's all closed now. Again I think we have a little bit the same situation. Last year was probably also other things like USTR. I think we all step back, not just us, but also others step back a little bit from sending ships to the U.S. that created again disruptions in it. And now of course, it's the war in the Arabian Gulf and then again, the closure. For sure, the closure of the Red Sea is just a new major disruptor. So -- and that, of course, means I think that the commodities will have to be moved for somewhere else. So let's see how it goes. Arabic Gulf is a big exporter of fertilizers and aggregates, cement -- sorry, cement and clinker, that has to be sourced from somewhere else, and that will definitely be longer ton-miles and I think that impacts the market immediately. Deepak Murali Krishna: Okay. Okay. And if I may ask about your plan about shifting half the fleet under the Singapore flag and -- under the Singapore operations. And then you -- Jimmy alluded to some costs related to that exercise. I just wanted to get a sense of has that excise been completed? If not, then should we expect any additional costs this year as well on that front? And then how do you see that impacting your operations? Or is it more of a structural change only on the organization front, but operationally, there's not much? Chi Kit Ng: Yes. Thank you, Deepak. Thank you for the question. So the transfer is ongoing. And we -- as we announced last year, the aim is to transfer a number of our vessels to Singapore. So that exercise is ongoing. Of course, the USTR and Chinese special port fees is currently under 1-year truce. So we do have a bit of time to complete the move that we set out to do. Now in terms of the cost that you see there is certain project costs incurred in 2025. We would expect a similar cost to be incurred in the coming year to complete the exercise, although the cost is likely to be less. As you could imagine, when we started off with the exercise, there is a certain amount of initiation costs. So the ongoing exercise would naturally have a smaller impact in terms of the cost. Now you also asked about the impact on operation. I think as we -- when we did the announcement, I think we also mentioned this is a change that wouldn't affect our operation, but it's more on the corporate organization. Martin Fruergaard: Yes. I think I could add for 2025. And of course, when USTR was implemented and also leading up to it, we did step back from calling the U.S. or at least limited somehow. And I think that had an impact on our earnings last year because that was actually a very strong market. For that reason, I would say, not because we didn't do it because I think many people stepped back from the U.S. So we didn't get the full value out of that part in third quarter and into fourth quarter. But going forward, that has stabilized, and things are back to normal. Deepak Murali Krishna: Okay. And then my last question is about the performance versus the index. When we look at the quarterly trend the last couple of quarters, at least for the Supramax versus I think we were lagging behind. So what's your take on how soon could this be bridged and probably resulted in outperformance? Martin Fruergaard: I think all in all, last year, of course, we had a total outperformance. So we did very well in the first half. And as I said, in second half also because of USTR, the market was quite divided. So the Atlantic market, very strong, very high and the Pacific actually not so good. And that, of course, also impacted our earnings. And the usual story is, of course, that when the market increases, we will also run a little bit after the market before we catch up with the market. I think we did catch up with the market here in January, February, but -- and now again, the market starts going up, which is a good thing. But again, that will also mean we'll run a little bit after the market in the short term. So -- but -- but if the market stays at these levels, we will definitely benefit from that in our earnings, but it will take a little bit of time for us to catch up with the index and do the outperformance on that part. Does that make sense? Deepak Murali Krishna: Yes, it does Martin. And then just sort of another question if I can. When we look at the vessel acquisition, right, you previously used to order vessels at the Japanese yards and then we see an order on the Chinese yard. And given that you have about 32 vessels -- with optionality for 32 vessels, do we think that the new ordering would probably take a step back and you will more exercise the optionality? Martin Fruergaard: We like to have both. I think we like to have as much optionality on our books as possible. But we also, of course, like to have access to quality yards, both in China and in Japan for our own newbuildings. So I think our strategy is to do so -- to keep all doors open for us. And of course, when we do the newbuildings, of course, we also get a design that we really want that gives us something that we can't get in the market. And for instance, on the Handysize, they are open hatched and give some special features that actually enables us to do more parceling and big cargoes or these things, which is area how we can sweat or optimize the earnings on our ships better. If we take ships on time charter, it's more standard ships in it, but we like the optionality of these long-term time charter deals as well. But I think it would be fair to say that we want to keep all doors open, we want -- we do like very much the optionality in the market. And we are fundamentally positive about our market going forward. Also when you look at the age profile of the fleet and so on. So we like the -- also our newbuildings getting delivered in '28 and '29, we think that's a good time to get delivery of ships as well. Deepak Murali Krishna: Okay. Makes sense. And then one clarification for these 20-plus vessels which you could potentially add, will this be also to replace some of the vessels which you might look to sell down as you did last year? Martin Fruergaard: Yes, we will -- our plan, of course, we follow the market now and see how it's developing. I think I explained in the past as well. We always do sale versus continuous trading calculations on all our ships. And we have sort of not a rule, but we tend to look at the ships when they become 20-year-old say, well, it, should we sell or continue to trade. Right now, of course, we do have -- I think we have 8 ships this year that is above 20 or will turn 20. They are, of course, candidates to sell. Of course, at the moment, when we look at the market, we are not in a hurry to do so, and we will have tried to take advantage of the market as possible. So it's not a rule that we have to sell and we don't regret what we've done in the past. But at the moment, we will follow the market a little bit to see how it develops and we are not in a hurry to do anything in this market at least. Operator: [Operator Instructions] There are currently no further live questions. Luna Fong: There is a question coming in from the online platform. So the question is, is there any view on how the ongoing geopolitical situation in the Middle East might impact the group's business. Martin Fruergaard: Yes, first of all, when we look at our fleets and where we are located, we do not have any of our own ships in the Arabian Gulf or Persian Gulf. So in that sense, we are not exposed in that way. We do trade in that area, but at the moment, we don't have a ship in the area. We have one ship on its way, but of course, that will probably divert to somewhere else and not go into the Arabian Gulf. So I think right now, we are also just looking at what's happening, and it looks like things are escalating. And for sure, we believe the Red Sea will be closed for longer. And then of course, we follow to see what's going to happen both in respect to oil price and longer prices and so on. But all in all, it will not have any sort of negative direct consequences for us. We probably see it will change the supply chains and they will be longer and then there will be more ton miles coming to the market going forward. But it's early days, so let's follow and see how the situation develops. Operator: There are no further questions. We will now begin closing remarks. Please go ahead, Mr. Martin Fruergaard. Martin Fruergaard: Yes. Thank you very much. Thank you very much for listening in, and have a good evening. Thank you very much.