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Operator: Good morning, ladies and gentlemen. And welcome to the Strata Critical Medical, Inc. Fiscal Fourth Quarter 2025 Earnings Release Conference Call. At this time, participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this call is being recorded. I would now like to turn the conference call over to Matthew Schneider, CFO of Clinical Services and Vice President of Finance and Investor Relations. Matthew, you may begin. Matthew Schneider: Thank you for standing by, and welcome to Strata Critical Medical, Inc.'s conference call and webcast for the quarter ended 12/31/2025. We appreciate everyone joining us today. Before we get started, I would like to remind you of the company's forward-looking statement and safe harbor language. Statements made in this conference call that are not historical facts, including statements about future time periods, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, and actual future results may differ materially from those expressed or implied by the forward-looking statements. We refer you to our SEC filings, including our annual report on Form 10-K and our quarterly report on Form 10-Q, each as filed with the SEC, for a more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements provided during this conference call are made only as of the date of this call. As stated in our SEC filings, Strata Critical Medical, Inc. disclaims any intent or obligation to update or revise these forward-looking statements except as required by law. During today's call, we will also discuss certain non-GAAP financial measures, which we believe may be useful in evaluating our financial performance. Reconciliation of the most directly historical comparable consolidated GAAP financial measures to those historical non-GAAP financial measures is provided in our earnings press release and investor presentation. Our press release, investor presentation, and our Form 10-Q and 10-K filings are available on the Investor Relations section of our website at ir.serratacritical.com. These non-GAAP measures should not be considered in isolation or a substitute for financial results prepared in accordance with GAAP. Hosting today's call are our Co-CEOs, Melissa M. Tomkiel and William A. Heyburn. I will now turn the call over to Melissa. Melissa M. Tomkiel: Thank you, Matt, and good morning, everyone. This was a fantastic quarter for Strata Critical Medical, Inc. Delivering excellent results and supporting our strong confidence in the future. In Q4 specifically, our organic growth of 35% was well ahead of our expectations, and led us to a full-year result that beat the high end of our guidance on all fronts. Given the strength we saw in Q4, strong volumes have continued into 2026 and additional new customer wins, we are also raising our guidance for the full year 2026 on both revenue and adjusted EBITDA. Continued acquisitions of smaller businesses operating directly in our areas of expertise are a key part of our strategy to accelerate growth and geographically expand our network while they seamlessly integrate into our existing business platform. We have multiple additional active opportunities and believe that our continued successful execution of this M&A strategy will accelerate our annualized adjusted EBITDA growth at least 30% throughout the coming years. This period marks our first full quarter with a singular focus on medical and our first full quarter with Keystone, and I am happy to report that we are off to a great start. Importantly, we are capturing a larger share of logistics services for transplant clinical cases, and this contributed to the logistics strength in the quarter. More than 40% of our sequential logistics revenue growth in Q4 versus Q3 was generated from Keystone's legacy customers, demonstrating the value of our full-stack one-call offering. Operationally, the teams are working very well together and also taking on broader responsibility across the Strata Critical Medical, Inc. organization. To that end, we are excited to announce an expanded role for Dr. Scott Silvestri, who was Keystone's Surgical Director, as Strata Critical Medical, Inc.'s new Chief Medical. Dr. Silvestri brings decades of experience leading transplant and cardiac surgery programs and is an industry leader in the area normothermic regional perfusion. We are very lucky to have Scott on the Strata Critical Medical, Inc. team, and under his surgical leadership, we have already begun rolling out new capabilities to our customers, most importantly, our expanded abdominal organ recovery platform. On the regulatory front, we are encouraged by the actions taken by government agencies over the last few months. It is clear that our approach is aligned with the regulators' goals of restoring trust in the transplant system, improving patient safety, and increasing the number of transplants in the most efficient manner possible. Strata Critical Medical, Inc. is incredibly well positioned to help the industry accomplish these goals. For example, in proposed rules from the Centers for Medicare and Medicaid Services, OPOs would now be incentivized to pursue medically complex organs, particularly those resulting from DCD donors. Historically, only some OPOs have been hyper-focused on utilizing technology to increase yields and pursue DCD or marginal organs. Others have been slower to embrace these new opportunities. Rules designed to incentivize more DCD donors are a clear positive for Strata Critical Medical, Inc., given our reputation as a leader in the recovery and transportation of all organ types and our unique expertise in DCD recovery. We are also very well positioned from a regulatory perspective in terms of our customer base, which is over-indexed to larger, more sophisticated transplant centers and Tier 1 OPOs that are being held up as the gold standard under new and proposed regulations. Approximately 20% of Strata Critical Medical, Inc.'s revenue is generated from OPOs, with Tier 3 OPOs, the lowest ranked, which could potentially be absorbed by larger OPOs under proposed regulations, representing less than 5% of our revenue, while our Tier 1 OPO customers represent 2.4 times the revenue of our Tier 3 OPOs. In the past quarter, these regulations directly resulted in new business for us when an underperforming OPO was decertified and absorbed by one of our existing OPO customers. Importantly, the cost intensity of organ transplant is rising, as the transplant community has innovated to identify, recover, and transport organs from DCD donors, which naturally have a higher cost profile compared to organs from DBD donors. Strata Critical Medical, Inc. is incredibly well positioned to help the transplant community reduce costs in DCD donation via the utilization of our expanding regional network of logistics bases and organ recovery hubs, and through the use of normothermic regional perfusion, which offers substantial cost savings versus alternative recovery methods. NRP delivered locally, exactly the way we do, is the best answer to pursue DCD organs more aggressively and reduce costs. Before I hand it over to Will, I wanted to touch on our aircraft fleet. We ended the year with a fleet of approximately 30 dedicated or owned aircraft. During the quarter, we discovered corrosion on one of our owned aircraft and made the decision to part out the aircraft and utilize the engines to reduce future engine overhaul costs rather than invest in costly repairs. While the book loss on the aircraft was $1.7 million, we estimate the economic loss at approximately $400,000. We have completed comprehensive G inspections on two-thirds of the remaining owned fleet over the last two years and have not identified any similar issues. Looking forward, we are excited to report that we have won customers in some new geographies, which we expect to begin servicing in 2026. We expect to add around two new owned aircraft to our fleet this year to better support these new regions, both for the new accounts and for existing customers that might be flying in those areas. We already acquired one aircraft during the first quarter, which is now in the conformity process. We continue to believe that we have struck the right balance with regards to our asset-light strategy. The vast majority of our flying is on third-party aircraft and will remain that way. At the same time, owning a small portion of our capacity has unlocked new business, provided important leverage in negotiations for third-party aircraft, and enhanced margins. It also allows us to strategically build out our national footprint. With that, I will turn the call over to Will. Thank you, Melissa. William A. Heyburn: We continue to demonstrate our ability to achieve and exceed the ambitious goals we set for ourselves, both for organic growth, which at 35.3% this quarter was well ahead of our targets, as well as for our M&A platform. And we are just getting started. We are working diligently towards closing several additional opportunities currently under exclusivity that are operating directly in our core competency areas and are actionable at mid-single-digit multiples of adjusted EBITDA. We expect that our successful continued execution on these acquisition opportunities will significantly accelerate our growth trajectory, enabling us to maintain an average annualized adjusted EBITDA growth rate of at least 30% over the coming years. This is a significant increase from the organic-only high-teens midterm adjusted EBITDA growth that we discussed at Investor Day, demonstrating our increasing confidence in our ability to deploy capital. To support this M&A platform, in February, we announced closing of a $30 million asset-based credit facility with J.P. Morgan, with the ability to upsize to $50 million. Importantly, our aircraft remain unencumbered, creating additional future financing opportunities as needed. This facility remains undrawn but provides important flexibility for future acquisitions. We also expect to support the acquisition strategy with Joby earn-out payments of up to $45 million related to the sale of Blade, our former passenger business. Up to a $17.5 million portion of the earn-out will become due in August, which is based on Blade's financial performance post-close, and we are encouraged by the results Joby has released to date. The balance, which will become due in March 2027, is based on the retention of former Blade employees who transferred to Joby and is largely hedged by our ability to recover stock from those employees if they do not fulfill their obligations. Finally, as a reminder, if Joby elects to pay in Joby stock, the number of shares will be determined at the time the earn-out is earned, not based on a historical Joby stock price. On the strategic partnership front, our device-agnostic strategy is working, and it is resonating with both current and prospective customers. Our willingness and ability to always support our customers' clinical decisions regarding device usage as well as our capability to fly these devices when possible has helped to attract new customers to the Strata Critical Medical, Inc. platform, and we are encouraged by the recent approval of yet another new machine perfusion device and the long pipeline of devices that are currently in clinical trials. As we like to say around here, we still believe that the customer is always right. We also continue to explore opportunities to leverage our existing assets and infrastructure to expand into adjacent offerings. While not material to the overall business at this point, we are now flying radiopharmaceuticals nearly every week as part of a pilot program. We have utilized existing personnel and resources for this program to date and will continue to monitor progress to determine if it makes sense to invest further, but we are encouraged at the positive reaction we have received in the market to date. We will turn to the financial results now. But before we dive in, let us review a few reporting changes we have introduced this quarter. Starting at the top of the income statement, we will now disaggregate revenue across three business lines. Logistics revenue is comparable to the medical revenue we disclosed before the Keystone acquisition and represents Strata Critical Medical, Inc.'s organic growth. Note that logistics revenue includes air and ground logistics along with our organ placement business, which we market as TOPS. Transplant clinical revenue includes clinical revenue generated from transplant customers, including NRP, surgical organ recovery, product sales, and other related services. Other clinical revenue includes clinical revenue generated from cardiac surgery departments within hospitals, including perfusion services, autotransfusion, ECMO, product sales, and other related services. Moving down the income statement, we will now report two segments: Logistics and Clinical, which represents the sum of transplant clinical and other clinical, all businesses that we acquired with Keystone. We have shifted away from the non-GAAP flight profit metric utilized by our divested passenger business and have migrated to the more traditional measure of GAAP gross profit as our segment profitability metric. As a result of this change, we shifted some costs from SG&A to cost of sales in our logistics business, which has no impact on adjusted EBITDA but results in logistics gross margins that are approximately 200–250 basis points below the previously reported medical flight margin metric. We will now report both logistics and clinical gross profit to provide insight into fundamental trends of the business. As we previously discussed, given our now consolidated corporate structure focused entirely on medical, we will no longer report SG&A by segment or unallocated corporate expenses. Instead, we will break out our SG&A into seven categories available in the MD&A, which we expect will be more helpful in understanding the cost drivers of the business. Finally, as a reminder, our P&L reflects continuing operations only, as the results of the passenger business that we divested in August 2025 have been reclassified as discontinued operations for all periods. The cash flow statement and balance sheet, however, continue to include discontinued operations in historical periods, the impact of which is highlighted. Moving now to the financial highlights from the quarter. Full-year 2025 revenue and adjusted EBITDA of $197.1 million and $14.1 million, respectively, both beat the high end of our guidance range, driven by a strong Q4 that was ahead of expectations. Q4 2025 revenue of $66.8 million was driven by logistics growth, which is organic, of 35.3% to $49.2 million in the quarter versus $36.4 million in the prior year. Air logistics strength was supported by new customers, existing customers, and a higher logistics attachment rate for our transplant clinical customers. Clinical revenue was $17.6 million in the current quarter versus $2.8 million in Q3 2025, which reflects the mid-September 2025 close of the Keystone acquisition. Compared to historical unaudited financial results in prior periods before the Keystone acquisition closed, clinical revenue grew strongly in the mid-double digits year over year, and mid-single digits quarter over quarter. Within clinical, transplant clinical revenue was $7.8 million in Q4 2025, and other clinical revenue was $9.8 million in Q4 2025. Compared to historical unaudited financial results in the prior year, before the Keystone acquisition closed, we saw significantly faster growth in the transplant clinical business line. This strong clinical growth continued despite industry regulatory and media scrutiny in 2025, which resulted in a flattening of U.S. organ donors and NRP donors. As Melissa mentioned earlier, we are encouraged by recent regulatory updates. While we have not yet seen a pickup in industry data for overall donors, we have seen a recovery in NRP donors in recent months. New customer acquisitions continue to drive growth in other clinical revenue, and there is a significant opportunity to continue to acquire new cardiac perfusion customers given our strong value proposition and relatively low market share. Gross profit increased 90% to $14.4 million in the quarter, versus $7.6 million in the prior-year period, driven by organic growth and the Keystone acquisition. Gross margin increased approximately 80 basis points year over year to 21.6% versus 20.8% in the prior-year period, driven by higher logistics gross margins and the positive mix impact from the Keystone acquisition. Logistics gross profit, which represents Strata Critical Medical, Inc.'s organic growth, increased 39.5% to $10.6 million in Q4 2025 versus $7.6 million in the prior-year period, driven by strong revenue growth and an approximate 70-basis-point increase in gross margin to 21.5% versus 20.8% in the year-ago period. Clinical gross profit was $3.8 million in Q4 2025. Adjusted SG&A rose to $8.9 million in the quarter, versus $7.5 million in Q3 2025, which largely reflects a full quarter of Keystone SG&A. Adjusted EBITDA rose to $7.0 million in Q4 2025, up from $1.1 million in the year-ago period and $4.2 million last quarter. Adjusted EBITDA margin rose to 10.4% in Q4 2025. Note that the year-over-year adjusted EBITDA comparison will not be particularly meaningful until we lap the passenger divestiture in Q3 of this year, given significant cost savings realized during the sale that are not reflected in the prior-year results. Operating cash flow was negative $8.3 million in Q4 2025. The $15.3 million difference between adjusted EBITDA and operating cash flow was driven by $9.6 million of nonrecurring items, including a legacy legal settlement which we disclosed last quarter, residual transaction costs, and other nonrecurring items, along with approximately $5.7 million in working capital, which was driven in part by delays in collections during our back-office integration, which we expect to normalize in the coming quarters. Additionally, the logistics business saw significant growth into year-end, contributing to the working capital build. Capital expenditures, inclusive of capitalized software development costs, were $2.0 million in the quarter, driven primarily by capitalized aircraft maintenance and ground vehicle purchases. We ended the quarter with no debt and approximately $61.0 million of cash and short-term investments. Moving to the outlook. Given the stronger-than-expected volume growth in Q4 that has persisted into 2026, along with the expected onboarding of new customer wins in the second half of the year, we are raising our 2026 revenue guidance range to $260–$275 million from $255–$270 million previously. We are also raising our adjusted EBITDA guidance range to $29–$33 million versus $28–$32 million previously. We are reiterating our free cash flow before aircraft and engine purchases guidance of $15–$22 million. For comparison purposes, assuming we closed the Keystone acquisition at the 2025, the company would have generated revenue of $243 million, while we estimate our adjusted EBITDA was consistent with the pro forma range we provided at the time of the acquisition. In the first quarter to date, we have seen continued strength in daily logistics trips as well as clinical cases despite a soft January for the industry. However, we have seen a slight mix shift to shorter air trips so far this quarter, and separately, we did have several days where our Northeast fleet was grounded due to winter storms. We put this in the category of normal ebbs and flows of both the industry as well as our specific subset of customers. As such, we expect a modest sequential revenue decline in Q1 2026 versus Q4 2025. On the profitability front, we expect adjusted EBITDA margins to decline approximately 100 basis points sequentially in the first quarter driven by this lower revenue. We do expect to see a sequential improvement in revenue and margin in the second quarter as well as in the back half of the year, boosted in part by expected new customer additions. In summary, we are thrilled with our progress after our first full quarter operating the now fully integrated organ transplant platform. We are getting great feedback from customers. Our financial results are exceeding expectations. We are even seeing smaller competitors proactively reaching out, hoping to join forces and thus enhancing our already strong acquisition pipeline. The best is yet to come, and we look forward to continuing to achieve and exceed our goals in the months and years ahead. With that, I will turn it back to the operator for Q&A. Operator: Thank you. Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Yuan Ju with B. Riley. Your line is now open. Yuan Ju: Good morning. Congratulations on a strong quarter. My first question is around regulatory policy. Can you please remind us or give us an update on the continuous distribution policy? Who are the stakeholders opposing this continuous distribution policy and why? And then why lungs are approved earlier than other organs? Melissa M. Tomkiel: Thanks for being on the call, and I appreciate the question. So continuous distribution is still the goal for all organs. As you pointed out, lungs have already transferred over to that, and we are seeing a lot of positive results, both for the number of organs that can successfully match to the people who need them the most and also, as it relates to our business, we are uniquely able to handle those longer trips for our customers. As it relates to the transition for hearts and livers, we did see at the beginning of this year a deprioritization of that process as regulatory agencies focus on some of the more pressing issues that were raised by the media over the last six to twelve months. We have seen a lot of progress on those fronts with new proposed rules coming out of CMS and coming out of OPTN. But we do not have a certain timeline as to when they will move that continuous distribution transfer back to the front burner again. We do know that that is the end goal. And once things get started, we would expect to see at least a six-month comment period, and OPTN has been very clear that they would like to gradually transition from the current acuity circles model to continuous distribution over a period of about a year once that rule is set up. In terms of stakeholders that are opposed to it, I do not know if I would characterize it as opposition, but there are certainly folks that want to make sure everybody is ready for what will be a more logistically challenging process when you move to a true national organ allocation program. We are very well positioned to help the entire industry support what is a more efficient way to get organs to the people that need them. Of course, we want to proceed carefully because some transplant centers and OPOs might not have the right partners like Strata Critical Medical, Inc. to enable them to hit the ground running with a new policy like this. Yuan Ju: Got it. Thanks for the helpful color. If we break down this transplant value chain which part of the service has the highest value and margin and what is the percentage of your customers using your full-service portfolio? Matthew Schneider: You know, we gave gross profit by segment, both logistics and clinical, this quarter, and you will see that on a blended basis, the profit margins are very similar. You do tend to see in the transplant clinical business slightly higher profit margins than the non-transplant clinical business. We are already seeing a lot more of those legacy Keystone customers, our clinical customers today, see the value in an integrated offering and start to use logistics. We talked about how about 40% of our sequential growth in logistics this quarter was driven by more business from those clinical customers. And oftentimes, it is not just a convenience decision for the customer. We are able to harmonize the departure location where our aircraft assets are located and where the clinicians and equipment are located that are performing that clinical procedure. It will save the customer money to use those integrated solutions together. So the next phase for us is to try to convert more of those clinical customers to contracted logistical customers and vice versa. We have already added a lot of our logistics customers onto rate cards that enable them to use our clinical services. But as we have talked about a lot, clinical services when purchased by transplant centers tend to be a little more ad hoc. So we are going to give it a few quarters to see what the uptick is, but we are really happy that many of our customers have reached out to get the contracts in place to be able to use both sets of services. Yuan Ju: Got it. Thanks for taking our questions. I will jump back to the queue. Operator: Thank you. Our next question comes from the line of Benjamin Haynor with Lake Street Capital Markets. Your line is now open. Benjamin Haynor: Good morning, folks. Thanks for taking the questions. First off for me, just on the acquisition pipeline, as these opportunities become available, do you expect to be announcing them as they occur? And then as it applies to kind of the adjacent offerings, I would imagine there are also some acquisition candidates that you would have there. Or is that more something that you would think about doing de novo, like with the radiopharmaceuticals? Melissa M. Tomkiel: Well, our first and foremost focus as far as our acquisition pipeline is on the product service that we currently offer. And we are doing that because we want to increase our scale and national footprint because that provides a more cost-efficient and time-efficient solution for our customers. So we do plan on announcing as we close on acquisitions. Hopefully, there is some news in the coming months. As we have mentioned, we do have a robust pipeline that we are working through. And we are very excited about all the opportunities that are out there that we are seeking through partners, like with Keystone in the past and Trinity before them, who are trusted and have credibility and enhance our service offering. As well as, you know, Will mentioned earlier, we are being approached by a lot of small competitors. It is still pretty fragmented. And a lot of smaller players realize that this cannot be done the right way without scale. So they want to join forces with us and share the same strategic vision. William A. Heyburn: And, Ben, to your question on the radiopharma side, we know we can do this. We know we can do it well. The question is whether relative to the other opportunities we have in front of us, which we are really very excited about, is that where we want to be investing time and resources? And so what we like to do is we like to first get some experience actually performing a service, which we are doing almost every week. But we are not at a place right now where you would see us make an acquisition in that space in the near term. As Melissa said, we are focused on our core business lines right now. We are going to keep learning on the radiopharma side. Benjamin Haynor: Okay. Got it. That is helpful. And on the folks that are approaching you, is part of the reason why, beyond just the scale, some of the regulatory scrutiny and such that the industry is seeing as well? Or is that too much of a stretch? Melissa M. Tomkiel: No. It is not a stretch at all. I mean, we like what we are seeing on the regulatory front because it is raising the standard across the industry, but it is bringing the standard to the level that we have. And we have the technology, and we have protocols and processes already in place to be able to provide the services in a way that the regulators want to see. So, yes, for sure there are smaller competitors out there that do not have those and do not have the infrastructure or the high-caliber team that we have that want to join up with us. Benjamin Haynor: Makes sense. And then just on the shorter trips that you have seen so far early this year, it sounds like that is more luck of the draw than anything. There is nothing to read into that? William A. Heyburn: I would not read into it. No. You know, it is a combination of mix shift to there are some customers that just generally have better luck matching closer, or there are OPOs that are flying shorter distances consistently. So we see the mix shift around from a customer basis quarter to quarter. And we also see trip lengths change. So this is the normal ebb and flow. And we are very encouraged to see those trip volumes both on the logistics and the clinical side staying very strong all the way into 2026 to date. Benjamin Haynor: Okay. Got it. And then lastly, on the new customer wins, anything you can share on the profiles of those customers and how much a factor those wins were in bumping up the revenue guide? William A. Heyburn: Too soon to give specific guidance on the new customers. But what I would say is that it is really encouraging to see that this integrated model is resonating with folks. We are getting a lot of new leads from the combined customer base of the much larger organization that we have today. And also, the aircraft strategy, as Melissa talked about, is really resonating with people. We think we struck the perfect balance there. You know, as we talked about, we will invest in one or two new aircraft to support some brand-new geographies that we will be serving much more consistently. But this all adds to the power of the platform and allows us to serve not just those customers, but other customers as well. So as we get closer to the launch date, we will provide a little more detail around those new customers. Benjamin Haynor: Got it. That is all I have. Thank you so much, and congrats on the progress and the outlook. William A. Heyburn: Thanks for the great questions, Ben. Operator: Thank you. Our next question comes from the line of Jon Hickman with Ladenburg Thalmann. Your line is now open. Jon Hickman: Hey, good quarter, Will. Could you just kind of reiterate, how many hubs are you operating out of in the United States now? Matthew Schneider: Hey, Jon. This is Matt. Are you referring to the air bases? Jon Hickman: Yes. Matthew Schneider: Yeah. Our air bases are probably overall in the teens. We, you know, as Will just said, when we add new customers or we have density in a certain region, we consider adding a new base. Based on new customer wins this year, we are likely to add at least one or two new bases. That is our plan for the year. William A. Heyburn: But remember, we have the capability to fly from anywhere through the asset-light network. So when we talk about a base, that just means that we have either an owned or contracted aircraft that we are certain is going to be available to us in that location versus aircraft that we have safety-vetted and can use but may not be held back for our use. And then on top of that, we do have some dedicated aircraft to us that can float and move their locations around the country as needed, which gives us even more flexibility. Jon Hickman: And then could you, maybe I missed this, but on the logistics side, I know it has been a goal kind of to increase the ground services. Were you able to do that this quarter? Kind of as a percentage of revenues? Matthew Schneider: Yes. I mean, our air business was very strong in the quarter, really in the back half of the year. So we continue to grow and scale our ground business, adding new hubs. But as a percentage of revenue, I believe it is about the same as it was in the prior-year period. And that just reflects, as I said, the strong growth in air and other revenue, including our organ placement business. Jon Hickman: Okay. Thank you. I appreciate it. Operator: Thank you. Our next question is from Yuan Ju with B. Riley. Your line is now open. Yuan Ju: Yeah. Maybe a quick follow-up on radiopharmaceuticals. Are you mainly handling the radiotherapeutics or radio imaging agent? And then are you mainly supporting the commercial product versus the clinical trials? William A. Heyburn: We think we can do all of these things really well. You know, we are probably best situated with our existing fleet on the clinical trial side of things because most of the aircraft we have access to are not cargo-configured. So a smaller load is going to be easier for us to leverage the existing fleet. If this was something that we wanted to invest more resources in, we could support full loads on cargo aircraft as well. But that is not in the existing fleet today. Yuan Ju: Got it. Thank you. Operator: I would now like to hand the call back over to Matthew Schneider. Matthew Schneider: Great. Thank you. So we received a few investor questions that we will now take on the call. The first one is on AI. And the question is, how will AI impact the transplant market over time and our business in particular? Will, why do you not take that one? William A. Heyburn: Sure. Great question. And I think this is a great business to remain extremely durable and actually benefit from AI rather than have any risk. If you think about what we do, we are operating in the physical world, scrubbing into operating rooms, flying airplanes every day. These things cannot be accomplished without access to these specialized aviation assets and credentialed medical professionals. We are driving with lights and sirens on the ground. And so, as such, we really see the artificial intelligence opportunity to make this business more efficient. We are already starting to employ it for real-time error checking as we are coordinating communications amongst multiple different stakeholders in an organ transplant mission. And we think over time, it could have the potential to make our cost structure more efficient, allowing us to invest in those differentiated people and assets that make our business great and really defensible. The next question we received is on some of the dynamics that we talked about in the first quarter, in terms of the weather impact that we alluded to. Melissa, can you just talk about the impact of weather that we are seeing in the first quarter? Melissa M. Tomkiel: Sure. Normally, weather really does not have an impact on our operations, and that is because our flights get priority over other flights at airports. So if a cell comes in, it might cause a disruption or slowdown or air traffic delays at an airport for an hour or two. It is not going to have any significant impact. We called it out for the first quarter because it was pretty unusual circumstances as far as the severe weather in the North, which is a very important region for us. We base several aircraft in the Northeast, and we have a high customer concentration there as well. And what we saw in the first quarter was so unusual with airports actually being closed for a number of days. So that will have an impact on the number of flights. Now we do see case volumes surging on days after or following an airport closure or something like that. So that will offset or mitigate that impact. And, you know, of course, it does not affect our confidence for the year, as you can see with the guidance. Matthew Schneider: And then we received a question recently just on some of the macro events and the impact of higher oil prices on our business. Melissa, can you just take that one? Melissa M. Tomkiel: Sure. Well, a raise in fuel price is going to result in higher costs for our customers, and that is not something we ever like to see. It will not impact our cost structure. When we contract with our customers, we negotiate fuel surcharge thresholds at a certain number, and anything above that gets passed through. So if we see a surge in pricing, that is going to be passed through to the customer, and it will not turn things upside down for us. William A. Heyburn: And we are above those thresholds already today. So any increase from fuel prices today would just get passed through. Matthew Schneider: That concludes the retail investor Q&A portion of the call. I just want to point out that we are planning on participating in the Sidoti and Needham investor conferences over the next few weeks, and we are looking forward to reporting our first quarter 2026 results in early May. Thanks to everyone for joining the call today and for your continued interest and support. Operator: This concludes today's conference. Thank you for your participation. You may now disconnect.
Operator: Greetings. Welcome to BRC Inc. Fourth Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I will now turn the conference over to Matthew McGinley, Head of Investor Relations. Thank you. You may begin. Matthew McGinley: Good morning, everyone, and thank you for joining BRC Inc.'s fourth quarter and fiscal year 2025 financial results conference call. We released our results yesterday, and the press release and related materials are available on our Investor Relations website at ir.blackriflecoffee.com. Before we begin, I would like to remind you of the company's Safe Harbor statement regarding forward-looking statements. During today's call, management may make forward-looking statements including guidance and the underlying assumptions. These statements are based on expectations that involve risks and uncertainties which could cause actual results to differ materially. Additionally, for a further discussion of these risks, please refer to our previous filings with the SEC. This call will include non-GAAP financial measures such as adjusted EBITDA. Whenever we refer to EBITDA, we mean adjusted EBITDA unless otherwise noted. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release which was furnished to the SEC and is available on our Investor Relations website. Now please refer to the presentation on our Investor Relations website and turn to Slide 4. I would now like to turn the call over to Christopher Mondzelewski, CEO of BRC Inc. Chris? Christopher Mondzelewski: Thanks, Matt. Good morning, everyone. Joining me today are Evan Hafer, our Executive Chairman, Matthew Amigh, our Chief Financial Officer, and Matthew McGinley, our Head of Investor Relations. 2025 was a year of measurable operating progress for BRC Inc., led by strong performance in packaged coffee. For the year, packaged coffee grew 31.1%, approximately three times the broader category growth rate, with units up more than 22% and share up 60 basis points in bagged coffee. That momentum accelerated in the fourth quarter, as distribution expansion translated into measurable improvements in productivity and share with key retail partners. The combination of expanded doors and stronger per-SKU productivity materially strengthened our retail position as we exited the year. We also advanced our ready-to-drink and energy platforms, securing incremental distribution and broadening our presence in priority accounts. These gains reflect disciplined commercial execution and reinforce the strength of the brand. 2025 presented a challenging operating backdrop. Coffee markets remained volatile, and consumers faced ongoing pressure. Throughout the year, we remained disciplined on pricing, tightly managed expenses, and aligned resources with the highest-return opportunities across the portfolio. We also took meaningful steps to streamline our platform. Our asset base is leaner and more focused, with capital and talent directed towards initiatives that support durable, profitable growth. As we look ahead, the actions taken in 2025, combined with expanding distribution, improving shelf productivity, and moderating cost pressures, position us for a return to strong EBITDA growth in 2026. We are encouraged by the progress we have made and confident in the trajectory of the business as we enter the new year. Moving to Slide 7. Momentum in packaged coffee accelerated as we exited the year. In the fourth quarter, our packaged coffee business grew 34% compared to nearly 13% growth for the broader category. That performance translated into continued share gains. In bagged coffee, market share reached 3.3% nationally, up 60 basis points year over year, while pods increased to 2.2% nationally, up 40 basis points. Importantly, these gains were supported by improving shelf productivity, not just expanded distribution. Velocity strengthened throughout the year and reached parity with the overall bagged coffee category in grocery, despite pricing approximately 40% above the category average. We are seeing stronger consumer takeaway and repeat purchase, reinforcing sustained velocity improvement. Achieving category-level velocity at a premium price point reinforces the strength of consumer demand and the durability of our retail position as we enter 2026. Move to Slide 8, please. Our land-and-expand strategy continues to prove itself as a scalable and repeatable growth engine. We begin with a focused assortment, entering retailers with a concentrated set of high-performing items designed to demonstrate the value of the brand to the category. Once performance is established, we earn the right to broaden the assortment by adding incremental items to the shelf. On the land side, we delivered another year of retail expansion. Distribution reach increased nearly 8 points in 2025, bringing ACV to 54.9%. That steady expansion reflects continued success in adding new retail doors and strengthening our national presence. The expand component is working as well. Improving velocity translated to directly higher shelf productivity, which supported broader assortments and additional shelf space. On average, grocers added two incremental BRC Inc. items in 2025 alone. And since entering grocery three years ago, we have nearly tripled our shelf presence. This disciplined execution is translating into greater shelf visibility, stronger retail economics, and deeper long-term retailer commitment to the brand. Slide 9. Looking at the broader category, much of the reported growth continues to be price-led, while underlying unit trends remain muted, with higher shelf pricing driving dollar expansion across legacy brands. Our performance looks different. The majority of our growth is volume-driven. Units increased more than 22% in 2025, reflecting real consumer takeaway rather than pricing actions. That distinction matters. We are adding households, increasing purchase frequency, and expanding share within existing accounts. As distribution expands and repeat purchase strengthens, our growth is becoming broader and more sustainable. In a category heavily influenced by price, our gains are rooted in unit expansion, repeat purchase, and stronger shelf productivity. Those dynamics reinforce durable top-line momentum and operating leverage. As volume scales, we expand gross profit dollars and improve fixed cost absorption, while delivering strong productivity and economics to our retail partners. Packaged coffee is firmly established as the core economic engine of the business, and we see meaningful runway for continued growth. Turning to Slide 10. Our direct-to-consumer business stabilized in 2025 and returned to growth in the fourth quarter. While retail continues to be the primary driver of top-line growth, direct-to-consumer remains an important strategic channel. Our owned website allows us to engage directly with our most loyal customers, gather insight and feedback, and introduce new products and messaging. Our approach is not to force traffic to a single destination, but to ensure BRC Inc. products are available wherever consumers choose to shop. We saw improvement on our core website during the year, and at the same time continued growth across third-party marketplaces. Those platforms are extending our reach, supporting repeat purchase, and complementing retail distribution. Taken together, direct-to-consumer is operating from a more stable base and contributing positively to the broader business. Slide 11. In ready-to-drink coffee, performance in 2025 varied by channel. We expanded distribution, increasing ACV by 10 points to 55.9%. The strongest performance was in grocery, mass, and dollar. We outperformed the category for the full year. The category remained under pressure in convenience, which represents more than half of tracked ready-to-drink sales. As c-store trends weakened, fourth quarter results reflected that softness. We are not assuming a category recovery and are focused on the factors we can control. That means prioritizing our top retail partners, improving shelf productivity, and using innovation as a disciplined growth lever. New flavors in our cold brew platform are intended to drive incremental takeaway and improve velocity within our existing distribution footprint. Packaged coffee remains our core economic engine. RTD is an important adjacency, and we are scaling it deliberately with a focus on returns and disciplined execution. Slide 12. In energy, distribution expanded in line with our launch-year plan, reaching approximately 22% ACV across nearly 20,000 retail doors in 2025. As we move into 2026, the focus shifts from launch execution to scaling the business in the right markets, with the right partners, and with a clear emphasis on where we can win. That discipline continues to guide our approach. We are prioritizing geographies and channels where we can drive velocity and returns, rather than pursuing distribution for its own sake. This return-focused strategy positions the energy business to scale responsibly and contribute to the overall growth of the BRC Inc. brand. Before I hand it off to Matt, I want to briefly touch on how we continue to show up for the communities we serve. Last quarter, we committed to eliminate $25,000,000 in medical debt for veterans through Operation Debt of Gratitude, in partnership with Born Primitive and ForgiveCo. I am proud to say we exceeded that goal, wiping out more than $34,000,000 in medical debt and helping approximately 15,000 veterans enter 2026 free from that burden. We also helped feed more than 1,000 military families through Operation Homefront during the holidays and continued supporting the Special Operations Warrior Foundation and other veteran and first responder organizations across the country. With members of our community and even our families currently deployed in the Middle East and around the world, we remain committed to supporting them and those waiting for them at home. That same commitment will guide us as we move into 2026 and honor America's 250th birthday through initiatives that celebrate service and expand programs that create meaningful impact for veterans and their families. Supporting this community is not a campaign for us. It is foundational to who we are and how we grow. I will now turn it over to Matthew Amigh. Matthew Amigh: Thank you, Chris. I will begin my remarks on Slide 14. For the full year, net revenue increased 2% year over year. Excluding the impact of the 2024 loyalty rewards accrual change and other nonrecurring items in both periods, net revenue increased 8%, primarily driven by wholesale growth. Our wholesale segment, which sells packaged coffee and ready-to-drink beverages to retailers, grew 5% year over year, or 13% excluding nonrecurring items, reflecting stronger velocity, expanded distribution across both doors and items, and continued contribution from BRC Inc. Energy. Sales to mass merchants increased double digits and grocery sales more than doubled. Direct-to-consumer declined 5% for the year, but was slightly positive excluding the 2024 loyalty benefit. With the stabilization achieved in 2025, direct-to-consumer is no longer a material offset to growth elsewhere in the business, allowing wholesale performance to more clearly drive consolidated results. Moving down the P&L, operating efficiency gains in 2025 from restructuring actions and reallocating resources towards higher-return initiatives partially offset higher commodity costs and tariffs. For the year, gross margins declined 650 basis points and EBITDA declined more than 40%. As shown on Slide 15, the operating expense reductions we implemented combined with improving revenue limited the fourth quarter EBITDA decline to just 2%. In the fourth quarter, revenue increased 7% year over year, or 11% excluding nonrecurring revenue in both periods. Wholesale revenue increased 8% year over year, or 16% excluding nonrecurring items. Direct-to-consumer revenue increased 7%, marking the first quarter of growth in this segment in more than three years. Turning to Slide 16. We provide a detailed view of this year's gross margin drivers and the path forward. Gross margin was 32.1% in the fourth quarter, a decrease of 610 basis points year over year. One-time items, including startup costs associated with onboarding a new direct-to-consumer fulfillment provider and a noncash impairment of coffee extract related to a formulation change, pressured margins by 270 basis points, partially offset by 170 basis points of productivity and favorable mix. Coffee inflation and tariffs, net of pricing, were the single largest headwind, impacting gross margins by approximately 420 basis points in the fourth quarter and 350 basis points for the full year. Coffee prices nearly doubled from 2024 to 2025 and remain elevated due to weather-related yield declines and tariff-driven shifts in global supply. U.S. tariffs on coffee were fully removed in November, and improved harvest expectations have contributed to a recent price moderation. Arabica prices peaked near $3.75 in early January, and have since declined into the high $2 range, while the futures curve implies continued normalization through 2026 and 2027. We expect some residual impact from elevated coffee costs and previously capitalized tariffs to flow through inventory in 2026. However, pricing actions, productivity initiatives, and favorable mix are expected to offset those pressures and stabilize gross margins relative to 2025. Longer term, we remain confident in our ability to reach our 40% gross margin target. The path is driven primarily by structural levers within our control, including product and channel mix, trade efficiency, and supply chain productivity. The green coffee forward curve has recently shown downward pricing pressure which would accelerate progress. That said, reaching our long-term target does not rely on additional pricing action. Slide 17. Operating expenses increased 1% year over year on a reported basis. Excluding nonrecurring items related to our 2025 restructuring and certain legal expenses, operating expenses were lower by 7%. Marketing expense decreased 10%, reflecting lower nonworking spend and a reallocation towards programs more directly tied to revenue. Salaries, wages, and benefits were flat despite a 15% reduction in headcount, primarily due to the lapping of a $3,000,000 incentive compensation reduction in the prior year. General and administrative expenses increased 28% in the quarter and reflect a significant portion of these nonrecurring items. Excluding those items, general and administrative expenses decreased 25%. Fourth quarter performance demonstrates the operating leverage now embedded in the model as revenue improves against a more disciplined cost structure. Turning to the balance sheet. Through the equity offering completed in July, we repaid the outstanding balance of our asset-based lending facility and reduced total debt by more than $30,000,000 in 2025. We ended the year with $39,000,000 of debt outstanding, representing approximately 1.8 times net debt to 2025 adjusted EBITDA and approximately 1.4 times adjusted EBITDA based upon our 2026 guidance. At the end of the year, we had more than $50,000,000 of total liquidity, including cash on hand and available capacity under our credit facility. Cash used in operating activities was approximately $10,000,000 in 2025, with roughly $9,000,000 attributable to working capital normalization. We do not expect working capital to be a comparable use of cash in 2026. As previously disclosed, we received notice from the New York Stock Exchange regarding the minimum price requirement. The notice has no immediate impact on our listing, operations, or financial reporting obligations. We have the standard cure period and are focused on executing our business plan to regain compliance. Our focus remains on disciplined execution and driving long-term shareholder value. Moving to the outlook on Slide 19. In 2026, we expect revenue growth of at least 7% to approximately $425,000,000. This outlook reflects current visibility into demand trends, pricing already in market, and distribution gains that are secured and operationally in place while incorporating category volatility within our ready-to-drink portfolio. Our guidance is grounded in confirmed commercial drivers and does not assume incremental distribution wins or other actions that remain pending. As we continue executing against our 2026 priorities, we expect to incorporate incremental gains through our regular quarterly updates. From a quarterly cadence standpoint, we expect revenue dollars to build sequentially through the year, consistent with the progression experienced in 2025. In the first quarter, we expect revenue growth of at least 10% compared to 2025, reflecting current momentum in the business and the early year benefit of distribution gains implemented in late 2025. We expect gross margins in the range of 33% to 36% in 2026 compared to 34.6% in 2025. The range reflects continued execution progress and external variables that remain dynamic. We benefit from the annualized impact of pricing actions taken in 2025, continued productivity initiatives across our supply chain, and favorable channel and product mix. At the same time, coffee prices have moderated in recent months, but remain above the 2025 average cost, which limits the pace of our margin expansion. We also expect residual tariff impacts early in 2026 as inventory produced under prior tariff rates flows through cost of goods sold. In addition, we are making incremental trade and slotting investments to support distribution expansion, which will weigh modestly on gross margins as we scale into new doors. We expect at least 30% growth in EBITDA in 2026 compared to the $21,400,000 generated in 2025. The primary drivers of the growth are higher gross profit dollars from revenue expansion and a reduction in operating expenses. We expect operating expenses to decline year over year, driven largely by lower general and administrative expenses as cost savings actions implemented in 2025 continue to benefit us in 2026. Marketing expense is expected to grow in line with sales, while labor expense growth should remain muted. From a cadence standpoint, we expect EBITDA will remain second-half weighted. In 2025, approximately 15% of the full-year EBITDA was generated in the first half. In 2026, we expect the first half EBITDA to represent roughly one quarter to one third of the full year, with the balance generated in the back half of the year as revenue scales and leverage increases. While we are not providing formal cash flow guidance, converting revenue growth into higher profit margins and improved working capital efficiency is a core focus. We will continue to invest where appropriate to support growth, but at capital expenditure levels consistent with the prior year, we expect to be cash flow generative. We have simplified the model, strengthened our cost structure, and improved the underlying economics of our company. The actions we took in 2025 are translating to higher profitability, tighter expense discipline, and a stronger balance sheet entering 2026. We are carrying real momentum into the year, particularly in coffee. Pricing, distribution gains, and productivity initiatives are working together to expand gross profit dollars and improve returns on invested capital. At the same time, we are converting that growth into EBITDA expansion and operating cash flow, reinforcing financial flexibility. Our focus remains consistent: disciplined execution, operational efficiency across the entire income statement, structural efficiency within operating expenses, and thoughtful capital allocation. We believe that combination positions us to further strengthen the business and drive durable, profitable growth in 2026 and beyond. Operator, we are now ready for the Q&A session. Operator: Thank you. Our first question is from Sarang Vora with Telsey Advisory Group. Please proceed. Sarang Vora: Great. Thank you. And first of all, congratulations. It is good to see the business momentum coming back. My first question is on the coffee side. The land-and-expand strategy that you talked about seems to be really catching up. You are seeing the momentum in the business. One of the main drivers I feel is expansion of SKUs across your retail network. So can you help us understand, I see the average number of SKUs is about five to six right now across the retail doors. Can you help us understand where it is at some of the higher level, which retailers you see at the higher level penetration, and then any color you can share in terms of bagged coffee or some of the newer products like K-Cups or cold brew, how the performance of some of these other coffee products has been as well? Christopher Mondzelewski: Hey, Sarang. It is Chris. Thanks very much for the question. Yes, so our land-and-expand strategy is the core of our growth model, and it is working quite well. Just to reiterate, the strategy is to put two to three of our best items per segment, in bags and pods, and drive those to strong performance. Then as we move into that upper half of velocity with that particular retailer, generate shelf expansion off of that. To answer your question directly, we have absolutely seen the total number increase. We mentioned that in the upfront comments. We have nearly tripled our number. I am not going to give you specific retailer names, but if we think about a number of the retailers that launched well, our largest retailer, we have 20 items on shelf. That may not be a comparative across grocery, but in a number of our grocery retailers that launched shortly thereafter, we have 14 items, 12 items, and 8 items—those would be three examples of a national retailer and two large regional retailers. The reality is that we believe that continuing to drive items up into that 12 to 15 range is absolutely achievable for us. We have demonstrated that. To answer your final question on which items are performing well, it continues to be our core items that drive the highest velocities. We are going to continue to innovate and make sure that we provide items that go where we know consumers’ preferences are moving. We are not going to talk specifically about any of the innovation items that we are launching this year. They have not yet hit the shelf. But like every year, we are going to bring new news to our retailers. We believe heavily in driving new items in order to help drive that category expansion. Sarang Vora: That is great, and it is really good to see the momentum coming back on the coffee side. My second question is on the energy side. We are almost a year into the launch of the energy drinks. Can you share any lessons learned over the year, and also a little more color on the plans for 2026, like markets that you are trying to expand, flavor profiles, changes in SKUs? Any color you can share on the energy side would be helpful. Thank you. Christopher Mondzelewski: Sure. It was a great learning year for us. We were pleased with the first year of execution. As we have talked about, it was a regional launch position for us in the first year. We want to continue to be very careful that we do not put more resource against energy than our core coffee business with the kind of momentum we have in coffee. That is obviously the first dollar spent for us. We continue to believe in the potential of energy because of the size of that category and the dynamics of that category and, even more importantly, because nearly two thirds of our consumers are already drinking energy as part of their routine. So we know that it is a tight fit to our consumer base. To answer your question, in the first year we did a regional launch as we talked about. We had markets that were very successful for us where we were able to drive from three to five units on shelves at a time and see the velocities respond around that. We had other markets where we had less success. Not surprisingly, similar to any other CPG business, certainly businesses in the cold, where we get better placement, better distribution, and couple the marketing programs around that, we see the best success. The key piece for us is that we have seen markets with very high success and we have seen our retail chains with very high success. I am not going to say which ones; we have not given guidance on that. As we go into 2026, the plan very much revolves around that. Rather than saying we are going to continue to drive our ACV to a significantly higher level, which would cost us a lot more in marketing dollars to support that, we are going to keep a regional focus. We like to talk about the smile states of the U.S., which is where a lot of our brand strength is. I am not going to talk to the specific markets. We will continue to be in the regions that we do best in as BRC Inc., and we will focus with our partners KDP on very strong execution, building off of our learnings in 2025, and continue to evaluate what is the best overall model for us from a marketing and commercialization standpoint to drive success with that item. Again, we will be careful that we do not ever pull more resource than we want to from the coffee business. Coffee is core for us. Energy is an incredible opportunity for us that we want to continue to prepare for the future. Sarang Vora: That is great and good luck ahead. Thank you. Operator: Our next question is from Daniel Biolsi with Hedgeye. Please proceed. Daniel Biolsi: I was wondering if you could share what you expect lower coffee bean costs will impact for the industry prices on the shelf? What have you seen with your latest price increase? Matthew Amigh: Sure, Dan. This is Matt. What we are seeing right now is we are seeing that coffee nearly doubled over the last two years, and in 2025 we were sitting about $2.83, and in 2026 we expect it to increase slightly. We are seeing a pullback in the commodities over the last, I would say, 20 trading days, where the price per pound of coffee has gone down on average about 18% for the forward curve months. So we are seeing a moderation there. We have taken two price increases in 2025. One was in Q3 and then the second one just settled in late Q4, and both of those price increases were in the upper single-digit ranges. The consumer response to that is in line with expectations—relatively low elasticity, sitting less than a 0.5 elasticity factor. So everything is going according to plan with the price increases we see in market. We will continue to stay close to how the market forms, how our elasticities look, how trade promotion looks, and we will adjust as needed. Daniel Biolsi: Thank you. And then I know you guys think about this a lot more than most of us, but do the current actions by our military change your messaging or your priorities in terms of marketing during these times? Christopher Mondzelewski: No. The reality is that this brand, from its inception, when the founders first came up with Black Rifle, was always centered around veterans. They were at the time active in the military service, and we have always had veterans at the core of everything that we do when it comes to our give back to the community, which I talked about earlier, as well as how we market the brand. Obviously, all of the troops overseas are in our thoughts and prayers like every other out there, but it does not change anything we are doing. We have been focused on veterans from the very beginning, and times like this are just a great reminder to everyone in America as to why we need to be backing our veterans every single day because they are constantly put in harm's way. We all owe a real debt of gratitude to them for that. Daniel Biolsi: Thanks. Operator: There are no further questions at this time. I would like to hand the call back over to management for closing remarks. Christopher Mondzelewski: Let me close by saying we are focused on disciplined growth, continuing to expand our margins, and generating cash. The actions we have taken this year are foundational for the business as we enter 2026. We have very clear priorities, very measurable targets, and our brand is stronger than ever. Distribution is growing, and we have greater financial flexibility than at any other point in time in the company. Execution will continue to be our focus going forward. We appreciate everyone calling in, appreciate your continued support, and look forward to updating you next quarter. Operator: Thank you. This will conclude today's conference. You may disconnect at this time, and thank you for your participation.
Operator: Ladies and gentlemen, welcome to Best Buy Co., Inc.'s Fourth Quarter Fiscal 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. At that time, if you have a question, you will need to press star 1 on your phone. If you choose to be taken out of the question queue, please press star 1 again. As a reminder, this call is being recorded for playback and will be available by approximately 1 p.m. Eastern Time today. If you need assistance on the call at any time, please press star 0, and an operator will assist you. I will now turn the conference call over to Mollie O'Brien, Head of Investor Relations. Mollie O'Brien: Thank you, and good morning, everyone. Joining me on the call today are Corie Barry, our CEO, Matthew M. Bilunas, our Chief Financial and Strategy Officer, and Jason J. Bonfig, our Chief Customer, Product and Fulfillment Officer. During the call today, we will be discussing both GAAP and non-GAAP financial measures. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, and an explanation of why these non-GAAP financial measures are used, can be found in this morning's earnings release, which is available on our website, investors.bestbuy.com. Some of the statements we will make today are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may address the financial condition, business initiatives, growth plans, investments and expected performance of the company and are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the company's current earnings release and our most recent Form 10-Ks and subsequent 10-Qs for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. I will now turn the call over to Corie. Corie Barry: Good morning, everyone, and thank you for joining us. Today, we are reporting better-than-expected profitability for the fourth quarter. On revenue of $13,800,000,000 we delivered an adjusted operating income rate of 5% and adjusted earnings per share of $2.61, both of which are slightly up to last year. Our Q4 comparable sales were down 0.8% versus last year, within our guidance range for the quarter. Our data sources show our market share was at least flat pointing to slightly softer consumer demand for our industry during the holiday quarter. Our holiday customer demand patterns were also different than modeled despite sales event timing that was very similar to last year's. We saw softer-than-expected sales in November and December. We then experienced strong sales in the last two weeks of December and the January week of the quarter. And sales were negatively impacted by weather-induced store closures during the last. We were prepared for a promotional holiday, and the environment was even a bit more than we factored heading into the quarter. I'm proud of how our team strategically pivoted throughout the quarter in terms of marketing, promotionality, and labor. From a product category perspective, we delivered our eighth consecutive quarter of positive comparable sales in computing, driven by laptops, desktops, and accessories. In mobile phones, we delivered our fourth consecutive quarter of growth driven by our expanded partnerships and in-store operating model improvements with large carriers. We grew our gaming category revenue, but at a much slower rate than the previous two quarters as expected. We also saw strong growth in newer and emerging categories, like AI glasses, 3D printers, collectibles and toys, health rings, and PC gaming handhelds. These positive growth categories were offset by declines in home theater and appliances. We are pleased with the progress we have made in our ads and marketplace and both delivered positive contributions to gross profit rate in the quarter. We are also pleased with our customer experience metrics. Our relationship NPS was up materially year over year and the highest it has been in 11 consecutive quarters. We delivered significant year-over-year gains across all five of our most attributes, including helpful, empathetic, meeting tech needs like no other company can, value and ease. As we exited the year, we saw continued Five Star customer satisfaction gains in associate availability, product availability, and store appearance. For our online customers, we reached our fastest-ever fulfillment speeds for our fourth quarter with 70% of online purchases fulfilled within two days. As I step back and look at the full year, I am proud of what we have accomplished. First, we returned to positive comps and stabilized our share position while navigating a complex and often evolving tariff environment. We successfully launched and scaled our U.S. digital marketplace, onboarding more vendors than originally expected, and drastically increasing our available SKU count for our customers. We grew Best Buy Co., Inc. ads, while almost doubling the number of ad partners compared to the prior year. We were able to both make the necessary investments in our marketplace and ads initiatives and expand our enterprise operating margin through a combination of disciplined expense management and efficiency optimization efforts. We leveraged the use of new technology in many areas to elevate customer experience and drive efficiencies, including faster online shipping and delivery speeds and better customer support capabilities. We further strengthened our in-store customer experience by partnering with multiple key vendors to expand their investment in immersive merchandising areas as well as expert labor. And we remain committed to being a best place to work and our most recent employee engagement survey improved year over year ahead of industry benchmarks and we continue to have industry-leading retail employee retention rates. Finally, we returned $1,100,000,000 to investors in the form of dividends and share repurchases. I'm incredibly grateful for the hard work, dedication, and resourcefulness of more than 80,000 employees to achieve these results. Moving forward to fiscal 2027, we are excited about the momentum in our business. We also expect to continue to navigate a mixed macro environment. For the year, we are guiding comparable sales growth in the range of down 1% to up 1%. I'll highlight some key assumptions. Consistent with the past several quarters, we continue to see a consumer who is still spending, but is value-focused and attracted to sales moments. Importantly, while customers continue to be thoughtful about big ticket purchases, they are willing to spend on high price point products when they need to, when there is technology innovation. We do expect consumers to spend a portion of their higher tax refunds at Best Buy Co., Inc. concentrated in the first quarter. From a product category perspective, we are planning for continued growth in computing driven by industry momentum from replacement cycles, the end of support for Windows 10, and innovation driven by AI. We expect continued growth in mobile phones from the new carrier labor models and system enhancements we have implemented over the past year. And we expect continued growth in our newer emerging categories that I referenced earlier like AI glasses, 3D printers, collectibles and toys, health rings, and PC gaming handhelds. And we see opportunities to improve the sales trends in home theater from expanded store experiences, increased expert labor, and our role as the national retail launch partner for an exciting new technology RGB, in the middle of the year. As you are aware, the significantly increased demand for memory components is driving cost inflation and supply uncertainty, particularly in computing. We are partnering with our vendors to mitigate impacts on the business. We are focused on five major navigation themes. One, we are bringing in as much inventory as we can. We are also providing our vendors with a longer forecast horizon to better plan allocations across commercial and consumer segments and collaborate more effectively with memory partners. Two, regarding terms, we want to ensure that business and operational terms are situated to make Best Buy Co., Inc. a preferred partner in the eyes of our vendors during a constrained environment. Three, we are using our ability in computing to specify configurations to hit price points that match consumer budgets. Four, we are narrowing assortments to improve in stock where there may be constraints. And five, we are focused on educating customers on why now is still a good time to buy. Their current device may not be performing optimally, we have quality options for every budget, and they can get a better device today on the same budget as their last purchase, which may have been years ago. We have a number of tools to highlight, including trade-in, financing, refurbished products, and easy upgrade with Geek Squad. As we think about the impact on our fiscal 2027 outlook, the high end of our comparable sales guide reflects a more neutral impact as higher prices are offset by lower unit sales. At the low end of the guide, inventory is more constrained across a number of categories. Now I will talk about our multiyear strategy, which is consistent. We will continue strengthening our position in retail as a leading omnichannel destination for technology, while at the same time, scaling new profit streams. Our priorities and resource allocation philosophy remain consistent as we build upon the momentum from fiscal 2026. These are, one, drive omnichannel experiences that resonate with our customers, two, scale Best Buy Co., Inc. ads and marketplace, and three, drive efficiencies and identify cost reductions that are crucial to help fund investment capacity and offset pressures in our business. Let me provide some key details on initiatives across stores, digital assets, and our services offerings. Last year, we provided multiple examples of store refreshes and upgrades we implemented in partnership with our vendors, including Meta, Breville, SharkNinja, TCL, Hisense, and LG. We are expanding these experiences to yet more additional stores this year, demonstrating the value these are driving for our vendors and our customers. In addition, we are continuing to improve our stores' look and feel by using our square footage more strategically. For example, in approximately 70 stores, we will move computing to the center of the store. Consolidate space, and allocate open spaces to value-generating initiatives. Many of these open spaces will be filled with a much larger and more comprehensive assortment from Meta. In other stores, we are piloting either outlet sections or outdoor furniture from our Yardbird brand. In these cases, we are shifting from stand-alone locations to leveraging the space and traffic we already have. This year, we expect to have new domestic Best Buy Co., Inc. store growth for the first time in more than a decade. We plan to open six new stores to better meet demand in markets that have grown, including areas where we have not previously had a physical presence. We have created and tested a smaller store model that drives incremental revenue in these types of markets. Like the Bozeman store we opened last year, we expect to close only two Best Buy Co., Inc. stores as a result of our ongoing review of leases as they come up for renewal. We are pleased with the investments we have made in customer-facing labor over the past couple of years. We plan to keep our labor flat as a percentage of revenue, balancing the growth in dedicated specialized labor with more flexible and multipurpose resources. We expect the level of vendor-provided labor hours to grow again this year after growing 20% in the second half of last year. Together with our vendors, we provide in-person expert CE experiences for our customers that are unmatched in today's retail world. As you would expect, we are also focused on our digital experience. We have already begun to activate on ways to bring our products to life through AI platforms this year. First, we are partnering with OpenAI to give our customers a new way to explore and discover our products. We are among the early retailers to make it easier for our product catalog to be displayed on ChatGPT, creating a more seamless path to product inspiration. We are also an early ads partner and exploring more opportunities to enhance our shopping experience with OpenAI. In addition, we support Google on its new universal commerce protocol, a cross-industry standard that helps create a more seamless agentic shopping journey across the web. Using this universal commerce protocol, we are working with Google to build a new way for customers to purchase directly in AI mode in Google Search, and the Gemini app. We are also the first retail partner to launch a native checkout integration with Wizard, an AI-powered commerce platform. As agentic commerce matures, we want to serve our customers in new ways both on and off of platforms. That includes evolving bestbuy.com to be more agentic-friendly, and ensuring our site is ready for AI agents to browse and discover on behalf of our customers. Other fiscal 2027 online priorities include strengthening customer recognition and personalization, increasing app adoption and engagement, enhancing our new invite-only capability, and driving online conversion for categories like major appliances and TVs. Now I will discuss our services offerings, which have long been a key differentiator for Best Buy Co., Inc. To sustain our leadership, a priority for us this year is to reassess our Geek Squad services by simplifying our portfolio, while at the same time making our services accessible to more customers. The good news is we are making progress in simplifying our range of offerings with different price points to create customer choice. We are also planning to move beyond break-fix and product installation services to dive into experiential solutions that cater to a variety of evolving customer needs. Whether it is a simple product upgrade, or a full premium home installation, we will be there for our customers with speed, expertise, and convenience. We are continuing to prioritize our renowned Geek Squad agent support in home, in store, and virtually. At the same time, we are enhancing our digital and AI experiences. This dual approach allows customers to choose how they want to receive service, whether it is through direct interaction with an agent, or more autonomous digital solutions, empowering customers to get the support they need on their own terms. Our services are also instrumental to the growth of our Best Buy Co., Inc. business arm. Here, we focus on business segments like education, hospitality, builders, health care, and corporate enterprises. Product sales are concentrated in computing, home theater, and major appliances, and often paired with services, such as field installation and end-to-end product support services like device life cycle management. Our Best Buy Co., Inc. business team generated more than $1,100,000,000 in revenue in fiscal 2026, and we expect to generate a mid-single-digit sales growth rate again in fiscal 2027. Now I'd like to provide an update on our Best Buy Co., Inc. marketplace. First, we have been very pleased with the outcome and performance. Our customers are responding favorably too as sales ramped through the back half and represented approximately $300,000,000 in domestic GMV in the fourth quarter. Furthermore, our five-star ratings for third-party purchase experiences are consistent with that of first-party purchases. This outcome affirms that the team adopted the appropriate design principles to deliver a seamless customer experience regardless of whether the product is 1P or 3P. And customer return rates for marketplace items continue to be lower than our 1P return rates. These customers are taking advantage of the convenient return-to-store option for more than 80% of product returns. Top unit categories in Q4 included mobile phone accessories, computer accessories, movies, and small kitchen appliances, illustrating momentum and opportunity in what have traditionally been lower share categories for Best Buy Co., Inc. As a result, marketplace is driving unit market share growth. While we are still early in our journey, our 3P seller community remains highly motivated and excited by the initial performance. To date, we have enlisted over 1,100 sellers on Best Buy Co., Inc. marketplace, and over 90% of our sellers with an open storefront are experiencing sales in any given week. I would add that our store employees are equipped with the right tools to help customers get what they want even if we do not carry it ourselves, and are contributing to the marketplace GMV. Moving to Best Buy Co., Inc. ads. In fiscal 2026, our gross advertising collections were just over $900,000,000. This is up more than 7% versus last year. Today, these collections show up mostly as an offset to our cost of goods sold with a small amount flowing through revenue. In fiscal 2027, we anticipate growth of approximately 10%. By the end of fiscal 2026, we had 750 advertising partners, nearly doubling the count from last year. Most of this growth stemmed from marketplace third-party partners following our August launch. Additionally, our first-party partners are investing more, with an average annual investment up 16% year over year. Our on-site inventory mix was just over 40% last year, lower than many other retail media networks. On-site inventory drives a higher margin than off-site. So as we continue to create more on-site inventory and grow this mix, there is significant margin growth potential over time. Both ads and marketplace positively contributed to our gross profit rate in Q4 and we expect continued gross profit rate contribution this year. From an operating income rate perspective, expect a slight contribution this year due to ongoing investments in our technology stack, marketing, and headcount across our sales, operations, and technology teams. We expect fiscal 2027 to be the last major investment year, with more material operating income rate contribution coming in fiscal 2028 and fiscal 2029. In order to invest in initiatives like these that will bring long-term value and offset pressures in the business, our third long-standing business priority is crucial, and that is driving efficiencies and identifying cost reductions. There are many ways we realize these efficiencies: with technology and analytics, through ongoing vendor partnerships and vendor selection throughout the enterprise, and by modifying existing processes or customer offerings. In fiscal 2027, our key opportunity areas are supply chain, customer care, reverse logistics, and continued optimization of our health business. In summary, I'm pleased with the progress we made in fiscal 2026 and excited about what we expect to accomplish in fiscal 2027 as it relates to our multiyear strategy. We are deepening customer relationships and successfully strengthening our position in retail as a leading omnichannel destination for technology, while at the same time scaling new profit streams that we expect provide considerable benefit over time. I will now turn the call over to Matt. Matthew M. Bilunas: Good morning. Let me start with our fourth quarter performance compared to the expectations we shared last quarter. Enterprise comparable sales declined 0.8% and were on the lower end of our guidance range. Despite the softer sales, our adjusted operating income rate of 5% was better than planned and included slightly favorable rates for both gross profit and SG&A. I will now talk about our fourth quarter results versus last year. Enterprise revenue of $13,800,000,000 decreased 1% versus last year. Our adjusted operating income rate increased 10 basis points compared to last year, and our adjusted diluted earnings per share increased 1% to $2.61. By month, our enterprise comparable sales were down approximately 3% in November, before improving to 0.2% in December and up 0.4% in January. Our domestic segment revenue decreased 1.1% to $12,600,000,000 driven by a comparable sales decline of 0.8%. From a category standpoint, the largest contributors to comparable sales decline were home theater and appliances, which were partially offset by growth in computing and mobile phones. Our online revenue of $4,900,000,000 decreased 2.3% on a comparable basis and represented 39% of our domestic revenue. Our online comparable sales growth includes the net commission revenue earned from our third-party marketplace sellers. From an organic standpoint, the blended average sales price of our products was approximately flat to last year. International revenue of $1,200,000,000 increased 0.5% versus last year. The revenue increase was primarily driven by the favorable impact of foreign exchange rates, which was partially offset by a comparable sales decline of 1.3%. Our domestic gross profit rate of 20.9% was flat to last year. During the quarter, our gross profit rate benefited from increased collections from Best Buy Co., Inc. ads and growth in marketplace commissions. These items were offset by lower product margin rates, which were primarily driven by an unfavorable sales mix and increased promotions. Our international gross profit rate decreased 90 basis points to 20.5%. The lower gross profit rate was primarily due to lower product margin rates. Moving to SG&A, where our domestic adjusted SG&A decreased $36,000,000. This decrease was primarily driven by reduced compensation expenses, which included incentive compensation, and lower Best Buy Co., Inc. Health expenses. These items were partially offset by increased expenses related to marketplace and Best Buy Co., Inc. ads, including higher advertising and technology expenses. During fiscal 2026, total capital expenditures of $704,000,000 were essentially flat to fiscal 2025. During fiscal 2026, we returned $1,100,000,000 to shareholders through share repurchases and dividends. We remain committed to being a premium dividend payer and this morning announced that we are increasing our quarterly dividend to $0.96 per share, which is a 1% increase. This increase represents the thirteenth straight year we have raised our regular quarterly dividend. Moving on to our full year fiscal 2027 financial guidance, which is the following: revenue in the range of $41,200,000,000 to $42,100,000,000, comparable sales of down 1% to up 1%, an adjusted operating income rate of approximately 4.3% to 4.4%, an adjusted effective income tax rate of approximately 25.5%, adjusted diluted earnings per share of $6.30 to $6.60, capital expenditures of approximately $750,000,000, and lastly, we expect to spend approximately $300,000,000 on share repurchases. From a phasing standpoint, the repurchases are planned to occur primarily during the fourth quarter, resulting in our weighted average share count remaining near the levels at fiscal 2026 year-end. Next, I will cover some of the key working assumptions that support our guidance. Earlier, Corie provided context on our fiscal 2027 top line assumptions, so let me spend more time on the profitability outlook. We expect our gross profit rate to improve by approximately 30 basis points compared to the prior year due to growth from Best Buy Co., Inc. ads and our U.S. marketplace. Now moving to adjusted SG&A expectations, include the following puts and takes. SG&A is planned to increase in support of ads and marketplace, which includes advertising, technology, and employee compensation expense. We expect higher incentive compensation as we reset our performance target for the next year, with the high end of our guidance assuming an increase of $30,000,000 compared to fiscal 2026. Store payroll expenses are expected to increase at the high end of our revenue guidance, with minimal impacts from a rate perspective. Partially offsetting the previous items are expected to lower Best Buy Co., Inc. Health expenses. Lastly, the low end of our guidance reflects our plans to further reduce our variable expenses, including incentive compensation, to align with sales trends. Before I close, let me share a couple of comments specific to the first quarter. We expect our first quarter comparable sales growth to be approximately 1%. From a monthly phasing perspective, comparable sales were down approximately 1% in February and expected to increase in March and April. We expect our first quarter adjusted operating income rate to be approximately 3.9% with gross profit rate expansion being the primary driver of the 10 basis points of year-over-year improvement. I will now turn the call over to the operator for questions. Operator: We will now open for questions. At this time, if you would like to ask a question, press star, then the number 1 on your telephone keypad. To withdraw your question, simply press 1 again. Your first question comes from the line of Katharine Amanda McShane with Goldman Sachs. Please go ahead. Katharine Amanda McShane: Hi. This is Grace on for Kate. Thank you so much for taking our question. We were wondering in the case that product prices do increase due to the higher memory pricing, what that could look like, and what do margins look like across the different computing categories, like good, better, and best? Thank you. Matthew M. Bilunas: So overall for next year, our guide for gross profit is about 30 basis points increase year over year, which is primarily driven by both ads business and marketplace growing. The remaining parts of the gross profit rate are pretty neutral, even inclusive of the product margin rate. So for the year, product margin rate is going to be assumed to be pretty flat year over year. So within that context, there could be some categories, some pressure on margins because of memory cost. But overall, we would expect to be able to navigate based on the list of things that we talked about in our prepared remarks. The ability to manage some of that pressure that might exist. So overall, pretty neutral impact to product margin rates in total, but there could be unique areas within computing that might have some impact. Operator: Your next question comes from the line of Scot Ciccarelli with Truist Securities. Please go ahead. Scot Ciccarelli: Good morning, guys. Hope you are well. Two questions. First, can you talk about what you saw in the fourth quarter in big screen TV sales, especially as a big competitor was really aggressive in that category from what we could tell. And then secondly, I guess, a bit more open-ended, how should we think about the growth opportunities around Meta and Google Glasses and any more details on how you are partnering with those vendors in that specific category? Thanks. Jason J. Bonfig: Okay. Thanks for the question. From a TV perspective, both revenue and units were below expectations in Q4 from an industry perspective. We are actually happy with the way that we showed up from a positioning perspective, but there just was a little bit more softness than expected. But we are excited and optimistic as we move into next year, and there is a new technology trend Corie mentioned, as we get into the middle of the year. With RGB technology across all of our major suppliers, we do think that is going to drive a lot of demand. It is going to drive a lot of interest in our store. It is really something that you need to see in person, and we will be there with our vendors to make sure that we put that on display in the best way possible. From a Meta perspective and just AI glasses in general, it is a significant growth trend for us. It does show up in gaming when we talk about it. We do think we have the best relationship with vendor partners, and our relationship with Meta is phenomenal. The way that they show up in our stores and the way we have been able to bring their new products to market, and then even locations that are even more of a showcase where the way that we were able to represent and partner with them on the display product and bring that to market. There are other things happening from an AI glass perspective. There is a lot of noise at CES and we expect that to be even more products not only from the partners that we already do, but probably also from new partners as this continues to be a growth category for us. Corie Barry: Scot, strategically, just to build on that a bit, I think the idea of AI for the consumer is kind of a long tail space where we will have a unique advantage. Some of that we have already been leaning into, which is think about, like, enhancing existing technology. That is like Copilot+; it is AI in computing. It is AI in phone. It is our ability to explain that and bring it to market. Some of it is what Jason is hitting on and what you asked about, that lifestyle tech example. There will be lots of different ways we will see that. Interactive gaming, we will see it in glasses. You are going to see probably some reinvigorated categories, things like smart home where it is actually just going to get a lot smarter. There is a lot more use cases that you are going to see for consumers. And then, ultimately, I think there is the question of what I would call always-on AI support. So what is right now OpenAI, connected TVs, talk about AirPods with cameras, kind of this idea of how do all these platforms start to show up actually in hardware and our experiences. And our goal is, and this is our sweet spot, as this technology comes to life, we want to be that key partner for our vendors to really help explain it to customers. Operator: Thank you. Your next question comes from the line of Michael Lasser with UBS. Please go ahead. Michael Lasser: Morning. Thank you so much for taking my question. Do you think you have appropriately embedded enough margin flexibility in your guidance in order to compete effectively in the year ahead? It seems like the industry just gets a little bit more competitive each day and 30 basis points of gross margin expansion may not be sufficient in order to drive the top line. Thank you. Matthew M. Bilunas: I mean, I think we will obviously navigate the year as we know more. Michael, I think a couple points. Our space is always very competitive. If you think about just FY 2026, it was already a very promotional year. And on top of a high promotion year, we had a sales mix impact from the margin rates as well. I think, as you think about next year, we are certainly not expecting to not be promotional—probably a similar level of promotionality, but maybe in some quarters, a little less sales mix pressure potentially, which helps mitigate some of the potential product margin rates that might come with memory cost adjustments. So we will clearly navigate as best we can, but I think right now, we feel like we have appropriately built in the product rate pressure that we need to be competitive. Corie Barry: Two things I would add, Michael. We have made it very clear that we want to position ourselves to make sure we are driving particularly unit share. And I can see that happening for us as we come out of Q4. You can imagine we are trying to build in enough flexibility to be able to do that. Matt also hit on it in his prepared remarks. I did as well. This is where ads and marketplace are also very helpful to our model, especially on the gross profit side of things, because this is the fuel we are looking for to continue to be able to reinvest in the base business. So you have to remember, it is all those things put together that shows up in that gross profit expectation. Michael Lasser: Understood. Thank you very much. And it seems like your message this morning is, listen, we expect 2026 to be a bit more challenging year because of these memory shortage challenges but you will navigate through it appropriately. Can you anchor the market to a longer-term expectation? Is 2026 just a transition year? The company can get back to positive same-store sales growth at the mid of whatever you would expect in the year after that? And what would be the key driver of that? Because presumably, if memory shortages are going to persist for an extended period of time, and the industry landscape is not going to get any easier. Thank you very much. Corie Barry: If we take a step back, this is an industry that, let us go pre-COVID, was, let us call it, flattish to up single digits pretty consistently. And what that relied on was also a pretty consistent kind of replacement behavior by consumers and a consistent innovation arm from our vendor partners. And as long as there was kind of the innovation and the replacement that really sustained a pretty decent growth trajectory for the industry, then our job was to continue to maintain our position, if not grow our share position, in that industry. Obviously, there have been lots of puts and takes over the last six years. Lots of pull forward. Now what we are getting back into is an interesting situation. You called out some of that kind of mixed macro that we had also called out, whether it is the ongoing situation or whether it is memory. On the flip side, though, we also are starting to see more innovation and more—I am going to call it—replacement behaviors, especially in computing and even mobile than we have seen in some time. So I think for our fiscal 2027, calendar 2026, what we are trying to do is put all of that together and say, for the coming year, here is what we see. And you are right. Some of that may persist. But the good news is there is also some of that innovation and that replacement behavior that is an interesting countervailing wind to some of the mixed macro impacts that we talked about. So I still believe over time, over the longer term, this is a great industry where, trust me, the world's biggest companies are innovating to bring new products to market, especially with AI coming to life the way that it is. I think it is just how do you navigate some of the challenges we see in front of us. And the last thing I would say is this is a team that has proven they are quite good at navigating in partnership with the vendors, if you just think about the year we went through. So I have a lot of confidence in our ability to do that. Matthew M. Bilunas: The only thing I would add would be, on the guide for next year, clearly at the high end of our guide, we are factoring some level of memory cost impacting units, but we also potentially get the benefit on the ASP side too so that ASP potentially mitigates some of the unit declines on the higher end of any sort of outcome. And the low end, obviously, there could be a situation where you have more constraints just broadly within the computing industry that could bring it to the bottom of the guide. I would also say during the last couple years, we have seen that we have price points across computing in all of our areas. So to the extent that there are cost increases, what we have learned is that people come in with a budget, they look to buy a certain product. We always have something in a range of products that that customer wants. And so we are seeing some of that mitigate the potential impact of cost increases. We just proved it out over the last couple years with the tariff situation. Michael Lasser: Thank you very much, and good luck. Matthew M. Bilunas: Thank you. Operator: Your next question comes from the line of Brian Nagel with Oppenheimer. Please go ahead. Brian Nagel: Hi, good morning. So my first question, I guess, shorter-term in nature. Just as we look at fiscal Q1. I want to make sure I heard this correctly. So you said comps were down 1% in February, but you are planning for a plus 1% for the full fiscal quarter. What underpins that expected acceleration here through the balance of the quarter? Matthew M. Bilunas: Yeah. Thank you. We are expecting the full quarter to be about a 1% comp for Q1. In the quarter, we expect to see continued growth in computing, in gaming, in mobile phones. We also expect to see improved trends within the TV based on the vendor pads that we have added in the specialty labor and just making sure we are priced in the right spot. From a phasing perspective, like I said, we are seeing February down approximately 1%. There are a few unique things that impact the monthly phasing. First, we are, as Corie talked about in prepared remarks, expecting the benefit of tax refund spending. More of that is weighted towards the month of March and April for us than it is February. Secondly, there are actually a couple of more material phone launches timing shift from February to March. Those actually have a pretty significant impact to a certain single month's comp. So that phasing can account for a lot of that start to the quarter. And we expect other more important launches to kind of hit in the back half of the quarter as well. So that really kind of accounts for the majority of the phasing between February, March, and April. Brian Nagel: That is very helpful. I appreciate it. Then my second question, I think you mentioned tariffs. This is in response to Michael's question previously. I just want to hit harder on tariffs. Where are we right now as far as dealing with tariffs, mitigation efforts? How does anything with tariffs and what Best Buy Co., Inc. is doing to deal with them affect or impact the guidance you laid out for the current fiscal year? Corie Barry: Brian, thanks for the question. I am just going to start with it, and I always start this way, but I think it is important. Our number one focus is always our customers and meeting their budgets wherever they are. And our approach has then been to deliver the right assortments to match the customer needs and the budgets while we partner with our vendors to make sure that there is a good outcome for all of us. And I have to say I am really proud of the way the team has been navigating. I think right now where we are, the recent Supreme Court ruling led to a lower effective tariff rate for our products at this point. And at this point, we have not modeled major impacts to our year based on that. I think there is still a lot, a lot of moving pieces, and there is still a lot to be figured out. But I think what is important here, and you can see it even in our results, we gave a lot of the reasons why our industry is a bit different. Things like, this is a really highly promotional category. It is relatively low frequency, so it is not like you are comparing prices week on week on week. It is an always changing assortment with different components and features. Innovation tends to drive price points up, while older price points kind of decline. It is a global supply chain, so vendors are making decisions across the entire globe. And we have this immense depth of product at all the different price points. So whatever your budget is, when you come in, we are going to have something for you. And so while there have been lots of moving pieces at the total company level, we are not seeing our ASP—has actually been relatively flat is what we saw in Q4. And so I think what that means too is customers are able to find what matches their budget, and we continue to work with our vendor partners to do that. So we know there will continue to be some changes in the space. Jason J. Bonfig: I think the team has done a really nice job working with our vendor partners to make sure we show up for our customers. Brian Nagel: I appreciate it. Thank you for all the detail. Corie Barry: You bet. Thank you. Operator: Your next question comes from the line of Steven Zaccone with Citigroup. Please go ahead. Steven Zaccone: Hey. Good morning. Thanks very much for taking my questions. First one I wanted to ask was just how should we be thinking about the same-store sales cadence for the year? Would we expect every quarter to kind of be within the range? And then you gave the commentary on the memory impact, which is very helpful. Is there a cadence to be mindful of when it comes to ASPs and unit volumes just given the disruption? Matthew M. Bilunas: Yeah. I think, broadly, if I look at the year, clearly talking about about a 1% comp for Q1. We clearly have not guided the rest of the quarters. But if you think about where maybe the more opportunity for us on a comp is probably in Q1 and Q4, some of our stronger quarters last year were in Q2 and Q3, so that might be a space where you might see a little bit of a little bit lower comp than maybe Q1 and Q4 as we are looking at it today. I think in terms of the memory, I think we are already starting to see some costs, some prices go up because of the memory in some small parts of categories. So it has begun a little bit. Imagine that continues to kind of roll through as we move into the future, into the upcoming quarters. Hard to say exactly at what pace does it change ASPs, but we are seeing signs that some spots are actually starting to increase. Steven Zaccone: Okay. Thanks. The follow-up I had was you have given a lot of detail on the marketplace and Best Buy Co., Inc. ads. Thanks for that. As we think about the opportunity for the contribution to EBIT margin in next year and the out year, can this be a material driver that the business can get back closer to a 5% operating margin in time? Matthew M. Bilunas: Yeah. I mean, I think as we think about past this year, clearly, we believe strongly in these two initiatives and we were talking about how this year is still an investment year for both of those two different areas. But they are scaling pretty materially, and they are beginning to—you are seeing signs of it—adding to the gross profit rate. It is just taking a bit of SG&A investment the last year and then FY 2027 to kind of build into the different new areas to scale it. As we look beyond this year, we do expect both of them to not only add operating dollars to the bottom line, but also help us generate a better rate as we look forward. Now exactly how much, and where and when we get to that type of OI rate in total, cannot really say at this point, but we do believe it will be a great contributor to our ability to expand our operating rate in the future. And we will keep focused on scaling those two things in the right, responsible way and then continue to invest as we see fit to unlock that growth in the future years. Steven Zaccone: Okay. Thanks for the detail. Operator: Your next question comes from the line of Steven Paul Forbes with Guggenheim. Please go ahead. Steven Paul Forbes: Corie, maybe just following up on Michael's comment from before. You mentioned average sales price flat, I think, in 2025. Then you also talked about configuration changes in conjunction with the vendors to meet certain price points. If it is not enough, maybe could you just baseline the outlook for average sales price for the company as a whole in 2026? And if you can maybe just talk about computing in particular as we marry together all these elasticity concerns. Corie Barry: Do not I wish I had the perfect organic forecast for you. To be clear, ASPs were flat in Q4. They were actually kind of down a bit in some of the other quarters, up a bit, but that was a Q4 quote. In terms of what we see going forward, we are not going to guide based on organic because, again, the goal here is have as many different price point opportunities available for the customer. That is true across our assortment, whether it is television—back to the earlier question where we continue to play really strongly in large screen—whether that is computing, whether that is mobile phones. The goal here is to have as many price points as possible and then have customers opt into what they want. So it is not even as easy as, alright, if all the SKUs go up X percent, that is probably not how it is going to work because the customer might come in with a budget and they are not going to look at a certain SKU. They are just going to look at how do I fulfill that budget. And so what we are focused on is less about exactly how much does the ASP per item go up. What we are focused on is how do we work with the vendor partners to make sure we have as many different price point items available with the right and best configurations possible so people can opt into what is most important to them. Steven Paul Forbes: That is helpful clarity. And then just, I guess, the second question around vendor support. You mentioned vendor-sponsored labor hours up, I believe, 20%, and I think there are some concerns out there around just promotional support. So I do not know if we can just talk about the various sort of components of vendor support and if there are any factors where you anticipate change, promotional support maybe being one of focus for investors? Jason J. Bonfig: Yes. So thanks for the question. There are a couple of things. Our vendors continue to make more investments in Best Buy Co., Inc. That is in physical experiences in our store. There was a long list of vendors that continue to contribute and want to grow that presence. There has also been a significant uptick in the amount of vendor labor that is supported, and that does not even include the training that they do throughout the year with our labor in total. From a promotionality perspective, we are not seeing a dramatic change there. I think there is one adjustment that you see naturally happen, and you are probably seeing it in computing first, which is price increases are not the first thing that happens. The first thing that happens is promotions are pulled back a little bit, and that is not that there is less of an impact or less of a funding of promotions. That is that there is less promotions. And in computing, you have actually seen less pure cost increases and more of a general slight pullback in promotions from computing vendors, which is the first thing they will do under this memory situation. The second thing is that the cost changes will come through. That is really the only area where we have seen any difference, and it is not a difference in level of support to Best Buy Co., Inc. It is actually an industry difference in level of promotional aggressiveness in a particular category. And just to be clear, the 20% reference was 20% growth in labor in the second part of last year. We would expect vendor-provided labor to grow this year as well, but that 20% reference was specific to the back half of last year. Steven Paul Forbes: Appreciate that. Thank you. Jason J. Bonfig: Thank you. Operator: Your next question comes from the line of Simeon Gutman with Morgan Stanley. Please go ahead. Simeon Gutman: Hey. Good morning, guys. I am going to ask questions in one. So first, the positive comp trends in the first quarter, can you talk about the complexion? Is there any difference from the way the year ended? Then if you can merge that into thinking about the comp outlook for fiscal 2027 in totality. And then Matt, I know you mentioned promotionality. When we saw you in December, you talked about reserving the right to be more promotional if need be. So can you talk about how that tone progressed through Q4 and then the position you enter fiscal 2027? Thank you. Matthew M. Bilunas: Sure. Yeah. So as we enter Q1, we do expect Q1 to see growth in areas that are pretty consistent to what we had been seeing. Places like computing and gaming, we have not quite lapped Switch launched in Q2 of last year. Mobile phones we would expect to be a growth area for us as we look here into Q1. We do expect improved TV trends. That would be something that we would carry through the remainder of the year as well. And then, like I said, we have some ED timing shifts between the months here in Q1 between the—from the mobile phone launch and other product launches. So those carry as you get into the latter part of the year. Continue to expect computing to grow at the high end of that guide. At the low end, it would assume a level of constraints that we cannot foresee at the moment. That is supported by continued end of support for Windows 10 and improved use cases for AI and just general replacement cycle continued need. The growth in mobile phones will continue to be fueled this year through the new carrier labor models and system enhancements that we have implemented last year. Interesting as you look into this year too, there are a lot of newer emerging categories that we have talked about like AI glasses, 3D printers, collectibles, toys, health rings. Those are all small individually, but collectively, they are about—they are even more—they are about a half a point or more of our growth next year. They will add up to something that is very nice that could support our business. And like I said, improved TV trends as the year progresses. Like Corie mentioned earlier, we have not contemplated any changes related to the tariff news that we have had. But I think, again, building on continued momentum, we do expect GTA in the back half of the year to help us in the back half. The other thing I would note is gaming, I would expect to see gaming growth in Q1. We will be lapping that Switch launch in the mid part of the year. So you would see a little bit of a difference in sequence growth there for the gaming category. Corie Barry: As it relates to promotionality, we have been pretty clear and pretty consistent. Customers have been drawn to key value events. And what we have also been clear about is we will lean into those places in partnership with our vendors and make sure that we are competitive. And so I think to Matt's point and when you heard him laugh, we know that these key moments, whether it is holiday, whether it is Fourth of July, whether it is Super Bowl, those are the moments where customers are really in the marketplace, and we are going to lean into those. But we have lots of tools also in our arsenal to lean into those. We have done a nice job really working hard on our more strategically personalized promotional levers as we can see signals now that we use to try to reengage customers back into the brand. Those have been very effective. And so I think what we are trying to do is make sure that when the customer is in the marketplace for good value, we are there, and we are competitive, and we are using other tools like trade-in and refurbished product and outlets and financing to make sure that we have the very best values there for them. And it seems to be resonating. Simeon Gutman: Great. Thank you. Operator: Your next question comes from the line of Unknown Analyst with Wells Fargo. Please go ahead. Unknown Analyst: Hey. Good morning. So with the SG&A moving parts around vendor labor as well as investments, could you update us on your leverage point in 2027? And then as the investment cadence dials back in 2028, how does that impact your leverage point and incremental margins going forward? Matthew M. Bilunas: Yeah. I mean, I think what you have seen us be able to do as sales, broadly speaking, move from positive to negative, we have been able to adjust our SG&A in a responsive way to kind of mitigate the impact of wire rate to continue to lever on a relatively big fixed cost base that we have. And so you see us in those situations, we responsibly—now we will always measure and look at customer experience to make sure we are not doing anything that is damaging—but we will scale back. First thing that scales back is incentive compensation as you move down on the scale of sales performance and ROI performance. You remove a level of incentive compensation within the year, and that is certainly representative in our guide. So at the bottom end of our guide, we will probably remove about $100,000,000 of incentive compensation at the minus 1% sales guide. We also will responsibly move down in terms of store labor, marketing, and other variable expenses to make sure that we are putting in the right amount of SG&A to support the sales outlook that we see. So those are a couple of examples, and then you see other changes to supply chain cost. If .com comes up and down, it can impact your parcel cost and bad debt expense. So there are things that just naturally flex down, and then there are things that you just responsibly move down because you are trying to match what you see in terms of demand. And you have seen us be able to manage our sales when sales do go down in a pretty responsible way and to deliver an operating income outcome that is actually as good in many cases as what it would have been at a higher end of sales. Unknown Analyst: Got it. And then on the appliance category, you have had some challenges there. Curious any thoughts on the game plan for fiscal 2027 to return to share gain? And how should we think about the glide path towards returning to positive comps? Jason J. Bonfig: Yep. Thank you for the question. Appliances continues to be a tough environment. Obviously, home sales and remodels are down. So the vast majority of the market continues to be duress and replacement of something that has, you know, broken. It also has been very promotional, not necessarily promotional that has led to an increase in business. So we are watching very carefully with our vendor partners around what promotions are actually doing to drive the business in total. Because the market is shifting to more duress and has been duress for a very high percentage, we are focused on a couple of things. Investments from our vendor partners in more specialty-specific labor to appliances, which we think will be helpful in investing in that experience. Investing in the ability for customers to take an appliance with them if they would like to do that, which is something that customers are showing more interest in doing in particular stores. And then we are really, really focused on delivery speed because it is around something broke, I need to have it replaced in a relatively short amount of time, and making sure we have that core set of SKUs that customers are able to get as quickly as possible, and we are able to actually get it to them as fast, if not faster than our competitors. And those are really the areas that teams are focused on as we move into next year just based on where the market is. And then when it flips, obviously, we will be very focused on the other part of the market, which is more experience driven, more bundle, more, you know, upgrading, but we will make sure that we serve both those segments of customers and be very, very focused in the first part of the year on that speed component. Unknown Analyst: Got it. Thanks for the time. Corie Barry: Thank you. Operator: Your next question comes from the line of Jonathan Matuszewski with Jefferies. Please go ahead. Jonathan Matuszewski: Great. Good morning, Corie and Matt. Two questions. First one, you are in top-to-top meetings with vendors frequently. Do your supplier conversations reveal plans to slow the pace of innovation and product launches in 2026, given the memory chip shortage distraction? And my second question, there is conjecture that recent computing and smartphone category performance could be aided by a pull-forward in demand with consumer awareness of potentially higher prices ahead. Are you seeing any evidence that would support a thesis of pull-forward? Thank you. Jason J. Bonfig: Great questions. On the first one, we are not seeing from our vendor partners that would slow down innovation. In fact, when you have something like we have in front of us with memory, there is actually a large push to try to find other things that are very valuable from a feature and benefit perspective to customers that will continue to drive the growth in the individual category. So looking at actually other parts of technology in computing, it could be size of screen, quality of screen, some of the AI features, but really other things that will drive interest into the category and make up for some of the pressure that we are going to see from a memory perspective in total. So there is absolutely nothing that would indicate that. And then as far as the pull-forward, where possible, we will pull in inventory. But from a demand perspective, we have actually seen continued stability and growth. We talked about computing. We have grown for the last eight quarters, and in mobile phones, we have grown for the last four quarters. There is not anything that is indicating that customers are actually trying to pull forward. It is actually just demand into categories that we are actually seeing customers want to upgrade. Corie Barry: There is one more thing that I would want to add to that before closing the call. And that is the concept of rising memory or component cost or shortages is not something that is new to the industry. It is something that we have dealt with in peaks many times over the last 25 years. So to reinforce some of what Jason said, our vendor partners are really excellent at pivoting and thinking differently. And by the way, there is no vendor partner out there that does not want to also drive consumer demand and continue to make sure their products are front and leading. And so this is not a brand-new space. It is just, you know, one more, I think, set of features that we need to work through with our vendor partners. And with that, I think that was our last question. We thank you for joining us this morning, and we look forward to updating you on our results and our progress on our next call in May. Mollie O'Brien: Thank you, everyone. Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Scholar Rock Holding Corporation Fourth Quarter 2025 Financial Results and Business Update Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. You would then hear an automated message advising your hand is raised, and to withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Scholar Rock Holding Corporation. Please go ahead. Laura Ekas: Good morning. I am Laura Ekas, Vice President of Investor Relations at Scholar Rock Holding Corporation. With me today are David Hallal, Chairman and Chief Executive Officer; Akshay Vaishnaw, President of R&D; R. Keith Woods, Chief Operating Officer; and Vikas Sinha, Chief Financial Officer. During today's call, David will provide introductory remarks and a business update, Akshay will review our R&D progress, Keith will provide an update on our commercial readiness activities, and Vikas will provide a financial update. We will then open the call for questions. Before we begin, I would like to remind you that during this call, we will be making various statements about Scholar Rock Holding Corporation's expectations, plans, and prospects that constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Any forward-looking statements represent our views only as of today, and should not be relied upon as representing our views as of any future date. I encourage you to go to the Investors & Media section of our website for our most up-to-date SEC statements and filings. With that, I would like to turn the call over to David. David? David Hallal: Thank you, Laura, and good morning. Thanks to everyone for joining our fourth quarter and full year 2025 earnings call. Scholar Rock Holding Corporation is poised for a transformative year in 2026. Our priorities are clear, and we are executing with focus, discipline, and urgency as we seek to deliver the world's first muscle-targeted therapy to children and adults living with SMA while also laying the foundation to realize our ambition to develop life-transforming therapies for patients with additional rare and severe neuromuscular diseases globally. Our highest priority is to bring upitigramab to the SMA community as quickly as possible. We remain relentless on behalf of patients, and we are grateful that important progress continues to be made at a steady and rapid pace. Let me briefly summarize the key events that have occurred since our constructive and collaborative in-person Type A meeting in November. First, a week following our Type A meeting, the FDA issued a warning letter to Catalent in Indiana. Next, Novo Nordisk rapidly responded to the FDA by mid-December. Then following Novo's response, FDA reached out prior to the holidays to schedule an early Q1 meeting. That meeting has since taken place, and importantly, at that meeting, the FDA had no additional requests to Novo's remediation plan. And most recently, following the meeting with Novo, we were encouraged that the FDA sent a field team to Catalent, Indiana. At the conclusion of the visit, the FDA once again did not have any additional requests to Novo's remediation plan and stated to Novo that it intends to conduct a site reinspection following routine manufacturing activities, which has since resumed in late February. The cadence of activity since our Type A meeting reflects the shared understanding between us, the FDA, and Novo of the high unmet need in the SMA community and a shared sense of urgency to bring up ipilimumab to children and adults living with SMA as rapidly as possible. We are pleased with FDA's continued level of engagement, and we expect this momentum to continue. Our team is prepared to resubmit the ipilimumab BLA following a successful FDA reinspection of the Catalent, Indiana facility. We are reaffirming our guidance of BLA resubmission and U.S. launch following approval in 2026. Also, I am pleased that progress with a second fill-finish facility is moving quickly to build redundancy into our supply chain. Engineering runs at the facility are now underway, with additional manufacturing runs to follow. We anticipate filing a supplemental BLA for the second filer later this year. As we advance the regulatory process for upitigromab toward approval for patients with SMA in the U.S., our MAA review continues in Europe, and we expect a decision from the European Medicines Agency in mid-2026. With anticipated regulatory approvals in the U.S. and Europe this year, I would like to now turn to our Scholar Rock Holding Corporation commercial launch preparations. In the U.S., our team is deployed in the field and is educating potential prescribers and payers on the unmet need in SMA and the importance of targeting muscle, the principal organ affected in SMA, while also broadening and deepening relationships with the community. In Europe, we are building momentum with launch readiness activities and engaging with the SMA community. We continue to plan for a launch in the second half of the year beginning with Germany. Keith will discuss substantial progress we are making with commercial preparations and our disease awareness initiatives shortly. We know it is not a matter of if but when epitigramab will be approved for children and adults with SMA. We are emboldened by the commitment we have made to the more than 35,000 patients globally living with SMA who have received an SMN-targeted therapy. We are working expeditiously to deliver on our ambition that globally, any patient with SMA who can benefit from abitigromab should have access to opitigromab. This is indeed what we know well and what we do well, and we are confident in the significant opportunity that we have to serve patients with SMA. We are ready now more than ever to usher in the next era of innovation for the SMA community. I would like to now turn to the progress we are making in advancing our world-leading anti-myostatin pipeline. Enrollment and dosing continued in our Phase 2 OVAL study evaluating ipilimumab in infants and toddlers with SMA. Our IND for upitigromab in FSHD is cleared, and we are on track to initiate a robust, randomized, placebo-controlled Phase 2 study later this year. With regards to our subQ formulation of epitromab, we shared the promising results of a Phase 1 study comparing subQ and IV epitogromab in January. We expect to share our clinical and regulatory strategy for the program later this year. And finally, we continue to enroll and dose participants in our Phase 1 study for our highly innovative SRK four thirty nine myostatin inhibitor. We expect to have top-line data from this study in the second half of this year. Turning now to our balance sheet. We were pleased to have added we we are pleased to have ended 2025 with $368,000,000 in cash and cash equivalents. This includes $60,400,000 from the exercise of warrants that were set to expire on December 31. We continue to strengthen our financial position to drive our commercial and R&D priorities. And this morning, we are pleased to announce that we have secured a new debt facility for up to $550,000,000, which Vikas will discuss later in the call. 2026 will be a transformative year for Scholar Rock Holding Corporation. We are ready to resubmit our BLA for epitigramab at any moment. Our U.S. commercial team is working with urgency to prepare the market for the launch of the world's first and only muscle-targeted therapy for children and adults living with SMA. Beyond the U.S., the build-out of our 50-country operating platform is underway in Europe, with other regions and countries to follow. And our highly innovative world-leading anti-myostatin pipeline with epitogromab and SRK-four thirty nine is progressing with strong momentum. The opportunity ahead of us to serve patients with SMA and additional rare and severe neuromuscular diseases is significant. We remain steadfast in our strategy, confident in the determination of our team, and energized by the transformative potential of upitikramap and our broader pipeline. The road ahead is one of purpose, progress, and extraordinary possibility. I will now turn the call over to Akshay for an R&D update. Akshay? Akshay Vaishnaw: Thank you, David, and good morning, everybody. As David noted, we remain focused on our apritamab BLA registration to bring this important therapy to children and adults with SMA as rapidly as possible. Since being joined by Cure SMA and Novo at our in-person five-day meeting with FDA leadership in November, I have been pleased by the ongoing level of engagement and progress made on the patients. We expect this momentum to continue, and our team is prepared to resubmit the ipilimumab BLA following a successful FDA reinspection of the Kaplan, Indiana facility. I would now like to provide an update on the status of our second drill finish facility, which will strengthen supply continuity and support future commercial demand. As we shared late last year, we are working with a world-class U.S.-based manufacturing facility that has a proven track record of successful FDA and EMA site inspections. Importantly, engineering runs are now underway with additional manufacturing runs planned in Q2, and we continue to expect to submit a supplemental PA BLA with this facility later in 2026. Outside of the U.S., our ipilimumab MAA is progressing through the review process with the EMA, and we continue to anticipate the decision in the middle of this year. Turning to our pipeline, let me start with the Phase 2 OVAL trial evaluating ipilimumab in infants and toddlers under the age two. This trial is enrolling participants who have been treated with an SMN1-targeted gene therapy or who are receiving ongoing treatment with an SNN2-targeted therapy. The study is important for two reasons in particular. First, it is anticipated to expand the impact of the ipilimumab to the full spectrum of patients currently being treated for SMA, as this is the first time we are evaluating the use of opicumab in the organza-treated patients in a clinical trial setting. Second, we believe early intervention with upivimab could support muscle during the critical early development phase, complementing SMN target therapy that aims to preserve motor neuron. By promoting muscle growth on both motor neurons and muscle, muscles are still maturing, apivolumab has a unique opportunity to improve motor outcomes in the youngest patients with SMA. To ensure that no patients are left behind, we continue to enroll patients in this study and dosing long ago. Turning now to our next indication for ipilimumab, parsioscapular humeral muscular dystrophy, or FSHD. FSHD is a rare, devastating neuromuscular disease with significant unmet need. More than thirty thousand patients are diagnosed in the U.S. with Europe alone, and there are no approved therapies. FSHD is caused by dysregulation of DUX4, a protein that can cause muscle damage when inappropriately expressed. Symptoms usually begin in adolescence or early adulthood, with muscle weakness in the face and upper body, but FSHD can impact any muscle in the body. An estimated 20% of patients will become wheelchair dependent. We are prioritizing FSHD as the next indication for ipilimumab for three key reasons. First, there is significant unmet need in this population for a safe and effective therapy. Second, we have preclinical data from the gold-standard FlexFlow four mouse model that provides mechanistic rationale for a cogumab in FSHD. Using this mouse model showed that mystatin inhibition can produce robust increase in muscle mass, significant improvements in muscle force, and consistent gains in endurance after 28 days. Third, there are randomized studies in FSHD that suggest muscle mass can increase in hypercapacities to show functional benefit. For example, in studies of either rigorous physical therapy or treatment with anabolic agents, patients with FSHD demonstrated increases in lean mass muscle function. These data suggest that the oprimumab as a monotherapy may have the potential bring important benefit to FSHD patients. The FSHD IND is clear, and our next step is to conduct a robust, randomized, double-blind, placebo-controlled Phase 2 study that is expected to enroll 60 patients. The study, or FORGE, is on track to initiate in the middle of this year. We also continue to advance two additional programs in our world-leading anti inflammatory pipeline, a subQ formulation of pipigimod, and s r p four twenty nine. In our s r pipilimumab program, we showed some very exciting data from a Phase 1 study earlier this year. In that study, healthy volunteers received ipilimumab v epiva 100 or 800 mg subQ or 800 mg IV. The data demonstrated that 800 mg subQ resulted in an overlap pharmacodynamic profile with 800 IV. Accordingly, sub qpigramat appears to have favorable bioavailability with the pharmacodynamic profile comparable to IV administration. Additional development activities with subcu efiblimab are underway. We are planning engagements with U.S. and European regulators. Turning after SRP four through nine, we discovered by leveraging our work work leading expertise in targeting mystatin. Four three nine is a subcutaneously administered mystatin inhibitor binding to both pro and latent mystatin with high affinity and selectivity. We recently presented data demonstrating that four twenty nine is 10 times more potent than epinephrine. We have shown in nonhuman primate that four three nine changes in whole body lean map at doses as low as 0.3 mg/kg. We are very excited about this program, and dosing in our Phase 1 healthy volunteer study is well underway. We expect to have top-line data on the study in the second half of this year. In closing, we are executing with focused urgency and bring upivimab to children and adults with SMA whilst in parallel investing with discipline to advance our world-leading anti mastectomy pipeline. The strength of our data and the sustained momentum of our programs underpins our confidence that we can shape the future of treatment for patients living with rare neuromuscular diseases. I will now turn the call over to Keith to discuss our commercial launch preparations. Keith? R. Keith Woods: Thanks, Akshay, and good morning, everyone. As David noted, our team continues to operate with urgency as we prepare for the launch of opitigramab. Our commercial organization remains focused and disciplined, advancing the critical capabilities required to deliver a seamless launch and support patients from day one. Nearly a decade after the introduction of SMN-targeted therapies, the market continues to grow and now represents nearly $5,000,000,000 in global annual sales. However, while SMN-targeted therapies have brought much needed innovation, muscle strength and motor function remain the top unmet need, with 95% of patients continuing to experience persistent and progressive muscle weakness that limits function and independence. Additionally, three-quarters of neurologists believe multiple modalities are necessary to optimally treat patients with SMA. This data underscores the significant opportunity we have with epitigramab, the world's first muscle-targeted therapy. To this end, our U.S. customer-facing team is active in the field, focused on disease education programs that reinforce a broader understanding of SMA as a disease of the motor unit consisting of both the motor neuron and the muscle, which is the principal organ impacted by the disease. We continue to engage across approximately 140 SMA treatment centers, 2,600 prescribing physicians, and their multidisciplinary care teams throughout the U.S., and our SMA disease education efforts remain a core component of our work in the field. In parallel, we are strengthening and advancing the key elements of our commercial capabilities to ensure launch readiness. We have expanded our specialty pharmacy network to enhance SMA patient and caregiver convenience. SMA patients currently receiving an SMN-targeted therapy from a specialty pharmacy will be able to access epitogromab through that same specialty pharmacy. In addition, through our patient access partners, we have established a home infusion network of more than 10,000 affiliated nurses nationwide. We are also working to ensure we mitigate reimbursement and access bottlenecks. This includes preparations to launch our patient services program, which we have named Scholar Rock Supports. This program is designed to provide comprehensive and individualized support to patients, caregivers, and providers. In addition, we remain focused on patient engagement and community activation. In January, we launched the next phase of our disease awareness campaign, called Life Takes Muscle, aligned with our objective to deepen community awareness of the importance of targeting muscle. And finally, we continue to engage with payers, advancing discussions with national and key regional payers as well as Medicare and Medicaid. At U.S. approval and launch, I look forward to discussing our comprehensive SMA Patient Access Support Program in more detail. While we make substantial progress in preparing for the launch in the U.S., we are also advancing launch readiness across key European markets in anticipation of a mid-2026 EMA decision. In Germany, we have established local leadership, initiated our compassionate use program, and are progressing reimbursement planning to enable rapid access following approval. Across the broader region, we are advancing reimbursement dossiers in multiple countries, strengthening our distributor relationship, and we are building out our EMEA infrastructure to support future commercialization. In closing, we have invested thoughtfully to build the commercial foundation necessary to support a world-class launch, and we believe epitogromab is well positioned to play a central role in the next era of SMA care. Our team is prepared to move quickly upon approval and to deliver on our commitment to the SMA community, one patient, one caregiver, and one family at a time. With that, I will turn the call over to Vikas. Vikas? Vikas Sinha: Thank you, Keith. Our financial objectives for 2026 remain consistent. We are focused on supporting our commercial build to deliver a strong epididymumab launch, funding R&D activity to advance our pipeline and expand our leadership in the myostatin and muscle space, and continuing to evaluate opportunities to strengthen our balance sheet in a way that supports long-term shareholder value. In keeping with these objectives, I am pleased to provide our fourth quarter and full year financial results. For the fourth quarter, we reported $91,900,000 in operating expenses, which included $19,400,000 in non-cash stock-based compensation. Excluding stock-based compensation, operating expenses were $72,500,000. For the year ended 2025, we reported $384,600,000 in operating expenses, which included $75,600,000 in non-cash stock-based compensation. Excluding stock-based compensation, operating expenses were $309,000,000 for the year ended 2025. Turning to our balance sheet, we ended 2025 with $368,000,000 in cash and cash equivalents. During the fourth quarter, we strengthened our cash position, adding $60,400,000 from the exercise of a warrant that was set to expire on December 31. We continue to spend on our balance sheet and are pleased to announce today that we secured a new debt facility for up to $550,000,000 with Blue Oak Capital. This debt facility consists of four elements. First, upon closing, $100,000,000 was immediately available to us, which we have used to repay our prior $100,000,000 debt facility with Oxford Finance. Second, an additional $100,000,000 is available to us this quarter, which we expect to draw down by March 31. Then, following FDA approval of apecigumab, we have the option to draw up to $150,000,000 in additional capital. And lastly, we have an option for an additional incremental facility of up to $200,000,000 at the mutual consent of Scholar Rock Holding Corporation and Blue Oak. With that, the facility provides us with additional flexibility as we transition towards a global commercial space company while investing in our pipeline. In addition to the $150,000,000 available from the debt facility upon FDA approval of apritamab, we will look to monetize a priority review voucher to further strengthen our balance. Looking ahead, we continue to operate with a tight financial plan. Our prioritized investments remain focused on our abalizumab commercial launch readiness in the U.S. and Europe, strengthening our supply chain to support the pipeline and commercial demand for our digital map, and advancing our highly innovative clinical programs that Akshay discussed earlier in the call. With that, I will turn the call back to David. David? David Hallal: Thanks, Vikas. In closing, we remain focused on bringing ofitigramab, the world's first and only muscle-targeted treatment to improve motor function, to children and adults living with SMA as rapidly as possible. We are encouraged by the progress that has been made and by the continued momentum across our regulatory, clinical, and commercial priorities. With a strong foundation, clear strategic priorities, and a world-class team, we are well positioned to make 2026 a transformative year for Scholar Rock Holding Corporation as we continue to work with urgency on behalf of children and adults living with SMA. We look forward to updating you on our continued progress throughout the year, and with that, we will now open the line for questions. Operator: Thank you. Star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. We ask you please limit to one question. Our first question is going to come from Eric Thomas Schmidt with Cantor. Your line is open. Eric Thomas Schmidt: Thanks for a very comprehensive update. David, just to put a pin in it, is Novo now ready for reinspection, open for reinspection? And then assuming the reinspection does go, quote, well, what would trigger your resubmission? What do you need to see from that reinspection to be able to push the button on the refiling? Thank you. David Hallal: Thanks, Eric. So you know, we are gratified really since our Type A meeting in November with the shared sense of urgency and high priority that both FDA and Novo has has has made the remediation of the Catalent Indiana facility, and you got a sense from the call just the drumbeat of progress week after week, month after month. We like the high engagement we continue to see. And given the constructive meeting in early Q1 and then the following sites that that really the gating item now just is a reinspection follows these routine manufacturing activities as Novo moves into full-scale production. As far as you know, our trigger we would look for, obviously, a successful reinspection as you noted, and we are assuming that given the progress that has been made. And that would then trigger. We are at the ready to submit our BLA submission very, very quickly. But it really would be with you know, some level of confidence that it was a successful rate. Operator: And our next question will come from Tazeen Ahmad with Bank of America. Your line is open. Tazeen Ahmad: Hi, guys. Good morning. Thanks for taking my question. Not to belabor the point on timing here, but I know you are confident about the ability of Novo to resolve the issue. But in the event that you do have to revert to your backup facility, you have guided to a supplemental filing in the second half of the year. What would happen to timelines if that needed to be the primary filing? David Hallal: Thanks, Tazeen, very much. As I noted on the call, we are we are gratified in the rapid and steady progress that has been made, you know, between FDA and Novo. And we do think of and the importance of ipilimumab for the SMA community is key driver in this. Not the sole driver, but a key driver in this. I would say that we are pleased with how rapidly we are moving forward with an additional filer, and our assumption is whether or not it were to be a supplemental BLA, which is our plan, or whether or not we had to fall back. We have always looked at that as an back. Important effort on our part no matter what because we cannot control everything in this process. And we do not really believe that that timing would be altered tremendously in terms of if it were not an SBLA. So we thought about it. It is our plan that it will be an SBLA. That is the level of insight, information, and confidence that we have. But, nonetheless, we would be prepared to pivot should need be, on behalf of children and adults living with SMA. Operator: Thank you. And our next question comes from Tessa Thomas Romero with JPMorgan. Your line is open. Tessa Thomas Romero: Hey, guys. Thanks so much for taking the question this morning. So first one is, can you elaborate on what it meant that the FDA sent a field team? What was the purpose of that? And is that routine? And then the second one, just to loop back on sort of better understanding the next procedural steps post the reinspection and what the timelines could be there, will you get verbal communication or is written documentation what you will see similar to a normal inspection? Thanks. David Hallal: Yeah. Thanks, Tessa. It is a good question because certainly nothing has been completely ordinary about this process. And I do think what has created some level of extraordinary behavior with kind of a constant drumbeat of progress I think it was really set off by that in-person Type A meeting that we held with FDA and where there really was, with CURE SMA in attendance, with Novo in attendance, there was a shared, you know, sense of urgency to bring opitogramab to patients. And so while I cannot really comment on, you know, what was the overall sort of objective, we do think what it shows is, you know, for just weeks after a really constructive meeting with Novo in early Q1, where there were no new requests by the FDA of Novo into their remediation plan, we think it just continues to show high priority by the FDA to send a field team out to interact with the site and to indicate that, you know, after routine manufacturing activities, which have since recommenced at the facility, they would be in line for a reinspection. So overall, we just feel good about the drumbeat of progress here, and we are quite pleased, and we would expect, given this, you know, sort of rapid and steady pace that we have seen over these last three months, that anything else that follows, the timing of a reinspection, the timing of resubmission, that review, you know, hopefully, it continues to follow sort of this commitment that has been made to rapidly progress the epitogromab file so that we can deliver this drug to children and adults living with SMA. And we will certainly keep you apprised on that progress. Thank you. Operator: Thank you. And our next question comes from Mani Foroohar with Leerink. Your line is open. Mani Foroohar: Hey, guys. You have Ryan on for Mani. Thanks for taking our question, congrats on the update. Maybe just one sticking with the review. Kind of based off your latest conversations with the FDA, I am curious what your expectations are for a turnaround time following BLA submission to eventual approval. Are there any details still need to be worked out, label, etcetera, with regulators? And then maybe just as a second one on the pipeline, can you talk about the strategy for April? Is this something that you plan to keep in house, look for broader strategic options? Is it best suited in rare neuromuscular diseases, or potential broader application? Thanks. David Hallal: Thanks, Thanks, Brian. Regarding the timing, again, just to remind, you know, everybody tuning in today, in our CRL that we received last year, the sole approvability issue was the state of compliance at the Catalent, Indiana facility. So we are certainly very focused on working with FDA and Novo on that. As I noted earlier in the call, we would and we are planning, and we are ready to rapidly resubmit our BLA following successful reinspection. And, again, we would just point to without really being able to comment on timing, we would just kind of point to, you know, the evidence of the progress over these last three months and how attentive the FDA has been to remediating this facility and how focused Novo has been to really working with urgency as well, and we will keep you apprised on that timing. Regarding the pipeline at $4.39 auction, Yeah. $4.39, obviously, is a very important, exciting drug. It is a high potency antimyostatin antibody. Appears to us at least in the preclinical work to be about tenfold more potent. So could be a very low volume, small volume, infrequent administration type drug. So I think that creates very interesting and exciting possibilities in the neuromuscular space for us that at least at the current time, we think this is a scholar of the bioreactor, and we have no intentions of harm right there. But we will share further development plans after we get the top-line Phase 1 data rate. Operator: Thank you. Operator: And our next question is going to come from Kripa Devarakonda with Truist. Your line is open. Srikripa Devarakonda: Hey, guys. Thank you so much for taking my question. Time lines wise, not to be over the point, you expect you continue to expect inspection, BLA resubmission, U.S. launch, everything to happen in 2026. For the launch to be in 2026, can it still happen with the Class 2 submission? Our due diligence suggests this is most likely going to be a Class 2 submission. And in any of your recent conversations with the FDA, was there any hint or for a potential CNPV for epitogromat? Thank you. David Hallal: I did not get the last part of that, Kripa. Could you say any indication of commissioners— Srikripa Devarakonda: Commissioner’s priority voucher. David Hallal: Oh. The national priority voucher. The these are all very good questions, Kripa. And as you might imagine, we have thought about it all. Right? And we, with all of the information that we have and the progress that is made, we were pleased and confident to reaffirm the guidance that we provided today of a 2026 BLA resubmission and U.S. launch upon approval. We would certainly point to sort of this steady FDA prioritization and progress with Novo, you know, over these past weeks and months, and it remains, you know, very steady. And I think, like, we have thought about Class 1 versus Class 2, and what we have seen actually in our own sort of analysis of this, even when Class 2s are sort of granted, oftentimes, the decision is taken up before that six-month timeline. And, again, I am just reminding you that the sole approvability, you know, issue for us has been the status of the Catalan Indiana facility. And, you know, we are pretty we are planning for the resubmission to be happening once we have indication that it was a successful reinspection. So we will keep you apprised at that, but we certainly are, you know, very, very comfortable with the guidance that we have provided. And then regarding, like, the commissioners, sort of, I would just say that we are just staying in close communication with the FDA on all of our different initiatives and just keeping in the forefront the very high priority that exists with the SMA community in the United States to gain access to the world's first and only muscle-targeted treatment. And we look forward to continuing to keep you guys apprised on our regulatory progress there with FDA. Operator: Great. Thank you so much. Operator: Thank you. And our next question will come from Michael Yee with UBS. Your line is open. Michael Yee: Hey, guys. Good morning. I am not going to ask a submission question. Can you talk a little bit about the expectations for the label as it relates to either ambulatory or nonambulatory and with no issues regarding age subgrouping, given that you had what sounds like a very successful review process and only CMC was the outstanding part? How should we think about a broad label? And then a follow-up, assuming approval, for Vakaast, can you just remind us, given that your drug is a weight-based drug, how to think about the comparable pricing relative to other drugs and if models should reflect anything philosophically as it relates to the differences in how the drugs are administered? Thank you. David Hallal: Thanks, Michael. Akshay, on the label and then, you know, Keith on the weight-based element of the drug and price action. Akshay Vaishnaw: Yeah. Michael, you know, we were gratified by all the progress made during the original cycle. He had gone to a very advanced stage with the draft label, and the FDA had really worked hard to get to that. So with the cabin issue being the only outstanding issue, we have to split that it. Relatively straightforward to get aligned with the FDA on the final label after a BLA resubmission. Now all of that being said, the details ultimately, that is up to the FDA. But we know from the conversation leading up to the September date that kind of the guiding principles are what—excuse me—what the FDA has shown before in the SMA space, the trial design that supports the approval, that is important. Now if you note that the totality of that package, we have experienced with both nonambulatory and abulatory. We have experience with children two years and older. They have experience in patients on this decline and this in medicine. And so I think that these are important guiding factors. James also previously tended to look at the full applicability or not of the therapy hypothesis and the next of action of the drug to try and maximize getting these drugs in the terrible disease as many patients as possible. Now those are the kind of guiding principle. I think we have to waive the ultimate BLA resubmission and see where we end up. But we have been pleased so far with how straightforward we can get this approach. R. Keith Woods: Yeah. And then on price, you know, I guess, first of all, it is not really appropriate for us to comment on specifics at this stage. But I do promise you when we have approval and we have our launch call, we will get very specific about the pricing. But, Mike, as you mentioned, because it is weight-based dosing, you are going to see a range. So it is not going to just be one set price for all. But, look, when we think about pricing of lopidogrelimab, we think about three key factors. And it is the rarity and the severity of SMA, it is the progressive nature of the disease, and, you know, in combination with SMN-targeted therapies, our data from both TOPAZ and SAPPHIRE have just demonstrated compelling clinical benefits. So we will get into all of the specifics on pricing on the launch call. Operator: Thank you. Operator: Thank you. And our next question is going to come from Amy Lee with Jefferies. Amy Lee: Hi. Thanks so much for taking our question. So looking ahead to launch, what commercial analogs would you point us to as we think about the initial uptake and launch trajectory? And then maybe another one on subcu api. Do you think approval will require a full clinical study in SMA, a smaller bridging study, or primarily human factor studies? And if you could give us a timeline to market, that would be awesome. David Hallal: Thanks very much, Amy, and yeah, what I would say is that, you know, for sure, we have been pleased in our engagement with the patient community, the caregiver community, as well as, as Keith noted, neurologists’ appreciation that not only addressing the motor neuron component of the disease, but for the first time, to really be able to address directly the muscle component of the disease, which is a principal organ that is clinically impacted and affected by this disease. We sense that there is a lot of interest in accessing the drug. And that in and of itself could support, like, a very nice uptake at launch. I think what Keith and I have looked at, though, is this is essentially a Q4 week infusion. It will have a miscellaneous J code for some period of time. We know that there are payers, for example, Medicaid, that could be a little sluggish at launch. We recognize payers in and of themselves it is not a matter of if they reimburse, but sometimes it takes time to reimburse. And so we believe robust demand, but we think that will be met with initially some access speed bumps that could impact our launch curve. But overall, the long term that we see for opiticlimab in the U.S. and beyond we feel like is quite significant for us, and we are really looking forward to the eventual approval and then Keith and team launching a pitogram to the SMA community. With respect to your question on subcu and clinical regulatory strategy, I will hand that over to Akshay. Akshay Vaishnaw: Yeah. Thanks, David. So for subQ berivimab, what we have is very interesting and supportive data that the subQ route is viable, shows excellent bioavailability, and a pharmacodynamic profile. Now we know a lot about afliberumab in terms of PK/PD from our prior work, clearly IV administration. Obviously want to leverage that by saying, you know, this is a drug that is well characterized and studied by different administration. But if we can mimic the appropriate PK/PD, then there is no reason why it cannot be equally safe and effective. Now those are all discussions that we need to have with the FDA. The initial approval of the drug, of course, is very important. But subsequent to that, hope to get aligned with regulators on that approach. So, ultimately, we cannot guide the timelines today, but we are hoping you have progressive regulators. Formulate our final time with them. Discuss the path forward. Amy Lee: Great. Thank you. Operator: Thank you. And our next question will come from Jeff Meacham with Citigroup. Your line is open. Jeff Meacham: Good morning, guys. This is Jarway on for Jeff. Maybe I was thinking about the second fill finish facility. If you guys were to switch over to that one, would it completely derisk the supply chain from a U.S. and EU launch perspective? And then on the launch, what specific leading indicators of payer and physician readiness are you guys tracking? Maybe if you guys can give some color on that, it would be helpful. Thanks. David Hallal: Absolutely. I will start with the second vial, and then, Keith, you might need clarification on the second. Yes. Can you repeat the second question, please? Jeff Meacham: Yeah. Sure. What specific leading indicators are you guys paying attention to to indicate, you know, payer and physician readiness that you are tracking? David Hallal: Great. So second fill finish. We are really pleased with the progress we have been making. As I mentioned, you know, tech transfer commenced in Q4. Engineering runs are underway, and there are additional manufacturing runs to follow here in the very near term. So we are working urgently. Again, our assumption is this is going to be our second filer. We are going to submit an FBLA. Should we rely on this facility solely, we are confident that we would be derisking as well our U.S. and EU commercial opportunities. So we wanted to be very thoughtful in selecting the right second partner for fill finish, and we are gratified that we have done that. And, also, as I noted, really pleased with the progress that is being made at a very rapid pace. Keith? R. Keith Woods: Yeah. So first of all, when it comes to the payers, you know, we have been really pleased with the access that our team has been able to get. As I stated in the prepared remarks, to not just the big national payers, but also now regional payers and even some Medicare and Medicaid. While we have had more time, we have been able to have in-depth discussions with them, and our medical team has been able to go through the SAPPHIRE clinical data with them. The bottom line is, just as we have research, just as what has been shared in a lot of the Cure SMA data in some of our own markets, you know, neurologists and patients, they want more, and they need more. And that is why we understand three-quarters of these physicians already believe in multiple modalities to treat this—to treat SMA. Operator: Thank you. And our next question will come from Salvator Caruso with TD Cowen. Salvator Caruso: Hi. This is Salvator Caruso on behalf of Marc Alan Frahm at TD. Thank you for taking my question. Just one quick question that kind of crossed some Ts and dotted some Is. Regarding the status of the MAA review, will that market also be served by the Novo Catalent Indiana facility? And if so, has the EMA taken any action in response to the FDA inspection findings? David Hallal: I will start, and then I can hand it over to Akshay. There is a mutual recognition between both FDA and EMA. And so this steady and rapid progress we are making with FDA actually serves us very well for the current MAA review with regulators. And so it is very important that we continue to make this progress forward. As I noted, the continued remediation and eventual, you know, successful reinspection will really support our EMA decision near midyear. And then as I noted, if for some reason we were to rely on the second filer, that would also be very important. But for now, we are very excited with the rapid and steady progress that has been made. Akshay, anything— Akshay Vaishnaw: Yeah. You covered it, David. I think the other piece that we can close touch with with doing the policy with the—so that is really what it is that is important, and we all await those additional this action by which will obviously not take approvals. Salvator Caruso: Thank you. Operator: You. The next question will come from Etzer Darout with Barclays. Your line is open. Etzer Darout: Great. Thanks for taking the question. Just a couple for me. Has the FDA requested or could they request additional safety data that could extend review of epitogromab? And then on FHSD, just wondered would you be looking at any functional endpoints in the Phase 2 study that you are planning? And could this be a more appropriate indication for SRK nine longer term? Thank you. David Hallal: Thanks, Etzer. Yeah. It is a great comment, and we can remind you that the BLA resubmission will be a fairly rapid and small resubmission, but there would be an update to sort of our safety database, which was called out in our response letter from the FDA. Akshay can comment on that for FSHD, and then talk about any sort of functional outcome measures. Akshay Vaishnaw: Okay. Yeah. So we are in line with the FDA. And the budget meeting was useful in many regards, including that and both the which aspect of the safe take place needs to be updated. So that is all agreed to, and so we are ready and prepared with this BLA resubmission. So I do not see any brain issues there, but it is a good question, and, obviously, we should always provide the FDA with a latest safety understanding about which we will do. With respect to the FORGE Phase 2 study in FSHD, the primary endpoint will focus on increasing lead muscle volume measure very sensitive with both imaging techniques. But we will have home state environment treatment, which is a validated approach in FSHD, to understand the functional impact of any potential change in muscle mass. And we look forward, obviously, to those data too. Operator: Thank you. Thank you. And our next question will come from Evan Seigerman with BMO Capital Markets. Your line is open. Evan Seigerman: Hi. Malcolm Hoffman on for Evan. Thanks for taking our here. Thinking about the financials of the business. I know you mentioned the new debt facility secured with approvals U.S. and Europe coming this year. I just wanted to ask, how are you thinking about expectations for time to profitability, whether you anticipate any additional need for financing ahead of that profitability hinge point. Thanks. David Hallal: Thanks, Malcolm. Vikas? Vikas Sinha: Yep. Hi, Malcolm. You know, we have not given forward-looking guidance at all here, but, you know, we will follow most likely the normal rare disease kind of revenue trajectory, which leads you into very similar levels of profitability time frames of two to three years from launch. But, you know, it also depends on how our pipeline progresses during that time, and we will weigh into profitability versus investing into the future. But overall, looking at a fundamental principle of creating long-term shareholder value. Akshay Vaishnaw: Thanks, Vikas. Thanks, Malcolm. Operator: And our next question comes from Allison Bratzel with Piper Sandler. Your line is open. Allison Bratzel: Hey, good morning, guys. Thanks for taking the question. Just drilling down on some of the prior discussion around review timing. I know you have talked a lot about FDA's sense of urgency on ipilimumab. I guess, is there good precedent for FDA spending less than six months to review a Class 2 resubmission, and can you just clarify, does your guidance for commercial launch in '26 assume a Class 2 resubmission and the full six-month review? And then separately, just on OPAL, could you talk to what you are seeing on enrollment trends there and just, you know, what that tells you about the underlying awareness of opitigimod in the SMA community. Thanks. David Hallal: Thanks, Allison. Maybe I will just, you know, point out one example on the Class 2 not taking the full time, and I think it is important that we have been mentioned occasionally here during this current journey, with Regeneron. In a CRL in 2023 at the same facility, Regeneron did have a resubmission. I believe it was a Class 2 resubmission, and yet it was approved within, you know, essentially a sort of a 60-day window. And so but we have more examples than that. I just point to that. It is a little bit relevant given the fact that it was CRL, and it was the same facility. And I think it had to do with some assessment of the facility post an inspection. So I would just point your attention to that. Akshay Vaishnaw: Yeah. So yeah. Following up on that is what is my treatment for. The—the enrollment's going very well. I mean, I think the first thing say actually is people who get enrollment that very, like, knowledge and appreciation for a muscle-based approach in the patient community and the prescriber community. And Keith has spoken about fact is startlingly high and patients, families, and physicians are waiting the approval of this drug. And consistent with that, the stroke throughout the entire patient. They see the, you know, the possibilities age range and disease severity range. As a community and we have verified by the very nice progress we have had. I am not going to share details today, but, yes, we are seeing a good clip of enrollment and, yeah, as we get later into the year, we will clarify, you know, if the sort of comes into sight. But exactly when we have data and so forth. But are fairly consistent with knowledge of the drug in its potential. It is very good in. David Hallal: And, Allison, I would just add, as Akshay noted in the prepared remarks, we have a deep commitment to the SMA community, and I am really, really pleased that we are making sure no patients are left behind by opening up this under two study. So we are super excited to be doing this work in the youngest of patients with SMA. Operator: And the next question will come from Kalpit Patel with Wolfe Research. Your line is open. Kalpit Patel: Hey. This is Dugan on for Kalpit. Previous myostatin inhibitors and FSH increased muscle mass without meaningful functional improvement. You give some color on how eptigramab aims to address this historical hurdle and what clinically meaning functional improvement might be in the planned Phase 2? Akshay Vaishnaw: Sure. Yeah. So I think you are pointing to either drug that did not have a very clear and well validated mechanism of action and potency safety profile. The earlier generations of adenosinemia have a potency, the selectivity. Of drug that has been in our opinion. More importantly, another one is the another point you raised is the Exelon example. I just suspect. Exelon did a study in FSHD, and they reject low fee in one isolated muscle. Now one cannot expect that to result in global, you know, functional improvement. But we do know separately that globally applied strategies like intense physical therapy, or anabolic agents that increase muscle mass, such as those—mastectomy—or rather growth hormone and testosterone and other similar agents, that those kinds of patients clearly show an increase in muscle mass and also increase in functional capacity. So we incorporated contact myometric testing into the Phase 2 to evaluate changing muscle function. The primary approach, or the primary endpoint, obviously, is to document change in the muscle volume. But we look forward to getting those data, and that is a validated approach to that patient. And we will share the data. David Hallal: Thanks, Akshay. Operator: Thank you. I am showing no further questions at this time. This will conclude today's conference call. Thank you so much for participating, and you may now disconnect.
Operator: Thank you for standing by, and welcome to the On Holding AG Fourth Quarter and Full Year 2025 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad; to withdraw your question, press 1 again. Thank you. I would now like to turn the call over to Liv Radlinger, Head of Investor Relations. You may begin. Liv Radlinger: Good afternoon and good morning to our investor community. Thank you for joining On Holding AG’s 2025 Fourth Quarter Earnings Conference Call and webcast. With me today on the call are On’s Co-Chairman and Co-Founder, David Allemann, and CEO, Martin Hoffmann. Before we begin, we will briefly remind everyone that today’s call will contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect our current expectations and beliefs only and are subject to certain risks and uncertainties that could cause actual results to differ materially. Please refer to our 20-F filed with the SEC earlier this morning for a detailed discussion of such risks and uncertainties. We will further reference certain non-IFRS financial measures, such as adjusted EBITDA and adjusted EBITDA margin. These measures are not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS accounting standards. Please refer to today’s release for a reconciliation to the most comparable IFRS measures. We will begin with David, followed by Martin, leading through today’s prepared remarks, after which we are looking forward to opening the call for a Q&A session. With that, I am very happy to turn the call over to David. David Allemann: Good morning, everyone, and a very warm welcome from Knoe—this time, not to itself, but the New York Stock Exchange. Standing here always brings me back to the day where we rang the bell for our IPO almost five years ago. That moment was never just about becoming a public company; it was about sharing a dream that the brand built on innovation and design and human energy could grow into the most premium global sportswear brand. Looking at where we are today, I feel both proud and deeply grateful to the global communities who choose to move with us every day. At the beginning of 2025, we set ambitious expectations for strong, profitable growth. What followed went well beyond them. Demand for our brand accelerated faster than we had planned, and for the first time, sports brand On cleared the CHF 3.0 billion revenue hurdle in 2025. Sales grew 36% at constant currency; we delivered our highest ever gross profit and adjusted EBITDA margins. For me, this outperformance is deeply meaningful because it shows our premium strategy is working, and our elevated offer is resonating with consumers even stronger than anticipated. In fact, we see an acceleration in key areas. Let me zoom out, as this acceleration happens on the backdrop of a profound societal shift. The traditional leisure class is giving way to the movement class. Old signifiers of bells, sedentary comfort, and overconsumption are being replaced by desire for vitality. You see this shift in the declining sales of self-indulgent categories. Today, status is an investment in the self. Health is the new wealth; longevity is the ultimate luxury. For this new ageless athlete, sportswear has shifted from utility to identity, capturing a massive share of their life and their spending power. The traditional volume-driven sportswear model is simply not built to cap this discerning consumer. This societal shift has blown the market wide open for new generational premium brands like On. So we have to ask, what does the movement class demand from us? We see three defining answers driving our acceleration. First, relentless performance innovation. We do not just talk about innovation; we engineer it. In the past five years, we scaled our R&D team by 1,000%. Today, over 400 experts—sports scientists, robotic specialists, and AI engineers—operate out of our Zurich labs. It is all about performance and feel for the movement class. In 2025, our engineers have made several industry-changing innovation breakthroughs. On Labs in Zurich is home to the only advanced foam competence center outside of Asia, and thanks to this competitive advantage, we are the first brand able to combine structural engineering with super foams. The immediate result is the upcoming Cloud Surfer 3, which is 15% lighter, 20% softer, and provides 15% more energy in push-offs. Over the next couple of years, we will bring this technology to a wide range of almost everyday running shoes, making cutting-edge innovation accessible for many of our fans. But our crown jewel is LightSpray. We are completely rewriting the future of manufacturing by changing the very nature of how an upper is constructed. We are no longer building uppers; we are spraying them. A robotic arm spins a 1.5-kilometer continuous filament into a perfect-fit upper in exactly three minutes. We took 200 assembly steps and reduced them to one. It generates 75% less CO2, and the entire shoe weighs just 170 grams, making it one of the lightest elite super shoes ever to compete in a marathon. The proof is on the podium. Bearing the Cloudboom Strike LightSpray, Hellen Obiri did not just win the marathon in New York in November; she shattered a 22-year-old course record. And now we scale. Last week, we opened our newest LightSpray facility in Busan, South Korea, increasing our production capacity 30-fold compared to 2025. And later this month, we will scale this elite, recuperating technology to everyday runners everywhere with the launch of the LightSpray Cloudmonster 3 Hyper. Second, premium inspiration. For the movement class, movement is not just a workout; it is their identity. They are buying into a brand that intersects with fashion and the zeitgeist. We are not following trends; we are co-creating culture. Take our collaboration with Loewe, now in its fifth year. We just launched our eighth drop featuring the Cloudtilt Solo at $750. The consistent and strong demand we see at this premium price point is a profound validation of our premium pricing power. The global energy is electric. At Paris Fashion Week, our high-fashion collaborations soared with younger consumers from APAC to London. We are pushing the boundaries of what sportswear can be, like our highly sought-after ballerina shoe with SK Twix. And the ultimate cultural catalyst is Zendaya. We are shifting from a partnership to true co-creation, leading to our first fully co-created collection for Spring/Summer 2026. Expect an important moment from On x Zendaya and Academy Award-winning director Barry S—. Here is what matters to our long-term success: this cultural heat translates into undeniable revenue. We opened 18 new stores this past year. You see it in the queues outside our doors. The proof is in the hard numbers. Tokyo Ginza became a top-10 global store despite only opening in September. Sales rocketed into the top 10 in its first months. Our retail footprint will scale to close to 20 countries in the next few months. It proves that when you intersect clinical innovation with cultural relevance, the commercial results are extraordinary. A premium brand does not stop at the physical product. It defines the entire experience. That is why we are applying our Swiss engineering directly to our digital ecosystem. We recently deployed a conversational AI layer across our customer service platforms. This is not about processing returns; it is about having deep, personalized conversations with our community at massive scale. But this is just step one. We are building the digital engine for our future. Over the next few years, you are going to see this AI blueprint transform how we operate. It will elevate our premium experience and drive efficiency from the moment we design a shoe to how we run our global supply chain. Third, a complete expression of the brand from toe to head. Performance footwear will always be our anchor, but to truly serve this community, we are building a complete sportswear house. And the breakthrough is happening right now. In 2025, our apparel business delivered an incredible 76% net sales growth at constant currency, proving we can build a highly profitable multi-category business. We saw apparel share of sales climb across every single region and every single channel, driven primarily by our direct-to-consumer business. Our foundation is running, but the movement class lives in our gear long after the run is over. They demand our performance in the gym, on the streets, and across entirely new sports. We are capturing these everyday hours with female-focused innovations like our new SenseTech fabric. The ultimate proof for this multi-category power: tennis. Demand across all our apparel business was outstanding last year, and tennis was our fastest-growing category. This was fueled by extraordinary moments on the court, like Iga Swiatek winning Wimbledon and Ben Shelton taking the Masters 1000 in Toronto. But it is also combined with our off-court storytelling. By bringing Burna Boy into our tennis lifestyle brand, we are successfully redefining courtside space for a younger demographic. And we are taking the same youthful energies straight into the global padel boom. In January, we brought on the youngest world number one in history, Arturo Coello. Arturo is not just an athlete on our roster; he is a co-creator driving our padel-specific innovation. So what we have built, courtside, is a blueprint. Wherever sport and culture collide on a global stage, you can expect On to be there. Let me be clear. We are not just building a better performance footwear company. We are building a lasting premium house for the movement class. Our premium growth strategy is working, and our global momentum is accelerating. And our foundation for the future is broader and stronger than ever. With that, it is my great pleasure to hand the baton to our CEO, Martin, to walk you through the numbers and the details of a historic foundational year. Martin, please. Martin Hoffmann: Thank you, David. I am incredibly proud of what we achieved as a team in 2025. For the first time, On crossed the CHF 3.0 billion net sales mark, a milestone that in a single year matches our total sales from our first two full years as a public company combined. Growth reaccelerated. A 30% year-on-year growth rate on a reported basis and 35.6% at constant currency proves that today, On is the best version of itself it has ever been. Beyond the top line, our performance is anchored in operational health and power. We delivered a record gross profit margin of 62.8% and adjusted EBITDA margin of 18.8%, already exceeding our 2026 aspirations. Our cash flow generation strengthened further, lifting our cash position to more than CHF 1.0 billion. These results are the fuel for us to dream bigger and bolder than ever before. What stands out to me is the power of our vision to be the most premium global sportswear brand, writing our own playbook, growing the addressable market for premium performance. At the same time, this has created a powerful financial engine. Our premium positioning generates high gross margins, which we partially reinvest into product innovation, brand experience, and our culture and our team, which in turn fuels future growth and even greater profitability, strengthening this position while remaining the most authentic brand. And maintaining our defining operational excellence remains our North Star. Because we are so clear on who we are and where we are going, we were able to take a huge step forward as an organization. We expanded our reach meaningfully, with global awareness now approaching 30%, still leaving 70% untapped growth opportunity. We saw our communities responding. New fans are building full looks, basket sizes are growing, and, crucially, customers are choosing On at full price across every region. At the same time, we became a more integrated and focused operator, strengthening our operational backbone and elevating the platforms that support our long-term growth. This process is visible in the broad-based strengths we see across all regions and channels. Our D2C share increased globally to 41.8%, a rise of 110 basis points, reflecting our deepening direct connection with our fans. While maintaining strong momentum in the Americas, we saw a strategic acceleration across EMEA and APAC. The result is a more balanced regional distribution, providing a significantly broader base for our future expansion. We ended the year with a global footprint of 67 retail stores, representing a net addition of 18 locations since 2024. These premium brand hubs showcase our fullest assortment through an elevated aesthetic. Our focus on larger, high-impact spaces—with 2025 store openings nearly 40% bigger than our existing estate—is yielding exceptional results. Despite the relatively early stage of our retail rollout, these more experiential formats are driving further gains in our market-leading sales productivity, which increased by around 20% during the year. The resonance is evident across categories, with apparel and accessories now contributing 15% of our total retail net sales, with many flagship stores achieving an even higher share. Complementing this direct footprint, our select franchise and distributor partners operate 45 mono-brand stores within our wholesale business. With its superior margin profile and the highest average item value across all channels, our retail network has solidified its position as a strategic cornerstone of our premium growth strategy. Multi-category expansion remains a standout driver of our performance too. On a constant currency basis, apparel grew by 75.5% and accessories by 135.1%. Today, they now represent 7% of our total net sales, a meaningful increase of 190 basis points year over year. With the majority of these sales—over 60%—flowing through our high-margin D2C channels, this category growth is structurally improving our premium mix and overall business profitability. All of this is only possible through the passion of our nearly 4,000 team members globally—our countless partners, ambassadors, athletes, our fans—thank you all so much. On a personal note, this was my first year as sole CEO. Spending time with our teams and communities has only deepened my belief in our unique combination of ambition and humility. I am deeply grateful to our finance team for their support during this transition, and I am incredibly excited to welcome Frank Sluis as our new CFO in May. Frank’s global experience and shared values make him the perfect partner to help elevate On to the next level as we continue to chart our own course. Our Q4 results are a direct reflection of the strong momentum of the On brand globally. The final month of the year is always a true reflection of the work done in the preceding quarters. We held our discipline and our commitment to premium execution across all regions. Even during Black Friday and Cyber Monday, new customer acquisition was led by full-price purchases. Despite being less promotional, we outperformed our growth expectations. Net sales reached CHF 743.8 million, increasing 22.6% year on year and 30.6% at constant currency, significantly ahead of our updated guidance in November. Our direct-to-consumer channel delivered another outstanding quarter. Net sales reached CHF 360.6 million, growing 21.7% reported and 30% at constant currency—an impressive result on top of a very demanding prior-year comparison. Our globally coordinated holiday campaign amplified brand heat, attracted new customers, and drove high repeat engagement, while disciplined full-price execution was clearly visible across all regions. Our retail network continues to express the brand at its highest standards. During the quarter, recent openings including Tokyo Ginza, Madrid, Stanford, and our two Seoul locations performed strongly, with many exceeding expectations and ranking among top-performing locations in our store network. Across the existing fleet, productivity rose further, even as the network expanded, with particularly strong performances from stores in Paris, Miami, and Hong Kong. This sustained productivity growth reflects both the strength and the scalability of our retail strategy. Wholesale also delivered exceptional results, outperforming our expectations, driven by strong sell-through numbers and sustained demand from key accounts in the Americas and EMEA. Together with strong momentum across our distribution markets in South Asia, net sales reached CHF 383.2 million, increasing 23.4% year on year and 31.2% at constant currency. Looking across regions, the Americas delivered net sales of CHF 434.3 million, growing 12.8% reported and 21.3% at constant currency. Close to 50% of net sales were driven by our D2C channels. Even during the most promotional period of the year, our full-price execution held firm and demand remained strong. Within D2C, we saw particular strength in our core running franchises, which grew their share of sales by over five percentage points. Our performance in D2C was complemented by exceptional demand across wholesale, where our key account partners are leaning further into the brand, expanding space, elevating presentation, and driving strong sell-through. Europe, Middle East, and Africa maintained excellent trajectory, with net sales reaching CHF 183.0 million, increasing 24.2% year on year and 27.5% at constant currency. Growth was broad across markets and channels. Momentum in the German-speaking region built further into year-end, the UK remained very strong across all channels, and Southern Europe continued to scale rapidly. The opening of our first store with a distributor partner in Riyadh in November marked an important milestone and is already driving incredibly strong consumer response. Asia Pacific delivered another exceptional quarter, further solidifying its role as a key growth driver for the brand. Net sales reached CHF 126.5 million, increasing 70.8% reported and 85.1% at constant currency. We continue to see deep resonance and incredibly high demand across the entire region and in all channels. We saw outstanding results from our Double 11 execution in China. In December, we ranked top five on Tmall for footwear over $140. This momentum carried into a very strong Chinese New Year performance, with in-store traffic in China more than doubling relative to our baseline. During the holiday, we saw our highest productivity globally in two of our Hong Kong stores and a stellar performance in our recently opened Shenzhen flagship, our largest retail store in China. This location is capturing a high share of Gen Z consumers and delivering an over 20% apparel share. With Asia Pacific now surpassing the CHF 1.0 billion mark for the full year 2025, we are proving that scale and premium can and do go hand in hand. Across product categories, it is inspiring to see how we are earning our place across the full spectrum of our fans’ day, and that is happening not just on their feet, but on their bodies as well. Net sales from shoes reached CHF 687.3 million, increasing 20.8% reported and 28.8% at constant currency. Performance running maintains strong forward progress, supported by the Cloudsurfer franchise and the strong launch of the Cloudsurfer Max earlier in the year. We continue to strengthen our connection with both dedicated and everyday runners in Q4. Across other verticals, franchises such as Cloud, Cloudtilt, and The Roger also delivered excellent momentum. Apparel continues to become an increasingly important entry point into the brand. The share of new customers acquired through apparel grew from 6% to 10%. Net sales reached CHF 45.1 million, growing 38.3% reported and 46% at constant currency against a tough prior year comparative. Growth was particularly pronounced in D2C, where power-forward store concepts are delivering measurable improvements in key retail KPIs, including conversion. Performance running and training led growth, supported by strong reception of new court and courtside collections in performance tennis. Turning to profitability, we delivered another outstanding gross margin, reaching a new Q4 high of 63.9%. That is up 180 basis points year on year and materially ahead of our latest guidance. This result reflects our strategy at its best—an unwavering commitment to disciplined, full-price execution supported and strengthened by sustainable operating efficiencies. This powerful combination, alongside favorable foreign exchange dynamics, allowed us to fully absorb external pressures like higher US import tariffs and still expand our profitability. Clear proof of the strength of our execution. SG&A, excluding share-based compensation, was 50.9% of net sales, up 40 basis points year on year. This modest increase reflects a conscious and decisive choice. Our relentless focus on operational excellence is generating significant savings, particularly in distribution. We are strategically redeploying those savings to fuel our biggest growth drivers—our global retail expansion and brand building. This is a key tenet of our philosophy: our growth is self-funding. It demonstrates our commitment to scaling this discipline by delivering strong top line and bottom line growth. Moving to our balance sheet, our commitment to disciplined, high-impact growth is clear. We continue to demonstrate remarkable capital efficiency. In Q4, capital expenditure was CHF 28.6 million, representing 3.8% of net sales, up 50 basis points year on year, reflecting significant targeted investments in our retail expansion, innovative infrastructure, and supply chain capabilities. Our year-end inventory stood at CHF 419.8 million, with net working capital improving to 18.9% of net sales. As in prior quarters, the underlying volume of products grew faster than the reported value due to the negative currency translation. Volume growth is more aligned with our sales expectations for 2026. We are also very pleased with the composition of our inventory across all channels, putting us in a strong position ahead of our Q1 launches, Cloudrunner 3 and Cloudmonster 3. Driven by our strong profit and precise planning, we generated CHF 359.5 million operating cash flow in 2025 and ended the year with a milestone moment—crossing the CHF 1.0 billion mark in cash. This is the strongest cash position in our history, providing us with the power and flexibility to continue investing into our future. Now looking ahead, 2026 will be defined by our commitment to premium growth, by exciting brand moments, and a very strong product pipeline rooted in innovation and performance. As I mentioned earlier, our vision is powered by a unique financial engine. Our strong brand momentum combined with high gross profit margins allow us to dream bigger, accelerate product innovations, and reinvest into standout customer experiences and our culture while consistently delivering strong adjusted EBITDA growth. David highlighted the pinnacle projects that will reshape our industry, but I want to emphasize the operational groundwork behind them. Throughout 2025, our engineers and scientists laid the foundation for market-first advances in technology. With the upcoming launch of the Cloudsurfer 3 in the second half of the year, we will introduce a world first in foam development. The combination of our unique CloudTec engineering with the new Surreal foam delivers a step change in performance. We are also innovating in how we manufacture at scale. With the opening of our new LightSpray facility in South Korea last week, we increased our production capacity for this revolutionary technology. This moves LightSpray from a breakthrough concept to a meaningful commercial reality, starting with the Cloudmonster franchise. This trajectory of performance excellence is already visible in our recent launches and a strong start into 2026. The successful introduction of the Cloudrunner 3 in February reinforced our momentum. Furthermore, pre-launch activations for the Cloudmonster 3—one of our largest franchises—generated exceptional consumer engagement, for example, at a marathon in Tokyo. The strength of our now complete Fall/Winter 2026 order book, which exceeded our expectations, reflects high partner confidence in our product pipeline and our long-term trajectory. Apparel remains central to this evolution in 2026. We will deepen its performance credibility, bringing proprietary and innovative materials to more consumers and unlocking the women’s opportunity through refined studio and training collections. We will elevate our premium expression across all touchpoints, from higher-productivity retail flagships to more immersive brand worlds within our key wholesale partnerships. This disciplined scaling ensures that our growth remains both brand accretive and highly profitable. All of this builds the foundation of our continued journey of sustainable growth as we enter the final year of our three-year strategy, and it allows us to perform materially ahead of our 2026 growth and margin aspiration that we laid out almost three years ago at our Investor Day. In 2026, we expect net sales to grow at least 23% at constant currency. It is important to recognize that this now factors in a significantly higher base following our Q4 results and therefore represents a further elevation of our ambition, reflecting the compounding strength of the On brand as we continue to grow at an exceptional rate. Our continued outperformance has fundamentally shifted our trajectory, now implying a three-year constant-currency CAGR from 2023 to 2026 of at least 30.5%. The opportunities ahead are compelling, underpinned by the continued strength of demand we see across the entire business. We anticipate robust, high-quality growth to persist across all regions. Furthermore, our relentless innovation in footwear and apparel is engineered to drive an even more premium mix, leading to D2C outperforming wholesale. As part of this category expansion, we expect apparel to meaningfully outpace overall growth. This further elevation of our D2C share is a strategic catalyst. It allows us to expand our member base and engage more directly with our fans, leveraging the unique opportunities created by our ongoing investments in technology. By fostering deeper connections, we are positioned to achieve increased engagement, significantly higher repeat purchase rates, and ultimately stronger customer lifetime values. As we grow, we remain intentional about every step forward, ensuring we build a lasting premium community. We are navigating an exceptional currency environment. At current spot rates, we anticipate a reported net sales target of at least CHF 3.44 billion. These foreign exchange fluctuations do not affect the underlying health or strength of our business. Alongside the raise of our 2023 to 2026 top-line CAGR, we expect a full-year gross margin of at least 63%—above our 2025 result—despite the additional impact from tariffs. The sustained desirability of our brand, the continued expansion of our premium full-price offer, cumulative benefits of our operational efficiencies, and an ongoing shift towards our D2C channel, alongside some foreign exchange tailwind, are expected to drive new highs to our margin. As outlined in our last call, the combination of strong net sales growth and exceptional gross profit generation allows us to accomplish three strategic objectives simultaneously: offset material foreign exchange headwinds on our Swiss franc-heavy cost base; accelerate targeted investments into our brand, technology, and innovation pipeline; and elevate our profitability outlook for the year. We now expect an adjusted EBITDA margin in the range of 18.5% to 19%, significantly beyond the 18% target set at our Investor Day in 2023. We are confident that when we look back at 2026 in a year from now, we will be able to share that we have built the foundation for something much bigger, through our relentless innovations, incredible products, unique brand moments, but most importantly, through an even larger and more powerful team. With that, thank you to our investment community for your continued trust over the past year and as we look to the horizon. Operator, we are now ready to open the line for Q&A. Operator: Thank you. We will now begin the question-and-answer session. If you would like to withdraw your question, simply press 1 again. Your first question today comes from the line of Jonathan Komp from Baird. Your line is open. Jonathan Komp: Yeah, hi. Good afternoon. Thank you. Martin, could you talk a little bit more about your expectations for growth across regions at a high level for 2026? And maybe more specifically, when you look at North America, what are some of the key drivers that stand out to you? And how are your partners accepting some of the new innovation as they build out their assortments? Martin Hoffmann: Hi, John. Thanks for the question. The On brand is extremely hot in every part of the world, and I think if we look into 2026, we have clearly the strongest product pipeline in terms of innovation and performance that we ever had. We will redefine how a running shoe performs and feels. LightSpray is not just a manufacturing revolution; it is a revolution on how upper materials allow us to provide a new sensation for runners in terms of lightness and feel. With the Cloudmonster and the Cloudrunner, we are relaunching two of our three most important franchises in the category. You see the amazing success that we have with apparel as a growth engine on an ever-growing base. And then when it comes to our premium position, we are so clear on where we are and where we are going and how we are charting our own way. This is a global story. This is the momentum that we have all around the world. As a result, we are seeing a much broader demographic coming into the brand. The growth with the 15 to 35 is the strongest across all the demographics. And so we expect very strong growth rates in each of the regions. As we said, we expect a stronger growth rate in our D2C channel given the innovations and investments that we also made in technology and our expansion of owned retail. We had a good start into the year across all the different regions. We expect that the first half of the year is growing slightly higher than the full year. We leave some cushioning for the second half of the year. We indicated that we have a very strong order book, which puts us in a good position also for the second half to deliver additional growth. So I think the momentum that you have seen in our numbers in 2025 and especially also in Q4 just reflects the momentum of the brand. David Allemann: And, John, this is David. I believe you have been at The Running Event in San Antonio and have seen all the behind-the-scenes innovation that is coming. We are really also extremely excited at how the run specialty community is reacting to that. I think they voted us the most innovative and memorable booth at TRE. That probably speaks to the excitement, and you already see how we are winning share in running. This will continue with all the exciting innovation that comes from us in CloudTec, but also in super foams, and then of course in uppers and the whole manufacturing revolution in LightSpray. Jonathan Komp: That is great. Martin, David, thank you. Operator: Your next question comes from the line of Janine Stichter from BTIG. Your line is open. Janine Stichter: Hi, good morning. Thanks for taking my question. Just on the wholesale distribution, I think you said that you are in 40% to 50% of your major wholesale doors with your US partners. Wondering how you are thinking about expanding that this year. Do you see the opportunity to add more doors, or is it more shelf space and category-driven? And then just broadly, if you could give us some insights as to how you are planning global expansion this year. Thank you. Martin Hoffmann: Hi, Janine. Thanks for the question. I think the important way to look at this is we still have 50% opportunity to expand in basically all of the key accounts all around the world, and we are so laser-focused on growing our brand in a very premium, very durable, long-standing way. At the same time, the opportunity is right there. We could grow at a higher pace, but we are fully committed to elevating that customer experience and also driving a higher share of apparel sales in our key accounts. If you look further out, there are many opportunities to expand our product portfolio to then drive additional growth even on the same store base in the stores that we are in. While wholesale remains an incredibly important partner, as I said, we expect that our D2C channel continues to outgrow our wholesale channel, allowing us to deepen the direct relationship with our consumers and, at the same time, really showcase the brand in a more premium way, elevate our premium assortment, and reach new price points, like David alluded to with the Cloud Solo and the Loewe collections. I think what we are doing with the brand and the direction where we are going will allow us to grow comp stores, expand in new stores, and then drive incremental D2C share into the brand. Janine Stichter: Okay, great. Thanks so much. Operator: Your next question comes from the line of Anna Andreeva from Piper Sandler. Your line is open. Anna Andreeva: Great, thank you so much, and congrats, guys. Nice results. You mentioned coming into 2026 in a position of strength and pipeline of innovation, the best you have ever seen. Should we think strong momentum from the holiday is continuing so far into 2026? Just a little bit of color on that. And with the expectation for DTC to outperform wholesale again in 2026, just curious, can you talk about what kind of growth did you see in your database in 2025? And any color on the new customer adds, specifically with the younger consumer? Thank you so much. David Allemann: So, probably just talking to D2C and retail expansion. It is fantastic to see how our brand becomes really super multidimensional across regions, across channels, across product. Retail is a super important factor in that because, as the most premium global sports brand that we want to be, it is about really serving our consumer—this movement class that I have been speaking about—in a very premium way. We can do that in our D2C channel; we can especially also do it in our retail channels. That gives us the opportunity to present our product in the most exciting way. And so, how we are presenting apparel is very, very exciting to consumers. You also understand why now this becomes a very important entry point, especially also for our young consumer. Also, when it comes to basket adds, often it is the fastest way how consumers add additional items in apparel in our D2C channel. And, of course, the way how you can experience TriTech, SensTech, but then also all the new innovation in our footwear product, is very, very exciting in retail. Martin Hoffmann: This development goes hand in hand with being more attractive to a younger consumer group. Again, this is not a replacement; it is an additional consumer group that comes into the brand. At the same time, we know there is still a huge untapped opportunity with the younger male consumer that we are clearly going after in the near-term future. We expect the next drop of our co-created apparel products with Zendaya two months from now. Clearly, those are products that very strongly resonate with a younger female consumer. The Cloudsurfer—those are products that are skewing much stronger to the younger consumer. So this is an important pillar of growth. At the same time, as said, with all the innovation that comes in the running space, we clearly expect an acceleration of winning share on the key running grounds all around the world. Anna Andreeva: Terrific. Thank you, Martin. Operator: Your next question comes from the line of Unknown Analyst from Bank of America. Your line is open. Unknown Analyst: Yes, thank you very much. Good afternoon, gentlemen. Three questions from me. First, do you confirm that you will organize a CMD in the second half? And if yes, what do you think are the key investor questions that you want to address in this CMD? Secondly, you expect about a 10-point slowdown, if I am not wrong, of the organic growth rate for the group this year. It is pretty large. Can you tell us what regions and what categories do you expect will drive this drop? And lastly, on the LightSpray product, you highlighted how much lateral production capacity you are going to have this year with the South Korean opening. Can you give us an idea of the percentage of volume that will be under LightSpray in 2026 and in 2027 approximately, please. Martin Hoffmann: So, just on the Investor Day, we clearly will do an Investor Day to outline our big aspirations that we have for the years to come. We are currently looking into the dates. We are trending a bit more towards first quarter of next year. Also, given that Frank is just starting as the new CFO, I think it would be important to develop that journey together. So at the moment, we expect it more to be in early next year. David, you want to talk a bit about LightSpray? David Allemann: Yes. Hey, I mean, LightSpray is fast developing. 2024 was when we had proof of concept, Hellen Obiri winning the Boston Marathon; 2025 is when we really expanded with our athlete community. The Cloudboom Strike LS has been at the feet winning gold medals, world champion titles, and Hellen Obiri winning the New York Marathon. Now this is clearly the year where we are scaling. You have seen how we opened the 30-fold increase in terms of capacity, so going from thousands of shoes to hundreds of thousands of shoes, and so it really leads to the democratization of this technology, now also with the Cloudmonster 3 LightSpray coming along. So it is really broadening out. This is not just a product for athletes. This is really a product for the wide market, and if you have just seen how the Cloudboom Strike that we now made for the first time available to a broader user base, out in two weeks. So we are very, very positive about the momentum of this technology. Martin Hoffmann: And then when it comes to the rate by region, as said before, we expect strong momentum across all the different regions. Very clearly, the Americas is our strongest region, our largest region, and we will not be able to put out such a strong growth outlook without full confidence in that region. Asia Pacific had an amazing run, more than doubling quarter over quarter. I think the fact that this is now a CHF 500 million business—we also need to be realistic on the speed of growth and maintaining the premiumness of growth. So I think being more conscious on the growth rates here is just super important in the benefit of this multibillion opportunity that is there for the years to come. And we are super excited about Europe because the momentum there—from the UK to Southern Europe, but also the accelerated momentum in Central Europe—I think is huge. So, again, it is going to be a continuous story of strong growth across all the different regions and all product groups and channels. David Allemann: I think probably a last point: what is really important is we are building a brand not just for the next years, but for the next decade. We see incredible demand. You have just seen how our awareness lifted from 20% to 30%. So demand is incredible, but we are very, very disciplined in how we fill it, in terms of which channels we go, how we also add stores, how we add to our digital community, and how we also make sure that we build long-lasting franchises. Unknown Analyst: Okay, thank you. Thank you. Operator: Your next question comes from the line of Cristina Fernandez from Telsey Advisory Group. Your line is open. Cristina Fernandez: Hi, thanks for taking my question. I have two. I wanted to see if you could give more color on the 30% brand awareness you mentioned the brand has gotten to—how it differs by region and customer demographic, if you can share those details. And, two, on the gross margin for the year, should we expect a higher gross margin in the first half or better strength, just given your comment on the sales growth being better earlier in the year? Thank you. David Allemann: Hey, I mean, awareness is just through the roof. The good thing is there are also still 70% of people that do not know us, so there is a lot of potential as well. Of course, we are seeing in specific hubs even higher awareness. So this is the overall awareness number. But if you look at what we are going to build out this year, with an incredible first co-created partnership with Zendaya and an Academy Award-winning director doing that together with us, with all the partnerships that continue with Roger, with Loewe—so you can expect a lot of cultural relevance and heat that is going to continue to drive this awareness. Martin Hoffmann: And then on the gross margin, really, the strength in the gross margin is fundamental, and we expect this to be very strong throughout the whole year. Of course, Q4 was the highest D2C share we usually will see, or is expected to see, also the strongest gross margin. What really is a strength is deeply embedded in the business and will positively benefit each quarter. Of course, compared to last year, the strongest upsides are then in the first February. And very important, the guidance that we have given—the 63% and more—is still based on the tariff regime that we have seen before the Supreme Court ruling. So it is still embedded on the 20%. Now all our inventory, of course, is behind customs, so all customs changes always come in with a bit of a delay of two to three months. But if we are now seeing that the 15% or 10% incremental tariffs are becoming the new norm, there is even upside to the guidance that we have given. And then there are also no refunds embedded into our guidance at the moment, although this would come incremental and would just give us so many more opportunities to accelerate some of the strategic projects for the future. Operator: Your next question comes from the line of Aubrey Tianello from BNP Paribas. Your line is open. Aubrey Tianello: Hey, thanks for taking the questions. I would love to hear more about EBITDA margin, and specifically how we should be thinking about the distribution and G&A line items in your guidance for 2026, but also how these two line items should develop longer term beyond this year, especially after seeing some really nice leverage there in 4Q? Thanks. Martin Hoffmann: I think we really see the incredible work that the operations and supply chain team is doing there, together with our partners—continuing to automate our supply chain and driving efficiencies. We have seen a huge improvement on the distribution line this year, and we expect that there is more upside in the future. As we reiterated many times in the past, our focus is to drive incremental profitability in a very controlled way and to really reinvest into the brand, into building a much bigger business for the future while driving incremental profitability. If you look into Q4, you see how this is working out, and the ability that we had to reinvest into bigger brand stories into our holiday campaign clearly is driving the strong momentum and then also the positive outlook. We will continue to do this—really combining the strong profitability and increasing profitability with those reinvestments. Operator: Our last question comes from the line of Jay Sole from UBS Financial. Your line is open. Jay Sole: Great, thank you so much. David, my question is for you. You talked a lot about building a community on a global basis in multi-categories as well. Can you talk about how you think about the total size of the addressable market that you are going after given the community that you see, also maybe what market share you think you have of that total addressable market today and where you can go? And then maybe, Martin, just to follow up on gross margin: you talked about some efficiencies that are going to be positive drivers of gross margin in fiscal 2026. Can you outline what some of those efficiencies are? That would be helpful. David Allemann: Jay, thank you for the question. Let me probably zoom out here a little bit. I spoke about the movement class and that this is not just a trend, but it is really a societal shift. We believe that investing in oneself is becoming much more important, and we have seen that over the last 10–15 years, and we have been part of that story. Even if you look outside of our market—how you invest in yourself when it comes to travel, when it comes to food—just look at hotel prices or restaurant prices in the US and how this has been expanding 3x, 4x. So we feel there is a complete white space opening beyond how you traditionally think about the sportswear market. This is where we are tapping into. This is a huge growth opportunity, and we are best positioned to actually fill this demand because we are not just about utility, but we are very much about identity. You see that in the margins. You see it in the willingness of people to invest in our innovation, to invest into the cultural relevance of On, and now increasingly also to invest into toe to head, which is an additional growth opportunity for us—and you see the growth rates behind it. Martin Hoffmann: And then to the gross profit margin, really, the fundamental driver here is our premium position and, with that, the pricing power that we have. We were able to increase the average selling price of our products quite substantially, and this is not driven by price increases, but it is driven by the mix and the ability to bring the customer into higher price points as well, which links to the opportunity that David just mentioned. Besides that, you see that our inventory position is very strong, so we can fully focus on full-price sales. We made huge steps forward in planning our business, reducing the share of air freight, and we are still scaling. We are scaling with our factories, which also gives us additional opportunities to have a wider spread between purchase and selling price. Jay Sole: Got it. Thank you so much. Operator: And this concludes today’s conference call. Thank you for joining. You may now disconnect.
Operator: Greetings, and welcome to the Helios Technologies, Inc. Fourth Quarter Fiscal Year 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, as a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tania Almond, Vice President, Investor Relations and Corporate Communications. Thank you. You may begin. Tania Almond: Thank you, operator, and good day, everyone. Welcome to the Helios Technologies, Inc. Fourth Quarter 2025 Financial Results Conference Call. We issued a press release announcing our results yesterday afternoon. If you do not have that release, it is available on our website at hlio.com. You will also find slides there that will accompany our conversation today as well as our prepared remarks. Joining me today are Sean Bagan, President and Chief Executive Officer, and Jeremy Evans, our Executive Vice President, Chief Financial Officer. Sean will start the call with highlights from the fourth quarter and the full year, then Jeremy will review our financial results in detail and establish our 2026 outlook. Sean will come back with some closing remarks, and then we will open the call to your questions. As an additional reminder, we have our upcoming Investor Day taking place in sunny Sarasota, Florida, on Friday, March 20 for institutional investors and analysts. We are excited to be sharing our longer-term outlook and will have colleagues from our flagship businesses on hand demonstrating some of our products. We are also offering an optional manufacturing facility tour of the original Sun Hydraulics production location. It is just three weeks away, and our leadership team is excited to see everyone in person. Please reach out to me if you would like to RSVP. Now turning to slide two, you will find our safe harbor statement. As you may be aware, we will make some forward-looking statements during this presentation and the Q&A session. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from those presented today. These risks and uncertainties and other factors can be found in our annual report on Form 10-K for 2024 along with the upcoming 10-Ks to be filed with the Securities and Exchange Commission. These documents are on our website or at sec.gov. I will also point out that during today’s call, we will discuss some non-GAAP financial measures which we believe are useful in evaluating our performance. You should not consider the presentation of this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliations of comparable GAAP with non-GAAP measures in the tables that accompany today’s slides. Please reference slides three through five now. With that, it is my pleasure to turn the call over to Sean. Sean Bagan: Thanks, Tania, and welcome, everyone. We truly appreciate you joining us today and are pleased to have this opportunity to share the sustained Helios Technologies, Inc. team made in the fourth quarter, capping off what became a true turnaround year in 2025. Results finished ahead of recent expectations, with all businesses reporting quarterly sales and earnings growth, leading to full year sales growth for the first time in three years, while also delivering record free cash flow. This is my favorite time of year, the NCAA March Madness Tournament is right around the corner. Teams are competing for higher seeds that reflect their full body of work, and I see a clear parallel to our fiscal 2025 performance. As the year progressed, we strengthened our position, finishing it off with back-to-back quarters of year-over-year profitable sales growth. That is the equivalent of winning the first two rounds of the NCAA tournament. It builds confidence and momentum, but championships require sustained excellence. Sales and orders accelerated in the second half of the year, reflecting the increasing impact of our go-to-market initiatives and our industry-leading innovative products. In conjunction with the CONEXPO trade show this week, we are excited to begin the rollout of our next wave of products, and our plans for 2026 will be to continue that at an elevated pace. Throughout 2025, we overcame numerous challenges. At a macroeconomic level, the two most meaningful indicators for our Hydraulics segment are PMI and Industrial Production, both showing extended contraction for much of the year, meaning weaker factory output conditions overall here in the U.S., while globally regional differences existed with pockets of expansion. We are encouraged by some of the initial 2026 readings with both sentiment and actual production improving together. However, 2025 can best be characterized as slow and uneven and certainly not sustained growth. Additionally, we managed through other macro challenges presented by global tariffs, geopolitical uncertainty, and a weak consumer market. Despite all that, the results were the same. We controlled the things we could control, and we executed. I could not be prouder of our team, and I extend my sincere gratitude to each one of my colleagues. Fourth quarter sales exceeded our expectations, up 17% to $211 million, resulting in 4% growth for the full year to $839 million. On a pro forma basis, excluding the Custom Fluid Power, or CFP, divestiture, sales for the fourth quarter were up 29% and for the full year, up 6%. Our margins are strengthening and benefiting from the higher volume along with our operational excellence efforts and cost control measures. We have had four consecutive quarters of gross margin expansion. Adjusted EBITDA in the quarter was 20.1%, our second quarter in a row back in the twenties. Operationally, we had numerous accomplishments in 2025. First, we returned to growth by executing on our customer-centric go-to-market strategic initiative. We redirected internal resources to more fully engage with our customers as well as accelerated the cadence of new product launches. This was reflected in the number of meaningful product launches in 2025 for both segments. We expanded our offerings with higher value solutions that complement existing products and represent a natural extension of our customers’ existing purchases. We believe our strategy to develop high-value, mission-critical, ruggedized solutions for our customers in niche applications gives us a competitive edge. Second, we took decisive action to optimize our portfolio. With the CFP divestiture, we removed Sun Hydraulics from owning the distribution business in Australia, reverting to our core and what we are best at: designing, developing, and manufacturing manifolds, cartridge valves, and integrated packages. Further, we are aligning our go-to-market approach in the Australian market with the rest of the business by leveraging an exclusive agreement with the buyer, Questus Group, to provide distribution and fulfillment services for Sun Hydraulics products in Australia. This fosters a partnership where each party’s success contributes to the other’s advancement. We also acted on our centralized engineering team, the Helios Center of Engineering Excellence operation, and reallocated engineering resources back into our core businesses. Continuous portfolio evaluation will be standard work for us moving forward. We introduced a new share repurchase program in 2025, and repurchased 1% of the company’s outstanding shares throughout the year. This share buyback model as a form of shareholder return marks the first for the company. Importantly, we continued our longstanding practice of paying cash dividends, which we have done for 116 consecutive quarters, or over 28 years. Finally, we fortified our leadership team in 2025. I was formally named President and CEO, Billy Aldridge was promoted to President of the Electronics segment, and Jeremy Evans was promoted to Chief Financial Officer. With Rick Martich and Matteo Arduini leading the two large businesses in the Hydraulics segment, supported by a fortified executive leadership team at the Helios Technologies, Inc. level, we now have our full leadership team in place to harness our collective energy and create the momentum to drive us forward. This makes us even more confident regarding our expectations for 2026 and beyond. Before I turn the call over to Jeremy to provide the details regarding our financial results, I want to share how pleased I am that he is now officially in the CFO seat. When Jeremy and I joined forces with the Helios Technologies, Inc. leadership team, we committed to building a predictable, performance-driven culture. Achieving or exceeding our forward quarterly guidance for nine consecutive quarters demonstrates the operational rigor and accountability that now define our team. Jeremy, over to you. Jeremy Evans: Thank you, Sean, and good day, everyone. It is an honor to report to you today in my new role as Chief Financial Officer. As many of you know, I have been with Helios Technologies, Inc. for the past two years in a finance leadership role. I am excited to continue partnering with Sean, Tania, our leadership team, our board, and the broader global Helios Technologies, Inc. family as we execute our strategy, build on our culture of accountability, and stay focused on delivering consistent and predictable performance. As I review our fourth quarter and full year results, please refer to slides six through nine. Fourth quarter sales were $211 million, up 17% compared with $180 million in the prior year period, and above the expectations we laid out on our third quarter call. We divested CFP at the September, so the fourth quarter is more comparable on a pro forma basis. Excluding the $16 million in CFP sales in last year’s fourth quarter, sales for the quarter were up 29% year over year. Growth was broad-based, driven by both segments, with Hydraulics sales up 10% and Electronics up 31%. On a pro forma basis, Hydraulics grew 27%. There was strength in all regions when normalizing APAC sales for the impact of the CFP divestiture. 2025 full year sales were $839 million, an increase of just over 4%. Sales were up 6% on a pro forma basis. As Sean mentioned, this marks our return to top-line growth after a multiyear period of declines and reflects the progress we have made on our go-to-market initiatives and the stabilization we have seen in some of our end markets. Higher sales and improved absorption drove gross profit up 31% in the quarter to $71 million, and gross margin expanded 350 basis points to 33.6%. In addition to higher volumes, we had the contributions of improved mix and ongoing productivity and cost actions, which were partially offset by residual tariff impacts. For the full year, gross profit also increased at a faster pace than sales, and was up 7.5% to $271 million. Gross margin was 32.3%, an increase of 100 basis points from 2024. Our margin profile also benefited from the CFP divestiture. While its profitability had been measurably improved over the years under Helios Technologies, Inc. ownership, it was nevertheless a drag on consolidated margins. Fourth quarter operating income nearly doubled over the prior year period, and operating margin expanded 480 basis points to 12.2%, demonstrating the operating leverage inherent in the business. For the year, operating income was down 19%, primarily as a result of the goodwill impairment charge taken in the third quarter related to iPROD product development. On a non-GAAP basis, adjusted operating margin in the quarter was 16.4%, up 310 basis points year over year. For the full year, non-GAAP operating margin was 15.4%, up 20 basis points over 2024. Our effective tax rates for the quarter and year were 22.7% and 22.5%, respectively, reflecting the income mix in our various tax jurisdictions. Diluted EPS in the quarter was $0.58, up over four times the prior year period. I should point out that we had a $5.4 million one-time benefit in net interest expense related to an interest rate swap that was originally due for maturity this quarter, dating back to our refinancing actions in June 2024. Diluted non-GAAP EPS was $0.81, an increase of 145%, reflecting our strong operating performance. For the full year, diluted EPS increased 24% to $1.45, and diluted non-GAAP EPS of $2.56 increased 22%. Adjusted EBITDA margin was 20.1% in the fourth quarter, up 270 basis points over the prior year. Improved profitability reflects the impact of the volume increase as well as the many actions taken during the year to streamline the business and focus on driving profitable sales. For the full year, adjusted EBITDA totaled $161 million, up 4% over the year-ago period, and EBITDA margin of 19.2% was flat with last year, net of the tariff impacts. Turning to the segments, please refer to slide 10. As I noted earlier, Hydraulics reported robust 27% sales growth for the quarter on a pro forma basis. By end market, we saw demand in mobile applications being driven by construction markets across all regions. Early signs of recovery in agriculture continue, as sales to the ag market were up from the prior year for the second quarter in a row. More robust activity in Europe and China is driving demand for faster ag-focused applications. Hydraulics gross profit in the quarter grew 27% year over year, and gross margin expanded 440 basis points to 34.1% driven by better fixed cost leverage on higher volume, lower direct cost as a percentage of sales due to ongoing productivity initiatives, and the impact of the CFP divestiture. Segment SG&A expenses in the quarter increased $1.3 million, or 7%, primarily reflecting higher wages and benefits as well as investments in R&D, but improved more than 50 basis points as a percentage of sales. Turning to Electronics on slide 11. Electronics sales in the quarter were up 31% year over year. We saw continued strength in the recreational space with a particular customer that is realizing meaningful growth in its market. Industrial and mobile end markets have also been solid with persistent demand for construction equipment to address the large amounts of infrastructure spend primarily in the U.S., but also in Europe. Health and wellness grew year over year as well. There are still pockets of volatility in consumer-exposed demand, particularly in the recreational marine markets. Electronics gross profit in the quarter was up 40% and gross margin expanded 220 basis points, primarily driven by higher volumes and a more favorable segment mix. SG&A expenses increased $3.3 million, mainly due to higher wages and benefits, but improved over 100 basis points as a percentage of sales. Operating income increased 76% to $9.5 million, and operating margin expanded 330 basis points on strong operating leverage. On slide 12, you will see that we had record cash generation from operations of $46 million for the quarter, delivering a record $127 million of cash from operations for the year. We had our second consecutive year of record free cash flow as well. It is worth noting that our working capital reduction efforts have paid off and contributed to the record cash flow. Our more structured approach to inventory management, receivables collection, and payables optimization have resulted in another year improving our cash conversion cycle. Flipping to slide 13, you will see we used the cash generated, along with the proceeds received from the divestiture of our CFP business at the end of the third quarter, to pay down $82 million in debt this year. As a result, we ended 2025 with a net debt to EBITDA leverage ratio of 1.8 times, a level that has not been achieved since 2022, on a reported pro forma basis. We hit another key milestone in the quarter: our available liquidity has surpassed our total debt. We have sufficient liquidity to execute on our growth plans and to return cash to our shareholders. We also continued our long history of returning capital to shareholders with our 116th consecutive quarterly dividend in January, and initiated repurchasing shares under our authorized buyback program that we established in 2025. We repurchased 80,000 shares during the quarter, increasing our year-to-date total to 330,000 shares at an aggregate cost of $13.6 million. Slide 14 summarizes my previous comments reflecting how we did on the financial priorities that we established for 2025. Across the board, our team successfully delivered results in each category. Slide 15 reflects our new financial priorities as we enter 2026 that align with how we plan to turn the opportunities we see in front of us into financial results. First, execute on our growth plan by winning share from our growing sales funnels through continued product innovation. Second, expand gross margins by driving productivity and leveraging our global footprint and capacity. Third, maintain earnings momentum by building on a strong foundation and aligning SG&A investments with our sales growth. Fourth, optimize capital allocation by investing in organic growth and driving sustainable shareholder returns. With these priorities guiding us, we are committed to focused execution to deliver expanded earnings and long-term value creation in 2026 and beyond. Turning to our outlook on slide sixteen and seventeen, for the first quarter of 2026, we expect sales to be in the range of $218 million to $223 million, up 22% over last year’s first quarter at the midpoint on a pro forma basis excluding the CFP divestiture. We expect consolidated adjusted EBITDA margin to be in the range of 19.5% to 20.5%, up over 250 basis points at the midpoint, and diluted non-GAAP EPS of $0.65 to $0.70 per share, up 53% at the midpoint. For the full year, we expect net sales will be in the range of $820 million to $860 million compared with $839 million as reported in 2025, or $792 million on a pro forma basis excluding the CFP divestiture. This implies 6% growth over 2025 on a pro forma basis at the midpoint, driven primarily by volume growth in our core platforms and the continued ramp of recent commercial wins. At the segment level for the full year, we expect Hydraulics net sales in the range of $510 million to $530 million, up approximately 5% at the midpoint on a pro forma basis. For Electronics, we project net sales in the range of $310 million to $330 million, up 7% at the midpoint. As you will notice, based on how we expect the year to start relative to our full year guide, we expect 2026 to have much stronger year-over-year growth rates in the first half based on the timing of the end market recoveries and our current visibility on customer order flow. We expect 2026 adjusted EBITDA margin will be in the range of 19.5% to 21%, reflecting continued gross margin expansion, operating expense discipline, and the full-year benefit of our portfolio and footprint actions. We expect diluted non-GAAP EPS in the range of $2.60 to $2.90, or 7% growth at the midpoint. As a reminder, fiscal year 2025 diluted non-GAAP EPS included a benefit from a $5.4 million interest rate swap. We believe we have a sound strategy built to drive sustainable growth, expand profitability, and unlock greater value for our shareholders. The resilience and execution of our global teams have positioned us well for what comes next, with slides eighteen and nineteen. With that, I will turn the call back to Sean for his closing remarks. Sean Bagan: Thanks, Jeremy. As I step back and reflect on where we have been and where we are headed, I am incredibly energized by the opportunities in front of us. We entered 2025 with a clear plan and a commitment to enhance discipline. Today, we are operating with greater precision, accountability, and focus. And it shows. Across our key focus areas, the Helios Technologies, Inc. team executed. We strengthened our go-to-market structure and institutionalized the cadence that drives funnel development, cross-selling, and pipeline management. We protected and grew our base business, capturing greater wallet share and driving organic growth. We improved profitability through prudent cost management and operational efficiencies. We continued investing in innovation and accelerated new product launches to support our long-term market leadership. We developed our talent, ensuring the right people are in the right seats to power our next chapter. And we sharpened our capital allocation strategy by divesting a non-core asset, reducing our debt, driving working capital improvement, and enacting a new share repurchase program. Simply put, we are building a stronger, more resilient, and more scalable Helios Technologies, Inc. The progress this year has been remarkable, but what excites me more is that we are just getting started. Investments we are making today are fueling the next chapter of performance. We are defining a new standard, and we intend to keep raising that bar. As we enter 2026, our key focus areas reflect the natural evolution of the foundation we built in 2025. We are advancing our strategic framework through focused execution of our plan while sharpening our go-to-market engine to convert funnel growth into consistent new business wins. We are institutionalizing innovation with more rigorous NPI processes, driving earlier and more impactful product launches. At the same time, we are deepening our commitment to operational excellence, strengthening organizational development, and embedding a return on invested capital mindset more rigorously into every capital allocation decision. Together, these priorities position Helios Technologies, Inc. to execute with discipline, scale with confidence, and elevate performance to the next level. In the NCAA March Madness tournament, you do not win championships in the first weekend, but you prove you belong. Two consecutive quarters of strong performance is our version of advancing to the Sweet 16. It reflects tenacity, resilience, and a team that knows how to perform under pressure. We like our momentum, and we are focused on sustaining it. I am more confident than ever in our strategy, our team, and our ability to deliver sustainable growth and increasing earnings power. The leadership team and I look forward to unveiling the CORE 2030 strategy on March 20. This strategy will define the next chapter of growth and outline our vision for Helios Technologies, Inc.’s future. We hope you can join us to hear more. The future for Helios Technologies, Inc. is bright, and we are deeply committed to long-term value creation for our shareholders. Thank you for your continued engagement and support. With that, let us open the lines for Q&A, please. Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Tomo Sano with J.P. Morgan. Proceed with your question. Tomo Sano: Hello, everyone. My first question is while full Q results were pretty strong and first quarter guidance is also strong, but the full year outlook appears more cautious for the second half. We understand there may be high comparables or conservativeness, but are the benefits from go-to-market initiatives or new product launches fully reflected in your guidance in the second half? And could you elaborate on the key assumptions for the second half and the potential for upside? Thank you. Sean Bagan: Good morning, Tomo. Thank you. Yes. And first, I want to thank you for learning more about our company and initiating coverage here in the fourth quarter of last year. We really appreciate it, and are very excited to partner with you moving forward, telling our company story. So when we set out our guidance for the full year, we put a range of $820 million to $860 million. That $860 million at the top end would be a plus 9%. We do believe carrying that momentum from 2025 into 2026 is real. We look at stronger order trends that we are seeing and our existing order backlog that help us inform Q1, particularly given that we released earnings so late here in the week in the fiscal year last year. And so we feel very good about the trajectory here to start the year. As we get to the back half, certainly as you referenced, we are going to lap tougher comps. We feel that 2025 is very strong. And so if we see sustained order volumes that we have seen for the last ten months of increasing orders year over year, we do believe we can get to that top end of the range. But there is certainly a lot of uncertainty as well in the world, and challenges that we are seeing brewing, whether it is with what is going on in the Middle East right now, some of the supply challenges, particularly on our Electronics side of the business with chips. So we are trying to really balance all of that, but clearly committing to continuing to drive growth, and believe that our go-to-market strategies and outcomes are going to give us the confidence to sustain that momentum. Tomo Sano: Thank you, Sean. And follow-up on the capital allocations. So under the new leadership, we have been seeing a notable improvement in cash flow, a higher CapEx as a percentage of sales, and introduction of a share repurchase. I think Jeremy already touched on a little bit, but could you give us more color on your key capital allocation priorities going forward, please? Jeremy Evans: Yeah. Thanks, Tomo. We have been very systematic about our capital, and we have been very focused on paying down debt over the last two years and, you know, ended the year with a net debt to adjusted EBITDA leverage ratio of 1.8, which was below our target of 2. And in the short term, we are going to continue to pay down debt. That is just going to naturally happen as we make our minimum debt payments and as our business grows, we get to higher EBITDA. We are going to see that leverage ratio come down a little bit. You did mention CapEx. We are projecting a bit higher CapEx in 2026 than we had in 2025. 2025 was a little bit low, sub 3%, and some of that is going to carry over to this year just due to the timing of how some equipment purchases and projects rolled in. But we do see opportunities to invest in ourselves and our internal capabilities, whether that be new equipment that gives us a little bit more productivity and automation, or investing in internal capabilities to meet some of the new product launches that we have in our roadmap. Tomo Sano: Thank you, and congrats on the quarter. Operator: Our next question comes from Nathan Jones with Stifel. Please proceed with your question. Nathan Jones: Good morning, everyone. Guess I will start with a couple comments that you guys made in your prepared remarks. You talked about recent commercial wins ramping up. Could you maybe provide a little bit more color around kind of products, markets, expected run rates, those kinds of things that we are looking at from those kinds of wins? Sean Bagan: Yes. So we will definitely dive a lot deeper into this at the Investor Day. But just at a very high level, as you know, our number one focus in 2025 was really reinvigorating our top line, and that required us to change sales leadership and put a lot more resources, put a lot more hunters into the business, and then just the process discipline around tracking the sales funnel. And really, as we get into this year in 2026, we have seen a tremendous amount of growth at the top side of the funnel, and so it is going to be about converting those into new business wins. But equally, we are very excited. We will show the progress we made in 2025 in generating new business wins well over $50 million that we will talk about again further at the Investor Day, but it is not as much on new markets in terms of areas that we have not been servicing already. It is with existing customers, more share of wallet. When you look at the product launches we have had throughout 2025, it is an extension of our product line of products and features that our existing customers would naturally be buying. And so we are trying to create those stickier solutions and catch some of that product. Now as we get into this year, as we announced today, we are going to continue that focus on launching new products into incremental revenue trends in those niche applications. So the one that we would call out that saw probably a lot of growth more so than others is aerospace. That is an area where we have been putting a lot of our energy and focus, and we think there is a tremendous opportunity there as well. And then as I said at Investor Day, we will be talking about some new markets and new adjacencies that we are pursuing and going to be launching products that we think can capitalize and even accelerate our growth further. Nathan Jones: Thanks for that. I guess my follow-up is around some commentary you made on the ag market and probably to the extent that this is relevant to other markets. You talked about, you know, significant improvement there, significant demand improvement. When you are talking about that, are you really talking about, you know, more stabilization of production levels rather than end customer actual demand levels, so it is kind of a bit more of end of destocking that leads to higher demand for Helios Technologies, Inc.? Or do you think you are actually seeing end sell-through in some of those markets improve? Thanks for taking the questions. Sean Bagan: No. Yeah, thanks, Nathan. The former, for sure. Definitely not seeing signs of any real strong market recoveries at the end market, but absolutely the channel inventory levels are way healthier. So as the retail environment improves, certainly we will benefit from that. But if I kind of look at our Sun Hydraulics business, that is through distribution, and our key indicator there is their distributor inventory levels of all those distributors that we go to market through. We continue to see that come down year over year, slightly down, sequentially down. The market is still being down, yet our Sun Hydraulics business grew, so it is a good sign that we are taking share. And, again, we would attribute that back to our go-to-market target account planning, closer to the customer, the products we are launching there. When you look at the Faster business indexed highly to the agriculture segment, totally spot on with your commentary that retail still is very choppy and down in most places globally. However, our Faster team has done a nice job to diversify and build a little bit steadier distribution business, but those channel inventory levels are definitely healthier, and we are starting to see signs of that in some of the guidance of the OEMs as well. We are going to feel that earlier as a supplier into those channels. When you go to the Electronics segment, that consumer market is still challenged. Interest rates have not come down as quickly as expected. A lot of the equipment that our product goes into is financed. And so that would be very helpful if we saw that. And, certainly, the dealer channel levels, whether it is marine or powersports, are healthier, but the end markets are not growing yet either. So overall, we feel as though we are taking share clearly, and a lot of that, again, is tied back to this targeted go-to-market focus. Jeremy, anything to add there? Jeremy Evans: Yeah. I think we have also seen some growth in health and wellness in the quarter, so that was another end market that came back in, and mobile, the construction piece is still pretty strong, if you look at the different infrastructure investments both in the U.S. and EMEA, so that is another, when we look at our end markets, that grew year over year. Nathan Jones: Thanks very much for taking the questions. Operator: Our next question comes from the line of Mig Dobre with Baird. Please proceed with your question. Mig Dobre: So for me, sticking with Hydraulics too, and, I mean, look, I appreciate that your approach has been to be fairly conservative with the outlooks that you are providing. But I just want to make sure that we all kind of parse out what is going on with the end market relative to, you know, the way you are kind of choosing to guide. If I look at the Q1 guide, and I think about normal seasonality, right, in this business, typically Q1 versus Q4, we see something like five to six percentage point sequential increase. You are guiding for a lot less than that. And when we are looking at the full year, 500 basis points of growth, that is frankly pretty modest in the context of that being in an early-cycle portion of an industrial recovery. You cited PMI earlier. And, of course, we know that a lot of your OEM customers are outright increasing production in 2026, whether that is construction equipment, earthmoving, aerials, even agriculture, as you just kind of discussed with Nathan a moment ago. So I guess my point here is it would be helpful to sort of delineate, you know, how you think about the end markets themselves relative to kind of how you are choosing to establish your outlook at this point? Sean Bagan: Thanks, Mig. So I agree with everything you said there. In terms of kind of the seasonality, Q1 ramp from Q4 typically. I think the first thing to highlight and point out is the impact that CFP is having. So roughly, from a year-over-year perspective, the run rate is roughly $15 million of revenue per quarter. But as you imply, in terms of our fourth quarter to first quarter, kind of flattish, and the CFP dynamic is not there. But I just want to remind that that is a year-over-year dynamic. When you get to the full year numbers that you were citing, roughly $45 million that will not repeat in 2026 that we had in 2025, all within the Hydraulics segment. So specific to the first quarter guide, we see the Hydraulics business still being up at a healthy clip year over year, 3% to 7% on a full year basis, and 19% to 21% on a pro forma basis, taking out CFP year over year for the first quarter. We feel real good about that first quarter number in terms of, like I said earlier, you know, we are already months into the quarter. We know what the order book is, so it just comes down to the execution. So we would not expect anything large to come in that we do not see in the first quarter. So that is tied back to, again, the current order book and the sales trajectory quarter to date. So, Jeremy, do you want to add some additional color on that? Jeremy Evans: Yeah. Maybe just add in the Hydraulics, you know, over half of the business goes through distribution, and so our visibility into the outward order book is a little bit more limited there than what we see through the OEMs. And when we look at, you know, the ag market, I would say what we have seen is more of a stabilization. It has flipped to growth for us, so it is a moderate growth back in Q3 and Q4. And, you know, early indications would imply that we would expect that to carry over, and that has been built into the guide. I would also say holistically that we are really trying to balance the visibility that we have in our order book over the first half over the volatility really around the current global trade situation and tariffs. That is still an unknown of, you know, how that is going to play out. There is also a rising demand for memory chips, and if you read a lot of the news, you know, a lot of these chip manufacturers are moving to the high-end chips, and, you know, we are potentially going to face some constrained supply. Now, we have done a good job already trying to lock in our supply for 2026, and, you know, taking somewhat of an inventory position on that to buffer against that, but I think that that is an unknown, as well as just what, you know, just recently happened here in the Middle East. And so we see a lot of volatility which, at this point, you know, we are trying to balance with what we see in that short-term order book through the distribution partners. Mig Dobre: Okay. My follow-up, since you brought up the topic of tariffs, is there a way to size the tariff impact on your business? What is incremental in 2026 versus 2025? And how should we think about pricing in both your segments as it relates to not just the tariffs themselves, but, you know, overall cost inflation? We have obviously seen material costs go up over the past few months. Thank you. Are you able to be price/cost neutral or better in 2026? Jeremy Evans: Yeah. This is Jeremy. Great question. So, you know, the tariff situation, a lot of unknowns right now just around what will be enforced, potential for refunds. I think we track that. We have good visibility. We are monitoring that situation very closely. As you mentioned, we were able to mitigate most of that through tariff avoidance by our “in the region for the region” strategy. But we did take pricing actions to offset that. And we had communicated back in 2025 that we expected our second half direct tariff cost to be about $8 million. We came in a little bit less than that, but as you point out, those tariff surcharges kind of ramped throughout the year, where Q1 was a bit light. So on a year-over-year compare, there will be higher tariff expansion in the first quarter. But most of that, again, is being recovered through pricing actions. And we would take a similar approach as it relates to, you know, cost inflation, definitely the situation around the memory chips, some of the price that, you know, we are seeing on those chips going up four or five times. And we will manage that in a similar situation and recoup as much as we can of that through pricing and obviously keeping those lines of communication open with our customers. Mig Dobre: Appreciate it. Thank you. Operator: Our next question comes from the line of Jeff Hammond with KeyBanc. Please proceed with your question. David Tarantino: Hey, good morning, everyone. This is David Tarantino on for Jeff. So you touched on the tariff pressures, but could you give us some greater detail on the margin expansion levers in 2026, particularly how you are thinking about margin growth between better volume absorption and the more internal initiative-driven productivity benefits? Sean Bagan: Yeah. So, David, I would answer that by saying we are going to continue to do what we did in 2025. What you would observe is, you know, starting the year at roughly 31% gross margin and adding a point every quarter. Now we think in the 2026 timeframe, we can get back to that mid-thirties, and, again, we are exiting at a 33.5% to 34% margin rate. So number one is volume. We have demonstrated that in 2025. We have a cost structure that will provide leverage to the bottom line as we continue to drive volume. We are not adding any capacity. We continue to optimize our facilities. But then within our focus within the plants and managing of our cost of goods sold, we take an SQDC approach to that—safety, quality, delivery, cost—where we focus most heavily because we think all of those are, one, tied to customer satisfaction and ensuring we are delivering timely product. Obviously, high quality is the number one focus there. But those drive measurable improvements in our margin rates as well, keeping our employees safe, limiting the, from a quality perspective, whether you are talking about rework or warranty or such. So that is the approach we are taking, and it is really on a rate-of-change perspective of driving that continuous improvement. So we have got initiatives in all of our centers of excellence, driven within our businesses. Jeremy Evans: Yeah, and we will talk more about the different operational initiatives we have within our businesses at our Investor Day, highlighting some of the things that we have done. One, within our Sun Hydraulics business, looking a lot at synchronous flow and how do we get the movement of product through our manufacturing system quicker. And that has actually driven some productivity, as well, helping us take down some of the inventory. We also are looking at how we, you know, configure the operations in the building and how do we make those more efficient, and we have undertaken some changes in lines and, again, reconfiguring that manufacturing process, which makes us more productive. But as Sean mentioned, the biggest driver remains just the volume. As the volume comes through, we get that leverage on our overhead cost and really see the incrementals flow through. David Tarantino: Okay. Great. That is helpful. And then maybe on the end markets, within Electronics, could you talk about what you are seeing in mobile and recreational end markets that informs the return to growth, particularly around recreational and how this is driven just between channel inventories being too low versus the recent tailwinds you noted from one specific customer? Sean Bagan: Yeah. On the end markets, if you take our two largest businesses, Balboa Water Group and Enovation Controls. And Balboa Water Group is all health and wellness predominantly targeted at the spa industry. And what we have seen there is the U.S. market still soft. Production continues to increase in China for export, particularly to the European region. But we did grow that business again last year on top of growth from the prior year in 2024. So we are not seeing a significant rebound, but typically that is a market that grows very sleepily, low single digits, and effectively, it is back to that pre-pandemic level, where we saw the spike, and for us, it was double the size it was pre-pandemic for our health and wellness business. And then it contracted more than half, and now it is kind of back to where it was at. And so we expect to see continued growth there, but we are going to outpace the market. And we have a whole line of new products coming that are much overdue. We have really been operating with the same product offering and portfolio of products since Helios Technologies, Inc. acquired Balboa. And given the R&D investment we have been making, we are very excited about what is coming to market. And we get early visibility to that because we are partnering with those OEMs to design in product into their new models. And so we are seeing a little bit of innovation there, and we are really excited about some of the things we are bringing to market as well. When you go to the Enovation business, as you highlighted, it is indexed more to that recreational market, but it is very diverse as well. So when you look at recreation and you look at marine versus more traditional recreational products—side-by-side ATVs, snowmobiles, motorcycles—first, starting with marine, there has been a little bit of consolidation. You have seen some M&A activity with some of our customers, and we see that as positive because that is going to bring in more opportunity for us to, again, sell more to our existing customer base. But we are also on the gas innovation-wise. If you look at all the products we launched last year and what we have coming, we will be showing some of this at CONEXPO this week. It really opens the aperture to the amount of markets we could serve. So we are going to be aggressively going after that. And we have a very strong sales force that is out hunting and, frankly, where we won over $50 million in new business wins, a lot of those new wins came in our Electronics business because we see that addressable market being very large. So overall, that marine market is now right-sized from a channel inventory level. Retail is still down. Early boat season sentiment is mixed. So we are not expecting significant growth out of that. When you do look at the more traditional recreational, the one customer that we highlighted is really taking a lot of share, and we are benefiting from that. In addition, we are trying to work with them in terms of selling them more of our existing products as well. So those would be the two big movers, but we certainly serve the construction and ag market as well on our Electronics side. David Tarantino: Okay. Great. Thanks, guys. Operator: Star 1 on your telephone keypad. Our next question comes from the line of Chris Moore with CJS Securities. Please proceed with your question. Will (for Chris Moore): Good morning. Fiscal year 2021 was an unusual year driven by Balboa, and adjusted EBITDA margin was 24.6%. What would it take over the next three to five years to get back to that level? Jeremy Evans: Yeah. Well, good callout. As Sean mentioned, 2022 really started in 2021 with the pandemic. We saw extreme growth, definitely in Balboa and that health and wellness, but also in the other end markets as well—rec, marine, the recreational off-road. And you are right. When we got the volumes, you saw the EBITDA and you saw the leverage there. Actually, Balboa in that period was one of the highest EBITDA margin businesses that we had. And so for us, it really comes back to our growth and leveraging the infrastructure that we have to drive that operating leverage. Now, that said, we have had acquisitions since that point in time. We had three in 2022 and 2023 that did not have the same margin profile as the remaining business. So, you know, getting back to that same level, you know, we are targeting definitely mid-twenties EBITDA. We think we can get to that over time, and we will go into a little bit more of that long-range plan at our Investor Day. Will (for Chris Moore): Thank you. And you have done a great job streamlining the organization and cost structure given some softer end markets. Is there any area where it would be difficult to ramp quickly? Jeremy Evans: Yeah. Great question. We actually have already started planning for that and saying, what happens if we see a market recovery? You know, how do we make sure that we have got the right resources in place, both people and, you know, I mentioned the supply using chips as an example, making sure that we have the components and the supply we need to deliver on that. So obviously, we will take a wait-and-see approach with some of the volume. We are managing, you know, leaning more towards overtime than, you know, just ramping up headcount. In fact, our headcount on a year-over-year basis, if you kind of adjust for the CFP divestiture, is actually down. So we are going to manage that tightly and push the productivity. But absolutely, we are having those conversations as we see the growth—how do we, you know, make sure that we are prepared and we deliver to our customers. Operator: We have no further questions at this time. I would like to turn the floor back over to Tania Almond for closing comments. Tania Almond: Great. Thank you, operator, and thank you, everyone, for joining us today. We look forward to seeing all of you in person at our upcoming Investor Day here on March 20. As we mentioned, we are also heading out to CONEXPO this week as well, so perhaps we will see some of you there as well, too. Feel free to reach out to me with any follow-up questions, and have a great day. Thank you. Operator: Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.
Operator: Good morning, and welcome to the Limbach Holdings, Inc. Fourth Quarter and Full Year 2025 Earnings Conference Call. At this time, participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I will now turn the conference over to your host, Lisa Fortuna of Financial Profiles. You may proceed. Lisa Fortuna: Good morning, and thank you for joining us today to discuss Limbach Holdings, Inc.’s financial results for the fourth quarter and full year 2025. Yesterday, Limbach Holdings, Inc. issued its earnings release and filed its Form 10-K for the period ended 12/31/2025. Both documents, as well as an updated investor presentation, are available on the Investor Relations section of the company’s website at limbachinc.com. Management may refer to select slides during today’s call and encourages you to review the presentation in its entirety. On today’s call are Michael McCann, President and Chief Executive Officer, and Jayme Brooks, Executive Vice President and Chief Financial Officer. We will begin with prepared remarks and then open the call to questions. Before we begin, I would like to remind you that today’s comments will include forward-looking statements under the federal securities laws. Forward-looking statements are identified by words such as “will,” “be,” “intend,” “believe,” “expect,” “anticipate,” or other comparable words and phrases. Statements that are not historical facts, such as those about expected financial performance, are also forward-looking statements. Actual results may differ materially from those contemplated by such forward-looking statements. A discussion of the factors that could cause a material difference in the company’s results compared to these forward-looking statements is contained in Limbach Holdings, Inc.’s SEC filings, including reports on Form 10-K and Form 10-Q. Please note on today’s call, we are referring to non-GAAP measures. You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our fourth quarter 2025 earnings release and in our investor presentation, both of which can be found on Limbach Holdings, Inc.’s Investor Relations website and have been furnished in the Form 8-K filed with the SEC. With that, I will now turn the call over to President and CEO, Michael McCann. Michael McCann: Good morning and welcome to our stockholders, analysts, and interested investors. We appreciate you joining us today. Yesterday, we reported our fourth quarter and full year 2025 results. Before I get into some of the business highlights, I want to recognize all the Limbach Holdings, Inc. team members who deliver safe, quality-driven customer solutions. Our strategy is built on the foundation of great people, and this team delivered a record-setting year. I also want to comment on our announcement yesterday that we will be relocating our headquarters to Tampa, Florida. Relocation of our headquarters to Tampa reflects the fact that a significant portion of our senior leadership team and nearly 40% of our corporate workforce are already based in Tampa, where our presence has grown substantially since establishing the corporate office in 2020. The move marks a milestone of the company’s 125th anniversary year, and we look forward to the future as we continue to grow and strengthen our presence in Tampa. Now turning to our strong results. 2025 marked a record year of significant total revenue growth of 24.7%. Notably, it is the first year our revenue has grown substantially since 2020, when we began executing our strategic shift to ODR. Our ODR/GCR mix for 2025 was 75% ODR and 25% GCR, right in the middle of our guidance range and a meaningful improvement from February mix of 67% ODR and 33% GCR. Total ODR revenue grew by 40.6% with organic ODR revenue growth of 17%, reinforcing organic growth as a major driver of our success. Total gross margin was 26.2% for 2025, and 28.2% when excluding all of our acquisitions since 2021, demonstrating the legacy business gross margins remained stable when compared to 2024. We reported record full-year adjusted EBITDA of $81.8 million within our guidance of $80 million to $86 million and a 28.4% increase from 2024. We generated $71.9 million in cash from operations excluding working capital in 2025, with $21.4 million generated in Q4, reflecting our high rate of cash flow conversion. In December, we authorized a $50 million share repurchase program. Finally, our balance sheet remains strong with only $24.6 million in net debt, or a net debt to adjusted EBITDA ratio of 0.3x. Turning to 2026, we are focused on three strategic core growth pillars, which include ODR and organic total revenue growth, margin expansion through REVOLVE customer solutions, and scaling the business through acquisitions. Our first pillar is to grow ODR organic total revenue. We expect our revenue mix between ODR and GCR to hold steady, while we focus on growing total revenue with ODR being the primary growth driver. Our strategy for growth is designed to combine national scale with local execution, allowing us to better serve mission-critical facilities. We are investing both at the local and national level to accelerate sales, leverage SG&A, and drive growth. We have supported both growth objectives by strategically positioning two seasoned senior executives on accelerating sales. One executive is focused on local sales, while the other is responsible for driving national relationships. We believe this strategy will be a key element in supporting our investments in driving growth. As we focus on growth, we continue to manage project risk and reward through careful selection based on project size and short life cycle. In Q3, we discussed in detail our various ODR revenue streams. As we mentioned, ODR revenue is broken down into two different categories. The first is fixed-price projects greater than $10,000, which represented 73% of total ODR revenue for 2025, with an average ODR project size of approximately $240,000. The second category is recurring, quick-burning revenue, which includes contracts, work orders for small fixed-price jobs less than $10,000, and time-and-material work. In full year 2025, our quick-burning revenue represented approximately 27% of total ODR revenue. We have also expanded our GCR gross profit by carefully managing the risk and reward profile as it relates to project size and scope. The average GCR project for 2025 was only $2.6 million. Our second pillar is margin expansion through REVOLVE customer solutions. We differentiate ourselves from the competition by being a single-source provider for building owners, capable of providing comprehensive life cycle engineered solutions. In 2026, we plan to continue to expand our offerings in six differentiated customer solutions including integrated facility planning, service maintenance, equipment replacements and retrofits, new equipment mechanical, electrical, plumbing, and control (MEPC) infrastructure upgrades, and energy efficiency and decarbonization analysis and projects. Our staff is being trained to bundle customer solutions and deliver long-term value to our clients. Each individual transaction may have a different margin profile, but the overall quantity of gross profit and the quality of blended margin are carefully managed. From 2020 through 2025, our total gross margin for the legacy branch business has grown from 14.3% to 28.2%. In total gross profit dollars, total gross profit has increased almost 50%, demonstrating that our teams are able to grow total gross profit while simultaneously enhancing margin. The third pillar is strategic M&A aimed at extending the reach of the Limbach Holdings, Inc. brand, strengthening our market presence, and expanding our capabilities. Through targeted acquisitions, we seek to diversify our vertical market exposure and broaden our geographic footprint while adding new offerings to enhance our customer solutions. In 2026, we remain selective as we would expect to pursue one to three acquisitions to meet our return thresholds by expanding our geographic footprint and increasing our local service capabilities. Additionally, we are looking for companies that expand our six core customer solutions. We are particularly focused on companies that expand our integrated facility planning solution. Due to their deep involvement in the capital-planning process, these companies tend to have national relationships in healthcare, data centers, and industrial manufacturing. We believe the synergies between these two types of deals will help us reach our long-term vision to be an indispensable building system solutions partner providing national reach with local presence. Turning to our last acquisition, Pioneer Power, where integration is well underway. We have largely completed the first phase of our value-creation process, centered around system integration. Next, we are focused on the second phase of our value creation, which is all about increased gross margin. Key strategic priorities in 2026 will include negotiating T&M contracts; measuring margins by revenue size and type while setting specific goals; introducing Limbach Holdings, Inc. sales training and sales enablement resources; identifying cross-selling opportunities by leveraging our respective national account relationships; and aligning resources to the most profitable accounts. We expect margin improvement at Pioneer to take shape throughout 2026, with exit margins higher than current levels, as we start the second phase of our value-creation process. We expect the gross margin improvement to continue over the next two to three years until Pioneer’s margins reach alignment with the current business. Our record for improving margins of acquired companies is best demonstrated by our acquisition of Jake Marshall in December 2021. At the time of purchase, the gross margin was approximately 13.4%. After four years of executing our value-creation model, from gross profit benchmarking to establishing account-focused teams, Jake Marshall’s gross margin increased to 28% for 2025. Today, Pioneer Power’s gross margin is below the level where Jake Marshall was at the time of the acquisition. This is an indication of the meaningful value-creation opportunity we have. Turning to the macro environment. We experienced positive demand improvement in the fourth quarter across all our verticals. Our institutional markets—healthcare, life science, and higher education—rebounded after softness in the middle of last year. The government shutdown and the D.C. policy changes caused many of our customers to temporarily pause activities. However, the subsequent recovery in these verticals allowed us to achieve 24% ODR organic revenue growth in Q4. I will now make some specific comments on several of our key verticals. In our healthcare vertical market, many customers were spending their leftover budgets while also preparing 2026 normalized spending patterns during the fourth quarter. Due to the uncertainty of economic conditions in 2025, several national customers have started to engage us much earlier in their planning process. Our unique combination of professional service and installation expertise creates both speed-to-market and cost-certainty advantages. As customers are planning their budgets now, and given our early involvement in the design and planning process, we anticipate a softer start in 2026 with revenue building throughout the year. As an example, in late December, one of our key national healthcare customers called us to help execute a critical infrastructure project. The engagement is worth approximately $15 million in contract value across three different hospitals in Florida. For this project, we are providing both program management and design-build services. They chose Limbach Holdings, Inc. because of our demonstrated ability to seamlessly procure, design, and execute a complex project swiftly, whereas the engineering firm that performed the original assessment was not able to execute the project fast enough. The project is expected to be designed in the first half of the year with work on site to begin in 2026. Shifting to data centers, where we have two very strong emerging relationships with hyperscale data center owners. These relationships have been developed due to our successful delivery of projects out of the Columbus, Ohio location over the past several years. Given the traction we have achieved and future opportunities with these owners, we have decided to dedicate resources towards building a national vertical market team focused on data center work. We believe we have the availability of resources and the unique skill set to position ourselves thoughtfully in this vertical. As an example of our traction in the data center vertical that took place in Q4, we were awarded a specialty infrastructure project worth approximately $10 million in contract value. The scope of the project is to provide fabricated piping systems directly to the owner. This is the fourth project of this scope, and the owner has expressed interest in further expanding our relationship. We believe we are well positioned to grow in this vertical in 2026 and beyond. In 2025, revenue in this vertical was less than 5% of total revenue. Our objective in 2026 is to increase vertical market diversity in the business; expanding our data center market contribution is critical to achieving that objective. We see the opportunity for this vertical to represent a meaningful portion of revenue over time. In 2025, our industrial manufacturing vertical produced strong and steady results and was less affected by the D.C. policy concerns. Our recent acquisitions of Pioneer Power and Consolidated Mechanical help provide us with diversity, both from a geographic footprint and vertical market standpoint. Our work here is conducted primarily via time-and-material shutdown work and small project work. We expect first-quarter revenue in this vertical to also be soft due to spending seasonality that traditionally kicks up in April. Our success in 2026 will be driven by our ability to accelerate sales and leverage our previous investments. We expect our revenue and earnings to be weighted to the second half of the year, with growing confidence in the sales growth demonstrated by fourth-quarter bookings of $225 million compared to $187 million in total revenue during the quarter, giving us visibility into 2026. Moving to our 2026 guidance, we expect revenue of between $730 million to $760 million, implying year-over-year growth of 13% to 17%, and adjusted EBITDA of $90 million to $94 million, implying year-over-year growth of 10% to 16%. Underlying that guidance, we have used the following assumptions: total organic revenue growth of 4% to 8%; ODR organic revenue growth of 9% to 12%; we expect ODR as a percent of total revenue in the range of 75% to 80%, reflecting the stabilization of the mix shift; total gross margin of 26% to 27%; SG&A expense as a percent of total revenue to be 15% to 17%; and free cash flow to be 75% of adjusted EBITDA for 2026, with significant cash from operations in Q1 due to the timing of incentive compensation, insurance, and tax payments, with strong cash generation building during the remaining quarters of the year. As investors and analysts model 2026, it is important to note that our first quarter tends to be the slowest quarter of the year due to seasonality and customer spending patterns. We expect first-quarter revenue to be similar to last year with lower adjusted EBITDA due to higher SG&A in 2026. Additionally, we do not expect 2026 to have the same gross margin write-ups of $900,000 that we had in 2025. As previously stated, we expect the second half of the year to be stronger than the first half. As our bookings momentum from last year converts into revenue, we expect revenue growth to accelerate in Q3 and Q4. With that, I will turn it over to Jayme to walk through the financials in more detail. Jayme? Jayme Brooks: Our Form 10-K and earnings press release, filed yesterday, provide comprehensive details of our financial results, so I will focus on the highlights of the fourth quarter and full year. All comparisons are for the fourth quarter and full year 2025 versus fourth quarter and full year 2024 unless otherwise noted. Starting with the fourth quarter, we generated total revenue of $186.9 million compared to $143.7 million in 2024. Total revenue growth was 30.1%, while ODR revenue grew 51.8% to $145 million. Of the total ODR revenue growth rate, 27.9% was from acquisitions and 23.9% was organic. GCR revenue decreased 13% to $41.9 million, of which 26.1% was a decrease in organic revenue, as designed, as we continued our mix shift towards ODR, offset by 13.1% growth in revenue from acquisitions. ODR revenue accounted for 77.6% of total revenue for the fourth quarter, up from 66.5% in 2024. Total gross profit for the quarter increased 10.4% from $43.6 million to $48.1 million, reflecting the ongoing growth of our ODR segment. Total gross margin on a consolidated basis was 25.7%, down from 30.3% in 2024, primarily driven by the impact of Pioneer Power. As we previously communicated, our acquisition integration strategy is focused on improving the acquired company’s gross margin to align with our broader operating model over multiple years. ODR gross profit comprised 76% of total gross profit dollars, or $36.4 million. ODR gross profit increased 19.1%, or $5.8 million, driven by higher sales volume, partially offset by lower ODR segment margin of 25.1% compared to 32.1% in the year-ago period. The decrease in segment margin was primarily attributable to Pioneer Power’s lower gross margin profile. GCR gross profit decreased 10.2%, or $1.3 million, due to lower revenues. Gross margin increased from 26.9% to 27.8%, driven by our ongoing focus on higher-quality projects. SG&A expense for the fourth quarter was $28 million, an increase of approximately 2.3% from $27.4 million. The increase was primarily attributable to incremental costs associated with Pioneer Power and Consolidated Mechanical. Consolidated Mechanical was part of the company for one month in the fourth quarter last year, and Pioneer Power was not part of the company during the fourth quarter last year. As a percentage of revenue, SG&A expense decreased to 15% of total revenue as compared to 19.1%, primarily due to the increased revenue from Pioneer Power. Interest expense increased $300,000 to $800,000 compared to $500,000 in the prior-year quarter, driven by higher borrowings under the company’s revolving credit facility to partially finance the Pioneer Power acquisition, as well as higher financing costs associated with the larger vehicle fleet. Net income for the quarter increased 25% from $9.8 million to $12.3 million, and earnings per diluted share grew 24.4% from $0.82 to $1.20. Adjusted net income grew 22.6% from $13.8 million to $16.9 million, and adjusted earnings per diluted share grew 21.7% from $1.15 to $1.40. Adjusted EBITDA for the quarter increased 30% to $27.2 million compared to $20.8 million. Adjusted EBITDA margin was 14.6% compared to 14.5% in Q4 last year. Turning to cash flow, our operating cash inflow during the fourth quarter was $28.1 million compared to $19.3 million in the year-ago period, driven by higher net income in 2025 along with slight improvement in working capital. Free cash flow, defined as cash flow from operating activities excluding changes in working capital minus capital expenditures, excluding our investment in additional rental equipment, was $21.1 million in the fourth quarter compared to $16.6 million in Q4 last year, representing a $4.5 million increase. The free cash flow conversion of adjusted EBITDA for the quarter was 77.5% versus 79.9% last year. Now turning to the full year 2025. Total revenue increased 24.7%, or $128 million, to $646.8 million from $518.8 million, primarily due to the acquisitions of Pioneer Power, Consolidated Mechanical, and Kent Island. Of the total percentage increase, acquisition-related revenue represented 21%, or $109.1 million, and organic revenue represented 3.6%, or $18.9 million. ODR revenue increased 40.6%, or $140.2 million, to $485.7 million, with acquisition-related revenue representing 23.6% of the increase, or $81.4 million, while organic revenue represented 17%, or $58.8 million. GCR revenue decreased 7%, or $12.2 million, to $161.1 million. Organic revenue represented 23% of the decrease, or a $39.9 million decline, as the company continued its strategic mix shift to ODR, offset by acquisition-related revenue growth of 16%, or $27.7 million. Total gross profit increased 17.4% to $169.3 million compared to $144.3 million. Total gross margin was 26.2%, a decrease from 27.8% in 2024, primarily due to the impact of Pioneer Power’s lower gross margin and total net project write-ups of $5.8 million recognized in 2024 compared to $1.0 million in 2025. ODR gross profit increased 20.5%, or $22.1 million, to $129.9 million from $107.8 million, while gross margin decreased to 26.7% from 31.2% primarily due to the impact of Pioneer Power’s lower margin profile and ODR-related project write-ups of $3.9 million recognized in 2024 that did not recur in 2025. GCR gross profit increased 8%, or $2.9 million, to $39.4 million from $36.5 million, and gross margin increased to 24.5% from 21.1%, driven by the company’s intentional focus on higher-quality projects. SG&A expense increased by approximately $12.3 million to $109.5 million compared to $97.2 million in the prior-year period. Of the increase, $9.3 million was attributable to incremental costs associated with Pioneer Power, Consolidated Mechanical, and Kent Island. Consolidated Mechanical was part of the company for only one month last year. Kent Island was part of the company for four months, and Pioneer Power was not part of the company during the entirety of last year. The remaining SG&A increase of $3 million is attributable to the existing business. SG&A expense increased primarily due to a $1.2 million increase in non-cash stock-based compensation expense and a $1.1 million increase in bad debt expense associated with the write-off of certain customer receivables that were deemed uncollectible. SG&A expense as a percentage of revenue decreased to 16.9% compared to 18.7%, primarily due to increased revenue resulting from the Pioneer Power acquisition. Interest expense increased $1.3 million from $1.9 million to $3.1 million due to higher borrowings under the company’s revolving credit facility to partially finance the Pioneer Power acquisition, as well as higher financing costs associated with our larger vehicle fleet. Net income increased 26.5% to $39.1 million from $30.9 million, and diluted earnings per share increased 25.7% to $3.23 compared to $2.57 in the prior year. Adjusted net income increased 26% to $54.5 million compared to $43.2 million, and adjusted diluted earnings per share increased 25.3% from $3.60 to $4.51. Adjusted EBITDA increased 28.4% to $81.8 million compared to $63.7 million, and adjusted EBITDA margin was 12.6% compared to 12.3%. Our operating cash flow for the full year was $45.7 million compared to $36.8 million in the prior year. Free cash flow, defined as cash flow from operating activities excluding changes in working capital minus capital expenditures, excluding our investment in additional rental equipment, was $70.1 million for 2025 compared to $52.3 million in 2024, representing a $17.8 million increase. The free cash flow conversion of adjusted EBITDA for the year was 85.7% versus 82.1% in 2024. As Mike mentioned, for full year 2026, we continue to target a free cash flow conversion rate of at least 75% of adjusted EBITDA and expect CapEx to have a run rate of approximately $5 million. At this time, we do not anticipate any additional investments in our rental fleet. Turning to our balance sheet, as of December 31, we had $11.3 million in cash and cash equivalents and total debt of $35.9 million, which includes $10 million borrowed on our revolving credit facility, hedged at a rate of approximately 5.37%. As a reminder, in June, we expanded our revolving credit facility from $50 million to $100 million in principal amount borrowings. On July 1, we used a combination of cash and revolver proceeds of approximately $40 million to fund the Pioneer Power acquisition. During the quarter, we paid down the revolving credit facility $24.5 million to the hedged amount of $10 million. As of December 31, our total liquidity, defined as cash and availability on our revolving credit facility, was $96.3 million. With this expanded facility and our expected strong cash generation, our balance sheet remains strong, and we believe we are well positioned to support our continued organic growth initiatives, strategic M&A, and opportunistic share repurchases. That concludes our prepared remarks. Operator, you may begin the Q&A. Michael McCann: Thank you. Operator: We will now be conducting a question-and-answer session. You may press 2 to remove yourself from the queue. Our first question comes from the line of Christopher Moore with CJS Securities. Please proceed with your question. Christopher Moore: Hey, good morning, guys. Thanks for taking a couple. So, Mike, I might have missed a little bit of it. Can you talk a little bit more about the investment or specific steps you are taking to take advantage of the data center opportunity? Michael McCann: Yes, absolutely. One thing that is going to be really important to our strategy—and we started this last year as well—is really building three national vertical market teams: healthcare—and in some sense that has been our proof point—industrial manufacturing, and data center. When we think about the way that customers buy, they buy some services locally, but from a national perspective and a capital planning perspective, it is advantageous for us, even from a resource perspective. From a data center market specifically, we have had some really good success in the Columbus, Ohio market with a few different customers. We always like to prove things out before we really make sure that we go all-in from an investment perspective, but as I referenced in the prepared remarks, it is our fourth project that we were recently awarded. That customer and a couple of customers are starting to tell us, based on our availability of resources and our unique combination of engineered solutions with our ability to install and fabricate, we are in a great position, not just in the Columbus market, but in other markets as well. Some of that will be overlap from a geographic footprint perspective, and some of that may be providing services—just like we do in healthcare—in other geographies as well. We think it is a really good opportunity. We have been patient, and I think we are at a point now where we want to dedicate some resources, and we hope this vertical becomes a meaningful portion of our revenue over time. Christopher Moore: Got it. You could see that potentially in a few years that could be your number two vertical? Michael McCann: We are going to see how it goes. We think there is a lot of potential. The spending of these customers—and we are really all-in on these three verticals: healthcare, industrial manufacturing, and data center—and we think it is an opportunity for diversity as well. We are pretty bullish on it. Christopher Moore: Got it. In terms of the ODR organic guide of 9% to 12%, Pioneer in terms of the 2026, is there any organic from Pioneer embedded in the 9% to 12%? Jayme Brooks: After the first half of the year, then it becomes part of our organics, because the acquisition date was July 1. Christopher Moore: Exactly. I was not sure if you are assuming much growth from Pioneer. I am just trying to get a sense of how that business is going and if you assume some growth there later in the year as part of your 9% to 12%? Michael McCann: Yes. A couple of things on Pioneer as well. Our focus for sure—obviously we want to see growth there—but I think the gross profit improvement is equally, if not more, important than really seeing growth from a revenue perspective. Several different things: we are moving past phase one, which is really system integration—people, process, getting the accounting system switched over—and we are really focused, especially in the back half of the year, from a profit perspective. A couple of things that we are going to focus on are, number one, our ability to push resources towards their best accounts; look at metrics from a year-over-year perspective; revenue types; getting on our accounting system allows us to do this; utilization of sales resources as well. We are looking to deploy the full breadth of our value-creation process, and that is really getting into phase two and implementation. In the back half of the year, that is going to be our focus. It is still going to take some time. You have to go back and renegotiate some contracts. You have to reintroduce yourself from a customer standpoint. We have seen some real positive things, and we are looking not just in 2026 but in 2027 and 2028 to really see that business get to the point where it matches the other legacy businesses from a margin perspective. We think it is a really good opportunity. Christopher Moore: Perfect. I will leave it there. Appreciate it, guys. Jayme Brooks: Thank you, Chris. Operator: Thank you. Our next question comes from the line of Robert Brown with Lake Street Capital Markets. Please proceed with your question. Robert Brown: Just following up on the organic growth. I know you gave guidance for the year. Longer term, do you see the organic growth in the ODR segment—once you get Pioneer integrated and the business is running—what sort of long-term organic growth is there? In the past, you said it is the teens to 20%. Michael McCann: Sure. Last year, we were at 17%. We had a strong finish in Q4, and this year we are guiding to 9% to 12%. I think we are really focusing on 2026 from that perspective, but we are also trying to think about what our real normalized growth rate from an organic revenue perspective is as well. I think about our growth trajectory as we look forward: our ability to still get really strong local results—we are going to continue to invest in and support our sellers that we have invested in over the last three years as well. The other thing is, from a national vertical market perspective, our access to capital and driving different decision makers and being a national provider—that is going to be an avenue as well. So we are really focused on 2026, but we are obviously looking forward to see what the normalized level is and what I would say also from an opportunity perspective. Robert Brown: Okay. Got it. And then you talked about pretty strong bookings in Q4, above the run rate. How does that compare to normal? It seems like the environment is getting better. Maybe a sense of how the bookings are coming in and what you see for the next? Michael McCann: One of the things that we have learned as we continue to transition the business: backlog is a factor, but sales bookings are really what we look at from a business perspective. In Q4, we booked $225 million versus $187 million of revenue in Q4. A 1.2 ratio—anything, in our opinion, above 1.0 obviously shows that there is some forward trajectory in the business. We like when the bookings are more than the revenue. We think we are starting to turn the corner from a sales perspective. We have learned a lot from a sales perspective, and I think we are really starting to turn the corner. The other thing that we saw a little bit in Q4 was our ability to get involved early. Sometimes that may be from customers that looked at strained budgets from 2025 and are really starting to plan effectively. I would say specifically in the healthcare vertical market we are definitely involved much more from a planning perspective. We are starting to understand where customers spend. I think probably the third different quarter in a row we reported a national healthcare provider giving us multiple projects that were born out of facility assessments. We think we are turning the corner and looking forward to continuing to look at that sales bookings versus revenue as a key indicator. Robert Brown: Thank you. I will turn it over. Michael McCann: Thank you. Operator: Our next question comes from the line of Gerard Sweeney with ROTH Capital Partners. Please proceed with your question. Gerard Sweeney: Good morning, Jayme and Mike. Thanks for taking my call. Just staying on the topic of growth, obviously earlier in January you announced two new positions—EVP of Sales and Head of National Customer. How does this play into the strategy of growth? It feels as though you are maybe maturing into a different position of growth. I wanted to see how this all plays together and maybe drives some opportunity down the line. Michael McCann: Yes, I think one thing that is really important from a messaging perspective: local and national are both really important to us. We thought the best way to make sure that we are going to get the results is to take two proven executives and make sure that they are assigned specifically to that task. One of them is going to be working on sales enablement—how do we support the roughly 100 to 120 salespeople we have invested in over the last three years with tools and training, and how do we help them actually deliver those sales. We are really excited to have that particular focus. The other individual is focused on national accounts. In some organizations, that may be two different roles. For us, it is so important that we want to make sure we have two different executives working on it. They have independent focus, but there are lots of synergies as well. It is important that we have people who understand the business. As we start to mature, having the ability to sell at the national level, and from a national reach perspective, as well as being able to deliver from a local geographic footprint perspective—we think that is going to differentiate us and really continue to elevate where we are from a customer experience perspective. Gerard Sweeney: How much of your sales has come from a national account opportunity, or has it been much more on the local front? Michael McCann: I would say the majority have been local. We have had lots of opportunities over the years from a national perspective, but we have not had that focus. At the end of the day, the national customers—whether it is data center, industrial manufacturing, or healthcare—want to see a seamless experience. When they see a seamless experience, they are more willing to allocate more capital. Sometimes even from a local perspective, we can only take it so far with the local team. The top person at one of these critical facilities could be the facility manager, and many of those corporate decisions get made at a headquarters office. We have had some success with healthcare that we feel like we can extend. I would say a lot of the sales have been local. Our opportunity is that we have a combination of local and national. Gerard Sweeney: Got you. And then just one more question on acquisitions. I think you are looking at maybe getting into different areas like integrated facilities opportunities, and there are a lot of companies out there that fit in that space that maybe even are purchased for higher multiples. One question with an A and B aspect: do you continue to go after these opportunities, or will you have to pay up for these opportunities? And secondarily, does it make sense to maybe shift away from the Pioneer Powers where it takes multiple years to integrate into your system and go after acquisitions that are more right down the middle—like a fully integrated facility-type acquisition? In other words, paying up a little bit for an opportunity right in your wheelhouse versus fixing one up? Michael McCann: We look at both as important. Our long-term objective is being an indispensable partner to building owners with national reach and local presence. When you think about national reach from an acquisition perspective, our ability to invest in companies from an integrated facility planning perspective—professional service companies—they are the ones that are going to have some of these relationships from a planning perspective. We think that is really important. When I think about the concept of local presence, you still need that geographic footprint as well. Do not think it is a question of one or the other; it is a question of combining the two together and making sure these acquisitions fit with that long-term objective. Obviously, from a geographic footprint perspective, the multiple may be different than from an integrated facility planning perspective, but our end game remains the same: buying great companies with great people that can ultimately achieve our long-term objective and making sure there is a really good fit. We are not just buying assets and compiling them. We are making sure that they are smartly integrated from a strategy perspective. Gerard Sweeney: Got it. I appreciate it. Thanks. Michael McCann: Thanks, Gerry. Thank you. Operator: Our next question comes from the line of Brian Roffey with Stifel. Please proceed with your question. Brian Roffey: Yes, thanks. Good morning, everybody. Just following up on the national account discussion here. In the past, you talked about going from 20 MSAs to 40 MSAs and then pursuing national accounts. Now it seems like you are leaning into it a little bit more heavily, but we have not hit that 40 MSA number. Can you talk about what is driving that change and your confidence level in being able to secure some of these despite not having a larger footprint? Michael McCann: We have looked at it and tested our paradigms on this. We have realized—especially in healthcare, and I think we are going to see the same thing in data centers—it is great that we are in a geographic location; it is almost an added benefit. But we can still provide a suite of services. As an example, we can still provide design-build services even if we are not in a geographic footprint. When we think about future MSAs, we are looking for overlap of national customers. Not only can we provide high-level program management and design-build, but we get an added benefit from an installation process as well. We are still going to need geographic footprint, but if we can get there via a national account presence, it is going to accelerate the opportunity within not only the acquisition that we purchased but also from a national vertical market perspective. We are going to be really strategic with those MSAs. Brian Roffey: Got it. That is helpful. Do you have a sense—or can you give us a sense—of how much of the growth in the guide is related to capitalizing on some of this national account opportunity, or should we expect to see more of these benefits in 2027? Michael McCann: For it to really take off, it is going to be 2027. There is some built in, but this year is focused on selling. Some of the items you asked about—the healthcare jobs that we sold last year—those are obviously going to revenue this year. We will see some of it in the back half of the year, but the real opportunity—from accessing capital to being able to burn the work—I think that is going to be as much a 2027, even more so than a 2026, perspective. Brian Roffey: Okay. That is helpful. Just one clarifying question on the data center opportunity. Are you still focused on existing buildings here, or are you starting to get into new construction at this point? Michael McCann: We are focused on existing buildings. There have been situations where we have been able to provide infrastructure from a carve-out perspective; a lot of the work is direct to owner. That is one thing we are very focused on. As we get into these relationships, we are going to make sure we are always getting the right risk-adjusted returns. We want to make the smart business decision. We are going to look at the opportunity and make sure that it makes sense with our strategy. Brian Roffey: Appreciate it. I will pass it on. Operator: Thank you. Our next question comes from the line of Tomo Saino with JPMorgan. Please proceed with your question. Tomo Saino: Good morning, Mike, Jayme. Michael McCann: Good morning. Thank you. Tomo Saino: Could you please provide an update on the integrations of Pioneer Power and share some concrete timelines and milestones for gross margin improvement? Additionally, what lessons have you learned from previous integrations such as Jake Marshall regarding driving a margin improvement to acquired businesses, please? Michael McCann: Absolutely. A couple of pieces of information that we provided—one was mentioned in the prepared remarks, and it is also in Slide 18 in our deck. We are at the point from a Pioneer Power perspective where we are really wrapping up phase one integration. We have learned from past deals that the sooner we can get through phase one, the better, and a lot of times that is directly related to the accounting system upgrade. We want to get that out of the way and accelerate that process. That allows us to see numbers, and it is a big change-management piece that we try to get through. At this point we are really focused on phase two implementation. We provided additional information to show the trajectory from a Jake Marshall perspective. Jake Marshall at approximately the time of purchase was 13.4% gross profit; by 2025 they were approximately 28.1%. So a tremendous increase in gross profit. One thing we learned from Jake Marshall is our phase one got pretty extended—we did not switch over the accounting system for 12 months—and we learned that we wanted to get that out of the way as quickly as possible. That is one of the lessons learned we applied. The second lesson learned is we want to be in front of the customers as soon as possible. We want to listen to customers. We want to have joint meetings. We already started that process with Pioneer Power last year, and we want that to build into additional opportunities. Part of the reason is we want to learn what their pain points are and what kind of value we are bringing, so we can then propose different solutions that can drive margins. Sometimes there is an opportunity to raise margins, but margins with value are far better from a long-term customer perspective. Our focus, especially at the beginning of the year—we hope to see impact in the second half of the year—is to get in front of customers, make sure we are focused on them, listen to what they want, and then propose solutions that can drive margins, hopefully in the back half of the year, and really start to impact 2027. When I look at the trajectory from a gross margin perspective, we have that Jake Marshall example. Our objective, of course, is how we can accelerate that timeline but still implement those lessons learned. Tomo Saino: Thank you, Mike. On gross margins, to achieve 26% to 27% gross margin guidance, what are the most material risks and uncertainties you are monitoring for 2026, and how are you preparing the business to navigate potential headwinds? Michael McCann: We are very focused on making sure that we are smart from a risk perspective. If you look at both our owner-direct fixed-price projects greater than $10,000, the average project size is $240,000, and GCR projects had an average project size in 2025 of $2.6 million. We really try to make sure that the projects have as short a duration as possible—that allows us to flex and ebb. That has always been very important from a strategy perspective. From a holistic perspective, a lot of our model comes down to our ability to sell. That is why from a Q4 perspective, our ability to sell $225 million worth of revenue versus $187 million of revenue is, to us, an important step. As we continue to sell work, we really want to evaluate it from a risk perspective as well. It is a careful balance, but those are probably the two things that we really look at, and we are always looking for opportunities to improve gross margin. Tomo Saino: Thank you. Appreciate it. Michael McCann: Thank you. Operator: Thank you. We have reached the end of the question-and-answer session. I will now turn the call back over to Michael McCann for closing remarks. Michael McCann: In closing, our strategic priorities for 2026 are the following: ODR organic revenue growth and total revenue growth, margin expansion through REVOLVE customer solutions, smart capital allocation, and scale through acquisitions. Over the past several years, the company has transitioned from a typical E&C contractor with single-digit EBITDA margins to a predominantly ODR-based platform with strong free cash flow conversion, operating with very minimal leverage. The structural shift is largely complete, and our focus is now on growth. Every acquisition since 2021—Jake Marshall, Acme Industrial, Industrial Air, Island Consolidated Mechanical, and Pioneer Power—was sourced on a proprietary basis and was strategically aligned with our specialized value approach, cultural fit, and niche expertise across our verticals. All of our acquisitions were underwritten at multiples of five to six times adjusted EBITDA. With the operational improvements we make, the ultimate multiple paid is lowered by the growth in EBITDA. Through a repeatable playbook, we improve margins and use the resulting cash generation to delever and redeploy capital. The company has expanded its adjusted EBITDA margin from 14.4% to 12.6% since 2020, and our leverage sits at just 0.3x. We maintain nearly $100 million of liquidity, all while meaningfully increasing the quality and margin of the business over time. At Limbach Holdings, Inc., we are building a long-term business model focused on delivering durable value, bringing a unique combination of engineered expertise and direct execution with building owners. Through long-term consultant relationships, we help deliver multi-year capital plans that extend beyond traditional backlog. We believe this differentiated approach positions us well for sustained growth and shareholder value creation. In March, we are attending the ROTH Conference in California. We hope to see some of you there. Thank you again for your interest in Limbach Holdings, Inc., and have a great day. Operator: This concludes today’s conference, and you may disconnect your lines at this time. We thank you for your participation. Have a great day.
Operator: Good day, and thank you for standing by. Welcome to the fourth quarter 2025 L.B. Foster Company earnings conference call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during this session, you will then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Lisa Durante. Please go ahead, ma'am. Lisa Durante: Thank you, operator. Good morning, everyone, and welcome to L.B. Foster Company's 2025 earnings call. My name is Lisa Durante, the company's Director of Financial Reporting and Investor Relations. Our President and CEO, John F. Kasel, and our Chief Financial Officer, William M. Thalman, will be presenting our fourth quarter operating results, market outlook, and business developments this morning. We will start the call with John providing his perspective on the company's fourth quarter and full year 2025 performance. Bill will then review the company's fourth quarter financial results. Some statements we are making are forward-looking and represent our current view of our markets and business today. These forward-looking statements reflect our opinions only as of the date of this presentation, and we undertake no obligation to revise or publicly release the results of any revisions to these statements in light of new information, except as required by securities law. For more detailed risks, uncertainties, and assumptions relating to our forward-looking statements, please see the disclosures in our earnings release and presentation. We will also discuss non-GAAP financial metrics and encourage you to carefully read our disclosures and reconciliation tables provided within today's earnings release and presentation as you consider these metrics. So with that, let me turn the call over to John. John F. Kasel: Thanks, Lisa. Hello, everybody. Thank you for joining us today for our fourth quarter earnings call. I will begin my comments on Slide 5, covering the highlights of the quarter. During last year's quarter's reporting cycle, we indicated that our increased backlog should deliver a strong fourth quarter, and I am pleased to report we wrapped up 2025 with exceptional sales growth, robust profitability expansion, and strong cash generation. Truly a fantastic finish to the year. Net sales of $160.4 million were up 25.1% over last year. This was the highest fourth quarter sales since 2018. Both segments delivered significant sales growth in Q4 with Rail up 23.7% and Infrastructure up 27.3%. Gross profit was up 10.6%, while gross margin of 19.7% was down 260 basis points due to weaker Rail margins primarily related to our TS& S business in the UK. Coupled with greater volume of Rail products, we delivered strong leverage of SG&A expenses, which were down $1.3 million or 5.2% from last year's quarter. The Q4 SG&A percentage of sales improved 470 basis points to 14.4%. Adjusted EBITDA of $13.7 million was up a remarkable $6.4 million or 89%, with the increased gross profit and lower SG&A expenses delivering the improvement versus last year. In line with our seasonal working capital cycle, we also delivered a strong quarter of cash generation, with operating cash totaling $22.2 million. Cash was deployed with capital expenditures at $2.4 million, stock repurchases of $3.3 million, and further reduction in net debt of $16.9 million to end the quarter's balance at $38.4 million. As a result of lower debt levels and improved profitability, our gross leverage ratio improved to 1.0x, down from 1.6x at the start of the quarter and 1.2x last year. I will now turn to Slide 6 to cover some of the key highlights of the 2025 full year results. Sales of $540.0 million were up 1.7%, with the full-year growth achieved as a result of a strong fourth quarter. Infrastructure delivered a strong year with sales up 14.9%. However, Rail sales were down 6.5% due to Doge-related U.S. Government funding impact at the start of 2025, and we continued our proactive scale-down measures with our business in the UK. Adjusted EBITDA of $39.1 million was up $5.5 million over last year and substantially lower SG&A expenses, partially offset by slightly lower adjusted margins. Operating cash flow also improved in 2025, totaling $35.6 million and up $13.0 million over last year. We deployed this cash to fund $10.4 million in CapEx, reduce net debt $6.1 million, and fund $14.4 million in stock repurchases under our stock buyback program, which reduced our outstanding shares 5.4% in 2025. New orders net of $540.9 million were up 6.8% year over year, and overall backlog increased 1.8% to $189.3 million with substantial improvements realized across our Rail business. I am very proud of what our team has accomplished in 2025, especially the strong finish in the fourth quarter. Their disciplined execution of strategic playbook continues to manifest in improving profitability and returns, and is positioning us well for expected growth in 2026 and beyond. I will now turn it over to Bill to cover the financial details for the quarter and year. I will come back in the end with closing comments on our markets and outlook for 2026. Over to you, Bill. William M. Thalman: Thanks, John, and good morning, everyone. I will begin my comments covering the fourth quarter highlights on Slide 8. As always, the schedules in the appendix provide more information on our results, including the non-GAAP disclosure reconciliations. Fourth quarter net sales of $160.4 million increased 25.1%, with higher organic volumes realized in both Rail and Infrastructure. While gross profit grew 10.6%, gross margins declined 260 basis points to 19.7% due to the weaker results in the UK, coupled with unfavorable sales mix in the Rail segment, partially offset by improvements realized in Infrastructure. More to come on segment sales and margins in a minute. SG&A as a percentage of sales of 14.4% was down 470 basis points due to lower personnel and administrative costs, despite the substantially higher sales volume. I will mention here that we completed a further restructuring of our UK Rail business in the fourth quarter. The total restructuring charge in Q4 was $2.2 million, with $1.0 million recorded in gross margin and $1.2 million recorded in SG&A. We expect this program, including staff reductions and two facility closures, to deliver approximately $1.5 million to $2.0 million in run-rate savings in 2026. Adjusted EBITDA for the quarter was $13.7 million, up 89% versus last year due to the higher sales volumes and the resulting improved gross profit, coupled with the lower SG&A expenses. I will cover cash flow performance along with segment orders and backlog later in the presentation. We would like to remind everyone of the financial performance seasonality we typically see over the year, reflected on Slide 9. Our sales and profitability are typically strongest in the second and third quarters, with the first and fourth quarters a bit weaker. This is due to the construction season for our customers in the spring and summer months. The phasing was skewed a bit in 2025, with the abnormally soft Q1 start for the Rail business related to the Doge government funding impacts, with both segments having an exceptionally strong fourth quarter. As a result, combined Q2 and Q3 sales and profitability as a percentage of the full year are slightly lower than what we would typically see with the strong performance in Q4. And as we have seen over the last three years, free cash flow is strongest in the second half of the year, as working capital needs unwind in line with the end of the construction. I will next cover segment details starting with Rail on Slide 10. Rail fourth quarter revenues totaling $98.0 million were up 23.7% over last year. The increase was driven by higher volumes in Friction Management and Rail Products, up 41.6% and 31.1%, respectively. Softer demand in both the UK and North American markets. Rail margins of 17.8% were down 440 basis points due primarily to lower sales volumes, higher costs, unfavorable sales mix, and the $1.0 million restructuring costs associated with our downsizing efforts in the UK. Rail margins were also adversely impacted by the dilutive impact of higher Rail product sales volumes. While Rail orders were softer in the quarter, Rail backlog was up 55.3% year over year, with substantial gains realized across all three business units. Turning to Infrastructure Solutions on Slide 11. Segment revenue increased $13.4 million or 27.3%, with sales growth realized in both business units. Steel product sales were up 58.2% led by a 206.5% improvement in protective coatings. Precast concrete also continued its strong run with sales up 18.7% for the quarter and 19.9% for the year. Infrastructure gross margins were up 20 basis points to 22.8%, with gains in steel products offsetting lower precast margins. Higher sales volumes and improved business mix drove steel product margins up, while precast concrete margins were weaker due to unfavorable sales mix, coupled with a $600,000 increase in start-up costs related to our new facility in Florida. And finally, the lower Infrastructure backlog reflects the $19.0 million Summit order cancellation reported back in Q3, as well as lower open orders for both Bridgeforms and precast concrete. We started last year with an elevated backlog for Infrastructure, especially for precast concrete. This year reflects a normal level that we expect will increase in the coming months as we enter the construction season. I will briefly cover the full-year highlights on Slide 12. As John mentioned, 2025 sales were up 1.7%, with the strong Q4 results delivering sales growth for the full year. Infrastructure realized sales growth in every quarter in 2025, while Rail achieved growth in the fourth quarter only, due to the weaker start to 2025. 2025 adjusted EBITDA was $39.1 million, up $5.5 million compared to last year, driven by substantially lower SG&A expenses, partially offset by lower margins resulting from the weakness in Rail. It should be highlighted that 2025 results included approximately $2.2 million in start-up costs related to our new precast facility in. In addition, reported gross margins and SG&A reflect the costs and charges associated with the UK automated material handling product line exit announced in Q2 and the UK restructuring completed in Q4. Such costs totaled $1.4 million and $2.2 million, respectively. And finally, I will mention here that the year-over-year decline in net income was driven primarily by last year's federal valuation allowance release, coupled with a relatively higher effective tax rate this year due to higher UK pretax losses not being tax-effective. We expect our effective tax rate to be substantially lower in 2026 with an improved outlook for the UK, which John will touch on in his closing remarks. I will now cover our liquidity and leverage on Slide 13. We have successfully managed our leverage and levels in line with our business profitability and capital allocation priorities, and the chart on Slide 13 reflects a consistent pattern of steady improvement over time. In 2025, we generated $35.6 million in operating cash flow and $25.2 million in free cash flow. Over the last three years, our average free cash flow was approximately $28.0 million, excluding the Union Pacific settlement payments, which were completed at the end of 2024. As a result, we have maintained significant financial flexibility while also executing our capital allocation priorities. Our capital-light business model, along with the modest cash tax requirements provided by our federal NOL, further enhances our cash generation and financial flexibility to fund our capital allocation priorities, which I will now cover on Slide 14. Managing our debt and leverage levels remains our top capital allocation priority, and we maintain a disciplined, prudent approach to capital allocation with leverage in mind. At the end of 2025, the gross leverage ratio for our revolving credit facility was just under 1.0x, a low point in recent years and at the low end of our target range of 1.0x to 1.5x. Seasonal working capital needs are expected to elevate our debt and leverage somewhat in early 2026, but we should stay around our target range and realize improvements in the second half of the year in line with our normal cash cycle. Capital spending in 2025 totaled $10.4 million, or 1.9% of sales. We have several targeted organic growth programs within our Precast Concrete business that we expect will increase the CapEx rate of sales to 2.7% in 2026. Share repurchases are an important capital allocation priority for us, and we have $28.7 million remaining to spend on our buybacks under the most recent authorization approved in February 2025. We repurchased approximately 121,000 shares for $3.3 million in Q4, and we repurchased just over 1,000,000 shares, or approximately 9% of the shares outstanding, at an average price of just under $23 per share since restarting the program back three years ago. And finally, we also continue to evaluate tuck-in acquisitions to add breadth to our growth platforms, primarily in the precast concrete market space. My closing comments will refer to Slides 15 and 16 covering orders, revenues, and backlog trends by business. The trailing twelve-month book-to-bill ratio at the end of Q4 was 1:1, improved from Q4 last year but down from Q3 with the strong Q4 sales. Rail order rates have begun to recover with the TTM ratio at 1.11:1, and I will highlight that Friction Management orders were up 58.4% in Q4. Lower net orders in Infrastructure drove the lower trailing twelve-month ratio to 0.87:1; the Summit order cancellation reported in Q3 was the driver of the decline. And lastly, the consolidated backlog reflected on Slide 16 totaled $189.3 million, up $3.4 million over last year, with substantial improvements across all Rail businesses, partially offset by lower Infrastructure backlog. The shifts in the backlog suggest a stronger start for our Rail business in 2026 compared to last year, with Infrastructure growth developing later in the year after the strong results achieved in 2025. John will cover some additional backlog details and developments in his closing remarks. I will wrap up by saying we are very pleased with our financial performance in 2025 and excited about the prospects for further progress in 2026. Thanks for your time this morning. Back to you, John. John F. Kasel: Thanks, Bill. I will begin my closing remarks on Slide 18, reviewing developments in our key end markets. Starting with the Rail segment, we are seeing favorable trends in bidding activity that give us optimism that we will return to growth in 2026. The federal government programs that fund our customers' repair and maintenance projects are active and flowing, and we expect that this will provide a tailwind for demand for Rail in the U.S. for the foreseeable future. Of course, we will monitor developments in Washington and respond to any changes in funding should they occur. Turning to Rail Technologies, Friction Management had a phenomenal year in 2025 with 19% sales growth, noting that this growth was all organic, and we continue to invest in our commercial technology capabilities for this important growth platform and expect continuing long-term growth aligned with our customers' focus on safety, fuel savings, and operating performance. The total track monitoring product line was somewhat flat in 2025, but we are expecting improved demand in 2026 with the commercialization of some new technologies that improve rail safety and operating ratios. The UK market environment remains extremely challenging. We have taken significant actions in the last three years to reposition this business and expect it will lead to improved results in 2026. We also see some market trends worth mentioning for our Infrastructure segment. Starting with civil construction, activity remains robust, particularly in the southern part of the U.S., which is bolstering demand for precast concrete products. Demand for our environment keep for water management solution is increasing, with some large projects wins already in our backlog. These improvements are partially offsetting softer demand for our CXT buildings in the short term. This product line had a record year in 2025, and bidding activity is starting to pick back up. The softer residential real estate market has impacted demand for our Biocast wall system product line in our new Florida facility. We remain optimistic that a lower interest rate environment and a favorable population trend will improve demand in the future. Within steel, our protective coatings product line sales improved 42.7% in 2025, with the renewed interest in U.S. oil and gas production, and we expect these favorable trends to continue into 2026 as well. A quick comment on tariffs. As is the case for most domestic markets, impact of rising tariffs is being absorbed and managed by supply chain and commercial teams. I can confidently say that tariffs have had a minor impact on our business. In summary, we expect to start 2026 to be stronger than last year. And we believe we are well positioned to benefit from the infrastructure-based investment plans for years to come. Turning to Slide 19, I will wrap up today's call with an overview of 2026 financial guidance. I will start by highlighting the significant progress we have made since we launched our strategic transformation back in 2021. While last year's sales were up only 5% since 2021, adjusted EBITDA has more than doubled and free cash flow is up $30.0 million. The capital deployed in the business is also much lower, significantly improving financial results. Our 2026 guidance anticipates continuing sales growth, profitability expansion, and strong cash generation while investing in our growth platform. Bill mentioned earlier that our backlog was approximately $189.0 million at year end, up 1.8% versus last year. While the increase is modest, there are some important shifts in the bio that should be highlighted, and they support our optimism in 2026. Starting with the Rail backlog, which is up $34.5 million versus last year. The increase is driven in part by stronger North American demand for both Rail products and Friction Management. Rail Products backlog is up $10.6 million; Friction Management is up 7.6%. The balance of the increase was realized within our TS&NS, with the UK business securing a $20.0 million multi-year order last year. So the higher executable backlog for Rail should translate into a better start for 2026 versus last year's weaker first half when the pause in federal funding curtailed Rail customer project work. While Infrastructure backlog is down $31.1 million, the majority of the decline is due to the Summit order cancellation. In addition, the precast concrete backlog is down $5.4 million, with slightly lower CXT building backlog at the start of 2026 after a record year in 2025 for this product line. As a reminder, our precast business grew 19.9% in 2025. This impressive growth was all organic. I am pleased to report that project pipelines are robust and bidding activity is picking up in both segments. During the first two months of 2026, overall backlog is up about 15% from year end, with solid gains realized in both segments. Our 2026 guidance reflects 3.7% sales growth, with 11.1% to 10.3% growth in adjusted EBITDA, both at the midpoints of the range. Free cash flow is expected to remain robust at the midpoint of $20.0 million, with a slightly higher CapEx rate of 2.7% of sales as we invest in organic programs, primarily in precast concrete. In summary, our 2026 guidance reflects our expectation of another solid year and improvement in financial performance while investing for future growth along with strategic priorities. I will close today's call by thanking our team for a fantastic 2025. It was a challenging year in many ways, but our team was resilient, and we finished the year strong, in fact one of the strongest quarters we have seen in recent years, and we are carrying that positive momentum into 2026. I am coming up on my fifth-year anniversary as CEO in July. I look forward to greater accomplishments in 2026. I could not be more proud of what our team has achieved over those five years and beyond. Thank you for your time and continuing interest in L.B. Foster Company. I will turn it back to the operator for the Q&A session. Thank you. Operator: One moment for our first question. Our first question will come from the line of Liam Burke with B. Riley Securities. Your line is open. Please go ahead. Liam Burke: Thank you. Good morning, John. Good morning, Bill. John F. Kasel: Good morning, William. Liam Burke: John, it looks like with the orders in both Friction Management and Rail Products that the segment will look a little more normal than it did in 2025, based on the UK problems and Doge opening the year. The only thing we are seeing is maybe track monitoring flat, but that is project-based. Is there anything else that would keep you from having a more normal year in Rail Products this year? John F. Kasel: No. Well, thanks, Liam, for joining us today. I think you hit it on the head. You know, we finished the year down about $189.0 million, and the reason being we delivered. So we all the executable backlog with our channel partners, you know, we had our billings were fantastic. The bookings really picked up here, as I mentioned, up 15% since the end of the year, with equal weighting, I would say, throughout Rail Products and the Infrastructure precast business. So this is, as you mentioned, back to normal, we feel. In fact, we were closer back to normal in the fourth quarter last year. Bidding activity and the need is there today. So our team feels very good about the start to the year and our ability to see that guidance, you know, the increased revenue that we are looking for, profitability. It is kind of refreshing to have that now compared to where we were just a year ago. Liam Burke: Great. Thank you. And on concrete, you have the order cancellation. You have normal quarter-to-quarter variability anyway. You touched on order activity being pretty solid in the first quarter. Do you anticipate better cadence for concrete as we get into the third and fourth quarter this year, or second and third quarter this year? John F. Kasel: Yeah. Same, you know, same. We are starting to pick up some nice backlog, as well as on the entire Infrastructure side in steel as well, which had a very strong back end of the year. We are starting to see the energy business, our specific facilities down in Texas as well as Birmingham, starting to build a backlog. And then Precast is, we were a little light coming into the year because of the building side, but, you know, we pretty much shored that up in the first two months already. So, again, our facilities are basically running at capacity right now through at least the first half of the year, and we will see definitely a pickup to the second half here, especially in areas like Florida, with their new facility really coming online. We will be excited about that. Liam Burke: Great. Thank you, John. John F. Kasel: Thanks, Liam. Operator: Thank you. And as a reminder, to ask a question, please press. And our next question comes from the line of Julio Alberto Romero with Sidoti & Company. Your line is open. Please go ahead. Julio Alberto Romero: Bill, Lisa. Maybe to start with you. Morning. Hey, maybe to start on the 2026 guidance ranges that imply sales growth of about flattish to 7% on the sales line and then EBITDA growth of 5% to 18%, I believe. Just talk about what the puts and takes are that you think can get you to the high and the low end of those ranges? John F. Kasel: Yeah. Well, I think Liam hit it right there. It is about work and backlog and less disruption, and the need is, you know, we are an infrastructure company in the right market right now with industrials. So our customers need our product. So we are feeling, you know, much different about the start of the year than we were last year. And so order book is strong, and the bidding activity is as good as we have seen it in recent years. So we feel good about bringing the revenue in. Now we have to really shore up some things. We had some, you know, as we mentioned, some things in the UK that were, and we have done now three years of really rightsizing that business to protect the company, to protect the margins. But we feel good with what is going on specifically here on the Rail side. Our FM business, as I mentioned, I mean, you look at our growth platforms here, Julio. You look at Precast as well as Rail, you know, both of them up respectively, you know, 20% in the fourth quarter. And all the activity we talked about was all organic. So it really bodes well for the capital that we are bringing into the company. You know, as I mentioned that we took up the capital as a percent of sales a little higher this year, 2.7%, because we feel very, very good about the opportunities we have in front of us. And the reality is we have to increase capital now to stay up with the need specifically on the Rail side and precast side. And then we are backfilling some of the work that we need to do on the coating side as well. So, you know, right now, we are really focused on producing the backlog and executing well, coming into, you know, the first quarter and first half of the year. A much different position than we were just one year ago today. Julio Alberto Romero: Absolutely. Thank you for that answer. And I was just hoping to go a little bit deeper into the cadence of the quarter-to-quarter Rail revenues expected in 2026. Obviously, it is difficult to foresee any Doge-like events kind of driving delays for your customers, but absent an event like that, you know, you mentioned you feel better about Rail now than maybe this time one year ago. Just speak about, you know, the confidence of the quarter-to-quarter cadence on your top line. John F. Kasel: Well, remember, we are a construction seasonal company too. Right? So as far as Rail, they really do not get in and do much as far as refurbishments until the weather improves heading into, you know, second, third quarter. Right? So right now, it is about bringing us orders and when we are providing them the materials for them to get on track and do what they need to do to shore up things in the second, third quarter. So we are looking more of a typical bell curve, if you will, this year, with the highest revenues coming in Q2 and Q3, Julio. So, you know, unlike what we had to do this year, we will, you know, make it all happen in the fourth quarter, we are going to see quite a bit more work and activity in sales happen in the first half of the year, specifically in Q2 and then continuing in Q3 compared to what we had just last year. We are set up to do it. So when the customers come and the need is there, you know, we pivot and we do very well executing. But I think it is going to look like a much more normal year this year on the Rail side, including on the precast side. We feel very good about the performance we are having coming out of our concrete group. You know, we have done a good job of stabilizing our acquisition that we made back in 2023, and we are starting to really move product to the East Coast. And then we had a record year in our Hillsboro facility. Plant manager there, Jason Busby, has just done an outstanding job with record revenue coming out of that facility. So we feel very, very good about what we see specifically with our growth platforms and their ability to perform and do it more consistently this year than getting in the hole like we had last year and having to come out of it in the, you know, in fourth quarter like we did. And we communicated to the market. And I think the other thing that we are really focused on is our debt. You know, for us to be down to one time, to really manage the working capital that you see here today, as well as the cash generation. We are very pleased with the focus on, you know, bringing the cash back to the shareholders and getting our debt to something, well, we finished the year at 1.0x. So we are very proud of all those activities. Julio Alberto Romero: And fair point about the inherent seasonality of construction in your business. I guess I am just asking because you had such a, you know, funky, for lack of a better word, sales cadence in 2025 on the revenue line. Thinking about the year-over-year growth rates for Rail in 2026, I mean, is it fair to expect year-over-year sales growth in 2026? And would you expect the year-over-year growth rates to be more weighted year, or, you know, I guess, just help us think about that given how the fact that the 2025 comps are so skewed. John F. Kasel: So let me give you a little color, and then I will let Bill give you a few specifics. But last year, remember Doge. Right? So this time last year, the POs were curtailed because, basically, much of what we see, especially on the Rail Products side, 55% of what we have flows through the government. So there were just a number of projects that we were looking for that did not happen. So we were basically in a waiting game. The need was still there, but the funds as well as the POs were not flowing. So it really put us behind the eight ball, if you will, for the first half of the year. And we were able to make it up for the most part in the second half of the year because we have very good supply chain partners in our ability to flex our workforce and get the product out to the customer. The good news is that demand and requirement has continued now from the fourth quarter into the first quarter of this year. So that is where things are completely different. We are getting the POs, the bidding activity is there, and most importantly, the need is there. You know? We are in the maintenance and refurbishment part on the Rail side. So the needs to the market are there. And the good news is we are there to deliver. Maybe Bill can give a little more color on the phasing. William M. Thalman: Yeah. Julio, I guess the way I would look at it is if you just take, you know, what you would layer out as a run rate in terms of your outlook for Rail, you know, if you convert that to a normal seasonality that we would typically see, you are probably going to find that there is going to be some growth in Rail in Q1, and stronger growth in Q2 and Q3 just based on the normal seasonality. And then with an extraordinarily strong Q4, you know, the growth potentially may not be as strong there or potentially, you know, not covering the extraordinarily strong Q4 that we had. And then on the Infrastructure side, I would say, as John mentioned, the backlog is improving, but we started the year with a little lighter backlog. That is probably going to be more. So I would say that it is still going to be a solid year of growth towards the second, third, and fourth quarters of the year, as opposed to getting off to a strong start like we did last year. I think John mentioned our backlog was elevated at the beginning of the year with a strong Buildings backlog. We executed against that in last year's Q1. So Infrastructure may be a little lighter, but strong sales growth to start the year for Rail. Julio Alberto Romero: Super helpful. Thank you. Thank you, Bill and John, for that. And I guess just last one before I turn it over is just wanted to comment on, you know, you really did have a really extraordinarily strong free cash flow in the fourth quarter. If you could just speak to the drivers of that and how much of a function of that is kind of the structural things you have done as an organization. John F. Kasel: Well, if you look in the last couple years, we do that pretty frequently, that we manage the fourth quarter. Right? Because of the working cycle needs. We have a big lift in working cycle related to raw materials coming in Q2, Q3 because of the seasonality, and that is our largest sales. So we are bringing in materials. Then we do a good job of moving those materials out and then collecting on our bills in the fourth quarter. We have a really good team that makes those things come together and make those things happen. So we did the same thing last year, you know, 1.2x that we finished the year, and we finished this year, that last year being the year of 2024. And then, of course, we finished this year at 1.0x. So we are good at it. Now, you know, we want to make sure that we keep that focus. But at the end of the day, it is also about making sure that we are delivering to our customer. And so behind all this is, you know, it is good quality, systems, on-time deliveries, and making sure that we do not have customers that have reasons not to pay us. So there is also a very good performing part of this that makes sure that when we ship something, it does not come back. We have delighted customers. Julio Alberto Romero: Great. Thank you for all the color. I will pass it on. John F. Kasel: Thanks, Julio. Operator: Thank you. And one moment for our next question. Our next question comes from the line of Justin Bergner with Gabelli Funds. Your line is open. Please go ahead. Justin Bergner: Good morning. William M. Thalman: Hi, Justin. Lot's been covered. Justin Bergner: But I just want to delve into some areas that maybe would be great. Could you give some more clarity on, so the total track monitoring? Could you provide some, you know, just discussion as to the puts and takes there on the fourth quarter and looking forward? John F. Kasel: Alright. So we mentioned it was somewhat flat last year related to the activity. That is true. So we have been doing quite a bit of work behind the scenes and continue to work on technology innovation, which I mentioned in today's call. So we have some things that are coming to the market that help shore up what that business is, and keep bringing in next generation of product for condition monitoring to the marketplace. So our team was very active, and we had a significant job that we are working on abroad last year too. It took away a little bit of our time and attention to the North American market, but we feel very good about where we are at today. We have built up that team. We have spent our available SG&A to bring the technical resources here in the U.S., moving from the UK. So we are really set up well to deliver our Mark IV application, and then, as we have been talking about, this rockfall installation that we are seeing, pretty significant excitement in the marketplace today. So last year was really getting ourselves shored up to make this happen, to make sure we support it, make sure we had our operating centers ready to perform. So we are looking for big things out of that group in 2026 and beyond. Justin Bergner: Got it. And then secondly, the protective coatings business, I mean, we expect double-digit type growth there in 2026. John F. Kasel: Yeah. I think we are going to be right up to it. It is, you know? And I think what is going on right now in the world related to energy, and the need for more energy here in the U.S., is probably going to continue to put us in a better position as far as volume and activity for the balance of the year. So, again, we have spent some money in those facilities. We brought in some new equipment to make us more efficient, be able to produce more product. So as those orders come in, we are going to be ready to deliver in a big way that we have not done in years past. Justin Bergner: Okay. Great. And then lastly, the headwinds to EBITDA in the quarter, I mean, you mentioned the UK Rail business. I guess your adjusted EBITDA adds back a lot of the restructuring expenses. So in light of that, any clarity on sort of, even after adding back those restructuring expenses, you know, what caused the fourth quarter to be a little bit light versus your expectations? John F. Kasel: That is right. Yeah. So first of all, as far as the UK, I mean, this has been a three-year plan now. We are really getting ourselves aligned to the market needs over there because it has been changing. It has been dynamic. It was a big part of our growth initially, and as that market has changed, we have been pivoting and adapting our business to those needs. So I think we have done a very good job of rightsizing the business, and the materials handling part of that was the last step that we have done, getting ourselves in position to end the year strong, much stronger over there than where we were just a year ago. Bill, maybe you could give a little additional color, would you? Yeah. Would like us as Q4 other hit puts and takes. Yeah. William M. Thalman: Yeah. Justin, you know, as John mentioned, it has been three years of a restructuring and downsizing effort there. What we are seeing coming through in the fourth quarter is basically what I would call us wrapping up those final steps of those downsizing efforts. So the margin impacts were a result of the lower sales volume. There was definitely manufacturing deleveraging that occurred as a result of that, some higher costs that came through. And then we also had some longer-term, legacy commercial contracts that we resolved within the quarter. So that all resulted in a headwind for margins in the UK in the fourth quarter. I guess what I would like to highlight is we are seeing improvement on a run-rate basis moving into 2026 already, and we expect that to continue to improve as we go into the year. Justin Bergner: Got it. That is very helpful. If I could throw one last one, just the Infrastructure backlog, you mentioned it was up from the end of the year. Is it up modestly or is it up materially? I mean, you know, if, obviously, you are only one month away from the end of the quarter. I mean, should we expect to see a nice uptick in the backlog for Infrastructure? John F. Kasel: We are up 15% since the end of the year. Justin Bergner: Gotcha. Alright. Thanks so much for taking the questions. John F. Kasel: Yeah. Thanks, Justin. Thanks for joining us today. Operator: Thank you. And I am showing no further questions, and I would like to hand the conference back over to John F. Kasel for closing remarks. John F. Kasel: Thank you, Michelle, and thank you for joining us today. So I would like to leave you with one thing that, you know, we mention sometimes, but I think it is really, really important to the culture and fabric of our company. I mentioned that, you know, in July will be my fifth year as CEO of the company. One of the things that the leadership team here has really been focusing on is our culture. L.B. Foster Company is in our 124th year, and that really, you know, says something about the company, and a lot of people have worked here for, you know, their entire career. And what really makes us tick is our value system. And, first and foremost, is our focus on the people and safety. Our safety results the last two years have been, respectfully, the best years we have had in the 124 years as far as safety performance. You know, it is not just the number. It is all the activity and the focus and the attention to our people, the process, putting money back in the facilities, the yards, and letting people know that they are important. When you have all those things come together, you are a more profitable company, and you are really providing the value to shareholders, and I think that is something sustainable. So I would like to recognize Ben McClellan. So Ben started with the company just about 25 years ago. So in October, he will hit 25 years. Ben is the Director of Environmental Health and Safety. He has basically been in that role since he joined the company, and let us just say 25 years ago, this was not the L.B. Foster Company that it is today. We did not have great safety performance. There was a lot of effort and a lot of activities to make that happen, but the reality is it took time. It took dedication. It took focus. It brought in new skill sets. And, but Ben was always there, and he was always pulling the levers as well as, you know, keeping the pieces together. So I would just like to thank Ben for all your efforts, all your focus, all your drive, and really putting L.B. Foster Company at the forefront to being world class. World class in, you know, how we do things and to be an extension of our, not just the shareholders, but, you know, our customers as well. So thank you for your time today, and I look forward to meeting or hooking up with you after we finish Q1 results. Take care. Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
Operator: Greetings, and welcome to Kontoor Brands, Inc. Q4 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. Please note that this conference is being recorded. I will now turn the conference over to Michael Karapetian, Vice President, Corporate Development, Enterprise Strategy and Investor Relations. Thank you, Michael. You may begin. Michael Karapetian: Thank you, operator, and welcome to Kontoor Brands, Inc.'s fourth quarter and full year 2025 earnings conference call. Participants on today's call will make forward-looking statements. These statements are based on current expectations and are subject to uncertainties that could cause actual results to materially differ. These uncertainties are detailed in documents filed with the SEC. We urge you to read our risk factors, cautionary language, and other disclosures contained in those reports. Amounts referred to on today's call will often be on an adjusted dollar basis, which we clearly define in the news release that was issued earlier this morning and is available on our website at kontoorbrands.com. Reconciliations of GAAP measures to adjusted amounts can be found in the supplemental financial tables included in today's news release. These tables identify and quantify excluded items and provide management's view of why this information is useful to investors. Unless otherwise noted, revenue growth rates referred to on this call will exclude the impact of the 53rd week and will be in constant currency, which exclude the translation impact of changes in foreign currency exchange rates. Joining me on today's call are Kontoor Brands, Inc.'s President, Chief Executive Officer and Chairman, Scott H. Baxter, and Chief Financial Officer and Global Head of Operations, Joseph A. Alkire. We anticipate this call will last one hour. Following our prepared remarks, we will open the call for questions. Scott? Scott H. Baxter: Thanks, Mike, and thank you all for joining us today. 2025 was a transformational year for Kontoor Brands, Inc. We completed the acquisition of Helly Hansen, Wrangler delivered another year of healthy growth and market share gains, we made progress repositioning Lee and executed Project Genius. Driven by the strength of Wrangler and strong contributions from Helly Hansen, we achieved record revenue, earnings, and cash flow in 2025, while returning over $140 million to shareholders through our dividend and share repurchase programs. Importantly, our results highlight our ability to grow revenue and earnings over the near term while investing in the long term. I am particularly proud of the strong execution our team delivered in a dynamic environment. Sharp focus and clarity on our strategic priorities gives me confidence 2026 will be another record year for Kontoor Brands, Inc. Let's discuss our priorities starting with Helly Hansen. Helly is a growth asset. In 2026, we will further integrate the business while taking steps to accelerate growth and profitability. Integration and growth are not sequential; they are parallel. In the seven months under our ownership, we have strengthened the leadership team, delivered better-than-expected revenue and earnings accretion, and leveraged our multibrand platform to drive greater synergies, operational discipline, and cash generation. We are bringing a renewed sense of focus to Helly's strategy while leveraging synergy opportunities to accelerate investments across the organization. We are in the early innings of unlocking geographic, category, and channel opportunities that will begin to accelerate in 2027 and beyond. We will bring the strategic vision to life at the Investor Day on September 2 in Oslo, Norway. We are excited to invite many of you to Helly's headquarters where we will share the significant opportunity that exists under our ownership. Second, accelerate growth in Wrangler. 2025 marked another strong year for the brand. We expanded market share in our core bottoms business, drove double-digit gains in female, western, and D2C, and invested behind our product assortment to drive greater category and channel diversification. Wrangler is on an incredible trajectory, and I am confident this momentum will continue in 2026. Third, position Lee for improving fundamentals and a return to revenue growth. We have strengthened the identity of the brand, realigned product distribution, launched the most significant equity campaign in years, and elevated consumer perception. We have built the foundation needed to improve the performance of the Lee brand. We expect further progress in 2026 with improved profitability and a return to growth in the second half of the year. And finally, finish Project Genius strong. When we initiated the project in 2024, we outlined how it would enhance our organization, create capacity for investment, and establish a world-class multibrand platform. With half the project now complete, I can confidently say it is delivering. The strong profit improvement and increased investment capacity we expect in 2026 is a reflection of our Project Genius and the benefits it has created across the business. Our global sourcing organization has been optimized to drive greater efficiency in our vendor network, our planning teams are driving greater inventory productivity, and our shared operating platform is creating immediate benefits for Helly Hansen. We will complete Project Genius later this year, transforming Kontoor Brands, Inc. into a best-in-class global multibrand organization while improving our overall financial profile. Now let's review highlights from the quarter starting with Wrangler. Wrangler finished the year strong, revenues increasing 3%. We are seeing broad-based growth across categories and in our men's and women's, the fourth quarter as we continue to scale this platform, and our denim bottoms business grew at a mid-single-digit rate. We leaned into this momentum in the fourth quarter through incremental demand creation investments, including activations around key events such as college football. Our collaborations are also performing well, with Filson and Stranger Things generating well over 3 billion media impressions and strong consumer demand. The team is executing on all fronts and I am confident 2026 will be another exceptional year. Turning to Lee. Revenue declined 6%. In the U.S., revenue inflected positive to 1% growth driven by increases in both wholesale and digital. Digital continues to lead the way, fueled by our refreshed creative vision that is generating results and improving brand KPIs. This is translating to increased revenue on our own digital platform as well as our wholesale partners. 2026 will be a transition year for Lee as we address distribution challenges, including U.S. mid-tier, and position the brand for a return to growth in the second half of the year. We have identified growth opportunities that are better aligned with Lee's refreshed brand position and are evaluating opportunities to optimize distribution in Europe and Asia. I am confident we are down the right path to position Lee for sustained success. Turning to Helly Hansen. The acquisition of Helly has exceeded expectations by every measure, and we are just getting started. In the fourth quarter, revenue grew 10% and earnings outperformed our plan by 50%. It starts with product. 2025 was a record year. We won six Red Dot Design Awards, our most ever in a single year, and recently we were awarded four ISPO awards, including a gold for LIFA Merino Kit EVO. Our innovation engine is fueled by our connection with professionals. In 2025, we celebrated the fourth anniversary of International Ski Patrol Day, partnered with national ski teams in Norway and Canada, and deepened our connection with the ocean and sail communities as an official partner of The Ocean Race Europe. The connection to professionals distinguishes Helly from among our peers and will be foundational to the growth acceleration in the coming years. We look forward to sharing more at the upcoming Investor Day. We will follow with a broader Kontoor Brands, Inc. Investor Day in 2027. Before turning it over to Joe, let me reiterate the confidence I have in our ability to achieve our '26 plan driven by intense focus on execution and strategic clarity. Wrangler enters the year with momentum, driven by market share gains in both denim and non-denim, accretive category growth within western and female, and incremental brand investments that are translating to strong consumer demand. Lee's turnaround is progressing, supported by a clearer brand identity, improving consumer perception, and double-digit growth in digital. Helly Hansen is performing ahead of plan, including better-than-expected revenue, earnings accretion, and cash generation. In 2026, we will grow the business, expand operating margins, and position the brand for breakout growth in 2027. And finally, we anticipate another year of strong cash generation that supports an accelerated deleverage path and our commitment to return cash to shareholders. While the environment remains dynamic, we are executing at a high level and I am confident we are well positioned to create significant value for our shareholders. Joe? Joseph A. Alkire: We delivered a strong finish to 2025, resulting in record fourth-quarter revenue, earnings, and cash flow while deploying approximately $250 million of capital towards debt repayments, opportunistic share repurchases, and dividends. For the full year, revenue increased 18%, adjusted operating earnings increased by more than 20%, and we generated over $450 million of cash from operations. Relative to the outlook we provided following the Helly Hansen acquisition, we outperformed our commitments across every measure. 2025 was a transformational year for Kontoor Brands, Inc., as we achieved the strongest financial performance in the company's history. Wrangler is executing at a high level, Helly Hansen is significantly improving our value creation potential, and the Lee turnaround is progressing. Our Project Genius transformation program is having a significant impact on our results, and we are building a more performance-based culture with a greater emphasis on growth and more aligned incentives across the organization and the brands in our portfolio. We are entering 2026 from a position of strength with sharp strategic clarity for our shareholders, a relentless focus on execution, and a commitment to continue to drive strong returns. Now let's review our fourth-quarter results. Starting with Helly Hansen, global revenue of $251 million increased 10% compared to prior-year reported results. Growth was broad-based across both sport and workwear, and in all geographies and product categories. On a full-year pro forma basis, revenue of over $700 million increased 7%. Within Sport, full-year pro forma revenue increased at a high single-digit rate. Growth was balanced across wholesale, digital, and brick-and-mortar retail. We saw sell-through was strong during the fall/winter season. Retail inventory levels are lean, and we are chasing demand across several of the brand's largest product franchises. Moving to Workwear. Full-year pro forma revenue also increased at a high single-digit rate. Growth accelerated to a mid-teen rate in the second half of the year driven by greater focus on new customer acquisition and key account growth as well as improving construction activity in Europe. We have seen this momentum continue in early 2026. The global workwear opportunity is significant. Helly's product and innovation pipeline is unmatched, and demand for premium workwear is increasing around the world driven by a combination of structural factors and consumer trends we believe will support years of profitable growth at scale. Moving to China. As a reminder, Helly Hansen's revenue results exclude the direct contribution of the China joint venture with our partner Youngor, as the results are not consolidated under the equity method of accounting. On a full-year basis, Helly's China business generated revenue of approximately $100 million, increasing 95% compared to prior year. As a reminder, the China JV for Helly was established just five years ago, so the business is just getting started and the market opportunity is massive. Including the China JV, Helly Hansen global revenue increased at a mid-teen rate on a pro forma basis for the full year. The economics of the 50/50 JV are reflected in royalty income and our share of the net income contribution, as accounted for under the equity method. The China JV generates a mid-teen operating margin, and we expect another year of strong revenue and profit growth in 2026. The acquisition of Helly is off to a strong start and the integration is progressing well. While still early, we are driving significant benefits as a more synergistic brand owner with a streamlined organizational structure and a strong management team in place in Oslo. Fourth-quarter earnings exceeded our outlook by more than 50% driven by stronger revenue growth, gross margin expansion, and operating expense leverage due in part to synergies— all cornerstones of our operating model. Operationally, we are driving increased discipline into the Helly business globally. On the front end, we are optimizing distribution and elevating Helly's premium position in the marketplace. We are investing more meaningfully in the commercial and product organizations and in areas such as consumer insights and innovation. We are also scaling demand creation investments with an increased focus on brand building to drive increased awareness ahead of Helly's 150th anniversary next year. On the back end, we are strengthening the inventory management and demand planning capabilities of the business and investing in a more robust planning organization. We are seeing early returns on these investments such as improved sales quality, higher gross margin, and an ability to capture more revenue opportunities. Leveraging our strong supply chain and operational capabilities, we are also driving a significant increase in working capital efficiency. More specifically, we have reduced inventory days outstanding by approximately 100 days compared to prior year. In the seven months under our ownership, Helly generated $100 million of cash from operations. As a result, we are ahead of our planned deleverage path, supporting increasing capital allocation optionality over both the near and long term. And in 2026, we expect to unlock additional working capital benefits and drive another year of strong cash generation. Helly Hansen is a growth asset. The brand provides access to significant growth vectors in the attractive outdoor and workwear TAMs globally. The business diversifies our portfolio and complements our operational strengths. We expect Helly to be one of Kontoor Brands, Inc.'s largest growth engines and a significant contributor to revenue and earnings growth in the years ahead. We are positioning the brand for accelerated growth in 2027 and beyond, and we look forward to sharing the specifics of our long-term strategic plan at the Investor Day later this year. Now turning to Wrangler. Global revenue increased 3% driven by 10% growth in DTC and 2% growth in wholesale. In the U.S., revenue increased 3% driven by 10% growth in DTC and 3% growth in wholesale. Growth was broad-based driven by strength in denim, female, and western. Following a softer October, trends improved in the combined November period with POS increasing at a low single-digit rate, consistent with the year-to-date average. Wrangler International revenue was flat with prior year, driven by an 11% increase in DTC, offset by a 3% decline in wholesale. On a full-year basis, global revenue increased 4% driven by double-digit growth in female, western, and DTC as well as consistent share gains in our denim and non-denim bottoms business. We expect the momentum of Wrangler to continue and the brand is well-positioned to drive another year of broad-based growth in 2026. Turning to Lee. Global revenue decreased 6%. U.S. revenue increased 1% driven by 8% growth in digital and 1% growth in wholesale. We are encouraged by the momentum in our digital business, which increased 11% for the full year supported by our brand realignment initiatives and incremental demand creation investments. Lee International revenue decreased 15% with the declines in wholesale offsetting mid-single-digit growth in our brick-and-mortar stores. In China, growth in our brick-and-mortar stores was offset by declines in wholesale and digital. As we have discussed in prior calls, 2026 will be a transition year for Lee, as the turnaround continues to progress as anticipated. We expect first-half revenue to decline at a low single-digit rate with second-half revenue inflecting positively with improving profitability. Moving to the remainder of the P&L. Adjusted gross margin expanded 210 basis points to 46.8%. Excluding Helly Hansen, adjusted gross margin expanded 30 basis points driven by the benefits of Project Genius and channel and product mix. This was partially offset by increased product costs and the impact from increases in tariffs, net of pricing actions. Helly Hansen was accretive to adjusted gross margin by approximately 180 basis points. Adjusted SG&A expense was $326 million. Excluding Helly Hansen, adjusted SG&A increased 11% compared to prior year driven by increased investments in demand creation and volume-based variable expenses including the impact of the 53rd week. These increases were partially offset by the benefits from Project Genius. Relative to our prior outlook, we made an incremental $8 million brand and demand creation investment, primarily within the Wrangler brand in support of our growth initiatives. Adjusted earnings per share was $1.73, increasing 25% compared to prior year. Adjusted EPS was $0.09 above our prior outlook. Organic EPS included approximately $0.10 of incremental brand and demand creation investments compared to our prior outlook. Helly Hansen contributed $0.44 per share compared to our prior outlook of $0.29. Now turning to the balance sheet. Inventory at the end of the fourth quarter was $567 million. Total inventory decreased by $198 million, or 26%, compared to the third quarter. The sequential decline in inventory exceeded our plan by $78 million as a result of stronger revenue growth, disciplined inventory management, and net working capital improvements at Helly Hansen. We finished the quarter with net debt of $1.0 billion and $108 million of cash on hand. Our $500 million revolver remains undrawn. On a pro forma basis, our net leverage ratio was 2.0x. During the quarter, we made a voluntary $200 million term loan payment ahead of our expected $185 million payment as a result of stronger operating earnings and cash generation. We have made voluntary term loan payments of $250 million since the closing of the Helly Hansen transaction. We are tracking ahead of our original deleverage plan and anticipate returning to less than 1.5x net leverage by 2026 while consolidating a significant increase in revenue, earnings, and cash flow and meaningfully improving our growth profile. During the quarter, we repurchased $25 million of shares. We are within our targeted net leverage range of 1x to 2x and will look to opportunistically repurchase shares consistent with our commitment to return cash to shareholders. We have $190 million remaining under our current share repurchase authorization. And as previously announced, our Board declared a regular quarterly cash dividend of $0.53 per share. Finally, on a trailing twelve-month basis, adjusted return on invested capital was 29%, improving from 23% in the third quarter. Before moving to our outlook, let me provide an update on tariffs. Our 2026 outlook reflects the impact of higher tariffs on all countries from which we source products, with the exception of Mexico, which remains exempt under USMCA. We have assumed a 15% reciprocal tariff rate effective February 24 on applicable inventory receipts on or after that date. We have assumed at least a 20% reciprocal tariff rate on applicable inventory owned as of the end of 2025 and up to 02/24/2026. We are currently evaluating the recent U.S. Supreme Court ruling on tariffs and the proposed trade agreement with Bangladesh. We utilize U.S.-grown cotton in more than 80% of our products sourced from Bangladesh, which may qualify for a duty-free exemption under the trade agreement. Our outlook does not assume any refunds for tariffs previously paid, which remain subject to more specific guidance from U.S. Customs and Border Protection and the International Court of Trade. Trade policy is rapidly evolving and we expect the level and structure of tariffs moving forward to remain uncertain and difficult to predict. Now let's review our updated outlook. Full-year revenue is expected to be in the range of $3.4 billion to $3.45 billion, representing growth of approximately 9%, including an approximate 2% impact from the 2026, for Wrangler and Lee, our outlook assumes no meaningful change in recent POS trends or retail inventory positions. Inventory levels at retail remain suboptimal and our retail partners continue to be in a conservative posture with regard to inventory management and forward inventory commitments. For Helly Hansen, our outlook is supported by order book visibility, current demand trends, and expanding distribution within both sport and workwear. Moving to gross margin. Adjusted gross margin is expected to be in the range of 47.2% to 47.4%, representing an increase of 60 to 80 basis points compared to prior year. Our gross margin outlook reflects the benefit of Project Genius, favorable channel and product mix, and the contribution from Helly Hansen, partially offset by the increases in tariffs, net of pricing and other mitigating actions. Tariffs, net of pricing, represent a headwind to our gross margin rate in 2026. We have implemented price increases for Wrangler, Lee, and Helly Hansen as part of a holistic plan to mitigate the impact of the increases in tariffs. Our pricing strategies were thoughtful and developed in consideration of the fluid macro environment, the strength of our brands, our elasticity expectations in certain categories and channels, and the retail environment around the globe. We remain fully committed to offsetting the impact of the increases in tariffs over a 12 to 18-month period through additional measures such as transferring production within our global supply chain, strategic supplier partnership initiatives, inventory management, and other proactive mitigating actions. For the first half of 2026, we expect adjusted gross margin to be in the range of 47.1% to 47.3%. Adjusted SG&A is expected to increase approximately 12% compared to prior year, reflecting the contribution from Helly Hansen as well as increased investments in demand creation and other strategic growth initiatives, partially offset by Project Genius and the impact of the 53rd week in the prior year. Adjusted EPS is expected to be in the range of $6.40 to $6.50, representing an increase of 15% to 16%. For the first half of 2026, adjusted EPS is expected to be in the range of $2.25 to $2.30. For the full year, we anticipate an effective tax rate of approximately 20%, reflecting synergy benefits as we integrate Helly Hansen into our global tax platform. For the first half of 2026, our effective tax rate is expected to approximate 23%. Finally, we continue to expect another year of strong cash generation. Cash from operations is expected to approximate $425 million. We will leverage and expand our supply chain and AR financing programs to include Helly Hansen in 2026. These programs and capabilities will be a significant unlock for the business while supporting accelerated cash generation and deleverage. Our outlook assumes voluntary term loan payments of $225 million, bringing total acquisition-related debt repayments to $475 million, or approximately 70% of the total debt incurred at the close of the Helly Hansen transaction in just 18 months. Moving forward, our capital allocation optionality is expected to increase significantly. We will continue to evaluate options to enhance shareholder value by effectively utilizing our strong balance sheet and cash generation. Before opening it up for questions, a few closing comments. I would like to reiterate the confidence we have in our business moving forward, the power of our operating model, and the global multibrand platform we are establishing. Our growth profile is fundamentally improving supported by the strength of Helly Hansen, continued momentum at Wrangler, and our progress repositioning Lee. We expect the benefits of our transformation initiatives to continue to scale, providing us with greater investment capacity and improved operational efficiency. And we expect another strong year of cash generation supporting an accelerated deleverage path and an increase in capital allocation optionality. Strategic clarity, a relentless focus on execution, disciplined capital stewardship, agility, and resilience—these attributes are deeply embedded in the Kontoor way. When coupled with an increased emphasis on growth in a more performance-based culture, we are excited about the road ahead and the opportunity to unlock the full potential of Kontoor Brands, Inc. It has been a transformational year for Kontoor Brands, Inc. On behalf of Scott, myself, our executive leadership team, and our Board, we would like to thank the organization for the passion, commitment, and success you continue to drive for Kontoor every day. This concludes our prepared remarks. I will now turn the call back to the operator. Operator: Thank you. We will now be conducting a question-and-answer session. Our first questions come from the line of Irwin Bernard Boruchow with Wells Fargo. Please proceed with your questions. Irwin Bernard Boruchow: Hey, everyone. Congrats. Couple of questions for me. First on Helly, I am not sure if it is for Scott or Joe. Did you specifically give an organic growth rate for Helly this year? And kind of curious the thought process around 2027 really being a much—sounds like 2027 is a much bigger year for the brand. Can you just kind of walk us through how we should be thinking about the brand's growth trajectory in 2026 and 2027? And then just a quick follow-up on Helly. On China, Joe, appreciate the details. Any color on what the China business for Helly should be doing this year in 2026? And do you have any optionality to take that business in-house? Is that something you are considering? Just kind of curious on that too. Scott H. Baxter: Thanks, Ike. I will go ahead and get it started, then turn it over to Joe. From a Helly standpoint, we are making a significant investment in the team from a product standpoint in headquarters in Oslo, building out a significant and real team in the U.S. in North America, which we have not had before. We have got some really strong leaders in that marketplace. But we need to surround that team with added talent and build a fully capable team, which is going to be a big unlock for us from a brand standpoint going forward. And how we have thought about it is 2026, the first half, we have not invested greatly from a marketing standpoint, but you are going to see it in a very significant way in the second half to build momentum going into 2027. So we feel really, really good about how we thought about our plan going forward. And we have seen from the consumer a real appetite for our product. So now we are thinking about the right distribution in the U.S. marketplace going forward and making sure we seed that in the correct way and really creating an atmosphere that there is a lot of opportunity for growth for a very long time for the brand in this marketplace and then continuing to accelerate the rest of the world too. So hopefully, that answers kind of how we are thinking about it here. And then Joe? Joseph A. Alkire: Yes. Hey, good morning. So for Helly on a full-year basis, revenue increased about 7%. In the back half, Q3, Q4, under our ownership, revenue increased 10% to 11%, with a couple of points of benefit in there from a currency standpoint. As we move into 2026, mid- to high-single-digit growth is what we expect for the brand. We have anchored everybody from an expectation standpoint on high-single-digit growth for the brand moving forward, and we think we have an opportunity to accelerate growth even beyond that. On China, look, we are very pleased with the performance of the China JV. We have got a strong partner in Youngor. We have got a strong management team on the ground in China that is executing very well. Part of our acquisition thesis was a view that the China business was on the cusp of an inflection, and that is exactly what has played out. This business is beginning to contribute quite meaningfully to revenue and earnings. So, as part of our integration strategy, we are connecting the Helly China business more closely with the brand centered in Oslo. We are reaping the early benefits of that stronger collaboration between those two teams. So 2026, we expect another year of strong revenue and earnings growth for the JV, north of 50%. Operator: Our next questions come from the line of Robert Drbul with BTIG. Please proceed with your questions. Robert Drbul: Hey, good morning. Just a couple of questions from me. On the Helly integration, just talk maybe about what you have learned seven months in so far, sort of any surprises, any disappointments? And then I think in the release you talked about $8 million of incremental demand creation. Can you talk about sort of the overall spending level that you are thinking about for '26 maybe by brand? And if I could just ask one more. On capital allocation, can you just talk about the plans or trade-offs here between buyback and deleverage? Scott H. Baxter: Sure, Bob, I will go ahead and start. From a Helly standpoint, we have done a lot of these in the past. As you know, you have covered the different companies that we have been associated with and where we are now. And this has been, hands down, without question, the best integration ever. I have never seen anything like it. From the execution from both teams, from the collaboration from both teams—you have heard me say it starts culturally—and these two teams meshed from the very beginning. And we found the Helly team in a situation where they were kind of, you know, not a real integral part of their past company for a lot of reasons. And now they are an incredibly integral part of our company. We talk the same language, which they have not had before—that is apparel and product. And it has just been—I just cannot get over how well this has gone, every single part of it. And I think the most important thing is that you see what is happening in the business because of this really strong integration. So incredibly pleased about this and really excited about what the future looks like here for the team. Joseph A. Alkire: Good morning, Bob. So from an investment perspective, we are driving double-digit increases in investment behind really all the brands—in demand creation, in product, in consumer insights, DTC—all the areas you would expect. Those investments, that capacity, is being funded in large part by Project Genius, which was precisely the point. Right? So we will continue to appropriately balance and evaluate our opportunities to invest with our goal of accelerating growth but also expanding profitability and returns on capital over time. Scott H. Baxter: Well, Bob, I will tell you really how we are kind of thinking about it is our cash flow is so strong and improving that we feel very strongly that we can and will do both in the upcoming year. We think there is going to be certainly an opportunity to buy some share backs and look forward to that. And obviously we are out there with a statement right now that we are going to take $225 million off of the table relative to deleveraging. So way ahead of the game on where we planned on being from a deleverage standpoint and plan on continuing to do that. And then, we will be opportunistic from the standpoint of share repurchase. But as you saw, we started that in the fourth quarter, we saw an opportunity there, and will continue in 2026 on both. Just in a position with our balance sheet that we can do both and can do them both pretty strongly. Robert Drbul: Great. Thank you. Good luck. Scott H. Baxter: Thanks, Bob. Operator: Thank you. Our next questions come from the line of Jonathan Komp with Baird. Please proceed with your questions. Jonathan Komp: Hi, good morning. Thank you. I want to follow up on Helly Hansen. I believe it was mentioned expanding distribution in both sport and workwear. So if you could maybe share more thoughts on the initial thesis there, the types of opportunities you see, then and then separately, just on the Wrangler business, can you maybe talk or rank order some of the organic volume drivers that you see looking forward? Thank you. Scott H. Baxter: Thanks, Jonathan. Appreciate it. I will go ahead and start with Helly. We made the acquisition and part of the thesis was the opportunity in North America because we know the market so well. And we just do not have an incredible amount of distribution right now in North America or that large of a D2C channel. So we think going forward—we know going forward—with product that we have and the knowledge that we have in the marketplace from past experience in this category, that there is a very large D2C expansion opportunity if done right. And we are in the process of all of that planning right now. And there is a really—and I want to make this statement really clear to everybody—there is a really nice opportunity to grow our wholesale business with the right partners, which we are doing, and you are actually going to see some pretty significant rollouts in the second half of this year. And we can talk about those—we will talk about those in the upcoming quarters coming up. There is some really nice momentum from the brand and, you know, from a consumer standpoint, they are really finding the brand now. And we think there is opportunity to do that over a period of time. So what I mean by that is we are going to go ahead and build that momentum going forward. We are just not going to go all in. And I think that from past learnings, we are not going to try to be everything to everyone and grab any point of distribution we can just because the brand is doing really well. We are going to really cultivate the brand going forward. So hopefully, that is a great message for everybody to think about the growth opportunities here for a very, very long time. And then from a Wrangler standpoint, I am pleased with what the Wrangler team is doing. I am very encouraged by D2C going forward, and, you know, maybe we try to talk about that in an upcoming call. I am very encouraged by what I am seeing in the west business, just from the incredible product that we are making in western female, which has also been really, really accretive to us. And then also in things like bespoke and our female business in general. So, we continue to take Circana market share gains on a pretty significant basis, continue to grow the portfolio. And I think we have a full offering for our consumers too that are really attaching to the brand, and we think that the future relative to Wrangler and the growth opportunity for a very long time is very, very significant. Jonathan Komp: Right. We will look forward to the details on Helly and the Investor Day in September. Thank you. Scott H. Baxter: Yes. Thank you. Hope to see you there. Operator: Thank you. Our next questions come from the line of Mauricio Serna with UBS. Hey, good morning. Thanks for taking my question. On Helly Hansen, I think you also mentioned in your prepared remarks that you are looking to expand margins this year. Could you talk about the margins of the business on a full-year basis last 2025, and how are you thinking about that in 2026? Joseph A. Alkire: Yeah, sure. I will take that. Good morning, Mauricio. So look, we are not going to provide specific guidance by brand. But we do expect strong earnings growth from Helly in 2026. That is going to be driven by both gross and operating margin expansion. We expect to grow operating earnings somewhere in that low-teen rate kind of range in terms of the increase over 2025. That is inclusive of synergies, that is inclusive of the investments we are making behind the business. We have got a full year of intangible asset amortization that was created in purchase accounting as well as the impact of tariffs. So beyond operating income, the integration of Helly into our tax platform—that is driving synergy below the operating income line—going to have lower interest expense in the first half of 2026 that will be a tailwind that will continue into 2027 as we rapidly pay down the debt incurred with the acquisition. In terms of shaping for the first half, remember Helly historically generates operating losses in the first half of the year, particularly in the second quarter, which is their smallest quarter of the year. In the first half, we also have interest expense, incremental interest expense, from the acquisition that we did not have a year ago. So the growth, the earnings contribution from Helly, will be more back-half weighted. Mauricio Serna Vega: Very helpful. And then just a quick follow-up on gross margin. You guided to an expansion this year. Could you maybe quantify the benefit that you get from the tariffs going to 15% from 20% as of, you know, the impact that that will be for after February. And then any sense of how much you could benefit if we do get a trade deal with Bangladesh and the cotton is exempt, given you said that 80% of the product from Bangladesh uses U.S. cotton? Joseph A. Alkire: Yeah. So a couple of things. We expect our gross margin to expand between 60 and 80 basis points for 2026. There are some pretty meaningful puts and takes within that. We expect Helly Hansen to be accretive by about 100 basis points. We expect Project Genius plus channel and product mix to drive about 180 basis points. And these benefits will be partially offset by higher product costs and somewhere between 160 basis points and 180 basis points of pressure from tariffs, net of our mitigating actions. In terms of how that is going to flow through, remember all the inventory we owned at the end of 2025—all the inventory that we received January, February—inventory has a 20% tariff rate attached to it. So that is going to turn through the P&L really through the first half of the year. And then the impact of the 15% tariff rate will start to influence the P&L as we get to the second half of the year. On Bangladesh in particular, look, there is still a lot of uncertainty around the level and structure of tariffs. We expect trade policy to remain pretty dynamic and difficult to predict. We are awaiting specific guidance from CBP as it relates to the applicability of trade agreements announced prior to the Supreme Court ruling and subsequent actions by the administration. Of particular interest to us is the trade agreement with Bangladesh, which we highlighted. That trade agreement reflected a potential reciprocal tariff ranging from 0% to 19% depending on the U.S.-grown cotton content of products sourced from Bangladesh. More than 80% of the product we source from Bangladesh does include U.S.-grown cotton. Bangladesh is our largest country of origin from a sourcing perspective. So by nature, it is also our largest source of tariff pressure. So we have not included any such benefit from a Bangladesh trade deal in our forward outlook, as again the applicability of the trade agreement remains uncertain. But it is potentially material for us, so we wanted to flag it for investors. Mauricio Serna Vega: Got it. Thank you so much. Operator: Thank you. Our next questions come from the line of Brooke Siler Roach with Goldman Sachs. Please proceed with your questions. Good morning and thank you for taking our question. Brooke Siler Roach: Scott, can you dive a little bit deeper into how you are feeling about the U.S. consumer and demand trends in your core U.S. denim business? What contribution are you expecting from pricing? What actions are you taking in the mid-tier channel? And how impactful are those opportunities as you balance a dynamic macro backdrop into this year? Scott H. Baxter: Good morning, Brooke. Sure, can. I think that myself and the team—and we have had quite a bit of discussion about this—feel really, really good about the North American market and the U.S. business. I think that the consumer here is incredibly resilient. If you think about the consumer as it relates to our channels and our products, it is just really, really strong right now. And I think the macro backdrop here is only going to improve over time. I really do. And I think that we are in an age here that things are really strong, really good. We are going to be able to go ahead and move forward with our business in a pretty significant way. I like the big wholesalers that we are aligned with—you know, that win-with-winners mentality. So I think we have got ourselves aligned in a proper way. And speaking to that, how we are aligning Helly Hansen going forward from a win-with-winners mentality and making sure that we are aligned with the right customers and the right consumers to make sure that that brand has a long trajectory of growth. From the standpoint of pricing, I think that we have always listened to our consumers. We have really great relationships with our wholesalers and I think we have done a really good job of balancing that. And I think we continue to. So I think one of the things is this market has been fairly fluid from a tariff situation, so we have had to be nimble from that standpoint. And I think that we need probably 30 to 60 days for some more information to come out so that we can go ahead and make some good decisions. But I think that you have come to see from us for a long time now that we make really good decisions relative to pricing, understand our elasticity because we have a lot of data here that we have had for many years. So we understand, you know, what the ceilings are and what the floors are. I feel really good relative to how we are strategically thinking about that, both at a D2C level and at a wholesale level. And from a mid-tier standpoint, certainly hope that they continue to do the things that they need to do to get stronger. New management in several of our big mid-tier retailers is wonderful. New CEO leadership, which is bringing incredible energy, and that is what we are hearing. So I have a lot of hope that that is going to continue to get better with some new leadership, new energy, some new ideas, new focus, and we will be right there for them from that standpoint. But I think if I can just encapsulate it, I think I would say that in my time as the CEO here since 2018, I do not know that I have ever felt better about the U.S. marketplace and our positioning in the U.S. marketplace. I would say that right now, I am as bullish as I have ever been. Brooke Siler Roach: That is great color. And then just an update for Joe. Can you provide a level set of where we are on Project Genius achievement to date, the expected Project Genius contribution that is embedded in this year's guide, and the opportunities for future margin improvement from Project Genius as we look to 2027 and beyond? Joseph A. Alkire: Yes. Hey, good morning, Brooke. So for Project Genius, we delivered gross savings of over $50 million in 2025. For 2026, we will approach $100 million of gross savings. The benefits will build over the course of the year and we expect to reach a full run rate in the first half of 2026. So the savings we expect to deliver in 2026 are significantly bigger than those that we achieved in 2025. Again, the program continues to scale. You can see these benefits pulling through really both in the gross margin but also the SG&A. These savings have allowed us to reinvest back into the business at a level beyond what we previously anticipated, and those investments continue to fuel our growth and momentum. The $8 million that we announced—the incremental $8 million in the fourth quarter—is a great example of that. So Project Genius remains on track. We are executing really well, and by the back half of this year we will deliver what we set out to do at the beginning. Scott H. Baxter: And, Brooke, I am going to go ahead and tag on to Joe here a little bit. Relative to every time you run a big project like this and you transform, one of the things that became an attachment to this was that we are now moving and are really pushing forward with what we call a performance organization, which we have not put in place before. And we have a world-class HR organizational team led by Pete and just an incredible team that he has put together. And we are pushing to make our entire organization accountable, driven by performance, and rewarded by performance. And that all kicked off this year on January 1, and we are really excited about the results and also the actions and behaviors that is going to drive. But that is all an aftershoot of thinking about Project Genius, all that has come from Project Genius, how to make sure that we take those Project Genius learnings and everything that we are doing relative to Project Genius and continue to push it forward, but motivate our people the right way. And it seems to be dovetailing really nicely together. And it is one of the things that I am most excited about for us as an organization in 2026 and beyond. Brooke Siler Roach: Great. Thanks so much. I will pass it on. Operator: Thank you. Our next questions come from the line of Blake Anderson with Jefferies. Hi, good morning. Thanks for taking my questions. Blake Anderson: I wanted to start with tariffs. I might have missed this, but did you quantify the gross tariff headwind as well? And then could you size up what are your key mitigating levers between pricing, cost savings, and sourcing to enable you to mitigate the tariffs, and what gives you confidence you can mitigate those more fully over the next 12 to 18 months as you mentioned? Joseph A. Alkire: Yeah. I will take that. Hey, Blake. So for 2026, the gross tariff impact remains over $100 million, right? So it still presents a significant headwind to the business. We are getting a bit of a reprieve from the 15% reciprocal rate that will begin to impact the P&L in the second half of the year. Our mitigating actions are larger in the first half of 2026 and those will carry into 2027, by which time we expect to fully mitigate the tariff. That is the 12 to 18 months that we continue to talk about. From a lever standpoint, you know, it is really all of it. Right? Pricing, we highlighted strategic supplier partnerships, inventory management—this is what our supply chain is really good at. We have got the ability to navigate situations like this around the globe. So, we remain really confident in our ability to offset this as we get to the back half of 2026 and into early 2027. Blake Anderson: Great. Thank you. And then wanted to ask on Lee. You mentioned that it remains in a transition year, but you expect inflection to growth in the second half. Can you elaborate on the key drivers of that inflection? What gives you confidence? And any more color on the quarterly trends there throughout the year? Thanks so much. Scott H. Baxter: You bet, Blake. This is Scott. From a Lee standpoint, proud of the work that the team has done relative to—we have gone back, put a national ad campaign together that we have not had for many years. We are much more engaged from a marketing standpoint, both digital and regular. So that really feels good going forward. Probably the single thing that I am most happy about is product. We have done a really, really nice job with product. It needed some upgrading, and we went ahead and have done it. And I think that the product offering that we have coming out this year and into 2027 is the best that Lee has ever had. And then you just co-join that with a really strong marketing campaign and just more energy from the marketplace and the team about this Lee turnaround and the product they are seeing. I think all that just kind of coming together at the same time. These things do take a little bit of time, but we have had some really nice green shoots and we have been happy with that. And we watch things like digital and how the consumer can respond to new offerings immediately, and that has been really strong. So we have been really happy about that. So going into the second half—and you heard our commentary about where Lee will be—there is a growing level of confidence. I do not think that we are getting ahead of ourselves, but we feel really good about the progress that Lee has made, the track that it is on, the product, the advertising, all of the above—just much, much better than it was a year to two years ago. Blake Anderson: Got it. Thank you so much. Operator: Thank you. Our next questions will come from the line of Peter Clement McGoldrick with Stifel. Please proceed with your questions. Good morning. Thanks for taking my questions. Peter Clement McGoldrick: Yes, first on Helly Hansen, I wanted to ask about your comments about new distribution. Can you help us think about the reception among the key retailer base and how those retailers are supporting the rollouts that you mentioned in the second half? Scott H. Baxter: Yes, I sure can, Peter. This is Scott. And I will pass it over to Joe after. But from my vantage point of doing this with another big outdoor brand for a very long time, I think that what we are seeing from key retailers is that they would like to have another—they would like to go ahead and have another big, strong, growing brand in their portfolio. I think there is just right now a little bit of fatigue with some other brands, and this is exciting. It is new. It is really good product. We are really dialed in. You heard us talk about some of the awards that we have won, and that brings footsteps into retailers and it brings excitement. So we are in a really great period right now where the opportunity—the phone calls are not outgoing, they are inbound—where people are asking, you know, “Hey, we would really like to talk to you about you being part of this year going forward,” and we have the opportunity to be a little bit selective, which is really nice. And you are going to hear some of that, like I mentioned earlier. We are happy to go ahead and expand on that a little bit at one of the upcoming calls so that you know what to expect in the second half going into '27. But that is happening pretty significantly here in the United States. But also, I should mention that our European team has done a fantastic job with that too, and our Canadian team. So you are just seeing that there is an uptick in Helly. There is a real uptick in people that are talking about how great the product is. And then some of the things that we have done relative to how we outfit some certain mountains and have some relationships with ski providers and ski mountains and what have you, and put it on the experts and the coaches and all the volunteers—I think that has really helped the brand too relative to the brand strength and just creating kind of an aura around the brand, which is really nice. But like I said, I have been here before and seen this all happen, learned some lessons along the way. And we are going to make sure that we implement those lessons as this brand starts to really blow up. And I think our team has done a really nice job with that. And I am excited about—we did buy the brand because—not all this is specific—but one of the reasons we bought the brand is because it was a really big opportunity here in North America. And our team is getting after that right away. And you will hear from us too, you know, we are about to fill some very strategic North American positions that we have not had before that, if you want to play in this category and in this channel, you have to have those types of positions. And we are about to do that. So lots of really good things, lots of big momentum, much more to come from a Helly standpoint. So stay tuned, and then certainly we are really looking forward to having everybody over to Oslo in September and having an Investor Day where we can really talk about the brand and you can meet the team and see the people and see some product and what is upcoming. So lots of good things happening with Helly and looking forward to the September date too in a pretty significant way. Joe, anything that you would add? Joseph A. Alkire: I would just add the workwear opportunity around the globe is significant, right? This business has grown pretty consistently at a high single-digit rate over time. This business is primarily a European business today, but the global opportunity for workwear is significant, including in the U.S. Peter Clement McGoldrick: That is really helpful. And then there were some encouraging comments about Helly Hansen's integration. And I was hoping you could help us think about the key remaining integration milestones, any cost synergy targets for 2026, and when you expect to reach the full run rate of synergies? Joseph A. Alkire: Yes. I will take the synergies. So we continue to have direct line of sight to significant synergies across the business. That list is growing the deeper we get into it, and we are working very collaboratively with the leadership team in Oslo. We have now identified synergies of more than $40 million. We were at $25 million before. These will come in the areas primarily of sourcing, logistics, distribution, technology, tax—all the things that you would expect—as well as some back-end operating efficiency. So we have got synergies baked into 2026. We will reach full run rate in terms of the $40 million as we move into 2027. Scott H. Baxter: I will tell you, Peter, this is kind of a fun one, but we talk a lot about collabs—would like to see a collab between Helly and some of our other brands. That would be kind of fun from a synergy standpoint. Peter Clement McGoldrick: Love it. Look forward to that. Thank you. Scott H. Baxter: Thanks, Peter. Operator: Thank you. We have reached the end of our question-and-answer session. I would now like to hand the call back over to Scott H. Baxter for any closing comments. Scott H. Baxter: Thank you, everyone, for joining us today. As you can see, there is a lot of effort and energy coming from Kontoor Brands, Inc., a huge thank you to our global team. I think you can count on us to keep our heads down, working really hard, and continue to drive this business forward. And just again, wanted to thank the entire Helly team and welcome them to our corporation. It has been a lot of fun, a great integration that I have not seen the likes of in my career. And I think that you can count on us to continue to work hard in this marketplace and take advantage of the opportunities that we have. One or two things that I would like to mention is we do have the upcoming Investor Day and we would like to hopefully see a strong showing for that so that we can spend the day together and really talk about the Helly brand. We thought because there were so many questions about that, that we would do that first and really focus on it because it is such a focal part and an important part of what we are trying to do here. And then we will follow that up very quickly, very quickly in 2027 back here in the United States with a full KTB Investor Day. So we will hit that kind of bam bam, one right after the other. But thanks again for your questions and also your support. Really appreciate it. And we will look forward to seeing everyone in September, but we will look forward to talking to you at the end of the first quarter in our call. Thanks everyone. Take care. Operator: Thank you, ladies and gentlemen. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time, and have a wonderful day.
Operator: Good morning. My name is Paul, and I will be your conference operator today. At this time, I would like to welcome everyone to Viking Holdings Ltd's fourth quarter 2025 earnings conference call. As a reminder, this call is being recorded. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question at that time, please press 1 on your telephone keypad. If you wish to remove yourself from the queue, please press 2. Thank you. I would now like to turn the program to your host for today's conference, Vice President of Investor Relations, Carola Mengolini. Carola Mengolini: Good morning, everyone, and welcome to Viking Holdings Ltd's fourth quarter and full year 2025 earnings conference call. I am joined by Torstein Hagen, Chairman and Chief Executive Officer, and Leah Talactac, President and Chief Financial Officer. Also available during the Q&A session is Linh Banh, Executive Vice President of Finance. Before we get started, please note our cautionary statements regarding forward-looking information. During the call, management may discuss information that is forward-looking and involves known and unknown risks, uncertainties, and other factors, which may cause the actual results to be different than those expressed or implied. Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release, as well as in our filings with the SEC. The forward-looking statements are as of today, and we assume no obligation to update or supplement these statements. We may also refer to certain non-IFRS financial metrics, which are reconciled and described in our press release posted on our investor relations website at ir.viking.com. Torstein and Leah will provide a strategic overview, a recap of our fourth quarter and full year results, and an update of the current booking environment. We will then open the call for your questions. To supplement today's call, we have prepared an earnings presentation that is also available on our investor relations website. With that, I am pleased to turn the call over to Torstein. Torstein Hagen: Thank you, Carola. Good morning, everyone, and thank you for joining us today. In our first full year as a public company, we have delivered very strong financial results. And I think we accomplished a great deal as our business continues to grow. If you turn to slide 3, I will begin by highlighting our fleet, which remains at the center of our strategy. 2025 was marked by the significant milestone of surpassing 100 ships. I believe that this accomplishment reflects our innovative approach and decades of thoughtful growth. From our humble beginnings in 1997, with just four river ships and two cell phones, we have certainly built a global business that now operates on all seven continents, spanning river, ocean, and expedition cruising. Today, our fleet consists of 89 river vessels, 12 ocean ships, and two expedition ships. All share the unique Scandinavian design and deliver the consistency and quality that our guests expect from Viking Holdings Ltd. As part of our ongoing fleet expansion, we will soon operate the world's first hydrogen-powered cruise ship, capable of operating part of the time with zero emissions, something I am particularly proud of. We believe that innovation should be practical and thoughtfully implemented. Also during the year, we continued to expand into new and exciting destinations. A highlight was the announcement of our new river itineraries in India, a region rich in history and cultural depth. At the same time, we increased our roof lid on the Nile and on the Mekong Rivers. In parallel to all this, we strengthened and expanded partnerships across the architecture and scientific institutions. These partnerships support brand awareness and local engagement among our target demographic. Moreover, in many cases, they also introduce opportunities to enhance our guest experience via unique privileged access unavailable through other travel providers. As you can see, we pursue growth with intention, expanding access, increasing choice, and enriching the cultural experiences that set Viking Holdings Ltd’s product apart. I am very pleased that the milestones we achieved in 2025 supported an exceptional fleet and with it an exceptional financial performance. Regarding our fleet, you can see on the next two slides some of the features that make our ships such a strong driver of our results. I will start with ocean on slide 4. As it pertains to our ocean fleet, we are one of the youngest fleets in the cruise industry. Our state-of-the-art efficient design eliminates wasted space and extra weight on board while maximizing guest comfort and optimizing fuel consumption. Moreover, our ocean ships with a sleek hull design and closed-loop scrubbers allow us to use more cost-efficient fuel. These attributes help us manage fuel costs in times of adversity. The layout and onboard offering of our ocean ships also allow us to operate with fewer crew, without diminishing our high level of service. All these elements improve ship profitability. If we now focus on river on slide 5, most of our river vessels are Longships, a unique type of ship designed for European rivers. These ships include design features such as patented asymmetrical corridors and a square bow that allows for three full decks. With this design, we can accommodate up to 190 guests, which is more than the average European river vessel, improving the Longship profitability. As it pertains to fuel cost, the river operation has fixed-price contracts for a significant portion of the 2026 season. Within each product, our ships are indistinguishable to our guests. Potential guests shop by itinerary rather than a specific ship or age of ship, and it allows all the ships to achieve similar yields even when introducing new ships. On average and based on contribution to operations, the payback period for an ocean ship is about five to six years, and the payback period for a Longship is about four to five years. Taken together, these characteristics show how the design efficiency and consistency of our ships translate directly into very good financial performance, which was particularly strong in 2025. Now turning to slide 6, you can see that we increased capacity by 12% year over year. This reflects both the expansion of our fleet and the continued demand for our product. At the same time, our net yields grew 7.4%, demonstrating our ability to attract high quality demand and to maintain pricing power. Together, these factors drove a 21.9% increase in total revenue, which reached a record of $6.5 billion in 2025. This strong top-line momentum translated into meaningful profitability. Our adjusted EBITDA reached almost $1.9 billion, an increase of 38.8% year over year, reflecting not only higher revenues, but also the benefits of scale, operational efficiency, and disciplined cost management. And lastly, our adjusted net income was $1.2 billion, 43.9% higher than last year. We are very proud of this performance, given the continued investments we are making to support our long-term growth. Now our 2025 performance is best understood and appreciated in the context of our long-standing track record of strong, consistent results. As you can see on slide 7, for 2025, every major financial metric outperformed the compound annual growth rates shown on the slide, which are all very good. I believe that these trends reinforce that our 2025 results were not driven by a single good year but by sustained demand, long-term planning, disciplined execution, and a strong business model. Additionally, on the next slide, number 8, you can see in a measurable way the strength of our demand. Viking Holdings Ltd has consistently increased capacity by increasing yields and maintaining high occupancy levels. Together, these trends reflect the long-term resilience of our business and our ability to execute consistently. In this context, strong financial performance is part of the story. It is also important to review additional metrics that validate our growth trajectory. These are on slide 9 and highlight the depth of our guest loyalty, our market position, and the strength of our balance sheet. In 2025, 54% of our guests sailed with Viking Holdings Ltd as repeat travelers, a number that continues to grow and that is a clear sign of the trust they place in our brand. Moreover, more than half our bookings were made directly through Viking Holdings Ltd. This provides a meaningful long-term advantage in how we manage demand and engage with our guests. On top of this, we continue to hold a leading market share position with a 52% share of the North American outbound river market and a 27% share of the luxury ocean market. In addition to all this, we managed our balance sheet well. We ended the year with 45.8% return on invested capital and a net leverage ratio of 1.1x. Overall, these results reflect our ability to achieve profitable growth by staying true to our principles of financial discipline and long-term value creation. Beyond the financial results, this consistency is also reflected in the recognition we continue to receive from our guests and the industry. On the next slide, number 10, we have highlighted some of the many accolades we have received during the year. These awards are particularly meaningful because they are based on guest feedback, reinforcing that our differentiated approach continues to resonate with our core demographic. In closing, I would like to highlight that even as business continues to evolve, the principles that define Viking Holdings Ltd and guide every decision we make are unchanged. And these principles are shown on slide 11. First, we remain unwavering in our commitment to obsess over our guests, making sure that we deliver an excellent travel experience at good value. Second, we continue to treat our employees as part of our extended family, recognizing that their dedication and care are central to everything we do. Third, we will continue to take a contrarian approach when we believe it serves the long-term interest of the business. And finally, we continue to do what we believe is right for the environment. With that, I will return to Leah to discuss our financials. Leah Talactac: Thank you, Torstein, and good morning, everyone. We are very pleased to report a strong fourth quarter, capping a year of exceptional financial performance. On slide 13, you can see our key financial metrics. On a consolidated basis and for the fourth quarter, total revenue was $1.7 billion, increasing 27.8% year over year, driven by higher capacity, higher occupancy, and higher revenue per PCD. Adjusted gross margin was $1.1 billion, up 27.3% year over year, resulting in a net yield of $546, 7.7% higher than 2024. Vessel operating expenses, excluding fuel per capacity PCD, increased 2.6% this quarter compared to the same time last year. Adjusted EBITDA totaled $463 million, an improvement of $157 million, or 51.3% over 2024. I will highlight that our adjusted EBITDA margin reached 41.8% this quarter, representing an increase of 663 basis points compared to the same period last year. Net income for 2025 was $300 million compared to $104 million for the same period in 2024. The net income for 2024 includes a loss of $96 million from the revaluation of warrants issued by the company due to stock price appreciation. 2024 was the final quarter impacted by the warrant revaluation. And lastly, adjusted net income attributable to Viking Holdings Ltd was $298 million and adjusted EPS was $0.67, 48.3% higher than 2024. Overall, we are very pleased and proud to close the year with a great fourth quarter, delivering strong revenue growth and meaningful margin expansion. Now I will briefly discuss our two reportable segments on slide 14. Unless noted, I will be referring to metrics for the full year ending December 31. For the river segment, our capacity PCDs increased 6.5% year over year. The increase was driven by the addition of two vessels delivered in 2024 and six vessels delivered in 2025. During the 2025 season, these vessels operated across multiple regions of the world, including Europe, Egypt, Vietnam, and Cambodia. Adjusted gross margin grew 16.2% year over year to $1.9 billion and net yield was $578, up 8.4% year over year. Occupancy was 96% for the year. For ocean, capacity PCDs increased 17.9% year over year, driven by the delivery of the Viking Vela in December 2024 and the addition of the Viking Vesta in July 2025. Adjusted gross margin increased 30.9% year over year to almost $2.0 billion and net yield was $572, up 9.7% compared to the previous year. Occupancy for the period was 95%. As Torstein mentioned, these great results reflect the strong demand from our core consumer, the loyalty of our guests, the value of our premium products, and the dedication of our employees to deliver exceptional experiences across all seven continents. I will now shift our focus to some metrics related to the balance sheet. On slide 15, you can see that we have a strong liquidity position. As of 12/31/2025, we had total cash and cash equivalents of $3.8 billion and an undrawn revolver of $1.0 billion. Our net debt was $2.1 billion and we finished the year with a net leverage ratio of 1.1x. Also on slide 15, you will see our current bond maturity profile, with all maturities falling in 2028 and beyond. In addition, as of 12/31/2025, deferred revenue totaled $4.6 billion. Taking these factors together, we believe that our liquidity position remains a clear source of strength, supported by ample balance sheet flexibility and a long-dated bond maturity profile. This position gives us the confidence in our ability to support operations, invest in our growth, and pursue strategic opportunities as they arise. With this, I would like to confirm our debt amortization for 2026. As of 12/31/2025, the scheduled principal payments were $397 million. From a committed capital expenditure perspective, and for the full year 2026, the total expected committed ship CapEx is about $1.4 billion, or $500 million net of financing. With that, I will hand it back to Torstein to discuss our business outlook, including our booking curves. Torstein Hagen: Thanks, Leah. If we move to slide 17, you will see that 2026 is shaping up to be another great year as the demand for our core products continues to be very strong. As of February 15, we were already 86% booked for the 2026 season. This is in line with the same time last year while our capacity is increasing by 7%. We have $6.0 billion of advanced bookings, which is 13% higher than the 2025 season at the same point in time. Let's now review the booking curves, which are all as of 02/15/2026. On the next slide, you will see our curves for ocean cruises; this is slide 18. The yellow line shows the bookings for 2026. As you can see, we have sold $2.7 billion of advanced bookings, which is 16% higher than last year at the same point in time. Our operating capacity is up 9% in 2026, and we have already sold 87% of this capacity at very good rates. As of February 15, advanced bookings per PCD were $787, compared to $746 at the same point in 2025. Our fleet expansion for ocean continues to advance in a prudent and strategic manner. This year, we expect two new ocean ships to join the fleet: the Viking Mara during the second quarter, and Viking Libra in the fourth quarter. It is important to note that this year's capacity growth comes on top of an 18% capacity increase in 2025. Taken together, the momentum underscores another strong year of demand for our ocean business. If we move to slide 19, you will see the curves at river cruises. Now before we move on, I would like to provide an update regarding our river build program. One of our shipyards informed us that they experienced temporary technological disruptions and resource availability issues, which affected certain production lines. As a result, delivery timelines for eight of our Longships have been adjusted. The two vessels originally scheduled for December 2025 will now be delivered in 2026. Additionally, as the yard works through the impact of workflow sequence, six ships originally scheduled for delivery in 2026 will now be delivered later in that year. As a result, we have adjusted our 2026 capacity for river, which is now 6% higher than 2025. Last quarter, we reported a 10% increase. Importantly, the yard has assured us that these disruptions are temporary, and they have already implemented corrective measures. Their teams are working to restore full technological functionality and are allocating resources to return to their regular scheduling cadence. We are in continuous communication with them, and we remain confident in their ability to deliver the vessels within the updated timeline. We believe that the impact of these changes to the advanced booking curves and our financial metrics for 2026 are immaterial. Moreover, while these adjustments shift certain delivery dates, they do not affect our long-term growth plans. We will now turn attention again to the booking curves. Advanced bookings for 2026 are shown by the yellow line, which follows a great trajectory. For river, we have already sold $2.8 billion, which is a very good number, 10% higher than last year. Overall, we sold 85% of our operating capacity at very strong rates, averaging $906 per day, compared with $841 last year. It is a very good trend for 2026, and they offer a clear illustration of the strength of demand. Our focus at this time is on selling the remaining capacity for the 2026 season, preparing for the start of the primary river cruising season, which begins in April. We will not be sharing information on future seasons yet. However, please note that both the 2027 and the 2028 seasons are open for sale. Now Leah will add some color to our order book and capacity. Leah Talactac: Thank you, Torstein. Moving to slide 20. Since our last earnings release, we entered into option agreements for two additional ocean ships to be delivered in 2034, bringing our total planned additions, including the options, to 16 new ocean ships over the next nine years. And we also entered into shipbuilding commitments for two additional expedition ships, scheduled to be delivered in 2030 and 2031. We are very pleased to add these ships to our order book as demand for the Viking Holdings Ltd expedition product remains very strong. This is a product that truly resonates with our loyal guests, who are eager to explore new destinations with Viking Holdings Ltd. By adding two more ships, we can thoughtfully scale a category where our brand has been recognized for delivering exceptional travel experiences. As it pertains to our 2026 capacity, similar to past seasons, more than 70% of the capacity from our core products in 2026 will be in Europe. Before we close our prepared remarks and move into the questions, I want to bring you up to date on the current developments in the Middle East. We are monitoring developments closely, particularly as they relate to our operations in Egypt, which represent roughly 2% of our overall capacity. We are prepared to make adjustments in operations if this should become necessary from the point of view of the safety and comfort of our guests and crew. I will also highlight, as Torstein already mentioned, that as it pertains to fuel, our river operation has fixed-price contracts for a significant portion of the 2026 season and our ocean fleet is designed with fuel efficiency in mind. While we continue to monitor these developments and their potential implications for our business, our thoughts are with all those impacted, and we hope for a swift de-escalation and a path towards lasting peace. With this, I conclude our prepared remarks. I will now turn it back to the operator to take questions. Operator: Thank you. We will now open for questions. In the interest of time, we ask that participants on today's call limit themselves to one question and one follow-up. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset. Please hold while we poll for questions. The first question today is coming from Steven Wieczynski from Stifel. Steven, your line is live. Please check your mute button. Steven Wieczynski: Sorry about that. Can you hear me now? All good? Okay. Thanks. Good morning, guys. So, Torstein or Leah, if we think about 2026, we can clearly see the curves, and we can see that the curves have essentially normalized versus where we were at this point last year. You are now coming off, you know, I think it is four straight years of yield growth north of 7%. So I guess my question is, if we think about 2026, and look, I fully understand you do not give firm guidance, but based on the curves and advanced bookings and the fact you are almost 90% sold, seems like yield growth will still be very solid this year, somewhere in that 5% to, let us call it, 7% range. Am I kind of thinking about it the right way? Leah Talactac: Hi, Steven. Good morning. I think we will point you back to the curves, which is what you have referenced. So as of what we see today, we do have 86% of our bookings currently sold with a 13% advanced booking growth with a 7% capacity PCD increase. And what you can also see is that we have been able to maintain that cadence from 2017 to 2025. So I think the curves speak for themselves, and I do not know that we can say much more than that, but I think that your extrapolation makes sense from our point of view today. Steven Wieczynski: Okay. Got it. And then second question, want to go back to the current, you know, the uncertain geopolitical backdrop. You know, obviously a lot going on around the world, especially in the Middle East, which, Leah, you touched on in your prepared remarks. But maybe for Torstein, wondering if you could give us a reminder of how your business, you know, especially on the river side has performed when there has been uncertainty in that region. Trying to understand if we should be expecting any material change in demand in the near term until there is more clarity around what is going on in the Middle East. Thanks. Torstein Hagen: Maybe I could give a long-term perspective on this. As you know, I have been in this business for a long time. And many, many years ago, events like this would have been creating tremors in many boardrooms. But I think American customers, and particularly the type of customers that we have, are well educated in the world, and they know where different places are. So I think what we have seen in the past is that we have not really been significantly impacted. You have a little blip when things happen, and then they go back to normal. And you can say here, you know, things happen very rapidly in the Middle East situation, of course. But, for example, we had a group in Jordan earlier in the week and there were 107 people, and we said, does anyone want to go home? And two of them said we would like to go home. So people are fairly relaxed about all this. Of course, the travel warning that came out last night after this was recorded changes things a bit. Hopefully, that goes away too. But, of course, it is a very limited part of our inventory which is related to Egypt, and Egypt is far away from where the troubles are. So, you know, of course, travel warnings are never nice, and maybe they are basically something real. But I think our guests are really quite well versed in where bad things happen. We do not minimize it, but I think things come and things go, and we will deal with it, of course, always taking care of our guests. Leah Talactac: So, Steven, I would also like to add that, as Torstein mentioned, our guests are fairly well educated. They know where areas of conflict are relative to where they will be traveling to. But also, we are 86% sold for the 2026 season, and that is another benefit of the curves, that we have the ability to wait out or wait for consumer reaction to catch up. And so for 2026, we are still solidly booked, and then we have time to address any reactions that the booking curve may have to current geopolitical events. Steven Wieczynski: Okay. Got it. Thanks for the color. Thanks, Torstein. Thanks, Leah. Operator: Thank you. The next question will be from Robin Farley from UBS. Robin, your line is live. Robin Farley: Great. Thank you. Just looking at your, what low you have ending the year, can you talk a little bit about whether at this point you might think about a dividend or something that, you know, one could argue is not, you know, the most efficient capital structure given how low your leverage is? Thanks. Leah Talactac: Hi, Robin. Good morning. Yes. So I think events that are happening currently remind us why the company likes to have strong cash balances and why we like to be prudent with our balance sheet. But having said that, I think it is still a little bit premature for us to think about share repurchases or dividends, not something that we would necessarily rule out, but we do have a strong order book, and we do have options that are quite far out. And so I think for the time being, that is not something that we would entertain, but not to be ruled out for the future. Robin Farley: Okay. Thank you. And then for my follow-up, just on the addition of two more expedition ship orders, I feel like in the past, I maybe remember Torstein saying that expedition, while it is much higher priced than a lot of the other river and ocean product you have, that maybe there was not as much growth in demand there just because there is a lot of expedition capacity that is out there. So I am just wondering if these two expedition ship orders kind of signal that maybe there has been an increase in demand on the expedition side that you are seeing over the long term, or maybe these ships are going somewhere that is different than where your current expedition ships are? Thanks. Torstein Hagen: I think we plan to deploy these vessels pretty much in the same itineraries as the current vessels. Of course, it has been a while since the first two were built. And when we look at booking curves, which we have also for expedition—we do not share it with you at this time—you will see that relatively the bookings there are very strong, since our supply has been limited. So you can almost read out that something needs to be done and that is why I placed the order. Operator: Thank you. The next question will be from Matthew Boss from JPMorgan. Matthew, your line is live. Matthew Boss: Thanks, and congrats on another nice quarter. So could you elaborate on the acceleration in advanced bookings per PCD to 6% growth relative to 5.5% three months back? Maybe just within that, what are you seeing from repeat guests relative to new-to-brand customers? Leah Talactac: Hi, Matthew. I hope you are doing well. I think, obviously, the price going from 5.5% to 6% is a good indication of how demand is looking for us. We are 86% sold, so we have a little bit more to go. Our goal is always to balance both price and our guest experience, feeling like they got good value for the experience they received. So I think we still aim for that mid-single-digit yield growth. That is something that is still a focus for us for 2026. As it relates to new-to-brand and past passengers, we do have a slide in the deck. Our past guest repeat rate for the 2025 season slightly ticked up between the two. So we are pleased with that. It was about 1%, so we are still seeing a good balance. Matthew Boss: Great. And then maybe, Leah, could you speak to the strength in ocean pricing that you are seeing? Advanced bookings per PCD accelerated by 100 basis points versus three months ago. And just any change in demand momentum at all that you are seeing for your European sailings today? Leah Talactac: Sure. So for the ocean bookings, I think we do have dynamic pricing. We react to what the demand or the consumer interest is. So what you see there is in response to that. But it remains the same answer, that we want to be thoughtful about pricing increases. Our goal is the mid-single-digit increases in yields year over year, and really, it is about having the value proposition for our guests because of that repeat, the importance for us to make sure that the guests do not see this as a one-off travel experience for them; rather, it is something that they want to continue to do as they think about their future journeys. Matthew Boss: It is great color. Best of luck. Leah Talactac: Thank you. Operator: Thank you. The next question will be from Conor Cunningham from Melius Research. Conor, your line is live. Conor Cunningham: Hi, everyone. Thank you. Maybe to keep along that line of questioning, I was hoping to get your perspective on occupancy versus pricing going forward. I mean, your occupancy is basically at all-time highs, I think, now. So just how do you approach the strategy going forward in general? And do you still see upside to occupancy overall? Or, I mean, I think 100% is pretty difficult. Just any thoughts there would be helpful. Thank you. Leah Talactac: Yes, that is exactly right. So unlike the other ocean cruises where they have triples or more than two people, we only have two people per cabin. So our occupancy will never be more than 100%. And with single supplements or people who travel singly, that kind of brings down our occupancy one to two percentage points. So I think with our goal, what you see, 95% occupancy, that is essentially sold out. So our strategy is to sell out the ships and manage the price increases as we have discussed, which is really creating value for guests, making sure that they find the value attractive. Conor Cunningham: Okay. Helpful. And then I just want to ring-fence the two issues that you flagged a little bit here. Just on the delivery delays from the river ships, is there any reaccommodation expenses associated with that that we need to be aware of? And just on the 2% Egypt exposure that you talked about, is that a good proxy for its overall contribution to profitability as well? Thank you. Torstein Hagen: Yes. I am not sure I understand your question on the dealerships, but let me try. Of course, it is a delay, so the revenue will be impacted this year; not so much, it will be impacted. And, of course, the operating costs offset that. There may be some other offsets we can have. It has happened, but things happen. And I think we are very pleased to say that from all we can see, it is now entirely under control, and the ships should be delivered as now indicated. And the 2027 deliveries should not be impacted at all. And whether that deals with the question at all or not. Leah Talactac: On the delay—you know, that is one of the benefits of our identical vessels, particularly in river. So our guests book based on itinerary, not necessarily what is new coming online, and so we were able to accommodate some of them to other ships that are traveling in the same itinerary that they had originally booked. So there are minimal, if any, reaccommodation expenses. And then, Torstein, I will turn it back to you for Egypt commentary. Torstein Hagen: No, you handled it so well. Why do you not continue? Leah Talactac: Okay. So with respect to Egypt, in the prepared remarks, we did say that we were ready to make any adjustments in case there were things like this updated travel advisory. So with respect to Egypt, we are in the process of notifying guests that we are temporarily pausing Egypt itineraries through 03/31/2026. It is really important for us that our guests feel safe and our crew feel safe, and I think that is the base from which the brand loyalty really—that is the foundation of it. This represents about 40 voyages with less than 3,000 guests impacted. So as a reminder, Egypt is only 3% of our total capacity, so we do not see this as a material impact to the business. Conor Cunningham: Very helpful. Thank you. Operator: Thank you. The next question will be from James Hardiman from Citi. James, your line is live. James Hardiman: Hey. Good morning. Just as a clarification, I think you already answered this, effectively, but the river yard issues do not seem like that is impacting the booking curves at all. If so, let me know. But then anything that you would be willing to share in terms of the monthly booking trends past 2025, right, past the end of the quarter? I think it was a year ago where you both first spoke to some softness in February. We have now lapped that. Maybe any update there would be great. Leah Talactac: As far as the booking curves, I think we point back to the curves. We had a strong first couple of months of the wave season, and you see that with the 86% sold and also the pricing increases that we presented today. And sorry, there was a second part to your question that I think I might have missed. Can you repeat it? James Hardiman: Just the river yard delays, if that impacted that curve in any meaningful way. Yes. Leah Talactac: Yes, and so I point back to the answer, which is it does not really affect the curves in the sense that, because the ships are identical, we were able to reaccommodate most of the guests who were impacted to continue sailing in the itineraries they had originally booked. So they are shopping based on itinerary and not necessarily vintage of ship. James Hardiman: Got it. And then, you know, obviously, it is too early to have any quantification on 2027. But I just wanted to hear any color on those Indian river itineraries, just given that they are what is going to be new for next year. Any thoughts on initial demand trends there? How should we be thinking about that market? How does that pricing compare? I know when you got into Egypt, that was a nice—I think it was a nice—pricing sort of benefit that showed up in some of these curves. But any thoughts on India as we look to next year? Leah Talactac: Sure. So India was first open to our past passengers, and it was overwhelmingly supported by them. So we were sold out in a few weeks—as soon as it opened—and it is yielding at higher rates, similar to how Egypt is pricing also is higher. Linh, do you have any additional color you would like to share? Linh Banh: No, I agree. I mean, I think our past guest support and loyalty is great. It is reflected in new itineraries when we open for sale, and that was no different with India. James Hardiman: That is really helpful. Thank you. Linh Banh: Thanks. Operator: Thank you. The next question will be from Andrew Didora from Bank of America. Andrew, your line is live. Andrew Didora: Hi. Good morning, everyone. So the 86% booked for this year—obviously very strong—seems fairly consistent with where you have been the last several years. Maybe if I nitpick, maybe ask about the 14% that is not sold. Just curious of what is not sold—what is the type of product or type of itinerary that is left to sell? Just kind of want to get a sense of what makes up that remaining 14%. Does that typically come at a premium, at a discount, kind of yield neutral? Just curious what is left out there. Linh Banh: Sure. Hi, Andrew. I think, given we are sitting here in early March—our curves are as of mid-February—what is generally remaining to sell is the fourth quarter. So that is our quote-unquote low season. Those guests do book closer in. Then we do have probably some remaining cabins in the third quarter, etc. But majority of that 14% is the fourth quarter, and that is similar year over year. Andrew Didora: Got it. And then appreciate the commentary on fuel. I know it is a small part of your cost structure, but I guess Brent is up 4%–5% or so this year. Just your fuel cost in 2025 versus 2024 were pretty flattish. I think that I would expect that to change this year. Any color you can give just in terms of a $20-plus move in crude, what kind of the like-for-like EBITDA impact could be on the business? Just want to hone in on that a little bit. Thanks. Linh Banh: Sure. So I think at the end of the day, we took a lot of time to design our ships to be fuel efficient. And so for oceans, we do use heavy fuel. Obviously, right now, the market is where it is. But I think the team has done a really good job of managing through times like this. We are monitoring where fuel prices are, and we will act accordingly. For rivers, we have entered into fixed-price contracts for a significant portion of the 2026 season. Andrew Didora: Okay. Linh Banh: Thank you. Operator: Thank you. The next question will be from David Katz from Jefferies. David, your line is live. David Katz: Hi, good morning, everyone. Thanks for taking my question. Congrats on the quarter and appreciate all the details so far. What I wanted to ask is that you obviously continue to put up outsized growth and project outsized growth with further capacity. How do you think about the depth of the market that you are growing into? Are there new-to-cruise customers that you are getting to explore? Are your existing customers sailing more? How do you think about a, say, total addressable market, I suppose, is the essence of the question? Torstein Hagen: Yes. I think maybe we have even been a bit surprised with the fantastic demand we have had for our product, both the rivers and the ocean. But I think when we analyze it and look at where our guests come from, we see that many of our new-to-brand guests both on the rivers and on the oceans come from the established ocean cruise lines, and they are really guests who are not so happy with being on huge ships with lots of screaming kids. You know our policy on kids and casinos and the like. So they graduated from being on the noisy entertainment palaces to being on more calm, peaceful places where they can enjoy their books and themselves. So I think we really found a—well, we knew what we did when we designed it, but I think we underestimated people's reluctance to being on these other ships. Of course, they are great for kids, and they are great for money making and so forth. Do not get me wrong. But I think it is a good source of business for us. And, of course, you have seen that some of the other people have started to come in our slipstream to see what they can do in the same field. So I think we have not tried to quantify total addressable market, but we have all confidence that the order book will be relatively easy to fill. So that is all I can say. Leah Talactac: Yes, and I would like to add to that. We have a huge brand awareness when it comes to river cruising, and that is also another avenue through which we expand into the total addressable market of people who would not ordinarily contemplate a cruise. When they join a Viking Holdings Ltd river cruise, then they see that there is a different way to travel, and that then creates a feeder into that addressable market for the other products that we have in our portfolio. So it is a combination of our well-thoughtfully planned ocean and expedition, but also this enormous brand value that we have by being over half the market share in river. David Katz: Understood. And if I may, I am past it, but I appreciate the screaming kid comment. With respect to other entries into the river cruising market, are you comfortable—and how should we be comfortable—that there is enough room in that marketplace for some new entrants to add some ships and that that is not going to have an impact on you? Torstein Hagen: I suspect all entrants into markets will have some impact. But the question will be a negative impact or a positive impact? The negatives we all know about; the positive, you know, it creates even more buzz around the whole river cruise concept. So I look forward to seeing the advertising when they say, are you tired of being on our big ocean-going trips? Try one of our river ships. I say, wonderful. Now let us see what their advertising will sell. So I think we have a 29-year head start on them, so we should not really be unduly worried about it, I would say. And I think it is similar on the ocean side, where you see that others are starting to copy us there too. You know, they have been in the business for 50 years. So I think we have done something right. But it means we should not rest on our laurels, but we should build on them, for sure. David Katz: Thank you very much. Appreciate it. Operator: The next question will be from Stephen Grambling from Morgan Stanley. Stephen, your line is live. Stephen Grambling: Hey. Thank you. Over the past three years, you have had gross margin expansion. Would love to just get your thoughts on some of the drivers of that and any considerations on how that may evolve not only in 2026, but beyond? Thank you. Linh Banh: Sure. I mean, I think we have approached the business with the guest first, and what Torstein has mentioned even in his early remarks. And with that, we have been able to build our brand, deliver an excellent product, which has led to capacity increases, yield increases, and then we have been prudent with our operating expense. So all those things combined have led to the margin expansion you see today. Of course, our hope is that we continue that into the future. The management team has done a great job, and so the goal is to continue that. Stephen Grambling: And sorry. I just want to make sure I zoom in on specifically gross margin rate. So thinking about the difference between net yield and gross pricing, right, your net yield or your net pricing has been above gross pricing. Normally, we think of that as being things like commissions, transportation, other. Anything in there that is permanent that should be driving it and any impact from fuel prices going up that could influence how that flow-through could look in the year ahead? Linh Banh: Sure. I mean, I think, obviously, we try to be balanced when we approach pricing and cost. And so as the team works through those things, we do our best to ensure there is margin expansion. Obviously, historical performance is no promise for the future, but that is something that we focus on. I think at the end of the day, we are getting the benefit of both price and being prudent with cost. Stephen Grambling: Okay. I will jump back in the queue. Operator: Thank you. The next question will be from Brandt Montour from Barclays. Brandt, your line is live. Brandt Montour: Hi, thanks, everybody. So a question on—another question on costs. The marketing and sales line, you guys did not get a lot of leverage on that line in 2024. You did get a lot of leverage on that line in 2025. You know, another year of substantial capacity growth and you guys are now going to be spending, I assume, well over a billion dollars on marketing and sales. Maybe you could take us a bit under the hood here and just sort of talk through the leverage that you can get this year and what channels you might be expanding to sort of scale with this growing business? Leah Talactac: I am going to think I understood the question, but I will give it a try. We do feel that we can leverage and scale SG&A. We see ourselves not just as a cruise operator, but as a marketing company. And as we think about the tools available in the market now with respect to AI and machine learning, there are certainly multiple areas of the business that we can have a broader digital transformation strategy that would help with the cost. So we feel that there could be some scaling or leverage off of our SG&A as capacity increases. Torstein Hagen: Could I make a comment? Maybe I can make another comment in that regard. You know, the way the accounting works, the marketing expenses are expensed as incurred. But, of course, we are booking so far in advance. So as we grow, it means a large portion of our marketing expense this year is related to 2027 operations. So as we grow, you can say a disproportionate amount of the expenses are charged to the current year rather than to the next year, to which they really are attributed. So that is something one should take into account when one evaluates these expenses, too. Just a comment. Brandt Montour: No, that is great color. Thank you. I think what I was trying to get to is the SG&A per capacity unit. That is the line that I think a lot of us focus on. That was down year over year in 2025, which is great. And so the question is, can you keep that metric muted or sort of well below yield growth for the next year or two years? Leah Talactac: We do not guide, but that is something that is certainly in our consideration set. And we will try to leverage SG&A. Brandt Montour: Thanks, everyone. Operator: And the final question today will be from Patrick Scholes from Truist Securities. Patrick, your line is live. Patrick Scholes: Hi. Thank you for taking my question. You talked about 86% sold for this year. My question around that is how much of that is, we would say, locked-tight nonrefundable at this point? Leah Talactac: So generally speaking, our guests not only book in advance, but they also pay in advance. And what we found is that once they are booked and paid, there are generally very low cancellation rates. And we also encourage that by the fact that we engage them prior to their trip. So we will send them language lessons, things to look forward to, to really make sure that they are looking forward to the trip. So I would say that—and you could see this in prior bookings as well and how it developed into results—that once they are booked and paid, the booking becomes generally very sticky. And that is why we feel that showing these booking curves are the best factual indication of what the current season looks like. Patrick Scholes: My follow-up on that would be, let us just hope it does not happen, that things did really continue to escalate. There would be, you know, hypothetically, fear of travel, but your ships or your vessels were still sailing. Could those who have booked still, or what percent could still, cancel with refund at this point down the road? Thank you. Leah Talactac: Sure. So our cancellation policy generally starts to kick in around 90 days prior to sailing. But having said that, what we have seen in historical patterns is that our guests are quite versed in reading a map, and so they can see where the areas of conflicts are and where they are planning to travel. And they also trust the brand, meaning that we will not operate if we feel that it would be unsafe for our guests and our crew. We have seen that in prior where they will either hold and wait for Viking Holdings Ltd to make announcements, or they will maybe just push it out a little bit later. But generally speaking, the booking curves are pretty sticky. And another part of the equation here also is that, with being 86% sold, any cancellations—we still have time to resell that inventory. Patrick Scholes: Okay. Thank you for the detail on that. Operator: Thank you. This does conclude today's Q&A session. I will now turn the conference back over to Torstein Hagen, Chairman and CEO, for closing remarks. Torstein Hagen: I want to thank everyone for joining us today on this call. I also thank you for your support and interest in Viking Holdings Ltd, and I wish you a great day. Have a nice one. Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Hello, everyone. Thank you for joining us, and welcome to the 908 Devices Inc. Fourth Quarter 2025 Financial Results Conference Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, press 1 again. Please go ahead. I will now hand the call over to Barbara Russo, Vice President of Marketing and Corporate Communications. Barbara Russo: Thank you, and good morning. On this call, we will be discussing our financial results for the fourth quarter and full year ending 12/31/2025, which were released earlier this morning. Joining me from 908 Devices Inc. is Kevin J. Knopp, Chief Executive Officer and Co-Founder, and Joseph H. Griffith, Chief Financial Officer. During today's call, we will make forward-looking statements within the meaning of federal securities law. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. For a discussion of these risks and uncertainties, please review the forward-looking statement disclosure on Form 10-Ks and other SEC filings in the earnings news release, as well as in our most recent annual report. These forward-looking statements reflect management's beliefs and assumptions as of the date of this live broadcast, 03/03/2026. Except as required by law, we disclaim any obligation to update forward-looking statements to reflect future events or circumstances. Our commentary today will also include non-GAAP financial measures, which should be considered as a supplement to, not a substitute for, GAAP financial measures. The non-GAAP reconciliations can be found in today's earnings press release, which is available in the Investor Relations section of our website. With that, I now turn the call over to Kevin. Thanks, Barbara. Kevin J. Knopp: Good morning, and thank you for joining our fourth quarter and full year 2025 earnings call. I want to start by expressing my sincere appreciation to our entire team for their exceptional execution and unwavering commitment to our strategic transformation throughout 2025. The momentum we have built and the progress we have achieved reflect our disciplined focus on delivering innovative chemical analysis devices that protect frontline responders worldwide. I am pleased to report that we achieved $17.4 million in revenue from continuing operations in Q4, representing robust 21% year-over-year growth. This performance was driven primarily by three factors: one, continued demand for our Explorer gas identification device by firefighters and hazmat response teams; two, strong initial demand for Viper, our new product that provides simple and fast chemical analysis of solids and liquids; and three, continued strong adoption of all of our products by U.S. state and local customers. Most importantly, we achieved positive adjusted EBITDA in the fourth quarter of $700,000, which is a remarkable improvement from the prior year's loss of $4 million. This achievement validates the structural initiatives we implemented as part of our transformation. For the full year 2025, I am proud to report that we delivered $56.2 million in revenue from continuing operations and in line with our five-year CAGR performance, representing strong 18% year-over-year growth. This strong performance validates our focus on vital health, safety, and defense tech applications. A key highlight was our team's execution of replacing outdated FTIR equipment with modern devices—one of our growth catalysts. In 2025, more than 50% of device placements came from FTIR, led by the full-year impact of our Explorer device. Another highlight is our achievement of 22% year-over-year growth in recurring revenue, which represents 35% of our 2025 revenues. This growth reflects our ongoing efforts to offer more value to our customers through service, support, software, and accessory offerings, strengthening revenue visibility and long-term predictability. I would now like to highlight our progress during 2025 across our three strategic focus areas. Our number one focus has been to increase adoption of our devices to address global threats to public health and safety. Our Explorer device continues to be a standout performer with its unique capability to detect, identify, and quantify over 5,000 unknown gas and vapor chemical threats in seconds. The market response has been exceptional across fire and hazmat teams worldwide, who recognize the device's value in filling a critical gap in on-site gas identification to better inform decision-making and accelerate action. In its first full year of commercial sales, the quantification-enabled Explorer delivered over 150 units to high-quality accounts, including the council of governments serving the broader Washington, D.C. area and the U.S. Marine Corps CBRNE installation and protection program. These wins underscore the growing adoption of Explorer among premier federal and regional response organizations. As a result, Explorer achieved standout growth of more than 40% year over year, reflecting both the strength of demand and the impact of introducing quantification capability into the field. To help drive procurement efficiency and predictability in our U.S. federal government business, we consolidated contracting partners in the fourth quarter from four to one. For 2026, we are now working with Mountain Horse Solutions, who specializes in supplying mission-critical equipment, such as our portfolio of devices, to all levels of the U.S. government and military. By leveraging their strong procurement relationships, contracting expertise, and integrated logistics and kitting capabilities, we improve forecasting accuracy and level-load production as a supplier while enabling government customers to receive fully configured, mission-ready solutions more quickly and reliably. We look forward to the benefits of coupling our demand generation with their procurement expertise. Outside the U.S., we saw traction for devices accelerate, especially in Europe, as NATO countries have begun increasing their defense budgets due to the ongoing war in Ukraine and other global concerns. For the full year of 2025, 27% of revenues came from outside the United States. This is an increase from 25% in 2024, with an even stronger increase in sales along NATO's eastern flank. We shipped chemical detection devices to Poland, Czech Republic, Finland, Ukraine, and others in the region. This international expansion, we believe, is just beginning, across all customer segments. Moving to our second objective, advancing our next-gen analytical tools portfolio. Our newest device, Viper, which we launched in July 2025, represents a breakthrough in simple, field-based chemical identification of unknown bulk substances by combining FTIR and Raman spectroscopy technologies with our proprietary smart spectral processing capability. The device's simple and smart workflow is game-changing for customs and border personnel as well as hazardous response teams. When connected with our Team Leader app, Viper allows field teams to instantly share results with command centers and subject matter experts, dramatically improving response coordination and decision-making speed. Overall, we are excited about the positive market reception for Viper with early deployments across state and local hazmat teams and international customers. In the fourth quarter, we shipped more than 40 Viper units, over $3 million in revenue, and are encouraged by the ultimate potential of this new product and the full-year impact that Viper will have in 2026. We also enhanced our flagship MX908 platform in 2025 and recently released several usability improvements, including the new TIC Hunter mission mode that provides first responders with a more guided and purpose-built tool for hazardous vapor detection. Additionally, we expanded the device's drug detection capabilities by adding five new priority targets, including medetomidine, a veterinary sedative estimated to be 200 times more potent than xylazine and which is increasingly being mixed with fentanyl. As the illicit drug landscape continues to evolve, our software-updatable platform enables us to rapidly deploy new target libraries and capability enhancements, ensuring law enforcement remains current and equipped to address emerging threats in real time. And finally, our third focus has been to strengthen our financial position and accelerate profitability. The operational improvements we implemented throughout 2025 have solidified our financial position. Our manufacturing consolidation into Danbury, Connecticut, and our move to a cost-efficient headquarters in Burlington, Massachusetts, have created meaningful efficiencies across our operations. These initiatives, combined with our disciplined cost management approach, enabled us to achieve our goal of positive adjusted EBITDA, which was $700,000 in the fourth quarter. This achievement demonstrates that our cost structure is now rightsized, disciplined, and fully within our control. Compared to our year-end 2024 position, we also strengthened our balance sheet materially, exiting 2025 with $113 million in cash. With this solid financial foundation, we now have the flexibility to invest in the expanding growth opportunities ahead, driven by developing secular tailwinds such as increased funding to combat the fentanyl and illicit drug crisis and increased global defense budgets. To that end, we have established three strategic focus areas for 2026. First, scale proven platforms. We will sustain growth by continuing to modernize legacy detection equipment, especially FTIR, across global fire, law enforcement, and defense enterprise accounts. We believe we have only made a dent in the overall potential and expect 2026 to benefit from a full year of growth of our newest product, Viper. Second, extend platform leadership. We will also drive growth with greenfield placements, differentiated capabilities, and disciplined product introductions. New capabilities drive new opportunities. Our Explorer product is a great example of this. With the differentiated gas quantification and identification capabilities, it is quickly penetrating the broader gas detection market. Similarly, our MX908 is now the proven device for trace chemical identification, and our law enforcement customers continue to rely on its unique capabilities. We expect to build on this and raise the bar further with our next-gen mass spec platform. And our third focus is to strengthen revenue durability. We are building a predictable revenue mix by pursuing recurring revenue opportunities with connected services, expanding OEM-based revenue, and through long-term programs. To that end, our DoD AVCAD program in partnership with Smiths Detection is nearing its next phase. Field testing was completed in late fall, and as of today, we believe all material issues have been deemed addressed. Smiths Detection has responded to an RFP for a next phase and is awaiting feedback from the government. This next phase quoted is for an initial production run of approximately a few hundred systems, with component and subsystem contributions from 908 Devices Inc. being potentially delivered throughout the second half of this year. We remain committed to support Smiths Detection and DoD on this important national defense effort. We look forward to updating you on our progress in each of these focus areas on future calls. I will now turn it over to Joseph H. Griffith to review our financial performance. Thanks, Kevin. As a result of the sale of our desktop portfolio in 2025, the financials we are reporting today are for continuing operations only. All current and historical activity related to our desktops, including the gain on sale, are captured in a single discontinued operations line in our financial statements. Total revenue was $17.4 million for the fourth quarter 2025, increasing 21% from $14.3 million in the prior-year period. Handheld product and service revenue was $16 million for the fourth quarter 2025, up 18% from $13.6 million for the fourth quarter 2024. The increase was primarily driven by our FTIR products, including more than 40 Viper shipments, and Explorer, which more than doubled its placements in the fourth quarter versus the prior-year period. MX908 product and service revenue was relatively flat, with an increase in U.S. orders that offset fewer international device shipments. In total, we shipped 224 devices in the fourth quarter, bringing our installed base to 3,736. Program product and service revenue was $300,000 in 2025, as we received funding for AVCAD program services performed in 2025; it was $17,000 in 2024. OEM and funded partnership revenue was $1 million for the fourth quarter 2025, compared to $700,000 in the prior-year period. Revenue growth was led by component sales to pharma and industrial QA/QC customers, leveraging our new precision machining capabilities, as well as component deliveries to Repligen under our supply agreement. Recurring revenue, which consists of consumables, accessories, software, and service revenue, represented 32% of total revenues this quarter and was $5.5 million, an 11% increase over the prior-year period. Gross profit was $9.2 million for 2025, compared to $6.7 million for the prior-year period. Gross margin was 53% for the fourth quarter 2025 compared to 47% for the prior-year period. The increase was driven primarily by higher volume along with the shift in channel mix to state and local and defense sales during the fourth quarter 2025 compared to international sales in 2024 that have a lower average selling price. Adjusted gross profit was $10 million for 2025, compared to $7.5 million for the prior-year period. Adjusted gross margin was 57%, an increase of approximately 530 basis points compared to the prior-year period. The increase in adjusted gross margin was driven by the channel mix and leverage as mentioned above. Total operating expenses for 2025 were $6.1 million compared to $23.4 million in the prior-year period. The decrease was largely a result of a $5.1 million reduction in the fair value of contingent consideration and a $10.1 million goodwill impairment charge in 2024. Excluding the impact of these two non-cash items, operating expenses for the fourth quarter decreased year over year by $2 million due to a reduction in headcount and facility expenses. Net income from continuing operations for 2025 was $4.4 million compared to a net loss of $16 million in the prior-year period. This increase was primarily driven by the $15.2 million decrease in non-cash goodwill and contingent consideration and was additionally due to improved gross margins and reduced operating expenses. Adjusted EBITDA for 2025 was a positive $700,000 compared to a loss of $4 million in the prior-year period, representing a $4.7 million improvement and achievement of the goal we set in 2025. This significant improvement was related to our aggressive cost initiatives, resulting in reduced operating expenses across the board, including headcount, facilities, R&D costs, and professional fees. We structurally changed our cost basis and expect to see the benefits of these efficiencies continue. Now moving on to our full-year results. Revenue for the full year 2025 was $56.2 million, increasing 18% from $47.7 million for the full year 2024. This was primarily driven by an increase in revenues from our FTIR products led by our recently launched Viper and our Explorer device, but also partly due to the impact of ownership for the full-year period in 2025 compared to eight months in 2024. An element of our growth in 2025 was driven by our state and local sales channel, which grew 38% to approximately $24 million, representing 43% of revenues for the full year 2025 compared to 37% for the full year 2024. State and local deals are generally smaller in size and more frequent, which is a more predictable balance to large, potentially lumpy, federal and military enterprise sales. Gross profit was $28.4 million for the full year 2025, compared to $24.5 million for the full year 2024. Gross margin was 51% for both the full year 2025 and 2024. Adjusted gross profit was $31.9 million for the full year 2025, compared to $26.7 million for the full year 2024. Adjusted gross margin was 57% compared to 56% for the full year 2024. The increase in gross margin was primarily due to improved service and contract gross margins. Total operating expenses for the full year 2025 were $67.8 million compared to $81.9 million in full year 2024. The decrease in operating expenses was driven primarily by a $47 million non-cash goodwill impairment charge, offset in part by a $27 million change in the fair value of the contingent consideration liability, where it was a charge in 2025 and a credit in 2024. Net loss from continuing operations for the full year 2025 was $33.3 million compared to $53.1 million in the full year 2024. This increase was largely due to the non-cash charge for the impairment of goodwill and change in valuation of the contingent consideration just mentioned. Adjusted EBITDA for the full year 2025 was a loss of $9.6 million, marking a meaningful 39% reduction compared to full year 2020. We ended the year with $113 million in cash, cash equivalents, and marketable securities, with no debt outstanding. We generated approximately $900,000 in cash in 2025. The increase was primarily related to collection efforts and timing of working capital. Looking ahead in 2026, we expect revenue to be in the range of $64.5 million to $67.5 million, representing growth of 15% to 20% over full year 2025. Our guidance range includes the following assumptions. First, we expect handheld product and service revenue to grow 13% to 17% year over year, which equates to a range of $59.5 million to $61.5 million. The increase reflects expectations around the full-year impact of Viper and growth of our MX908. Second, we expect OEM and funded partnerships, including contract revenue, to be approximately $3 million. And third, we expect revenue contribution from the AVCAD program to be in the range of $2 million to $3 million, likely in 2026. Moving down the P&L, we expect adjusted gross margins to be in the mid- to high-50% range for full year 2026 and are targeting margin expansion of at least 100 basis points with our increased volume. Channel and product mix play a key part in our adjusted gross margin, and we will look to balance this with our first full year of manufacturing in Danbury and insourcing initiatives with our precision machining capabilities. During 2025, we were able to streamline our research and development and selling, general, and administrative costs. We will continue to be thoughtful on investments in 2026 and likely will see an increase in selling and marketing expenses as we look to drive revenue growth with targeted headcount investments. And on the bottom line, we expect to cut our 2025 adjusted EBITDA loss in half for 2026, reducing it to the mid-single-digit millions, making another significant step down year over year while we go after the growth opportunity. At this point, I would like to turn the call back to Kevin. Thanks, Joe. As we wrap up today's call, I want to emphasize that 2025 was a defining year for 908 Devices Inc. The results we have delivered demonstrate that our strategic transformation is working. With our lower cost structure and healthy balance sheet, our trajectory is firmly within our control as we balance disciplined growth investments with profitability. I am confident in our ability to capitalize on the significant and growing opportunity in front of us. We have entered 2026 with a late-stage pipeline that is double the size it was at the start of 2025, which is a tangible reflection of stronger customer demand. With funding momentum building and favorable U.S. policy decisions reinforcing the priorities of our end markets, we believe we are well positioned to translate this demand into sustained growth in the year ahead. Lastly, and perhaps most importantly, we are executing a mission that matters. Every device we deploy helps protect frontline responders who put their lives on the line to keep our communities safe. This purpose-driven focus, combined with our technology leadership and operating strategy. That, let us open it up for questions. Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. To withdraw your question, press 1 again. If you would like to ask a question, please press 1 on your telephone keypad. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Matt Larew with William Blair. Your line is open. Please go ahead. Matt Larew: Hi, good morning. Thanks for taking my question. The first one on the relationship with Mountain Horse, Kevin, that you referenced. Just curious why you decided this was the right time to work with an external partner, how much volume of this particular product set you are trying to work with them on, and, Joe, I think you referenced the changing economics that might be involved there relative to margin expansion from feeding your first full year of Danbury. So just kind of curious how the economics will work with that relationship as well. Kevin J. Knopp: Yeah. Absolutely. Happy to take that question. Thank you. You know, as a reminder, as I think you know, we drive demand for all our products. We have direct employees that are across the United States working with the federal and military accounts, and they work very closely with those end customers. But in many cases, these larger U.S. military and federal customers, we really need to work with the procurement specialist. We need to work with a contracting partner. The primary factor behind that consolidation from four partners to one for the federal military side was really to drive procurement efficiencies, predictability, and help us improve forecasting. As you know, historically, it could be lumpy—some of these large U.S. federal opportunities. Mountain Horse is very unique. They have been a great partner for us. They are led by U.S. veterans. They have great procurement relationships across all levels of the U.S. government, which gives us wonderful visibility and helps us move those along in various contracting vehicles. They have experts on their team that help us get through the contracting, help us get through any integrations that are required. They can do kitting. They also do logistics. If you think about some of our orders, they may have to go and then be shipped to bases across the globe. There are a lot of complexities around that. So they do a great job for us. And we thought now is really the right time to consolidate to one because we can gain commitments, we can gain forecasting visibility, we can gain a mix and some volume incentives, and it also is very helpful to the U.S. government because they can get these more fully configured, ready-to-go solutions out of the box and, in some cases, at a lower cost. So it certainly helps us, certainly has helped us here in 2025, and we do expect them to continue to be a great partner in 2026, and we are really excited about it. And, Matt, you were asking about the benefits of Danbury, and a lot of efforts went into that, and I think it translates across the P&L in a few areas, but primarily within the adjusted gross margin. And, you know, we were pleased with the way the 2025 results fell out. Joseph H. Griffith: I hope it becomes a baseline to drive it up over time. For 2026, we are targeting margin expansion of about 100 basis points from the 50.7% adjusted gross margin that we did achieve. We certainly have operational momentum now resulting from last year's structural improvements, that full year of manufacturing in Danbury being a key one, and expanded insourcing that we can do with our precision machining capabilities. And these efficiencies really create a strong foundation to absorb the quarterly variability of channels and products. Kevin J. Knopp: And, Matt, maybe I will also add in, we are really at a point in our business with the transformation. We have done a ton to make the business much more predictable. We talked today about recurring revenue increases. We talked today about how we have so many more state and local sales, and that was a big driver of our Q4. So we are having maybe a smaller percentage now of exposure to these large, lumpy potential federal opportunities. We like them; it just can be difficult to get through contracting, and that is another reason that Mountain Horse helps us. Matt Larew: K. That is great. And then I just wanted to ask on the new, next-gen MX908 platform. I think that is still on schedule for 2026, but curious from a timing perspective when you think that might appear, how to think about adoption. I know you have more than 3,000 placements out there. Kevin J. Knopp: Yeah. That all remains accurate. We are really continuing to advance that next-gen platform with the commercial launch later this year. We are excited about the progress the team has made, but, obviously, for commercial and competitive reasons, we are not providing specifics today. What I would say is that we are really disrupting ourselves. We are not reacting to competitive pressure. MX908 really remains a very highly differentiated product with really limited direct competition. So we are working on that product. We think it can be compelling, but we also want to make sure we are focused on really dialing it in before broad commercialization. So we do see demand coming as we go from both existing and also opening up some new customers due to its step change in simplicity and size, and goals that we have set for ourselves. And you are right. We have more than 3,100 MX908 devices out there. The advantage of the MX908 is it has been tested from A to Z. We have something that is very thick, probably a two-inch binder of various third-party test reports. So, obviously, we are going to be very thoughtful with the pacing and the transition, and some enterprise accounts are likely going to continue with our MX908 for some time. And then we will be getting this out to disrupt ourselves and take us further. We absolutely believe there is a lot of opportunity there with the increased funding in the opioid crisis, fentanyl and illicit drug area, and the rising global defense spending, particularly across these NATO countries. So, absolutely, the MX908 today remains a great growth driver as we see it for 2026, but the next gen will help us set up, and if we do our jobs right, it could be pretty impactful to next year on a full-year basis. Matt Larew: Okay. Thank you. Operator: Your next question comes from the line of Puneet Souda with Leerink. Your line is open. Please go ahead. Puneet Souda: Yeah. Hi, guys. Thanks for the questions here. So first one, Kevin, when we look at the overall growth for this year, you know, 17.5 or 18 to get close to almost 18 at the midpoint. You have a number of drivers this year, obviously, including AVCAD. You have a state and local pandemic crisis ongoing still. There is international growth from Eastern Europe with disruption there and conflict. And now we have got a new conflict. So I was just wondering if you can talk to us about what takes you to the higher end versus the lower end of the guidance range on the top line growth? And then how should we think about the current conflict, if that were to expand? Could that drive additional handheld sales? Obviously, it is very hard to tell with where we currently stand, but I just wanted to get your sense on if there are any prior precedents that you can point to that will help us understand where 908 Devices Inc. can be more helpful if this conflict were to get worse. Kevin J. Knopp: Yeah. Absolutely. Maybe I will start with some of that and pass to Joe as well for his comments. Yes, we have some great growth drivers in front of us from a macro tailwind perspective, and that is increased funding, increased defense budgets, NATO, and global concerns, as you mentioned, which seem to unfortunately be expanding each day. Those are all drivers for increased defense spending and increased spending on the public safety side. AVCAD is absolutely, as you mentioned in the prepared remarks, a program of record we have been working on for some time with Smiths Detection that we do view as nearing its next phase. And from our survey of those involved, I remain very encouraged and positive that we will see an award this spring, and hence we are factoring it into some of the guidance discussion today. Joe? Joseph H. Griffith: Absolutely. And maybe to revisit and reinforce some of the drivers that can get you within the range and for us to get to the top end of the range. We do see those multiple paths to drive the organic growth, which more than double our pro forma growth from 2025, getting us to that 15% to 20% range. We expect Viper to be a key contributor, driven by our first full-year impact. It was great that we were able to get 40-plus in Q4, which we feel is meaningful. However, 2025 had less than 50; we believe it could be two to three times that in 2026. To help get us to the top end of the range, we expect Explorer again to be a big contributor. It was last year. It is our first full year with the quant-enabled Explorer here in 2025. We shipped over 150 devices and had 40% year-over-year growth. Now we just started to tap into our federal defense channel and see this as an opportunity for 2026 and beyond. With Explorer, we are opening up a broader fire gas detection market, which is exciting. We are continuing to keep extending our platform leadership in trace chemical identification and enterprise accounts and create field placements across our state and local, international channels and the opportunity there. And our law enforcement customers continue to rely on the MX908 and are excited at the next-gen mass spec platform as it comes out. In AVCAD, we just touched on it. We are planning on $2 million to $3 million this year in our guide. I would add, too, just as we think about the full year and maybe provide a little bit of insight on seasonality. For 2025, our revenues stepped up each quarter, and we had 44% of the revenues in the first half. Fourth quarter was about 31% of our revenues overall. So for 2026, I think there are a few factors to consider. I expect H1/H2 to be comparable to 2025. Within H1, I would expect Q1 growth to be in the low teens—say, maybe 10%, maybe get into the 15% level—and then Q2 would be close to the higher end of our guide of 20% year-on-year growth. So there are some Q1/Q2 timing dynamics, partly due to our production limits of our new product Viper, which I mentioned had a lot of demand in Q4, requiring us to replenish material inventory. So a lot to think about, a lot of different elements there as we go into 2026, but excited in laying out the 15% to 20% growth and looking to try to achieve that top end where possible. Puneet Souda: Got it. That is super helpful. And then just on the adjusted EBITDA side, I just wanted to get, you know, you are pointing to 50% improvement, but just wanted to understand any other levers that you have and how should we think about that cadence as well. And, you know, with the DHS shutdown, should we, I am just wondering, are you accounting for that in the first quarter here? Thank you. Kevin J. Knopp: Yeah. Great question. I will start with the funding dynamic and pass it to you, Joe, on the EBITDA remarks. On the funding dynamics, overall, I think we are in a better spot than this time last year, because we do have 11 of the 12 federal appropriations bills complete, which means the federal government and agencies are funded through September 30. You are absolutely right. Homeland Security is the one oddball there that is in short-term extensions and remains unresolved and unfunded at the moment, so different funding demand dynamics there. In the state and local markets that rely upon grant funding that often flows through DHS, we have not seen a slowdown. Customer applications remain active. I think we are also just entering 2026 with a materially stronger late-stage funnel. So DHS specifically, it is a little hard to quantify the impact here in the first quarter or the first half. But, again, many of the grant preparedness programs are these multi-year funding cycles, which really helps smooth it out. So, all in all, I think it is a net positive in where we sit from a funding dynamics standpoint today versus a year ago or certainly earlier in Q4. Joseph H. Griffith: Mhmm. On the adjusted EBITDA, for 2026, we are committed to cutting our adjusted EBITDA loss in half from that approximately $10 million in 2025. We think there is another significant step down. We believe we can do it without handicapping our ability to address the expanding opportunity. We really feel that is key. It is such a great opportunity, and we need to go after it hard. I think getting to the low- to mid-single-digit millions of adjusted EBITDA loss for the full year of 2026 is huge and monumental. With our balance sheet and efficient cost structure, we can firmly control our trajectory. We are focused on that growth and cash runway, and it is not as much of a concern at this point. And with some targeted investments in the selling and marketing side, whether it is internationally within specific opportunities on the state and local, and making sure that we get the next-gen MX off and running—a little bit of investment on the R&D side. So I think the adjusted EBITDA with volume is under our control and excited to be on that journey. Puneet Souda: That is helpful. Okay. Thank you. Welcome. Operator: Your next call comes from the line of Dan Arias with Stifel. Your line is open. Please go ahead. Dan Arias: Hey, good morning, guys. Thank you. Kevin, maybe just going back to the Middle East conflict here. Can you talk through the way in which these situations at the federal level or the global level tend to impact timing and the focus of the federal government? I mean, another way to say it is, when we go to war with Iran, does that sort of suck up all the air in the room for the defense folks, DHS, military, in a way that creates some uncertainty when it comes to the stuff that you are working on with them? Kevin J. Knopp: Yeah. No. That is a great question. We are not seeing that or feeling that today. I think the government is very large and has many prongs of engagement with 908 Devices Inc., and increasing amounts on the state and local side. It was about maybe 30% of our sales last year with a larger federal and military, and 70% was outside. I would say that if you look internationally, certainly in the Middle East, a lot of people are working from home right now. So can that slow down some of our opportunities in the Middle East? That is possible. Can this conflict increase the demand there? I think that is also highly likely, but those deals take a long time to progress. So we are not particularly seeing a meaningful immediate impact one way or the other on that. From the U.S. government, absolutely, our troops are in harm's way. Some of our employees' children are involved in those conflicts. So we very much wish them the best. If you think from a demand side, we know some of our customers are there. We do know that some of our customers are involved, and where that plays out, we will see. But I think it is pretty balanced at the moment. We are not really expecting any disruption from it at this time. Dan Arias: Okay. And then, Joe, you mentioned op expenses kicking a little bit higher this year. What specifically are you looking to do when it comes to the commercial efforts? And then how are you thinking about the return on that spend? Is it more immediate, or is it longer-term investment? Thanks. Joseph H. Griffith: Yeah, great question. I think some of the opportunity that we have seen—performance on the state and local at a high level—and we see more opportunity there, as far as getting more penetration in the field, but also leveraging inside sales capabilities, outreach, remote demos, and opportunities. So adding some folks to support those efforts and drive the need and the funding sources that we are seeing on the state and local side. I think on the international side, we work with the distribution network—over, I think, it is 65, almost 70 countries that we sell through today—and those are supported by 908 Devices Inc. employees. I think there is opportunity to build out and provide more of a commercial presence internationally, whether it is in Europe, Middle East, and APAC across the board. Kevin J. Knopp: Yeah. International sales were about 27% of our revenues last year. That is up from 25% in 2024, and, obviously, a larger number. And so we really do believe there is a lot of potential in that area. We have channel managers and apps people across Europe, Middle East, and APAC, but we do think it is an area well worth investing. Joseph H. Griffith: Yeah. From a timing perspective, I think the state and local can have some more immediate opportunity and contribution with those investments. They turn around a bit quicker. International is a little bit more of the long game. There might be some benefit in the back half, but definitely as we grow and continue to show growth trajectory in the years to come. Dan Arias: Okay. Thank you. Operator: Your next question comes from the line of Chad Wiatrowski with TD Cowen. Your line is open. Please go ahead. Chad Wiatrowski: Hey, Kevin. Hey, Joe. Obviously, the FTIR replacement cycle is a major driver this year. In your words, you have only made a dent so far. So can you help frame the path forward in light of initial 2026 guidance, but even looking at 2027, 2028—how do you expect this to play out? And is this a durable multiyear driver? Kevin J. Knopp: Yeah. Absolutely. Great question. To us, innovation is absolutely a focus and a multiyear driver. We just launched our Viper, our newest product, in the July time frame, and now we have shipped more than 40 devices in Q4—$3 million of revenue. So we are very excited for that early reception and those placements in the U.S. and internationally. We do think about that as a great driver for us for 2026 and beyond. There is a pretty large market opportunity we see for that and all of our FTIR products in total. And, as we called out, Explorer is another great example of that. It delivered 40% year over year in 2025, and we again expect it to be a very significant contributor. So, yes, we really do believe that cycle—the modernization, the increased capabilities that we are bringing—does drive very durable growth. And just to recap a bit, so 2025, 58% of our revenues was mass spec–related, 42% was FTIR, and— Joseph H. Griffith: Super excited to see that contribution within the first two years of acquisition and some of the product traction. Kevin highlighted Viper, and with our product portfolio, typically you see some of the initial opportunities being able to be secured within state, local, international, and then fed and military defense might be a little bit further down the pipeline. So as we think about growth in 2027 and beyond, that would be through some of those enterprise accounts and adoption that have to go through more of a testing cycle to get adoption. So it is not just the initial, but then the longer-term trajectory of things like Viper and Explorer, where we are just getting going. Chad Wiatrowski: And on that same theme, I guess, for 2027 and beyond, on the deck, I see that you referenced integrations with UGVs, UAVs, and robots. Could you spend a minute explaining what applications you are referring to there and what that could actually look like? Kevin J. Knopp: Yeah. Absolutely, Chad. That is an area that we have been planting seeds, and we continue to do that today. Those seeds are working with partners across different countries. We have talked about a collaboration with Dallas Defense Group in France; they have put it on their quad-robot. We have talked about and showcased an effort at the Indy 500, where our gas sensing technology was added to a patrolling quadrabot that went through the tunnels underneath the raceway looking for toxic industrial chemicals and any leakages or hazardous conditions. So those are the types of areas that we talk about. As our platforms—all of our platforms—as you look at our roadmap, we are always thinking about smaller size, weight, and power. All that enables more and more opportunity in those areas. So we are trying to align our engagements out there and seed the market because we do think it opens up even further the number of sockets as we look towards 2027 and beyond. Operator: There are no further questions at this time. I will now turn the call back to Kevin J. Knopp, CEO and Co-Founder of 908 Devices Inc., for closing remarks. Kevin J. Knopp: Okay. Well, thank you very much for the thoughtful questions and your time today. We appreciate you listening to our call. Have a great day. Operator: This concludes today's call. Thank you for attending.
Operator: Thank you for standing by. My name is Jordan, and I will be your conference operator today. At this time, I would like to welcome everyone to the Tidewater Inc. Q4 and Full Year 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. You are limited to one question and one follow-up question. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to West Gotcher, Senior Vice President of Strategy, Corporate Development, and Investor Relations. Please go ahead. Thank you, Jordan. Good morning, everyone, and welcome to Tidewater Inc.’s fourth quarter and full year 2025 earnings conference call. West Gotcher: I am joined on the call this morning by our President and CEO, Quintin Kneen; our Chief Financial Officer, Samuel R. Rubio; and our Chief Operating Officer, Piers Middleton. During today's call, we will make certain statements that are forward-looking and refer to our plans and expectations. There are risks, uncertainties, and other factors that may cause the company's performance to be materially different from that stated or implied by any comments that we are making during today's conference call. Please refer to our most recent Form 10-Ks for additional details on these factors. These documents are available on our website at tdw.com or through the SEC at sec.gov. Information presented on this call speaks only as of today, 03/03/2026. Therefore, you are advised that any time-sensitive information may no longer be accurate at the time of any replay. Also during the call, we will present both GAAP and non-GAAP financial measures. A reconciliation of GAAP to non-GAAP financial measures can be found in our earnings release located on our website at tdw.com. And now, with that, I will turn the call over to Quintin. Thank you, West. Good morning, everyone, and welcome to the Tidewater Inc. fourth quarter and full year 2025 earnings conference call. I will start the call this morning discussing Tidewater Inc.’s performance during 2025, providing some highlights of the fourth quarter, update you on our current views on capital allocation, and then discuss our outlook for the market and vessel supply and demand including our initial thoughts on any impact from Operation Epic Fury. We will then provide some additional detail on our financial outlook and give you our 2026 guidance. Piers will give you an overview of the global markets and global operations and then Sam will wrap it up with our consolidated financial results. Entering 2025, there was a good deal of uncertainty as to how the market would unfold and what the pace of offshore activity would look like. Our view was not dissimilar, but we did believe that the broader set of demand drivers for our vessels would help deliver a year consistent to 2024. That proved to be the case. In the face of last year's softer offshore drilling demand and general macro uncertainty, I am pleased to say that Tidewater Inc. nonetheless delivered its best year in recent memory by nearly every metric. We generated year-over-year revenue growth, gross margin expansion, and average day rate growth. We generated EBITDA of nearly $600 million and generated nearly $430 million of free cash flow, well outpacing the free cash flow generated in 2024, which itself was the recent high point for the offshore industry activity. This performance against the broader industry backdrop not only speaks to the resiliency of Tidewater Inc.’s business model, but also to the resiliency of the company we have endeavored to build over the last eight years, with a relentless focus on scalable infrastructure and operational excellence. Fourth quarter revenue and gross margin came in ahead of our expectations. Revenue came in at $336.8 million due primarily to higher than anticipated average day rate and slightly better than anticipated utilization. Gross margin came in at nearly 49% for the quarter, an improvement quarter over quarter and about 250 basis points better than we expected. Fleet utilization continued to benefit from better than anticipated uptime and lower than expected downtime for repair and dry dock days. Additionally, during the fourth quarter, we completed a strategic internal realignment of our vessel ownership to consolidate a significant portion of the fleet under a single wholly owned U.S. entity. During the fourth quarter, we generated $151 million of free cash flow, bringing the full year 2025 total free cash flow to nearly $430 million. Fourth quarter free cash flow came in materially higher than the first three quarters of the year, which was the result of a meaningful working capital benefit, which Sam will provide more detail on later, combined with our lowest quarterly dry dock spend of the year. We are very pleased with the free cash flow generation of the business, ending the year with nearly $580 million of cash on the balance sheet. We made a comment last quarter that we would find it unacceptable to build this kind of cash on the balance sheet and would look for ways to put the cash to more productive, economically accretive use. Subsequent to the end of the fourth quarter and as announced last week, we entered into an agreement to acquire Wilson Sons Offshore Ultratug for $500 million. In addition to our expectation of maintaining the existing debt, we plan to fund the remaining purchase price with cash on hand. We are very excited about the addition of Wilson’s for a wide variety of strategic and financial reasons, many of which we discussed last week. But this is exactly the type of capital allocation opportunity we target. This acquisition has many merits as it relates to the strategic and operational capabilities, but it also provides a compelling use of capital to realize an economic return well in excess of our cost of capital. Importantly, we are able to maintain a healthy balance sheet pro forma for the transaction given the structure of our unsecured debt, revolving credit facility capacity, and the continued cash flow generation of the business. It is worth noting that during the fourth quarter, we did not repurchase any shares under our repurchase program as we were working on the Wilson’s acquisition. We retain our $500 million share repurchase authorization and capacity, which represents 13% of our shares outstanding as of yesterday's close. We have discussed our capital allocation philosophy over the last year or two. We have said consistently that given the strength of our balance sheet, we felt comfortable using a substantial amount of cash for share repurchases and/or M&A transactions, as long as the near-term cash flow visibility provides us the ability to quickly delever back down to below 1x net debt to EBITDA. As discussed last week, we expect to be below 1x net debt to EBITDA pro forma for the acquisition even as of closing, assuming a June 30 closing date. Although still developing, Operation Epic Fury adds an aspect of uncertainty to our operations in the Middle East, but thus far no real changes. Our largest geographic area of operation within this segment is Saudi Arabia, which makes up 80% of this segment's revenue for 2025, and everything there is business as usual. Our vessels in the UAE and Qatar are safely in port but remain on hire and no customers have inquired about evacuations. We do expect an increase in insurance costs while hostilities are ongoing, but that incremental cost is immaterial to our business. Diesel costs are also rising, but fuel is a pass-through to our customers. Similar to the increase in insurance cost, the impact is immaterial to our overall business. It is still early in developing, but thus far, the developments do not change our outlook for 2026, which remains optimistic, particularly as it relates to the pace of offshore drilling activity. Observable offshore drilling leading indicators such as tenders and contracts are materially higher over the past few months compared to earlier in 2025, which suggests that operators are progressing in earnest to commence additional offshore projects in the future. In our conversations with our customers, the commentary is similar to what we hear publicly. Offshore international projects are of high interest and pretender and tender conversations for our vessels continue. One other indicator, which is a bit more structural in nature, from recent oil and gas industry reports, is that the last decade of underinvestment has led to a declining resource base for many E&P companies. There have been indications that oil companies are acknowledging this challenge beyond looking just to fill the gap through their own M&A, through the rollback of capital return programs to focus on exploring activities and otherwise on activities focused on growing a given company's resource base. Combining this resource need with a longer-term hydrocarbon demand curve that looks materially higher than estimated even a year ago provides a significant incentive for our customers to explore and develop existing assets and take advantage of a healthy long-term hydrocarbon demand environment. We believe that the offshore resource base provides a compelling opportunity for oil companies to find new resource bases, and believe that these fundamental factors will support an increase in drilling activity not only as we progress through the year, but for at least the next few years. I have only spoken about drilling, but the other areas of activity where we benefit—production support, offshore construction, and EPCI work—are all likely to benefit in the scenario outlined. To the extent that drilling activity does increase in a structural way, this will likely occur in frontier regions that require new subsea infrastructure and ultimately FPSO installations to efficiently move product to market. This element of our business continues to serve us well today, and would also provide for incremental vessel demand. It is useful to contrast this intermediate demand picture with the current state of vessel supply, which, as we often say, is the most important determinant of the long-term financial health of our business. The demand curve for vessels is highly inelastic. When vessel supply slightly exceeds demand, our pricing power is fairly restrained. However, when demand slightly exceeds vessel supply, pricing leverage accelerates quite quickly. The global fleet of vessels has been essentially unchanged, if not declining slightly, over the past few years. In 2024, there was a handful of newbuild vessels that were ordered, representing roughly 3% of the global fleet. We have not seen any newbuilds ordered since then. Given the lead time on newbuild orders—somewhere between two to three years—and some of the structural reasons that were limiting newbuild ordering that we have discussed in the past, the vessel supply and demand picture I have illustrated depicts what we believe to be an exciting outlook for the offshore vessel industry. In summary, we are pleased with how the business performed through 2025 with a particularly strong finish to close out the year. We are excited to welcome the Wilson’s organization into the Tidewater Inc. family and will work diligently to close the transaction and to integrate the business. We will look to continue to efficiently allocate capital to the highest returning opportunities we have against a compelling vessel supply and demand that we believe is in the early stages of developing. And with that, let me turn the call back over to Wes for additional commentary. West Gotcher: Thank you, Quintin. Subsequent to the end of the fourth quarter, we announced the acquisition of Wilson Sons Offshore Ultratug for $500 million in an all-cash transaction. We expect to finance this transaction using cash on hand and the assumption of approximately $261 million of debt provided by BNDES and Banco do Brasil. The assumed debt carries a weighted average cost of 3.6%. Further, the assumed debt has a long-term amortization profile that stretches out to 2035, with no particular year of amortization adding any significant maturities to our current debt maturity profile. Assuming a 06/30/2026 closing date, we expect to have a net leverage ratio below 1x. As Quintin mentioned, we did not repurchase any shares during the third quarter due to the Wilson’s acquisition—excuse me, during the fourth quarter due to the Wilson’s acquisition. At the end of the fourth quarter, we retained our $500 million share repurchase authorization. As a reminder, under our outstanding unsecured bonds, we are unlimited in our ability to return capital to shareholders, provided our net debt to EBITDA is less than 1.25x, pro forma for any share repurchase. Under our revolving credit facility, we are also unlimited in our ability to repurchase shares, provided that net debt to EBITDA does not exceed 1x. However, to the extent we exceed 1x net leverage, we still retain the flexibility to continue to return to shareholders, provided that free cash flow generation is in excess of cumulative returns to shareholders. From a financial policy perspective, our approach to leverage remains consistent. Our general test is that so long as we can return to net debt zero in about six quarters, we are comfortable to proceed with a given outlay of capital. Further, our target leverage at any given point in time is 1x, although we will consider exceeding this target for M&A based on the relative merits of the transaction and the visibility and durability of the acquired cash flows, all with an eye to returning to our target leverage level with an ability to return to net debt zero in about six quarters. We will maintain a disciplined approach to deploying debt in such a way that we are able to achieve return-enhancing uses of capital while maintaining the strength of our balance sheet. We remain opportunistic on share repurchases, and we will look to execute share repurchase transactions when suitable M&A targets are not available. We retain the option of evaluating M&A and share repurchase concurrently, but our financial policies and philosophies outlined dictate our relative appetite to pursue both concurrently. Turning to our leading-edge day rates, we will reference the data that was posted in our investor materials yesterday. Across the fleet, weighted average leading-edge day rate was down slightly in the fourth quarter compared to the third quarter. During the quarter, we entered into 21 term contracts with an average duration of six months, and so we are working to ensure that we maintain vessel availability for new contract opportunities as the market is expected to tighten later this year. Turning to our financial outlook, we are updating our full-year 2026 guidance to contemplate the Wilson’s acquisition, assuming a June 30, 2026 closing date. We are raising our full-year 2026 revenue guidance to $1.43 billion to $1.48 billion and a full-year gross margin range of 49% to 51%. The updated guidance is reflective of the addition of the Wilson’s fleet and does not contemplate any changes to our guidance for the legacy Tidewater Inc. business. Our expectation remains that there is the potential for uplift depending on the strength of drilling activity picking up towards the end of the year. Looking across 2026, firm backlog and options and January revenue for the legacy Tidewater Inc. fleet represent approximately $1.1 billion of revenue for the full year, representing approximately 80% of the midpoint of our legacy Tidewater Inc. 2026 revenue guidance. Approximately 65% of available days for 2026 are captured in firm backlog and options. Our full-year revenue guidance assumes utilization of approximately 80%, leaving us with about 11% of capacity to be chartered if the market tightens quicker than we are anticipating. Our largest class of PSVs and anchor handlers retain the most opportunity for incremental work, followed by our midsized anchor handlers and small and midsized PSVs. Contract cover is higher earlier in the year, with opportunity available later in the year. The bigger risk to our backlog revenue is on unanticipated downtime due to unplanned maintenance and incremental time spent on dry docks. With that, I will turn the call over to Piers for an overview of the commercial landscape. Piers Middleton: Thank you, Wes, and good morning, everyone. Before I talk about the market and put some of Quintin and Wes’s comments into a wider global context, I wanted to mention that we will be releasing our sixth sustainability report in early April. This report, as always, is a global team effort. I would like to take this opportunity to thank everyone within the Tidewater Inc. team for their hard work and commitment helping to put this report together as we continue to showcase to all our stakeholders our historical as well as our future commitment to sustainability. Please look out for the report. Turning back to the offshore space, as Quintin has already mentioned, 2025 was a very good year for Tidewater Inc., which is testament to the hard work of the whole team not just in maintaining market-leading day rates, but also continuing to improve our vessels' uptime with a laser focus on making the right investments in the maintenance and operations of our vessels to be the gold standard in the industry and thereby continuing to decrease our downtime for repair days year over year across the global fleet. We all came into 2025 with a level of uncertainty as to how the market would turn out. So for our global teams to deliver such impressive results in a flattish market, I believe bodes very well for us as we start to see the expected tide of increasing demand turn in 2026. Demand had eased back slightly during 2025; however, long-term fundamentals of the business are still very much in Tidewater Inc.’s favor, and with the limited supply story, the only truly global footprint, and the largest and one of the youngest and best maintained fleets in the industry, we are well placed to springboard on from our 2025 results and make further progress in future years as expected demand growth comes back online in 2026. Turning to our regions. Starting with Europe and the Mediterranean. The Mediterranean seems set fair to be very active during the year with several oil majors announcing and tendering for drilling programs in the region for commencement in 2026, as well as several EPCI projects kicking off throughout the year. So we expect a very active 2026 in the Mediterranean. In the North Sea, Norway looks set for a good few years ahead. With additional rigs expected in the region and some PSVs expected to leave the OSV space, the supply-demand balance should further tilt in our favor over the next few years. Even in the UK, rumors continue to circulate that the UK government is discussing an early end to the windfall tax levy as soon as this year, although the more likely scenario is this would not fully come into play until 2027. But as we mentioned in our last call, this would be a significant shot in the arm for the industry in the UK. Lastly, in the North Sea, where we operate two large AHTSs, we have seen some early signs of large AHTS spot rates both in the UK and Norway cresting over $100,000 per day. While these are very short-term contracts, it is quite unusual to see day rates this high so early in the year. With a couple of large AHTSs leaving the region over the winter for warmer climates, we do expect to continue to see strong rates for large AHTSs through the rest of 2026. In Africa, sentiment remains cautiously optimistic for 2026, strengthening drilling activity in West Africa and neighboring regions such as the Mediterranean and Mozambique coming back into play is expected to support high utilization and day rate increases across all AHTS and PSV segments throughout the year. A number of oil companies have released tenders for further exploration campaigns in 2026 in Namibia. The 900 square meter plus PSV region in a country where over the last few years we have been very successful supporting our customers from our in-country base, and the expectation is that in early 2027 we should start to see a number of our customers kicking off field development in earnest in Namibia, which is more vessel intensive, especially in countries like Namibia with limited infrastructure. Similarly, in Mozambique, we are starting the year supporting TechnipFMC with four of our larger OSVs, with the expectation that we will start to see several other projects kick off in Q3–Q4 of this year and go well beyond 2027, as things continue to settle down safety-wise in-country. Lastly, in Angola, we are seeing a lot of increased activity in-country, as the government continues to pressure the IOCs to increase production, and thereby a big focus on both improving existing fields for improved subsea but also through exploration for new fields, as Angola sees annual production rates stagnating. Overall, we are positive with the outlook for Africa as we get towards the latter part of 2026, and for the next few years beyond. The Middle East market remains tight with very limited availability of tonnage in the region, and we expect the region to remain supply constrained for the short to medium term. The opportunity will be there to continue to push rates throughout 2026. Of course, as a word of caution, as Quintin just mentioned, we are watching carefully the ongoing situation in the region, and as of today, operations are continuing. However, the safety of our people and crew in the region are of the utmost importance, and as such, we will constantly be monitoring the situation and work with all of our stakeholders to make sure everyone stays safe. In Asia Pacific, Australia looks to be a flattish year compared to 2025, with most of our customers focusing on production, so we do not expect any significant incremental demand during 2026. In Malaysia and Petronas specifically, we saw an uptick in activity in the latter half of 2025 which has meant that locally owned OSVs have now gone back to work, meaning there is less supply available to depress day rates in the wider region, which, with increased tendering activity in countries like Indonesia, Myanmar, and Vietnam, should mean that we are able to push rates upwards for the larger class of PSVs as we move into 2026. In the Americas, the Gulf of Mexico market outlook for 2026 looks flat at best and we expect there to be some pressure through the year. There will be very limited work on the East Coast, which over the last few years has soaked up a number of boats in the Gulf during the summer months and kept the supply-demand balance in check. We have limited Jones Act exposure with only four or five of our U.S. boats currently working there, and we believe any softening in the Gulf will be more than offset by the growing demand we are seeing in the Caribbean. In Mexico, with Pemex seeming to slowly be righting their listing ship, we are cautiously optimistic that by the end of this year we will really start to see some significant increase in the tendering activity driven both by Pemex, and also by a number of new operators that are targeted to be coming into the country to help Mexico focus on increasing its falling production rates. Lastly, in Brazil, we are very excited about the long-term prospects in the country, evidenced by our recent announcement to acquire Wilson’s Ultratug, and as we talked about last week, we really believe that the combination of our two companies will create an even stronger platform to allow us to continue to support and meet the growing demands of our customers in Brazil. Overall, as Quintin mentioned, we are very pleased with how our global team both on and offshore performed through 2025, and while we saw some softening in the offshore space during 2025, the market still continued to move in the right direction through the year, and we remain positive that the platform we have created will continue to be able to reap significant rewards for all of our stakeholders for many years to come. And with that, I will hand over to Sam. Thank you. Samuel R. Rubio: Thank you, Piers, and good morning, everyone. At this time, I would like to take you through our financial results. My discussion will initially focus on the full year 2025 compared to 2024, followed by a deeper discussion of the sequential quarterly results from 2025 compared to 2025. As noted in our press release filed yesterday, we generated revenue of $1,350,000,000 for the year, an increase of approximately $7,000,000 versus our 2024 amount. Gross margin for the year was $665,800,000 compared to $649,200,000 in 2024. Our net income was $334,700,000 compared to $180,700,000 in 2024. Our net income for the quarter and full year 2025 includes the previously mentioned tax benefit related to a strategic realignment of our vessel ownership. Included in that amount is a one-time non-cash tax benefit of $201,500,000, primarily related to the utilization of foreign tax credits that were previously subject to valuation allowances. The incremental tax basis is reflected in deferred tax assets for property and equipment. Average day rates improved by $1,300 per day for the full year to $22,573, while active utilization decreased slightly to 78.7% due to more idle days, partially offset by fewer dry dock and repair days. The strength in the day rates combined with the reduction in operating costs versus 2024 increased our gross margin by about one percentage point year over year to 49.2%. Adjusted EBITDA was $598,100,000 for 2025 compared to $559,600,000 in 2024. We also generated $426,000,000 of free cash flow, an increase of $95,000,000 from 2024 due in part to a reduction in dry dock costs of $35,000,000. We also sold 12 vessels for total cash proceeds of $17,600,000. Working capital was a source of cash due to notable success in our cash collections during Q4. Our success in our Q4 cash collections was a large contributor to our free cash flow generation in 2025. Overall, 2025 was a good year with strong free cash flow delivery and solid operational execution, as well as completing important strategic initiatives including our debt refinance in Q3 and the previously mentioned vessel realignment. Our improved balance sheet and future cash flow generating capability will continue to provide opportunities to deploy capital in M&A, as illustrated by the Wilson’s announcement last week, as well as repurchase our own shares. As a reminder, although we did not repurchase shares during Q3 or Q4, for the full year we used $98,000,000 in cash to reduce approximately 2,800,000 of our shares in the market during the year, including shares which were held back to pay roughly $8,000,000 in taxes related to vesting of employee share-based awards. I would now like to turn our attention to the fourth quarter, where we reported net income of $219,900,000, or $4.41 per share, which includes the tax benefit mentioned previously. We generated $336,800,000 in revenue compared to $341,100,000 in the third quarter. Average day rates were down about 3% versus the third quarter; however, we did see a nice increase in active utilization from 78.5% in the third quarter to 81.7% in the fourth quarter, which was our highest active utilization since Q1 2024. This utilization increase resulted mainly from the decrease in idle and write-off days. Gross margin in the fourth quarter was $164,000,000 compared to $163,700,000 in the third quarter. Gross margin percentage in the fourth quarter was almost 49%, nicely above our Q4 expectation and slightly ahead of our Q3 margin of 48%. The increase in margin versus Q3 was primarily due to a decrease in operating costs. Operating costs for the quarter were $172,700,000 compared to $177,400,000 in Q3. In the quarter, there were three fewer vessels operating in Australia, which is a high operating cost area. Overall, we saw a decrease in salaries, travel, and consumable expenses, partially offset by increases in R&M and other vessel expenses. Adjusted EBITDA was $143,100,000 in the fourth quarter compared to $137,900,000 in the third quarter. For the year, our total G&A costs were $134,500,000, which is $23,700,000 higher than 2024, primarily due to increases in professional fees and personnel costs. This amount includes approximately $8,300,000 in transaction-associated costs related to our M&A diligence efforts. G&A cost for the quarter was $39,000,000, $3,700,000 higher than the third quarter due primarily to an increase in professional fees and personnel costs. For 2026, exclusive of additional M&A costs, we expect Tidewater Inc. standalone G&A costs to be about $123,000,000. This includes an estimated $15,000,000 of non-cash stock compensation. Moreover, we expect to incur approximately $7,000,000 in additional G&A costs in the second half of this year related to the Wilson’s acquisition. Dry dock costs for the full year were $98,600,000, which includes approximately $35,000,000 of engine overhauls. Full year 2025 dry dock days affected utilization by about five percentage points. In the fourth quarter, we incurred $13,900,000 in deferred dry dock costs compared to $17,600,000 in the third quarter. We had 672 dry dock days that affected utilization by about four percentage points in Q4. Dry dock cost for 2026 is expected to be approximately $122,000,000, which includes $46,000,000 of engine overhauls. 2026 dry dock days are expected to affect utilization by approximately five percentage points. Additionally, we expect to incur about $16,000,000 in dry dock costs in the second half of the year related to the Wilson’s acquisition. Full year 2025 capital expenditures totaled $25,800,000. In Q4, we incurred $5,100,000 in capital expenditures related to vessel modifications and upgrades, ballast water treatment installations, DP system, and IT upgrades. For the full year 2026, we expect to incur approximately $51,000,000 in capital expenditures. The increase year over year is primarily due to a planned major upgrade to one of our Norwegian vessels, which is supported by customer contract. Optional upgrade or maintenance CapEx is expected to be approximately $36,000,000 during 2026. We will also spend an additional $24,400,000 in 2026 related to two purchase options we have exercised for vessels we have been leasing. The purchase option prices were below market value for these vessels. Finally, we expect to incur about $1,000,000 in CapEx in the second half of the year related to the Wilson’s acquisition. We generated $101,200,000 of free cash flow in Q4 compared to $82,700,000 in Q3. In the quarter, we sold two vessels for proceeds of $5,300,000 and incurred $3,800,000 less in deferred dry docks. However, the free cash flow increase quarter over quarter was mainly attributable to significant working capital benefit achieved in Q4 due to an increase in cash collections. This was largely due to our cash collections related to our largest customer in Mexico, whose overall receivable balance decreased by more than $40,000,000. As a result, our overall DSO decreased by 14 days quarter over quarter. As a reminder, following our debt refinancing, which was completed in Q3 2025, we only have small debt repayments that are related to refinancing of recently constructed smaller crew vessels. We have no payments until 2030 on our new unsecured notes. Following the anticipated close of the Wilson’s acquisition, our debt maturity and repayment profile will change to accommodate the newly assumed Wilson’s debt. We conduct our business through five operating segments. I refer to the tables in the press release and the segment footnote and results of operations in our 10-Ks for more details of our segment results. In the fourth quarter, consolidated average day rates were down versus the third quarter; however, results varied by segment with our Middle East day rates improving by 9%, which was offset by day rates declining in each of our other regions. Total revenues were slightly lower compared to the third quarter, with increases in our Middle East and African regions offset by decreases in our APAC, Americas, Europe, and Mediterranean regions. Regionally, margin increased in Africa by six percentage points, and we also saw a three percentage point increase in our APAC region as well as a one percentage point increase in the Middle East. Our Europe and Mediterranean region saw a decrease of one percentage point and the Americas declined by eight percentage points. The gross margin increase in our African region was primarily due to a large increase in utilization of 13 percentage points, combined with a slight decrease in operating costs and partially offset by a 2% decline in average day rates. The increase in utilization was due to fewer idle, dry dock, and repair days. Gross margin increase in the APAC region was due to an increase in utilization and a large decline in operating costs, partially offset by a day rate decrease of about 11%. The decline in operating costs and day rates are primarily due to three fewer vessels operating in Australia versus Q3. Utilization increase is primarily due to a decrease in idle and dry dock days, partially offset by an increase in repair days. The increase in the Middle East gross margin was primarily due to a 9% increase in average day rates, partially offset by higher operating costs. The cost increase was primarily due to higher R&M and personnel expenses. Utilization was roughly flat quarter over quarter. Our Europe and Mediterranean region gross margin was marginally lower versus the previous quarter, and the gross margin decrease in our Americas region was driven by a nine percentage point decline in utilization as well as a 6% increase in operating costs. The cost increase was primarily due to higher R&M and higher fuel expense due to lower utilization compared to Q3. The decrease in utilization was due to higher dry dock and idle days. In summary, Q4 was a strong quarter. We delivered both strong financial results and free cash flow. Our balance sheet is in excellent position and the industry long-term fundamentals remain very strong. We are especially excited about the Wilson’s acquisition in the highly important Brazilian market, and we remain optimistic about the opportunities that lie ahead for Tidewater Inc. With that, I will turn it back over to Quintin. Quintin Kneen: Thank you, Sam. Jordan, I think we can go ahead and open it up for questions. Operator: Great. In order to ask a question during this time, simply press star 1 on your telephone keypad. First question comes from the line of James Michael Rollyson from Raymond James. Your line is live. James Michael Rollyson: Yeah, you can call me Jimmy. That is fine. Good morning, everyone. Quintin or Piers, so if you kind of lay out the day rate picture, right, leading edge has slipped the last couple quarters, which I guess just speaks to the whitespace timing and seasonality and that kind of stuff. But with what Piers went through, you know, with maybe a couple exceptions, it sounds like things are shaping up to get, you know, materially better as we move through this year and into next. Maybe just some context around the guidance and kind of your thoughts on how your fleet average day rates move throughout the year and heading into next. Right? You were going up $4,000 a day for a couple years. That kind of trimmed back to, I think, was $1,300 that Sam mentioned. But how do you think that trajectory looks and kind of what is embedded at the midpoint of guidance for 2026? Piers Middleton: Well, I will start. You know, obviously, we are expecting things to be somewhat flattish for 2026, but looking for a tightening in the market in the second half. We are not banking that into the guidance. But if we do see that tightening, my hope is that we are going to see those day rates climb in 2027 and 2028 at another $3,000 and $4,000 a day. So it is quite responsive to even small increases in demand for vessel usage. We are starting to see some signs of that. So, you know, if you go back two or three years, there was some slackness in the Middle East, but, you know, you see that that region was one of our best movers in the past quarter. I expect that to continue. I am getting very excited about what I am seeing develop in West Africa, and we saw some rate there. So as long as the world can still hold itself together and maybe, as Piers indicated, we get some relief from the taxing authorities in the UK, we will see that market tighten up globally. And then you will see those $3,000–$4,000 a day movements per year. So I may have covered what Piers was going to say, but he and I are in separate locations. Let me just ask Piers if he wanted to add anything before we hand it back to you. Piers Middleton: No. I mean, Quintin, you should join the commercial team. That was brilliant. Yeah. No. Nothing more to add. I mean, we are actually just—I think, Jim, we are seeing, you know, a lot of, I think as Quintin said in his opening remarks, a lot of additional tender and pretender type of conversation at the moment with our customers, which does really bode well for the sort of second half of this year. You know, big projects both on the E&P stuff and also on the drilling side as well. So, yeah, very optimistic as we get towards the latter half of the year. And I think as Quintin said, then we get the chance to really push rates in 2027 to hopefully where we were in the last big time we got to really push rates. James Michael Rollyson: Yeah. That is certainly exciting and nice to actually have visibility beyond just kind of hope of things going. And my follow-up is probably for Sam. Sam, if you kind of line up your midpoint of guidance, let us just say, for 2026 and the little bit higher dry dock CapEx and a little bit higher overall CapEx, and then, you know, however you are thinking about working capital as Pemex kind of catching up, how are you thinking about free cash flow generation right now for 2026? Samuel R. Rubio: Yeah, Jim. Thanks. No. I think the free cash should stay fairly strong for 2026. You know, we did see in Q4 2025, obviously, we had a big bump in our cash collections. So, you know, if we look back over the last few years, you know, it should average out in the, you know, $300–$311 million somewhere. Quintin Kneen: Yeah. I guess the other thing I would add to that, Jim, is that we did have a disproportionate bump in Q4 from the lump-sum collections from Pemex, and we are certainly very happy to see that. I need to see them continue to pay at that level. But if you look at the DSO for us, it is actually abnormally low for such an internationally and broad company, and that may normalize. So that may eat up some otherwise, you know, operational cash flow in 2026. James Michael Rollyson: That is kind of where I was going. Thank you. Appreciate it, guys. Samuel R. Rubio: Thanks, Jim. Operator: Your next question comes from the line of Keith Beckman from Pickering Energy Partners. Your line is live. Keith Beckman: Hey. Thanks for taking my question. Always appreciate the slide that you guys kind of put out on newbuild economics. Just kind of wanted to get a sense on maybe you see the maximum vessel life for a majority of the PSVs in the industry, and then when you think a rough timeline maybe on when you think we could face either serious upgrades and renovations or a full newbuild cycle? Obviously, looking much further down the road. Quintin Kneen: Well, I will start. And as I indicated, Piers, Wes, and I are in separate locations. I am here with Sam. So he and Wes may want to add something because he maintains those slides. But I will tell you that the industry is a lot more capital disciplined than it has ever been in my two decades in the industry. I was at a conference about a month ago, and this was a big discussion, and nobody is interested in building. If you look at most people's financial statements, they use a 25-year depreciation life. But the fact is these boats can work well into 30, 35 years. But they will need serious upgrades as they go forward, and that needs to be supported by day rates and so forth. So, you know, I think that we are going to see real modest to almost no building in the next year. And then if the industry does pull back—like I was just mentioning to Jim—in 2026 and 2027, and you start to see average day rates closer to $30,000 a day, you are definitely going to see some building. But at least from my discussions recently, I believe it is going to be very moderate and be more replacement-oriented. So we will have to see how it plays out. But I still think that we need to see day rates closer to $30,000 a day before you see anybody spending a lot of money and certainly before you see banks supporting Keith Beckman: Awesome. That is very helpful. And then my second question was just around—like, right now, obviously, you guys are focused on integrating the Brazil acquisition. I was just wondering if there are any other regions that could make sense to increase your fleet looking forward down the road, or on the other end of that, is there any sort of fleet rationalization that could make sense at some point on maybe some lower-spec boats? Quintin Kneen: Well, you know, we sell boats on a regular basis, and Sam, I think, covered some of the boats we sold during the year. So every year, you know, there are some vessels that hit the wall. So, economically, we will sell them off. But certainly, the regions that we are in today are regions that we are dedicated to. I am actually—I mentioned it in one of the remarks, I think, earlier on the call. I cannot remember if it was in the questions or earlier on the call. But I am excited about West Africa. I am starting to see things really solidify there, and, you know, historically I had been focused on the Americas, and obviously we got the deal done in Brazil. I guess now more I am tilting towards West Africa, but we will just have to see. You know, a lot of it has to do with price, and that is always hard to say. Keith Beckman: I really appreciate you taking the time, and I will turn it back. Samuel R. Rubio: Thank you. Operator: Your final question comes from the line of Greg Lewis from BTIG. Your line is live. Greg Lewis: Hey. Thank you, and good morning, and thanks for taking my questions. Samuel R. Rubio: Certainly. Samuel R. Rubio: Good morning. Greg Lewis: Hey. I did want to talk a little bit about what is happening in the Middle East. You mentioned things are kind of just business as usual, I guess, in Saudi Arabia. I realize it has been years, right, since Saudi evacuated a rig. I think you probably have to go back to, what, Desert Storm, which I do not—I do not—I doubt—maybe, Quintin, maybe you were in the industry, but I do not know anyone else was. As we think about that, is there any kind of way to think about if we do evacuate rigs, as we think about the contracts with Aramco, are there, like, force majeure clauses? Is there any kind of contract language that allows them to pause contracting or anything like that? How should we think about the—you know, realizing it is changing by the hour probably? Quintin Kneen: So you are right to think about the Middle East as the primary active area, of course. I will tell you that when it comes to Saudi Aramco, they rule the roost, and, no, there is nothing in the contracts that gives them the privilege to cancel at will. But, you know, they are a strong force and they will come to us if they feel they need to reduce the vessel count. But the reality is, during these times, people need oil and the production becomes very important. And so, in that particular area where it is very production focused offshore, I expect that, you know, we may see things like insurance costs go up. We may see things like personnel costs going up, because it sometimes gets harder for people to go there during those times. At least that is what we have seen in the past. But I am honestly, at this point, not concerned. But, you know, obviously, we will update you in the next month and a half or in May when we do the first quarter call. But, no, it is just what we do. So it is—for right now, it is just not a concern. Greg Lewis: Okay. Great. And my other one, appreciating, you know, you guys have your ongoing merger with—happening. I guess I am just kind of curious. It looked like OceanPact is acquiring CBO in Brazil also. Has anything changed in Brazil that is kind of driving this kind of flurry of M&A activity? I feel like everybody has been waiting for potential consolidation in Brazil for, I do not know, a few years now. And it just seems like all at once, it is happening. Is there anything that has changed that is driving this? Just kind of curious if you have any kind of color you could provide around that. It is the optimism that, you know, that is in Brazil today. Quintin Kneen: You know, there was some back and forth in 2025 about what Petrobras was going to be doing and what the activity levels were going to be and, generally, you know, the strength of the South American market. And then I would tell you that people are just very focused on finding long-term contracts with good payers at good margins, and Brazil fits that bill. I think that it is just coincidental that these two transactions have happened real quickly. You know, whisper talk has been that they have been going on for a couple of years, and so, as a result, you know, yeah, I think it is just more coincidental of the timing, but the general optimism in Brazil is quite nice. Greg Lewis: Okay. Super helpful, and congrats on the quarter too. Samuel R. Rubio: Thanks, Greg. Operator: That concludes today's question and answer session. I will now turn the call back over to Quintin Kneen for closing remarks. Quintin Kneen: Jordan, thank you, and thank you, everyone. We will update you again in May. Goodbye. Operator: That concludes today's meeting. You may now disconnect.
Operator: Greetings, and welcome to the Advantage Solutions Inc. fourth quarter and full year 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press. As a reminder, this conference is being recorded. Thank you. Operator: Welcome to Advantage Solutions Inc. fourth quarter and full year 2025 earnings conference call. David A. Peacock, Chief Executive Officer, and Christopher Robert Growe, Chief Financial Officer, are on the call today. David and Christopher will provide their prepared remarks, after which we will open the call for a question-and-answer session. During this call, management may make forward-looking statements within the meaning of the federal securities laws. Actual outcomes and results could differ materially due to several factors, including those described more fully in the company's Annual Report on Form 10-K filed with the SEC. All forward-looking statements are qualified in their entirety by such factors. Our remarks today include certain non-GAAP financial measures, which are reconciled to the most comparable GAAP measure in our earnings release. As a reminder, unless otherwise stated, the financial results discussed today will be from continuing operations, and revenues will exclude pass-through costs. I will now turn the call over to David A. Peacock. David A. Peacock: Thanks, operator. Good morning, everyone. Thank you for joining us. I want to thank our teammates across the organization for their ongoing commitment successfully serving our clients as they navigate the market uncertainty and volatility, helping them adapt and succeed. Before turning to our results, I would like to highlight several strategic actions we have taken over the past few months to strengthen our foundation for shareholders, employees, and customers and to position the company to drive sustained performance in 2026 and beyond. First, we moved towards refinancing our debt later this month, extending maturities to 2030. We had over 99% acceptance of a new debt package from our lender group. This refinancing is intended to provide operating flexibility and enhance our liquidity profile while helping us achieve our long-term leverage target of 3.5 times or less. This provides us with greater financial flexibility and ensures we have the capital necessary to continue investing in our core capabilities while delivering exceptional service to our clients. This planned refinancing includes a pay down of approximately $90,000,000 of our debt. Second, we further sharpened our portfolio through the divestiture of three noncore businesses. These transactions streamline our focus and allow us to redeploy capital into higher opportunities aligned with our long-term strategy. As a result of these actions and our strong cash flow performance, we ended the year with $241,000,000 in cash and a strengthened balance sheet, positioning us in a place of greater stability and optionality as we enter 2026. Finally, our upcoming reverse stock split supports broader institutional accessibility as we enter our next phase of growth. Taken together, these initiatives increase our strategic flexibility, enhance operational focus, and allow us to move from defense to offense. Turning to fourth quarter results, net revenues of $785,000,000 were up approximately 3% year over year, reflecting an improving trajectory in Experiential Services while Branded Services continue to face cyclical headwinds and Retailer Services face slowing spend and some revenue timing shifts. Combined, our overall company delivered adjusted EBITDA of $88,000,000, which reflects the ongoing mix shifts toward more labor-intensive, lower-margin businesses. Our cash flow generation was strong, and in 2025, we generated $174,000,000 in unlevered free cash flow, a significant increase from $50,000,000 in the first half, representing over 100% unlevered free cash flow conversion, excluding the payroll timing factor. One reason for this was our successful SAP implementation earlier this year. Net free cash flow of $74,000,000 in the second half exceeded our target of 30% of adjusted EBITDA, excluding payroll timing, and as I discussed earlier, our cash position strengthened materially. We believe our liquidity position provides ample flexibility to serve our clients effectively, invest selectively, and further improve the balance sheet. As I mentioned earlier, we further streamlined our portfolio in recent months, including in early 2026, with several small divestitures of noncore businesses, resulting in approximately $55,000,000 in proceeds, further bolstering our cash position. Before discussing our strategy going forward, I want to briefly reflect on how we arrived at this point, both from an external and internal perspective. Externally, consumers continue to be cautious, value-seeking, and selective. This is affecting overall shopping behavior and spending at retail, with lower-end consumers buying more on promotion at lower price points, while higher-end consumers are shifting purchasing habits away from expandable consumption categories to healthier options. These two dynamics affect our business in three ways. One, we can see overall lower commission revenue when we manage sales for CPGs or private label manufacturers. Two, we see CPG and retailer P&Ls challenged, leading to some lower spending on merchandising projects, resets, and remodels. And three, we are seeing overall pullback in traditional marketing as retailers demand more investment in their retail media networks, and many are cyclical in nature. Despite them, we made meaningful progress adapting our business to these conditions to compete more effectively for the long term. Internally, we have been proactively investing in a multiyear IT transformation that concludes this year. These investments required upfront spending that are already driving efficiencies across the business. We expect our capital spending to decline in 2027, reflective of ongoing support rather than transformation investments. We continue to rationalize applications to reduce complexity and support efficiency in our IT platform. We also experienced some client losses in certain areas, particularly where clients became more price sensitive or chose to bring work in house. At the same time, overall retention remains high, and we continue to execute against our pipeline of new clients, reinforcing the fact that there is continued demand for our services when we compete on the full value of our offering. With that context, let me turn to what we are doing to structurally improve performance and strengthen the balance sheet. First, we are improving productivity across the organization, with our centralized labor model serving as a core driver. Better profitability per labor hour. Expanding this rollout remains a key priority for 2026. Technology will continue to be another critical driver of our productivity while also differentiating our ability to better serve our clients and customers. Given our investments in new systems, we are able to rationalize many of our legacy applications and systems to provide a more efficient IT backbone. Our enterprise transformation, including our new SAP and Oracle systems, in addition to our Workday implementation later this year, creates a strong and modern platform to provide insight-driven services to our clients and customers. Our new technology platforms are enabling efficiency gains, better workforce optimization, faster data integration, and sharper visibility into performance, positioning us to operate as a truly insights-driven organization, which we believe will propel us to a leading position in the industry. In parallel and in conjunction with our materially upgraded systems, we are integrating AI where it drives the most impact. One example is AI-enabled staffing and scheduling, which is already making us more effective and efficient, reducing manual work while improving speed, predictability, and labor utilization. Second, we are focused on driving growth that deepens client relationships, expands our addressable market, and leverages the capabilities we have built. Our partnership with Instacart is a good example as it continues to progress, combining their in-store audit capabilities and consumer insights with our retail execution network to help CPG brands improve on-shelf and overall in-store performance. We remain focused on pursuing new partnerships with retailers outside the grocery sector, which would significantly expand our addressable market. Our efforts are focused on retail segments where our capabilities translate well. We will share more as these opportunities progress. Finally, we are leveraging our industry-leading data investments through our alert-based sales system called Pulse. This is an AI-enabled decision engine that integrates proprietary retail data with real-time capabilities to help clients anticipate demand and drive growth while more quickly identifying opportunities. Pulse will help our key account managers either remediate underperformance in an account or accelerate growth by more quickly providing the causal analysis and recommended actions. This was enabled by our migration to the cloud and creation of our data lake, which is helping us ingest and analyze more data than ever before. Turning to our segments, Experiential Services delivered strong Q4 results and stands as the clearest proof point of our progress in 2025. Accelerating demand, improved hiring velocity, higher labor readiness, and more consistent execution drove increased event volumes, stronger execution rates, and better predictability, positioning us well entering 2026. Branded Services remained under pressure, consistent with prior guidance. Softer CPG spending, tighter procurement, and client insourcing continue to weigh on performance. While we are not expecting a near-term inflection, we believe many of these pressures are cyclical. In 2026, our priorities are stabilizing the revenue base and converting new business even faster. Our pipeline of new opportunities has expanded, and we expect to provide more visibility into conversion and win rates as the year progresses. We are also managing costs and continuing targeted investments in data and analytics and partnerships to drive measurable client ROI. Retailer Services results were affected by channel mix shifts, project timing, and cautious retail spending, particularly in grocery. Some activities shifted into early 2026, creating a timing mismatch as costs were incurred in 2025. Overall, while performance varied by segment, the underlying theme is clear. Execution discipline and operating consistency are improving, particularly in Experiential Services, which gives us confidence looking ahead. Turning to our outlook, we are approaching 2026 with cautious optimism as we shift from heavy investment to enhanced execution. 2026 is the final year of our elevated IT spending, and we expect to begin seeing the operating benefits of these investments flow through our results. While the industry faces continued macro headwinds, we expect revenue to be flat to up low single digits excluding divestitures, driven by continued momentum in Experiential Services, a more stable trajectory in Retailer Services, and a move towards stabilization in Branded Services over the course of the year. We expect adjusted EBITDA to be flat to down mid single digits excluding divestitures. I want to be direct about why. This reflects ongoing macro uncertainty and mix shifts toward more labor-intensive, lower-margin services while some higher-margin businesses remain challenged. That said, execution discipline, labor productivity initiatives, and technology investments should drive an improving margin profile as the year progresses. Cash flow remains a core strength and priority. We expect unlevered free cash flow of approximately $250,000,000 to $275,000,000 for the year and net free cash flow conversion of at least 25% of adjusted EBITDA, excluding the incremental costs related to a potential debt refinancing. This reflects continued working capital discipline, including further improvement in our DSO performance and a steady CapEx profile as we enter the final stage of our IT transformation. Overall, this outlook reflects both the realities of the current environment and our confidence in the progress we are making. We are building a more durable, predictable, and cash-generative company, and the actions we are taking across labor, technology, and execution position us well over time. I will now turn the call over to Christopher Robert Growe for the financial results. Christopher Robert Growe: Thank you, David, and welcome, everyone, to our call today. I will review our fourth quarter and full year 2025 performance by segment, expand on David's guidance commentary, discuss our strong cash flow results, and improved capital position. Starting with Branded Services, in the fourth quarter, we generated approximately $259,000,000 in revenues and $39,000,000 adjusted EBITDA, down 929% year over year, respectively. For the full year 2025, Branded Services generated $1,000,000,000 in revenues and $143,000,000 in adjusted EBITDA, down 921% year over year, respectively. Performance reflected sustained softness in CPG spending throughout the year, which continued to pressure results in the fourth quarter, along with challenges in the sales brokerage and omni-commerce marketing businesses. Insourcing remains a headwind; we believe this is cyclical in nature. We are focused on converting our large and expanded pipeline of new business to counteract this trend, continuing to manage costs tightly while prioritizing execution, and positioning the business for recovery as client spending improves. In Experiential Services, fourth quarter performance once again exceeded our expectations. We generated approximately $280,000,000 in revenues and $28,000,000 adjusted EBITDA, up 19115% year over year, respectively. Results reflected higher event volume, up 15% in the quarter, and faster and more responsive hiring, with execution rates exceeding 93%. The EBITDA margin was once again in the double digits, as the incremental margin in the quarter reached over 30% despite elevated labor-related costs, including workers' compensation and medical benefits. For the full year 2025, Experiential Services delivered $1,000,000,000 in revenues and $101,000,000 adjusted EBITDA, up 834% year over year, respectively. This segment experienced a strong second half finish to the year, supported by our hiring initiatives, strong execution, and robust demand, supporting momentum as we move into 2026. In Retailer Services, fourth quarter revenues were $246,000,000, with adjusted EBITDA of $20,000,000, up 1% and down 22% year over year, respectively. As David mentioned, performance was impacted by delayed projects leading to costs being incurred ahead of revenue being recognized, and ongoing pressure in advisory and agency work due to channel mix. A portion of planned project activity shifted out of the quarter and into early 2026, while associated labor onboarding and training costs were already incurred. We also saw higher workers' compensation and medical benefit costs in the segment as well. For the full year 2025, Retailer Services generated $944,000,000 in revenue and $87,000,000 adjusted EBITDA, down 212% from the prior year, respectively. Looking forward, we believe this business is positioned to grow in 2026 in a more normalized environment for retail project work, expanding our retail partners beyond the grocery segment, and an exciting suite of new value-added services we are developing. For the year, shared services and IT costs increased as systems move fully from build to live operations, which is in line with our expectations. We see shared service costs rising modestly in 2026 inclusive of higher IT spending as we near the end of our transformational IT investments. We do expect the growth in these costs to moderate after 2026, allowing us to capitalize on the efficiencies created by our shared service infrastructure. Moving to the balance sheet and cash flow, we ended the quarter with $241,000,000 in cash, up roughly $40,000,000 sequentially. The strong cash performance was driven by improved working capital performance, proceeds from recent divestitures, as well as the partial settlement on the Take 5 litigation. Specifically, we sold our minority interest in Action Food Service in September for approximately $20,000,000, and we sold Small Talk, our small marketing-oriented business, in December for approximately $20,000,000. In January, we divested part of our stake in Advantage Small in for $27,000,000, and we also received the final $27,500,000 cash payment in early 2026 from the sale of June Group. We did not repurchase debt or shares during the quarter. Our net leverage ratio was approximately 4.4 times adjusted EBITDA at quarter end, in line with the third quarter but above our long-term target of 3.5 times, and we are executing against a clear plan to reduce. Given our strong cash position, we expect to apply approximately $90,000,000 to debt pay down as part of our refinancing. Over the course of 2026, we expect our strong cash flow to contribute to continued debt paydown. With cash on hand, expectations for improved cash generation in the year, and approximately $440,000,000 available under our revolver, we believe our liquidity position supports our needs amidst a still volatile macro environment. Turning to cash generation, DSOs improved during the fourth quarter to approximately 57 days, the lowest level in our history, reflecting improved working capital management, intense focus on collections, and normalization following earlier systemic disruptions in the year. Optimizing DSO has been a priority for the organization, and we will continue to make progress in reducing DSOs as we move through 2026, which will contribute to additional cash flow generation. CapEx was approximately $24,000,000 in the fourth quarter due to heavier IT-related spending against our transformation plan. For the full year 2025, CapEx totaled $53,000,000. Turning to cash flow, we generated approximately $75,000,000 of adjusted unlevered free cash flow in the fourth quarter, and the conversion rate was nearly 130%, excluding the payroll timing shift. Cash flow performance exceeded our expectations, driven primarily by strong working capital execution, including improved DSOs. For the full year 2025, adjusted unlevered free cash flow achieved an approximately 80% conversion rate, excluding payroll timing, reflecting a materially stronger second half performance. As David mentioned, planned extension of our debt maturities from 2027 and 2028 to 2030 provides meaningful financial flexibility for the business while improving the balance sheet over time. We believe this outcome will be favorable for all stakeholders and allow us to execute our strategy and remain focused on delivering improving operating and financial results. The strategies we have in place are the right ones to achieve that goal. Turning to our outlook for 2026, our guidance reflects a measured and prudent view of the macroeconomic environment coupled with confidence in our cash flow generation. Excluding divestitures, which contributed approximately $20,000,000 to revenues in 2025, we expect revenue growth to be flat to up low single digits, with continued strength in Experiential Services, a more stable performance in Retailer Services as project timing normalizes, and a gradual recovery profile in Branded Services over the course of the year. Also excluding divestitures, which contributed over $10,000,000 to adjusted EBITDA in 2025, we expect adjusted EBITDA growth to be flat to down mid single digits year over year, reflecting continued macroeconomic headwinds, the last year of our major IT investments, and mix shifts toward lower-margin, labor-intensive businesses, particularly within Experiential Services, but also within Branded Services. While we expect execution and profitability to improve through the year, our guidance assumes a conservative margin profile early in the year and does not rely on a near-term inflection in Branded Services. Cash flow remains a core focus in our outlook. We expect unlevered free cash flow of $250,000,000 to $275,000,000 for the year, with net free cash flow conversion of approximately 25% of adjusted EBITDA, excluding any incremental debt refinancing costs. This outlook is supported by improved DSO performance and disciplined working capital management and a steady CapEx profile. We expect CapEx to be approximately $50,000,000 to $60,000,000 in 2026, consistent with 2025 levels, and this represents our final year of elevated CapEx levels before we start to see a meaningful reduction in future years. While we do not provide quarterly guidance, we do expect a widening of the first half/second half adjusted EBITDA breakdown, with the second half representing approximately 60% of EBITDA. Importantly, this guidance reflects our current assumptions around consumer spending, the labor environment, and timing of known project activity. As always, we aim to plan our business prudently and responsibly. Thank you for your time. I will now turn it back over to David. David A. Peacock: Thanks, Christopher. Our expertise and range of services position us well to navigate through 2026 with resilience and agility. We continue to execute with discipline and advance our productivity and growth initiatives. We are making measurable progress in our transformation and see proof points across the business. Finally, our focus on long-term shareholder value creation is unwavering. Operator, we are now ready to take questions. Operator: Thank you. We will now begin the question-and-answer session. If you have dialed in and would like to ask a question, please press 1 on your telephone keypad to raise your hand and join the queue. If you are called upon to ask your question and are listening via speakerphone on your device, please pick up your handset to ensure that your phone is not on mute when asking your question. Again, press 1 to join the queue. Our first question comes from the line of Lucas Morison with Canaccord. Your line is open. Lucas Morison: Hey, guys. Thanks for taking the question here. Maybe just first on the debt exchange. It seems like clearly the right move to me, extending the runway to 2030 and removing that near-term maturity risk. I guess my follow-on question is just around the rate step-up from 6.5% to 9%, and whether that changes the sequencing or urgency around getting into sub-3.5 times leverage, and just sort of your path to that level. Thanks. Christopher Robert Growe: Yep. Thanks, Luke. Just to give you some perspective on that, you are right. It does step up, and obviously, the term loan steps up in cost as well. Your overall borrowing rate is going up, call it 150 basis points, roughly that. And I think through this time, to get that incremental time in terms of our ability to extend the debt out to 2030, there was an incremental cost related to that, which we were aware of. I think you will see roughly $10,000,000 or so of incremental interest costs in 2026, and we will see the full sort of annualization of those costs in 2027. I would just note that on the term loan, it is SOFR plus 600 basis points, so SOFR has come down. That has led to a little less incremental cost. But I think what I would say is that certainty around the runway we have right now to 2030, another four-plus years for the debt, that incremental cost, I think, was very much worth it. It gives us the ability now to invest. We have been investing heavily—transformation investment—very heavily back in the business. We are calling this year to be the end of that, and now it gives us the time to put that into action, if I can say it that way, to start to really accelerate the growth of the business. Lucas Morison: Yes. Makes sense. And then maybe just to follow on, just looking at the guide, you explained the spread between revenue and EBITDA growth a little bit. Maybe just double click there and help us think about the structural cost base and what is the eventual path to those two lines converging over the medium term? Christopher Robert Growe: Yes. I mean, I think when you look at the business, we see a couple of drivers, especially with the fourth quarter. One, we had unusually high labor costs, largely in the benefits area, due to higher claims. This is something where we have brought in a new benefits adviser immediately and have started looking at options to bring those costs in line. We have seen pretty significant inflation across the benefits lines over the last couple of years. And then the other has been mix within our business, both cross-segment and intersegment mix. And this is basically lower-margin businesses, some of our labor-intensive businesses, growing faster than some of the businesses that are less labor intensive. I would say that as we look to stabilize the Branded Services segment in the back half of this year, later part of this year, and then obviously aim to grow that long term, that is going to help. And then we are also seeing strong incremental margin in our labor businesses. And so you are going to get to a point where the margins that are being generated from some of these labor businesses get up to the average margin in our overall business. So we do see that arresting over time and those lines ultimately inflecting differently, where you have got EBITDA growth and revenue growth either more in line or even EBITDA performance even ahead of revenue performance. Last thing I would say on it is some of the technology adoption—David talked a lot about our new systems and some of the efficiencies that will come with those. I think like a lot of firms, we are early in the stages. I think anyone who says they are late in the stages is probably not truthful on the AI front, and there are significant efficiencies to be gained there, both what I call in personal productivity but also in enterprise-wide productivity, that we are just, I think, scratching the surface like most companies, but excited about the potential. Lucas Morison: Excellent. Thank you. Operator: Our next question comes from the line of Gregory Scott Parrish with Morgan Stanley. Your line is open. Gregory Scott Parrish: Hey, guys. Good morning. Thanks for taking my question. Maybe I will just start with the revenue guide, flat to up low single digits. 2025 was down 1.5%. So maybe help bridge that step up, if you will—what is baked into your expectations on which segment is improving implied in the guide to get there in 2026? Christopher Robert Growe: Yes. Greg, it is Chris here, and thanks for your question. I would just say that in the fourth quarter, we did grow revenue, so that is a good indication as the year went on. You have seen that really significant step up in the growth of Experiential. We talked last quarter and the last couple quarters about the demand signals there being very strong, and then really want to give credit to the organization to come together to achieve the hiring needs and the execution rates that we needed to satisfy that demand. We talked about 93% execution. I hope that is even higher here in 2026 against this rising demand. So that is going to be a key driver of our 2026 momentum, and there is certainly momentum in that business. I think we do see the Retailer segment growing. We do think Branded Services moves more towards stabilization throughout the year. So I think that is one that will be a bit of a drag early on, but get better as the year goes forward. I think that is the construct we expect for the growth in the year. I think the difference versus Q4 is we do expect the Retailer Services segment to grow, and that will be the key component of what we expect for 2026 growth in revenue. Gregory Scott Parrish: Okay. That is helpful color. And maybe just double click on Branded here. I think you said you are not confident in an inflection near term, but maybe just help us—what is the catalyst here over the next six, nine, twelve months to get that on the right track in the second half? I mean, is it mostly market volumes, or are there other factors that you think could drive upside? David A. Peacock: No. I think some of it, Greg, is we saw some client losses where price became a significant issue relative to the competition, and we are lapping those, number one. Number two, frankly, we have got some new leadership in position and really a renewed focus on what I call the foundations of the business. This is not a difficult business. I tell our team all the time, if you simply do what you say you are going to do and follow up consistently with both our retailer customers and our CPG clients, it is amazing how easy this business can be. And, frankly, I think between transformation and some macro noise in the market that has certainly been difficult—and disruptions around pricing that can relate to tariffs and other things, disruptions in supply chain. We still have some clients that are struggling to meet market demand with supply, and just other macro headwinds. I think we have allowed ourselves to get too distracted and need to be focusing on executing at peak levels despite the conditions we may be competing in. So we feel very good about some of the things we are seeing with clients, the way we are operating with them, the fact that some of our clients that we have had long-term relationships with are starting to shift accounts to us to cover, versus insourcing, and maybe reversing some of those decisions. And so I think all of these things would give us confidence as we head into the latter part of 2026 about the Branded Services space. And then our new business pipeline has really never been this robust, if you will. And a lot of it can be market driven. So it is not always the large CPG that you are thinking about. It can be a lot of the emerging brands, the mid-sized CPG companies, and then just picking up a couple of accounts with various CPG companies at the market level where there is not a lengthy RFP process, but the conversion rate is much quicker. So that gives us some optimism as we head into 2026. Gregory Scott Parrish: Great. That is very helpful. And maybe just lastly for me on the divestitures. Could you size how much revenue that is? I think small ones do, but I do not know. Maybe just sort of rough numbers, like, what the divestitures would impact. Thanks. Christopher Robert Growe: Sure, Greg. It is Chris. And I did give these in my script, so you can just go back to check those. But $20,000,000 of revenue in 2025, then about a little more than $10,000,000 of EBITDA. And I think you hit the nail on the head. The reality of the two of those businesses that we divested—think our Action Food Service stake, which we have already told you about, which occurred back in the third quarter, and then the Advantage Small in have no revenue effect. But they have an EBITDA effect. And then you have got the Small Talk business, which is a marketing-oriented business that we sold in December. That is the totality of the revenue. So when I pick the revenue from that one business, but then the EBITDA from all three, I get that over $10,000,000 effect on EBITDA. So the point is to try to keep that in mind. Our guidance is based off, call it, the pro forma base, excluding that $10,000,000. Gregory Scott Parrish: Yep. Okay. That is helpful. Okay. Thanks, guys. Christopher Robert Growe: You got it. Thank you. Operator: There are no further questions at this time. I want to turn the call back over to David A. Peacock for closing comments. David A. Peacock: Thank you. We want to thank everybody for joining, and we look forward to connecting with this group next quarter. Thank you. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Hello everyone. Thank you for joining us and welcome to the 2025 fourth quarter and full year earnings conference call. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, please press 1 again. I will now hand the call over to Adam Strachan, Head of Investor Relations. Please go ahead. Adam Strachan: Good morning, everyone, and thanks for joining us today for Marex Group plc’s fourth quarter 2025 earnings conference call. Speaking today are Ian Lowitt, Group CEO, and Crispin Robert Irvin, Group CFO. After Ian and Rob have made their formal remarks, we will open the call to questions and Paolo Tonucci, our Chief Strategist and CEO of Capital Markets, will join for Q&A as usual. Before we begin, I would like to remind everyone that certain matters discussed in today's conference call are forward-looking statements relating to future events, management's plans and objectives for the business, and the future financial performance of the company that are subject to risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements, and the risk factors that may affect results are referred to in the press release issued today. The forward-looking statements made today are as of the date of this call, and Marex Group plc does not undertake any obligation to update these forward-looking statements. Finally, the speakers may refer to certain non-IFRS financial measures on this call. A reconciliation schedule of the non-IFRS financial measures to the most direct comparable IFRS measures is also available in the earnings release issued today. A copy of today's release and investor presentation may be obtained by visiting the Investor Relations page of the website at marex.com. I will now turn the call over to Ian. Ian Lowitt: Good morning, and welcome to our fourth quarter and full year 2025 earnings call. 2025 was a year of continued growth for Marex Group plc. We delivered another year of record financial performance, with revenue of over $2,000,000,000. Over the past five years, we have increased profitability sevenfold, from $61,000,000 in 2020 to $418,000,000 in 2025. We have done this by broadening our product offering across our four interconnected services, expanding geographically and combining organic growth with targeted M&A. Acquiring, integrating, and scaling businesses is embedded in the DNA of Marex Group plc, enabling us to add clients, deepen relationships across products, asset classes, and geographies. Our platform and organization are difficult to replicate, increasing further the high barriers to entry we benefit from in our industry. The results we are reporting today demonstrate that our strategy is effective and continues to deliver value for our shareholders. On slide four, you see that we closed the year with record profitability in the fourth quarter. Revenues grew 38% from $416,000,000 to $572,000,000 and adjusted profit before tax increased 41% to $115,000,000. We grew EPS by 50% to $1.14 per share. Pleasingly, this performance was not driven by an idiosyncratic market event, but by broad-based strength across the firm. Full year revenue grew 27%, from $1,600,000,000 to just over $2,000,000,000, and adjusted PBT increased 30% to $418,000,000. Profit after tax increased at a faster rate, benefiting from an improved effective tax rate, which declined from 26% to 25%, reflecting our evolving geographic mix. Full year EPS grew 39% to $4.12. We experienced growth across all our segments, with continued strength and client balance growth in Clearing, strong performance in Agency and Execution driven in particular by Prime, which I will come back to, as well as good momentum in Market Making and Hedging and Investment Solutions. In Clearing, average customer balances increased over the year by 18% to $14,000,000,000 in the fourth quarter, with balances growing steadily quarter by quarter. We continue to execute our M&A strategy, strengthening earnings through disciplined integration and development of recent acquisitions. We have developed a repeatable model for identifying complementary assets, acquiring them at attractive prices, integrating them efficiently, and enhancing their earnings power as part of the Marex Group plc platform. That capability continues to be a sustainable competitive advantage for the firm. We are very selective in the opportunities we pursue, and maintain high conviction in our ability to meet our return objectives and grow acquisitions once integrated. This is evidenced by the acquisitions we completed during the year, which are delivering in line with or ahead of expectations. ARNA provided an opportunity to establish a Clearing presence in the Middle East. The day-one synergies we identified, which increased profitability by around 50%, were realized as expected. Hamilton Court provides us with access to a number of UK/EU corporates that we did not serve previously. It expands our client base and creates meaningful cross-sell opportunities. Winterflood, which we completed in December, has started strongly and enhances our UK equity market making franchise while creating cross-sell opportunities with leading UK participants. Following the subsequent sale of Winterflood's custody business, which we expect to complete in Q2, we will have acquired Winterflood at a meaningful discount to tangible book value, a transaction that we believe will generate substantial long-term value for our shareholders. Alongside M&A, we continue to execute a number of organic growth initiatives including digital assets within Clearing, expanding our footprint in Asia, the Middle East, and Brazil, and growing our Prime brokerage and FX capabilities. A meaningful contributor to the diversification of the firm, and an example of how we scale businesses once integrated into our platform, is Prime Services. We acquired Prime in December 2023 for approximately $25,000,000 of premium. In 2025, it generated over $250,000,000 of revenue, and now accounts for around a quarter of the group's profitability. Prime also adds diversification to our earnings profile, broadening our revenue drivers beyond traditional exchange volume-linked activity. Finally, as the breadth of our platform expands, we are increasingly scaling relationships with larger, more sophisticated clients, something I will touch on in more detail shortly. On slide five, you can see the consistent improvement in our key financial metrics: revenue, profitability, earnings per share, and return on equity. Beyond the headline growth, what is particularly encouraging is the quality of that growth. Full year revenues increased 27% to over $2,000,000,000, adjusted profit before tax grew faster than revenues, up 30% for the year, and EPS increased 39% reflecting the improved tax rate. Reported return on equity improved to 27.6%, underscoring the capital efficiency of the model, and pretax margins were 21%. Looking now at the operating environment in more detail, on slide six. As we step back and look at the operating environment during the year, it is clear that on the whole, we have enjoyed a supportive backdrop for our services. The spike in volatility in April was notable at the start of the second quarter. While April was a strong month, it was not outsized in the context of the full year. We continue to deliver strong growth even as volumes reduced from April's peak, including through the seasonally quiet third quarter, amid the impact of the short report. We also absorbed the impact of lower interest rates in Clearing, as we grew our client balances, which Rob will cover in more detail. In Q4, exchange volumes increased, up 5% year on year and 8% higher than the third quarter, while volatility also picked up modestly. Equity markets being at or around all-time highs in Q4 helped our Prime business, which is a function of customer balances and spreads. It also, to some extent, supports Solutions, where we tend to see higher client activity in structured products when markets are rising. In this context, our fourth quarter profits were up 41% year on year, and up 14% compared to the third quarter, and also above our prior record in Q2. This demonstrates that we are growing faster than underlying market volumes, and that we have set up the firm to deliver growth through a variety of environments. I will now turn the call over to Rob, who will take you through the financials in more detail. Crispin Robert Irvin: Thanks, Ian, and good morning, everyone. I will take you through our financial performance for the full year and the fourth quarter, following the same structure as usual. For the full year, we grew revenue by 27% to $2,020,000,000 with growth across all our business segments. Total expenses increased by 24% reflecting the higher revenues as well as ongoing investment to support growth and acquisitions during the year. Adjusted PBT margin expanded by 60 basis points to 20.7%, delivering a 30% growth in adjusted PBT to $418,000,000. The effective tax rate for the full year decreased from 26% to 25%, reflecting mainly the geographical mix of our earnings. This is an excellent result for the year, capped off by the fourth quarter, which was the strongest quarter in our history. Q4 revenue of $572,000,000 was up 38% versus last year, while total expenses grew 36%, broadly in line with revenues, driven by higher compensation costs and ongoing investments to support growth. Adjusted profit before tax increased 41% to $115,000,000 as margins increased 50 basis points to 20.1%. Our adjusted return on equity remained very strong at 30.8%, and we grew basic EPS to $1.14 per share, up 50% year on year. Focusing now on our segmental performance, starting with Clearing. In the fourth quarter, Clearing revenue increased 10% to $137,000,000. This was driven by growth across all revenue lines, higher volumes, and continued momentum in client onboarding, particularly large institutional client wins during 2025. Average Clearing balances increased to $14,000,000,000 from $11,900,000,000 in the fourth quarter of last year, reflecting the contribution from ARNA and new client wins. Net commission income increased 6% reflecting higher client activity as well as our broadened product offerings across regions. Net interest income was stable at $59,000,000. The durability of Clearing NII even as rates have declined shows how well this business is positioned, as growth in client balances offset these rate pressures. Adjusted profit before tax for the quarter increased to $67,000,000 with margins at 49%. For the full year, Clearing revenue increased 13% to $528,000,000 with sustained growth in client balances, new client wins, and an expanded product offering. Adjusted profit before tax increased to $262,000,000 with margins at 50%, reflecting disciplined investment to support growth. Overall, the fourth quarter capped a year of sustained momentum in Clearing, with strong client acquisition, higher balances, and disciplined investment, positioning us well going into 2026. Turning now to Agency and Execution. This quarter, we are providing a more granular breakdown of performance across the asset classes to reflect the continued expansion and diversity of the platform. The fourth quarter was another strong period, with revenue increasing 51% to $290,000,000. This was driven primarily by strong growth in securities, reflecting the continued strategic expansion of Prime alongside more modest growth in energy. Securities revenues increased to $209,000,000, reflecting broad-based growth across the platform with all major asset classes contributing. Prime was again a standout performer with revenue increasing to $70,000,000, supported by a significant increase in clients on our platform and continued expansion of our securities-based swaps offering. FX also performed strongly, benefiting from the integration of Hamilton Court, completed in July, and growth across the broader FX platform. In Energy, revenue increased to $76,000,000 driven by higher activity in UK and European gas and power markets, and continued capability expansion. Adjusted profit before tax increased to $89,000,000 in the quarter, with margins expanding to 31%, reflecting growth in higher-margin activities, particularly Prime. For the full year, Agency and Execution revenue increased to $1,050,000,000 with strong contributions from both securities and energy. Adjusted profit before tax increased to $281,000,000, reflecting the continued build-out of a more diversified high-quality platform with 27% margins. Turning now to Market Making. Fourth quarter revenue grew 83% to $81,000,000, driven by particularly strong performance in metals and securities, partly offset by softer conditions in agriculture and energy. Metals delivered the second-best quarter on record with revenue increasing to $50,000,000. While supportive market conditions and high volatility provided a favorable backdrop, performance was driven by increased client activity across both precious and base metals. Securities revenue increased to $20,000,000 reflecting the inclusion of Winterflood following the completion in December, alongside improved performance from our FX and credit desks. In Energy, revenue was lower year on year, as the prior period benefited from elevated volatility and large client flows, whereas the fourth quarter in 2025 saw more muted hedging activity. Agriculture also moderated year on year, reflecting a more challenging macro backdrop and elevated commodity prices, although performance improved sequentially from the third quarter as conditions stabilized. Adjusted profit before tax increased to $27,000,000 with margins expanding to 33%, as strong revenue growth more than offset higher front-office compensation and the additional headcount following the Winterflood acquisition. For the full year, revenue increased to $236,000,000 driven primarily by strong performance in both metals and securities, which more than offset softer conditions in agriculture. Adjusted profit before tax increased to $69,000,000 with margins at 29%, reflecting investment through the year and the mix of revenues across the platform. Finally, Solutions, which had its strongest quarter on record in Q4. Revenue increased by 57% to $63,000,000, reflecting growth across both Financial Products and Hedging Solutions. Hedging Solutions revenue increased to $23,000,000 supported by institutional client wins and higher activity in energy and FX, more than offsetting softer agricultural markets. Financial Products revenue increased to $40,000,000 reflecting continued strength in structured products. Performance was supported by improved market conditions, expanded exchange access, regional expansion, particularly in Asia, and rollout of our new technology platform, which also supported higher issuance volumes and broader product accessibility. Adjusted profit before tax increased to $14,000,000 with margins improving to 23% despite continued investment in technology and headcount. For the full year, revenue increased to $197,000,000 reflecting sustained growth across both businesses. Adjusted profit before tax increased to $44,000,000, margins at 22%, reflecting our investment to support long-term scalability. Turning now to net interest income at the group level. For the full year, NII was $153,000,000 compared to $227,000,000 in the prior year. Interest income increased 4% year on year as a $4,800,000,000 increase in average balances more than offset a 100 basis points decline in rates. However, interest expense increased 21% reflecting $1,500,000,000 of additional average structured note balance and senior debt issuance, which more than offset the increase in interest income. NII for Q4 was $26,000,000, down $13,000,000 compared to Q3 2025, primarily reflecting the further 40 basis points decline in the average Fed funds rate during the quarter. Interest income was $181,000,000 as lower rates offset growth in average balances. Interest expense was broadly flat, with the decrease in rates being broadly offset by higher structured note balance. Throughout the quarter, we continued to hold significant liquidity headroom. While this creates a modest near-term headwind to group NII, it is a deliberate choice that strengthens the balance sheet, positions us to support clients, and pursue future growth opportunities. Importantly, as we highlighted in the Clearing segment, Clearing NII remains resilient. Average Clearing balances increased to $14,000,000,000 in the fourth quarter, and that growth has continued to broadly offset the impact of lower rates. I will briefly touch on expenses as it is important to how our cost base evolves as we grow. As I have said before, our cost base is highly flexible with around 55% of total expenses in Q4 variable in nature, which are linked to the performance of the group. In the front office, variable expenses primarily flex with revenues, while back-office variable expenses flex with the overall profitability of the group. Given the strong revenue performance year over year, $54,000,000 of the increase in total expenses was driven by higher variable compensation, including variable compensation for recently completed acquisitions. A further $18,000,000 relates to the fixed costs associated with the recently completed acquisitions. These acquisition-related costs are not the one-off transaction expenses but the continuing operating costs of growing these business which generate revenue and drive overall profitability. And an additional $50,000,000 to support the organic growth of the organization and investment in control and support, notably technology. These investment decisions are deliberate choices we have made to support the future growth of the organization. Looking now at our balance sheet, as a reminder, approximately 80% of our balance sheet supports client activity, and consists of higher-quality liquid assets. Total assets increased to $35,000,000,000 at December, driven by growth in Clearing client balances and securities activity, including Prime. After netting client assets and liabilities, the remaining residual balance sheet primarily comprises corporate cash and other assets against group liabilities, including our structured notes portfolio and senior notes issuance. Turning now to capital and liquidity. We continue to manage capital and liquidity prudently, maintaining substantial headroom above regulatory requirements to ensure resilience across market environments. At year end 2025, regulatory capital was $927,000,000 against the requirement of $403,000,000, representing a capital ratio of 230%. This provides a substantial buffer and supports our investment grade credit ratings. Total corporate funding increased to $6,200,000,000, up from $3,800,000,000 at year end 2024, primarily reflecting structured notes issuance and a senior debt issuance of $500,000,000 during the year. We maintained approximately $1,000,000,000 of liquidity headroom at year end. In line with the growth of the business, we have increased our liquidity stress testing limits and associated buffers to ensure we remain well positioned to support higher client volumes while maintaining a conservative risk profile. While carrying excess liquidity creates a modest drag on net interest income, maintaining substantial headroom remains a deliberate and conservative choice that strengthens the balance sheet and ensures we are well positioned to support all clients and navigate periods of market volatility. Overall, our capital and liquidity framework remains robust, scalable, and aligned with our growth ambitions. Finally, we announced again a quarterly dividend of $0.15 per share for 2025 to be paid to shareholders on March 31 this year. Finally, we have a proactive and involved risk management approach at Marex Group plc. In Market Making, we are a client flow-driven business and do not take a directional view on prices. However, we do carry a small level of inventory to source client demand and capture the trading spreads. Average daily VaR was $3,800,000 for the full year, and remains at a very low level relative to the growth in the overall business. In terms of credit risk, we had a realized credit loss of $800,000, representing less than 0.1% of revenues. Now I will hand you back to Ian. Thanks, Rob. Ian Lowitt: Let me spend a moment on clients because this is the critical component of the Marex Group plc growth story. As our platform has expanded, particularly since we went public, we are increasingly having success with larger and more sophisticated clients. You can see on slide 19 that while active clients, which we now define as those generating over $25,000 in annual revenue, grew 19% year on year, revenues grew 32%, and average revenue per client increased 11%. Consistent with my commentary throughout the year, that growth is particularly evident amongst our largest clients. Our $5,000,000-plus client cohort increased by 36% and revenue from that segment grew by over 80%, with average revenue per client up 35%. Today, those top circa 50 clients generate on average $14,000,000 annually versus $10,000,000 last year, and drove over $300,000,000 of our revenue growth in 2025. Importantly, this does not mean we are becoming overly concentrated. The top cohort represents around a third of firm revenue. But we remain diversified across more than 3,400 active clients and no single counterparty represents undue exposure. We included slide 20 at last year's Investor Day, and again at the half year results. We think it is a helpful way to demonstrate the quality and reliability of our earnings. On the left-hand side of the chart, we show the consistent year on year growth in our average monthly PBT, and the relatively low variability in the distribution, driving an extremely high Sharpe ratio of 6.2 for the full year 2025. This shows that our profitability is not driven by a few exceptional months. It is stable and in a narrow band, demonstrating high quality earnings. On the right of the chart, we show the distribution of our daily profitability for the full year versus last year. You can see the distribution has shifted to the right by around $400,000 year over year, from around $1,300,000 to $1,700,000. The left tail remains very small with only six negative days during the year. In the right tail, you can also see how we have successfully captured market opportunities with more above-average profitability days. This is not just successful market making. We are doing more larger transactions with clients as we become more relevant to sophisticated market participants. So in conclusion, at our Investor Day last April, we described our goal of delivering sustainable profit growth with roughly 10% organic and 5% to 10% from selective inorganic opportunities. 2025 performance reinforces our belief in our competitive position and ability to continue to deliver growth. Structural shifts in bank focus, high barriers to entry, the breadth of our capabilities, and the quality of our service creates opportunities for Marex Group plc. Our M&A pipeline remains attractive, opportunity sets continues to expand, as our scale and reputation improve. And we are increasingly seeing inbound opportunities. As a result, we are able to be more selective, executing only those transactions where we have high conviction in our ability to enhance returns through integration and scale. Our digital assets initiatives continue to progress well, as we are seeing growing engagement from clients coming to us to solve real world use cases for them. We already have 24/7 trading capability in place for our digital assets offering in Solutions and plan to extend this imminently to Clearing, where we clear crypto futures for clients primarily on CME. This will also give us the ability to support prediction markets at limited additional cost. In 2025, we went live as a day-one clearer for SGX Derivatives’ launch of digital asset perpetual futures, meeting institutional demand for transparent access to regulated crypto derivatives. And we are actively involved in the CFTC's pilot program for the acceptance of stablecoin and crypto as collateral for futures, and we expect to go live with this in March. While still early days, we believe these initiatives position us strongly as market structure continues to evolve. They represent a meaningful long-term opportunity for the firm. Artificial intelligence is clearly a major theme in the markets today, and given how topical it is, I would like to address it. We see AI as an accelerant to our competitive advantages and are already deploying it internally to enhance productivity, improve risk management, and deepen client engagement. As a vertically integrated firm with deep expertise and institutional knowledge of market infrastructure, and strong client relationships, we believe our competitive moats are reinforced, not threatened, by the technological advancement. Looking ahead, we remain confident in our ability to continue to deliver sustainable growth across a range of market environments. For eleven straight years, we have reported to our Board and shareholders that Marex Group plc has delivered record profitability. We are extremely proud of that track record, and we feel confident in our ability to continue that trajectory in 2026 and beyond. We remain committed to disciplined capital allocation, excellent client service, and long-term value creation for shareholders. Finally, you may have seen we announced a second Investor Day on March 26 in New York. We look forward to seeing as many of you as possible there later this month. With that, I will hand it back to the operator to open the line for questions. Operator: We will now begin the question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. To withdraw your question, please press 1 again. Please pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Daniel Thomas Fannon with Jefferies. Your line is open. Please go ahead. Daniel Thomas Fannon: Ian, I was hoping you could just talk a little bit more about the current environment given we are in early March and a lot has changed not only recently here in the last week or so, but just even year to date. I was hoping to get an update in terms of how clients are behaving, maybe balances or any real changes in the environment that you have seen so far? Ian Lowitt: Hi, Dan. As you say in your question, it has been a very interesting couple of months and certainly it feels like there is a great deal going on at the moment. I think that there are a series of things that I would regard as tailwinds for our business and then a series of things that probably feel more like headwinds. The tailwinds are obviously increased exchange volumes, which are actually quite a bit higher this year than they were last year. Volatility has been a lot higher, particularly around commodities. As we have spoken on this call a few times, when we think about volatility, there is a Goldilocks level of volatility, which is active volatility, but it is not excessive or too high. I think the volatility that we have seen in January and we are seeing again in March does not fall into the Goldilocks category. It is pretty high, and it makes a big difference and puts a lot of pressure on clients. So I think that it is very active. I think there is a lot of uncertainty in the marketplace. I think that the demand for our services is high, and I think that, consistent with the message that we had in the prepared remarks, we are very confident with regard to our ability over the course of the full year to deliver growth in the sort of corridor that we previously indicated to the market. Exactly how that plays out through the course of the year is obviously impossible to tell. But we feel very good about our business, our business model, our competitive position, and the opportunities ahead of us given how diversified our business is. Daniel Thomas Fannon: Understood. And then just as a follow-up, I was hoping you could expand on the growth and outlook for the Hedging and Investment Solutions business. Obviously, I think you said a record quarter, really strong 4Q results. Just to get a little bit more underneath that in terms of what is driving that and the sustainability of that as we think about 2026. Ian Lowitt: I think about all of our businesses in 2026, I have quite a lot of confidence that all can continue to grow. The management in each of those businesses is ambitious. They all see opportunity, and we see ourselves as broad-based and looking to ensure that all the elements of the firm are growing. Your question is about Solutions specifically, and I think that what we are seeing there is the impact of global expansion as well as the addition of additional products, and then additional penetration of clients. I do not see anything that will undermine that over the long term, and I think that we should and expect to see Solutions continuing to grow consistent with broadly how the overall firm is expecting to grow. Operator: Your next question comes from the line of William Raymond Katz with TD Cowen. Your line is open. Please go ahead. William Raymond Katz: Thank you. I apologize for any background noise in transit this afternoon. Thank you very much for your commentary. I was really keyed in on your commentary around the growth in some of the larger accounts and not a lot of concentration. Could you unpack that a little bit, maybe where you are seeing the greatest rates of growth either by distribution channel, geography, the segment of the business? I am curious what some of the underlying drivers are in the process there. Ian Lowitt: What I have been sharing with people is client wins that we have been enjoying with prominent hedge funds and with some of the largest and most sophisticated players in our space. We have had traditional strengths with commodity producers and consumers. As you are aware, as part of our efforts to diversify the firm, we were looking to expand out the products that we could offer leading financial players. And I think that what we are seeing now is the fruit of that. It does not feel like it is the end. It feels like it is building momentum. So who are the people in that $5,000,000-plus category? It is the largest financial players in the world. It is the largest commodity producers and consumers. I think if there was a geographic focus, it is probably in North America, which again I think is not surprising just given the preponderance of large players in the US, and I think the success we have had growing our US franchise. But the growth has been with financial players—banks, hedge funds, large asset managers—more than in any other client type. And those are all clients who are engaging with us across a number of different segments and a number of different desks. So part of what is driving that growth is just the cross-sell, so that those players who are able to engage with us across a lot of products and do so in size are increasingly doing that. William Raymond Katz: Just as a follow-up, I am very intrigued by the digital opportunity, the stablecoin, crypto, what have you. A lot of debate just in terms of the impact of tokenization on the ecosystem at large. If you can maybe break down where you see the opportunities for tokenization at the front—maybe that is already on expanded trading activity—but maybe post trade, how we should think about the durability of the business to the extent that tokenization continues to mature and season into the market structure system. Thank you. Ian Lowitt: What we are focused on is what I think we described last quarter as our digital prime brokerage offering. What we are very keen to be able to support for clients is our ability to take digital assets as collateral with all the things that go with that, to ensure that that is viable and supported. There is a lot of work that goes into that, and that has really been our focus more than around what our view is with regard to the long-term prospects of tokenization. My expectation is that there will be week-in, week-out trading. I think it will be done in tokenized form. I think it will just live alongside the exchanges for some period of time, and maybe forever. And it will not replace it. It will just exist as a separate world meeting very specific requirements of a specific set of investors. How tokenization moves into post trade, I do not really have a specific perspective, and we are not currently investing in that. But I think that if that does turn out to be more relevant, we will be in a position to take advantage of it. But really, the emphasis at the moment is being able to create some products for clients which are more around being able to take digital assets as collateral. What I would add to the answer, though, is we have certainly seen with some of the digital asset products that we have been involved with, the ability to collect margin real time and in particular over the weekends is a very attractive feature in terms of risk mitigation. And so, as I think about the impact on Clearing, as a general matter, the ability to get collateral or get payment 24/7, I think, is actually a really attractive risk mitigant. I do not know if you have anything to add to that, Paolo. Paolo Tonucci: Yes, just a couple of points, but it is a good question, Bill. I think, just to extend Ian's point on where we are focusing, the key components of both the Clearing and the Prime offering—one is more futures-oriented and the other is more securities-oriented—is that we can receive the collateral and recognize the collateral, which I think there has been progress both with the exchanges and on the regulatory side, that we can provide a combined sort of margining on a risk basis, which includes the activities, the risks, and the collateral. That we can provide all of the reporting and the reconciliations, and I think that in each of those dimensions, we have made significant progress. We have applied for a license which will allow for the conversion—for us to provide the conversion between crypto and fiat currencies, and we hope that that will come through in the next few weeks. We have got the infrastructure in place and we have partnered with very established players to establish the infrastructure both for execution as well as for Clearing. And that extends to tokenization where we are working with some of our most progressive clients to ensure that all of the rails for tokenization, whether that is for post trade or whether that is for supporting 24/7 activities. So I think we have moved a long way and my sense is relative to where the rest of our competitor group are, we are probably towards the front, if not at the very front of that queue. William Raymond Katz: Thank you very much. Ian Lowitt: Thanks, Bill. Operator: Your next question comes from the line of Benjamin Elliot Budish with Barclays. Your line is open. Please go ahead. Benjamin Elliot Budish: Hi. Good morning, thank you for taking the question. Maybe first, Ian, I was wondering if you could unpack a little bit more the comment you made earlier in the Q&A around this not being a Goldilocks volatility kind of environment. Maybe talk about what you typically see when there are volatility spikes in terms of either exchanges’ collateral requirements or how customers respond. And I gather—I think your comments maybe were referring to mid-February—but things have changed a bit more in the last couple of days. So just curious how to think about—you know, we can see your collateral balances daily through your website, but things have changed more the last couple of days. So if you could unpack that a little bit, that would be helpful. Thank you. Ian Lowitt: Sure, Ben. It is a really good question. At times of very high volatility, a couple of things are happening. One is either we are increasing margin multipliers or the exchanges are often increasing their margins, and you certainly saw that in January. So people are having to put more margin up against the existing positions. The other thing that plays out is, in terms of their own existing risk models, they have limits for what kind of positions they can maintain relative to the risk that they have been authorized to hold. They tend to reduce their positions in order to remain within their risk limits. The other thing that is just an obvious consequence of extremely high levels of volatility is it impacts how people choose to hedge and how they think about hedging, in the sense that they have to decide what their entry points are. They have to decide how long they are willing to hedge for. And just as we saw in April with Liberation Day, when people are unsure what is driving pricing and where it is going to settle, their reaction is often to shorten the duration of their hedges or actually just be unsure about when to begin to hedge. They also have to manage their liquidity carefully in addition to managing their risk carefully. So all of those things play through when you have those volatility spikes. And just to put that in perspective, I am sure you appreciate that some of the moves in some of these commodity contracts were one-in-35-year events that were playing through at the end of January. I do not know, in terms of over the last few days and where this thing is going to go, whether we are going to see volatility of that magnitude. But certainly, in natural gas prices, we are seeing price moves that are not dissimilar to what we saw with the Ukrainian invasion. So that is a bit more color on what is actually involved when you are operating in a world of extremely high volatility. Benjamin Elliot Budish: Understood. That is very helpful. Maybe just to follow up, a separate topic. You mentioned briefly prediction markets in your opening remarks. And just curious, from your seat, how do you see this evolving from an institutional perspective? It seems like from all the data that is trackable, most of this is happening in sports and in the retail channel, but there is a big question mark around how and when this might evolve into something broader. So just curious, what does institutional interest look like? Where in prediction markets are you looking to participate? How do you think this plays out over the next few quarters? Ian Lowitt: The method that is interesting to us is if this results in contracts that are really listed on the principal exchanges. So where the CME or ICE or Cboe end up listing a series of contracts which are not sports-related specifically, but are financial instrument-related, which I think is certainly a direction that people are looking at. We also believe that there is interest from retail aggregators for this particular product. So I do believe that we will see these products listed on exchanges so that you deal with the credit risk associated with some of these other venues. And you will, I think, see experimentation with financial instruments and strategies expressed as event contracts in the coming quarters—maybe it will take a little longer than that—but I think that is my expectation. And I think there is a variety of people who are interested in experimenting with it and, at some level, you could imagine these contracts actually being quite intuitive ways for retail investors to express certain investment theses they have. And so I can see that actually taking off. But you do not want to deal with the credit risk associated with some of these venues, and I think that the exchanges will naturally evolve into this space. Benjamin Elliot Budish: Great. Thank you. Ian Lowitt: Thanks, Ben. Operator: Your next question comes from the line of Patrick Malcolm Moley with Piper Sandler. Your line is open. Please go ahead. Patrick Malcolm Moley: Yes. Good morning. Thanks for taking the question. I know the Middle East has been an area of focus for you and it is a place where you have found success, especially with the ARNA acquisition. Just curious, with all the geopolitical turmoil going on, if we do see an extended conflict in the Middle East, how that impacts Marex Group plc’s business and the overall strategy there? Ian Lowitt: The answer clearly depends on what actually happens with regard to this conflict, whether it resolves relatively quickly or not. Certainly, we see that opportunity as attractive and sustained, and certainly we are hopeful that there is nothing that undermines it, and there is not knowledge at the moment that it might undermine it. But there is obviously a lot that we do not know. I do not know what you would add, Paolo. Paolo Tonucci: It is difficult to have certainty about the longer-term impacts, but so far, we have got a very broad-based business in both Dubai and Abu Dhabi. Volumes have been consistently increasing. The breadth of product offering has been consistently increasing. It does not feel as though that trend is going to change, but we may have obviously some disruption in the short term just as we all watch what is transpiring. Patrick Malcolm Moley: Thanks for that. And then you mentioned in your prepared remarks the pipeline of opportunities that you are looking at from an M&A perspective. Could you just update us on maybe what is in focus right now in terms of both asset classes and geographies? Any color there would be great. Thank you. Paolo Tonucci: Absolutely, Patrick. We have continued, I think, the pace of acquisitions that we have seen for the last couple of years, and we have had a couple of announced transactions this year. We most recently announced that we will be purchasing WebTraders, which is an options market making group. So somewhat away from the Clearing and Agency and Execution areas where we have traditionally more focused on acquisitions. Winterflood also is a Market Making business. So it shows that there are opportunities across all of the different service lines. We remain of a view that we are buying the capabilities and not just the revenues, and the other capabilities include both the geographic coverage as well as product capabilities. There are opportunities across each of the service lines, but I think that you will see both Clearing and Agency and Execution businesses being added in the next couple of quarters. And from a geographic perspective, whilst it is really hard to predict when these opportunities will arise, we are still focused on both extension in Asia, where we have probably a slightly subscale business, certainly on the Capital Markets side, and in Latin America where we bought AgriInvest last year. We are really pleased with how that is going. That is obviously an agricultural-focused business, but we are seeing opportunities on the financial side as well. So the geographic focus remains the same. It is just hard to say exactly when those will come to fruition, but we are seeing good opportunities. And the thing I would just add to that is we are always looking to fill in holes where, within a geography, we do not have the product. If we think we could build that organically, then that is typically what we would choose to do. But in many cases, and particularly as you try to expand geographically, that is just very hard to do organically. Those are the places where we would typically focus around acquisitions. Patrick Malcolm Moley: Very good. Thank you, and look forward to seeing you at the Investor Day. Thanks. Operator: Your next question comes from the line of Alexander Blostein with Goldman Sachs. Your line is open. Please go ahead. Alexander Blostein: Hey. This is Anthony on for Alex. Wanted to hit on Prime Services, which continues to see solid growth. How much of this growth has been a function of maybe existing clients doing more with you versus onboarding new accounts? And what does the pipeline of new clients look like today? Paolo Tonucci: Hi, Anthony. Thank you for the question. I am going to split the answer into this longer-term trend and what we saw in the fourth quarter. In terms of our annual accumulation of new clients, we are adding about 30%. We have a growth rate of about 30% a year on a gross basis, and then we lose about 5% of our clients because they cease to be or they move into different structures. So the long-term trend is around that type of growth rate. In the short term, where you see a bit more volatility is with existing clients which have relationships and are able to ramp up. In the fourth quarter, there was more increase in activity from existing clients increasing activity than there was from new clients. But the trend over the longer term, and I think you will see this over the course of both 2025 and 2026, is that we are adding clients and we are adding them at about a 30% annualized growth rate. Alexander Blostein: Thanks. That is helpful. And maybe just to follow up on the M&A you either completed or announced in 2025. Could you talk about the aggregate annual impact on run-rate earnings from these transactions? And where do you think they might scale to over the next few years as you realize revenue and expense synergies? Paolo Tonucci: The majority of the earnings increase in this year was organic. That does include the impact, as we have talked about very extensively, of the Prime business, and it comes through on the organic side because we have owned that for some time. It has really been about our investment in the products and capabilities. While the platform is obviously very important, it is the basis on which we have been able to develop that business. I expect the split between organic and inorganic will be somewhere in the range we have had before. Crispin Robert Irvin: Yes. So this year, the growth was roughly 75% organic and 25% inorganic. Alexander Blostein: Thank you. That is helpful. Operator: There are no further questions at this time. I will now turn the call back to Ian Lowitt for closing remarks. Ian Lowitt: Thanks, everybody, for joining us. We are very pleased with the full year numbers that we were able to deliver. We are really pleased that it was another record and that we had a record quarter in the fourth quarter, and, as I have indicated, we really are quite excited about our prospects over the course of the year and our ability to continue to grow in 2026 and beyond. Thank you for joining us, and hopefully we will see as many of you as possible at our Investor Day. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Greetings, and welcome to the Great Elm Capital Corp. Fourth Quarter and Full Year 2025 Financial Results Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. It is now my pleasure to introduce Adam Yates, Managing Director. Please go ahead. Adam Yates: Hello, and thank you, everyone, for joining us for Great Elm Capital Corp. Fourth Quarter and Full Year 2025 Earnings Conference Call. If you would like to be added to our distribution list, you can email investorrelations@greatelmcap.com or you can sign up for alerts directly on our website www.greatelmcc.com. The slide presentation accompanying today's conference call and webcast can be found on our website under Events and Presentations. On our website, you can also find our earnings release and SEC filings. I would like to call your attention to the customary safe harbor statement regarding forward-looking information. Also, please note that nothing in today's call constitutes an offer to sell or a solicitation of offers to purchase our security. Today's conference call includes forward-looking statements, and we ask that you refer to Great Elm Capital Corp.'s filings with the SEC for important factors that could cause actual results to differ materially from these statements. Great Elm Capital Corp. does not undertake to update its forward-looking statements unless required by law. To obtain copies of our SEC filings, please visit Great Elm Capital Corp.'s website under Financials, SEC Filings, or visit the SEC's website. Hosting the call today is Jason Reese, Great Elm Capital Corp.'s newly appointed Executive Chairman of the Board. He will be joined by Matt Kaplan, Chief Executive Officer; Chris Croteau, Head of Research; Chief Financial Officer, Keri Davis; Chief Compliance Officer and General Counsel, Adam Kleinman; and Mike Keller, President of Great Elm Specialty Finance. I will now turn the call over to GECC's Executive Chairman, Jason Reese. Jason Reese: Thanks, Adam, and thank you for joining us today. I am excited to assume the role of Executive Chairman at this important time for the company. This change reflects the Board's decision to enhance direct engagement with management and increase active oversight on our operations as we navigate a more demanding credit environment. I would like to begin by thanking Matt Graftkin for his service and leadership during his tenure on the Board. His commitment to GECC helped guide the company through a meaningful chapter, and we are grateful for his many contributions. It is important to note, Matt will continue in his role as Vice Chairman of GEG, working closely with me to create value for both GEG and GECC shareholders. As the Chairman and CEO of Great Elm Group, the parent company to GECC's investment manager, and well acquainted with both the management team and our investment process, that familiarity supports a seamless transition into this role. Strength and oversight, my focus is clear: protect shareholder value and reinforce accountability across the platform. We recognize that recent quarters were challenging for GECC; they have been across much of the sector. We experienced losses that reduced NAV, and when performance falls short of expectations, it is our responsibility to respond decisively and transparently. That is precisely what we have done. First, Great Elm Capital Management waived all accrued and unpaid incentive fees through 03/31/2026, approximately $2,300,000 or $0.16 per share. As of year-end, that represented a direct benefit to shareholders. This action is immediately accretive to NAV and reinforces our commitment to economic alignment. Second, we strengthened our investment platform with the addition of Chris Croteau as Head of Credit Research. Chris brings over 25 years of credit experience and deep underwriting discipline to the team. Since joining, he has worked alongside Matt and the team to enhance portfolio surveillance, fortify risk management, and source compelling new investments. We are excited to have Chris speak with you today. Third, we have been deliberate in repositioning the portfolio. We ended the year with minimal investments on nonaccrual, significantly expanded portfolio diversification, meaningfully reduced exposure to higher risk investments, and materially enhanced our liquidity profile. We believe the portfolio today is more resilient and better aligned with current market conditions. Matt and Chris will provide additional details shortly. Finally, through my appointment as Executive Chairman, I will be actively engaged. With decades of credit investing experience, I look forward to working closely with management to reinforce disciplined underwriting, thoughtful capital allocation, and proactive portfolio management and sourcing. During late 2025 and into 2026, we have selectively closed what we believe are compelling cash-generative investments to support sustainable NII growth. We are operating from a position of balance sheet strength. We maintain substantial liquidity, including meaningful cash on hand, availability under our revolving credit facility, and a healthy base of liquid assets. We have no near-term balance sheet constraints and full flexibility to act. That flexibility matters. Periods of uncertainty often create the most attractive risk-adjusted opportunities for disciplined investors. With our strengthened underwriting framework, reduced exposure to higher volatility sectors, and ample liquidity, we are well positioned to selectively deploy capital as markets reprice risk. We intend to be patient but decisive. When compelling cash-generative opportunities emerge through our proprietary sourcing network, we have the capital, the experience, and the governance structure to move quickly. We are committed to rigorous credit standards, transparency, accountability, and long-term shareholder value creation. We believe these principles position GECC to deliver durable performance for our shareholders. I will now turn it over to Matt to discuss operating results and portfolio positioning in greater detail. Matt Kaplan: Thanks, Jason. Thank you all for joining us today. Our fourth quarter reflected a challenging credit and broader market environment but also meaningful progress in improving the earnings profile of the company. Total investment income increased sequentially, and net investment income grew more than 50% quarter over quarter to $0.31 per share. That growth was primarily driven by higher cash income, including stronger distributions from our CLO joint venture. Net asset value per share declined from $10.01 on 09/30/2025 to $8.07 on 12/31/2025. To note, reflecting the incentive fee waiver that Jason highlighted, pro forma NAV was incrementally higher at $8.23 per share at the end of the fourth quarter. Drivers of the quarter over quarter decrease in NAV include approximately $0.40 per share of unrealized losses resulting from volatility in Coralweed stock price, and approximately $0.30 per share from lower quarter over quarter fair values on our CLO investments due to spread tightening of the CLOs' assets coupled with credit market dispersion. In addition, both realized and unrealized losses associated with investments that have undergone restructurings and liability management exercises, or LMEs, accounted for approximately $0.80 per share of the decline. Our First Brands investments further impacted NAV by $0.09 per share, and we took actions in the quarter to materially reduce exposure to First Brands, which was de minimis as of year-end. In the fourth quarter, we sold our entire allocation of the senior secured DIP loan at an average price of 107% of par after funding the loan at approximately 95% of par. In addition, we fully exited our roll-up DIP loans at an average price of 45% of par. The derisking of our First Brands DIP positions, as a result of our decisive actions taken in the quarter, which Chris will expand on, were collectively at much higher levels than where they trade today. The portfolio is now cleaner and more streamlined, comprised primarily of performing, more liquid, cash-generative investments, and we ended the quarter with nonaccruals at less than 1% of our portfolio fair value. Turning to our CLO investments. 2025 was a challenging year for CLO equity investors. Cash flows to the equity tranches of CLOs began to come under pressure as we moved through 2025 as spreads on broadly syndicated loans held by CLOs tightened meaningfully. In addition, lower base interest rates contributed to reduced income. Credit market headwinds also intensified in the back half of the year, with dispersion increasing across the leveraged loan market. Certain sectors and several notable idiosyncratic credits experienced significant price declines, with weakness accelerating in the fourth quarter. Despite contributing to the NAV decline in the fourth quarter, our CLO investments generated a positive return throughout 2025 and outperformed the broader CLO equity market. For example, inclusive of our income from the CLO JV in 2025, the broader market performance ranged from negative 6% to negative 13% in the fourth quarter. While our CLO investments may see volatility to their marks given their leverage and the current backdrop of the industry, it is important to remember these vehicles have long-duration liabilities and are constructed to be resilient through periods of market volatility. Further, these investments continue to produce meaningful cash flows, which diversify our income streams and support our ability to consistently deliver sustainable net investment income to our shareholders. As Jason also noted, our portfolio today is positioned more defensively than in prior periods. We have historically maintained an underweight exposure to software-based businesses that may be more susceptible to artificial intelligence disintermediation, a stark contrast to many of our peers. Over the last several months, we have taken proactive steps to further reduce that exposure and rotate capital into investments with stronger downside protection. As of February, investments in our corporate credit portfolio that we believe fall in the category of software businesses comprise less than 4% of our portfolio. From a capital deployment perspective, we are investing at a measured approach in a credit market where spreads in investment grade and high yield ended 2025 in the 14th and 4th percentile, respectively. We saw some compression in private credit spreads over the course of the year as well. We are prudently deploying capital, prioritizing senior secured positions with durable cash flows while continuing to monetize select positions. More broadly, in 2025, we improved credit quality in the portfolio, strengthened our balance sheet, and exited the year with ample liquidity. We have also enhanced our capital structure by opportunistically repurchasing approximately $18,700,000 of our GECCO notes in the fourth quarter and through the end of last week at or below par plus accrued interest. As of the end of last week, we had $39,000,000 of notes outstanding against $16,000,000 of cash, $50,000,000 of revolver capacity, and $14,000,000 of liquid exchange-tradable assets, providing more than sufficient liquidity to address the upcoming maturity of the balance of these notes in the coming months. To that end, we called approximately half of our remaining GECCO bonds on Friday, which brings our pro forma debt-to-equity ratio to approximately 1.5x, consistent with our historical average leverage level. Finally, as previously mentioned, we also strengthened our investment team with the addition of Chris Croteau as Head of Research. Chris is a seasoned investor with experience across syndicated credit and direct lending. He has played a key role in our portfolio underwriting through capital deployment, and we are very pleased to have him on board. With that, I will turn it over to Chris to introduce himself and provide additional insight into the portfolio. Chris Croteau: Thanks, Matt. First, a bit of background on me. I have spent over 25 years in leveraged credit, including serving as Head of Credit for North America for a large public asset manager and acting as agent on private credit transactions. That experience shapes the underwriting rigor and discipline we are executing at GECC. Our investment framework is built on three core pillars: downside protection, portfolio granularity, and durable underwriting edge. First, we anchor every underwriting decision to downside outcome. In credit investing, protecting NAV and avoiding permanent capital impairment are paramount. Second, portfolio granularity serves as a key risk management tool. We utilize broadly syndicated credit intentionally to enhance liquidity and diversification while deliberately maintaining smaller position size. This allows us to be nimble and reduce exposure when our thesis plays out or when compensation for risk no longer justifies the capital at work. Liquidity and granularity work hand in hand. Third, investments are underwritten collaboratively with management and sector analysts prior to investment committee review. We are concentrating capital in areas where our underwriting advantages are durable, supported by deep sector expertise, and aligned strategic partners. We apply this underwriting intensity to our entire corporate credit portfolio. During the quarter, we sold or reduced 18 credit positions. We began the quarter with 61 corporate credit positions, so that means nearly 30% of the portfolio by number was actively repositioned. Those actions included reductions in second lien exposure, which now represents approximately 7% of the corporate portfolio, reflecting stronger structural positioning and improved portfolio granularity. At the same time, we added 12 new broadly syndicated credit positions with an average size of approximately $2,000,000, reinforcing smaller and more diversified exposures in liquid markets. In private credit in the fourth quarter, we closed one transaction with a mid-teens yield profile and warrant participation. Our private credit pipeline remains active with aligned strategic partners where incentives, information flow, and governance oversight are strongest. While we continue to expand that funnel, we remain highly selective in light of current spread dynamics. We continue to engage in active dialogue with our CLO investment partner to identify emerging credit trends early and to enhance idea generation across the platform. Our objective is consistent: attractive risk-adjusted returns driven by disciplined capital allocation, senior positioning in the capital structure, and steadfast protection of NAV. We believe robust underwriting intensity, greater portfolio granularity, aligned partnerships, and active monitoring position the portfolio for more durable performance across market cycles. Now I will turn the call over to Michael Keller to discuss specialty finance. Michael Keller: Thanks, Chris. Raytown Specialty Finance delivered a solid fourth quarter, distributing approximately $287,000 to GECC. We continue to execute on GESF's strategic transformation, successfully repositioning the platform for future growth and enhanced profitability. At Great Elm Commercial Finance, which now offers traditional asset-based lending solutions across a broad range of industries, we continue working with lenders to scale the platform. Asset-based lending, when underwritten conservatively and structured properly, can provide attractive risk-adjusted returns with meaningful downside protections. As we scale the platform, operating leverage has begun to take hold, driving meaningful improvement over the past several quarters. In addition, our pipeline of potential transactions remains robust. As part of the strategic initiatives implemented in 2025, Great Elm Healthcare Finance is now better positioned for sustained profitability and generated solid distributable income in the fourth quarter. The GEHF platform is supported by a strong pipeline of actionable opportunities, which we expect to drive continued profitability into 2026. Meanwhile, Prestige, our invoice financing business, continues to perform exceptionally well. As a reminder, Prestige provides spot invoice financing solutions and has consistently demonstrated the ability to generate attractive returns on equity over the course of the year. In summary, as we move through 2026, we believe we have built a significantly enhanced specialty finance platform aligned with our long-term growth objectives. We are seeing the benefits of our strategic repositioning take hold across all platforms and remain confident in our ability to generate improved returns for shareholders going forward. Now I would like to turn the call over to Keri Davis to go over our performance. Keri Davis: Thanks, Mike. I will go over our financial highlights now, but we invite all of you to review our press release, accompanying presentation, and SEC filings for greater detail. During the fourth quarter, GECC generated NII of $4,400,000, or $0.31 per share, compared to $2,400,000 or $0.20 per share in 2025. The increase in NII was driven primarily by higher CLO JV and increased earnings from deployed capital. Our net assets as of 12/31/2025 were $112,900,000 or $8.07 per share, as compared to $140,100,000 or $10.10 per share as of 09/30/2025. Details for the quarter over quarter change in NAV can be found on Slide 12 of the investor presentation. Net assets pro forma for the incentive fee waiver noted were $8.23 per share as of 12/31/2025. Our balance sheet remains strong and liquid. GECC's asset coverage ratio was 158.1% on 12/31/2025, as compared to 168.2% as of 09/30/2025. Pro forma for the incentive fee waiver and the called baby bonds, our asset coverage ratio was 166% as of 12/31/2025. As of 12/31/2025, total debt outstanding at par value was $194,400,000, and we had no borrowings on our $50,000,000 revolver, providing meaningful liquidity and flexibility. Cash and money market fund investments totaled approximately $5,000,000. Our Board of Directors approved a quarterly dividend of $0.30 per share for 2026, equating to a 19.2% annualized yield on GECC's 02/27/2026 closing price of $6.26. I will now hand the call back to Matt. Matt Kaplan: Thanks, Keri. We continued to strengthen the portfolio during the quarter by rotating capital into senior secured investments and exiting credits with weaker downside protection. Our CLO joint venture is a meaningful contributor to earnings and provides added portfolio diversification. The portfolio today is well positioned to generate sustainable income in the year to come. Our proprietary sourcing platform continues to be a key differentiator, which highlights our ability to generate attractive returns through unique opportunities. Nonaccruals remain below 1% in the portfolio, reflecting the progress we have made improving overall credit quality. While the broader market remains uncertain, we remain disciplined in deploying capital and focused on protecting NAV while growing earnings. We believe our strong liquidity position, diversified portfolio, and improving income profile, and disciplined investment approach position GECC well as we move through 2026. I will now hand it over to the operator for questions. Operator: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star 1. One moment while we poll for questions. As a reminder, if you would like to ask a question, please press star 1. Our first question is from Erik Zwick with Lucid Capital Markets. Erik Zwick: Thanks. Good morning, everyone. I wanted to start with a question just in terms of the portfolio repositioning that Chris was describing. Is the actions that you have contemplated, are they complete at this time, or are there potentially more actions to reposition and maybe derisk the portfolio? Is there potentially more that you could undertake here in this quarter or in future quarters? Matt Kaplan: Good morning, Erik, and thanks for the question here. I would say we took a lot of actions in the quarter, as Chris highlighted, to exit out of names that we have perceived more downside risk and rotate into higher-quality credits on a liquid basis. And further, I highlighted, over the last few months, we have looked to derisk on the portfolio of our software side of the business. I would say at the end of the year, when we looked at the software-ish component, it is about 7% of the portfolio, and we are right now around 4%, so less than 4%, I would say. So I think right now, we have a very clean portfolio on the corporate credit side of things, and we have taken a lot of actions to clean it up. Erik Zwick: Thanks, Matt. And then just the comments around you certainly have ample liquidity today. Wondering if you could just frame volatility in the markets potentially creating opportunity. For me, how you view your pipeline today and where you are seeing the best risk-adjusted opportunities for new investments? Matt Kaplan: Continue to evaluate private credit opportunities, and we are very selective and evaluate the deals where we have strong covenants alongside strategic partners where the incentives are aligned. And then, secondly, as I touched on for a minute in the software space, we are underweight software in the space relative to other BDCs and the U.S. loan market in general. I think BDCs' exposure is well over 20% according to Morgan Stanley research, and the U.S. loan market is 16%. You know, we are evaluating possible opportunities in the average loan market, especially with the current volatility in the geopolitical events here, and we continue to be very focused and rigorously looking at downside protection across all industries in which we invest, not looking to catch any falling knives here, and then weigh the opportunities as they come. But this is obviously a dynamic market environment right now, and we have ample liquidity to manage both our maturities and take advantage of any opportunities in names where we have, as Chris mentioned, durable edge in relationships with sponsors, management teams, etc. Erik Zwick: And then is private credit where you are seeing greater opportunities there relative to additional CLO investments or BSL investments? Matt Kaplan: We have evaluated many private credit opportunities over the course of the year, and I would say that we are very selective in executing on them, focused on the covenants on both maintenance covenants from a financial perspective as well as making sure the incentives are aligned. So it changes over time for us as we look at the marketplace and it shifts. And right now, there is a shift. So I think we are very real-time, day by day, looking at where the public markets are as well as the private markets. You know, we have a very robust liquidity position in both cash or full access to our revolver and kind of exchange-traded assets. Erik Zwick: And then just thinking about the stock repurchase authorization you have outstanding, just how do you weigh the relative opportunities between new investments for the portfolio and buying back stock at this juncture? Matt Kaplan: Something that we constantly evaluate, and there are lots of factors that go into that based on both the portfolio opportunities in the market and discussions with the Board. So lots of factors go into making that decision, but we actively monitor our stock price as well as the opportunity set in the marketplace. Jason Reese: Matt, it is Jason. Maybe I can jump in. Erik, as the Board, we are looking at creating the best ways to create shareholder value. So, right, we are going to constantly look at the stock price versus NAV and decide where we are better off. Obviously, buying back stock is riskless as opposed to putting cash into a credit where there is a level of risk. So we will be looking back daily and have the opportunity to create value. Erik Zwick: Thanks. And just last one for me. I know in 2025, the contribution from the CLO investments was a little bit lumpy as that got ramped up. Are we at the point now where the contribution would be a little bit more even quarter to quarter? Or is there still some variability expected as those cash flow payments come in? Matt Kaplan: I would say there is still some variability as cash flow payments do come in, but I would expect it to be less lumpy than it was over the course of 2024 and 2025. Erik Zwick: Thank you for taking my questions today. Matt Kaplan: Thank you. Operator: Our next question is from Alan Demzer, Private Investor. Alan Demzer: Yes. Hello. I just heard my question answered pretty much regarding the stock buyback program that you announced, and I would just urge you to take a look at the economics of that, being that you might find being more aggressive on this program behooves you. So I urge you to, given the fact that you expect things to stabilize in the marketplace NAV-wise, to really go forward with a clear eye about the value that is inherent in buying back your stock. Thank you. Jason Reese: Alan, if you are interested, I can promise you that the Board is taking this very seriously and looking at this every day. Operator: Right. Thank you. There are no further questions at this time. I would like to hand the floor back over to Jason Reese, Executive Chairman, for closing remarks. Thank you again for joining us today. Jason Reese: We are closing the period with a strong governance framework, enhanced oversight, and a portfolio that is meaningfully more resilient. Our priorities are clear: protect capital, generate sustainable NII, and methodically rebuild NAV over time through disciplined credit execution. The actions we have taken—waiving incentive fees, strengthening our credit leadership, enhancing Board engagement, improving portfolio quality, and maintaining liquidity—reflect a clear commitment to accountability and long-term value creation. We believe GECC is operating from a position of balance sheet strength with the flexibility and underwriting discipline required to navigate uncertainty and capitalize on attractive opportunities as they emerge. We appreciate your continued support and look forward to updating you on our progress next quarter. Operator: Thank you. This concludes today's conference. Thank you again for your participation. You may disconnect your lines at this time.
Operator: Greetings, and welcome to the Paysafe Limited fourth quarter 2025 earnings conference call and webcast. At this time, participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Kirsten Nielsen, Head of Investor Relations. Please go ahead. Kirsten Nielsen: Thank you, and welcome to Paysafe Limited's earnings conference call for the fourth quarter and full year 2025. Joining me today are Bruce Lowthers, Chief Executive Officer, and John Crawford, Chief Financial Officer. Before we begin, a reminder that this call will contain forward-looking statements and should be considered in conjunction with cautionary statements contained in our earnings release. These statements reflect management's current assumptions and expectations, and the company's most recent SEC reports, and are subject to factors that may cause actual results to differ materially from those forward-looking statements. You should not place undue reliance on these statements. Forward-looking statements during this call speak only as of the date of this call, and we undertake no obligation to update them. Today's presentation also contains non-GAAP financial measures. You can find additional information about these non-GAAP measures and reconciliations to the most directly comparable GAAP financial measures in today's press release and in the appendix of this presentation, which are available in the Investor Relations section of the website. With that, I will turn the call over to Bruce. Bruce Lowthers: Good morning, everyone, and thank you for joining us today. I will start off with a few key messages. In 2025, we delivered our third consecutive year of organic revenue growth while continuing to sharpen our focus on experience-driven commerce. While business mix led to a different margin outcome than the original outlook called for, I want to reiterate that we have made incredible progress in 2025. For the last three years, we have made deep structural changes modernizing our platform, upgrading our talent, and positioning Paysafe Limited for its next phase of growth. During this time frame, we renewed our focus on product innovation, which is reflected in the progress of our vitality index. I am confident that the positive impact of this work will become increasingly evident through our financial results as we move forward. I am grateful for the dedication of our 2,008 colleagues worldwide. Their resilience has driven us through the challenges and laid a foundation of accelerated growth and exceptional experiences for both customers and employees. Let's move to slide four. For the full year, we reported $1.7 billion in revenue, growth of 6% excluding the disposition. While we saw softer results in the SMB business, this was offset by double-digit growth from e-commerce, including record iGaming volumes across the U.S. football season. We also saw strong demand for our local payment solutions in Latin America and, increasingly, consumer engagement from product initiatives across Europe. Importantly, our digital wallet consumers reached 7.8 million at quarter end, our highest level in three years. We generated an impressive $298 million in unlevered free cash flow in 2025, despite divesting a business line that generated $40 million in EBITDA the prior year. This provided us with the flexibility to return more than $90 million to shareholders in 2025 as valuation levels were a compelling opportunity. As John will discuss later, we expect to continue to return capital through open market purchases, but reducing our leverage ratio will be a higher priority in 2026. Turning to the full year revenue walk on slide five. Revenue growth was balanced across the existing client base and our new sales and product initiatives, which contributed 810% of revenue growth respectively. Revenue attrition ended up at 12%, slightly higher than our original expectation for the full year. We continue to see improvement throughout the year. In Q4, attrition was 11%. When we put all this together, our performance reflects strong cross-selling and growth with existing clients as well as new clients and new products. On slide six, we have shared our regional performance for the full year. Our largest market, North America, grew 5% in 2025 excluding the disposition, and Europe grew 7% normalized for FX. Latin America was flat for the year, but after lapping the impact of a large customer renewal, we saw more than 20% growth from the region in Q4 and continued strength in January. In the non-core rest of world region, we saw a decline from our consumer wallets as a function of both the market dynamics and our own actions to trim this exposure over the years. This gives you a sense of our balanced regional profile, which we will plan to provide on an annual basis going forward. Slide seven is a look back on our 2025 priorities. Having shifted our focus to the key growth engines of the company, our aim was to drive more revenue from new products, deliver on our longer-term innovation road map, and mature the sales organization, bolstering both areas through new partnerships. Despite strong progress, we had a bit more groundwork to complete, including advancement of our wallet platform, such as our business wallet and white-label wallets, and monetizing our pipeline in targeted e-commerce verticals. Reaching 24% in the fourth quarter and 27% for the full year. North America iGaming had a standout year with 50% growth in processing revenue. As we discussed on the last call, total e-commerce growth did moderate compared to the more than 30% growth in the first half, and compared to what we planned for the year driven by softer performance across other verticals. Just to take a step back, we delivered $196 million in e-commerce revenue for 2025, an impressive three-year CAGR of 29%. Turning to the enterprise bookings, we increased our total deal count by 38% compared to 2024, along with 10% growth in larger-sized deals. Cross-selling was a strong component overall with 40% of our total bookings from existing clients. We also want to highlight the evolution of our enterprise sales function which was built over 2023 and 2024 and is now generating a meaningful revenue contribution from those cohorts since inception, driving nearly $260 million in revenue in 2025. On the SMB side of the business, we saw total new MID growth of 6% driven by 18% year-over-year growth in the second half, led by our direct sales channels, along with positive growth in revenue per merchant. SMB revenue growth for the year was a modest 1%, coupled with a margin headwind due to the ongoing mix shift to our lower-margin ISO channel. Throughout 2025, we have focused on retooling and optimizing our SMB portfolio and believe we have a stronger foundation to improve growth in 2026, supported by the expansion of our agent programs and value-added services. Turning to the consumer snapshot on slide nine, continued growth from product initiatives and expansion of Paysafe Limited's digital banking. Other KPIs remained healthy with 6% growth in transactions per user while ARPU was relatively stable. Additionally, we believe our classic wallet, Skrill, remains a high-value asset despite not accelerating to the level we planned for in 2025. It has a stable user base exceeding 900,000 actives for the last five quarters. We focused on reducing friction and improving user experience. At the same time, our product initiatives have effectively elevated both new and existing eCash users to our wallet platform. We continue to believe higher growth and value can be created here as we deliver on our initiatives to deepen consumer engagement, coupled with successful rollout of our business wallet and white-label solutions. Turning to slide 10. One of the clearest measures of our progress is our new product vitality index. This is how we measure the health of our organization and the momentum we have around innovation that directly addresses our customers’ evolving needs. 2025 reached $270 million of vitality revenue, representing 16% of total company revenue. It has fueled mainstream, sustainable revenue, enabling us to reduce high-risk, non-core revenue streams while improving our overall growth profile. We continue to innovate and launch new solutions. We expect this momentum to carry Paysafe Limited towards industry-leading benchmarks. So let's look at how one recently launched product is contributing to this progress on slide 11. Within our eCash business, you may recall us highlighting growth from new products, our account-and-card product which we have recently rebranded as Paysafe wallet. This began as an initiative to cross-sell and shift eCash users towards online account-based distribution. Paysafe wallet serves as a full-service consumer solution including a personal bank account and a debit card, allowing customers to send, receive, spend, and withdraw money. We first launched in a few European markets to offer cash and stored-value consumers the benefits of the wallet, and later expanded into banking services. What we saw was strong adoption, with sign-ups surpassing 500,000 by October 2025, reaching a scale that took some of the leading digital banks nearly two years, despite their broader offerings and large marketing budgets. What is different and advantageous here is that we already have a sizable base of users we can target, which allows us to scale at a much lower cost of acquisition, which is around $21 for Paysafe Limited. Today, we are live in 18 countries and continue to drive functionality and regional expansion. On slide 12, we share the key priorities and outcomes that we are driving in 2026. Starting with consumer business, we will continue to enhance our classic wallet user experience, including loyalty programs and value-added features and services. Our Paysafe wallet and PagoEfectivo in Latin America will continue to expand on core capabilities, with the goal in both regions focused on building a simple, everyday digital banking wallet customers can rely on to manage their daily spend. To support user growth, we will scale our marketing strategy, leveraging our expanding wallet portfolio and localized go-to-market plays to drive acquisition, retention, and lifetime value. Turning to our merchant priorities, we are focused on capturing opportunities in existing and target e-commerce verticals, supported by enhancements to our gateway and bank network to incrementally offer more flexibility for both large merchants and SMBs. Success with these top initiatives will support continued growth. We will focus on elevating customer experience with faster onboarding and activation, with seamless access to value-added services. Our vitality index company-wide, which we see as one of the most important markers of our success. Turning to slide 13. Before I hand the call over to John, I want to take a moment to reflect on the transformation we have driven over the last few years and how it is positioning Paysafe Limited for the future. When I joined nearly four years ago, I shared with the team my vision for building a truly modern payments company. It was not just about adopting new technologies like AI or eventually quantum computing. It is about fundamentally reimagining our business processes for scale, adaptability, and resilience in a high-volume, always-on payments infrastructure. We have made meaningful progress. Our go-to-market motion has strengthened. We have launched innovative products, and we have opened new revenue streams in adjacent markets such as our Paysafe wallet, which offers a modern, consumer-friendly solution comparable to what other players like Revolut and Chime have delivered in digital banking and embedded finance. Our measure of this innovation momentum is our vitality index, the percentage of revenue from new product initiatives. We have grown this from less than 2% in 2022 to 16% in 2025. Looking ahead, our long-term aspiration is to reach over 30%, in line with world-class innovative companies that consistently drive sustained growth through fresh offerings. Every core function has felt this impact. We have stayed disciplined, focusing on process improvement first and deploying tools only where there is a clear ROI. Over the last three years, we have reduced aggregate FTEs by approximately 20% through automation and efficiency gains. More importantly, we have reallocated those savings to fuel growth, investing in higher-impact areas. We have upgraded our talent significantly, eliminating about 30% of our senior executive roles from three years ago, and of the remaining executive team, roughly 77% are new additions, bringing fresh perspectives and expertise. Our capital allocation has shifted dramatically, roughly 90% maintenance-focused to now 80% directed towards growth initiatives. This reflects a deliberate move from sustaining the status quo to building for the future. To me, modernization goes beyond just any single tool like AI. It is about reengineering processes that enable us to operate at scale in a complex, 24/7 payments environment while staying agile and cost effective. That is the foundation that we are building. Embedded AI across the enterprise, not as experiments but as the operating system powering how we work. It accelerates decision making, enhances experiences for merchants and consumers, and strengthens our position in sectors like gaming, digital entertainment, travel, and e-commerce where seamless, personalized, trust-building interactions are increasingly the standard. In operations, we have automated high-volume workflows in customer support, disputes, reconciliations, and back-office functions, driving higher productivity and improved service levels. In product development, AI is now end-to-end, shortening cycles and enabling smarter, adaptive solutions that boost engagement and monetization. We have reduced integration times for new payment methods by approximately 80%, putting us in line with industry leaders. In risk and compliance, AI drives real-time onboarding, monitoring, fraud detection, and reporting, lifting auto-decisioning on direct applications to around 50% while cutting false positives by over 20%. And in our tech stack, modernization has delivered strong results. Over 30% of the code was generated via AI in 2025, speeding time to market while maintaining quality. Across the board, we are moving faster, deciding with better data, scaling with tighter controls, and doing it at a lower cost. This has made intelligent systems foundational to how we compete. Looking ahead on slide 14, our AI strategy is structured around three clear pillars. Product innovation: scaling AI-native offerings like our embedded wallet and intelligent tools. Our modern wallet platform enables merchants to deploy commercially ready, fully brandable embedded wallets, delivering white-label solutions they own end to end for seamless deposits, withdrawals, identity verification, and enriched user experiences. Agenic Commerce: aligning with emerging standards while leveraging protocols like Model Context Protocol (MCP), Agent Payment Protocol (AP2), and Universal Commerce Protocol (UCP) to remain secure, compliant, and governed, ensuring agent-driven protocols clear financial policies. AI-driven automation: continuing to deliver structural efficiency gains while enhancing quality controls and fraud prevention. We see AI and Agenic Commerce as a meaningful expansion of our addressable market and a structural opportunity for platforms that bring together scale, regulatory expertise, and orchestration capabilities. That is where Paysafe Limited is differentiated. I will stop here and turn it over to John. John Crawford: Thank you, Bruce. Let's move to slide 16 for a summary of our fourth quarter results. Revenue for Q4 was $438.4 million, an increase of 4% on both a reported and organic basis, as the impact from the business disposal and a modest headwind from interest revenue was offset by favorable FX. Organic performance in the fourth quarter reflects 6% growth from digital wallets, led by Latin America, which increased more than 202%, and organic growth for Merchant Solutions driven by continued strong volumes from e-commerce merchants which offset a decline from SMB. Relative to the revised expectations we outlined in November, our Q4 performance was in line overall. Adjusted EBITDA declined 1% to $102.1 million in the fourth quarter, and adjusted EBITDA margin declined 130 basis points, mainly due to higher marketing investment and OpEx timing items. These impacted the margin comparisons throughout the second half compared to 2024. We generated $103 million in unlevered free cash flow in the quarter, bringing our cash flow conversion to 101%, which benefited from the license deal completed in Q3 as well as timing-related working capital flows. This brings our full-year cash conversion to 69%, which is at the high end of our targeted range. Adjusted EPS decreased 4% to $0.46 compared to $0.48 in Q4 of last year, including higher depreciation and amortization expense, fully offset by a reduction in our adjusted tax rate as well as a reduction in share count from our share repurchase activity. Moving to slide 17. A quick recap: our full-year reported revenue growth was flat year over year at $1.7 billion. Including impacts from FX, interest revenue, and the disposed business, organic revenue growth was 5%. Adjusted EBITDA declined 5% to $429 million, and adjusted EBITDA margin was 25.2%. Excluding the noise from the business disposal, which was a $41 million headwind, our adjusted EBITDA margin would have declined only 40 basis points. This included a headwind of 120 basis points from gross margin—two thirds from mix and one third from interest revenue—which was offset by tight cost management in SG&A. Despite the puts and takes behind the margins here, we believe this full-year margin profile to be a sustainable margin for 2026, which we will discuss in a moment. We generated $298 million in unlevered free cash flow for the full year, and it is worth pointing out that we continue to generate this attractive cash flow conversion despite divesting a business line that generated more than $40 million in EBITDA in the prior year. Finally, adjusted EPS declined 9% to $1.95 per share, predominantly reflecting the adjusted EBITDA loss due to the business disposal, partially offset by the denominator benefit from our share buybacks. Let's move to slide 18 to discuss the Merchant Solutions segment. Revenue in the fourth quarter from Merchant Solutions was $222.7 million, resulting in full-year revenue of $904.7 million. This represents organic growth of 2% for the fourth quarter and 5% for the full year. A reminder, the underlying performance was led by e-commerce, which grew 24% in Q4 and 27% for the full year, and moderated somewhat from a growth rate north of 30% in the first half of the year. This was partly offset by soft performance from the SMB business, which declined 3% in the fourth quarter and grew modestly at 1% for the full year. Adjusted EBITDA for the Merchant Solutions segment was $28.8 million for the fourth quarter, reflecting a margin of 12.9%, leading to full-year adjusted EBITDA of $145.7 million, with a full-year adjusted EBITDA margin of 16.1%. Looking past the impact from the business disposal, adjusted EBITDA margin declined 130 basis points for the full year, the main driver being the channel mix dynamic due to stronger growth within our third-party ISO channel, which outpaced the higher-margin direct sales in Merchant Solutions as we discussed all year. Additionally, the Q4 margin of 12.9% included the bulk of the higher marketing expense I mentioned earlier, and timing-related items in OpEx. Going forward, we expect adjusted EBITDA margin for the segment back into the mid-teens in 2026. Turning to the Digital Wallet segment on slide 19. Revenue from Digital Wallets in the fourth quarter increased 13% to $220.2 million, or 6% on an organic basis, leading to full-year revenue of $815 million with 6% reported growth and 4% organic growth for the year. In Q4, adjusted EBITDA grew 4% to $93.1 million, helped by favorable FX and reflecting a margin of 42.3%. Our full-year adjusted EBITDA was $352 million with a margin of 43.2%. Margin declines in the segment were driven by lower interest revenue—$3 million in Q4 and $13 million for the full year—as well as the business mix dynamics we have discussed throughout the year, including higher growth in eCash products. The fourth quarter also reflected an increase in segment SG&A, mainly due to timing, with full-year SG&A being favorable as a percent of segment revenue. Turning to slide 20 for a summary of debt and leverage. At the end of the year, total debt was $2.6 billion, an increase of $252 million, largely due to fluctuations in the euro-USD exchange rate which increased total debt by $144 million, along with net withdrawals of $105 million. Net leverage ratio was 5.5x at year end compared to 4.7x at the end of 2024. At the bottom right of the slide, you can see that this increase was attributable to FX and the business disposal. In 2025, we allocated more than $90 million to share repurchases. We are laser focused on reducing our net leverage ratio in 2026 and expect to be below 5x by the end of this year. We repaid $64 million of our revolver in the month of January, and while we continue to think our shares are materially undervalued, we will prioritize debt repayment this year. Moving to the full-year guidance on slide 21. Which is consistent with the preliminary outlook we discussed on our November earnings call, we expect revenue in the range of $1.79 billion to $1.83 billion, representing 5% to 8% growth. This includes a small full-year uplift from FX mainly in the first half of the year, assuming current FX rates, rounding out to roughly 5% to 7% organic growth. As for the cadence, we expect the first quarter and the first half growth to be in the mid-single digits on an organic basis, and the second half to improve towards the higher single digits. We expect adjusted EBITDA in the range of $449 million to $464 million, reflecting 5% to 8% growth. For the cadence here, we expect first-half adjusted EBITDA margins to be around 24%, and the second half averaging above 25%, leading to flat adjusted EBITDA margin for the full year compared to 2025. In terms of the year-on-year comparisons and shaping quarterly models, recall that we had the $10 million license deal that benefited the third quarter results in 2025. And finally, we expect adjusted EPS to be in the range of $2.12 to $2.32 per share, aiming for double-digit growth versus 2025. Turning to slide 22, let me wrap up with a few comments on our current financial position before we open the call for questions. 2025 marks our third consecutive year of positive organic revenue growth, a meaningful step forward considering our flat growth profile four years ago. We have achieved this while enhancing the quality of our revenue base, notably derisking our portfolio, including the direct marketing divestiture at the start of 2025. Though these actions created short-term noise in our results, they position us for a stronger future, and we expect our financials to be much cleaner in 2026. The operational improvements we have made have allowed us to allocate more investment to our growth functions. We are beginning to see the benefits reflected in our financial results and new product delivery. Our outlook is further supported by the strong free cash flow we continue to generate, providing a path to reducing leverage to below 5x by the end of this year. To close, we are starting 2026 in our healthiest position since going public, which gives us confidence in the business and our ability to deliver on our long-term objectives. We will now open for questions. Operator: Thank you. We will now be conducting a question-and-answer session. Our first question is coming from Dan Perlin from RBC Capital Markets. Your line is now live. Dan Perlin: Good morning, everyone. Bruce, I was wondering if we could revisit the strategic initiatives as you see them to reaccelerate SMB as we think about going into 2026. You alluded to it a little bit in the prepared remarks, but anything incremental would be helpful. Thank you. That is great. And then just on the guide for 2026, I am wondering, given the state of the world, what expectations you have baked in in terms of macro environments. I think you touched a little bit on FX. And then if there is any delineation you can draw between SMB and e-commerce growth, that would be great. Thank you. Bruce Lowthers: On the SMB side of things, we have been putting a lot of energy around that in 2025 and building momentum into 2026, which we can see already emerging early in Q1. We feel very good about the product sets that we have, seeing significant lift with our Clover sales in Q4—really pretty strong. I think we were north of 30% in new MIDs year over year in Q4 with Clover, so we feel very good about that. We have engaged new management, so we have a new team that is leading us in the SMB space. I think that is going to really pay tremendous dividends, and we are excited about having the team on board. From a product standpoint, we feel very good about the product set that we have. It really now is just about execution. We have really honed our marketing on the SMB side. We see real strength in the direct channel, so we feel like we are in a pretty good position overall with the new team, strong product, value-added services, and increased marketing around merchant acquisition. Overall, we feel like we are coming into 2026 in a very good place. John, do you want to take the macro? John Crawford: On the macro, I think we are baking in relative stability on the FX side. As folks probably remember, Q1 last year, the euro was much lower and moved a lot at the end of the quarter. We do not have dramatic changes other than what is projected in the current curves out there in terms of interest rate changes as well, and no significant real change in the macroeconomic environment. Bruce Lowthers: As John said in the prepared remarks, the nice thing about 2026 is it is a very clean year for us. We do not have a lot of activity. Obviously, the divestitures have worked their way through, all the grow-overs have worked their way through, and it looks like a very clean year for us as we go into 2026. Operator: Thank you. Our next question is coming from Darrin Peller from Wolfe Research. Your line is now live. Paul Obrecht: Hi, thanks. This is Paul Obrecht on for Darrin. Can you help frame the opportunity of the Paysafe wallet? Where are you seeing momentum with this product initially? What do consumer engagement trends look like? And then, in the deck, you also called out plans to expand it to more geos. Where do you see the most opportunity? And then, you briefly touched on it in your prepared remarks, but could you provide any more detail on how you see Paysafe Limited’s role evolving in Agenic Commerce and what steps you are taking today to prepare for eventual consumer adoption down the line? Bruce Lowthers: Good morning, and thank you for the question. We are very excited about Paysafe wallet. We have had a lot of momentum with that product over the last 12 to 18 months as we have been flying under the radar with it. It is something that we have invested in quite a bit over the last year. We are in 18 countries right now. As we look at the growth of that product, it is really about continued execution on the rollout. The product is very solid. We feel very good. We talked about the 500,000 registered users for it. When we look at that, it is really on pace with what the others that are in that vertical—embedded finance—have done. When you go back and look at their initial couple of years, we are tracking right in line with them, which is great to see. I think the big differential is the cost, because we have roughly 8 million active users out there. We are marketing a lot to our own users and driving those into the Paysafe wallet. We feel very good from a feature-functionality standpoint and from cost of acquisition right now. We are going to invest some marketing behind this and really drive it in 2026. From a geographic footprint for 2026, we are going to continue to focus within Europe and really drive within Europe. It is not an aggressive geographic expansion outside of Europe. We will do some test-and-learn in probably a couple of markets, but predominant growth is expected within the Europe region. So for us, we have been really incorporating a foundational change to the organization. When we look at Agenic Commerce, it is really about TAM expansion for us. We are going to stay within the entertainment area—or the experience economy is really where we like to play—so you will see us continue to stay within those verticals. For us, it gives us the ability to accelerate product into travel and leisure, for example. When we look at our verticals, we have tremendous strength in the gaming space, whether that be video gaming or sports betting. We think Agenic Commerce allows us to step into some of these adjacent verticals that will help really drive an overall experience for us in our market within the experiential economy. We think it is a great opportunity. It is something that we have been working with over the last few years. Going back to when the first Copilot rolled out a few years ago, we were one of the 200 companies to adopt that. We have had our head of technology out on the West Coast working with all the major players in this space on protocols and making sure that we are aligned with how the market is moving, so we feel very good about our level of engagement around this. Operator: Thank you. Our next question is coming from Andrew Harte from BTIG. Your line is now live. Andrew Harte: Hey, thanks for the question. Good morning. Bruce, last quarter we talked about the Digital Wallets segment still being under construction, but it feels like in 4Q the business seems to have really accelerated. What changed there, and how should we think about it going forward? Are there any one-off benefits we should think about that happened in the fourth quarter? And then, on the merchant side, you called out the expectation for 2026 e-commerce revenue growth in the mid-teens and SMB to return to growth. Could you break out how we should think about direct sales versus ISO—any growth rates we should think about for those two, and maybe e-commerce as well—and help us with how to think about the relative margin contributions of each? Bruce Lowthers: There was really nothing in a one-off context in Q4 around the digital wallet space. We have a lot of momentum building. Earlier in 2025, we had some issues that we needed to work through as we continued to expand the use cases around our wallet, but those are normal new-product launches. You can see our vitality index is getting very strong, moving from 2% in 2022 to 16%. We will see that accelerate in 2026, so we feel very good about new products that we are bringing to market. In the payments space, it is a very complex network or ecosystem that we participate in. There are a lot of moving parts—from the networks themselves, the back-end processors, the banks that are the bank sponsors. There are a lot of components that all have to be aligned, including regulators by country, and sometimes there are starts and stops as you roll out a product, as each of them make their own determination as to how it is going to work within their institution or regulatory framework. We have worked our way through that. We feel good momentum building, and we feel like we are in a good spot for our vitality index to continue to accelerate in 2026 and ultimately 2027. Overall, really good progress in the back half of the year on our product set. I do not think we have provided historically the direct sales versus ISO segmentation. We can have Kirsten follow up with you. Overall, we feel very good about SMB returning to positive growth in 2026. It will be in line with the overall segment guidance that we have given, and we are already seeing a positive move coming into Q1. We have moved in the right direction early here in Q1. Operator: Thank you. Our next question is coming from Timothy Chiodo from UBS. Your line is now live. Timothy Chiodo: Great, thanks a lot. Slide eight had some good data around the revenue contribution in-year from the sales hires. The number was $257 million for 2025. I am assuming that the gross margin on that is high given generally the direct margins are higher on a gross margin basis. Could you give us a rough sense—how many productive, in-field salespeople were contributing to that number earlier in the year, say January 2025, and how many ended the year—so we can get a sense of the average number of salespeople that produced that in-year contribution of $257 million in revenue? And then I have a follow-up on Agenic Commerce. Are you able to share roughly what that number was, just as a reminder? And then, on Agenic Commerce, when you say that you are preparing to accept payments in that environment—supporting ACP, MCP, UCP, the various Visa and Mastercard initiatives—what do you have to do on the ground to make sure that you can receive that information through that channel and process the payment? What are some of the additional complexities to consider relative to a traditional e-commerce transaction? Is this something you think all merchant acquirers will be doing, or a more select group because of the effort required? Bruce Lowthers: I do not have the number of active enterprise salespeople in front of me. Maybe John has it there, but there has not been a tremendous amount of movement in the number of salespeople throughout the year on the enterprise sales team, so it has been relatively consistent through 2025. John Crawford: I was just going to say the same thing, Bruce. The number at the end of 2025 is very similar to the number at the end of 2024—about 132. That is just our enterprise sales team. Timothy Chiodo: Right, exactly—the ones associated with the $257 million. John Crawford: Yes. Bruce Lowthers: On Agenic Commerce, I think this creates an opportunity. I would imagine that most payment organizations get involved with these new standards as we move forward. It is extremely complex. When you think about this new, emerging commerce, it is really about elevating the experience for consumers, and through that it creates a tremendous amount of complexity. It creates personalization, which brings options and different data sets that have to be exchanged, interrogated, and acted upon. You have coordination between all kinds of embedded software—not just the schemes but also the information you are sharing with sponsor banks, additional software providers, and consumers themselves. The biggest thing you hear a lot of people talk about right now is liability management—how do we deal with the liability management of Agenic Commerce? Those things still have a long way to go before they are worked out—the governance rules. Every organization dealing with this has to set up the right governance framework from a board level and an operating level. This is not an easy product that will roll out quickly. It is going to take time. We think this is a great opportunity for us to accelerate into new verticals and create great experiences around the experience economy, but I think this is something that everyone will find a way to participate in, in some form or fashion, within our industry. I would not say this is a one- or two-player, winner-take-all situation. The industry as a whole will participate. Operator: Thank you. Next question is coming from Jamie Friedman from Susquehanna International Group. Your line is now live. Jamie Friedman: Hi. Good morning. Good finish to the year. To step back about the sales strategy, Bruce, without getting into the details of the commission per head or margin characteristics, could you share what you see as the strengths and challenges between a direct and ISO strategy? And then, you referenced the success in cross-sell between products and services on the platform. Could you elaborate on that and what a good account looks like? Is there any metric you have shared in the past about how many products each is taking, or what you target for the cross-sell opportunity? Bruce Lowthers: Good morning, Jamie, and thank you for the question. Between the ISO and direct, the direct is a much higher-margin profile, which is why we put so much energy behind that side of the sales channel. We are focusing on building the infrastructure that drives scaled sales. We feel like we have the management team in place for that and the product in place. We have a variety of products that we sell in the SMB space, but our partnership with Fiserv has really been working in the back half of the year. We have had a lot of success selling Clover, and we feel like that is a great model for us in the SMB space—not only because it provides the merchant acquiring, but also the value-added services that SMBs need to be successful. We provide that in a great form factor through Clover. Not everybody is going to want that, so we have optionality. We have other products that we use for people that are not looking for such a robust solution, but I would argue that Clover is probably the best solution in market in the U.S. for SMB today. In the ISO channel, it is a little bit different. It is us helping our partners be successful, making sure that they are trained on the products that we have, creating good second-line support for them, and helping them find ways to grow their customer base. That is what we have been focused on over the last year—how we reframe that ISO marketplace. On the SMB space, you have probably seen a lot of energy around the agent space. We have rolled out a new agent program, which we are very excited about. We like the agent program quite a bit. We can see a tremendous amount of growth coming from the agent side of the business as well, and that is a hybrid between the margin profile of the ISO and the margin profile of the direct business. Think of it as creating a mini-franchise program for independent sales agents and providing the support and training that they need to be successful. On cross-sell, this is a point of pride for us. We have seen tremendous growth. Going back to 2022 and 2023, we had virtually no cross-sell. It was a theory that we would be able to cross-sell to our existing customer base, especially in the gaming, video gaming, and gambling space. We felt those larger clients had the opportunity to take more than one product, and we focused on that. To see 40% of Q4 sales have cross-sell as part of that is remarkable from nearly zero just a few years before. Overall, it is really about focusing on those enterprise customers, getting the Digital Wallet customers to do acquiring with us—and the other way around. The big focus now is through our product organization, bringing more products to market and giving us more to go back and cross-sell into existing customers. That is what we are focused on as we move into 2026, 2027, and 2028—continuing to accelerate that vitality index with new products and services. Operator: Thank you. We have reached the end of our question-and-answer session. I would like to turn the floor back over to management for any further or closing comments. Bruce Lowthers: Yes, thank you. Just a couple of comments before we head out. As we enter 2026, we are in a very good position. We feel good about the foundation we have built. We are operating with more discipline, clear priorities, and stronger execution across the business. Our outlook is rooted in what we control—continuing to innovate, deepening relationships with our customers, and allocating capital in a way that drives sustainable value—and that is what we are focused on. I also want to take a moment to welcome our new board members. I think everybody has probably seen we added four new board members in the last month, so we are very excited about Rupert and Ruth Aquile, Pete Thompson, Karen Tamponi, and Edward joining the team. We are very excited about that. I also want to quickly thank our departing board members from CVC and congratulate them on their career journeys—Peter Rutland and Matthew Bryant, just congratulations. We are so proud of them, what they have been able to do, and we wish them all the success in their new roles as they move forward. There has been a lot of change for us in the last month, but we are incredibly excited about it as we move forward. Finally, I want to thank our employees for their continued commitment and hard work. As we start 2026, we are starting from a position of strength. For what feels like the first time, we have a clean year to start the year and feel very good about that. We are confident in our ability to build momentum that we created off of Q4. Thank you for joining us today, and we look forward to speaking with everyone next quarter. Operator: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
Operator: Ladies and gentlemen, thank you for standing by. Hello, and welcome to James River Group Holdings, Ltd. Fourth Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. I would now like to turn the conference over to Bob Zimardo, Senior Vice President of Investor Relations. Please go ahead, sir. Bob Zimardo: Thank you. Good morning, everybody, and welcome to James River Group Holdings, Ltd.'s Fourth Quarter 2025 Earnings Conference Call. A reminder that during the call, we will be making forward-looking statements that are based on current beliefs, intentions, expectations, and assumptions that are subject to various risks and uncertainties, which may cause actual results to differ materially. Such risks and uncertainties are detailed in the cautionary language regarding forward-looking statements in yesterday's earnings release, and the risk factors of our most recent Form 10-Ks and other reports and filings we have made with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements. In addition, during this presentation, we may reference non-GAAP financial measures. Please refer to our earnings press release for a reconciliation of these numbers to GAAP, a copy of which can be found on our website. Lastly, unless otherwise specified, for the reasons described in our earnings press release, all underwriting performance ratios referred to are for our continuing operations, business that is not subject to retroactive reinsurance accounting loss portfolio transfers. Thank you, and I will now turn the call over to Frank D’Orazio, Chief Executive Officer of James River Group Holdings, Ltd. Frank D’Orazio: Okay. Thanks, Bob. Good morning, everyone, and thank you for joining our call today. We are speaking to you this morning, already two months into 2026, and keenly focused on executing our business plan and strategic objectives for the year. Today, I am eager to discuss our fourth quarter and full year results with you, but just as importantly, I want to communicate our vision and share our optimism for 2026. Over the past few quarters, we have commented at length on the strides that the company has taken to focus on its wholesale-only E&S platform, maintaining a strong position in the E&S marketplace, while delivering shareholder value to our investors. I think it is fair to say that our future success will not be driven by a single factor, but rather the combination of several purposeful, prioritized initiatives working in concert to drive our future results. At a high level, I believe three primary themes both underlie and empower our ability to perform in 2026 and beyond. First, I would point to our refined risk appetite and enhanced performance monitoring that we have invested in over the last few years, which has resulted in a focus on smaller and more profitable accounts across our casualty universe, while exiting or reengineering our stance on several classes that have proven to be unprofitable to James River Group Holdings, Ltd. over time. Secondly, we will benefit from the lasting operational efficiencies and expense management focus achieved through substantial cost-saving initiatives across the business during 2025 including our redomicile to the United States. And finally, our continued engagement and deployment of our technology platform will support both of these efforts, which we expect will drive efficiencies and future profitable scale in our E&S business. Now as for execution, we began the year with a refreshed and reorganized E&S leadership team fully in place, with a compelling game plan for the implementation of our strategic vision. With respect to our redefined appetite in E&S, that work has largely been done already. We will continue to target smaller accounts that tend to have higher renewal retention ratios that we believe have proven to be more profitable for James River Group Holdings, Ltd. over the company’s 20-plus-year history. In Q4, that same focus saw our average policy size decrease by 9.6% compared to the prior-year quarter, and for the full year, the impact has been an average policy size decrease of 8.4%. While our approach tempered top line growth in the quarter and much of 2025, the prioritized focus of the organization is on profitability, and admittedly we are comfortable with that trade-off. Submission flow across our casualty-focused business remains healthy, 4% overall growth for 2025. With increased competition in a transitioning market, we are seeing a combination of both strong renewal submission activity, which we view as a sign of continued relevance with our distribution partners, and an increase in new submissions overall. Rate change remained positive at 9% for the year, consistent with 2024 and above loss trend, but clearly the level of rate increases has moderated and there is dispersion by product line and division. Expense discipline remains an essential part of our story. In the fourth quarter, we executed on our redomicile to the United States, which simplifies our corporate structure, improves tax efficiency, and gives us greater flexibility as a U.S. specialty insurer. Through the redomicile and other initiatives, we removed meaningful expenses, permanently lowering our full-year expense ratio over 1 point from 2024 and the quarterly expense ratio over 2.5 points from the first quarter, all on fairly flat net earned premium. Combined with the underwriting improvements and appetite changes we have made over the last several years, our expense discipline has meaningfully improved the company’s profitability and earnings profile. Perhaps even more importantly, deliberately taking these measures has enhanced the organization’s future ability to further leverage profitability and increase scale utilizing the investments we have made in technology, most notably the complete multiyear upgrade of our core operating systems to Guidewire that will be completed in 2026, and our recently announced partnership with Kalepa to roll out AI-enabled underwriting workbench capabilities throughout our E&S segment. The Guidewire implementation has afforded our platform a notable modernization uplift while allowing us to fully engage in the deployment of customized AI underwriting workbench technology, which we believe will enhance our underwriting efficiency in 2026 and beyond. We are using advanced data and decision support tools to enhance underwriting judgment, not replace it. These tools will help us assess risk more consistently, identify outliers earlier, and improve operating efficiency in an increasingly competitive environment. While speed in our market is a priority, the goal is not speed for its own sake. It is about better decisions made more efficiently and having a positive impact on our day-to-day underwriting workflows and quote and bind rates. We are confident that continued technology adoption will undoubtedly be a tangible differentiator for us as we optimize our SME platform and our very special wholesale-only distribution model. Moving back to our performance, our 2025 results validate the balance sheet actions of the last few years but more so position us for continued success ahead. For the full year, we delivered a 96.6% combined ratio and generated a 15.3% annualized adjusted net operating return on tangible common equity, while growing tangible common book value per share by 34%. Those outcomes were not driven by a favorable market surprise; rather, they are a result of strong execution, deliberate choices around underwriting, expenses, and risk selection. Our fourth quarter E&S combined ratio of 86% reflects that progress and represents our strongest quarterly profitability in several years. When we look at production over the course of 2025, our gross written premium was down approximately 5% overall. That said, two of our five primary divisions are driving most of that reduction, with Property down 27% year over year and Manufacturers and Contractors, one of our larger divisions, down 11% year over year. Property remains a small component of our overall focus, and our construction production has been impacted by our decision to refine our underwriting guidelines relative to tract housing exposure. Despite these dynamics, we did see growth this year across several specialty departments including Allied Health, Professional Liability, and Management Liability, and maintained flat performance in our largest division, Excess Casualty. Overall, we remain encouraged by the profitability headroom we see across even more divisions in 2026. On recent accident years, we continue to be encouraged by a lower frequency of claims and improved loss emergence but remain cautious in recognizing those trends as the book continues to mature. Importantly, we continue to operate with reserve protection in place, which has allowed us to focus on the company’s current performance profile rather than its legacy. In sum, while growth in certain lines has slowed, we believe that the trade-off has been the right one for James River Group Holdings, Ltd. Profitability, balance sheet strength, and earnings durability were priorities in 2025, and our results reflect that focus. We enter 2026 with a leadership reorganization complete, a cleaner corporate structure, improving margins, a more disciplined portfolio, and a team that is empowered by technology and positioned well to execute. The North American E&S market is vast, and although the market has been transitioning for several quarters now, we see attractive opportunities for James River Group Holdings, Ltd. in 2026, particularly with our focus on smaller insureds, with the benefit of refreshed underwriting guidelines, new technology, and the emphasis we have placed on performance monitoring. In particular, we see an opportunity to scale our small business unit as well as several underwriting departments in our specialty division like Allied Health and Professional Liability, departments that have historically been very profitable for the company. We also expect to push rate in areas like Excess Casualty and parts of our General Casualty portfolio in an effort to stay ahead of our view of loss trends, but have also identified areas across the E&S segment where we can relax rate and attempt to gain a bit of scale in those businesses. In short, we feel 2026 holds significant promise and opportunity for James River Group Holdings, Ltd. With that, I will turn it over to Sarah to walk through more details for the quarter and the year. Sarah Doran: Thank you, Frank, and good morning, everyone. James River Group Holdings, Ltd. generated very strong financial results for 2025. We reported $47,400,000 of net income, $39,600,000 of it available to common shareholders, which is a marked improvement from the $81,100,000 net loss of 2024. Operating earnings were $54,100,000, or $0.79 per diluted share, for the 2025 year. As Frank pointed out, we delivered a full-year combined ratio of 96.6% as compared to 117.6% for 2024. Our operating return on average tangible common equity was 15.3% for the year, and tangible common book value per share increased 34% to $8.94 per share. For the fourth quarter, we reported operating earnings of $16,000,000 as compared to a loss of $40,800,000 in the prior-year quarter. Annualized return on tangible common equity was 16.2%. As we review them, our results included strong underwriting income, meaningfully improved expenses, solid investment returns, as well as a tax benefit, which I will address first. As previously discussed, the one-time $14,100,000 tax benefit was driven by interest expense deduction from Bermuda to Delaware in connection with the company’s November redomicile. Importantly, we excluded that tax benefit from our operating earnings due to its one-time nature. I am drawing this important distinction as most analysts did include it in operating earnings, which distorted a comparison this quarter. If we had included it, fourth quarter operating earnings would have been $0.53 per share rather than the $0.30 per share that we reported. On top of that, annualized operating return on tangible equity would have been 19.7% for the quarter, and 19.3% for the full year. Looking ahead, alongside the expense work accomplished in 2025, we see meaningful efficiency benefits to our tax rate coming out of the redomicile, as on a go-forward basis we expect our effective tax rate to be in line with the U.S. statutory rate. Moving to underwriting results, our E&S segment generated $59,500,000 of underwriting income for the year and $19,700,000 for the quarter. Our full group results were $20,300,000 and $8,600,000 respectively. Our full-year expense ratio of 30.2% was below the 31% indication discussed earlier in the year. We have made meaningful permanent changes to our structure throughout the year. It is notable that we reduced the expense ratio in a year when we also reduced gross written premium, and more so that net earned premium was flat given our portfolio management as Frank reviewed. Throughout the year, we have created nearly $13,000,000 in expense savings and reduced G&A expenses by about 9% overall. We ended the year with 578 total employees, over 60 fewer than when we began the year. These changes were driven by continued optimization and operating efficiency gains at both operating segments. As a result, lasting changes in items including compensation expenses drove a material amount of the savings throughout the year, while rent and professional fees contributed as well. Regarding the quarter’s loss activity, we recorded $1,800,000 of net favorable impact from prior-year development. This consisted of $5,000,000 of favorable development in the E&S segment, partially offset by adverse development attributed to Specialty Admitted. Within E&S, we continue to observe declining trends in frequency for recent accident years, and we have removed meaningful exposure to accounts and risks that drove prior-year development in 2023 and prior. We start 2026 with $23,000,000 of aggregate limit on the adverse development cover for E&S, covering accident years 2010 through 2023 with no retention. During the quarter, we ceded $28,600,000 of development to the cover, largely related to Product Liability in the 2019 through 2023 years. As you know, our external opining actuary completes their work and opinion in the fourth quarter with the filing of our statutory opinions. Turning to investments, we had $21,000,000 of net investment income for the quarter, down about $1,000,000 from the previous quarter and a year when interest rates also declined generally. The quarterly result reflects outperformance within the company’s fixed income portfolio, which had about 72% of cash and invested assets, and generated meaningful income as new money yields remain in the 5% range, well above our current book yield of 4.5%. We mentioned earlier this year that we had been able to put a meaningful amount of cash to work at attractive yields and high-credit-quality securities, as we worked through our cash aggregation from year-end 2024. Still, compared to the prior-year quarter, a lower rate environment overall impacted both the bank loan portfolio and short-term cash returns. Our portfolio remains conservatively positioned with an average credit rating of A+ and duration of 3.5 years. Finally, as we close out last year and move further into 2026, we expect our performance for the year to generate a low- to mid-teens return on average tangible common equity. While we continue to prioritize the protection of our balance sheet, we feel our active portfolio management actions are largely behind us. That means that, especially given our employment of technology, we see meaningful opportunities for profitable top line growth this year. Finally, we expect to continue to be vigilant with our expenses as we look for profitable growth to bring improved scale across our E&S business especially. But with that, I would like to turn the call back over to the operator to open the line for any questions. Operator: Thank you. Quick reminder before we start the Q&A. Press number 1 on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question or your question has been answered or has been asked, please press 1 again. Thank you. We will pause for just a moment to compile our roster. We have not received any questions from any of our analysts. I will be turning the call back over to Frank D’Orazio, our CEO, for closing remarks. Frank D’Orazio: Thank you, operator, and many thanks to those of you who were able to join our call this morning. To conclude, we are pleased with how the organization performed in 2025, particularly given the competitive market we are operating in. The progress we have made reflects a continued focus on bottom line profitability, and with new leadership in place across the organization, we are motivated and encouraged to perform well in 2026. Thank you again for your time, and we look forward to speaking to you again in just a few short weeks. Operator: The meeting has now concluded. Thank you all for joining. You may now disconnect.
Operator: Greetings. Welcome to Core Scientific Fourth Quarter Fiscal Year 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Jon Charbonneau, Vice President of Investor Relations. Thank you. You may begin. Jon Charbonneau: Great. Good afternoon, and welcome to Core Scientific's Fourth Quarter and Full Year 2025 Earnings Call. Before we begin, I need to remind you that statements made on this call other than historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. and are based on our current expectations. Words such as anticipates, estimates, expects, intends and believes and similar words and expressions are intended to identify forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ substantially. For further information on these risks and uncertainties, we encourage you to review the risk factors discussed in the company's reports on Form 10-K, 10-Q and 8-K filed today with the Securities and Exchange Commission and the press release and slide presentation contained therein. The forward-looking statements we make today speak as of today only, and we do not undertake any obligation to update any such statement to reflect events or circumstances occurring after today. Today's presentation is available on our website, investors.corescientific.com. The content of this conference call contains information that is accurate as of today, March 2, 2026. Joining me today from Core Scientific are our CEO, Adam Sullivan; our Chief Operating Officer, Matt Brown; and our Chief Financial Officer, Jim Nygaard. We will conduct a question-and-answer session after management's remarks. We will now begin with remarks from Adam. Adam Sullivan: Good afternoon, everyone, and thank you for joining us. On our October 30 update call, we laid out 4 specific deliverables for this earnings call. First, we expect to sign at least one new customer, an important step towards diversifying our customer base. Second, we plan to sign one new power expansion contract at an existing site. Third, we expected to sign a new large land and power agreement. And fourth, we plan on making a financing announcement. These are the building blocks for our future growth, expanding contracted revenue, increasing our power optionality, widening our footprint and funding growth in a way that is responsible and repeatable. Before we talk about those 4 priorities, let's talk about execution. The complexity of these build-outs is enormous, and we've made incredible progress on our CoreWeave build-out. Despite challenges in the market and the evolving criteria for operating the newest generation of GPUs. This requires the deep bench that Core Scientific has to adapt to changes in real time. Matt will cover the details, but here are the facts. As of this week, we'll have energized approximately 350 megawatts of capacity, of which close to 200 megawatts are currently billing. This puts us well -- the halfway mark of the CORE contract. When we say energized, we mean power has been delivered and is generally within 90 days of billing. The natural lag between energization and billing commencement varies by site and customer requirements. Now let's put that in perspective. Last year, we energized as many megawatts as our closest publicly traded peers combined. We were building and delivering while they were still signing their first AI contracts. And going forward, to keep this simple and consistent, we'll report megawatts when they start billing. In this business, the market will always talk about demand. Investors should stay focused on what actually matters here, execution. Schedules will always move. It's easy at mile 2 of a marathon to say that you're on pace, but these are large and complex projects that expose who can actually execute. We've shown we can build, turn on capacity at scale and deliver for our customers. This leads directly into our pipeline. As this industry matures and evaluates opportunities against a more stringent criteria, we're confident we check those boxes through proven execution and true site readiness. And we're disciplined. We only sign contracts we know we can deliver on time and done right. That discipline is how we're building a durable, long-standing company, one defined by execution and known for being a great partner to our customers. That's what we set out to do, and it's exactly what we're doing today. And over time, that's what will separate us from the rest of the industry and position us to be a market leader for years to come. Now let me start by providing an update on the most visible item on our priority list, a new customer contract. We did not sign one by this call, and we are not satisfied with that. But the demand is there, and we have 2 sites under short exclusivity arrangements. We expect that this exercise will result in colocation leasing agreements in the near future. Our funnel is larger and broader than it was a few months ago, and we are in active discussions with hyperscalers, neoclouds and large enterprises. This is a timing issue, not a demand issue. While we are operating under the merger agreement, hyperscalers simply would not engage with us. Those conversations restarted following the termination, and we have made significant headway. Deals of this level are not a one meeting exercise. It's a rigorous multistep process. While hyperscalers have a longer contracting process, the path to project financing and delivery can oftentimes be more straightforward. The bottom line is we are engaged, moving through the process and competing for the right long-term opportunities. Now on neoclouds, there is meaningful demand across the industry. However, for those deals to work for us, there needs to be a strong balance sheet standing behind the contract. In most cases, that means a hyperscaler, chip manufacturer or another investment-grade guarantee. Putting that structure in place requires the due diligence of both the neocloud and investment-grade guarantee, which has more coordination and steps. And because these guarantees are new for many parties, they take time to negotiate and finalize. This is one reason we believe you've seen fewer neocloud deals announced across the industry recently. We are not going to compromise on counterparty strength because that protection matters over the life of the contract. Second, we said we plan to add new power at an existing site, and we delivered in Dalton, Georgia. Dalton will expand to 450 megawatts of total gross power capacity, including 120 megawatts of uncommitted leasable customer capacity. Our Dalton site is strategically located about 90 miles from Atlanta, sitting in the middle of an incredibly attractive demand corridor. We've been working towards this expansion with local stakeholders for over a year. And to support it, we've secured an additional 175 acres of land. This is what execution looks like, long-term planning, deep coordination and strong partnerships with the utilities and the local community. Late last year, we also increased leasable customer capacity in Pecos, Texas to 200 megawatts, an area that has seen significant traction for high-density compute. Given that demand, we're moving forward with the conversion of Pecos from Bitcoin mining to colocation. Pecos is in the Goldilocks zone for customer signing, meaning we've secured a general contractor, locked in long lead equipment and conversion work is underway with a time line to RFS within 12 months. This means Pecos is within a time frame that customers are actively trying to solve for right now. Stepping back, our strategy remains the same. We expect every megawatt in our portfolio to be dedicated to colocation within the next 3 years. Third, we delivered on signing a new large land and power agreement through our contract to acquire a major new site in Hunt County, Texas. This site represents approximately 265 acres that we expect can support roughly 430 megawatts of gross power capacity or 285 megawatts of customer leaseable capacity. This location is about 45 miles outside of Dallas in one of the fastest-growing colocation markets. We expect this to close by the end of Q1. And importantly, this site has a clear interconnection path. The ERCOT energization schedule was approved in 2024 and with power expected to begin coming online in 2027 and ramp through 2029. You've also seen the headlines around ERCOT. In our view, more discipline and transparency in that process is constructive. It helps reduce speculation and rewards companies with real sites, real plans and the ability to execute. We believe this makes our 2 leasable sites in Texas, both Hunt and Pecos, even more attractive in the market given the clarity around their ability to deliver. As we sit here today, our pipeline is approximately 1.5 gigawatts of customer leasable capacity. This number is not a speculative position. It is not inflated with load studies. It only includes real opportunities with a clear line of sight to development, existing power under contract, new sites like Hunt and available incremental power at both new and existing sites. Power matters, and we stay disciplined on it. But in the broader market, power is often treated as the bottleneck, and we think that can be overstated. In practice, the bigger constraints are often securing long lead equipment and lining up experienced general contractors and subcontractors. The reality is simple. We already have more power in our pipeline than we can build over the next several years. And fourth, on financing. Our balance sheet remains strong, and we have a variety of financing options that Jim will cover here shortly. Looking at 2026, our priorities are straightforward: diversify our customer base and execute on the CoreWeave contract. We are focused on delivery, disciplined growth and doing what we said we would do. I'll now turn it over to Matt to give an updated construction overview. Matt Brown: Thanks, Adam. Through 2025, our teams executed with intensity and precision. We stayed focused on what matters, our customers and building the infrastructure powering the Fourth Industrial Revolution. Our mission is simple: design and deliver AI factories at scale, purpose-built for accelerated computing. Every quarter felt like new architecture cycles, new GPUs, higher power densities and new cooling paradigms that created extraordinary opportunity and real complexity. We maintained operations through unprecedented weather events across multiple regions, iterated designs in real time to support the newest GPU platforms, applied lessons from prior deployments to better align infrastructure delivery with evolving customer needs. each challenge to refine the system. Each build made the thinking machine better. Now let me take a step back and frame the magnitude of what the team accomplished over the last 14 months. Alongside our design build partners, we broke ground on 5 AI factories supporting our 590-megawatt commitment to CoreWeave, 2 brownfield expansions, Denton, Texas and Marble, North Carolina; 3 greenfield campuses, Muskogee, Oklahoma, Dalton Phase 1 and Phase 2 in Georgia. In 2025, these 5 sites represented 1 million square feet of data center shell, nearly $2 billion of installed infrastructure assets, more than 5 million labor hours supported by an average of 3,300 workers on site and over $5 billion in total project investment. This is one of the most significant AI expansions underway anywhere in the world. Let's start with Texas. Our 262-megawatt 400,000 square foot Denton campus made remarkable progress. By the end of Q4, Denton delivered 67 billable megawatts across 3 buildings with roughly half the campus energized. Today, Denton North is fully operational, running production GPU workloads and represents 90 billable megawatts. At Denton South, the first 40-megawatt data hall has commenced building. And as of today, our next 41-megawatt data hall will begin the energization process. The remaining buildings on the South campus remain on track for Q2 energization with full campus completion by midyear. Denton alone currently represents approximately 130 billable megawatts, actively supporting more than 50,000 Grace Blackwell GPUs. In North Carolina, our 65-megawatt 250,000 square foot Marble data center achieved full site energization in 2025. Two of the 3 data halls were delivered by the end of the fourth quarter, representing 36 billable megawatts supporting approximately 15,000 Grace Blackwell GPUs. The third and final data hall is currently in commissioning and is expected to be delivered in the second quarter. Our customer is actively accelerating GPU deployments at the site this week. Next, at our Muskogee, Oklahoma campus, Phase 1, a 70-megawatt, 138,000 square foot data center has completed vertical construction and is now fully energized and has advanced into commissioning, remaining on track for full delivery in the second quarter. Finally, our Dalton, Georgia campus Phase 1, a 30-megawatt 52,000 square foot data center has also completed vertical construction and is now fully energized. Commissioning is progressing and preparing the facility for high-density liquid-cooled AI systems with full delivery expected in the second quarter. Then at Dalton Phase 2, a 145-megawatt 250,000 square foot data center, vertical construction is currently underway with full delivery targeted for early 2027. This facility will serve as the final AI factory supporting CoreWeave's 590-megawatt commitment. Looking ahead, I want to outline our development and go-to-market strategy, Operation Forward Observer. This strategy is straightforward, advanced development across multiple sites through the first commission data hall while simultaneously securing long lead equipment to enable rapid expansion. By progressing sites to this advanced stage before contract signing, we position our ahead of our peers and winning colocation agreements. This approach provides customers with a high degree of certainty around RFS time lines, not only for the initial delivery, but also for seamless expansion into subsequent data halls. Executing this strategy strengthens our competitive positioning, enhances our leverage in negotiating favorable terms with a broad base of creditworthy customers. Let me walk through our initial forward observer sites. First is the Hunt campus, a planned 285 leasable megawatt AI campus strategically located near the Dallas-Fort Worth market. Our development teams are actively engaged in predevelopment work to deliver the full 285 megawatts across multiple buildings with initial delivery currently planned in the second half of 2027. Next, our Pecos campus, a planned 200 leasable megawatt campus in West Texas. Our development teams are mobilized and advancing early civil work and engineering on Phase 1, which is designed to deliver 185 megawatts of leasable capacity across multiple data halls with initial delivery expected to begin in early 2027. At Dalton, Phase 3 will consist of approximately 250,000 square foot greenfield data center planned to deliver 120 megawatts of leasable capacity across multiple data halls with initial delivery targeted for the second half of 2027. The development teams are mobilized and progressing through early civil work and engineering. Finally, construction is underway on the first phase of our 30-megawatt leasable data center in Auburn, Alabama. The site remains on track for its first 10 megawatts in the second half of 2026. Auburn is designed as a Tier 3 facility with dense connectivity positioned to serve multi-tenant enterprise AI customers. Engineering, preconstruction and permitting are complete and all long lead equipment is on site. As we close, the takeaway is simple. We've built a repeatable execution engine for AI infrastructure at scale. We've delivered more than 185 meaningful billable capacity, progressed multiple campuses through energization and commissioning, reached 350 megawatts energized and expanded our development pipeline by 600 leasable megawatts to support the next wave of accelerated computing, all while continuing to enhance how we design, build and onboard customers. Entering 2026, our priorities are clear: maintain alignment with customer GPU deliveries, stay ahead of the technology curve and keep transforming megawatts in production-ready AI factories. We're proud of what the team accomplished in 2025 and even more focused on the path ahead in 2026. With that, I'll turn it over to Jim. Jim Nygaard: Thanks, Matt. 2025 was a transitional year for the company. While the vast majority of our revenue continued to come from our Bitcoin mining operations, our primary focus was on scaling the colocation business, including the ongoing build-out of capacity for CoreWeave. At the same time, mining activities continue to support the funding of the company as we progress through the transition. Although colocation revenue in 2025 was limited, we expect to reach an important inflection point in the coming months as we begin billing for additional megawatts, bringing colocation revenue to a level that will not only cover our operating costs but also drive significant margin expansion going forward. In terms of Bitcoin mining, we remain focused on operational optimization, and we'll continue to mine to cover contractual power costs. We finished the year with a very strong balance sheet with total liquidity of approximately $530 million. We also opportunistically sold just over 1,900 Bitcoin for approximately $175 million in January at materially higher prices above current market levels. At this time, we hold under 1,000 Bitcoin and expect to remain opportunistic going forward. In terms of a broader capital formation strategy, we have a full range of financing options available that we will continue to evaluate in the coming months and quarters as our needs evolve, including both sizable alternatives at the corporate level and the up to $4 billion that we can raise against our contracted capacity with CoreWeave at stabilization. These capital sources will fund investments in our pipeline sites going forward. At these sites, we will also utilize project-based financing structures with 60% to 85% advance rate on build costs, depending on customer credit quality and site characteristics. Finally, I want to address the historical restatement outlined in our 10-K filing today. In early 2025, we changed auditors to KPMG from Markham. As part of KPMG's normal audit procedures and our ongoing review of the conversion of legacy mining sites to colocation, we identified an error in our historical accounting going back to 2024 for certain property, plant and equipment that was demolished as part of those conversions. Under the historical accounting treatment, demolition costs were capitalized and existing carrying values were maintained. It was determined that these values and expenses should have been written off in certain historical periods. We have filed amended statements to correct the error. Please refer to the SEC or the Core Scientific Investor Relations website for today's filings. To clarify, there was no impact to revenue, adjusted EBITDA or our net cash flow. And while you will see a material weakness noted in our filings for the next 4 quarters, rest assured, we have taken the appropriate steps to strengthen our controls over nonroutine accounting items going forward. As we look ahead, we are incredibly excited about the trajectory of our business. The demand backdrop for high-performance infrastructure remains strong, and we've positioned Core Scientific to capitalize on that opportunity with scale, operational discipline and a clear strategic vision. We are building a differentiated data center platform with the capabilities and balance sheet strength to compete at the highest level. With an experienced and focused team, a growing pipeline and a commitment to disciplined capital allocation, we believe we are not only well positioned for the coming year, but structurally set up to create meaningful long-term value for our shareholders. With that, I'll turn the call over to the operator for questions. Operator: [Operator Instructions] Our first question is from Jon Petersen with Jefferies. Jonathan Petersen: Adam, you talked about 2 deals that are, I guess, in discussion right now. Can you give us some more details on the potential sizes of those deals, maybe what locations those might be in? And then also just kind of curious your selectivity around the type of tenants that you're -- potential tenants that you're willing to talk with right now, how important credit quality is? Adam Sullivan: Yes, happy to, and thanks for the question, John. it's helpful to look back at October 30 when we first emerged from the termination of the merger agreement. One of the things that we talked about is that we were engaged with a number of different counterparties, including neoclouds. But at the time, hyperscaler customers and certain large investment-grade counterparties were not willing to speak with us during that time, which was understandable. Where we have migrated our sales pipeline over the course of the past 4 months is we've continued or we've engaged with those large counterparties once again, which has been great to see. We're in discussions across a number of them with a number of our sites. And the one thing I'll say is today, we sit with 500 megawatts under exclusivity arrangements with a large investment-grade counterparty that we're excited to continue to advance forward, and we're really looking forward to hopefully signing one of those over the near future. Jonathan Petersen: Okay. All right. And as a follow-up, in your presentation, you list 700 megawatts of unannounced leasable customer power opportunities. Is that additional power you might get at existing land sites? Is that new land sites? How do we think about what that bucket is exactly? Adam Sullivan: Yes. That's really just a combination of both of those items. There are places where we may be waiting to sign certain extensions on power at an existing site due to certain collateral requirements until we're closer on customer signing or it might be sites that we have under exclusivity are completing due diligence, but have the confidence to be able to bring those to customer conversations as opportunities that we can present to them. Operator: Our next question is from Brett Knoblauch with Cantor Fitzgerald. Brett Knoblauch: Adam, on the new site in Hunt County, I think for the most part, the deals we've seen get signed kind of are on maybe sites with energized power today. Obviously, this isn't going to be energized until next year. Could you talk about maybe the level of confidence you have in being able to get a lease signed for that site, even though power is going to be delivered at a later date? Adam Sullivan: Yes. I mean, for us, really, it doesn't matter if the power is available today because it's going to take time for us to construct and build that site. So as long as the power and the ramp schedule that we've been provided by the utility matches with our construction schedule, that is acceptable to potential customers. So we feel great about the Hunt site. As we see it today that the site is not impacted by Senate Bill 6 or any of the recent ERCOT changes. And we've also been told that this project will not be restudied by ERCOT. So it gives us a lot of confidence in that site and that project. And we're excited about building out a large -- another large-scale campus just outside of Dallas. Brett Knoblauch: Awesome. And then maybe just as one follow-up from a demand perspective and maybe pricing perspective, it feels like the deals kind of have gotten better month after month, quarter after quarter. Are you guys seeing that on your end when you guys are having conversations with prospective tenants? Just curious kind of your thoughts for the overall pricing environment and where we're heading. Adam Sullivan: Yes. We've definitely seen pricing continue to shift. Part of that's driven by equipment prices and labor prices continuing to rise in the market. And so you're seeing a similar move in terms of leasing economics. That's one of the reasons why we launched our project with going forward with securing long-lead equipment, securing trades at sites and beginning civil work across a number of different locations was so that we could lock in economics at those sites, essentially locking in what our costs are going to look like while we're still in an environment where we're seeing lease rates continue to move higher. So that's something that's more protective from our business, but it's also an offensive approach for us to continue to attack the market and put ourselves in a position to really compete on deals with hyperscalers because they're expecting capacity delivered sub-18 months and in some cases, sub-12 months. And so for us to be able to put ourselves in those positions, we have to be making the moves that we're making today related to really securing site readiness around these new locations. Operator: Our next question is from Darren Aftahi, and he is from ROTH Capital Partners. Darren Aftahi: Two, if I may. Just on the Hunt County site, could you talk about what the rough payment was? And then I know you said it'd be energized 2027. How does that kind of energization scale up? And then a follow-up, Jim, you've made a comment about financing against the CoreWeave deal when there's "stabilization", can you just kind of enlighten us what that actually means and perhaps that 6 months after all the campuses are built out? Adam Sullivan: Yes. Thanks, Darren. So we'll be announcing further details related to the Hunt County site as that site gets to close later in this quarter. As it relates to energization, as we look at the megawatts, there are tail megawatts here, but really the energization schedule ramps alongside of what our construction schedule looks like. So we feel how that site looks today in terms of our site readiness and our ability to deliver against the ramp schedule provided by the utility. We think that puts that site in a very strong box in terms of checking a number of different criteria that both hyperscalers as well as other large offtake companies may have. So we're excited about that site and how that continues to move forward. I'll let Jim take the last question you had. Jim Nygaard: Thanks, Adam. When you look at the size of our contract with CoreWeave at 590 megawatts, it represents somewhere between $5 billion and $5.5 billion of total infrastructure. So when I say stabilization and I indicate the availability of capital up to $4 billion, I'm referencing the full stabilization of the contract relative to the asset base that we're constructing. The reality is that this is different than what is more commonly structured in project finance terms where you're borrowing the money upfront and building later. We have substantial availability under that asset base to borrow a good portion of that $4 billion today. But the scaling is quite fast because we are already at such a significant progress on the billing, we will get through the vast majority of that before the end of this year. Operator: Our next question is from Nick Giles with B. Riley Securities. Henry Hearle: This is Henry Hearle on for Nick Giles. I wanted to follow up on the new Hunt County site. Specifically, what does the site kind of look like today? And are there any preliminary permits that are needed before construction can begin? Matt Brown: Yes. I appreciate the question. So today, the site is essentially what we have to do to kind of energize that site is there's still a substation that needs to be built. And so when we look at the kind of the utility energization schedule and the construction schedule, we feel like we can start energizing that site in late '27, but that's going to require us kind of start to get the process rolling both in terms of our preconstruction activities and getting the substation going here in pretty short order. Henry Hearle: And then just on preliminary permits for construction, any color on that? Matt Brown: So we've gone through pretty much all of the EFA sort of Phase I, Phase I studies and geotechnicals for the site. We have schematic designs in place. And so we have a pretty good idea on the development strategy for that site. And it's really just a matter of finalizing design docs, getting to IFPs and then releasing those for permitting. Operator: Our next question is from George Sutton with Craig-Hallum Capital Group. George Sutton: Matt, you referenced new architectures and cooling and also new GPUs. And that sounds like a bit of a frustration. I'm just curious how -- as you're developing new sites, how much change you're seeing relative to the prior sites? Matt Brown: Yes. So the evolution, I think, on the technology stack, obviously, when you're building projects that are taking 12, 18 months to sort of get out of the ground and you're going through sort of multiple sort of technology changes and trying to adapt to those in real time. In our case, we went -- we started our very first data center with CoreWeave, started with H100. Then we quickly evolved into NVIDIA's first iteration of Grace Blackwells, NVL36s, then the NVL72s and then to -- from the GB200 platforms into the GB300 platforms and sort of having to adopt sort of the data halls kind of in flight to those technology iterations. And then recently, NVIDIA released its reference architecture for Rubin Vera (sic) [ Vera Rubin ]. And so we have a pretty good idea kind of what that sort of paradigm shift is going to start to look like. Both from a cooling and power distribution standpoint. And so I would say our teams are starting to factor those changes into our new projects. And so that we're both -- we're pretty future-proofed in terms of what we're expecting next to happen. And then in addition, the last thing I'll say, obviously, the Google and the TPUs and the TPUs becoming more prevalent into the market. And so we're also evaluating sort of how do we take our standardized base of design so that we have a very predictable, repeatable approach to putting product into the market that is both adaptable to what we're doing today and what we're expecting from NVIDIA tomorrow and these new chipsets coming to market like TPUs as those become more prevalent even outside the Google ecosystem that we're able to adapt our data halls to those shifts as well. So a lot of moving parts, a lot of things happening kind of in the technology ecosystem, but our engineering team and our development teams are, I think, are well ahead of the curve and thinking about how do we adapt to those. George Sutton: Very helpful. And then just a follow-up for Adam. You mentioned the broader and larger funnel of groups that you're talking to, but you also have suggested that we need investment-grade guarantees at some point. How broad can that funnel really be relative to those guarantees? Are you seeing that availability? Adam Sullivan: Yes. I would say we're seeing a pretty wide range, and that range has continued to expand. It's helpful to think back on 2025. Think back at the demand from both neoclouds and from AI Labs in the first half of 2025, you essentially did not really see many new deals being announced. That changed dramatically, obviously, in Q3 as guarantees were introduced into the market. We saw some deals backed by Google. And I believe over time, we're going to continue to see the evolution of these guarantees. And the ones that we've seen so far come from wide and varying sources. We listed hyperscalers chip manufacturers and other large investment-grade guarantors. And that's really what we're seeing in the market. It's a wide range. They look different all the way from debt guarantees to full lease guarantees. So they cover the full spectrum. And I think what we're going to see over 2026 is really a centralization on terms related to those guarantees and wrappers that exist in the market. So I think some of the delay and pause that you've seen in some of the neocloud and lab signing over the course of the past 3 months has more been related to what are those guarantees going to look like because I don't think they're going to look like they have in the past. So we're in the process of negotiating with certain guarantee counterparties here, and we're hopeful that these counterparties begin to centralize on the right guarantee in order for data center developers to go out and fund these developments. Operator: Our next question is from Mike Donovan with Compass Point. Michael Donovan: In prepared remarks, you stated you have more power in your pipeline than you can build over the next few years. Can you share a range of megawatts you are confident you can bring online per year? And are there any areas of concern today around supply chain or labor availability? Matt Brown: Yes. No, I appreciate the question. So -- in terms of what we think kind of an order of magnitude of what we think we can develop, a lot of that's going to be really customer-driven. We announced in our strategy that we're progressing multiple sites through the design build process into 2027. But as customers step into those, that's really going to drive what the scalability and the pace of acceleration in terms of how many megawatts we build out. In previous quarters, I think we've guided around the idea that we could, in theory, build out as much as 500 megawatts in a single calendar year. I think that's certainly possible, but that's going to require customers stepping into these projects pretty early so that we can line up the financing and line up the supply chain in order to scale those out to that sort of order of magnitude of development. So another way of saying that is our internal capacity to take on 0.5 gigawatt in a year and 18-month time horizon is we feel really comfortable with. It's really a matter of sort of lining up economics and financing to support that strategy. Hopefully, that answers your question. Operator: Our next question is from Jon Hickman with Ladenburg Thalmann. Jon Hickman: Could you elaborate on your comments like right upfront, you talked about the billing. There's a 90-day delay in when you energize and when you get the bill. Is that what you were telling us? Matt Brown: I can handle the first part of that. This is Matt. So kind of what we're referring to as we turn on power to a building, so we achieve basically our energization milestone of basically hydrating all the equipment with electrons. From that point, the -- each data hall within the building has to go through its subsequent commissioning phases, the fully commissioned test commission and go through all the integrated testing to operationalize each of those data halls within that structure. And so from the time we start energization to the time that we fully commission those data halls could roughly range into the 90-day time horizon for which we would expect to turn on revenue. Jon Hickman: Okay. And then I think I missed this number, but as of the end of the year, how many megawatts had you delivered to CoreWeave? Matt Brown: The end of calendar year '25? Jon Hickman: Yes. Matt Brown: Yes. So we had energized 213 megawatts by the end of the calendar year. And so we had fallen just slightly short of our -- 1 data hall short of our goal. But as we said in this earnings call, we have more than made our way back ahead of schedule with 350 megawatts energized and nearly 200 megawatts billing. So I think the step function of progress over the last couple of months has been pretty remarkable. Jon Hickman: And you said that kind of by midyear, you'd have it all energized? Matt Brown: By the end of -- basically going into 2027 or the early part of '27, the full contracts should be fulfilled and fully delivered to CoreWeave. Operator: Our next question is from Kevin Dede with H.C. Wainwright. Kevin Dede: Adam, can you drill in a little bit about on Alabama? It just seemed to be a little bit of an outlier at 30 megawatts. I'm just wondering how you sort of process that in this grand scheme of landing hyperscalers. Adam Sullivan: Yes, absolutely, Kevin, and thanks for the question. The 30-megawatt site in Alabama is a site that we saw early on as a location that could move quickly. We also recognize the power constraints in Georgia and recognize the low latency that Auburn had available to it. That's a site that we believe sitting here today, based on our customer conversations is a site that has interest across a number of different potential counterparties. And it's something that we're using to customers on larger contracts. I think one thing important to note is that hyperscalers are not only focused on the larger sites and larger campuses. They're also looking for backfill across certain locations to serve certain markets. And we think Alabama and Auburn specifically serves that very well. So we're excited about that project, and we're looking forward to landing a customer there as well. Kevin Dede: So do you think it sort of fits the bill for an inference type solution? And if that's the case, is Matt sort of reorganizing the way sites are constructed and fitting potential use case changes? Adam Sullivan: Yes. It's definitely a site that's going to be utilized for inference use cases. But Matt, I'll let you take it related to infrastructure design. Matt Brown: Yes. Auburn is unique from a couple of different standpoints. One, it sort of has the makings of a much more traditional multi-tenant data center, Tier 3 type facility, multiple 10,000 square foot data halls, high degrees of security and a mass amount of connectivity. So more akin to what you might find in Digital Realty or Equinix or a modern Equinix type facility. And so from that standpoint, we think we look at Auburn as really an entry point, both in terms of inferencing AI loads but also in terms of the enterprise segment as well since the enterprise segment tends to be on a smaller deal size, on smaller deal constructs with that and the needs for dense connectivity, multicarrier-neutral type environments with the type of infrastructure that's laid out there sort of makes it ideal for a number of different customer segments, both on AI and on some of the non-AI segments as well. So Auburn sort of a little unique from that standpoint. In terms of like adjusting to inferencing versus large language model sites as an example, from a technology standpoint, we don't see a ton of difference from what the density, the power density needs are between those. What we might see happening is, I think the cluster sizing might be slightly different between an inference cluster and a large language model cluster sort of driving a little bit more segmentation potentially within the campus at some point. So that's generally how -- what we think is happening today. Kevin Dede: Okay. Adam, before I get the hook, and nobody has really asked about Bitcoin mining. And I know it's not a priority, but it's still the lion's share of revenues for a little while anyway. Can you give us some insight on how you expect this year to fall out from a hash rate perspective and whether or not you're chasing down those block miners that you thought you might look at the end of last year? Adam Sullivan: Yes, absolutely. It's been interesting to watch what's happening in the mining environment, right? We're seeing hash price go to levels that have never been seen before, dipping below $0.03 was definitely something that I think folks thought might happen probably in 2027 or 2028, just given where machine efficiency is today. For us, that business is still essentially in runoff today, right? We're trying to manage our machine fleet based on what our minimum power draw requirements are across a number of different sites. And that's something that we're going to continue to operate in that mode over the course of this year. We're really just optimizing right now to ensure that we -- that we are hitting our minimum power draw requirements across our portfolio. In terms of the block units, those units are getting installed today. And so that's something that's going to help us maintain productivity across our mining portfolio and really help us hit given that a majority of our machine fleet is anywhere from 4 to 5 years old today, really allow us to continue to hit those minimum power draw requirements profitably. Kevin Dede: So where does Bitcoin mining stand at the end of this year, as you look at how your sites are converted? Adam Sullivan: It's something that's continuing to evolve, Kevin. We're building next door at many of these locations, which is why we've been acquiring additional land across our portfolio. So it really will come offline as we're transferring that power over to a data center. Operator: Our next question is from John Todaro with Needham & Company. John Todaro: Progress so far. There's been some conversations of NVIDIA backstopping a number of kind of neoclouds. It would just potentially open up the type of customers you guys could sign with by quite a bit. Just wondering if there's -- if that's starting to happen in some lease discussions. Any commentary there? Adam Sullivan: Yes. I think we're going to see all chip manufacturers start to begin to play the game of guarantees to help them secure their customers moving forward and really lock in architecture in the data center around their GPU chipset. So it's definitely something we've seen. I think it's something that's going to continue to evolve, as I noted earlier. But I would expect both hyperscalers and chip manufacturers continue to march down the path of looking to provide guarantees for both neoclouds as well as labs. John Todaro: Okay. Understood. And then beyond just kind of maybe some of the terms, but on lease rates, as we think about some of the latest-gen architecture and maybe a little bit higher CapEx spend from the data center operator side and also maybe the use case changes that we heard in your responses to Kevin, are leasing rates going to start moving quite a bit higher from historically what we've seen signed here, ranging from you guys having one of the first leases to the more recent one with -- should we expect that to start materially moving higher? Adam Sullivan: I wouldn't not necessarily say materially moving higher. I think in the market, what we've seen our lease rates move generally a bit higher in relation to what the CapEx is on those builds. So I wouldn't say that we're sitting here today, we're going to see something material outside of the bounds of what has been signed historically. But I do believe that over the course of 2026, we may see a little bit more normalization and a touch movement higher in terms of lease rates, but that's really just driven by the fact that many of the hyperscalers price their data centers based on a yield, and they know how much their basis of design costs. Operator: Our next question is from Ben Sommers from BTIG. Benjamin Sommers: So kind of building off that last question, kind of curious if you're seeing any sort of bifurcation of kind of more urban located sites and the potential pricing there, I guess, demand profile for those sites and kind of how that could potentially lead to maybe improved pricing on a site like Hunt County that's right near one of the largest data center hubs in the U.S. Adam Sullivan: Yes. I mean, as we look at Hunt, there's definitely better pricing capacity for us and for data center developers more broadly when you're within a certain latency band back to a major metropolitan market. In relation to, I would say, more urban environments, that's not necessarily a game that we play in. That is more of the Equinix Digital Realty type model. But I would expect to see our pricing for sites that are closer to major metropolitan areas. be stronger than sites that might be further away from major metro areas. So there is that pricing bifurcation and some of that is related to dual use case when you're closer to the major metropolitan area, it can be used for both LLMs as well as inference. But the other part here is also time to RFS. It's something that we talked about in our prepared remarks. Time to RFS is really the trump card for data center developers. The closer you are to RFS, the better pricing power you have. Benjamin Sommers: Awesome. Super helpful. And then just one more, if I may. Sorry if I missed this earlier. Just kind of curious on any time line around Kentucky and North Dakota on those sites and just kind of any comments on the demand for those sites for potential HPC contracts? Adam Sullivan: They're under discussions with a number of different counterparties. They're in our priority list, albeit though the projects that Matt Brown walked through earlier are our focus points today. Operator: There are no further questions at this time. That will conclude today's conference. You may disconnect your lines at this time, and have a wonderful day.
Operator: Welcome to the Harrow Health, Inc. fourth quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please note that this call may be recorded. I would like to turn the call over to Michael D. Biega, Vice President, Investor Relations and Communications. Please go ahead. Michael D. Biega: Good morning. Welcome to Harrow Health, Inc.’s fourth quarter and full year 2025 earnings conference call. My name is Michael D. Biega, Vice President of Investor Relations and Communications, and I am excited to be introducing today's call. The company's remarks may include forward-looking statements within the meaning of federal securities laws. Forward-looking statements are subject to numerous risks and uncertainties, many of which are beyond Harrow Health, Inc.’s control, including risks and uncertainties described from time to time in its SEC filings, such as the risks and uncertainties related to the company's ability to make commercially available its FDA-approved products and compounded formulations and technologies and FDA approval of certain drug candidates in a timely manner or at all. For a list and description of those risks and uncertainties, please see the Risk Factors section of the company's most recent annual report on Form 10-K filed with the Securities and Exchange Commission. Harrow Health, Inc.’s results may differ materially from those projected. Harrow Health, Inc. disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of today. Joining me on today's call are Mark L. Baum, Chief Executive Officer, Andrew R. Boll, President and Chief Financial Officer, Patrick Sullivan, Chief Commercial Officer, and Amir Shojaei, Chief Scientific Officer. With that, I would like to turn the call over to Mark. Mark. Mark L. Baum: Good morning. Thank you for joining us. Over the past five years, Harrow Health, Inc. has undergone a fundamental transformation. Harrow Health, Inc. now owns one of the largest portfolios of prescription ophthalmic products in the United States market. We have been the most prolific acquirer of ophthalmic pharmaceutical products in the U.S. market, having completed more than a half a dozen transactions, integrating over 15 branded products into our scalable commercial platform that reaches every populated county within the United States and touches with impact nearly every key ophthalmic disease segment. As you will note in my letter to stockholders, I am proud of the fact that during the last five years, hundreds of members of the Harrow Health, Inc. family, including my incredible leadership team, drove real economic accomplishment and stockholder value creation, which resulted in a more than 700% appreciation in the Harrow Health, Inc. stock price during this period. As a founder and a large Harrow Health, Inc. shareholder, I am proud of our track record and the returns we are providing to stockholders who have had the patience to let this team do its thing. This team is not done, and frankly, we have only just begun. I cannot guarantee where our stock price will be five years from now. However, I can say with nearly absolute certainty that Harrow Health, Inc. will be a larger and more powerful enterprise, positively impacting the lives of millions of Americans. I resolutely believe that then we will be selling more of every one of our key products like VEVYE, IHEEZO, and TRIESENCE. I predict we will also sell many more units of other products that many stockholders have not thought too much about. I also predict that we will complete compelling new acquisitions of products and or businesses structured to appropriately balance risk and potential reward. Finally, I can say confidently that one or two product candidates from our recent Melt Pharmaceuticals acquisition, specifically what we are now calling G-MELT and YOCHIL, will be approved for marketing. That if they are coded and reimbursed in the way that we expect, they will make massive improvements to the standard of care in ocular surgery and more generally in the lives of so many Americans in need of an alternative to IV and opioid-based medicaments for sedation and anxiety. It is a very large market. Of course, these assets, as I reflected in my letter to stockholders, should in due course, become our largest revenue products. My bet is that if we do all of that and maybe even a little bit more, patient stockholders should be handsomely rewarded. I invite you to join me for the ride because our best days are absolutely ahead of us. Now, let me provide a bit of color on our business as things stand today. We are entering the final phase of our current 5-year plan, and we are doing so with momentum. The portfolio we have assembled, the pipeline we have advanced, and the commercial infrastructure we have built were designed for scale. This is not a single product company or a single product story. We are meaningfully diversified. Our commercial platform is built for durability, operating leverage, and sustained growth. Today, Harrow Health, Inc. operates as one Harrow Health, Inc., one strategy, one commercial engine, one unified organization. We have constructed a diversified ophthalmic franchise focused on expanding patient access, improving affordability, and delivering strong clinical outcomes. In the fourth quarter of 2025, we saw clear validation of that strategy. For the first time, all of our core growth drivers accelerated simultaneously. That alignment reinforces our confidence and supports our goal of exceeding $250 million in quarterly revenue by the end of 2027. Financially, 2025 was a strong year. We delivered great top-line growth and demonstrated operating leverage, underscoring the earnings power embedded in our model as revenue scales. Let me briefly highlight some of the key drivers. VEVYE is positioned for revenue acceleration and increasing new prescription velocity. Expanded payer coverage is now in effect. We are doubling the VEVYE sales force to ensure that we fully capture the opportunity to build a product with peak sales potential of multiples of last year's numbers. More sales professionals will equal more prescriptions. This should correlate to increasing profitable revenue growth. Our data backs this up. With covered patients averaging approximately 9 refills annually, effectively a full year of therapy, this reinforces the durability of the demand for VEVYE. As access continues to expand and commercial intensity increases, we expect total prescription growth to continue this year and for many years to come as VEVYE finally becomes a 9-figure revenue product this year. IHEEZO delivered a record quarter driven by real traction in a growing number of retina specialists' offices. We have broadened our addressable market by focusing on in-office procedures, effectively increasing our procedure volume TAM by more than 2.5 million units annually. We are also expecting IHEEZO price improvements to begin in the second half of this year as we release a new retina-focused packaging format. At around the same time, we expect retina-specific data readouts from studies underway to show from a patient's perspective the difference between IHEEZO and legacy anesthesia modalities. This is only going to help us, we believe. We have to see what the data says. These 2026 activities should further enhance financial performance. With multiple growth levers now in place, IHEEZO represents a durable and critical part of our long-term strategy. TRIESENCE generated its strongest quarter since relaunch, reflecting accelerating adoption in the very large ocular inflammation market. Based on what I am seeing this quarter, with new account trials starting in numerous potentially very large accounts and growing confidence in market access, I have asked our talent team to at least double the dedicated TRIESENCE sales force to deepen penetration in what remains a very large market. Momentum here is early, but it looks meaningful. Because of the origin of the revenue, it is likely highly sustainable. It is not easy to get a product like TRIESENCE added to a surgical treatment protocol. Once you do, and I have seen this happen many times over the years, if the product delivers exceptional outcomes, as TRIESENCE appears to be doing, then surgeons are often reticent to change. This is what I mean by the sustainability of the TRIESENCE momentum. On a related topic, for years, I have spoken about tracking the migration of elite sales representatives. This is nearly a surefire leading indicator of future success. You see, sales reps go where they can win, where they can make money, and provide for themselves and their families. Well, the word is getting out that TRIESENCE is on the move. These elite reps from around the country are hearing about our commitment to this product, and they know they will also be selling the G-MELT too if they can make it onto our team. A lot of folks want to get in on the G-MELT, believe me. So we are seeing a mushrooming inbound interest from some of the most prolific ocular surgery pharmaceutical representatives who want to take these coveted surgical positions at Harrow Health, Inc. on the TRIESENCE team. This is really good news. Now on to our rare specialty and compounded products. Behind the scenes, believe it or not, we have been planning a few positive surprises for our stockholders. From the part of our portfolio they would probably least expect. Yes, our rare specialty and compounded products. This portfolio is now under new sales leadership, and it will benefit from new resources we are providing to finally wring out the value we expect from this exciting and unique group of products. As I discussed more in my letter to stockholders, there are three products from within this portfolio that our team has been quietly doing great work on. One product is awaiting a coding decision from CMS, which we expect in April. There are no guarantees, but if this comes through next month, it will open up a very nice, attractive market for this product. Regarding another product in this portfolio, we have a key study underway that we expect to read out later this year. Our entire team is super excited about this opportunity. This is a big one. Based on what we know about this product, we expect the study to be able to highlight the opportunity that we have uncovered, and once the data is announced, it should fuel opening up, as I said, a very sizable and compelling market for this product. In fact, we are also simultaneously working out supply chain issues to ensure that if things work out the way we expect, that we will be able to supply the market adequately given the historically lower volumes that this product has required. There is a third product that we expect to be revived from this portfolio to also fill yet another nice but happens to be a smaller market opportunity, but a good one nevertheless. The bottom line is that I believe our stockholders may be positively surprised throughout the year and into next year as our plans for this portfolio are revealed. A few final points. In 2026, we will also launch two important products BYQLOVI and BYOOVIZ, further expanding our retina and specialty footprint and leveraging our commercial platform. Beyond commercialization, our pipeline continues to advance, and Amir will shortly speak about the great work he and his team are doing. In summary, Harrow Health, Inc. is a diversified ophthalmic platform with multiple accelerating growth drivers and increasing operating leverage. We have demonstrated the ability to build, integrate, and grow, and generate a heck of a great return for our patient stockholders as our five-year track record demonstrates. As I said at the outset, I really believe that we are still in the early innings of our growth and stockholder value creation story. With that said, I will turn it over to Andrew. Andrew? Andrew R. Boll: Good morning, everyone. I will begin with our fourth quarter and full year 2025 financial results. For the fourth quarter of 2025, consolidated revenues were $89.1 million, representing 33% year-over-year growth. For the full year, revenue was $272 million, up 36% versus 2024. The growth reflected continued strength across our branded portfolio and expanding commercial execution, particularly in the second half of the year. Adjusted EBITDA was $24.2 million in Q4 and $61.9 million for the full year, reflecting 54% year-over-year growth. This margin expansion demonstrates the operating leverage in our model as revenue scales faster than costs, even as we continue investing in commercialization and R&D. In addition, during 2025, we generated just under $44 million of cash from operations, which helped us end the year with $72.9 million in cash and cash equivalents. Overall, 2025 was a year of strong execution, improving profitability and disciplined capital allocation. Moving on to our core growth drivers. Starting with BYOOVIZ, fourth quarter revenues were $25.9 million, up 14% sequentially, bringing full-year revenue to $88.7 million, a 216% increase over 2024. Growth reflects expanding demand. IHEEZO generated $35.9 million in Q4 and $81.3 million for the full year, representing 64% quarter-over-quarter growth and 65% year-over-year growth. Performance was driven by increasing penetration across new and existing accounts, particularly in Retina. Based on the momentum we are seeing with TRIESENCE and other modest investments we intend to make in this franchise, we are disclosing this revenue separately for the first time. TRIESENCE fourth quarter revenue was $5.1 million, a 36% increase from the third quarter, totaling $9.9 million for the year, a 193% increase from 2024. The growth was primarily driven by accelerating adoption of TRIESENCE and ocular inflammation. Our rare specialty and compounded portfolio generated $22.2 million in Q4 and $92.3 million for the full year. The temporary compounding inventory constraint discussed last quarter is expected to be resolved in the coming weeks, and we expect inventory levels to normalize near the end of the first quarter. We do not anticipate a recurrence of this issue. For 2026, we are approaching guidance with greater transparency and structure and are committed to providing greater insight into the seasonality of our business and how we expect performance to build throughout the year. We expect full year 2026 revenue between $350 million and $365 million. For modeling purposes, we currently expect first half revenue in the range of $133 million to $153 million, and the second half revenue in the range of $203 million to $226 million, reflecting the expected phasing of demand, channel dynamics, and launch timing across the year. Adjusted EBITDA is expected to be between $80 million to $100 million for the full year, with the majority of the EBITDA generated in the second half of 2026. As in prior years, the second half is expected to be stronger, with that weighting being more pronounced in 2026. Historically, quarterly revenue patterns have been consistent, though 2026 will be slightly more second-half weighted. Like the past two years, the first quarter is expected to be our lowest revenue quarter, primarily due to stocking activity from the fourth quarter and insurance resets and a higher concentration of high-deductible plans. We estimated fourth quarter demand for IHEEZO resulted in approximately one and a half quarters of incremental inventory being built across the channel. That inventory is expected to be drawn down largely during Q1. As a result, although we are seeing demand grow for IHEEZO similar to the first quarter of 2025, because we are drawing down on Q4 2025 inventory within the channel, we do not anticipate meaningful IHEEZO revenue in the first quarter. VEVYE entered the year with expanded coverage effective January 1. While we expect improved access will increasingly drive prescription growth throughout the year, the first quarter typically reflects an increased mix of high-deductible plans, which creates near-term pressure for VEVYE and our branded portfolio. The financial impact of the coverage win will start to be more pronounced as the year progresses and once our expanded sales force is fully deployed. We typically operate with a disciplined, methodical approach to spend, and we have done that for a reason: to protect profitability, derive ROI, and preserve strong cash flow. This year, however, we see a clear opportunity to maintain that discipline while increasing the pace and level of investment to expand our revenue base for years to come. As a result, we expect SG&A to increase to approximately $185 million-$205 million from the year as we expand our sales force across our major products and categories, including VEVYE and TRIESENCE, and prepare to support the launches of BYOOVIZ and BYQLOVI. We plan to add roughly 100 new sales roles in the first half of the year, and we will pair that with increased promotional and marketing investment to drive awareness, adoption, and sustained growth in the back half of the year and into 2027. Importantly, even as we invest, we will continue to manage expenses with a careful eye toward profitability and cash flow, holding ourselves accountable to returns and managing the spend accordingly. We also expect R&D expenses to increase this year to approximately $30 million-$35 million as we complete studies required for the product candidates NDA submissions and as we invest in post-market studies that Amir will discuss later. Efforts we believe can support near and long-term growth across key products. Looking to the second quarter, we expect IHEEZO will lose pass-through status effective April 1, impacting the ASC market. Approximately 30% of 2025 units were generated in the ASC setting. We have been preparing for this transition through our retina pivot in 2024 and the recently announced in-office expansion strategy, which, as Mark said, added about 2.5 million annual procedures to our TAM. The continued growth in retina and the in-office utilization is expected to offset and ultimately exceed the ASC impact. We also plan to launch BYQLOVI in Q2, which will support incremental growth in our specialty portfolio. Looking at the third quarter. We typically experience some late summer softness due to both doctors, staff, and patients going on vacations. The third quarter will include the first full quarter of BYOOVIZ revenue contribution, which should provide incremental growth. We are anticipating that IHEEZO will also catch some of the additional tailwind as a complementary product to BYOOVIZ. Beginning in the third quarter, we expect to start to see the impact of our expanded and fully deployed VEVYE and TRIESENCE sales force driving growth for both products. Starting in the third quarter, we are expecting a pricing improvement for IHEEZO to go into effect. When you combine that with the continued retina growth and the in-office expansion, we expect IHEEZO to have a strong second half of 2026 and position us very well for 2027. The fourth quarter should remain our strongest quarter, driven by demand patterns, stocking activity, and patients reaching out-of-pocket maximums. Finally, as Mark discussed in his letter, as we intentionally transition compounded volume to FDA-approved branded alternatives, shifting revenue into our specialty portfolio, we expect compounded revenue to be approximately $60 million-$65 million for the full year, with Q1 the softest quarter as we exit the final stages of the inventory shortage. In summary, we expect a softer first half as we work through channel inventory, absorb the ASC transition, and navigate seasonal deductible dynamics. In the second half, we expect meaningful acceleration driven by a fully deployed VEVYE and TRIESENCE sales force, contributions from BYOOVIZ and BYQLOVI, improved IHEEZO pricing, expanding retina and in-office adoption, and incremental contribution from specialty products. I will turn the call over to Pat Sullivan. Patrick Sullivan: Thank you, Andrew. Starting with VEVYE, we exited 2025 with strong fourth quarter momentum at a clear inflection point as expanded coverage went live. Despite limited coverage throughout 2025, we delivered a 115% increase in prescribers writing VEVYE, underscoring strong underlying demand for the product. There is so much more opportunity for VEVYE growth in the large and growing U.S. dry eye category. With broader coverage now in place for our sales force expansion underway, we expect prescriber growth to continue. Consistent with the data shared in 2024, covered patients average approximately nine refills in 2025, effectively a full year of therapy. That level of persistence underscores VEVYE's differentiated clinical profile, rapid onset, sustained efficacy, and comfortable on-eye experience without the stinging and burning commonly associated with other treatments. The bottom line, though, is that we do not believe that any product in the category has this level of refill persistence. Since coverage expansion began, we have seen acceleration in new prescription trends despite navigating a challenging period with insurance benefits resetting and high deductible plans. We expect continued improvement as the year progresses. To fully capitalize on this opportunity, we remain on track to double the Veeva sales force by Memorial Day, expanding our Veeva presence among eye care professionals to drive higher prescription volume through 2026. Turning to IHEEZO. This product materially outperformed our expectations in 2025, with an impressive 56% growth in unit demand year-over-year. Growth was driven by our expansion in the new retina practices and deeper utilization within existing accounts. Ordering accounts increased 49% year-over-year. Retina specialists represented approximately 70% of fourth quarter unit volume, underscoring where adoption and clinical traction are strongest. Importantly, we believe we are still in the early innings of penetration with significant untapped market opportunity ahead as we continue to expand utilization and drive broader adoption. Looking ahead, in the second half of 2026, we expect a net price improvement, which we expect will further enhance the product's revenue and overall financial profile. Importantly, this comes as we prepare to launch BYOOVIZ in mid-2026, further accelerating IHEEZO's expansion into new retina accounts while deepening penetration within our existing customer base. We are also expanding IHEEZO into the office-based setting to broad utilization beyond retina. This initiative targets more than 2.5 million anesthesia relevant procedures that already benefit from established reimbursement pathways, reducing access friction. Turning to TRIESENCE, we delivered a record quarter driven by accelerating momentum in ocular inflammation and continued strength in retina. Despite formally launching in market on October 1, we saw a good portion of the Q4 unit volume come from ocular surgery accounts. We expect this large market will drive the majority of new volume going forward. Nearly half of the fourth quarter ordering accounts were new and helped drive quarter-over-quarter growth in unit volume. To extend this trajectory, we are in the process of doubling the dedicated TRIESENCE sales force. Based on current trends, we see substantial runway for continued growth in 2026 and beyond. Finally, our rare specialty and compounded portfolio performance rebounded in the fourth quarter as new commercial leadership took hold and execution improved. While we are encouraged by that momentum, I believe there is substantial room to grow this portfolio of everyday workforce products from current share levels. We are implementing several revenue generating initiatives tied to these assets, which we expect to detail later this year. In parallel, as Mark discussed in his letter, we are focused on converting compounded utilization into FDA-approved branded products through the launch of PharmaPack Max and PharmaPack Prime, further strengthening the long-term revenue profile of this segment. In closing, each of our core growth drivers accelerated in the fourth quarter, and we entered 2026 with clear commercial momentum. We are scaling the organization to support the trajectory, doubling the sales forces behind VEVYE and TRIESENCE, expanding IHEEZO into the office-based setting, and preparing for important launches this year. With strengthened infrastructure, expanding access, and a diversified ophthalmic portfolio, we believe we are well positioned to drive sustained growth and delivering increased value to patients and shareholders. With that, I will turn it over to Amir. Amir Shojaei: Thanks, Pat. I would like to turn to our pipeline, which we believe represents a compelling long-term value driver for Harrow Health, Inc. The next phase of growth is highly focused and capital efficient. We are advancing clinically relevant programs aligned with clear unmet needs in ophthalmology and tightly integrated with our commercial infrastructure and regulatory expertise. While there are several programs on this slide and more that you do not know about yet, I am only going to focus today on G-MELT, formerly known as MELT-300, and the ongoing IHEEZO study. G-MELT exemplifies our strategy. It is a fully opioid-free and IV-sparing procedural sedation candidate that has the potential to redefine that standard of care, and I believe has the potential to become our largest product. Today, procedural sedation often requires IV access and uses opioid-based regimens, introducing complexity, staffing burden, monitoring requirements, and longer recovery times. G-MELT has the potential to simplify that model. From a development perspective, we initiated the remaining pharmacokinetic work earlier this year and are advancing CMC activities with our CDMO partner. We remain on track for an NDA submission in early 2027 while continuing to evaluate opportunities to accelerate timelines. We view G-MELT as platform-level upside, a differentiated sedation solution with the potential to broadly improve procedural efficiency and create meaningful long-term value. In the ophthalmic market and eventually beyond. Pipeline value also comes from expanding the evidence base for marketed products, including IHEEZO. I am amazed that our team has been so successful with IHEEZO on retina, given its supporting data was in cataract surgery. I know from my experience developing back of the eye products that retina professionals who are the primary users of IHEEZO want to see specific data based on procedures they need IHEEZO for, namely intravitreal injections. We are investing in clinical data generation to support adoption strength and differentiation and reinforce long-term positioning with both clinicians and payers. While this slide highlights IHEEZO, similar work is underway across the portfolio. High quality evidence builds clinical confidence, drives utilization, and supports sustained reinvestment in the franchise. For IHEEZO, we are sponsoring multiple complementary studies in intravitreal injection procedures. The first and most near-term data is an investigator-initiated randomized trial led by Dr. Sabin Dang comparing IHEEZO to standard anesthetic approaches, evaluating pain and ocular symptoms with data expected at ASRS this year in July. You can see the quote he provided us with on the bottom left of the slide. For our own Harrow Health, Inc.-sponsored IHEEZO study, my team has put together a Phase 4 multicenter randomized trial assessing patient-reported pain and safety across approximately 240 patients. We initiated the study in the first quarter of 2026 under the IND and expect to have data available by the end of 2026. Together, these studies are designed to generate clinically meaningful practice-relevant evidence that supports further and more broad-based adoption, reinforcing IHEEZO as a durable long-term growth driver. In summary, Harrow Health, Inc.’s pipeline is focused, efficient, and impactful. It complements our commercial momentum, expands our addressable markets, and creates multiple pathways for long-term value creation. We are building not just individual products, but a sustainable innovation engine that positions Harrow Health, Inc. for continued growth. With that, I will turn it over for questions. Operator: Thank you. We will now open for questions. If you would like to ask a question, please press star 1 1. If your question has been answered and you would like to remove yourself from the queue, please press star 1 1 again. Our first question comes from Chase Richard Knickerbocker with Craig-Hallum. Your line is open. Chase Richard Knickerbocker: Good morning, team. Appreciate the candid thoughts in the shareholder letter and thanks for taking the questions here. Mark, you kind of mentioned in the letter that you expect, you know, kind of continued commercial growth and commercial mix improvement for VVI kind of through the year. What have you seen so far from a commercial mix perspective in Q1? Can you walk us through what your ASP assumptions or direction of ASP for VVI is in the 2026 guide kind of versus volume? Thanks. Mark L. Baum: Yeah. Regarding ASP, I think I will answer the second question first. On ASP and net pricing, you know, the only comment that we have made and that we intend to make is regarding the buoyancy and the slight uptick in ASP, which I had forecasted probably a quarter or two late. Nevertheless, as I said in the letter to stockholders, we saw that direction of travel and we eventually got there. With a more sustainable and buoyant net pricing for VVI, that coupled with some of the things that we are seeing on the commercial side with this new coverage, we have initiated this program to more than double the VVI sales force. In terms of the build and what we are seeing on the ground today for VEVYE, as I said also in the letter to stockholders, even in the fourth quarter, we started to see a little bit of momentum build. I think I have said in the past that CVS had actually sent out letters to thousands and thousands of eyecare professionals around the United States alerting them to the new positioning, the preferred positioning for VEVYE on their formulary. That alone, I think began the positive momentum that we are also seeing a little bit in the first quarter. What I can say regarding the first quarter is that typically it is a weaker period and we are quite surprised with, you know, the new prescription volumes that we are seeing today relative to what we thought we would see, which is to say that the new prescription volumes are meaningfully better than what we thought we would be receiving at this point in the year. We expect that to build throughout the year. As I said in my prepared remarks, we have data that demonstrates very clearly that more reps in the field for this particular product, given the persistence of the product and the market interest in the product, yields more prescriptions. For us, building those new prescriptions, ultimately leads to more and more total prescriptions and more revenue. We are bent towards building volume in VEVYE, and that is how we are set up for this year, and that is what you should expect. Chase Richard Knickerbocker: Helpful, Mark. Just for my second question, another multipart just on the TRIESENCE Phase 3 cataract announced this morning. You know, obviously a large potential volume opportunity. Just a couple of questions to help us understand the magnitude. What % of the cataract market do you think is kind of the sweet spot for TRIESENCE as it relates to kind of the value prop versus the multi-drop regimens that are pretty pervasive today? How should investors kind of think about the TAM expansion from this label expansion kind of within cataract for TRIESENCE? Second, I think investors often have kind of question on duration of opportunity with pass-through products in the ASC. Can you just remind us or discuss the unique aspects of TRIESENCE that may allow for longer, term payment outside the bundle or how you plan to approach pricing there? Mark L. Baum: Sure. you know, once again, I will take the second question, the second part first. In terms of reimbursement for the product, TRIESENCE has a very unique label in that it is both used in the office setting of care, and it is also used in the hospital and outpatient department setting of care. As a result of that, and I do not want to go into the nuances of reimbursement policy, but we believe that TRIESENCE will not be limited by a TPT or a temporary pass-through period. Regarding the first part of the question, in terms of what the TAM expansion might be for this study that, you know, Amir just received clearance on, I believe, yesterday. I go back to, I think, another comment that I made in my prepared remarks, and that is that our vision for cataract surgery is that in the future, patients in the United States should have an IV-free, opioid-free, and even an eye drop-free procedure. That is what I would want my mother to have. That is what I would want anyone that I love to have. Not to have to put eye drops in their eye multiple times per day, multiple different eye drop bottles. That is assuming you are using an FDA-approved product, of course. That should be the ideal, and that is what we are working towards. That is what the G-MELT is about, and that is what this expansion with TRIESENCE is about. It is about putting power in the hands of the surgeon to deliver the anti-inflammatory into the eye so that the patient does not need to administer these post-surgical eye drops. What is interesting is, anecdotally, what we see is that for patients who are using this on label, which is a subsegment of the cataract surgery population, it is those patients who really cannot administer eye drops, who have other comorbidities. What we decided to do, because those patients are having such exceptional results, is to invest in expanding the label so that all cataract surgery patients have access to this therapy. What is terrific is, as I said, we have got reimbursement. We have an exceptional clinical outcome. With this amazing study that Amir and his team are going to execute, we are going to have a very broad-based label that will finally give cataract surgeons access to an easy-to-administer, highly efficacious post-cataract surgery anti-inflammatory that they themselves can inject. Here is the best thing for consumers, for patients: It has the lowest out-of-pocket of any injectable steroid at around $37 per unit. It is affordable, it is accessible, it is highly efficacious, and we are going to invest for a very small amount of money in a study that will significantly expand the number of patients who will have access to it. In the United States, by the time this data reads out, that should be about 5 million procedures annually. It is a very large market opportunity. As I have said for a couple of years, you know, TRIESENCE is a slow grower. We have got a lot to prove there for sure, but this is a product that in the next couple of years is gonna be a meaningful value driver for our stockholders. Chase Richard Knickerbocker: Very helpful, Mark. Thank you very much. Operator: Thank you. Our next question comes from Timur Ivannikov with Cantor Fitzgerald. Your line is open. Timur Ivannikov: Yes. Hi, thank you. This is Timur Ivannikov on for Steven Seedhouse. First on IHEEZO, I think you mentioned price improvements in the second half of 2026. Could you clarify, is that a price improvement from Q2 2026 or from Q4 2025? Do you expect Q2 2026 ASP to be significantly lower? Thank you. Mark L. Baum: Andrew, you wanna take that? Andrew R. Boll: Yeah. I just to try to make sure I answer the question correctly. We expect by the time we get to Q3 of 2026, pricing for IHEEZO will be better than what it was in 2025 and in the first part of 2026. Timur Ivannikov: Okay. Okay, got it. Second question is on the TRIESENCE cataract trial design. I just wanted to understand the trial a little better. I think you mentioned the trial design versus placebo. Could you talk about the use of anti-inflammatory eye droplets in both groups? I mean, are you allowed to, you know, dose the droplets in the treatment arm and the control arm? Thank you. Mark L. Baum: Amir, can you handle that one? Amir Shojaei: Yeah. Hi. I think the protocol design is pretty clear. We are gonna have a control arm which will not get the TRIESENCE. What we do have rescue criteria already built in. Rescue criteria would allow drops again, per protocol. Timur Ivannikov: Okay. Thank you. Appreciate that. Operator: Thank you. Our next question comes from Mayank Mamtani with B. Riley Securities. Your line is open. Mayank Mamtani: Yes. Good morning, team. Thanks for taking the questions and appreciate the helpful go forward guidance framework. On VEVYE, NRX improving and the commercial mix also improving. Mark, are you able to share with us any end of year or second half loaded kind of market share targets that you may have so, you know, we can understand, you know, the growth in the market? Obviously, you know, multiple companies investing here on the penetration side, but also want to understand how you are thinking about share gains in both the cash pay and also obviously the commercial mix markets. I have a follow-up on IHEEZO. Mark L. Baum: Sure. Yeah. We have three goals for VEVYE. First of all, I just want to say that the dry eye market in the U.S. is, Pat said, a very large market. We believe it still continues to be under-penetrated, and we continue to see data that demonstrates that there are large segments of the dry eye patient population that are receiving products on a monthly basis that burn and sting, cause pain, sneeze. I mean, the list of these effects are too long. When we see that patients are getting access to these non-optimal therapies, for whatever reason, whether it is coverage or, they are just not aware of VEVYE, we see that as opportunity, to convert those patients to a therapy that does not burn and sting and that has all of the positive benefits that VEVYE offers, including now these enhanced coverage metrics. In terms of what our goals are, to be clear, the first goal is we believe VEVYE will be the number one cyclosporine in the U.S. market. Cyclosporine is the most trusted active ingredient in, the dry eye market, and we aim to be the number one cyclosporine. Second to that, we believe we can capture, the anti-inflammatory market, so any product that actually has an active ingredient in it that would be an anti-inflammatory. We believe all forms of dry eye disease, you know, we do not care which one you choose, have an inflammatory component to them. We aim to be secondarily the number one anti-inflammatory. Eventually, and it is not gonna happen overnight, we think we have the opportunity with this particular product to be the number one most prescribed dry eye product. For the last couple of years, our competition has had a sales organization, you know, that even the most inferior products in the market have had much larger sales organizations than we have had. We are now, as I said, more than doubling our sales force. I think we are more than halfway there. I am actually surprised. The talent team is doing a great job. There is just a lot of people that wanna join this Maria's team, sell VEVYE. In terms of specific market share percentages, we are not giving those goals. I think to be the number one cyclosporine in the market, we probably need to have just north of 20% market share. That gives you a sense of what we think is achievable. By the way, in many markets we are already there. The problem is that we touched historically so few markets with a sales organization of just under 50 people, that even if you have better than 20% market share in the greater Cincinnati area, which happens to be the case, you... There are many other markets where you just simply do not have that level of market share. With this enhanced sales force now, numbering close to about 100, we will touch more markets. We will increase our market share, I believe, and we will get closer and closer to that goal of being the number one cyclosporine. Pat, do you want to add to that at all? Patrick Sullivan: Thanks, Mark. I think, you know, one of the things we are most optimistic about, as we stated in our earnings, is the increase in writing that we see. We saw 115% growth in our writing. I think as Mark mentioned, the feedback that we receive from our eye care professionals and from their patients is extremely positive around the fact that VEVYE uniquely manages inflammation, how rapid it works, and at the same time, is the unique tolerability profile. We are extremely encouraged in our next phase of expansion to cover a much larger portion of the market and increase VEVYE's presence to really grow this product to be the number one cyclosporine. Mark, we are well on our way to building our next phase of growth for VEVYE. Mayank Mamtani: On IHEEZO, obviously a lot going on here. ASC pass-through status expiration, but also price per unit improvement that you mentioned. There is also some data generation activity you noted at ASRS conference middle of the year. Was just curious, you know, to contextualize its contribution to the guidance. Are you also thinking like VEVYE, this is a 9-digit revenue contributor for this year, or is it more a reasonable target for next year? Mark L. Baum: Yeah, I do not wanna comment on the revenues for that product. I think the only product we have given guidance on specifically is VEVYE, which is clearly, you know, on the road to nine figures. What I will tell you is this. Just as a reminder, in 2024, we had absolutely zero retina presence. We did not have a retina sales force. We did not have any products in that market. Only a couple of years ago did we hire that sales organization. In really August of 2024, we began what we call the Retina Pivot, where we were able to attract great people from much larger companies that had tremendous backgrounds in retina, and we built this organization. I remember going to ASRS in Stockholm. Nobody knew who Harrow Health, Inc. was. We had no presence in that market. It is a very tight community, the retina community. What I can tell you is over the last year and a half, two years or so, I think if you go to retina professionals now and ask them if they know who Harrow Health, Inc. is, they really know who Harrow Health, Inc. is. I have to say another thing about IHEEZO specifically, because it is amazing what Ali and her team have done. Taking a product where the clinical studies supporting the NDA were in cataract surgery, and they have been able to adapt that data to the intravitreal injection market now with more than 70% of the unit volume for IHEEZO in the retina market. What is really exciting is what Amir talked about with the DANG study. What Ali has wanted for well over a year, we have had numerous conversations, is specific data related to the performance of IHEEZO in the intravitreal injection procedure. We had all this anecdotal information, you know, doctors would tell us how it performed. You know, some doctors had other benefits that they experienced from the product, including efficiency in their workflow. What I think you are gonna see in the middle of the year, finally, for Ali and her team, is a data set that will demonstrate the real difference between IHEEZO and these legacy modes of providing these patients with anesthesia for these intravitreal injections. I have to tell you, if you are a patient getting these injections, the anesthesia and pain control really matters. We think we have a product, at least anecdotally, we have received tremendous information from accounts that use this product about its performance. In the middle of the year at ASRS, and he got a late breaker, by the way. I mean, it is not easy to get these. You know, he is going to present this data, and I think that is going to fuel significant demand in the retina market for this product. In terms of how IHEEZO fits into our overall guide this year and certainly in 2027, depending on how this data comes out, this is an opportunity, I think, to significantly improve the unit volume demand for IHEEZO. As Andrew said, that coupled with this new packaging format that is specifically for retina and a meaningfully improved price, you know, I think that by the end of next year, you know, you are gonna hopefully be surprised at what we think we can generate from this particular product. Mayank Mamtani: Thank you, Mark. Lastly, very quickly, the OpEx expansion, you know, you are seeing your R&D was higher in fourth quarter. Is it sort of a first half loaded kind of dynamic? Is it a steady state OpEx spend, Andrew, you are trying to get at some point this year? Thanks for taking my question. Mark L. Baum: Thank you, Mike. Andrew, do you wanna tackle the OpEx? Andrew R. Boll: Yeah, absolutely. Thanks, Mike. I want to be sure to note in Q4, in the P&L, there is an $8.5 million charge for acquired and processed R&D, which was associated with the Melt acquisition. Those are upfront costs and some of the transaction costs associated with the deal. None of that acquisition cost was capitalized. It all ran through the P&L and ran through R&D according to GAAP rules. We also did not back it out or add it back in, I should say, to the EBITDA number for 2024. Kind of looking forward. Mark L. Baum: The adjusted. Andrew R. Boll: The adjusted EBITDA, pardon. Mark L. Baum: Go ahead. Andrew R. Boll: The- Mark L. Baum: Yeah. Andrew R. Boll: Looking forward at the OpEx spend, Mike, I am gonna kind of break it into two parts. You have got the SG&A side, which we are adding that sales heads right now. We have been adding them aggressively in Q1. We will continue to add them in Q2. We have also been preparing. We are preparing from a marketing and promotion standpoint, which is also increasing that spend. We are kinda trying to get ahead of a lot of that as well, so that when these people get hired and trained, they are hitting the ground running with VEVYE. TRIESENCE for that matter. From an R&D perspective, a lot of that cost, as you know, is going to be trial dependent. We sort of have a base year of R&D spend year-over-year. As we put out this announcement this morning regarding the TRIESENCE IND being accepted and that study picking up, those costs will kind of show up in the middle part of the year, so Q2, Q3. We will have a little bit of a ramp in the middle part of the year, and then it should come down a little bit on the R&D side in Q4, as you sort of wrap up those studies along with some of the Melt studies. Operator: Got it. Thank you. Thank you. Our next question comes from Lachlan Hanbury-Brown with William Blair. Your line is open. Lachlan Hanbury-Brown: Hey, guys. Thanks for taking the questions. I guess first, would appreciate maybe a little more color on how you are thinking about the IHEEZO dynamics in 2026. You said you think the in-office procedure expansion beyond retina can offset the ASC loss. Is that sort of specifically talking about Q2, or is that more of a longer term, you think, you know, looking a year or so out, it will have more than offset that? I guess should we expect maybe a drop in Q2 in unit demand? Mark L. Baum: I do not wanna be specific about demand in any particular quarter other than to say that in Q4, Q1, Q2, Q3, I think I have said this, we expect demand to continue to increase. Demand continues to increase. That is separate from revenue recognition, but demand for the product does continue to increase. In terms of when we are likely to see the offset from the loss of the ASC units. When I looked at the ASC units specifically, the number of units that we are losing relative to the overall opportunity that we are adding when we add these in-office opportunities with this 2.5 million unit increase to our TAM, it is such a small level of success. We have a discrete team going into the same customers that are using it in the ASC that do not know that they can use it also in their clinics. You know, remember, every one of the doctors that is using it in the ASC is a surgeon. They also only spend a day or two a week in the surgical operating room. The rest of the week, they spend in their office doing procedures. It is a simple idea. We are going to the same customers that are using the product satisfactorily in the ASC. We are saying, "Hey, you are doing more procedures in your office than you are doing in the, in the surgical suite." It is not for every procedure, but for those procedures where this can be impactful, we are going to the same customers and trying to convert their in-office business. It is such a small number of units, as I said, that we do not have to really be that successful to fully offset the entirety of what we are losing when we lose the temporary pass-through code. Is that gonna happen in the first quarter or the second quarter? No. I doubt it. It should happen throughout the year. As I said, it is such a small number of units relative to what the overall opportunity is that we can fail and fail and fail again and still end up eating up all of those lost units from the ASC. Lachlan Hanbury-Brown: Okay. Thanks for that. It is good to call it. I guess second question is just on VEVYE and the new coverage. Just wondering what you are seeing in terms of the patients that are sort of getting scripts filled under that coverage. Are they new to brand patients, or is there a sizable chunk of them who were, you know, previously paying cash pay or maybe you previously managed to get coverage for them who are now just converting to be, you know, sort of covered more easily? Mark L. Baum: Yeah. I cannot say specifically with numbers, you know, what % or what number of patients are converting. You know, I can sort of echo what we have said in the past and that, you know, in 2025, there were a lot of patients who we received prescriptions for, but, you know, legal prescriptions, but who were denied access to the product for one reason or another, who chose not to get their prescription filled. We are going out to those patients. Now, those patients still have legal prescriptions, and we can contact them and make them aware of the existence of coverage and try to capture as many of those as possible. At the same time, there are patients who are paying cash, as you said, so these consignment patients who do have coverage now but formerly did not, and we can go to them. We know exactly who those folks are as well and convert them. This is a sizable number of people and, you know, you are talking about, you know, well north of $30 million new covered lives where you have, you know, the best access for VEVYE now. We have to see how things play out. I think based on what we are seeing in the first quarter, we thought we would not be where we are. We are in a better place than where we thought we would be in terms of new prescriptions. The new to brand side of things I think is going to come once we get these new bodies out, these new sales reps. You will have more and more of that new to brand. I can, I do not want to steal Pat's thunder, but Pat, do you wanna actually talk about the whole new to brand? I know that is really been a focus of yours. Patrick Sullivan: Thanks, Mark. I think, you know, the core to our next phase of growth for VEVYE is really around, you know, driving new growth for VEVYE. We know better is possible when it comes to managing dry eye disease, as Mark mentioned. Our main focus going forward is ultimately to, you know, win the new-to-brand patients. I think, you know, that is gonna be a heavy focus for us. Obviously, beginning of this year in our conversion from CVS, we are really in our expansion and leading up to our expansion, heavily focused on the right patient and working with our physicians and our communication approach to make sure that we are targeting these patients. Because what we do know is those that are having either coming in, that are having dry eye disease symptoms or are having unresolved or persistent symptoms on other suboptimal treatments, VEVYE is the perfect treatment for that. Our goal moving forward is to make sure that we have the right presence with our customers and ultimately target the right patients going forward. Mark, to your point, new-to-brand for us is a huge focus and will really start to come to life for us as we go to our next phase of expansion. Mark L. Baum: Great. Thanks. Operator: Thank you. Our next question comes from Thomas Eugene Shrader with BTIG. Your line is open. Thomas Eugene Shrader: Good morning. Thanks for all the updates. This fascinating time. On the VEVYE sales force, after your increase, where does that put you relative to competitors like Miebo? Would you be on an equal playing field? Just a remedial question on the melt franchise, are you still wedded to two products? It seems like the first product is the bigger product, it is the combination. Does your compounding business inform you that there really is a need for two products? Thank you. Mark L. Baum: Yeah. You know, I will take the first question. In terms of the VEVYE sales force, You know, we do not know exactly how many reps, you know, these competitors have out in the field. You know, we have heard that, you know, one of our competitors that has, you know, a pretty sizable market share has upwards of 300 people. We are gonna have around 100 ourselves. What I can tell you is that our reps are so powerful that one Harrow Health, Inc. rep with VEVYE is equal to 4 of theirs. I am kidding. We really do have a terrific sales organization that is well trained, and they have an outstanding product to sell. This is the second phase of our expansion. This, you know, we had the initial hiring for this product. This is the second phase, taking us up to around 100 territories or so. There very likely could be a slight increase in the number of territories as we see this investment pay off. You know, we are excited to have these, this sales force more than doubling here in the near term. I am also pleased with the quality of people we have been able to attract, and those that we have, you know, continued to retain who are on Maria's team. In terms of melt and the need for both products, the MKO Melt, which is a compounded formulation that we have sold for a number of years, has really informed the entirety of the development program. One of the nice things about the G-MELT when it is approved is that we are gonna discontinue the compounded version of the product, and we will hopefully convert all of that business into, you know, an FDA-approved and hopefully reimbursable product. It is very hard, as I have said over the years, to sell compounded medications. They are not FDA-approved. They do not have a label, particularly in anesthesia and sedation, where an anesthesia professional is, you know, gonna think twice or three times about whether or not they are gonna use a compounded formulation. When we have an on-label FDA-approved product that is also hopefully reimbursed, this should significantly expand the market opportunity for the G-MELT in cataract surgery, but also for other procedures where, you know, and a sublingual non-opioid sedation choice can prevail. In terms of why we need also the 210 program, the 210 program addresses a different market segment. Believe it or not, in terms of the total number of units of opportunity for it, based on the expected label, and we still need to discuss that, you know, with the FDA and come to a resolution around what ultimately a label might look like for what is now called YOCHIL. That product, in terms of unit demand, is bigger in unit volume demand, we believe, than even the G-MELT. The G-MELT will be used certainly in cataract surgery, which is what we are studying it for. We also believe it will be used, as the compounded product is used in ENT, and you know, for endoscopy. It is used in dermatology, plastics, dental, widely used in dental. It is used to deal with claustrophobia in MRI tubes. So that is the experience that we have with the MKO Melt, the compounded version. Our expectation is that the G-MELT, when it is approved, eventually will be used in markets outside of ophthalmology, which happen to be even bigger markets than the ophthalmic market. The answer is yes, we need two products. They serve different markets. One is specifically related to anxiety. It will also, as I said, be available. I said this, I think, in the letter to stockholders ultimately be available in a number of different strengths. Thomas Eugene Shrader: If I can sneak in one follow-up. The new TRIESENCE, I mean, it seems like it is much easier product to make and use. Do you think you might expand that outside the eye where that steroid is used, or is this entirely a formulation for the eye? Mark L. Baum: It is purely for the eye. You know, we started our company in 2014. Our first sale was with triamcinolone acetonide for injection. This is a product category and an active ingredient we know really, really well. You know, our compounded formulation, once again, the enthusiasm for TRIESENCE for us comes from our experience having sold Tri-Moxi in, you know, well over 1 million cataract surgery. It is a market we know well. It is just this product is just going to be for the eye. But we have real high hopes that we can once again create this protocol, which is IV-free, opioid-free, and even eye-drop-free eventually for cataract surgery patients, which is really where the market needs to go. Thomas Eugene Shrader: Great. Thanks for all the color. Mark L. Baum: Thanks, Tom. Operator: Thank you. Our next question comes from Thomas Slayton with Lake Street Capital Markets. Your line is open. Thomas Slayton: Hey, good morning, guys. Appreciate you taking the question. Following up on VEVYE, with respect to the sales force expansion, can you talk a little bit about, and I think you alluded to this, Mark, that it is a lot of new territory, but new territory versus territory splitting because of overload, and then how you see the dynamics between the ophthalmology and optometry community playing into that growth, expectation? Mark L. Baum: I will take the second one first, then I will flip the first to Pat. You know, in terms of the sales force. Actually, pardon me. I do not. Your second sales force expansion and what else, Thomas? Thomas Slayton: The ophthalmology versus optometry component. Mark L. Baum: Yeah. Ophthalmology. Yeah. Ophthalmology and optometry, believe it or not, you know, the optometric market is a critical market. I would say that, you know, I would be slightly biased towards the optometric market. I think now, optometrists are writing as many or probably more prescriptions for dry eye medications than ophthalmologists. That is what the data that I am seeing shows. Pat, do you want to talk about the sales force expansion specifically? Patrick Sullivan: Yeah. Thanks, Mark. I think when we think about the expansion, I mean, this is a real great opportunity for us to look at the great progress that VEVYE has done for dry eye disease patients to date. I think, you know, one of the first things we do is, you know, is look at this to your point, you were talking about like basically business interruption versus business continuity. It sounded like your question was around. I think we are taking a very methodical approach to make sure that we are, one, relooking at making sure that this approach going forward, it is sales force expansion, but it is about VEVYE's brand presence and promotional efficiency in front of our customers going forward. This is a very active category that is large, growing and active. For us, like to the prior question by one of your colleagues around, you know, playing in that dynamic part of the market where that new to brand is, it is gonna take not only having our current territories be very efficient, but also our expansions. We are being very, very thoughtful in how we are, one, putting our footprint together. I think the key takeaway here is VEVYE is poised for significant growth going forward, but it will be about how we, one, put a new VEVYE presence in front of our customers. That one is, you know, is really about differentiation, new to brand, and having the right presence that is commensurate with being a number one goal of being a number one cyclosporine and number one dry eye disease treatment. To your question, very thoughtful on how we will drive that business to maintain our aims and our growth going forward. Thomas Slayton: Got it. Mark L. Baum: Thomas, just as a practical matter, look, we need to get salespeople in these offices. They need to see their VEVYE reps more frequently, and that is what this is about. We know where the high value targets are. We know who is prescribing dry eye disease. We know who is looking for dry eye disease. This expansion is gonna allow more Harrow Health, Inc. VEVYE reps to get in those offices far more frequently. You know, our data demonstrates very clearly that when we do that, we end up with more prescriptions for VEVYE. I think you are gonna see that throughout the year. Thomas Slayton: Mark, to follow up on the last commentary on MELT being used or MKO being used a lot outside of ophthalmology indications, what can we expect with respect to deal making to get MELT, you know, appropriately exploited in those opportunities that are outside ophthalmology? Mark L. Baum: Well, right now we are completely focused on 2 things. One is Amir and his team building this data set. I have put a bounty on him getting that NDA in sooner than he even thinks he is able to get it in. I am hopeful that, you know, we can hopefully, you know, we can beat some of these timelines that we have laid out. It is all about getting the NDA in and getting the data in front of the FDA so that we can hopefully get this approved and then ultimately get it coded for reimbursement. The second thing is that the market, even in ophthalmology, you know, you are talking about 5 million use cases minimally per year, and that is just really cataract surgery. If you tack on glaucoma surgeries and other relevant procedures, you know, you can add another couple of million procedures. For a reimbursed non-opioid, non-IV sedation medicament, the opportunity in ophthalmology is very large. You know, it is billions of dollars per year where our competition is IVs and opioids. The data, there is a Duke study, there is a Mayo study, the data is clear. Patients today are getting dosed with fentanyl for sedation during cataract surgery in particular. We aim to change that. We have got to build our commercial strategy for the G-MELT, and that is underway, so that is the second component. Other than that, outside of the U.S. market in ophthalmology and getting the studies completed and filing the NDA, you know, something happens where there is a partnership that is revealed or an opportunity like that that is revealed, we will certainly pursue it. We have such a big revenue opportunity with the G-MELT in ophthalmology that we need to really stay focused on that, and that is what we are going to do. Thomas Slayton: Got it. Appreciate it. Thank you. Operator: Thank you. Our next question comes from Jeffrey Scott Cohen with Ladenburg Thalmann & Company. Your line is open. Jeffrey Scott Cohen: Hey, good morning. Thanks for taking our questions. I guess 2 from our end. Firstly, Mark or Andrew, could you comment any on margins and/or tariffs and ramifications throughout 2026 or any net changes that you are seeing now from 25? Mark L. Baum: Andrew, you want to tackle tariffs and margins? Andrew R. Boll: Yeah. Hey, Jeff. Jeffrey Scott Cohen: Hey. Andrew R. Boll: Yeah, on the tariff side, we are not expecting much impact. I think the analysis we did last year was kinda almost in a worst-case scenario when we kind of relooked at things, and we are doing that on a continual basis. The analysis we did last year is still holding strong, and actually we are in better shape than we would have been last year in that worst-case scenario around Liberation Day. To answer your question more directly, we are not expecting to see any impact on margins as it relates to tariffs this year. Jeffrey Scott Cohen: Got it. Secondly, any commentary on your midyear expected launch on BYOOVIZ as far as preparations and commercial organization and how that might look like midyear? Mark L. Baum: Andrew, you wanna touch on that at all? Anything you want to add there? I think we are ready to go. I think we start realizing revenue and the team's got a very unique strategy. Andrew, do you want to touch on that or Pat? Andrew R. Boll: I can touch on a little bit and then hand it over to Pat. Jeff, we are really leveraging the existing retina team with that launch. There is some incremental costs that will go into that. We will have some variable costs as we get the hub up to help support the product. We are really excited to get that thing going. We have got a great partner in Samsung as well that is helping us, helping us as we prep. This is a very dynamic market. We are going to be getting in with BYOOVIZ right away in the middle of this year, which is a Lucentis-referenced biosimilar. Then, you may have recently seen that Samsung announced it is entered into a settlement with the innovator drug for EYLEA. We will be able to get into the market a little earlier than we expected with that product as well at the beginning of next year, which will be in January. From a spend perspective, like I said, we will leverage most of the existing sales force. There will be some small incremental costs there, and maybe some variable costs related to the hub activity for the products, but should be highly accretive to earnings on new revenues. Pat, do you want to add anything? Patrick Sullivan: Thanks, Andrew. I think the one thing to add is, you know, as Mark mentioned, you know, we are really excited to get this going. You know, thinking about back to Mark's comments about the team that we have here, a very deep set of heritage in the retina space. I think to me, we will capitalize on that very quickly. I think in addition, when you think about our current portfolio, we made significant strides in growing our retina business, and this is going to, you know, help us significantly with our presence in growing the value of that franchise. We are actively right now preparing the market and targeting our business to take off here in the middle of this year. You know, we are super excited about BYOOVIZ going forward. Jeffrey Scott Cohen: Terrific. Thanks for taking my questions. Mark L. Baum: Thanks, Jeff. Operator: Thank you. Our next question comes from Yi Chen with H.C. Wainwright. Yi Chen: Thank you for taking my questions. Could you comment on your marketing strategy for the biosimilar, whether they will have a dedicated sales force and how you are going to present your biosimilar as a differentiated product from other biosimilar competitors? Thank you. Mark L. Baum: Yes. Thanks for the question, Yi. You know, as I think Andrew referenced and as Pat discussed, I think as you know, it is a highly dynamic market. It is competitive, we have a unique place in the market with our Lucentis referenced biosimilar. At this point, I really do not wanna reveal specifically how we are going to, you know, attain the market share that we expect to drive towards. What I have said in the past is that based on our cost in getting into the deal, the level of success that we need to achieve to make this highly profitable is quite low. We are not playing to get 30% market share with BYOOVIZ. We are playing to get a handful of percentage points of market share in this market, which is the largest market in ophthalmology by revenue. Our expectations are quite modest, and we believe that the strategy that we are going to employ, with the team that we have, which as Pat said, has a tremendous background in relationships, and this market is gonna be successful in helping us get to our goals. We do not have, you know, you know, we are trying to get about a handful of percentage points of market share, which is what we have said historically. Operator: Thank you. Andrew R. Boll: I can add a little bit too. You know, the one big advantage we have compared to everyone else in this market is we have other products that we are selling these doctors. It allows us to provide a really comprehensive offering. We can talk about the patient experience with our anesthetic. No one else has that anesthetic in the biosimilars. It is more than just the biosimilar products that we are gonna be selling. It is this comprehensive package of products where we totally support the practice and focusing on the patient experience. Operator: Got it. Thank you. Thank you. I am showing no further questions. I would like to turn the call back over to Mark L. Baum, CEO, for closing remarks. Mark L. Baum: First, this is not in my script, I have to say that this call is the longest call I think we have ever had. It reminds me of our recent State of the Union. It set a record. We are gonna definitely work next time to try and make this call a little bit more efficient. We apologize for the time that this call took, but I think it was worthwhile. Hopefully, anyone who is listening feels a lot more knowledgeable about where this company is and where we are going over the coming quarters and years. Across the portfolio, we are seeing tangible momentum, improved access, expanding adoption, and growing commercial execution. We have got a great new commercial leadership team. Multiple products are scaling meaningfully. Key franchises are gaining depth, and we are seeing early signs of inflection where we have been patient and disciplined. The result is that you own a business with increasing revenue concentration that is in durable high-value assets, and that we have multiple pathways with other products for continued growth. I want to thank you for your continued confidence in Harrow Health, Inc. We are building something durable and lasting and valuable, and we believe the most exciting part of our story is still ahead. This will conclude our call. Thank you. Operator: Thank you for your participation. You may now disconnect. Everyone, have a great day.
Operator: Greetings. Welcome to Versant Media's Full Year 2025 Operating and Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. At this time, I'll turn the conference over to Wylie Collins, Executive Vice President, Investor Relations and Treasury. Thank you. You may now begin. Wylie Collins: Thank you, and good morning, everyone. Welcome to Versant Media's Fourth Quarter and Full Year 2025 Operating and Financial Results Conference Call. Joining us today are Mark Lazarus, Chief Executive Officer; and Anand Kini, Chief Financial Officer and Chief Operating Officer. Also with us are Jordan Fasbender, General Counsel; and Natalie Candela, VP of Investor Relations. Before we begin, I'd like to remind you that certain statements made during this call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied. For a discussion of these risks and uncertainties, please refer to Versant Media's filings with the SEC and today's earnings release. All forward-looking statements are made as of today, March 3, 2026, and we undertake no obligation to update them. During today's call, we may refer to certain non-GAAP financial measures. Reconciliations of these measures to the most directly comparable GAAP measures are included in today's earnings release and in the materials posted in the Investor Relations section of our website. With that, I'll turn the call over to Mark. Mark Lazarus: Thank you, Wylie, and good morning. We are pleased to report Versant's 2025 operating and financial results as an independent, well-positioned media and entertainment company. 2025 was a pivotal year for Versant. We completed our transition to a stand-alone public company while advancing our clear and deliberate strategy, continuing to win with premium content, extending the reach of our iconic brands and accelerating the growth of our digital platforms. We operate in 4 large and growing markets: business news and personal finance, political news and opinion, golf and athletics participation and sports and genre entertainment. In each, our brands hold leadership positions with clear opportunities to extend beyond pay TV. Versant enters this next phase with meaningful scale, reaching an average of approximately 100 million people every month. Our live news, live sports and premium entertainment programming continue to attract large engaged audiences and generate robust advertiser demand. Approximately 60% of our audience comes from news and sports, which is most valued by audiences and advertisers. In 2025, CNBC solidified its position as the #1 global business media brand, delivering exclusive breaking news and more than 6,000 hours of live on-air coverage. That leadership was on full display in Davos last month, where viewership surged across all 3 days of coverage as CNBC was at the center of the world's most consequential business conversations. We built on that position of strength in 2025 with a multiyear partnership with Kalshi, integrating real-time prediction market data directly into CNBC's editorial coverage. This important commercial relationship introduces new revenue streams and connects us with a younger, highly engaged and data-driven investor audience. We're extending that strategy even further. CNBC will launch a next-generation direct-to-consumer subscription service tailored to retail investors, a fully integrated platform combining CNBC editorial insights, investment recommendations, portfolio tracking, advanced charting, AI-powered analysis and powerful decision-making tools, all built on a brand and talent that investors trust. We believe this service addresses a significant market need with a product only CNBC can deliver. On election night in 2025, MS NOW was the most watched network across all of cable, reinforcing the strength of the brand at the most consequential moments in politics. Since the rebrand to MS NOW in the fourth quarter, that momentum has not only held, it has accelerated with double-digit growth in total viewers since November. That momentum extends well beyond traditional television as well. In 2025, MS NOW generated nearly 8 billion views across TikTok and YouTube, along with more than 140 million podcast downloads, demonstrating the depth and demand of a highly engaged audience. To build on that engagement, later this year, we will launch a new MS NOW direct-to-consumer platform centered on community, access and exclusive content, extending the breadth and depth of MS NOW's audience reach. The Golf Channel is the #1 golf media outlet. And in 2025, we aired over 2,000 hours of live coverage across more than 200 events, accounting for 35% of all hours watched for golf. The inaugural Golf Channel games aired in December, and we also extended our USGA partnership through 2032 and our PGA of America partnership, including the Ryder Cup through 2033, securing long-term rights and reinforcing our leadership in golf for years to come. Beyond pay TV, our tee-time platform, GolfNow, delivered a record year with 40 million tee-times booked over 9,000 courses globally, demonstrating Versant's scale in the broader golf ecosystem. Across our broader sports portfolio, USA Sports added Pac-12 football and basketball and expanded our leadership in women's sports through long-term agreements with the WNBA and League One Volleyball. Last month, we also brought the Olympic Winter Games from Milan Cortina to audiences nationwide on USA Network and CNBC, and we'll provide more on that during our first quarter call. In entertainment, USA delivered the #1 scripted cable original premiere of 2025 with The Rainmaker, and it has already been renewed for a second season, reinforcing our ability to launch and develop premium franchises. We also broadcast the Critics Choice Awards, which delivered their strongest ratings since 2022, a reminder of the enduring appeal of live unscripted entertainment. At Fandango, we will launch new ad-supported streaming service later this year, enabling audiences to watch films and television series for free, leveraging Fandango's broad distribution footprint, scaled customer base and Versant's strong library of content. This is a natural extension for the Fandango platform, growing audience and deepening engagement while driving incremental monetization. In addition, we completed the acquisition of INDY Cinema Group, expanding our offering for cinema operators with a cloud-based operating system now deployed across theaters worldwide. We also added Free TV Networks to our portfolio with national over-the-air distribution, expanding our presence in the fast-growing free ad-supported market and extending our footprint beyond traditional pay television. These acquisitions reinforce our strategy of building on our leadership in our core markets by expanding distribution, deepening engagement and developing new audience touch points through both existing and new platforms. We view revenue mix as a critical indicator of our strategic transformation. In 2024, 17% of our revenue came from non-pay TV platforms. In 2025, that increased to 19%, and that was achieved without the benefit of the new initiatives launching this year. Our target is 33% over the next 3 to 5 years and over time to get closer to 50%, positioning Versant to a platform for growth over time. We are committed to continue investing in the business and returning capital to shareholders. Our Board has declared the company's first dividend and has also approved a $1 billion share repurchase authorization. This program reflects our confidence in the business and our strong balance sheet, which provides us the flexibility to invest in growth while also delivering meaningful shareholder returns. As we move forward, we have a clear strategy and the infrastructure, operating discipline and leadership required to win. We enter this next chapter from a position of strength, profitable, scaled and disciplined. None of this would be possible without our team. Across every part of our company, our people executed at a complex separation while continuing to deliver for audiences, partners and shareholders. I am incredibly proud of what we have built and even more confident in what we will accomplish next. With that, let me turn it over to Anand. Anand Kini: Thanks, Mark, and good morning, everyone. As Mark noted, we are focused on disciplined execution and positioning the company for long-term value creation. I'll review our full year 2025 results, discuss key performance drivers and provide our outlook for 2026. Unless otherwise noted, all comments reflect stand-alone results, meaning a view of 2025 and 2024, as if we were already operating as an independent company, aligned with how we presented at Investor Day and how we will report going forward. 2025 performance is consistent with the forecast we shared in December with strong profitability, healthy margins and significant free cash flow generation. Total revenue was approximately $6.7 billion, down 5% year-over-year. The decline primarily reflects ongoing secular pressure in pay TV and advertising normalization following the prior year's presidential election cycle, partially offset by growth in our platform's businesses. Stand-alone adjusted EBITDA, which excludes transaction and separation-related costs, was about $2.2 billion, down 9% year-over-year. Stand-alone adjusted EBITDA margins remained above 30%, consistent with the framework outlined at Investor Day. An estimated stand-alone free cash flow totaled a healthy $1.5 billion for the year. Turning now to revenue details. Linear distribution revenue was $4.1 billion, down 5% year-over-year, driven by continued moderate cord cutting, partially offset by contractual rate increases. Importantly, more than half of our pay-TV subscribers are under agreements not subject to renewal until 2028 and beyond, providing meaningful revenue visibility. Advertising revenue was approximately $1.6 billion, down 9% year-over-year, reflecting ratings declines and post-election normalization in use. Quarterly growth trends were affected by sports timing differences and certain assumptions related to the impact of the 2024 Paris Olympics on our stand-alone results. Platforms revenue, primarily GolfNow and Fandango, increased 4% to approximately $826 million. GolfNow delivered another strong year with growth in bookings, payment volumes and subscriptions. Fandango performance reflected a softer-than-expected theatrical slate, particularly in the second half. We expect platforms to return to high single-digit revenue growth organically in 2026, supported by a stronger box office slate and continued growth at GolfNow. Additionally, we anticipate favorable contributions from our recent INDY Cinema acquisition. Content licensing and other revenue was approximately $193 million, down 9% year-over-year, primarily due to timing of entertainment licensing agreements. On expenses, cost of revenues declined by about $130 million in 2025 driven by programming cost savings, including from a new long-term NASCAR agreement. SG&A, excluding transaction and separation-related costs, was slightly lower year-over-year and reflects the resources required to operate as a stand-alone public company. Turning now to the fourth quarter. Results were broadly consistent with the full year trends. Revenue was $1.6 billion, down 7% year-over-year. Stand-alone adjusted EBITDA was $521 million, down 19%, impacted by production tax benefit in the prior year quarter. Full year results better reflect the underlying financial profile. We began the year with approximately $850 million of cash and total liquidity of approximately $1.6 billion, including availability under our $750 million revolving credit facility. Gross debt totaled approximately $3 billion, resulting in net leverage of 1x trailing 12-month stand-alone adjusted EBITDA, providing substantial financial flexibility. With respect to capital allocation, returning capital to shareholders remains a top priority for us, alongside disciplined investing to support long-term growth. As Mark noted, the Board has authorized a share repurchase program of up to $1 billion and has declared a $0.375 per share quarterly cash dividend, representing an expected annualized dividend of $1.50 per share. Our 2026 outlook remains consistent with the framework provided at Investor Day. We expect revenue between $6.15 billion and $6.4 billion supported by midterm political advertising and new product initiatives. We expect adjusted EBITDA between $1.85 billion and $2 billion as we continue to invest in growth with some quarterly volatility caused by sports rights timing, particularly in second half. Depreciation and amortization will remain elevated in 2026 largely due to amortization of intangibles related to the 2011 Comcast acquisition of NBCUniversal. This amortization will be substantially complete by year-end 2026. We anticipate our cash tax rate for 2026 to be approximately 26%, excluding the impact of intangibles on the balance sheet. From a capital expenditure standpoint, we expect 2026 CapEx to be modestly above stand-alone 2025 levels. The increase primarily reflects the build-out of our new Manhattan headquarters and targeted investments in our platforms and other growth businesses. Over the medium term, we expect capital intensity to normalize following completion of these projects. We continue to expect free cash flow between $1 billion and $1.2 billion in 2026. Free cash flow conversion will be modestly lowered in 2025, reflecting working capital timing, onetime cash tax benefits in 2025 and the incremental capital expenditures I just outlined. On working capital, we anticipate quarterly variability, particularly in the fourth quarter. This is principally caused by separation-related timing effects, including NBCUniversal's prefunding of certain receivables at separation, which increased our opening cash balance with a corresponding Q1 working capital impact. With that, I'll hand it back to the operator to open the line for Q&A. Operator: [Operator Instructions] And the first question comes from the line of Michael Ng with Goldman Sachs. Michael Ng: Congratulations on your first quarter as a stand-alone public company. I just have 2 questions, if I could. First, platforms is obviously a critical part of getting to your revenue diversification goals. Can you talk a little bit about your confidence in achieving that 1/3 of revenue from non-pay TV over the next 3 to 5 years, key new product launches and features that you expect to be the most meaningful in the next couple of years here? Mark Lazarus: Yes, sure, Michael. Thanks. So we're really confident in our platforms business. As we mentioned earlier, though the results for 2025 were a little bit impacted by a slightly softer film slate for the industry. And Anand mentioned, we expect high single-digit revenue growth for 2026, which is consistent with the history that we have with these businesses. So we're very bullish on strong growth, both top and bottom line long off into the future. When you think about those core businesses, GolfNow and Fandango are established leaders. They're really strong, you'd say, preeminent brands in their respective markets. And they still have a lot of room to grow organically and to grow penetration. GolfNow, for example, represents less than 10% of the total rounds booked and it's very early on in the international expansion trajectory that we've undertaken. We can extend these businesses very easily into adjacent markets. We're launching a free AVOD service as part of Fandango, which will complement the movie ticketing and the home rental business. And we purchased INDY Cinema, which we mentioned, which enables us to offer the industry's best operating software to the same cinema operators who already use our partners in the ticketing business. So there's a lot of -- many more expansion opportunities for Fandango and GolfNow. We'll also launch brand-new platforms associated with our brands. CNBC's D2C is targeted to the retail investor. MS NOW D2C will be offering community insights perspective relevant to that brand. These are big powerful brands. We've got big existing audiences, and we're in a great position for these to be adopted at scale around D2C places we have not really invested before. Anand Kini: Yes. The only thing I would just add is, I think as Mark mentioned, Michael, it's a good question. And for us, it's a combination, as you saw, of organic investment where we're making quite a bit as we just talked about the different brands. And then also M&A, our bar is high. I think INDY Cinema is a good example of an M&A opportunity that we found very compelling, very good use of capital, significant value creation, fits with our brands, fits with Fandango. It's kind of an opportunity to add incremental value right away because we already have a sales channel to those exhibitors who buy our Fandango ticketing products. So I think that between the organic investment and then selective inorganic just kind of reinforces how confident and how bullish we are about our platforms business. Michael Ng: Wonderful. And just as a follow-up, could you just provide an update on the SportsEngine strategic review process and the M&A point to support platforms? Just some clarity on kind of tuck-ins versus maybe something more midsized? Anand Kini: Sure. I'll start with SportsEngine. So as we discussed, we're evaluating kind of value-maximizing alternatives for that business. So just to be very clear, we see a lot of consolidation in youth sports market-wide. So we think it's the right time for this review, but we haven't made a decision yet. We -- just to be very clear, we like SportsEngine. It's been a very good business for us. It is a very good business. And so we're only going to pursue opportunities that genuinely maximize value for the long term. Broadly on M&A, we will consider, obviously, all opportunities that add value. I think INDY Cinema is a very good example of a tuck-in, as you called it. And we think there very well may be more. I mean, for example, GolfNow, we built GolfNow over time. It was really a roll-up of a lot of independent operators. You can kind of consider that in some ways a tuck-in type as well. So definitely, we'll look at those. Could there be something bigger? Sure. But I think the key point is our thresholds here are very high. As part of our capital allocation, M&A is one area, but the brand fit, the ability to drive value right away and the synergies are something that we obviously consider very carefully. And so it has to kind of satisfy all those thresholds and make sure it delivers premium returns, and we will continue to be very disciplined in pursuing that. Operator: Our next questions are from the line of Brent Penter with Raymond James. Brent Penter: First one for me. Good to see the shareholder return plans in the buyback authorization. What's your philosophy going to be on buybacks? Do you plan on being pretty opportunistic? Or should we expect them to be pretty regular? And is there a 10b5-1 program in place already? Mark Lazarus: Yes. At this point, we're going to be opportunistic. We're going to be thinking through the total capital allocation program sort of holistically, and we'll handle it that way. Brent Penter: Okay. And then realize it's very early into your journey as a stand-alone company and majority of your renewals are beyond '26 and '27, but can you just update us on your confidence on the affiliate fee trajectory and what you might be hearing from distribution partners at this point? Mark Lazarus: Well, we were able to execute a bunch of deals last year when we were long announced as a stand-alone company, and we were able to do that on terms that work for us and work for the distribution partners. We have a few deals up later on in this year, and we anticipate being able to have very productive and similar discussions with them at that time. Our live portfolio of news and sports we think plays into what people are still looking to watch on linear television, and that's a big part of our asset play. Brent Penter: Okay. Got it. And then final question for me. The Warner Bros. Discovery process, obviously kind of moving into the next phase now. Watching from the sidelines, what have you all learned from this process in terms of the industry in terms of some of your competitors in terms of valuations? What does all this mean for Versant? Mark Lazarus: Well, we have our plan to go as an independent company. We have a strong set of assets. We're very focused on our vertical markets. And the wider view was it was interesting because the assets from Warner Bros. were interesting to a couple of people in a couple of different ways, and we look at that as being reinforcing of the value of our company. Anand Kini: I think the only other thing I'd add is I think maybe what we learned is as you kind of went through that process, the assets that had a tremendous amount of value often were around news and sports. And I think you've heard us say before that, that's about 60% of our audience is news and sports. So we think in many ways, that process validates, a, the quality of our brands and our portfolio and the strategy that we're pursuing to kind of continue to drive those businesses, which are supremely positioned within the pay TV ecosystem, and it also gives us the opportunity then to extend them outside of it. So we think, in many ways, kind of validated the approach that we have. Operator: Our next question is from the line of Peter Supino with Wolfe Research. Peter Supino: A couple of questions about the way your brands go to market. First, I wondered if you could talk about the size of the audience that you're reaching in linear pay TV. We obviously can see ratings data on individual shows, but I wonder how many households are engaging with your news and sports content every month and with enough frequency to be important to your negotiations with pay TV distributors. And the background of that question is we just hear in our conversations with clients and enormous preoccupation with the possibility that you all might have -- I mean it might someday lose a distributor. And then a second go-to-market question relates to your brand's DTC opportunity. Could you talk about your economics streaming CNBC and MS NOW direct-to-consumer and whether someday a partnership with a third-party streamer with a massive audience might be interesting. Mark Lazarus: So on the audience engagement, we have big brands that are well known and ubiquitously known to the marketplace. We reach around, as we stated earlier, 100 million people each and every month with our brands. If you look at some of them individually, MS NOW has doubled its audience in prime time in the last 10 years. We're reaching over 1 million people on average, 1.2 million people on average in prime time on MS NOW each and every day. So that's massive scale. And those people are watching with huge engagement, they're watching roughly 8 to 9 hours a week, which is the second highest engagement across the entire media TV landscape. CNBC similarly has a large loyal following in the financial sector and with retail investors, and you'll see that as we talk about the D2C and eventually launch that in the future. Across our sports, Premier League, WWE, NASCAR, WNBA, the Olympics was -- we were reaching 2 million, 3 million, 4 million people at a time with USA Network over the last few weeks. So we have scale, and we do it by both on individual networks and the accumulation of the total audience across our portfolio. On the D2C programs on the economic profile, we feel very confident that we already have an infrastructure. So the build-out of these is not a massive capital -- not massively capital intensive. We're creating product suites that will appeal for CNBC to the retail investor and the MS NOW to that highly engaged audience. Anand Kini: Yes, that's right, Mark. I think, Peter, what part of that also kind of may be implicit or embedded in your question is, would we go to market in different ways. And I think that answer is yes. So sure, we're going to offer it direct to consumers. But clearly, we're open to different opportunities to distribute through other partners, whether that's bundling or packaging or other distributors. And we will, in fact, be active in kind of striking that. I mean it's all about kind of driving value and driving scale. And there's actually a lot of folks that are interested, frankly, in working with us on that. And those conversations, we'll discuss them at the right time, but they're ongoing. Operator: Our next question is from the line of Jessica Reif Ehrlich with Bank of America. Jessica Reif Cohen: Two questions. First one is on advertising. So in addition to your existing business, which obviously has a big advertising component, your new businesses, whether direct-to-consumer or free TV or dependent, at least in part on advertising. So could you give us a little bit of color on the current market and talk through some of the levers that you can control to maybe improve the advertising trajectory in the current year, whether pricing or sell-through, cross-platform packaging, measurement, et cetera, data, so that would be great if you can give some real color. And then secondly, second completely different topic, but on sports, with the larger media companies facing what's likely a very expensive NFL renewal, does this open the door for you to buy what would be considered secondary or tertiary sports, but growing sports, whether like women's sports or upcoming sports and maybe bigger picture, I mean, sports is obviously a focus. How do you think that your sports strategy will evolve? Mark Lazarus: So why don't I take the second one first. And yes, as the NFL comes to market and we'll discuss new arrangements with some of the other media companies, we believe that there will be and some -- one of our competitors actually said a rebalancing of the sports portfolios. We believe that there will be a rebalancing of the sports portfolios and that, that will leave opportunity for us who have a heritage in sports, who have strong sports properties and legacy to begin with, but we also have broad reach. And with USA Network in particular, it's as broad a reach vehicle as any other cable television asset and/or pay television asset. And we believe that there will be opportunity for us to get involved in properties that we might not have otherwise gotten involved with. We're open to conversations. We're having ongoing conversations. We've built out our own production unit, and we are prepared for the sports landscape to be shifting, and we will be in the middle of that. We will be disciplined, but we'll be in the middle of that. As it relates to advertising, I'll start out. I mean, I think we're still -- for the next 2 years, NBCUniversal is representing us. That has been a very strong and proven go-to-market strategy, not just for us, but for them to have the scale of our assets and their assets under one umbrella. That's the way we've done it for the last 15 years, and it's been a very successful model. We will continue that at least for the next 2 years, and then they will -- they and we will decide on the right future strategy for our ad sales and theirs. We are moving some of our advertising outside of pay TV, and you mentioned DTC and free TV networks. That allows us to reach other marketers. It allows us to be involved more in the programmatic sales and to more of -- the more technology-driven sales with Fandango, with GolfNow, we have a lot of data and information about our customers and we'll to use that to target advertising in the free TV and the digital spaces. Operator: Our next question is from the line of Kutgun Maral with Evercore ISI. Kutgun Maral: I just had a follow-up on linear distribution. I think we're all aware of the secular challenge across -- challenges across the industry, along with more skinny and genre-based packages coming to market. But as you go into your future negotiations, do you see any offsets to some of these industry-wide headwinds when it comes to pricing, for example at networks like MS NOW, which seems quite underpriced in terms of affiliate fees per subscribers compared to its cable network peers or cable news network peers. And is there anything more specifically you can share on expectations for linear distribution revenue growth in 2026 specifically? Mark Lazarus: Well, on the broader question, I mean, sure, we all believe all of our networks are underpriced, but thank you for recognizing that. We -- listen, news and sports have been the predominant focus on the new packaging. We are fortunate or we are strategic in having both of those sets of assets. We have 2 news networks and 2 networks that are sports with Golf Channel and USA Network. So we're in all of those packages, and that has been very helpful for us in retaining our distribution and our revenues. I think those kind of packages will continue. And Anand kind of talked about it a little earlier on the D2C side. We're a new stand-alone company. We don't have as many competing constituencies as we had in the larger company. So we will be as flexible and creative as we can be while making sure we retain the value that we are able -- that we think our networks deserve and that the audiences have shown that they deserve. Anand Kini: And on the 2026 question, we have pretty good visibility here. We have actually very good visibility, I should say. I think we've mentioned that we have about 16% of our subscribers are up for renewal, but obviously, that means 84% are not that we have kind of security on that. And so in terms of what the kind of trajectory would be, what we assume is that the pace of cord cutting is -- it's not been getting worse. We assume that it's kind of roughly the same that we've seen now for a while, kind of that high single digits then offset by some contractual rate increases. So that probably dimensionalizes in terms of what we're kind of looking for as you look forward in '26. Operator: Next question is from the line of David Joyce with Seaport Research. David Joyce: A couple of clarifications and other questions. On the affiliate fees, are you starting to negotiate your carriage on your own as they expire? Or was there a complete separation already versus the Comcast and Universal -- NBCUniversal deals? And then secondly, on your various other platform companies, do you anticipate providing trends on the data of the users or subscription numbers. Just wondering what we could look for in terms of some more data points and trends there. Mark Lazarus: So on the distribution question, yes, we have our own distribution negotiation team, and we are handling all of those deals on a going-forward basis ourselves. We're already in -- we have an established group of people that came to us some from Comcast, from NBCU, some from outside and have strong relationships across the industry, and we're out there in the marketplace, building upon those relationships. Anand Kini: Yes. I think in terms of then the kind of the platforms revenue, like right now, we're just -- we're going to continue to report, of course, kind of good visibility in the platforms revenue line, which we think provides a good meaningful indicator of how that business is scaling. Again, just to be very clear, what's in there is kind of the big businesses are GolfNow, Fandango, SportsEngine and some of the new D2C initiatives that we just talked about. And like over time, again, we'll provide a little color commentary as we launch these services. I think Mark referred to earlier with a few launching in 2026. So expect to talk a little bit more about them. But like I said, we think right now that the way we're running the business is really looking at that platform's revenue in total and also then looking at our revenue mix as well. I mean we referred to earlier the percentage of our revenues that come from outside pay TV, which platforms is a big percentage going from 17% to 19%. And our goal is about getting that to about 33% over 3 to 5 years. So we'll continue to provide visibility on that as well. David Joyce: Okay. I appreciate that. And one final question, actually. On the Fandango AVOD service that you're going to be launching, what's the anticipated library availability there? Is there anything that you have exclusive? Or what are the kind of the windowing availabilities that are going to be on there? Mark Lazarus: Yes. It will be a combination of content we own, content we license. As part of our linear deals, we have licensed content from a lot of different studios, in particular, Universal and where we will be able to use part of our windows that we -- that were met for the linear networks to run on our -- on the new AVOD service. So the combination of those and then other third-party deals. Anand Kini: Yes, that's right. So some of it will be -- as Mark just mentioned, it will be kind of exclusive in a way to Versant sometimes where it may be available, as you just said, on our television networks as well as then the Fandango AVOD, but you wouldn't be able to watch it anywhere else. And then other types of programming, it may be available also on other platforms, too. The thing that we've seen on AVOD success is, a, that you don't need to be exclusive for the vast preponderance. The market doesn't really necessarily want that or I should say need that. A lot of it's about the brand and Fandango is a really big brand, having a great user experience, and we're continuing to invest in that so you can actually discover the programming that is there. And then also a lot of knowledge of the customer. And one of the big advantages we have in our -- in Fandango AVOD is we already know the customer. These are scaled services where people are logging on to their connected TV. So we can provide recommendations to them. The advertising will be targeted. And so we think there's a lot of areas not only on content, but in other features where we have a real look. Mark Lazarus: I think to enhance one of Anand's point is Fandango is already a big broad brand. It's already on people's phones and connected TVs because of buying moving tickets and also it's a top 5 home video service for buying and renting movies and TV series. So we already have a large installed base. It's now a matter of converting them and showing them to -- that we have a strong free AVOD service, something that we have seen the trends across the industry as a growth vehicle. And we believe that the combination of our brand and our content and our large installed base will help us grow quickly. Operator: Our final question today comes from the line of Doug Creutz with TD Cowen. Thank you. Ladies and gentlemen, this will conclude today's conference. We thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.