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Operator: Good morning. My name is Angeline, and I will be your conference operator today. At this time, I would like to welcome everyone to the SOPHiA GENETICS S.A. fourth quarter and full year 2025 earnings conference call. At this time, all participants are in listen-only mode. Following the presentation, there will be a question-and-answer session. Should you require any operator assistance, you may press star 0. I will now turn the conference call over to Kellen Sanger, SOPHiA GENETICS S.A. VP of Strategy. You may begin. Kellen Sanger: Thank you. Good morning, everyone. Welcome to the SOPHiA GENETICS S.A. fourth quarter and full year 2025 earnings conference call. Joining me today to discuss the results are Dr. Jurgi Camblong, our Co-founder and Chief Executive Officer, Ross Muken, our Company President, and George Cardoza, our Chief Financial Officer. I'd like to remind you that management will make statements during this call that are forward-looking statements within the meanings of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on forward-looking statements. Additional information regarding those risks, uncertainties and factors that could cause results to differ appears in the press release issued by SOPHiA GENETICS S.A. today and in the documents and reports filed by SOPHiA GENETICS S.A. from time to time with the Securities and Exchange Commission. During this call, we will present both IFRS and non-IFRS financial measures. A reconciliation of IFRS to non-IFRS measures is included in today's earnings press release, which is available on our website. With that, I'll now turn the call over to Jurgi. Jurgi Camblong: Thanks, Kellen. Good morning, everyone. I will start today's call with a brief overview of how exiting 2025 SOPHiA GENETICS S.A. sits at the center of some of the most exciting megatrends in healthcare. I will then turn the call over to Ross, who will provide a detailed update on Q4 performance and what's ahead in 2026. George will close with a review of our financial results and guidance. 2025 was a defining year for SOPHiA GENETICS S.A. We re-accelerated revenue growth, signed several of the largest commercial deals in our company's history. We also continued building one of the most sophisticated AI engines in healthcare. In 2025, our platform broke many records. We analyzed over 391,000 patients with cancer or rare diseases using AI to deliver life-saving insights for diagnosis and treatment. We also reached a total of 993 customers globally. Congratulations to the SOPHiA GENETICS S.A. team on these accomplishments and the incredible impact our platform is having across the world. However, building disruptive AI in healthcare does not happen overnight. Healthcare, unlike other industries, requires rigorous validation, clinical evidence, and deep institutional trust before change is enacted. At SOPHiA GENETICS S.A., we have been pioneering AI in healthcare for over a decade. For 15 years, we have gone from institution to institution slowly and sometimes painfully, bringing their genomic workflows onto a single technology platform. As we've added customers over the years, our network and the collective intelligence behind it has been getting stronger and stronger. Top clinicians across the globe depend on SOPHiA DDM each day to generate insights for their patients. In doing so, they contribute a constant stream of data and knowledge to the platform. The data stream in our platform every day makes up one of the most unique and powerful data assets in healthcare. It includes a real-time, real-world genomic data from over 30,000 patients per month or almost 400,000 patients per year. It is also a diverse, complex, and a match in breadth and global exposure, covering patients from 75 countries across the globe. This rich stream of diverse real-world data has enabled us to build what we believe is some of the most sophisticated AI in healthcare. For over a decade, our R&D team, which includes many of the top AI ML data scientists and mathematicians in the world, have been solely focused on building proprietary AI algorithms on top of this data. These algorithms provide advanced multi-layered analysis of genomic and multi-omic data, enabling clinicians to transform raw data into precise, actionable insights for patients. This AI, housed in SOPHiA DDM, offers our customers an invaluable toolkit of analytical capabilities across a wide range of clinical use cases. Over the last 12 months, demand has been accelerating for these capabilities. We signed a record 124 new customers in 2025 and significantly outperformed all internal booking targets, setting up strong to hit our revenue goals in 2026 and beyond. As more customers adopt the platform, patient volumes have grown substantially. However, volume only tells part of the story. While volumes are growing, the amount of data processed by our platform has increased materially. In 2025, we processed nearly 1 petabyte of genomic data in routine usage. To put that in perspective, that's roughly equivalent to 1 billion books or 30 years of continuous high-definition video streaming. It is also nearly double the amount of data we processed just 2 years ago. The stepwise change in genomic data production reflects a shift in customer demand. Customers are increasingly moving from small targeted panels to large comprehensive tests, multi-omic analysis, longitudinal monitoring, and in general, more sophisticated computational interpretations. All those emerging use cases do not only produce exponentially more data per patient, but they also can only be handled by highly scalable AI-enabled approaches. In response to these trends, we launched a major initiative back in 2022 to drastically modernize our platform. This effort included moving the platform from Java to web and microservices, integrating the latest AI tools into our architecture, and significantly upgrading our compute techniques. I'm proud to share that the new generation of SOPHiA DDM, already adopted by one-third of our customers, now delivers 10 times greater capacity per run than standard systems. As a result, we can double the amount of data we can process per week without impacting margins. Compared to other systems where whole genome analysis can take over 24 hours, we can now complete a whole genome analysis in less than 6 hours. This increased scalability also makes our platform much more cost-efficient than standard systems, enabling us to scale advanced genomics analytics in a sustainable way for institutions across the globe. This faster, scalable, and sustainable approach has been a driving force behind our ability to win larger and larger customers, including the recent signing of 2 of the largest healthcare systems in the US. It also has enabled us to expand our adjusted gross margin by 140 basis points to 74.2% in 2025, despite the huge increase in data compute, which to me is an incredible accomplishment. Beyond scalability and operational excellence, our platform continues to delight customers. Our net promoter score is a remarkable 67. Our customer satisfaction score is over 97%. Annualized revenue churn is below 1%. These metrics underscore the speed, scalability, and stickiness of SOPHiA DDM. In addition, our decentralized approach provides an unparalleled ability to deploy AI models directly into the clinical setting. This enables faster innovation and more efficient launch of new applications. A few examples we will investigate in 2026 are MRD solid tumor and DNA methylation. In addition, we also announced a partnership with MD Anderson in January to leverage our AI algorithms to explore the co-development of the whole transcriptome test. Together, these initiatives reflect the expanding capabilities of our platform and set the stage for the next generation of applications we are bringing to market. Which brings me to my final point. Last quarter, we launched SOPHiA DDM Digital Twins. Digital Twins leverages genomic, clinical, and real-world data to create dynamic AI-driven virtual representations of individual patients. These models allow clinicians and researchers to simulate potential treatment scenarios before decisions are made, helping oncologists select the most effective therapy based on real-world evidence from patients with similar genomic and clinical profiles. I'm proud to announce today that we've already begun onboarding our first lung cancer users. Starting with lung cancer and expanding over time, Digital Twins represent a foundational step towards deploying multimodal AI models, which deliver differentiated care to patients. As we approach the 15th year anniversary since we founded SOPHiA GENETICS S.A., I am more optimistic than ever about our trajectory. We have built a differentiated business with one of the largest, most defensible networks in the world. We also sit at the center of the most exciting trends in healthcare and have more demand than ever among our customers. As SOPHiA GENETICS S.A. continues to grow from a vision into a global business, I recognize that it's the right time to bring in a new leader for the next phase of the company's growth. As announced in January, I am thrilled to promote Ross Muken to Chief Executive Officer effective July first. Ross, who currently serves as our company president, has been instrumental in SOPHiA GENETICS S.A.'s success over the past five years. He led our company through the IPO and helped scale the company from $28 million of revenue to $77 million today. Ross brings a data-driven, commercial-oriented leadership style that is perfect for our next phase of growth and needed for scaling the enterprise. I'm confident he's the right person to lead the company to even greater heights, expand our impact for patients, and create lasting value for our employees and shareholders. As for me, I will transition to the position of Executive Chairman, subject to election at the company's annual general meeting in June 2026. In this new role, I remain 100% committed to SOPHiA GENETICS S.A. as a full-time employee. I will focus my time primarily on science and technology innovation and being a thought leader in precision medicine. With that, I will now turn the call over to Ross, who will provide a more detailed update on each of these areas and make a few new announcements on the new business going into 2026. Ross Muken: Thank you, Jurgi. I'm grateful for your continued involvement as Executive Chairman and excited for the future. Over the past five years, I've come to recognize how unique SOPHiA GENETICS S.A. is and how there is truly no other company like it. From our technology to our customers to our employees, SOPHiA GENETICS S.A. is a category-defining company that is reshaping precision medicine, and I couldn't be more excited to lead this next chapter. Today, I'll begin with an update on our fourth quarter performance as we close 2025 with sustained commercial strength across the business. I'll cover our 2026 growth drivers before handing it over to George Cardoza for a detailed look at the financials. First, we delivered 22% revenue growth in the fourth quarter, re-accelerating the business toward historical levels. Excluding biopharma, clinical revenue grew an impressive 31% year-over-year, reinforcing the strength of our core business. I'm looking forward to this continuing throughout 2026 and for biopharma to pick up after the major recent signings which we saw over the second half of the year. From a regional perspective, EMEA grew 22% in the fourth quarter. Excluding biopharma, EMEA clinical revenue was up a robust 35% year-over-year. Belgium and Germany contributed significantly as the countries grew 93% and 66% respectively, as major recent wins such as GESA came online. North America analysis volumes were exceptional in the fourth quarter, growing 45% year-over-year. On a reported basis, you may notice that revenue growth is lower as we booked a one-time large vendor payment in the fourth quarter of 2024, which created a challenging prior year comp. Excluding this, underlying regional growth remains strong. Asia Pacific also continued to outperform in the fourth quarter, with 44% revenue growth in the period, driven primarily by India and Australia. We also saw revenue from Japan begin to ramp as our new partnership with A.D.A.M. Innovations is now underway and gaining traction. In Latin America, we were happy to see recovery in the fourth quarter with 49% revenue growth. Mexico and Brazil contributed significantly as the countries grew 95% and 48% respectively. From an application standpoint, we continue to establish ourselves as a global leader in hemato-oncology testing. Hemonc volumes grew 27% year-over-year in the fourth quarter, off an increasingly large base. Beyond hemonc, liquid biopsy continues to grow as more MSK-ACCESS customers come online. In the fourth quarter, we recorded just over 2,400 liquid biopsy analysis. We look to 2026 for new higher ASP products like MSK-ACCESS, MSK-IMPACT, and Enhanced Exomes to meaningfully drive overall growth. Moving to new business on the clinical side, I'm happy to share that we continued to book new business at record levels. We landed 30 new customers in the fourth quarter, bringing total new customers signed in 2025 to 124. Average contract value of the new customers signed in 2025 was up 120% year-over-year. I'll now take a moment to update you on recent major wins across the regions. Starting in North America, last month, we announced the signing of two of the largest integrated health systems in the United States, one based on the West Coast and another in the Midwest. The two networks are adopting SOPHiA DDM to support genomic testing for up to 60,000 patients annually with their communities. Both customers are initially adopting SOPHiA DDM for rare disorders utilizing a 20,000 gene Enhanced Exome application. We expect these clients to be what we call routine usage by the fourth quarter of 2026. It's also worth noting that together, the two systems serve nearly 1 million oncology and rare disease patients each year, creating meaningful long-term expansion potential as we integrate our solutions into their workflows. Beyond these two large wins, we also landed NYU Langone Health in New York City and Protlab in Florida as new customers. As Jurgi mentioned, we announced a strategic collaboration with MD Anderson. Through this alliance, we will bring together MD Anderson's world-class oncology research arm and SOPHiA GENETICS S.A.'s world-class AI and algorithm capabilities to develop tests which we can then activate across our customer base. From an expand perspective in North America, many customers signed to adopt additional applications in the fourth quarter, including Vanderbilt University School of Medicine, the Icahn School of Medicine at Mount Sinai, and Memorial Healthcare System in Florida, which is adding MSK-ACCESS. In EMEA, MSK-ACCESS also continued to attract major interest. In the fourth quarter, we signed Labpoint Medical Lab in Switzerland, the Royal Infirmary of Edinburgh in Scotland, and Citogen in Spain to the application, among others. We also saw a large amount of interest in our newly launched solid tumor application, MSK-IMPACT Flex, signing Parapath in Austria, AZ Delta in Belgium, and Ospedale di Circolo e Fondazione Macchi in Italy, among others. In total, we have now signed 21 customers to MSK-IMPACT. In Latin America, we continue to see new business in Brazil and signed the Human Genome and Stem Cell Research Center. We also added the National Institute of Genomic Medicine from Mexico for our MSK-ACCESS test. In Asia Pacific, we signed the National Taiwan University Hospital, who is adopting multiple applications for solid tumor testing, including MSK-IMPACT. We also expanded our footprint in Peter MacCallum Cancer Centre, one of the top hospitals in Australia. Congratulations to the team on these wins. I could not be more pleased with the momentum we're carrying into 2026. I look forward to seeing the new customers complete implementation and begin generating revenue over the coming months. Speaking of implementation, we implemented a record 102 new customers in 2025, including 29 in the fourth quarter, who are now moving to routine usage. This reflects the impact of the actions we took to expand and strengthen our implementation capabilities and shorten time to revenue. While we have made meaningful progress, we continue to optimize this function throughout the year. Looking ahead to 2026, we expect to continue accelerating growth within these three growth drivers. First, continuing to execute and grow in the United States. Second, continuing to expand our liquid biopsy application, MSK-ACCESS. Third, capitalizing on the renewed momentum in our biopharma offering. Starting with our first driver, U.S. analysis volume grew at nearly 50% year-over-year in the fourth quarter. Recent large wins and a strong and growing pipeline give us confidence that this will continue to grow into 2026. Our U.S. commercial team continues to perform at a very high level and with a robust pipeline, we are well-positioned to repeat our record bookings performance this year. Liquid biopsy offers a second meaningful driver for growth, as we have now signed 70 customers for MSK-ACCESS across 29 countries to the application. Of these customers, only about half have completed implementation and begun to ramp usage, giving us a large base to grow in 2026. We also continue to develop our partnerships with Myriad Genetics in the U.S. and A.D.A.M. Innovations in Japan to develop MSK-ACCESS into a regulated global companion diagnostic offering. Activities are progressing well. Interest from biopharma in this product is very high, which brings me to our final growth driver for 2026, biopharma. Biopharma demand continues to build. At the J.P. Morgan Healthcare Conference in January, I met with over 20 biopharma companies exploring partnerships with SOPHiA GENETICS S.A. Our value proposition is now well understood. We believe we're approaching an inflection point as biopharma recognizes the value of a decentralized partner, our massive global network, and the rich data and AI ecosystem it fuels. I'm excited to announce today that we recently renewed our global commercial agreement with AstraZeneca. As you know, AZ has been a major collaborator with us, as in 2025 alone, we signed several new contracts. These include AZ-sponsored deployment of MSK-ACCESS across 30 sites globally, the development of an AI-driven NGS solution for the PTEN pathway, and the signing of a multiyear AI-driven evidence generation project for breast cancer, which we mentioned was the largest contract in SOPHiA GENETICS S.A.'s history. Today, I'm also proud to announce that beyond AZ, we recently signed for the first time ever, a global commercial agreement with a new top 5 global pharmaceutical company. Congrats to the team on this advancement, and I look forward to updating you as details progress. As we enter 2026, we are fueled with substantial new wins across clinical and biopharma. Despite strong bookings conversion, our pipeline remains incredibly strong and is at record levels. Deal size continues to grow, and the number of opportunities in our pipeline above $1 million is expanding materially. Overall, we're pleased with the business's trajectory and look forward to updating you throughout the year. With that, I will now turn it over to George, who will provide a more detailed look at our financial results and outlook for 2026. George Cardoza: Thanks, Ross, good morning, everyone. As Jurgi and Ross highlighted, 2025 was an exciting year of growth for SOPHiA GENETICS S.A. Before I discuss our outlook for 2026, I will start by providing a brief overview of our fourth quarter financial results. Total revenue for the fourth quarter was $21.7 million, compared to $17.7 million in the fourth quarter of 2024, representing year-over-year growth of 22%. Platform analysis volume was over 105,000 in Q4, compared to 91,000 in the fourth quarter of 2024, representing growth of 16%. Gross profit was $14.7 million in Q4, compared to $12.1 million in the prior year period, representing year-over-year growth of 21%. Gross margin was 67.7%, compared with 68.2% for the fourth quarter of 2024. Adjusted gross profit was $16 million in Q4, an increase of 22% compared to adjusted gross profit of $13.2 million in the prior year period. Adjusted gross margin was 73.9%, decreasing slightly by 30 basis points year-over-year. Total operating expenses for Q4 were $33.2 million, compared to $29.5 million in the prior year period. It is worth pointing out that our Q4 results were adversely impacted by certain items which temporarily impacted results but do not reflect the company's underlying operating performance. For example, adverse foreign exchange movements continued to negatively impact reported OpEx, primarily due to the strengthening of the Swiss franc. The Swiss franc has appreciated by 14% since the start of 2025, which means that our payroll and rent expenses in Switzerland are translating 14% higher when viewed in US dollars. Guardant Health filed patent infringement claims in the United Kingdom and at the Unified Patent Court in Paris during Q3, alleging that our MSK-ACCESS application infringes their patents. This litigation resulted in legal expenses of approximately $1.8 million, which is reflected as an adjustment for litigation in our adjusted EBITDA table. In January, the UPC rejected Guardant's request for provisional measures and ordered them to pay us €400,000 in interim costs, which we expect to receive by mid-March. We also activated an at-the-market or ATM facility with TD Cowen in Q4. We incurred $450,000 of costs associated with the ATM facility in Q4. I am pleased to announce that we have raised $15.5 million in net proceeds, including $1.1 million raised in Q4 2025 and $14.4 million raised in Q1 2026, executed at a weighted average price of $5.12 per share. Operating loss for the fourth quarter of 2025 was $18.5 million, compared to $17.4 million in the prior year period. EBITDA loss for the fourth quarter was $16.1 million, compared to $15.2 million in the prior year. Adjusted EBITDA was a loss of $9.9 million compared to a prior year loss of $9.1 million. Lastly, total cash burn, which we define as the change in cash and cash equivalents, excluding cash received from borrowings and stock sales as well as FX impacts, was $12.3 million compared to $12.8 million in the prior year quarter, representing a year-over-year improvement of 4% despite the Guardant litigation cost impact that we discussed. Now turning to the 2025 full year results. Total revenue for the full year 2025 was $77.3 million, representing year-over-year growth of 19%. Platform analysis volume was over 391,000 for the full year 2025 compared to 352,000 in 2024. Our genomic customers were 528 as of December 31st, 2025, up from 472 in the prior year period and up sequentially by 17 customers relative to Q3. Annualized revenue churn was at a record low of less than 1% for 2025. Net dollar retention for the year increased to 115% in 2025, up from 104% in 2024. This impressive same-store growth demonstrates the stickiness of the platform, as well as our continued ability to expand within accounts by encouraging them to adopt additional applications. Gross profit for the full year 2025 was $52.1 million compared to $43.9 million in 2024, up 19% year-over-year. Gross margin was 67.4% for the full year 2025 and flat to prior year. Adjusted gross profit was $57.3 million, an increase of 21% compared to adjusted gross profit of $47.5 million in the full year 2024. Adjusted gross margin was 74.2% for the full year 2025 compared to 72.8% for 2024, increasing 140 basis points due to ongoing compute optimizations. As Jurgi mentioned, targeted platform improvements by our tech team have driven cloud compute and storage costs lower throughout 2025, an achievement we remain proud of and expect to continue into 2026, despite the increase in data processed with larger panels being run. Beyond cloud compute, we also had a significant reduction in our scrap costs related to bundles, which helped drive gross margin improvements. Total operating expenses for the full year 2025 were $123 million compared to $110.5 million in 2024 as reported in US dollars. While constant currency costs have remained fairly flat year-over-year, the appreciation of the Swiss franc and euro have resulted in higher expenses when reported in US dollars. These foreign exchange movements has significantly and adversely impacted our reported results throughout the year as our expenses still exceed our revenue. Beyond foreign exchange rates, we also made a target investment in our sales and marketing team in 2025. We have seen the results of this in accelerated growth, which is reflected in our 2026 guidance. We continue to be very focused on our expenses and operating as efficiently as possible while still making strategic long-term investments in R&D and continuously improving our platform. Operating loss for the full year was $70.9 million compared to $66.6 million in 2024. EBITDA loss for the year was $61.4 million compared to $58 million in 2024. Adjusted EBITDA loss for the year was $41.5 million compared to $40.2 million in 2024. Lastly, total cash burn for 2025 was $50.4 million compared to $53.7 million in the prior year, improving 6% year-over-year. These numbers exclude cash received from borrowings and stock sales as well as FX impacts. We finished the year with cash and cash equivalents of $70.3 million as of December 31st. Note that this does not include the Q1 2026 proceeds from the ATM of $14.4 million to date, and this will be affected in our Q1 update. In January, we also expanded our credit facility with Perceptive Advisors, increasing total available liquidity by $25 million. We remain confident in our current capital position with respect to the achievement of our long-term goals. I'll turn to our 2026 outlook. As we announced in January, SOPHiA GENETICS S.A. expects full year reported revenue to be between $92 million and $94 million, representing 20%-22% growth. Let me provide a few key underlying assumptions relative to our revenue forecast for 2026. With respect to seasonality, we expect 2026 growth to be mostly back-half weighted as new business signed in 2025 comes online in the second half of the year and as more MSK-ACCESS business continues ramping up to routine usage. We mentioned the two large U.S. wins that we have. These clients will not produce meaningful revenue in the first half of the year. As a reminder, Q1 tends to be seasonally softer from a revenue standpoint, where Q4 is seasonably stronger. We currently contemplate that exchange rates will remain volatile due to macro uncertainties. Since January first, we've seen the U.S. dollar sink further against the Swiss franc and euro, which has had the impact of increasing both our sales and operating expenses when reported in U.S. dollars. The company expects adjusted EBITDA loss to be between $29 million and $32 million, compared to $41.5 million in 2025. This guidance is based on the following expectations. We continue to make targeted investments in our platform, which should further optimize cloud compute and storage costs, and therefore expect gross margins to expand slightly in 2026. We also expect to hold the line on operating expenses in local currency and excluding social charges, as we currently have the correct team size to support our medium-term growth objectives. In addition, we are looking at targeted opportunities to flatten our organization structure and reduce our headcount in certain areas. Lastly, we will continue to revisit our discretionary expenses and execute on identified savings in systems, professional services, and certain public company costs throughout 2026. Overall, in 2026, we expect to drop 60% of every incremental revenue dollar down to the bottom line and demonstrate improved operating leverage throughout the year. We continue to believe that we are on track to be approaching adjusted EBITDA breakeven by the end of 2026 and crossing over to positive adjusted EBITDA in the second half of 2027. With that, I would like to turn the call back over to Jurgi for the closing remarks before we take your questions. Jurgi Camblong: Thank you, George. I am confident as ever in our long-term trajectory. I am excited for the year ahead as the momentum in our business continues to build. As we enter 2026 and approach the 15th-year anniversary of our founding, SOPHiA GENETICS S.A. is entering its next phase of scale, one that positions us to reach important milestones in the years ahead. Our forward-looking indicators remain strong across the business. We continue to see a steady stream of new customer signings, expanding biopharma interest, rising average contract size, and a healthy expansion in pipeline across regions and applications. At the same time, we continue to be laser-focused on optimizing costs and delivering sustainable growth. Thank you to the SOPHiA GENETICS S.A. team, customers, partners, and investors for your continued trust and partnership. 15 years ago, we had an ambitious vision to transform healthcare through data and AI. Today, we operate the most widely used AI-driven platform in precision medicine, impacting 391,000 patients in 2025 and over 2.3 million patients since inception. I'm so proud of what we've accomplished over the past 15 years, and I know we are just getting started. Please note we are presenting at the TD Cowen Health Care Conference tomorrow in Boston. We all look forward to continuing to update you on SOPHiA GENETICS S.A.'s future success. Operator, you may now open the line for questions. Operator: Thank you. In a moment, we will open the call to questions. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two 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 any keys. Please be advised that the questions are limited to two questions, and then you can rejoin the queue. Thank you. One moment, please, while we poll for questions. The first questions come from Subhalaxmi T. Nambi with Guggenheim. Please go ahead. Subhalaxmi T. Nambi: Hey, guys. Thank you for taking my question. Good morning. Your guidance is for 21% growth at the midpoint. Can you walk us through what contributions you're expecting from key growth drivers such as MSK-ACCESS IMPACT and from rare disease? Jurgi Camblong: Hi, Subbu. Good morning. Yeah, absolutely. We will drag you through that. First, to recap, we ended up the year very strong with a 31% revenue growth year-over-year on Q4, with as well signings for the ACV as being very, very strong. 120% better in 2025 versus 2024 full year. This is now well positioning us for basically a 2026 performance. I know, Ross or George, if you want to comment on the guide. George Cardoza: Maybe just specifically, you know, to the point you made, the ramping of MSK-ACCESS continues to be a really nice driver for us. Sequentially, we had some sizable customers start to come online in the fourth quarter, and you'll see that ramp continue in Q1 and beyond. We've only seen roughly half of the total cohort start to contribute. Even those that come online, the volumes are relatively modest as it does take time to ramp and liquid. I would say that is certainly a really nice area of expansion for us. You know, you mentioned impacts of CGP. We've had some really material wins, both in ex U.S. as well, as in our native markets. I feel quite confident, we're gaining share, in that vertical. I think in general, you're seeing a shift again to kind of larger and larger panels. In solid tumor, we're well-positioned for that, particularly with our flex product, which I think has some really unique characteristics. Outside of that, I would say overall, as to Jurgi's point, the entire platform has had really nice growth across almost all of the application sets, right? It's really been quite balanced. Those, you know, points you made are obviously some of the true highlights. You know, even on the rare and inherited side, we're seeing really great uptake in our Enhanced Exomes product. And that, you know, was one of the key drivers behind the 2 big U.S. wins we called out several weeks ago. I would say in general, it's really balanced. We've got quite a number of drivers, and I would say we're really levered to a number of the key, I would say, mega trends you're seeing across oncology, diagnostics and NGS that you see with many of the other, you know, key players that you cover. Certainly a balanced and exciting period for us on the growth side. Subhalaxmi T. Nambi: Thank you both. I feel like you probably answered my second question and smidge. The net dollar retention was up meaningfully to 115%. Can you speak to a bit to what drove the cross-selling strength here, and if you expect this to continue in 2026? Thank you so much. George Cardoza: We're super pleased, Subbu, with the re-acceleration in NDR. You know, this is really a metric quite critical to us and to any other software company where you're obviously looking at same-store organic growth. First part that we're incredibly proud of, the churn is now actually under 1%. I mean, this is like 99 percentile performance for software. It just really shows how sticky the platform has become and really how hard it would be to sort of move to other opportunities just because again, the uniqueness of what we're able to do from a compute and scalability and cost perspective and efficiency perspective is really unmatched. I'd say above and beyond that, you know, and you've seen this in general, there is a re-acceleration of volumes within sort of NGS, oncology, and rare disease. We're benefiting from that. I would say as well, we've done a much better job on the expand, right? Which is really where this is also a key metric to make sure that, you know, we're enabling our customers to scale not just with the data computes or higher ASPs, but also with bigger volumes and then moving to more applications, right? I would say overall you'll see that continue into 2026 and beyond, particularly given the great number of new logos or new accounts we've brought online, you know, north of 200 over the last 2 years. There's just huge expansion potential, which you'll see come through on the NDR. Subhalaxmi T. Nambi: Thank you so much for that, George. George Cardoza: Thanks, Subbu. Operator: Thank you. The next question comes from William Bonello with Craig-Hallum. Please go ahead. William Bonello: Hey, thanks for taking my question. A couple here. On the pharma side, obviously, exciting to see the number of contracts that you're signing. I'm just wondering, you know, when you sort of add them all up, beginning with the stuff that you, the expansion that you did with AZ and then the new contracts that you've added, can you give us any kind of sense of the potential annual contribution from those contracts and then maybe sort of the time period over which we would see that revenue begin to roll in? George Cardoza: Thank you, Bill. I would say, you know, obviously considering, you know, we had obviously challenging performance in the pharma business going back to 2024. We're really pleased to see improved momentum in terms of new contracts and new logos coming online. You know, coming off of J.P. Morgan, you know, I spent quite a bit of time with very senior members of many of the top 20 pharma, and I would say finally our story is really resonating. I think there's really, I would say, you know, specific areas of repeatable business where we can scale. I think on the product market fit and on the, you know, sort of ability to have a much more material contribution to our overall revenue and growth, we're moving in the right direction. That being said, you know, pharma business, as you know, does take time, right, to sort of come online and ramp and also decide. You know, it is long cycle business. We are trending in the right direction. I do think, you know, obviously the contribution into 2026 will be a net positive for biopharma, which is important. Certainly, you know, we're not in a position yet where we're looking for a hockey stick, right? Obviously we're, you know, we're doing all of the right, I would say, strategic steps to lay the groundwork for a pretty nice re-acceleration in later 2026, 2027 and beyond. We're not yet kind of at a point where I would say the critical mass is enough to where I can declare this will be X% of revenue. Aspirationally, you know, we think pharma could be a much higher percentage of total revenue, certainly much greater than where it is today. I wouldn't say we're at a point yet where we can exactly point to that. Certainly as we see more and more evidence of kind of that momentum continuing and building, we'll be happy to share more specific figures to allow you guys to model better that business, which I know has been a bit challenged over the last two years. William Bonello: Sure. Thanks. Just on the 2 large health systems that you added, thanks for talking about what indication it is that they're using. You know, how do you sort of assess the potential for those, you know, based on your discussions with those health systems, the potential that those customers may want to eventually, expand into additional, indications and sort of what the, you know, what the key components would be to influence their decision one way or another? George Cardoza: Sure. It's a great question, Bill, and I appreciate you pointing this out because obviously we're incredibly excited to be able to serve two of the four largest health systems in the United States. You know, this is starting with just one application, right? If you look at the growth we had in the period, particularly in volume in the US, nearly 50%, this isn't even, you know, sort of, I would say, contemplating any of that volume starting to contribute. Again, we're really excited about just the size and magnitude that this can bring just again with one application. Give you a sense, we actually have already an expand opportunity in the pipeline from one of these two parties, and it's also fairly significant. I'm super, I would say, optimistic that we'll be able to, you know, grow these accounts materially over time where we're looking and we'll share in the investor deck, and some of the cohort analysis over time. I think what you'll see is our ability to really over multiple periods to grow that initial land by multiples, right? So 2x, 3x, 4x, 5x through the volume uptick, through the increased ASP and through application expand. I mean, these are both accounts that, you know, if we were to fully penetrate them, could be certainly, you know, in the 8-figure range. These are very, very sizable initial, I would say, starts for us, and we're really optimistic we'll be able to convert them on the platform as that remains, I would say, a really attractive opportunity. If you think coming off of last week at AGBT, particularly with all of the new platforms coming online on the sequencing side and the complexity of the chemistry and all of the new applications, MRD, transcriptomics, et cetera. The ability to do all of that in one platform at massive scalability at a cost that makes sense with sort of the labor savings these institutes can see, given where reimbursement's been attractive, this is a very favorable medium to near-term trend for us, and we would expect this to accelerate to others. William Bonello: Thanks very much. Operator: Thank you. The next question comes from Daniel Brennan with TD Cowen. Please go ahead. Daniel Brennan: Great. Thanks, thanks for the questions. Congrats, Jurgi and Ross. Maybe first one just on volume price mix for the 2026 guide. Volumes, I think, grew, what, 16% in Q4, up low double digits in 2025. What does the guide contemplate for volumes and price mix in 2026? Given the push with MSK and liquid biopsy, should we expect price mix growth to accelerate as we go forward from here? George Cardoza: We've recommended that people do continue to assume that our ASPs are going to increase. We're concentrating on selling higher priced tests like MSK-ACCESS, MSK-IMPACT and the MSK-IMPACT Flex product that we have. We do expect lift from those. You know, these ASPs are much higher, in some cases 2x, what our average ASP is. You should model some increases. Realize too, though, we're also going to be putting on volumes in areas like Latin America, India, Turkey, that do have a little bit of lower ASP, that sort of tempers it out a bit. Generally speaking, I think you saw the 16% in the fourth quarter. I think we feel good about that in terms of the volume growth. Figure the rest of that revenue growth is going to be coming from the ASP lift. Daniel Brennan: Okay. Maybe second one for Ross. As new CEO of the company, can you just speak to a little bit about your approach philosophy? I assume given the trajectory of the business, it's probably going to continue on what you've been doing. If we look out a year or 2 and then we're looking back at what's transpired, do you think we'll see any potentially meaningful changes? Kind of what type of how will your approach possibly be similar to Jurgi and/or maybe different? Thank you. Ross Muken: Thanks, Dan. You know, I've still got a few months before I take over, I'm super excited, also, I would say to have Jurgi remain involved in an executive chairman function. I think the two of us will make a very good partnership going forward, being able to really help scale this business. Look, I would say in general, I'm fortunate in that the transition's happening in a period of great strength for the business, right? We have a ton of momentum at the moment. I think the real focus is, all right, you know, obviously we're very focused on getting to the $100 million barrier of revenue, you know, whether that's on an ARR or full year basis. You know, how do we scale materially from there, right? A lot of the effort, a lot of the focus of myself is preparing the organization for that next level of substantial growth and expansion. I would say we have a lot of the pieces in place, but certainly, you know, as you get bigger, you need to put systems and people and technology in place to allow that to continue in a way where the return on that capital is quite appealing, and we create shareholder value. I would say that is a good part of it. You know, the other side I would say is we're still not fully tapping the full value of the platform and the network and the ability to have, again, nearly, Dan, 1,000 institutions connected around the world, right? What we're starting to see as we get to the scale is, you know, one, labs of all sizes really see us as someone, they will need to continue to compete in the future, but not just in sort of the traditional business in precision medicine. You know, you look at again where AI is going with Software as a Medical Device or with, you know, multimodal algorithms. Think about, you know, what's happening in the ABC category with computational pathology and digital biomarkers. You look at, you know, the desire to create, again, these more complex algorithms for patient stratification or patient segmentation in clinical trials. There's just a lot more areas where I would say AI and having a network of the size and the data that we touch becomes really unique on a global basis, given its diversity. We need to figure out how to obviously unlock and scale that. You know, one of the things in the interim that I would say has limited us somewhat is, you know, obviously, as we're trying to get to be profitable, right? You have to be very disciplined on the investments you make. I would say with our confidence in that crossover to profitability in the near medium term, you start to get a lot more capital freed up to make some of those investments and bets. I would expect to see us take products like the digital twins and others and really use that to scale into some of those multimodal and other data related capabilities and really truly build this kind of intelligence layer for healthcare that I think could be incredibly differentiated on a global basis. Daniel Brennan: Great, Ross. Thank you. Ross Muken: Thanks, Dan. Operator: Thank you. The next question comes from Mark Massaro with BTIG. Please go ahead. Mark Massaro: Hey, guys. Thank you for taking the questions and congrats on all the momentum. One of the key levers to your business, I think, over the years has been your ability to turn on customers. Can you just give us a sense for where you are now with your go live implementation timelines? Can you speak to maybe the infrastructure or boots on the ground that you have, perhaps any metrics you could share about, you know, taking all these customers you've signed on to to make them go live in 2026? Jurgi Camblong: Yes. Good morning, Mark. Absolutely right. Turning customers in routine has always been part of our business model. As you know, we're being paid on usage. First we land customers, we sign them, then we implement the platform on the customer side, and then we start seeing revenue coming up, right? As you understand, most of the bookings we've been doing in 2025 are going to contribute in our revenue story from mid to end of 2026. The KPI you're highlighting in terms of implementation is obviously something we scrutinize a lot, and it's very important. Ross will share with you where we stand on the momentum and remind you maybe what were some of the actions we had taken last year as well to speed it up the implementation. Ross Muken: Yeah. Mark, if you look, we're able to complete north of 100 implementations this year, and that was up pretty materially year-over-year. If you look at the sequential cadence of what we did in the second half, it was materially above the first half, right? The actions we took starting in kind of the first part of this year, particularly in the second quarter, really started to pay off. We'll see that momentum continue into 2026. We're starting to see, essentially the amount of revenue released per month similar to the amount of bookings signed per month, which is more ideal, right? We had a period where more was coming into the funnel than was coming out just because we were sort of at this material acceleration period. It doesn't mean that growth isn't continuing to sequentially improve. It is, but we're getting much better at handling the volume, and optimizing a number of steps in that process and essentially managing the customer to a quicker time to revenue and routine. We're also getting better, I would say, at enabling customers to choose products, that are in, from a long-term perspective, you know, future-proofed and things that are more standard for us. You think about, again, MSK-IMPACT, MSK-ACCESS, Enhanced Exomes, et cetera. These are products or our comprehensive hematology product that we can bring online faster, that we're doing multiple of at the same time, and it's allowing again for that quicker speed to revenue. I won't declare victory. I think we still have plenty of places to get more efficient and improve, but I think the trend is favorable and that will help again in terms of that sequential revenue acceleration that we're obviously implying in the guidance over the balance of this year as well, similar to what we saw last year, in terms of the cadence. Mark Massaro: Okay, that's really helpful. You know, you guys have been driving really strong growth in the U.S. market with analysis volume up 50% in Q4. You indicated you expect it to continue in 2026. You know, since U.S. is still a relatively small portion of your business, do you think you can build off of the 50%? Related to that, you guys do compete with some other send out labs in the U.S. market, some of which have really juiced up their commercial teams, some of which in 2025, others are doing it now this year. How do you think about the right size of your U.S. sales operation, and could that be an area where you look to expand? Jurgi Camblong: Yeah, absolutely, Mark, right. Actually the U.S. clinical market should be our biggest market. As you remember, we started in Europe, developing the technology there and really penetrated the U.S., from 2022, post-COVID. Yes, to your point, the U.S. market should be significantly bigger with our model. Given that there is more and more data, more and more complexity on the data, we expect to make inroads into many, more new customers and grow those volumes. Ross? Ross Muken: You know, Mark, I'm really proud of our performance here, in the U.S. I think obviously it's taken some time, for our model to really scale and resonate. I think there's also a bunch of other favorable trends happening, in the space with reimbursement getting more asserted on many of these tests, as well as, you know, the sequencing equipment and consumables getting, more affordable, right? I think with a platform like ours, the ability to generate precision medicine data at scale close to the patient, has never been easier, right? We're seeing a lot of large institutions start to see the benefits of that and really move in that direction outside even just the traditional academics that have done so in the past. In that vein, Mark, again, just to remind you, we don't necessarily view ourselves competing, right, with the send outs because in general some of them actually use us as well, right? It's really our customers that are competing with each other. For example, those two large entities we talked about in the U.S., right? I guess you can say they are going to compete for exome volumes with others in the space, but we don't really see ourselves as necessarily that competitor, right? We're happy to also work with large laboratories doing exomes as well, right? For us, our belief is ultimately with our scale and cost advantage and with the size of our network and the size of just the compute we're doing based on the number of patients, you know, we'll at some point be the largest sort of precision medicine, you know, platform and laboratory in the world, right. Just 'cause we're serving an entire globe, not just regions of the U.S., et cetera. I think with that, it gives us a lot of flexibility. I will say, Mark, you know, last 12 months you're really seeing an inflection in the U.S., right. We're proud of that growth number. To me, there's no reason why that can't even accelerate at some point in 2026 as some of these large customers come online. I'll tell you, and we were meeting yesterday as an executive team, and this is one of the questions. It was, you know, with the performance of that business, do we need to add, you know, headcount? I think we probably will, is the answer. You know, when I look at what others are doing versus us, it's a very different sale, right? For us, if I add 2 FTEs to the U.S. business, right? That's pretty material for us because they're, you know, they're not calling on clinicians, right? They're not calling on oncologists. We're signing entire health systems, right? You know, we pick up 1 million patients, or in this case, you know, in the 2 institutions, 60,000 patients, that's 1 salesperson, right? To do that at a send out laboratory, you'd need many, right? 'Cause you'd be calling on the clinicians. We get much better operating leverage on that. I would say it's astute of you. We're certainly going to be adding, and it's one of the only few places in the entire organization we're adding headcount. Again, if you're thinking of quantum, I don't think we're going to be adding 100 feet on the street. It's, you know, I think in our model, we're pretty well scaled, and we can add incrementally and that new salesperson and productivity adds quite a bit of revenue, right, per salesperson. We're excited about that from an efficiency standpoint as well. Mark Massaro: Sounds good. Thanks for the time, guys. Ross Muken: Thank you, Mark. Operator: Thank you. We have reached the end of the question and answer session. Let me transfer the call over to Jurgi Camblong, Co-founder and CEO for closing remarks. Please go ahead, sir. Jurgi Camblong: Thank you so much for joining us today. Thank you to all the Sofians for the great work in 2025 and Q4 2025. We're very much looking forward to your impact in 2026. To remind you, tomorrow we are attending the TD Cowen Healthcare Conference in Boston, and we will be happy to see you there and take your questions. Have a good day. Operator: This concludes today's conference, and you may now disconnect your lines at this time. Thank you for your participation.
Operator: Good morning. I would like to welcome everyone to the Plaza Retail REIT Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would like to advise everyone that this conference is being recorded. I will now turn the conference over to Kim Strange, Plaza's General Counsel and Secretary. Please go ahead, Ms. Strange. Kimberly Strange: Thank you, operator. Good morning, everyone, and thank you for joining us on our Q4 2025 results conference call. Before we begin, we are obliged to advise you that in talking about our financial and operating performance, and in responding to questions today, we may make forward-looking statements, including statements concerning Plaza's objectives and strategies to achieve them, statements with respect to our plans, estimates and intentions, or statements concerning anticipated future events, results, circumstances or performance that are not historical facts. These statements are based on our current expectations and assumptions and are subject to risks and uncertainties that could cause our actual results to differ materially from the conclusions in these forward-looking statements. Additional information on the risks that could impact our actual results and the expectations and assumptions we applied in making forward-looking statements, can be found in Plaza's most recent annual information form for the year ended December 31, 2024, and management's discussion and analysis for the fourth quarter ended December 31, 2025, which are available on our website at www.plaza.ca and on SEDAR+ at www.sedarplus.ca. We will also refer to non-GAAP financial measures widely used in the Canadian real estate industry, including FFO, AFFO, EBITDA, adjusted EBITDA, NOI and same-asset NOI. Plaza believes these financial measures provide useful information to both management and investors in measuring the financial performance and financial condition of the Trust. These financial measures do not have any standardized definitions prescribed by IFRS and may not be comparable to similar titled measures reported by other real estate investment trusts or entities. They should be considered as supplemental in nature and not as a substitute for related financial information prepared in accordance with IFRS. For definitions of these financial measures and where to find reconciliations thereof, please refer to Part 7 of our MD&A for the fourth quarter ended December 31, 2025, under the heading Explanation of Non-GAAP Financial Measures. I will now turn the call over to Jason Parravano, Plaza's President and CEO. Jason? Jason Parravano: Thank you, Jim, and good morning, everyone. 2025 was a year that reinforced why Plaza's strategy works. In a market defined by cautious consumers, uneven economic signals and still elevated cost of capital and construction, our portfolio continued to demonstrate the durability of the essential needs retail backed by disciplined execution and fully internalized operating platform. We remained focused on optimization and intensification while continuing to benefit from steady operating fundamentals and a portfolio concentrated in nondiscretionary retail. This combination delivered another year of growth. Total FFO increased to $44 million or $0.395 per unit compared to $40.5 million or $0.363 per unit in 2024, an 8.8% improvement. There are a few onetime items that cloud those results, so I figured I would provide an explanation on how to normalize our solid performance for the year. If you exclude $123,000 of reorganization costs, $425,000 related to a change in bonus accrual timing and $544,000 of bad debt tied to Toys R Us insolvency in 2025 and exclude $2.7 million in reorganization costs of 2024, FFO per unit would have increased approximately 4.5% year-over-year. This performance reflects the strength of our portfolio and the disciplined execution of our strategy, which we have been pursuing for the last year. The main driver behind this growth comes from higher NOI from same asset growth, which highlights our ability to complete many optimization projects as well as acquisitions and intensifications. Leasing fundamentals remain robust with blended leasing spreads of 13.4% over the renewal term. Notably, our leasing spreads on negotiated renewals over the renewal term were just over 18%. This underscores our ability to drive value from the existing portfolio and demonstrates the favorable delta between our in-place and market rents. Our committed occupancy remains at an all-time high of 97.6%. We also have an active lease pending attending condition, which will increase that committed occupancy number to 98% in the coming days. Excluding enclosed malls, our occupancy rate is even higher and is near perfect at 99%. These metrics continue to reflect all-time high performance levels, reinforcing sustained tenant demand and the strategic positioning of our portfolio in markets characterized by limited retail supply. As renewals continue to take effect during the year, we expect continued positive impact on same-property NOI, completed by contributions from intensification and optimization projects currently underway across the portfolio. On the value creation side of the business, our intensification, development and consolidation initiatives added approximately $5.5 million of NOI in 2025, reinforcing our strategy of extracting embedded growth within the existing portfolio while maintaining capital discipline. Total NOI for the year was $77 million, representing growth of 2.7% compared to 2024. We also advanced and completed several projects that should contribute more visibly in 2026 and beyond. During the year, we handed over multiple spaces to Loblaws and other key tenants for fit-ups and construction across select properties. As these locations open and stabilize, we expect their contribution to become more apparent through 2026. As we have noted previously, optimization work can create timing-related noise in AFFO, but this work supports FFO growth and long-term value creation. Stepping back, our portfolio today stands 191 properties totaling approximately 8.8 million square feet across Canada, with a strong concentration in open-air centers and small box format leased -- small box formats leased predominantly to national tenants serving the essential needs, value and convenience segment. This focus continues to underpin stable demand and attractive reinvestment opportunities across our markets. In 2026, our priorities are clear: continue executing on optimizations and intensifications already in motion, drive leasing spreads where we see embedded mark-to-market and prudently allocate capital to the highest return opportunities within our pipeline. We remain disciplined. We remain focused on retail. We know it well, and we remain committed to long-term value creation for our unitholders, our tenants and the communities we serve. With that, I'll turn it over to Jim to take you through the financials in more detail. Jim Drake: Thank you, Jason. Good morning, everyone. I will expand on a few of Jason's comments and highlight our results. Within the total NOI growth that Jason mentioned, same-asset NOI increased 1.1% for the quarter, 1.7% for the year. Excluding bad debt related to the Toys R Us insolvency, same-asset NOI would have increased 2.2% for the quarter, 2.5% for the year. In addition to the FFO growth Jason noted, AFFO per unit also increased 4.9%. Although our optimization program has a temporary impact on AFFO, which included $2.1 million of leasing costs related to that program, the result is improved asset quality and increased revenues. On the balance sheet, our debt-to-assets ratio is down 60 bps versus last year at 50%, excluding land leases. Net debt to adjusted EBITDA was 8.9x, 20 bps lower than last year, given EBITDA growth and reorganization costs incurred last year. We maintain a balanced mortgage maturity ladder with $63 million of fixed rate mortgages maturing next year at a weighted average rate of 3.4% and overall loan-to-value of 42%. We continue to see strong interest in our mortgage offerings with all-in rates in the low 4s to low 5% range. In addition to the lease renewal spreads Jason spoke about, we also introduced a new leasing spread. The new leasing spread represents rent in year 1 of the new lease versus the expiring rent for the previous tenant if that previous tenant was in place within the last 12 months. The new leasing spread for the year was 82%. This significant spread further highlights the impact from our optimization program. The optimization program also increases asset quality as does our noncore asset sales and consolidation programs. We sold 21 properties during the year, generally QSRs and some small single-tenant assets and replaced them under our consolidation program with a 50% interest in a grocery-anchored property in Halifax and a 75% interest in 3 freestanding Shoppers Drug Marts in Ontario. In both cases, we now own 100% of the assets. Finally, for the fair value of our investment properties, we took a $14 million write-up during the quarter on increased stabilized NOIs, new appraisals and cap rate compression. Our weighted average cap rate is now 6.8%. Those are the key points for the quarter and year. We will now open the lines for any questions. Operator? Operator: [Operator Instructions] The first question comes from Mark Rothschild at Canaccord. Mark Rothschild: Looking at the leasing spreads you achieved in the past year and the same property NOI growth you would have achieved not for the Toys R Us issues. Is it reasonable to expect that 2.5% is probably a good number to look at for this year and maybe just a general run rate that you could be achievable for the foreseeable future? Jason Parravano: Mark, it's Jason. I believe 2% to 2.5% is achievable for the foreseeable future, taking into consideration timing impacts and any unforeseen that could happen in the portfolio. But yes, that makes a lot of sense. Mark Rothschild: And in regards to the space that has been vacated recently, and obviously, it's not a huge number, but how is the leasing going? And should we expect anything notably different on the leasing spreads? Jason Parravano: No. So again, with respect to like our optimization projects, that's a space that we would be forcing tenants to vacate and that would impact our new leasing spreads. With respect to renewals or tenants that are in place, we currently have in our open-air strip portfolio, call it, somewhere around 70,000 to 100,000 square feet of vacancy. And with respect to that space, we're working towards signing documents on probably 1/3 of it while actively trying to lease the balance, and it's made up of a bunch of little units across the portfolio. But I would say that where we're at today on an occupancy level is probably the highest you're going to get just given the fact that there's always space that's going to roll. And what we've seen as a trend over the last 2 years or so is we always have approximately 75,000 to 125,000 square feet in our open-air strips that's constantly rolling, and it's those mom-and-pop tenants that are in and out and replacing them with new ones. Mark Rothschild: Okay. Great. And maybe just one more for me on the development projects. Is it reasonable to expect most of these projects get completed over the next year or so? Some of them, I guess, are longer term, but maybe what's the timing of all that? Jason Parravano: So we're in the process of completing a large development, greenfield development project right now as well in Ontario, and we're handing over space to the tenants. As soon as we complete asphalt, probably closer to mid-April, end of April, while we have other projects, notably our greenfield project in Galway, which we're working through a couple of additions this summer on space and working towards further building out that final phase of that project or the final material phase of that project closer to 2028. Operator: The next question comes from Lorne Kalmar with Desjardins. Lorne Kalmar: Just quickly on the Toys vacancy. Can you remind us of the NOI impact there? And if that was already fully felt in 4Q or if you'll feel a little bit of that or rather we should take a little bit off in Q1? Jason Parravano: You're going to have to take off a bit of it in Q1 and Q2 as we work towards leasing it up. So that's approximately $1 million a year of NOI. So that would be the base and the additional rents that were collected on that tenant. It's about 35,000 square feet. Lorne Kalmar: Okay. And then just in terms of backfilling that, how is that progressing? Jason Parravano: Working on a few options. There is demand for that space. You can imagine the notable suspects who are approximately 30,000 to 35,000 square feet. It doesn't happen overnight. So we're working towards hopefully leasing that up on the back end of 2026. Lorne Kalmar: So do you think it can be -- you get straight-line rents there by the end of '26 or more of a '27? Jason Parravano: Straight lines by the end of '26, hopefully. Lorne Kalmar: All right. And then maybe just lastly, switching gears on the acquisition side. I know you guys are focused on cleaning up some of these partnership agreements. What's the outlook for 2026? How much do you think you can do? Jason Parravano: So we increased our ownership slightly in one syndication earlier in -- sorry, at the end of January, and we're looking to consolidate at least one more syndication for sure, while we clean up some pieces on some other ones as opportunities come due throughout the course of the year as liquidity permits. Operator: [Operator Instructions] The next question comes from Tal Woolley from CIBC Capital Markets. Tal Woolley: You've got about 4 expansions and redevelopments, I think, coming online over the course of the first half of the year. Do you have an estimate of how much incremental NOI you anticipate to achieve from those projects coming online? Jim Drake: I'll take that. Tal, there's a chart in the MD&A that talks about the developments, redevelopments, and it shows a stabilized NOI upon completion. So the difference between what we have today versus what is stabilized is what we'll see over the next little while. Tal Woolley: Okay. This is on Page 4? Jim Drake: Yes. So Page 14 of the MD&A, you'll see the chart providing details on NOI. So stabilized NOI from intensifications acquisitions is about $6.1 million. And then there's another $600,000 or so from properties currently under development. Tal Woolley: Okay. Perfect. And then just looking at the change in net rental income from Q3 to Q4, it's down about $1.5 million. So I'm assuming some of that is the chose us bankruptcy write-off. But I guess, is the balance mostly just the seasonality of your operating expenses? Jason Parravano: I can take that, Jim. So we've got about $0.5 million there from the Toys R Us write-off. Another maybe $200,000-or-so related to just normal course bad debt, which we would normally experience in the portfolio and the balance of it would be seasonality. Tal Woolley: Okay. That's great. And then just lastly, yields will keep moving all over the place a little bit. Just wondering your rough cost of secured financing right now for 5 years. Jason Parravano: Jim? Jim Drake: Five years we would be in the low 4s to mid-4s. Operator: Mr. Parravano, there are no further questions at this time. Jason Parravano: All right. Well, thank you all for joining us today and your continued support and trust. We remain committed to creating long-term value for our unitholders, our tenants and the communities they serve. We appreciate your time and look forward to the journey ahead. Take care and talk soon. Operator: Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Thales 2025 Full Year Results Conference Call. The presentation will be held by Patrice Caine, Thales' Chairman and CEO; and Pascal Bouchiat, Thales' CFO. [Operator Instructions] I must advise you that this conference is being recorded. I would now like to turn the conference over to Mr. Louis Igonet, VP, Head of Investor Relations. Please go ahead, sir. Louis Thibaut Igonet: Good morning, everyone. Welcome, and thank you for joining us for the presentation of Thales' 2025 Full Year Results. I'm Louis Igonet, I recently joined Thales as Head of IR. I'm excited to be with you today. With me today are Patrice Caine, Chairman and CEO; and Pascal Bouchiat, CFO. The presentation will be followed by a Q&A session. As usual, this presentation is audio webcasted live on our website at thalesgroup.com, where the slides and press release are also available for download. A replay will be available soon after the end of the event. Please also note that this presentation contains forward-looking statements based upon what management of the company believes are reasonable assumptions. These statements are not guarantees of future performance. With that, I'd like to turn over the call to Patrice Caine. Patrice Caine: Good morning, everyone. So I'm now on Slide #2. So let's start by sharing some highlights for 2025 which was another very strong year for Thales. First, on commercial performance. We delivered another year of strong order intake, equaling the record level reached in 2024, thanks to our strategic positioning in high-growth markets. Our sales growth accelerated, surpassing our guidance. We achieved a robust improvement in profitability compared to 2024. And most notably, our free operating cash flow reached a record high level, reinforcing our financial strength and ability to fund future growth. Hence, we achieved or exceeded all our 2025 financial targets. On the strategic front, we also made major progress in positioning Thales for the future, thus delivering on our strategic road map. Typically, we further increased our production capacity to capture rising defense spending and support our customers' rapid ramp-up, ensuring we meet demand without compromising quality or on-time delivery, which are our clients' key priorities. We also continued to strengthen our R&D leadership with new breakthroughs in 2025 that keep us at the cutting edge of technology from AI with cortAIx to quantum and even nuclear fusion with our GenF project. And we took a major step in space by signing an MoU with Airbus and Leonardo to create a leading European space player, a move that will reshape the industry and secure Europe's strategic autonomy in this critical domain. So moving to Slide #3. To illustrate our ramp-up and successful positioning in the European rearmament dynamic, I'd like to mention our groundbreaking success with SAMP/T NG, a strategic milestone that reshapes the air defense landscape. The SAMP/T NG produced in partnership with MBDA through Eurosam is the world's most advanced air defense system, which offers long-range air defense with a unique detection and tracking capability against all current and future threats, aircraft, helicopters, UAVs, cruise and ballistic or hypervelocity missiles. It definitely sets a new standard in air defense with 360-degree and 90-degree coverage, meaning it can intercept threats anywhere in the sky, extensive interoperability with NATO systems, ensuring a seamless integration with allied forces, high firepower with low manpower requirements, optimizing operational efficiency, encamping and decamping, and 24/7 operations. So with SAMP/T NG, we have disrupted a long-standing de facto monopoly. Denmark's decision to select SAMP/T NG over their legacy system is a clear validation of our technology, performance and value proposal, proving that European sovereignty in air defense is now a tangible reality. And this is only the beginning with SAMP/T NG being a high-value, a large-scale system we expect many more export successes. Moving to Slide 4. Now to discuss what truly differentiates Thales, our innovation and technological leadership, I would like to focus on AI, where we are leading the transformation. Our AI leadership is built on scale and expertise with 800 AI experts and 100 PhD students. We are also expanding cortAIx globally with 5 country hubs across the globe, 200 patents covering the full spectrum of AI technologies, securing our intellectual property and competitive edge. Our cortAIx accelerator is now fully deployed across all Thales divisions, embedding AI into 100-plus products with 250-plus use cases deployed or in development. Another of our strengths lies in our strategic partnership. We are joining forces with industry leaders to codevelop solutions or use cases. With Dassault Aviation, for instance, we are integrating cortAIx into next-gen aviation systems, enhancing functions for manned or unmanned aircraft for observation, situation analysis, decision-making, planning and control during military operations. With Naval Group, we aim to accelerate the development of trusted AI solutions applied to critical systems in several key areas, collaborative combat, decision support systems, electronic warfare, training and simulation, logistics and support, just to mention a few. Then to give you concrete examples of how we are turning AI and innovation into customer value. Number one, our TALIOS reconnaissance and targeting pods capabilities are now unmatched. Boosted by cortAIx AI, it provides AI-assisted targeting, passive detection and enhanced vision to overcome stealth threats, electronic warfare and poor visibility. It maximizes mission efficiency, ensuring safety and maintaining superiority across all domains for the end users. The second example is in the maritime domain, our autonomous mine countermeasures with first delivered in 2025 to the French Navy as AI augmented detection, classification and identification capabilities. I am now on Slide 5. Moving on to our strategic ambitions in space, an area where Thales is positioning itself at the heart of Europe's sovereign capabilities. We have taken a major step forward by signing a Memorandum of Understanding with Airbus and Leonardo to create a leading European space player. This partnership will combine our complementary strengths to build a global scale champion for Europe. Our target is to launch operations in 2027, subject, of course, to regulatory approvals and closing conditions. And this initiative holds significant value creation potential for all stakeholders, for customers, for Europe, for investors. For customers, it means end-to-end space solution from secure connectivity to earth observation and exploration. For Europe, it ensures strategic autonomy in a critical domain. And for investors, it opens new avenues for growth in one of the fastest evolving high-tech sectors. Let's now move to Slide 6 to look at our financial performance with a few charts. As previously said, we have enjoyed strong commercial momentum in 2025, reaching EUR 25.3 billion for the second year in a row. The book-to-bill ratio is maintained significantly above 1, reaching 1.14. Sales recorded a sharp 8.8% organic growth, reaching a record high EUR 22.1 billion. Adjusted EBIT rose by more than 13% on a reported basis, while EBIT margin improved to 12.4%. Adjusted net income, group share, grew by 5.5%, crossing the EUR 2 billion mark. And a very strong generation of free operating cash flow from continued activities, which increased by 27%, reaching EUR 2.6 billion, notably supported by the solid momentum in our order intake. And the last chart, the dividend. This new year of strong financial performance is leading our Board of Directors to propose at the next AGM in May, a 5.5% increase to EUR 3.90 per share. It demonstrates Thales' confidence and commitment to regular shareholder returns. Turning now to Slide 7, looking at our extra financial performance in 2025. I indeed wanted to come back on the continuous progress we've made in terms of corporate social responsibility. First pillar, society. The Thales Climate Passport training deployed in 2024 raises employees awareness to climate change and its impact on society. The 2025 campaign was a success with over 94.6% of managers who completed the training, way above the 85% target. We are clearly ahead of plan on this pillar. Second pillar regarding our strategy for climate change. Our CO2 emissions from Scope 1 and 2 decreased by 75.2% in 2024 and Scope 3 emissions decreased by 15.4% compared to 2018. The group has thus achieved its 2030 targets ahead of schedule for the third consecutive year. The absolute carbon footprint reduction targets remain relevant for 2023 in light of the group's growth prospects. Finally, our third pillar named people aims at strengthening gender diversity where at the end of 2025, we are in line with our 2030 trajectory. First, the percentage of women in senior management position reached 21.8%. And this performance is in line with the group's trajectory to reach the set goal of 25% by 2030. Second, the percentage of management committees with at least 4 women reached 69.2% in 2025 compared to 64.1% at the end of 2024. For 2030, we have set an ambitious target to have 85% of management committees with at least 4 women. After this introduction, I now hand over to Pascal, who will comment our financial results in greater detail. Pascal Bouchiat: Thank you, Patrice, and good morning to everyone. I'm now on Slide 9. So starting with order intake. As Patrice mentioned, 2025 was again a strong year in terms of commercial momentum as order intake was maintained at a record level, namely EUR 25.3 billion. This reflects the quality of Thales' diversified product and solutions portfolio fit for our clients' purposes. The book-to-bill ratio stood at 1.14, meeting our expectations for the year and even 1.24 for Defence segment. This bodes well for future revenue generation. This robust performance was driven by all type of orders with a notable strong momentum for orders below EUR 100 million. Looking at large orders. 28 orders with a unit value over EUR 100 million were booked in 2025, of which half in the sole fourth quarter. 20 large orders were booked in Defence with several flagship contracts notably in Air Defence. I can, in particular, mention the LMM, Lightweight Multirole Missile contract with the U.K. MOD or a major land surveillance contract with the German MOD. 2025 saw also a good momentum in Space with large -- with 5 large contracts booked, of which 1 in OEN and 4 in telco, including the IRIS2 initial phase contract. Avionics booked 3 large contracts, of which a flagship contract for IFE with a major U.S. airline in Q4 2025. Overall, a strong performance in 2025 for order intake, driven by continued high demand from our clients in all our businesses. Now moving on to sales on Slide 10. Sales in 2025 reached EUR 22.1 billion, translating into an organic growth of 8.8%, significantly above the top of our guidance range, which was upgraded in July. This robust performance was notably driven by Defence activities, which recorded double-digit organic growth again this year. Aerospace also contributed significantly with stronger organic growth fueled by both Avionics and Space activities. Cyber & Digital sales were slightly down organically, in line with latest expectations. I will comment further the performance in the following slides. From a geographical perspective, sales organic growth was again well balanced between emerging and mature markets. It's worth noting that all our emerging markets, Asia, Middle East and Rest of World, recorded double-digit growth. Reported growth was negatively impacted by material currency impacts this year as the euro strengthened against most currencies in 2025, against the U.S. dollar, as we are all aware of, but also against other currencies like the Australian and Canadian dollars. Overall, currency led to a 1.5 percentage points headwinds on 2025 sales reported growth. Scope impact was positive and resulted mainly from Cobham Aerospace Communications acquisition in April 2024. Taking into account these elements, 2025 sales recorded a solid 7.6% reported growth year-on-year. Let's now have a look at adjusted EBIT. I am on Slide 11. So as you can see, adjusted EBIT increased sharply in 2025 and reached EUR 2.7 billion. This increase mainly was driven by the significant progression of our gross margin, up by EUR 391 million (sic) [ EUR 383 million ]. This was mostly the result of the sales volume progression in Defence and Aerospace. Looking at indirect costs. R&D expenses continue to increase in volume and represented 6% of sales in 2025, in line with our expectations. Marketing and sales expenses were broadly stable organically, reflecting Thales' ability to optimize its indirect cost in line with the evolution of the business. This was notably the case in Cyber & Digital in 2025. G&A grew organically at half the pace of revenue, which is also satisfactory. Equity affiliates contributed positively for EUR 61 million to adjusted EBIT growth in 2025. This includes, in particular, a stable contribution from Naval Group, which includes the fiscal surcharge in France. It also includes positive contributions from various JVs, notably from our Defence JVs. It also reflects a one-off positive effect linked to the Thales JV, which is accounted for in our Digital Identity business. A word on mechanical effects. As for sales, negative currency impact at minus EUR 37 million outweighed scope positive impact at EUR 24 million. Moving on now to performance for you by segments, starting with Aerospace on Slide 12. Orders in the Aerospace segment amounted to EUR 6.1 billion, slightly down versus last year on the back of high comparison basis. Underlying momentum in both Avionics and Space remain solid. In Avionics, this solid momentum extended into most activities. In Space, 5 orders with unit value above EUR 100 million were booked, including several geostationary communications satellites and the initial phase contract for IRIS2. Those wins enhance visibility for the coming years. Sales reached EUR 5.9 billion in 2025, recording a solid 8.7% organic sales growth. Both Avionics and Space contributed to this performance. Avionics indeed saw double-digit growth year-on-year, driven by OEN activities. Both flight avionics OE and aftermarket enjoyed strong dynamic, supported by continued ramp-up in aircraft production and also a solid air traffic momentum. Both civil and military domains were supportive. In Space, sales were up as well in 2025, mostly driven by the OEM business. Looking at profitability. Adjusted EBIT stood at EUR 560 million in 2025, an outstanding 39% organic increase, which led margin to reach 9.5%. Avionics posted a solid increase in its profitability driven by stronger aftermarket and further contribution from Cobham AeroComms. Space recovered even better than announced a year ago, posting a positive EBIT in 2025. Now commenting Defence on Slide 13. Order intake in Defence amounted to EUR 15.1 billion in 2025, setting this year, again, a new record high. The book-to-bill ratio stood significantly above 1. It's now the seventh year in a row that Defence sees its book-to-bill ratio stands above 1.2. With a backlog of EUR 42 billion, the level of visibility in this activity keeps being higher at 3.4 years of sales. Thales booked 20 orders with a unit value above [Audio Gap] air defense, effectors, airborne solutions or in the naval domain. We also believe that stronger European collaboration, for example, through EU MFF mechanism such as Space [Audio Gap] EUR 12.2 billion, up 12 [Audio Gap] firmly supported by further production and deliveries ramp up across the portfolio. Surface radars and effectors are, for instance, areas where efforts have been paying off in 2025. Overall, organic growth has outpaced our expectations in 2025. And I want to highlight the tight execution throughout the year that led to this excellent performance. A word finally on adjusted EBIT [Audio Gap] EBIT in 2025 versus 2024. Now moving on to Cyber & Digital on Slide 14. Sales in the Cyber & Digital segment were broadly flat organically in 2025, reflecting a mixed performance. In reported figures, it's worth noting that the FX impact was significantly negative and led to a 3.4 points headwind on sales growth. Starting with Cyber as a whole, which was down 3.8% organically over the whole year. Cyber Products, which represented a bit more than 80% of the Cyber business in 2025, recorded a low single-digit organic decrease last year. As you know, until Q3, we have been impacted by the merger of Thales and Imperva sales forces, which notably led to a higher staff turnover and weighed on the performance. Employee turnover is now back at a benchmark level. In Q4, Cyber Products was back to growth, which is positive, and paves the way for further growth in 2026. Market momentum keeps being supportive and Imperva sales force integration being now over, we should progressively recover sales growth profile. Cyber Services sales were down double digit organically year-on-year as it kept being impacted by soft market in Australia. The premiumization strategy Thales has adopted for this business showed encouraging signs in related geographies as we are focusing on selective, profitable segments. Digital Identity sales were up slightly, 1% in organic terms. Digital Solutions kept driving growth, notably in secure connectivity solutions and payment services. However, volumes on payment cards remained low in 2025. And at this stage, we don't expect the market to improve materially in 2026. Having a look at profitability. Adjusted EBIT margin resisted in the context of lower revenues in 2025 and stood at 13.7%. This is mainly the result of tight cost management in the Cyber business, which saw an increase in margin in 2025 as well as a positive impact from one-off elements in the digital business we already mentioned in July 2025. Turning now to Slide 15 and looking at below adjusted EBIT items. So the line cost of net financial debts and other financial results was moderately up in 2025 as expected. Net financial interest was significantly down in 2025 and stood at minus EUR 116 million in 2025 versus EUR 166 million in 2024, driven by the ongoing deleveraging following the acquisition of Cobham AeroComms. Other financial results amounted at minus EUR 28 million versus plus EUR 35 million in 2024. This evolution is due to the non-recurrence in 2025 of positive one-offs recorded in 2024. The finance cost on pensions and other employee benefits were slightly up in 2025 to minus EUR 56 million. Moving on to income tax. At minus EUR 561 million, the amount of income tax integrates EUR 75 million of tax surcharge in France in 2025. This led the effective tax rate to reach 24.1% in 2025. But it's worth measuring it is broadly stable excluding the surcharge. The 2026 French budget includes a recurrence of this tax surcharge in 2026. The expected impact for Thales in 2026 P&L should amount to around EUR 90 million, a EUR 50 million increase versus 2025. In addition, the impact on our share in Naval Group's net income should be broadly stable at minus EUR 8 million. Minorities have significantly decreased year-on-year to EUR 26 million. This is mainly driven by the reduced net losses incurred by tax. All in all, this led to an adjusted net income, group share, at EUR 2 billion, an increase of almost 6%. The adjusted EPS stood at EUR 9.76 in 2025. Excluding the tax surcharge in France, adjusted net income group share would have been up by more than 9%. Having a look at the bridge from adjusted EBIT to free operating cash flow, I'm now on Slide 16. So in 2025, on Slide 16, we see D&A, depreciation and amortizations broadly stable, while net operating investments were significantly up at minus EUR 746 million, in line with our guidance of 3% to 3.5% of sales. This reflects the group's strategy to keep investing for future growth, for example, with additional industry capacities as already commented. Overall, the balance of D&A and net operating investments amounted to negative minus EUR 260 million. Change in working capital requirements was a strong tailwind in 2025. I will comment further in the next slide. All in all, 2025 is again an impressive year in terms of cash generation. Free operating cash flow amounted to almost EUR 2.6 billion in 2025. This means a conversion from adjusted net income to free operating cash flow of 128%, a very strong performance. Let's now have a look on what drove this impressive performance. I'm now on Slide 17. Firstly, and we've discussed it already, 2025 was once again a year of strong momentum for order intake. Major orders were booked while orders with a unit value below EUR 100 million were solid as well. Secondly, the payment profile from our customers is very satisfactory. This includes down payment, but also highlights Thales' tight management of contract structure. Lastly, the emphasis that we keep putting internally on stocks optimizations over the last few quarters and year showed a positive outcome in 2025. All in all, conversion ratio has outpaced expectations for the year at 128%. For 2026, we anticipate a cash conversion ratio between 95% and 100%. This give us confidence to reach the high end of the guidance we gave at our 2024 Capital Market Day, which is an average conversion ratio of between 95% to 105% over 2024-2028. Now a word on net debt evolutions, moving on to Slide 18. Net debt saw significant reduction in 2025, and Thales' financial position is particularly strong as of end 2025. This was primarily driven by the strong free operating cash flow generation I just detailed. The impact from acquisition and disposal amounted to a negative EUR 69 million, which corresponds mainly to final price adjustments related to the sales of Thales transport business to Hitachi Rail finalized in May 2024. The dividend cash out amounted to EUR 781 million in 2025, corresponding to a payout ratio of 40% and reflecting the increase in adjusted net income. All in all, net debt stood at EUR 1.6 billion as of the end of December 2025. Finally, on Slide 19, a word on dividend. As I just described, 2025 was again a year of robust financial performance and value creation. This leads our Board to propose to the next AGM a dividend of EUR 3.90, up 5.5% versus 2024. This is in line with the payout ratio at 40% and reflects the increase in adjusted EPS. A quick look at the chart on the right-hand side shows the steady growth of adjusted EPS over the last few years, reflecting Thales' ability to consistently deliver sustainable and profitable growth over the years. This marks the end of this financial review. I'm now turning over the call to Patrice, who will address our strategic priorities and guidance. Patrice Caine: Thank you, Pascal. So now turning to our strategy and outlook for 2026. So let's move to Slide 21. And before talking about our 2026 strategic priorities, I'd like to briefly give you the big picture on the tailwinds supporting our different businesses and the key differentiators that Thales can leverage to keep delivering strong and profitable growth. Thales is a unique business in the sense that we are only positioned on markets which benefit from positive long-term momentum supported by proven resilience and sustainable macro trends. First, if we start with Defence, our activities are supported by a strong need for more security, more protection in the context of geopolitical instability. This is shown by the global increase in defense spending with a notable concentration in Europe, where it is projected to grow high single digits annually until 2035 in Europe. And also by the need for our clients for speed as they seek both high-performance products and solutions as well as good enough products that are quickly available. The competition is fiercer than ever, but we have significant competitive advantages. Number one, our deep and diverse portfolio with a unique and historic ability to fill products with the latest technologies, our AI augmented radars, for instance. Number two, our strong customer intimacy and historic knowledge of our clients' concept of operations or CONOPS. And number three, Thales is the strategic partner of choice at the heart of European rearmament. Our position is unmatched because we are deeply embedded in Europe's defense ecosystem. Moving to Avionics. Well, in Avionics, we have a great visibility, thanks to sustained and powerful demand for travel and mobility. That shows no sign of slowing, resulting in continued growth in global air traffic, as IATA, the International Air Transport Association predicts passenger numbers to double in 20-year forecasts. And at the same time, a global renewal of commercial fleets, which increases demand for our equipment from OEMs. And of course, we have strong differentiators, thanks to our commitment to developing a more sustainable and connected avionics, bringing skills and technologies to build the future of avionics, for instance, through predictive maintenance and new generation of flight management systems. Space now, while demand in the institutional market is improving with a growing number of opportunities, thanks to the rise in government investments, typically growing ESA budget and EU MFF and the need for large-scale projects like IRIS2 or the space early warning initiative. We have won very important contracts and delivered truly emblematic projects, which are a testament to the relevance of our positioning and the quality of our products in exploration in science with the Lunar Descent Element for the Argonaut mission in the 2030. Regarding observation, the long-awaited entry into force of the all-in-one contract with Indonesia and the first slice of the Leonardo constellation. On the telecom side as well, where we recorded a good level of orders and the launch of the initial phase of IRIS2 will allow us to start the technological development of the payload. And lastly, in Cyber & Digital. Well, the omnipresence of connected devices and the digitalization of our daily lives with the consequential need to protect our data, our applications, our identities from cyber attacks continues to fuel our activities. We are a world-class player in Cyber with best-in-class products across application security, data security, identity and access management and also premium cyber services. And the services we provide to accompany all industries in their move to cloud are ideally positioned in the competitive landscape. So moving now to Slide 22. To seize all the opportunities created by this environment and to address the many challenges facing Thales, I have identified 4 key priorities for 2026. The first one being our ability to capture profitable growth. To seize this growth, we will continue to ramp up our capacity which means continuing to scale up production across both existing and new facilities with a clear focus, focusing on high-end demand products such as radars, munitions and optronic cameras, systems like our SAMP/T NG, Rafale equipment, counter-UAS, just to mention a few. And at the same time, ensuring we have the right talent. Hence, we plan to recruit more than 9,000 employees worldwide in 2026. Secondly, we'll put a heavy focus on competitiveness through operational excellence, i.e., continuously improving internal processes to continue to deliver on time at cost and quality, but also AI-driven productivity, leveraging artificial intelligence to transform how we operate from AI optimized logistics to so-called software companion, accelerating development cycles and reducing time to market. Lastly, to fully capture the current momentum, we will continue addressing our customers' core expectation, proximity, intelligence. Proximity, our customers expect alignment with their local realities and sovereign requirements, typically leveraging our ability. We will further strengthen customer intimacy by localizing critical parts of the value chain where it creates value, as we demonstrated, for instance, with the recent radar factory opened in the UAE. Intelligence as well, we will continue to enhance the value we deliver by embedding AI across our entire product portfolio, building on our track record of combat-proven AI-enabled systems already deployed operationally. We are scaling AI capabilities across all our offerings. Another key area of focus in 2026 will be to restore growth in our cyber business. The integration of Imperva is fully done, as said by Pascal. So we are now ready to go back on the offensive. First, by reaping the benefits on the sales team reorganization which is now fully up and running to gain traction and go after significant opportunities across all our segments, IAM, software monetization, that affect application security and the likes. And second, by continuing to deliver on commercial synergies by offering to our clients solutions combining the best of Imperva and the best of Thales across all our activities, for instance, via cross-selling. Lastly, our teams are working on the next generation of cyber products. These developments will be essential to ensure that we outperform the competition. So in a nutshell, we have everything in place to position ourselves for growth on these markets. Regarding the Bromo Project, well, if everything goes as planned, this joint venture will be operational within 2 years. So during this time, we are focused on securing support from all stakeholders. This includes the European Commission, but also many key states and their regulatory bodies. And above all, in the meantime, we remain focused on delivering our road map and maintain a solid pace of recovery. This is essential, as by definition, there is still a lot of work to do before the merger is authorized, if it is authorized. So it is critical that we continue doing business to the best of our ability on a stand-alone basis. And as such, the recovery plan we have been implementing is now bearing fruit as you have seen in 2025. But beyond that, we agree that this project has a strong rationale, securing Europe's future in space and allowing to accelerate innovation through joint R&D and cutting-edge space missions. And hence, competitiveness against global players, lead sovereign and military space programs for European nations and strengthen the European space ecosystem, creating opportunities for suppliers and employees alike. Last but not least, regarding Avionics. Our focus for 2026 will be to expand that business above and beyond. Today, we benefit from a world-class portfolio, supporting our customers in making aviation greener, more digital and more connected. Our ambition is to extend our leadership across all aircraft manufacturers. As you know, the most powerful structural trend in the market in both civil and defense markets is the renewal of most aircraft platforms around the 2030s and we are already actively preparing for this significant opportunity. To that end, in 2026, we are continuing to invest heavily in technologies, in industrial capacities -- capabilities. In technology, our 9 product lines, including flight controls, high-performance IMA, Integrated Modular Avionics, help displays, navigation heads are already competitive and are being further enhanced to address the next generation of platform requirements. In industrial capabilities as well, while we continue upgrading our industrial sites to ensure best-in-class performance and competitiveness. So thanks to the actions already taken and the investments underway, we are extremely well positioned for the upcoming competitions. We are excited to deliver the most advanced, reliable and industrially competitive avionics solutions. So now I'm on Slide 23. Well, all these priorities will bring Thales to pursue ambitious financial targets in 2026. First, a book-to-bill ratio above 1. Second, a dynamic organic sales growth between 6% to 7%, which should correspond to sales ranging from EUR 23.3 billion to EUR 23.6 billion, including FX impact. Number three, 12.6% to 12.8% adjusted EBIT margin, which puts us well on track to deliver our 2028 target. And number four, free operating cash flow conversion ratio still high, expected between 95% and 100%. This is clearly a key strength of our model. So overall, we are well on track to deliver the various commitments we made back at our 2024 CMD where we provided some outlook by 2028. We are not even halfway through the 2024-2028 period. But I can already tell you that we feel very confident in our ability to reach the high end of our organic sales guidance given what I've just described in terms of business opportunities. In terms of operating margin, we are clearly on track to deliver 13% to 14% by 2028. And as far as free operating cash flow generation is concerned, there again, we are confident we will be in a position to reach the high end of our guided range. Many thanks again for your attention, and we will now be pleased with Pascal to take all your questions. Operator: [Operator Instructions] And the questions come from the line of Chloe Lemarie from Jefferies. Chloe Lemarie: Could I start with the guidance and digging into the divisional growth expectation, please? So for 2026, what do you factor in, in terms of organic growth for Defence, Aerospace and Cyber & Digital? And in Cyber, what do you call a vigorous market? And how do you think Thales will perform compared to that market growth, please? Pascal Bouchiat: Okay. So first, I mean, giving you a bit of insight on our segment expected growth for 2026. So in total, as you -- as we mentioned, the guidance of organic growth between 6% and 7% at group level for 2026 over 2025. So going through our divisions, starting with Defence. So Defence at this point, high single digit. Overall, that was by the way what was our guidance for 2025. You have seen that we went above this level ultimately. Now as we move into 2026, we believe that high single digit is a reasonable guidance for Defence overall and consistent with the 6% to 7% overall for Thales Group. Overall, that was, by the way, what was our guidance for 2025. You have seen that they weren't above this level ultimately. Now as we move into 2026, we believe that high single digit is a reasonable guidance for Defense overall and consistent with the 6% to 7% overall for Thales Group. Second, on Aerospace. So aerospace, I mean, growing, by the way, both from avionics and also from our space business. So aerospace overall, what we see probably mid-single digit to mid-single digit plus with avionics mid-single digit. We mentioned as we presented 2025 growth that avionics in 2025 was more low double digit. So we are at this point, probably a bit more conservative on avionics for 2026. And today, as we see mid-single digit, this being based on also, I mean, the announcement from Airbus in terms of OEM, but also, I mean, as we see, I mean, the air traffic developing in 2026. Space, we are positive on the back of, I mean, the 2025 order intake and as we see 2026 overall. So -- and lastly, I mean, CDI overall mid-single digit with, of course, I mean, cyber above this level and digital lower than this level. So as you know, I mean, one of our key priorities that Patrice mentioned is to get cyber back on growth in a market which is today pretty positive, as we said. So at this point, of course, and we mentioned that Q4 for cyber product was getting back to growth, which is not the case for the cyber services that was down in Q4. At this point, of course, I mean, we need to be a bit cautious, but the market is there in terms of demand. Now it's up to us I mean, to get back to growth, in particular, in the cyber product, which is absolutely essential for us in terms of value creation. More to come as we move forward in 2026. But overall, yes, I mean, one key priority for us is to recover and regrowth. Operator: [Operator Instructions] We are now going to proceed with our next question. And the questions come from the line of Benjamin Heelan from Bank of America. Benjamin Heelan: I hope you both well. I had a question around AI and the implications around cyber. Obviously, there's been a lot of pressure on software companies over the past couple of months around the threats of Agentic AI. I was wondering if you could talk a little bit about what you're seeing in the cyber market. Do you see it as a threat? Do you see it as an opportunity? How can we, on the outside, think about the impact of Agentic AI on cyber? And then the second question was, I guess, a bit of a follow-on from that. Can you talk a little bit about given what is going on from a technology perspective with AI, how is your M&A strategy evolving to encompass that? Is it a time to accelerate doing deals in cyber or moving into different areas? Is it a time to slow down and see how things progress? Is there any update that you can provide us from that? Patrice Caine: So I will take this one, Ben, and thanks for your question. Yes, indeed, there has been recently a lot of debates about AI and in particular, Agentic AI and how will it or not, by the way, disturb the software market. Well, as far as the cyber market is concerned, our market, first, it's a mix of, I would say, hardware product and software solution. And typically for hardware, there is no real, I would say, worries to have in mind. For our software solution, I do think this is a clear opportunity to have even more, I would say, efficient solutions to fight against AI --to fight against cyber attacks, sorry. So this is for me a great opportunity. And in particular, we are, I would say, on the verge of, I would say, launching new solutions, leveraging Agentic AI to serve some of our products -- cyber products. That's a key plus for us. Now M&A, if I move to M&A -- well no change, if I may, in our global, I would say, approach or mindset in terms of capital allocation in general and M&A in particular. We will be always, I would say, very pragmatic and financially disciplined. We are looking at every, I would say, verticals of Thales, defense, aeronautics or cyber and digital, probably putting a little bit space aside because we have already a big M&A, I would say, initiative to conclude with the BROMO project. But clearly, I do not exclude any segment or definition to benefit from an M&A, I would say, opportunity. So clearly, I would say we'll see if something will make sense in the next future. But I would say no change versus what we've already discussed for several years in a row. Operator: The next questions come from the line of Olivier Brochet from Rothschild & Co. Redburn. Olivier Brochet: Two questions then. First of all, on cyber, you're positioning yourself for growth. Does it mean some pricing efforts that needs to be done there? And what impact do you see for the margin in cyber and digital in 2026. Consensus is at 15.1%. Is that something you think is reasonable? And second question is in your revenues in 2025, how much was done with Ukraine direct and indirect, please? Pascal Bouchiat: Maybe I will start and let Patrice to complete maybe. Margin. So I mean, first, let me start with this cyber product, which, as you understand, represent 80% of our cyber business. And this is where, I mean, clearly, our challenge to get back to growth and of course, not at the expense of prices. So basically, I mean, this is -- I mean [Audio Gap] And for us, this represents when I talk about the Rule of 30, it should represent a level of EBIT margin of around 20% and overall a level of growth of 10%. This is basically what we have in mind in terms of midterm objective for this business. And of course, as we enter 2026, our view is not to give up on prices just to get back to growth. This is absolutely not what we are willing to do first point. Second point on Ukraine and our level of revenue directed to Ukraine. Giving you just 3 figures. I mean 2024, overall, our revenue directed to Ukraine was around EUR 200 million. It went up pretty strongly in 2025 with overall in 2025, a level of revenue of around EUR 450 million. All of that to be compared to a defense level of revenue for Thales at EUR 12 billion. So if you look at 2025, EUR 450 million out of EUR 12 billion, it's something like 3.5%, 3.6% of our revenue directed to Ukraine. Now we believe that revenue to Ukraine will keep growing in 2026. And today, our view in 2026 is a level of revenue to Ukraine that would be close to EUR 600 million. So it's a growth driver. Now when you look at overall what it represents against our global defense exposure, something like 3.5% of the Defense segment's revenue, which is still pretty limited. Olivier Brochet: That's very helpful. Sorry, I didn't catch if you commented on the consensus in cyber for '26. Pascal Bouchiat: The consensus -- no, I'm not... Olivier Brochet: It's 15.1%... Pascal Bouchiat: 2026. Overall, I mean, what I mentioned is overall for cyber and digital level of growth mid-single digit. So if you start from our level of revenue in 2025 and if you add up 5% [Technical Difficulty], for the 2026 level of revenue. So overall, starting from 2025 level [Technical Difficulty] CDI -- so if you add the price on top of that, this is how you should get to 2026 expected revenue for CDI. Olivier Brochet: Sure. No, I was thinking of the margin consensus at 15%. Pascal Bouchiat: No. So overall, I mean, it's above what we have in mind. It's above what we have in mind. If I start with 2025, we mentioned a level of margin for CDI at 13.7%. But we said that we had in this level of margin, I mean, a few positive one-offs. We believe that the 2025 recurring level of margin is more in line with 13% for 2025, putting aside those one-offs -- by the way, I mean, you need to understand that in 2025, CDI had also to face with 2 headwinds, one being, I mean, the drop in the U.S. dollars plus implementation of the U.S. tariff. So all of that representing probably something like 1 percentage points of headwinds. And this leads to a recurring level of margin in 2025 at 13%. And I mean, from that, this is what we could expect for 2026. So maybe slightly above this level, but this is, I mean, the overall ballpark that we could expect for CDI EBIT margin in 2026. Patrice Caine: But I think, Olivier, your question was related to cyber, not CDI as a whole. You mentioned the 15.1% consensus for 2026 for cyber, which corresponds to what we see globally for the cyber segment of CDI for 2026. So... Pascal Bouchiat: Yes, 2026, I mean, I'm sorry for that, but I mean the connection is not great. So if your question was about cyber EBIT margin for 2026. So overall, a 15.5% EBIT margin for 2026 is what we have in mind. Operator: We are now going to proceed with our next question -- and the questions come from the line of Alessandro Pozzi from Mediobanca Capital. Alessandro Pozzi: The first one is on free cash flow conversion. I was wondering if you can perhaps share your assumptions around working capital and CapEx. I think working capital was a key contributing factor in 2025. And given the order intake, perhaps maybe we should assume something similar for '26. And CapEx I think you mentioned that -- of course, you have the ramp-up going on, you increased the production of radars and you mentioned that potential CapEx is going to go up again in 2026. And if you can quantify that as well? And second question on capital allocation, which is a nice segue from the first question is, your net debt is substantially down, and we know that your priority is to delever the company. But I think by 2026, probably that target will be accomplished and or you're going to be very close. And I was wondering whether we should think about a different capital allocation, maybe more buybacks as well. So any thoughts on that will be appreciated. Pascal Bouchiat: Okay. Thank you very much -- thank you very much, Alessandro. So we can -- by the way, we can hear you loud and clear, which was not the case before, much better. So let's start with, I mean, cash flow generation for 2026. I mentioned that, I mean, conversion ratio should be 95%. And this takes into account a few assumptions that you want me to give you more insight. So first, in terms of CapEx, it's true that we'll keep seeing our CapEx moving up in 2026. Overall, I mean, if you look at 2025, CapEx were at around EUR 750 million. 2026, it should be higher and probably, in my view, EUR 820 million to EUR 850 million CapEx for 2026, pretty much in line with the overall CapEx to revenue ratio around 3.5%, which was the high end of our guidance that we shared with you at our Capital Market Day in November 2024. So first point. And second point, in terms of working capital, it's true that 2025, I mean, change in working capital was a clear tailwind and reflecting, I mean, in particular, down payments and large down payments in particular, defense export contracts. 2026 at this point, we believe that the guidance that I mentioned about conversion ratio is more based on a flattish level of working capital. So this is, I mean, what we have in mind. Of course, it will depend at the end of the day of the -- of our order intake and the profile of order intake, in particular, coming from export contract. But at this point, what we shared with you is the level of cash flow generation. So I mean, makes -- to ensure 100% being based on something like a stable level of working capital. So again, with a stable level of working capital, a pretty strong level of cash flow generation again. With Thales investing also more in terms of CapEx. As I mentioned, I mean, a level of CapEx EUR 820 million, EUR 815 million, it has to be compared to a level of depreciation slightly above EUR 500 million. So basically, we keep investing on all our industrial sites. We keep investing on ISIT. We keep investing in engineering tooling for us, I mean, to benefit from the growth that we see down the road. Maybe capital allocation for Patrice. Patrice Caine: Yes, I can -- Alessandro, I can come back on this point in a more global setup. As you know, we've said that for a while now we have all the different levers available in what we call that ToolBox in Thales. Clearly, you've mentioned, number one, deleveraging the company, which is an important stake for us as we do want to keep Thales being an investment-grade company with a strong balance sheet. Clearly, funding our organic growth through CapEx and R&D, and R&D is super important for us. M&A, we discuss M&A with the same, I would say, philosophy as already discussed, dividends as well. And we said that the 40% payout ratio will be proposed to the AGM giving clear visibility on this front. And last but not least, buyback. So buyback is part of the ToolBox clearly. Now don't -- always keep in mind that among the different criteria that we look at if and when we have to decide for a buyback is clearly the price of the company, the share price. Is there a gap or not? Do we think there is clearly potential in terms of valuation of the company that is not well understood by the market. And it's true that currently, if we look at the share price of Thales, I cannot say that there is a misunderstanding or a mismatch between the full potential of the company and how the company is currently valued by the market. So all in all, the ToolBoxes there, we have all the levers in hand, and we do not exclude one among any others per definition. Operator: We are now going to proceed with our next question. And the questions come from the line of Christophe Menard from Deutsche Bank. Christophe Menard: I had two. The first one on BROMO. Thanks for the update. Is there any extra update on the authorization? Any progress being made on this, quite obviously? You mentioned it needs to be authorized. That's the key element. And the other question on SAMP/T NG , thanks for the update as well. The contract in Denmark, has it been confirmed -- I mean, there has been announced back in September, but is it confirmed yet? And can you comment -- I mean, you mentioned a few other potential markets. Do you see more interest since the September [ CH ] or the September announcement? And what is the updated potential? Patrice Caine: I can start and Pascal will complement, of course, if needed. Well, on BROMO, I would say so far so good. I mean, everything is on track. Number one, the social processes are ongoing. And I would say with constructive discussions with the unions, constructive discussions. They do understand the rationale of this initiative. And I would say the benefits for everybody, the customers, the employees and as well the shareholders of the groups. Of course, the second work stream, which is important is antitrust authorization. On this front, discussions are ongoing in a positive -- I would say, with a positive, I would say, mindset of everybody. So this is -- I'm not saying that we expect such outcome. But globally speaking, I would say the discussions are constructive on this front as well. That's the two main work streams. There are many others, but probably with less, I would say, importance than those two ones. So stay tuned. We'll keep you informed, of course. But for the moment, work in progress in a positive sense. On SAMP/T, there is, for me, absolutely no risk not to do this contract in 2026. The Danish customer even passed us some LLI contracts, long lead item contract to, I would say, anticipate the formal and definitive full scope contract that was clearly expected in 2026. So no surprise on the fact that it was not booked in 2025. Denmark has chosen to go through [indiscernible]. That's why it takes a bit of time. And again, it's just an iterative process. No surprise on this front. So you should or you could consider that it is 99% secure, I would say. Now of course, there are many other prospects in -- typically in Europe, Eastern Europe, in the Middle East as well. By the way, the recent events of this last weekend shows how air defense is important again and again after Ukraine, it's another, I would say, very visible and striking example of how air defense is important. And of course, it reinforced our conviction that some SAMP/T NG has a lot of potential in the years ahead of us. I don't want to mention any country in particular because they don't like us to disclose discussions. But believe me, the pipe is important in this domain. And in particular, both in terms of, I would say, performance offered by the SAMP/T NG versus its main competitor, which is the Patriot system. And secondly, an important criteria of decision is lead time. And again, SAMP/T NG is, I would say, available in the short run, clearly, before 2030, 2028, 2029, where the Patriot system, if you want to buy one tomorrow, you will have to wait much longer than the date I said for the SAMP/T NG. So all these criteria or all these elements are positive elements, and that makes SAMP/T NG a good candidate for future big orders in the years to come. Operator: We are now going to proceed with our next question. And the questions come from the line of Aymeric Poulain from Kepler Cheuvreux. Aymeric Poulain: The first question is on cyber again. And just to understand the phasing of the reacceleration, the gradual comments you make in the guidance? And why does it take so long to regain the lost market share of last year? That would be the first question. And secondly, to follow up on Ben's question on AI implication for cyber, but perhaps broadening the question on the whole portfolio. I mean, what do you see in terms of the overall competitive impact of AI on your various businesses? What are the most important challenges or opportunity? And maybe is there already some figures you can provide in terms of the contribution to sales or the benefit in terms of cost or the size of the investments that you're putting into your AI transformation? Pascal Bouchiat: Maybe -- first good morning Aymeric ,thank you very much for your two questions. Maybe I will start on cyber. So in a nutshell, why is it so low? Why it so slow? I mean -- so of course, I mean, I guess it was quite clear that 2025 was below expectations. And we made it clear that, I mean, those difficulties that we faced in 2025 was above what we anticipated beginning of 2025. And it's true that it took us a bit of time, I mean, to put that under control in terms of, I mean, the organization of the sales force, the implementation of the new variable compensation program, getting the right level of training across the workforce. I mean, developing the new element, the new level of intimacy with customers and our sales force, our sales reps having to get trained to a new portfolio of products. So it seems to be easy from the outside. Now when you drive and you manage a sales force of more than 1,000 sales reps, I can tell you that it's not that easy. So we are, of course, a bit cautious. This is also our trademark globally. And we believe that we should see growth accelerating throughout 2026. Now let's take quarter-by-quarter, I mean, to give you more input on that. But please be assured that we are doing whatever we can, I mean, to accelerate on this cyber product business. Patrice Caine: I've tried to explain, but perhaps I was not clear enough during the presentation, how we do leverage AI for a while now in all our different lines of products, be there I would say, sensors. I took the example of the TALIOS pod, but I could have mentioned how do we embed AI in our radars, in our electronic warfare equipment, in our even radio communication equipment, number one. And number two, how do we leverage AI in the so-called decision and making system, the C2 system, if I take the military acronym. And we have already powered by AI, several, if not many, C2, C3, C4I systems for several customers in the world. So it's not possible to give you a measure of how AI make us even more, I would say, attractive. But that's what I observed with the conversations I have with our customers, starting from world-class products and making them even more, I would say, attractive by enhancing their capability through AI. This is a clear and straightcut strategy for us. Last but not least, we do as well care about AI on our internal processes. That's another, I would say, aspect of how do we use AI. It's clear that it is a key element of our global and overall competitiveness plan. Now it's one element among many others. So it's, again, not possible to, I would say, decouple this one from all the others and to say, okay, the contribution of this element help us in this amount of -- in this percentage to improve the competitiveness of the group. But definitely, it is a key element that we use or a key enabler that we use to improve the overall competitiveness of Thales. Operator: We are now going to proceed with our next question -- and the questions come from the line of David Perry from JPMorgan. David Perry: So two questions. One simple one, one a bit longer. The simple one is the associate line was very strong. If you could just comment on that, that would be helpful. The second one, if I can be a bit provocative. If I -- you delivered a good EBIT number overall for the group, it was better than consensus. But if I compare it to expectations 12 months ago, you're kind of double-digit better on EBIT in Defense and Aerospace and you're about 20% worse in Cyber and Digital. What is the chance in 12 months' time that you meet your group guidance, which you often do, that it's going to be a lot better in defense or aerospace and worse in cyber, so -- or cyber and digital. If you can just give your level of confidence overall on the individual parts? Pascal Bouchiat: David, thank you very much again for your insightful questions. So I mean, the first one, I mean, about equity affiliates. Yes, it's true that, I mean, 2025 was pretty good. Having said that, 2024 -- the 2024 reference base for equity earnings was pretty low. And it's true that we had in 2024, some negative one-off. I think probably a better reference base for equity earnings would be more 2023 than 2024. And if you compare 2025 against 2023, you will realize that overall, our equity earnings in 2025 are 20% above what we reported 2 years ago. And this is basically, I mean, a normal type of expected contributions and in particular, because it so that our defense JVs are doing pretty well, but also, I mean, fueled by, I mean, also the level of demand across the board. Maybe a last point, it's also true that and I mentioned it, we had on one of our CDI JV, a positive one-off in 2025. Now the underlying, I mean, message is that overall, across the board, we see, I mean, contributions from JVs keeping moving up. By the way, it could have been even better absent the tax surcharge in France that it never got contributions by EUR 8 million in 2025. So all in all, I mean, a pretty good level of contribution, but reflecting, in particular, defense JVs that are performing pretty well. And I could also mention JVs in the avionics business that are doing also pretty well. Now your second question about what is going to happen in a year's time when we meet again, how will -- no, I mean maybe I can start, Patrice, unless you want to. No, of course, I mean, we give you at this point, I mean, the best view that we have within Thales with, of course, I mean, defense with, I mean, quite a good traction on this matter. Avionics also pretty good traction. Space as well. And that's -- I mean, when you look at our level of growth for Space in 2025 has been above the expectations. It's a matter of fact. I mean, I remember a year ago telling you space revenue should be low single digit in 2025. Eventually, we have done the mid-single-digit plus for space, so doing better. I mean the -- then it's about cyber, and we share, I mean, how we see the situation getting back to growth progressively on cyber product. And I mean, this is what we expect to announce you in a year's time as we release our 2026 financials. But overall, what I see is that as compared to what we said a year ago, we are overall, whether it's order intake, whether it's revenue, organic growth, whether it's EBIT, whether it is net income, whether it's free operating cash flow, at the end of the day, when you look at our 2025 figures compared to what we said a year ago, all those metrics in terms of 2025 results are above what we said a year ago. I mean this is just a fact-based comments. So at this point, and we are just entering 2026 with, of course, a number of open points, and we see in a year's time whether or not, I mean, we'll be at this level or whether we'll be above what we guided this morning. Patrice Caine: But we have shared what we do strongly believe in as we speak, of course. But David, every year, we face along the year, unexpected events. And typically, last year, it was a tariff who could have expected the decision taken by the U.S. President at the very beginning of 2025, no one, by the way, no one. Then it's our duty. And I think it's part of the merit of the business model of Thales to deliver whatever it happens. And the fact that, yes, we are, I would say, involved in several domains or several verticals, maybe a source of complexity for you guys trying to understand Thales, but it's also a source of resilience along the year when it happens something here or there. And it always happens something here or there, always, always always. So at the end, what really counts, it's Thales' results, even more importantly, that's the results of division A, B or C. And again, if we do our results by the end of this year a bit differently, what would be even more important is doing our results globally speaking. So we will see, David. We'll do our best to deliver, I would say, as expected per division, but what matters most is what we do at group level. David Perry: Okay. And something we can chat about over the next dinner, which we look forward to. Pascal Bouchiat: With pleasure, David, with pleasure. Operator: Yes, we are now going to proceed with one final question. And the questions come from the line of Ross Law from Morgan Stanley. Ross Law: So just one on kind of high level on the medium-term growth outlook, which you've upped -- the upper end of the range of 5% to 7%. Can you just provide some color on the growth rates at the divisional level? That's the first one. And then just secondly, on Space, what is the absolute EBIT contribution in '25? And what do you expect for '26? Pascal Bouchiat: Okay. So at this point, I mean, a bit cautious and we are guiding you division by division for the 2024, 2028 period of time. I mean what we said today is overall Thales in terms of organic growth being at the high end range of the 5% to 7%. But at this point, we need to be more patient. I don't want to go deeper on this matter. Second point on Space. So you probably remember a year ago, we said that we're expecting, I mean, 2025, pre-restructuring EBIT being positive. What I can share with you is that overall, the post restructuring, so full adjusted EBIT for Space was slightly positive in 2025 despite the level of restructuring that in my memory is something around EUR 20 million. So overall being slightly positive despite the EUR 20 million headwind on restructuring. It shows that we have done a bit more than expected on this matter. And what we're expecting in 2026 is the further progression of our EBIT. All of that being consistent with the 7% plus 2028 EBIT margin that we shared at the Capital Market Day with some kind of linear progression in terms of EBIT margin. This is what we said a year ago, and this is what we can confirm today. So linear progression from this breakeven plus full EBIT margin in 2025 to 7% plus in 2028. Patrice Caine: So thank you all for your questions. We'll be happy to meet you on the road in the next couple of days together with Pascal. If you have any follow-up questions, do not hesitate to reach out to Louis and the IR team. I wish you all a very good day. Thank you very much. Bye-bye. Pascal Bouchiat: Thank you very much. See you. Bye-bye. Operator: Thank you, ladies and gentlemen. If you didn't have a chance to ask your question on today's call, please do not hesitate to send your question to Thales Group Investor Relations at ir@thalesgroup.com, and we will get back to you as soon as possible. Thank you all for your participation. You may now disconnect your lines. Thank you.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Thales 2025 Full Year Results Conference Call. The presentation will be held by Patrice Caine, Thales' Chairman and CEO; and Pascal Bouchiat, Thales' CFO. [Operator Instructions] I must advise you that this conference is being recorded. I would now like to turn the conference over to Mr. Louis Igonet, VP, Head of Investor Relations. Please go ahead, sir. Louis Thibaut Igonet: Good morning, everyone. Welcome, and thank you for joining us for the presentation of Thales' 2025 Full Year Results. I'm Louis Igonet, I recently joined Thales as Head of IR. I'm excited to be with you today. With me today are Patrice Caine, Chairman and CEO; and Pascal Bouchiat, CFO. The presentation will be followed by a Q&A session. As usual, this presentation is audio webcasted live on our website at thalesgroup.com, where the slides and press release are also available for download. A replay will be available soon after the end of the event. Please also note that this presentation contains forward-looking statements based upon what management of the company believes are reasonable assumptions. These statements are not guarantees of future performance. With that, I'd like to turn over the call to Patrice Caine. Patrice Caine: Good morning, everyone. So I'm now on Slide #2. So let's start by sharing some highlights for 2025 which was another very strong year for Thales. First, on commercial performance. We delivered another year of strong order intake, equaling the record level reached in 2024, thanks to our strategic positioning in high-growth markets. Our sales growth accelerated, surpassing our guidance. We achieved a robust improvement in profitability compared to 2024. And most notably, our free operating cash flow reached a record high level, reinforcing our financial strength and ability to fund future growth. Hence, we achieved or exceeded all our 2025 financial targets. On the strategic front, we also made major progress in positioning Thales for the future, thus delivering on our strategic road map. Typically, we further increased our production capacity to capture rising defense spending and support our customers' rapid ramp-up, ensuring we meet demand without compromising quality or on-time delivery, which are our clients' key priorities. We also continued to strengthen our R&D leadership with new breakthroughs in 2025 that keep us at the cutting edge of technology from AI with cortAIx to quantum and even nuclear fusion with our GenF project. And we took a major step in space by signing an MoU with Airbus and Leonardo to create a leading European space player, a move that will reshape the industry and secure Europe's strategic autonomy in this critical domain. So moving to Slide #3. To illustrate our ramp-up and successful positioning in the European rearmament dynamic, I'd like to mention our groundbreaking success with SAMP/T NG, a strategic milestone that reshapes the air defense landscape. The SAMP/T NG produced in partnership with MBDA through Eurosam is the world's most advanced air defense system, which offers long-range air defense with a unique detection and tracking capability against all current and future threats, aircraft, helicopters, UAVs, cruise and ballistic or hypervelocity missiles. It definitely sets a new standard in air defense with 360-degree and 90-degree coverage, meaning it can intercept threats anywhere in the sky, extensive interoperability with NATO systems, ensuring a seamless integration with allied forces, high firepower with low manpower requirements, optimizing operational efficiency, encamping and decamping, and 24/7 operations. So with SAMP/T NG, we have disrupted a long-standing de facto monopoly. Denmark's decision to select SAMP/T NG over their legacy system is a clear validation of our technology, performance and value proposal, proving that European sovereignty in air defense is now a tangible reality. And this is only the beginning with SAMP/T NG being a high-value, a large-scale system we expect many more export successes. Moving to Slide 4. Now to discuss what truly differentiates Thales, our innovation and technological leadership, I would like to focus on AI, where we are leading the transformation. Our AI leadership is built on scale and expertise with 800 AI experts and 100 PhD students. We are also expanding cortAIx globally with 5 country hubs across the globe, 200 patents covering the full spectrum of AI technologies, securing our intellectual property and competitive edge. Our cortAIx accelerator is now fully deployed across all Thales divisions, embedding AI into 100-plus products with 250-plus use cases deployed or in development. Another of our strengths lies in our strategic partnership. We are joining forces with industry leaders to codevelop solutions or use cases. With Dassault Aviation, for instance, we are integrating cortAIx into next-gen aviation systems, enhancing functions for manned or unmanned aircraft for observation, situation analysis, decision-making, planning and control during military operations. With Naval Group, we aim to accelerate the development of trusted AI solutions applied to critical systems in several key areas, collaborative combat, decision support systems, electronic warfare, training and simulation, logistics and support, just to mention a few. Then to give you concrete examples of how we are turning AI and innovation into customer value. Number one, our TALIOS reconnaissance and targeting pods capabilities are now unmatched. Boosted by cortAIx AI, it provides AI-assisted targeting, passive detection and enhanced vision to overcome stealth threats, electronic warfare and poor visibility. It maximizes mission efficiency, ensuring safety and maintaining superiority across all domains for the end users. The second example is in the maritime domain, our autonomous mine countermeasures with first delivered in 2025 to the French Navy as AI augmented detection, classification and identification capabilities. I am now on Slide 5. Moving on to our strategic ambitions in space, an area where Thales is positioning itself at the heart of Europe's sovereign capabilities. We have taken a major step forward by signing a Memorandum of Understanding with Airbus and Leonardo to create a leading European space player. This partnership will combine our complementary strengths to build a global scale champion for Europe. Our target is to launch operations in 2027, subject, of course, to regulatory approvals and closing conditions. And this initiative holds significant value creation potential for all stakeholders, for customers, for Europe, for investors. For customers, it means end-to-end space solution from secure connectivity to earth observation and exploration. For Europe, it ensures strategic autonomy in a critical domain. And for investors, it opens new avenues for growth in one of the fastest evolving high-tech sectors. Let's now move to Slide 6 to look at our financial performance with a few charts. As previously said, we have enjoyed strong commercial momentum in 2025, reaching EUR 25.3 billion for the second year in a row. The book-to-bill ratio is maintained significantly above 1, reaching 1.14. Sales recorded a sharp 8.8% organic growth, reaching a record high EUR 22.1 billion. Adjusted EBIT rose by more than 13% on a reported basis, while EBIT margin improved to 12.4%. Adjusted net income, group share, grew by 5.5%, crossing the EUR 2 billion mark. And a very strong generation of free operating cash flow from continued activities, which increased by 27%, reaching EUR 2.6 billion, notably supported by the solid momentum in our order intake. And the last chart, the dividend. This new year of strong financial performance is leading our Board of Directors to propose at the next AGM in May, a 5.5% increase to EUR 3.90 per share. It demonstrates Thales' confidence and commitment to regular shareholder returns. Turning now to Slide 7, looking at our extra financial performance in 2025. I indeed wanted to come back on the continuous progress we've made in terms of corporate social responsibility. First pillar, society. The Thales Climate Passport training deployed in 2024 raises employees awareness to climate change and its impact on society. The 2025 campaign was a success with over 94.6% of managers who completed the training, way above the 85% target. We are clearly ahead of plan on this pillar. Second pillar regarding our strategy for climate change. Our CO2 emissions from Scope 1 and 2 decreased by 75.2% in 2024 and Scope 3 emissions decreased by 15.4% compared to 2018. The group has thus achieved its 2030 targets ahead of schedule for the third consecutive year. The absolute carbon footprint reduction targets remain relevant for 2023 in light of the group's growth prospects. Finally, our third pillar named people aims at strengthening gender diversity where at the end of 2025, we are in line with our 2030 trajectory. First, the percentage of women in senior management position reached 21.8%. And this performance is in line with the group's trajectory to reach the set goal of 25% by 2030. Second, the percentage of management committees with at least 4 women reached 69.2% in 2025 compared to 64.1% at the end of 2024. For 2030, we have set an ambitious target to have 85% of management committees with at least 4 women. After this introduction, I now hand over to Pascal, who will comment our financial results in greater detail. Pascal Bouchiat: Thank you, Patrice, and good morning to everyone. I'm now on Slide 9. So starting with order intake. As Patrice mentioned, 2025 was again a strong year in terms of commercial momentum as order intake was maintained at a record level, namely EUR 25.3 billion. This reflects the quality of Thales' diversified product and solutions portfolio fit for our clients' purposes. The book-to-bill ratio stood at 1.14, meeting our expectations for the year and even 1.24 for Defence segment. This bodes well for future revenue generation. This robust performance was driven by all type of orders with a notable strong momentum for orders below EUR 100 million. Looking at large orders. 28 orders with a unit value over EUR 100 million were booked in 2025, of which half in the sole fourth quarter. 20 large orders were booked in Defence with several flagship contracts notably in Air Defence. I can, in particular, mention the LMM, Lightweight Multirole Missile contract with the U.K. MOD or a major land surveillance contract with the German MOD. 2025 saw also a good momentum in Space with large -- with 5 large contracts booked, of which 1 in OEN and 4 in telco, including the IRIS2 initial phase contract. Avionics booked 3 large contracts, of which a flagship contract for IFE with a major U.S. airline in Q4 2025. Overall, a strong performance in 2025 for order intake, driven by continued high demand from our clients in all our businesses. Now moving on to sales on Slide 10. Sales in 2025 reached EUR 22.1 billion, translating into an organic growth of 8.8%, significantly above the top of our guidance range, which was upgraded in July. This robust performance was notably driven by Defence activities, which recorded double-digit organic growth again this year. Aerospace also contributed significantly with stronger organic growth fueled by both Avionics and Space activities. Cyber & Digital sales were slightly down organically, in line with latest expectations. I will comment further the performance in the following slides. From a geographical perspective, sales organic growth was again well balanced between emerging and mature markets. It's worth noting that all our emerging markets, Asia, Middle East and Rest of World, recorded double-digit growth. Reported growth was negatively impacted by material currency impacts this year as the euro strengthened against most currencies in 2025, against the U.S. dollar, as we are all aware of, but also against other currencies like the Australian and Canadian dollars. Overall, currency led to a 1.5 percentage points headwinds on 2025 sales reported growth. Scope impact was positive and resulted mainly from Cobham Aerospace Communications acquisition in April 2024. Taking into account these elements, 2025 sales recorded a solid 7.6% reported growth year-on-year. Let's now have a look at adjusted EBIT. I am on Slide 11. So as you can see, adjusted EBIT increased sharply in 2025 and reached EUR 2.7 billion. This increase mainly was driven by the significant progression of our gross margin, up by EUR 391 million (sic) [ EUR 383 million ]. This was mostly the result of the sales volume progression in Defence and Aerospace. Looking at indirect costs. R&D expenses continue to increase in volume and represented 6% of sales in 2025, in line with our expectations. Marketing and sales expenses were broadly stable organically, reflecting Thales' ability to optimize its indirect cost in line with the evolution of the business. This was notably the case in Cyber & Digital in 2025. G&A grew organically at half the pace of revenue, which is also satisfactory. Equity affiliates contributed positively for EUR 61 million to adjusted EBIT growth in 2025. This includes, in particular, a stable contribution from Naval Group, which includes the fiscal surcharge in France. It also includes positive contributions from various JVs, notably from our Defence JVs. It also reflects a one-off positive effect linked to the Thales JV, which is accounted for in our Digital Identity business. A word on mechanical effects. As for sales, negative currency impact at minus EUR 37 million outweighed scope positive impact at EUR 24 million. Moving on now to performance for you by segments, starting with Aerospace on Slide 12. Orders in the Aerospace segment amounted to EUR 6.1 billion, slightly down versus last year on the back of high comparison basis. Underlying momentum in both Avionics and Space remain solid. In Avionics, this solid momentum extended into most activities. In Space, 5 orders with unit value above EUR 100 million were booked, including several geostationary communications satellites and the initial phase contract for IRIS2. Those wins enhance visibility for the coming years. Sales reached EUR 5.9 billion in 2025, recording a solid 8.7% organic sales growth. Both Avionics and Space contributed to this performance. Avionics indeed saw double-digit growth year-on-year, driven by OEN activities. Both flight avionics OE and aftermarket enjoyed strong dynamic, supported by continued ramp-up in aircraft production and also a solid air traffic momentum. Both civil and military domains were supportive. In Space, sales were up as well in 2025, mostly driven by the OEM business. Looking at profitability. Adjusted EBIT stood at EUR 560 million in 2025, an outstanding 39% organic increase, which led margin to reach 9.5%. Avionics posted a solid increase in its profitability driven by stronger aftermarket and further contribution from Cobham AeroComms. Space recovered even better than announced a year ago, posting a positive EBIT in 2025. Now commenting Defence on Slide 13. Order intake in Defence amounted to EUR 15.1 billion in 2025, setting this year, again, a new record high. The book-to-bill ratio stood significantly above 1. It's now the seventh year in a row that Defence sees its book-to-bill ratio stands above 1.2. With a backlog of EUR 42 billion, the level of visibility in this activity keeps being higher at 3.4 years of sales. Thales booked 20 orders with a unit value above [Audio Gap] air defense, effectors, airborne solutions or in the naval domain. We also believe that stronger European collaboration, for example, through EU MFF mechanism such as Space [Audio Gap] EUR 12.2 billion, up 12 [Audio Gap] firmly supported by further production and deliveries ramp up across the portfolio. Surface radars and effectors are, for instance, areas where efforts have been paying off in 2025. Overall, organic growth has outpaced our expectations in 2025. And I want to highlight the tight execution throughout the year that led to this excellent performance. A word finally on adjusted EBIT [Audio Gap] EBIT in 2025 versus 2024. Now moving on to Cyber & Digital on Slide 14. Sales in the Cyber & Digital segment were broadly flat organically in 2025, reflecting a mixed performance. In reported figures, it's worth noting that the FX impact was significantly negative and led to a 3.4 points headwind on sales growth. Starting with Cyber as a whole, which was down 3.8% organically over the whole year. Cyber Products, which represented a bit more than 80% of the Cyber business in 2025, recorded a low single-digit organic decrease last year. As you know, until Q3, we have been impacted by the merger of Thales and Imperva sales forces, which notably led to a higher staff turnover and weighed on the performance. Employee turnover is now back at a benchmark level. In Q4, Cyber Products was back to growth, which is positive, and paves the way for further growth in 2026. Market momentum keeps being supportive and Imperva sales force integration being now over, we should progressively recover sales growth profile. Cyber Services sales were down double digit organically year-on-year as it kept being impacted by soft market in Australia. The premiumization strategy Thales has adopted for this business showed encouraging signs in related geographies as we are focusing on selective, profitable segments. Digital Identity sales were up slightly, 1% in organic terms. Digital Solutions kept driving growth, notably in secure connectivity solutions and payment services. However, volumes on payment cards remained low in 2025. And at this stage, we don't expect the market to improve materially in 2026. Having a look at profitability. Adjusted EBIT margin resisted in the context of lower revenues in 2025 and stood at 13.7%. This is mainly the result of tight cost management in the Cyber business, which saw an increase in margin in 2025 as well as a positive impact from one-off elements in the digital business we already mentioned in July 2025. Turning now to Slide 15 and looking at below adjusted EBIT items. So the line cost of net financial debts and other financial results was moderately up in 2025 as expected. Net financial interest was significantly down in 2025 and stood at minus EUR 116 million in 2025 versus EUR 166 million in 2024, driven by the ongoing deleveraging following the acquisition of Cobham AeroComms. Other financial results amounted at minus EUR 28 million versus plus EUR 35 million in 2024. This evolution is due to the non-recurrence in 2025 of positive one-offs recorded in 2024. The finance cost on pensions and other employee benefits were slightly up in 2025 to minus EUR 56 million. Moving on to income tax. At minus EUR 561 million, the amount of income tax integrates EUR 75 million of tax surcharge in France in 2025. This led the effective tax rate to reach 24.1% in 2025. But it's worth measuring it is broadly stable excluding the surcharge. The 2026 French budget includes a recurrence of this tax surcharge in 2026. The expected impact for Thales in 2026 P&L should amount to around EUR 90 million, a EUR 50 million increase versus 2025. In addition, the impact on our share in Naval Group's net income should be broadly stable at minus EUR 8 million. Minorities have significantly decreased year-on-year to EUR 26 million. This is mainly driven by the reduced net losses incurred by tax. All in all, this led to an adjusted net income, group share, at EUR 2 billion, an increase of almost 6%. The adjusted EPS stood at EUR 9.76 in 2025. Excluding the tax surcharge in France, adjusted net income group share would have been up by more than 9%. Having a look at the bridge from adjusted EBIT to free operating cash flow, I'm now on Slide 16. So in 2025, on Slide 16, we see D&A, depreciation and amortizations broadly stable, while net operating investments were significantly up at minus EUR 746 million, in line with our guidance of 3% to 3.5% of sales. This reflects the group's strategy to keep investing for future growth, for example, with additional industry capacities as already commented. Overall, the balance of D&A and net operating investments amounted to negative minus EUR 260 million. Change in working capital requirements was a strong tailwind in 2025. I will comment further in the next slide. All in all, 2025 is again an impressive year in terms of cash generation. Free operating cash flow amounted to almost EUR 2.6 billion in 2025. This means a conversion from adjusted net income to free operating cash flow of 128%, a very strong performance. Let's now have a look on what drove this impressive performance. I'm now on Slide 17. Firstly, and we've discussed it already, 2025 was once again a year of strong momentum for order intake. Major orders were booked while orders with a unit value below EUR 100 million were solid as well. Secondly, the payment profile from our customers is very satisfactory. This includes down payment, but also highlights Thales' tight management of contract structure. Lastly, the emphasis that we keep putting internally on stocks optimizations over the last few quarters and year showed a positive outcome in 2025. All in all, conversion ratio has outpaced expectations for the year at 128%. For 2026, we anticipate a cash conversion ratio between 95% and 100%. This give us confidence to reach the high end of the guidance we gave at our 2024 Capital Market Day, which is an average conversion ratio of between 95% to 105% over 2024-2028. Now a word on net debt evolutions, moving on to Slide 18. Net debt saw significant reduction in 2025, and Thales' financial position is particularly strong as of end 2025. This was primarily driven by the strong free operating cash flow generation I just detailed. The impact from acquisition and disposal amounted to a negative EUR 69 million, which corresponds mainly to final price adjustments related to the sales of Thales transport business to Hitachi Rail finalized in May 2024. The dividend cash out amounted to EUR 781 million in 2025, corresponding to a payout ratio of 40% and reflecting the increase in adjusted net income. All in all, net debt stood at EUR 1.6 billion as of the end of December 2025. Finally, on Slide 19, a word on dividend. As I just described, 2025 was again a year of robust financial performance and value creation. This leads our Board to propose to the next AGM a dividend of EUR 3.90, up 5.5% versus 2024. This is in line with the payout ratio at 40% and reflects the increase in adjusted EPS. A quick look at the chart on the right-hand side shows the steady growth of adjusted EPS over the last few years, reflecting Thales' ability to consistently deliver sustainable and profitable growth over the years. This marks the end of this financial review. I'm now turning over the call to Patrice, who will address our strategic priorities and guidance. Patrice Caine: Thank you, Pascal. So now turning to our strategy and outlook for 2026. So let's move to Slide 21. And before talking about our 2026 strategic priorities, I'd like to briefly give you the big picture on the tailwinds supporting our different businesses and the key differentiators that Thales can leverage to keep delivering strong and profitable growth. Thales is a unique business in the sense that we are only positioned on markets which benefit from positive long-term momentum supported by proven resilience and sustainable macro trends. First, if we start with Defence, our activities are supported by a strong need for more security, more protection in the context of geopolitical instability. This is shown by the global increase in defense spending with a notable concentration in Europe, where it is projected to grow high single digits annually until 2035 in Europe. And also by the need for our clients for speed as they seek both high-performance products and solutions as well as good enough products that are quickly available. The competition is fiercer than ever, but we have significant competitive advantages. Number one, our deep and diverse portfolio with a unique and historic ability to fill products with the latest technologies, our AI augmented radars, for instance. Number two, our strong customer intimacy and historic knowledge of our clients' concept of operations or CONOPS. And number three, Thales is the strategic partner of choice at the heart of European rearmament. Our position is unmatched because we are deeply embedded in Europe's defense ecosystem. Moving to Avionics. Well, in Avionics, we have a great visibility, thanks to sustained and powerful demand for travel and mobility. That shows no sign of slowing, resulting in continued growth in global air traffic, as IATA, the International Air Transport Association predicts passenger numbers to double in 20-year forecasts. And at the same time, a global renewal of commercial fleets, which increases demand for our equipment from OEMs. And of course, we have strong differentiators, thanks to our commitment to developing a more sustainable and connected avionics, bringing skills and technologies to build the future of avionics, for instance, through predictive maintenance and new generation of flight management systems. Space now, while demand in the institutional market is improving with a growing number of opportunities, thanks to the rise in government investments, typically growing ESA budget and EU MFF and the need for large-scale projects like IRIS2 or the space early warning initiative. We have won very important contracts and delivered truly emblematic projects, which are a testament to the relevance of our positioning and the quality of our products in exploration in science with the Lunar Descent Element for the Argonaut mission in the 2030. Regarding observation, the long-awaited entry into force of the all-in-one contract with Indonesia and the first slice of the Leonardo constellation. On the telecom side as well, where we recorded a good level of orders and the launch of the initial phase of IRIS2 will allow us to start the technological development of the payload. And lastly, in Cyber & Digital. Well, the omnipresence of connected devices and the digitalization of our daily lives with the consequential need to protect our data, our applications, our identities from cyber attacks continues to fuel our activities. We are a world-class player in Cyber with best-in-class products across application security, data security, identity and access management and also premium cyber services. And the services we provide to accompany all industries in their move to cloud are ideally positioned in the competitive landscape. So moving now to Slide 22. To seize all the opportunities created by this environment and to address the many challenges facing Thales, I have identified 4 key priorities for 2026. The first one being our ability to capture profitable growth. To seize this growth, we will continue to ramp up our capacity which means continuing to scale up production across both existing and new facilities with a clear focus, focusing on high-end demand products such as radars, munitions and optronic cameras, systems like our SAMP/T NG, Rafale equipment, counter-UAS, just to mention a few. And at the same time, ensuring we have the right talent. Hence, we plan to recruit more than 9,000 employees worldwide in 2026. Secondly, we'll put a heavy focus on competitiveness through operational excellence, i.e., continuously improving internal processes to continue to deliver on time at cost and quality, but also AI-driven productivity, leveraging artificial intelligence to transform how we operate from AI optimized logistics to so-called software companion, accelerating development cycles and reducing time to market. Lastly, to fully capture the current momentum, we will continue addressing our customers' core expectation, proximity, intelligence. Proximity, our customers expect alignment with their local realities and sovereign requirements, typically leveraging our ability. We will further strengthen customer intimacy by localizing critical parts of the value chain where it creates value, as we demonstrated, for instance, with the recent radar factory opened in the UAE. Intelligence as well, we will continue to enhance the value we deliver by embedding AI across our entire product portfolio, building on our track record of combat-proven AI-enabled systems already deployed operationally. We are scaling AI capabilities across all our offerings. Another key area of focus in 2026 will be to restore growth in our cyber business. The integration of Imperva is fully done, as said by Pascal. So we are now ready to go back on the offensive. First, by reaping the benefits on the sales team reorganization which is now fully up and running to gain traction and go after significant opportunities across all our segments, IAM, software monetization, that affect application security and the likes. And second, by continuing to deliver on commercial synergies by offering to our clients solutions combining the best of Imperva and the best of Thales across all our activities, for instance, via cross-selling. Lastly, our teams are working on the next generation of cyber products. These developments will be essential to ensure that we outperform the competition. So in a nutshell, we have everything in place to position ourselves for growth on these markets. Regarding the Bromo Project, well, if everything goes as planned, this joint venture will be operational within 2 years. So during this time, we are focused on securing support from all stakeholders. This includes the European Commission, but also many key states and their regulatory bodies. And above all, in the meantime, we remain focused on delivering our road map and maintain a solid pace of recovery. This is essential, as by definition, there is still a lot of work to do before the merger is authorized, if it is authorized. So it is critical that we continue doing business to the best of our ability on a stand-alone basis. And as such, the recovery plan we have been implementing is now bearing fruit as you have seen in 2025. But beyond that, we agree that this project has a strong rationale, securing Europe's future in space and allowing to accelerate innovation through joint R&D and cutting-edge space missions. And hence, competitiveness against global players, lead sovereign and military space programs for European nations and strengthen the European space ecosystem, creating opportunities for suppliers and employees alike. Last but not least, regarding Avionics. Our focus for 2026 will be to expand that business above and beyond. Today, we benefit from a world-class portfolio, supporting our customers in making aviation greener, more digital and more connected. Our ambition is to extend our leadership across all aircraft manufacturers. As you know, the most powerful structural trend in the market in both civil and defense markets is the renewal of most aircraft platforms around the 2030s and we are already actively preparing for this significant opportunity. To that end, in 2026, we are continuing to invest heavily in technologies, in industrial capacities -- capabilities. In technology, our 9 product lines, including flight controls, high-performance IMA, Integrated Modular Avionics, help displays, navigation heads are already competitive and are being further enhanced to address the next generation of platform requirements. In industrial capabilities as well, while we continue upgrading our industrial sites to ensure best-in-class performance and competitiveness. So thanks to the actions already taken and the investments underway, we are extremely well positioned for the upcoming competitions. We are excited to deliver the most advanced, reliable and industrially competitive avionics solutions. So now I'm on Slide 23. Well, all these priorities will bring Thales to pursue ambitious financial targets in 2026. First, a book-to-bill ratio above 1. Second, a dynamic organic sales growth between 6% to 7%, which should correspond to sales ranging from EUR 23.3 billion to EUR 23.6 billion, including FX impact. Number three, 12.6% to 12.8% adjusted EBIT margin, which puts us well on track to deliver our 2028 target. And number four, free operating cash flow conversion ratio still high, expected between 95% and 100%. This is clearly a key strength of our model. So overall, we are well on track to deliver the various commitments we made back at our 2024 CMD where we provided some outlook by 2028. We are not even halfway through the 2024-2028 period. But I can already tell you that we feel very confident in our ability to reach the high end of our organic sales guidance given what I've just described in terms of business opportunities. In terms of operating margin, we are clearly on track to deliver 13% to 14% by 2028. And as far as free operating cash flow generation is concerned, there again, we are confident we will be in a position to reach the high end of our guided range. Many thanks again for your attention, and we will now be pleased with Pascal to take all your questions. Operator: [Operator Instructions] And the questions come from the line of Chloe Lemarie from Jefferies. Chloe Lemarie: Could I start with the guidance and digging into the divisional growth expectation, please? So for 2026, what do you factor in, in terms of organic growth for Defence, Aerospace and Cyber & Digital? And in Cyber, what do you call a vigorous market? And how do you think Thales will perform compared to that market growth, please? Pascal Bouchiat: Okay. So first, I mean, giving you a bit of insight on our segment expected growth for 2026. So in total, as you -- as we mentioned, the guidance of organic growth between 6% and 7% at group level for 2026 over 2025. So going through our divisions, starting with Defence. So Defence at this point, high single digit. Overall, that was by the way what was our guidance for 2025. You have seen that we went above this level ultimately. Now as we move into 2026, we believe that high single digit is a reasonable guidance for Defence overall and consistent with the 6% to 7% overall for Thales Group. Overall, that was, by the way, what was our guidance for 2025. You have seen that they weren't above this level ultimately. Now as we move into 2026, we believe that high single digit is a reasonable guidance for Defense overall and consistent with the 6% to 7% overall for Thales Group. Second, on Aerospace. So aerospace, I mean, growing, by the way, both from avionics and also from our space business. So aerospace overall, what we see probably mid-single digit to mid-single digit plus with avionics mid-single digit. We mentioned as we presented 2025 growth that avionics in 2025 was more low double digit. So we are at this point, probably a bit more conservative on avionics for 2026. And today, as we see mid-single digit, this being based on also, I mean, the announcement from Airbus in terms of OEM, but also, I mean, as we see, I mean, the air traffic developing in 2026. Space, we are positive on the back of, I mean, the 2025 order intake and as we see 2026 overall. So -- and lastly, I mean, CDI overall mid-single digit with, of course, I mean, cyber above this level and digital lower than this level. So as you know, I mean, one of our key priorities that Patrice mentioned is to get cyber back on growth in a market which is today pretty positive, as we said. So at this point, of course, and we mentioned that Q4 for cyber product was getting back to growth, which is not the case for the cyber services that was down in Q4. At this point, of course, I mean, we need to be a bit cautious, but the market is there in terms of demand. Now it's up to us I mean, to get back to growth, in particular, in the cyber product, which is absolutely essential for us in terms of value creation. More to come as we move forward in 2026. But overall, yes, I mean, one key priority for us is to recover and regrowth. Operator: [Operator Instructions] We are now going to proceed with our next question. And the questions come from the line of Benjamin Heelan from Bank of America. Benjamin Heelan: I hope you both well. I had a question around AI and the implications around cyber. Obviously, there's been a lot of pressure on software companies over the past couple of months around the threats of Agentic AI. I was wondering if you could talk a little bit about what you're seeing in the cyber market. Do you see it as a threat? Do you see it as an opportunity? How can we, on the outside, think about the impact of Agentic AI on cyber? And then the second question was, I guess, a bit of a follow-on from that. Can you talk a little bit about given what is going on from a technology perspective with AI, how is your M&A strategy evolving to encompass that? Is it a time to accelerate doing deals in cyber or moving into different areas? Is it a time to slow down and see how things progress? Is there any update that you can provide us from that? Patrice Caine: So I will take this one, Ben, and thanks for your question. Yes, indeed, there has been recently a lot of debates about AI and in particular, Agentic AI and how will it or not, by the way, disturb the software market. Well, as far as the cyber market is concerned, our market, first, it's a mix of, I would say, hardware product and software solution. And typically for hardware, there is no real, I would say, worries to have in mind. For our software solution, I do think this is a clear opportunity to have even more, I would say, efficient solutions to fight against AI --to fight against cyber attacks, sorry. So this is for me a great opportunity. And in particular, we are, I would say, on the verge of, I would say, launching new solutions, leveraging Agentic AI to serve some of our products -- cyber products. That's a key plus for us. Now M&A, if I move to M&A -- well no change, if I may, in our global, I would say, approach or mindset in terms of capital allocation in general and M&A in particular. We will be always, I would say, very pragmatic and financially disciplined. We are looking at every, I would say, verticals of Thales, defense, aeronautics or cyber and digital, probably putting a little bit space aside because we have already a big M&A, I would say, initiative to conclude with the BROMO project. But clearly, I do not exclude any segment or definition to benefit from an M&A, I would say, opportunity. So clearly, I would say we'll see if something will make sense in the next future. But I would say no change versus what we've already discussed for several years in a row. Operator: The next questions come from the line of Olivier Brochet from Rothschild & Co. Redburn. Olivier Brochet: Two questions then. First of all, on cyber, you're positioning yourself for growth. Does it mean some pricing efforts that needs to be done there? And what impact do you see for the margin in cyber and digital in 2026. Consensus is at 15.1%. Is that something you think is reasonable? And second question is in your revenues in 2025, how much was done with Ukraine direct and indirect, please? Pascal Bouchiat: Maybe I will start and let Patrice to complete maybe. Margin. So I mean, first, let me start with this cyber product, which, as you understand, represent 80% of our cyber business. And this is where, I mean, clearly, our challenge to get back to growth and of course, not at the expense of prices. So basically, I mean, this is -- I mean [Audio Gap] And for us, this represents when I talk about the Rule of 30, it should represent a level of EBIT margin of around 20% and overall a level of growth of 10%. This is basically what we have in mind in terms of midterm objective for this business. And of course, as we enter 2026, our view is not to give up on prices just to get back to growth. This is absolutely not what we are willing to do first point. Second point on Ukraine and our level of revenue directed to Ukraine. Giving you just 3 figures. I mean 2024, overall, our revenue directed to Ukraine was around EUR 200 million. It went up pretty strongly in 2025 with overall in 2025, a level of revenue of around EUR 450 million. All of that to be compared to a defense level of revenue for Thales at EUR 12 billion. So if you look at 2025, EUR 450 million out of EUR 12 billion, it's something like 3.5%, 3.6% of our revenue directed to Ukraine. Now we believe that revenue to Ukraine will keep growing in 2026. And today, our view in 2026 is a level of revenue to Ukraine that would be close to EUR 600 million. So it's a growth driver. Now when you look at overall what it represents against our global defense exposure, something like 3.5% of the Defense segment's revenue, which is still pretty limited. Olivier Brochet: That's very helpful. Sorry, I didn't catch if you commented on the consensus in cyber for '26. Pascal Bouchiat: The consensus -- no, I'm not... Olivier Brochet: It's 15.1%... Pascal Bouchiat: 2026. Overall, I mean, what I mentioned is overall for cyber and digital level of growth mid-single digit. So if you start from our level of revenue in 2025 and if you add up 5% [Technical Difficulty], for the 2026 level of revenue. So overall, starting from 2025 level [Technical Difficulty] CDI -- so if you add the price on top of that, this is how you should get to 2026 expected revenue for CDI. Olivier Brochet: Sure. No, I was thinking of the margin consensus at 15%. Pascal Bouchiat: No. So overall, I mean, it's above what we have in mind. It's above what we have in mind. If I start with 2025, we mentioned a level of margin for CDI at 13.7%. But we said that we had in this level of margin, I mean, a few positive one-offs. We believe that the 2025 recurring level of margin is more in line with 13% for 2025, putting aside those one-offs -- by the way, I mean, you need to understand that in 2025, CDI had also to face with 2 headwinds, one being, I mean, the drop in the U.S. dollars plus implementation of the U.S. tariff. So all of that representing probably something like 1 percentage points of headwinds. And this leads to a recurring level of margin in 2025 at 13%. And I mean, from that, this is what we could expect for 2026. So maybe slightly above this level, but this is, I mean, the overall ballpark that we could expect for CDI EBIT margin in 2026. Patrice Caine: But I think, Olivier, your question was related to cyber, not CDI as a whole. You mentioned the 15.1% consensus for 2026 for cyber, which corresponds to what we see globally for the cyber segment of CDI for 2026. So... Pascal Bouchiat: Yes, 2026, I mean, I'm sorry for that, but I mean the connection is not great. So if your question was about cyber EBIT margin for 2026. So overall, a 15.5% EBIT margin for 2026 is what we have in mind. Operator: We are now going to proceed with our next question -- and the questions come from the line of Alessandro Pozzi from Mediobanca Capital. Alessandro Pozzi: The first one is on free cash flow conversion. I was wondering if you can perhaps share your assumptions around working capital and CapEx. I think working capital was a key contributing factor in 2025. And given the order intake, perhaps maybe we should assume something similar for '26. And CapEx I think you mentioned that -- of course, you have the ramp-up going on, you increased the production of radars and you mentioned that potential CapEx is going to go up again in 2026. And if you can quantify that as well? And second question on capital allocation, which is a nice segue from the first question is, your net debt is substantially down, and we know that your priority is to delever the company. But I think by 2026, probably that target will be accomplished and or you're going to be very close. And I was wondering whether we should think about a different capital allocation, maybe more buybacks as well. So any thoughts on that will be appreciated. Pascal Bouchiat: Okay. Thank you very much -- thank you very much, Alessandro. So we can -- by the way, we can hear you loud and clear, which was not the case before, much better. So let's start with, I mean, cash flow generation for 2026. I mentioned that, I mean, conversion ratio should be 95%. And this takes into account a few assumptions that you want me to give you more insight. So first, in terms of CapEx, it's true that we'll keep seeing our CapEx moving up in 2026. Overall, I mean, if you look at 2025, CapEx were at around EUR 750 million. 2026, it should be higher and probably, in my view, EUR 820 million to EUR 850 million CapEx for 2026, pretty much in line with the overall CapEx to revenue ratio around 3.5%, which was the high end of our guidance that we shared with you at our Capital Market Day in November 2024. So first point. And second point, in terms of working capital, it's true that 2025, I mean, change in working capital was a clear tailwind and reflecting, I mean, in particular, down payments and large down payments in particular, defense export contracts. 2026 at this point, we believe that the guidance that I mentioned about conversion ratio is more based on a flattish level of working capital. So this is, I mean, what we have in mind. Of course, it will depend at the end of the day of the -- of our order intake and the profile of order intake, in particular, coming from export contract. But at this point, what we shared with you is the level of cash flow generation. So I mean, makes -- to ensure 100% being based on something like a stable level of working capital. So again, with a stable level of working capital, a pretty strong level of cash flow generation again. With Thales investing also more in terms of CapEx. As I mentioned, I mean, a level of CapEx EUR 820 million, EUR 815 million, it has to be compared to a level of depreciation slightly above EUR 500 million. So basically, we keep investing on all our industrial sites. We keep investing on ISIT. We keep investing in engineering tooling for us, I mean, to benefit from the growth that we see down the road. Maybe capital allocation for Patrice. Patrice Caine: Yes, I can -- Alessandro, I can come back on this point in a more global setup. As you know, we've said that for a while now we have all the different levers available in what we call that ToolBox in Thales. Clearly, you've mentioned, number one, deleveraging the company, which is an important stake for us as we do want to keep Thales being an investment-grade company with a strong balance sheet. Clearly, funding our organic growth through CapEx and R&D, and R&D is super important for us. M&A, we discuss M&A with the same, I would say, philosophy as already discussed, dividends as well. And we said that the 40% payout ratio will be proposed to the AGM giving clear visibility on this front. And last but not least, buyback. So buyback is part of the ToolBox clearly. Now don't -- always keep in mind that among the different criteria that we look at if and when we have to decide for a buyback is clearly the price of the company, the share price. Is there a gap or not? Do we think there is clearly potential in terms of valuation of the company that is not well understood by the market. And it's true that currently, if we look at the share price of Thales, I cannot say that there is a misunderstanding or a mismatch between the full potential of the company and how the company is currently valued by the market. So all in all, the ToolBoxes there, we have all the levers in hand, and we do not exclude one among any others per definition. Operator: We are now going to proceed with our next question. And the questions come from the line of Christophe Menard from Deutsche Bank. Christophe Menard: I had two. The first one on BROMO. Thanks for the update. Is there any extra update on the authorization? Any progress being made on this, quite obviously? You mentioned it needs to be authorized. That's the key element. And the other question on SAMP/T NG , thanks for the update as well. The contract in Denmark, has it been confirmed -- I mean, there has been announced back in September, but is it confirmed yet? And can you comment -- I mean, you mentioned a few other potential markets. Do you see more interest since the September [ CH ] or the September announcement? And what is the updated potential? Patrice Caine: I can start and Pascal will complement, of course, if needed. Well, on BROMO, I would say so far so good. I mean, everything is on track. Number one, the social processes are ongoing. And I would say with constructive discussions with the unions, constructive discussions. They do understand the rationale of this initiative. And I would say the benefits for everybody, the customers, the employees and as well the shareholders of the groups. Of course, the second work stream, which is important is antitrust authorization. On this front, discussions are ongoing in a positive -- I would say, with a positive, I would say, mindset of everybody. So this is -- I'm not saying that we expect such outcome. But globally speaking, I would say the discussions are constructive on this front as well. That's the two main work streams. There are many others, but probably with less, I would say, importance than those two ones. So stay tuned. We'll keep you informed, of course. But for the moment, work in progress in a positive sense. On SAMP/T, there is, for me, absolutely no risk not to do this contract in 2026. The Danish customer even passed us some LLI contracts, long lead item contract to, I would say, anticipate the formal and definitive full scope contract that was clearly expected in 2026. So no surprise on the fact that it was not booked in 2025. Denmark has chosen to go through [indiscernible]. That's why it takes a bit of time. And again, it's just an iterative process. No surprise on this front. So you should or you could consider that it is 99% secure, I would say. Now of course, there are many other prospects in -- typically in Europe, Eastern Europe, in the Middle East as well. By the way, the recent events of this last weekend shows how air defense is important again and again after Ukraine, it's another, I would say, very visible and striking example of how air defense is important. And of course, it reinforced our conviction that some SAMP/T NG has a lot of potential in the years ahead of us. I don't want to mention any country in particular because they don't like us to disclose discussions. But believe me, the pipe is important in this domain. And in particular, both in terms of, I would say, performance offered by the SAMP/T NG versus its main competitor, which is the Patriot system. And secondly, an important criteria of decision is lead time. And again, SAMP/T NG is, I would say, available in the short run, clearly, before 2030, 2028, 2029, where the Patriot system, if you want to buy one tomorrow, you will have to wait much longer than the date I said for the SAMP/T NG. So all these criteria or all these elements are positive elements, and that makes SAMP/T NG a good candidate for future big orders in the years to come. Operator: We are now going to proceed with our next question. And the questions come from the line of Aymeric Poulain from Kepler Cheuvreux. Aymeric Poulain: The first question is on cyber again. And just to understand the phasing of the reacceleration, the gradual comments you make in the guidance? And why does it take so long to regain the lost market share of last year? That would be the first question. And secondly, to follow up on Ben's question on AI implication for cyber, but perhaps broadening the question on the whole portfolio. I mean, what do you see in terms of the overall competitive impact of AI on your various businesses? What are the most important challenges or opportunity? And maybe is there already some figures you can provide in terms of the contribution to sales or the benefit in terms of cost or the size of the investments that you're putting into your AI transformation? Pascal Bouchiat: Maybe -- first good morning Aymeric ,thank you very much for your two questions. Maybe I will start on cyber. So in a nutshell, why is it so low? Why it so slow? I mean -- so of course, I mean, I guess it was quite clear that 2025 was below expectations. And we made it clear that, I mean, those difficulties that we faced in 2025 was above what we anticipated beginning of 2025. And it's true that it took us a bit of time, I mean, to put that under control in terms of, I mean, the organization of the sales force, the implementation of the new variable compensation program, getting the right level of training across the workforce. I mean, developing the new element, the new level of intimacy with customers and our sales force, our sales reps having to get trained to a new portfolio of products. So it seems to be easy from the outside. Now when you drive and you manage a sales force of more than 1,000 sales reps, I can tell you that it's not that easy. So we are, of course, a bit cautious. This is also our trademark globally. And we believe that we should see growth accelerating throughout 2026. Now let's take quarter-by-quarter, I mean, to give you more input on that. But please be assured that we are doing whatever we can, I mean, to accelerate on this cyber product business. Patrice Caine: I've tried to explain, but perhaps I was not clear enough during the presentation, how we do leverage AI for a while now in all our different lines of products, be there I would say, sensors. I took the example of the TALIOS pod, but I could have mentioned how do we embed AI in our radars, in our electronic warfare equipment, in our even radio communication equipment, number one. And number two, how do we leverage AI in the so-called decision and making system, the C2 system, if I take the military acronym. And we have already powered by AI, several, if not many, C2, C3, C4I systems for several customers in the world. So it's not possible to give you a measure of how AI make us even more, I would say, attractive. But that's what I observed with the conversations I have with our customers, starting from world-class products and making them even more, I would say, attractive by enhancing their capability through AI. This is a clear and straightcut strategy for us. Last but not least, we do as well care about AI on our internal processes. That's another, I would say, aspect of how do we use AI. It's clear that it is a key element of our global and overall competitiveness plan. Now it's one element among many others. So it's, again, not possible to, I would say, decouple this one from all the others and to say, okay, the contribution of this element help us in this amount of -- in this percentage to improve the competitiveness of the group. But definitely, it is a key element that we use or a key enabler that we use to improve the overall competitiveness of Thales. Operator: We are now going to proceed with our next question -- and the questions come from the line of David Perry from JPMorgan. David Perry: So two questions. One simple one, one a bit longer. The simple one is the associate line was very strong. If you could just comment on that, that would be helpful. The second one, if I can be a bit provocative. If I -- you delivered a good EBIT number overall for the group, it was better than consensus. But if I compare it to expectations 12 months ago, you're kind of double-digit better on EBIT in Defense and Aerospace and you're about 20% worse in Cyber and Digital. What is the chance in 12 months' time that you meet your group guidance, which you often do, that it's going to be a lot better in defense or aerospace and worse in cyber, so -- or cyber and digital. If you can just give your level of confidence overall on the individual parts? Pascal Bouchiat: David, thank you very much again for your insightful questions. So I mean, the first one, I mean, about equity affiliates. Yes, it's true that, I mean, 2025 was pretty good. Having said that, 2024 -- the 2024 reference base for equity earnings was pretty low. And it's true that we had in 2024, some negative one-off. I think probably a better reference base for equity earnings would be more 2023 than 2024. And if you compare 2025 against 2023, you will realize that overall, our equity earnings in 2025 are 20% above what we reported 2 years ago. And this is basically, I mean, a normal type of expected contributions and in particular, because it so that our defense JVs are doing pretty well, but also, I mean, fueled by, I mean, also the level of demand across the board. Maybe a last point, it's also true that and I mentioned it, we had on one of our CDI JV, a positive one-off in 2025. Now the underlying, I mean, message is that overall, across the board, we see, I mean, contributions from JVs keeping moving up. By the way, it could have been even better absent the tax surcharge in France that it never got contributions by EUR 8 million in 2025. So all in all, I mean, a pretty good level of contribution, but reflecting, in particular, defense JVs that are performing pretty well. And I could also mention JVs in the avionics business that are doing also pretty well. Now your second question about what is going to happen in a year's time when we meet again, how will -- no, I mean maybe I can start, Patrice, unless you want to. No, of course, I mean, we give you at this point, I mean, the best view that we have within Thales with, of course, I mean, defense with, I mean, quite a good traction on this matter. Avionics also pretty good traction. Space as well. And that's -- I mean, when you look at our level of growth for Space in 2025 has been above the expectations. It's a matter of fact. I mean, I remember a year ago telling you space revenue should be low single digit in 2025. Eventually, we have done the mid-single-digit plus for space, so doing better. I mean the -- then it's about cyber, and we share, I mean, how we see the situation getting back to growth progressively on cyber product. And I mean, this is what we expect to announce you in a year's time as we release our 2026 financials. But overall, what I see is that as compared to what we said a year ago, we are overall, whether it's order intake, whether it's revenue, organic growth, whether it's EBIT, whether it is net income, whether it's free operating cash flow, at the end of the day, when you look at our 2025 figures compared to what we said a year ago, all those metrics in terms of 2025 results are above what we said a year ago. I mean this is just a fact-based comments. So at this point, and we are just entering 2026 with, of course, a number of open points, and we see in a year's time whether or not, I mean, we'll be at this level or whether we'll be above what we guided this morning. Patrice Caine: But we have shared what we do strongly believe in as we speak, of course. But David, every year, we face along the year, unexpected events. And typically, last year, it was a tariff who could have expected the decision taken by the U.S. President at the very beginning of 2025, no one, by the way, no one. Then it's our duty. And I think it's part of the merit of the business model of Thales to deliver whatever it happens. And the fact that, yes, we are, I would say, involved in several domains or several verticals, maybe a source of complexity for you guys trying to understand Thales, but it's also a source of resilience along the year when it happens something here or there. And it always happens something here or there, always, always always. So at the end, what really counts, it's Thales' results, even more importantly, that's the results of division A, B or C. And again, if we do our results by the end of this year a bit differently, what would be even more important is doing our results globally speaking. So we will see, David. We'll do our best to deliver, I would say, as expected per division, but what matters most is what we do at group level. David Perry: Okay. And something we can chat about over the next dinner, which we look forward to. Pascal Bouchiat: With pleasure, David, with pleasure. Operator: Yes, we are now going to proceed with one final question. And the questions come from the line of Ross Law from Morgan Stanley. Ross Law: So just one on kind of high level on the medium-term growth outlook, which you've upped -- the upper end of the range of 5% to 7%. Can you just provide some color on the growth rates at the divisional level? That's the first one. And then just secondly, on Space, what is the absolute EBIT contribution in '25? And what do you expect for '26? Pascal Bouchiat: Okay. So at this point, I mean, a bit cautious and we are guiding you division by division for the 2024, 2028 period of time. I mean what we said today is overall Thales in terms of organic growth being at the high end range of the 5% to 7%. But at this point, we need to be more patient. I don't want to go deeper on this matter. Second point on Space. So you probably remember a year ago, we said that we're expecting, I mean, 2025, pre-restructuring EBIT being positive. What I can share with you is that overall, the post restructuring, so full adjusted EBIT for Space was slightly positive in 2025 despite the level of restructuring that in my memory is something around EUR 20 million. So overall being slightly positive despite the EUR 20 million headwind on restructuring. It shows that we have done a bit more than expected on this matter. And what we're expecting in 2026 is the further progression of our EBIT. All of that being consistent with the 7% plus 2028 EBIT margin that we shared at the Capital Market Day with some kind of linear progression in terms of EBIT margin. This is what we said a year ago, and this is what we can confirm today. So linear progression from this breakeven plus full EBIT margin in 2025 to 7% plus in 2028. Patrice Caine: So thank you all for your questions. We'll be happy to meet you on the road in the next couple of days together with Pascal. If you have any follow-up questions, do not hesitate to reach out to Louis and the IR team. I wish you all a very good day. Thank you very much. Bye-bye. Pascal Bouchiat: Thank you very much. See you. Bye-bye. Operator: Thank you, ladies and gentlemen. If you didn't have a chance to ask your question on today's call, please do not hesitate to send your question to Thales Group Investor Relations at ir@thalesgroup.com, and we will get back to you as soon as possible. Thank you all for your participation. You may now disconnect your lines. Thank you.
Operator: Good day, ladies and gentlemen, and welcome to Intertek Full Year Results 2025. [Operator Instructions] I would like to remind all participants that this call is being recorded. [Operator Instructions] I will now hand over to Andre Lacroix, Chief Executive Officer, to start the presentation. André Lacroix: Good morning to you all, and thanks for joining us on our call. I have with me Colm Deasy, our CFO; and Denis Moreau, our VP of Investor Relations. 2025 marks the third consecutive year of double-digit EPS growth, and I would like to start our presentation today by recognizing all my colleagues around the world for the strong delivery of our AAA differentiated strategy for growth. Here are the key takeaways from our call today. In 2025, we have converted a 4.3% revenue growth into 10.1% EPS growth with a strong margin progression of 90 basis points. Cash conversion was excellent at 110%, providing us with the funds to invest GBP 300 million in growth and returned GBP 602 million to our shareholders. Following the launch of our AAA strategy 3 years ago, our earnings per share have grown 2x faster than revenue. Our margin progression of 240 basis points was ahead of target, and we have delivered a cumulative operating cash flow of GBP 2.3 billion. Importantly, we have increased dividend per share by 17% per year on average in the last 3 years. In 2026, we're expecting a strong performance with mid-single-digit like-for-like revenue growth, further margin progression, strong earnings growth and a strong cash generation. Let's start with the highlights of our 2025 performance. We have delivered indeed a strong financial performance. Our revenue growth was robust, up 4.3% at constant rate and 1.1% at actual rate. Operating margin was excellent at 18.1%, up year-on-year by 90 basis points. Operating profit growth was strong, up by 9.3% at constant rate and 5% at actual rate. EPS grew at 10.1% at constant rate. ROIC was excellent, 21.3% and our organic ROIC increased by 70 basis points. And as I said earlier, our cash conversion was excellent at 110%. Let's now discuss our like-for-like revenue growth performance. The demand for our ATIC solution was robust and our like-for-like revenue growth of 3.9% at constant rate was driven by both volume and price. Our like-for-like growth in consumer products, corporate insurance, health and safety and industry infrastructure combined, which represent 90% of the group's earnings was 5.4%. The World of Energy performance was driven by 2 factors. First, a very demanding base with 8% like-for-like revenue growth in 2024 and 8.7% like-for-like revenue growth in '23 as well, as you know, a slowdown in transportation technology in the second half of 2025. In the last 3 years, as you can see on the slide, our group mid-single-digit like-for-like revenue growth was broad-based and in line with our AAA targets. The acquisitions we've made are performing very well. We've made 7 acquisitions in the last 3 years to strengthen our IT value proposition in high-growth and high-margin sectors. These investments are value accretive to the group, having delivered in aggregate a margin of 34% in 2025. We are truly excited about the consolidation opportunities in our industry and we will continue to target high-quality businesses. Indeed, 2 weeks ago, we've acquired Aerial PV, a drone-based inspection business to strengthen our value proposition in the solar energy. And last week, we've acquired QTEST in Colombia to expand our Intertek electrical network in Latin America. In the industry, Intertek is recognized for its science-based customer excellence with our ATIC premium offering, delivering a superior customer service. Our high-margin and capital-light assurance business solution is the fastest-growing business. From a geographic standpoint, we've benefited in the last few years from broad-based revenue growth within each region. There's been a lot of discussion about the economy in China, and let me give you an update on the performance of our China business. We had a very strong business in China, operating a diversified portfolio with scale positions across all of our business lines. We've delivered a like-for-like revenue growth of 5.4% in 2025, in line with our 3-year like-for-like revenue growth of 5.6%. We are extremely pleased with our margin performance of 18.1%, which was up 90 basis points at constant currency. We have benefited from portfolio mix, fixed cost leverage linked to growth, productivity improvements, our restructuring programs and of course, our accretive investments. These positive margin drivers were partially offset by the cost inflation and our investments in growth. A few years ago, we announced a cost reduction program to target productivity opportunities based on operational streamlining and technology upgrade initiatives. Our restructuring program has delivered GBP 13 million savings in 2023, GBP 11 million in 2024 and GBP 6 million in 2025. We expect an GBP 8 million benefit in '26 from the restructuring that we have done in 2025. In the last few years, we've increased our margin by 80 basis points on average per year, well ahead of our AAA targets. I will now hand over to Colm to discuss our full year results in detail. Colm Deasy: Thank you, Andre. In summary, in 2025, the group delivered a strong financial performance. Total revenue grew to GBP 3.4 billion, up 4.3% at constant currency and 1.1% at actual rates. Sterling strengthened compared to major currencies impacting our revenue growth by a negative 320 basis points. Operating profit at constant rates was up 9.3% to GBP 620 million, with operating margin of 18.1%, up year-on-year by 90 basis points at constant currency and 70 basis points at actual rates. Diluted earnings per share were 253.5p with growth of 10.1% at constant rates and 5.4% at actual rates. Now turning to cash flow and net debt. Group delivered adjusted cash from operations of GBP 762 million, down from our '24 peak, largely due to EBITDA being impacted by translation and, of course, lower working capital change than the prior year. Adjusted free cash flow was GBP 352 million, down from our '24 peak due to a lower cash generated from operations, higher interest and borrowing costs, higher cash tax outflow following our strong EPS progression and higher CapEx investments. Turning to our financial guidance for '26. We expect net finance costs to be in the range of GBP 71 million to GBP 72 million, excluding FX. We expect our effective tax rate to be between 25.5% and 26.5%, our minority interest to be between GBP 21 million and GBP 22 million and our CapEx investment to be in the range of GBP 150 million to GBP 160 million. Our financial net debt guidance prior to any material movements in FX or M&A is GBP 930 million to GBP 980 million. I will hand back to Andre now. André Lacroix: Thank you, Colm. And I'll summarize our performance by division. All comments will be at constant currency. Our Consumer Products delivered a stellar performance in 2025 with GBP 983 million in terms of revenue, up year-on-year by 6.2%. Our 6.3% like-for-like revenue growth was driven by high single-digit like-for-like in Softline, mid-single-digit like-for-like in Hardlines, mid-single-digit like-for-like in Electrical and double-digit like-for-like in GTS. Operating profit was up 11% to GBP 299 million with a margin of 30.4%, up year-on-year by 250 basis points as we continue to benefit from a strong operating leverage and productivity gains. In 2026, we expect the Consumer Product division to deliver mid-single-digit like-for-like revenue growth. We grew revenue in our Corporate Assurance business by 6.8% to GBP 514 million. Our like-for-like revenue growth was driven by high single-digit like-for-like in Business Assurance and low single-digit like-for-like in Assurance. Operating profit was GBP 116 million, up year-on-year by 3% and our slight margin reduction after a strong 2024 was driven by mix and investment in growth. In 2026, we expect our Corporate Assurance division to deliver high single-digit like-for-like revenue growth. Health and Safety delivered a revenue of GBP 347 million, an increase year-on-year of 5.5%. Our 2.4% like-for-like revenue growth was driven by double-digit like-for-like in Food, low single-digit like-for-like in AgriWorld and negative low single-digit like-for-like in Chemical & Pharma after a strong baseline effect in '23 and '24 and a temporary project delays by some of our clients. Operating profit rose 2% to GBP 45 million with a margin of 13%, slightly down year-on-year after a strong 2024, driven by mix. In 2026, we expect our Health and Safety division to deliver low single-digit like-for-like revenue growth. Revenue in Industry Infrastructure increased 5.3% to GBP 858 million and our 4.7% like-for-like revenue growth was driven by a stellar performance from Minerals, double-digit like-for-like revenue growth, mid-single-digit like-for-like in Industry Services and low single-digit like-for-like in Building & Construction with a strong second half. Operating profit of GBP 95 million was up 24%, and our margin was up 170 basis points as we benefit from operating leverage, productivity gains and portfolio mix. In 2026, we expect our Industry Infrastructure business to deliver mid-single-digit like-for-like revenue growth. Revenue in our World of Energy business were GBP 729 million, 1.3% lower than '24. Our like-for-like revenue performance was driven by low single-digit like-for-like in Caleb Brett after a strong '24 and '23, where we reported high single-digit like-for-like revenue growth. Negative high single-digit like-for-like in TT was due to a temporary reduction of investments by some of our clients and a negative high single-digit like-for-like in our CEA business was due to a baseline effect following a strong double-digit like-for-like performance in 2024. Operating profit was GBP 63 million, down 15% due to mix and, of course, a lower revenue in TT and CEA. In 2026, we expect our Water and Energy division to deliver low single-digit like-for-like revenue growth. Three years ago, in 2023, we introduced our AAA differentiated strategy for growth to unlock the significant value growth opportunities ahead. And today, I would like to step back and give you a strategic update on where we are and how excited we are about the future. Our AAA strategy is all about being the best every single day for every stakeholder. We want to be the most trusted partner for our clients. We want our employees to be fully engaged. We want to demonstrate sustainable excellence in all of our operations and community. And of course, we want to deliver durable value creation for our shareholders. Our AAA commitment to all stakeholders is simple, demanding and compelling, quality growth assured. Our clients invite us into the most critical parts of the value chain because they know that our science, our independence and our ethics are nonnegotiable. Our high-quality portfolio with leading scale position is growing in structurally attractive markets where regulation, complexity and innovation are rising year after year. We target quality revenue growth, focusing on selling our ATIC solutions in high-growth and high-margin segments. Our quality revenue growth, combined with strong fixed cost control, productivity gains and disciplined investment in growth deliver continuous margin progression, resulting in strong earnings growth, which we convert into excellent cash generation. That's how the Intertek earnings models compound value over time. That's how the Intertek earnings models deliver durable quality growth. 10 years ago, we recognized that TIC solutions were necessary but not sufficient to give a superior customer service to our clients given the complexity in their global operations. We invented ATIC and today, we are the premium leader in risk-based Quality Assurance. Our systemic end-to-end Quality Assurance, combined with our scientific technical expertise is what makes us truly unique and the best in the industry. Our ATIC approach is industry agnostic, and let me show you some examples on how ATIC works across categories. Here, you can see how ATIC works for a T-shirt in the Softline industry part of our Consumer Products division. Here, you can see how ATIC works for the development of data center, the high-growth areas for electrical and building construction operations. In the fast-growing energy storage market, ATIC solutions are, of course, mission-critical for the performance and safety of batteries. And here, you can see from an ATIC standpoint, how it works in attractive LNG sector, which plays, as you know, a significant role in the energy transition. Our growth model has compounded significant value over time. Our earnings per share have grown at an average of 10% since 2004. Outstanding financial performance starts, of course, with the trust of our clients based on our science-based customer excellence advantage. At the bottom of the slide, you can see a few examples of our Your BMAs campaigns where our clients acknowledge publicly the trust they have in Intertek. And of course, there are many more examples on our website. We are very excited about the growth opportunities ahead. Every day in every industry, we pursue 3 type of growth opportunities. In the outsourced Quality Assurance market, we are targeting higher penetration with existing clients as well as the acquisitions of new clients. In in-house Quality Assurance market, outsourcing remains a significant opportunity. Of course, the most exciting growth areas is the untapped opportunity based on the Quality Assurance work that our clients don't do today and will do moving forward. Our clients indeed invest more today than 10 years ago in Quality Assurance, but they still do not invest enough given the increased risks in their operations. That's why our role of independent quality assure is mission-critical for the world to operate safely. Regulation on quality, safety and sustainability are tightening. Supply chains have become more global and more complex. The energy transition and electrifications are creating new growth opportunities. For sure, innovation cycles are shortening in all categories and consumers are demanding more choice and high-quality choices driving SKU proliferation. Finally, digitization and data-driven assurance increase the value of our science-based ATIC intelligence. Over the years, we have built a high-growth quality portfolio to seize these opportunities in every single of our business line. Moving forward, at the group level, we continue to expect to deliver mid-single-digit like-for-like revenue growth. Let me explain how we'll do that, starting with Consumer Products. Consumer Products, our largest division in revenue and profit has reported like-for-like revenue growth of 5.2% between '23 and '25, ahead of our guidance. As a result, we are upgrading our corporate guidance for Consumer Products to deliver mid-single-digit like-for-like revenue growth in the medium term. In the medium term, we continue to expect high single-digit to double-digit like-for-like growth in Corporate Assurance, mid-single-digit to high single-digit like-for-like growth in Health and Safety and Industry Infrastructure and low single-digit to mid-single-digit like-for-like growth in the World of Energy. Margin accretive revenue growth is central to the way we manage performance at Intertek. Between '15 and 2025, we have step changed our margin performance, having increased our reported margin by 220 basis points. Indeed, we have benefited from our portfolio mix and strong pricing power. We've delivered consistent revenue growth with good operating leverage. We've reduced our fixed costs, both at the operating and management levels. We have reinvented our processes to increase productivity. Our CapEx and M&A investments were made in high-growth and high-margin sectors, and these positive margin drivers were partially offset by the cost of inflation and the investments that we've made to accelerate growth. The margin accretion potential ahead is significant, and we are on track to deliver our 18.5% plus margin target. On cash and shareholder returns, we've also made significant progress between '15 and 2025 with our end-to-end cash performance management. The opportunity ahead is also significant from a cash generation and in terms of return for our shareholders. We'll continue to, of course, be very, very disciplined in terms of cash management on a daily basis. Being the best every day for our customers is mission-critical to deliver quality growth for our shareholders. We do regular customer research monitoring our performance versus our peers, and I can proudly say that Intertek is positioned as the absolute premium leader in Quality Assurance. Being the best for our customers gives us the opportunity to benefit from growing recurring revenues with our existing clients as well as win with new clients, giving us strong reputation in the industry. To deliver superior return, as we just discussed, we consistently convert our revenue growth into faster earnings growth and strong cash generation. On that slide, we provide a benchmark of our performance versus our 2 peers, and I'm pleased to report that Intertek stands out with best-in-class productivity metrics, margin and returns in the industry. Of course, a key component of our superior returns is our accretive capital allocation. We allocate CapEx in working capital, targeting 4% to 5% of our revenue to support growth. And since 2015, we've invested more than GBP 1.2 billion in CapEx. In terms of shareholder returns, our goal is to grow dividend over time with a payout ratio of around 65%. Selective acquisitions to strengthen our leadership positions are important, and we've invested since '15, GBP 1.4 billion in M&A. Lastly, our goal is to operate with a leverage target of 1.3 to 1.8 net debt to EBITDA and return excess capital when it cannot be deployed at attractive returns. Our high-quality cash compound earnings model that we just discussed has played and will continue to play an essential part in unlocking the value ahead and delivering quality growth. We have good visibility on the structural growth drivers to deliver our revenue growth targets. We are confident that we'll deliver the substantial upside to our medium-term target in terms of margin of 18.5%. We have step changed the cash generation of the group and our disciplined capital allocation policy is, as we just discussed, accretive. We'll continue to benefit year after year from the compounding effect of mid-single-digit like-for-like revenue growth, margin accretion, excellent free cash flow and disciplined investments. This is how we'll deliver durable quality growth and unlock significant value ahead. Over the years, we've built 5 enduring competitive advantage, which underpin our confidence moving forward. We operate a high-quality growth portfolio poised for global growth with leading scale position in attractive industries. We are the premium leader in Quality Assurance with our superior ATIC offering, giving us the trust of our clients. Our high-quality cash compound earnings model, deliver industry-leading productivity and returns and our high-performance science-based organization continue to attract the best talent in the industry. And finally, we operate with doing business the right way. This is part of our culture, and this is supported by strong controls, strong compliance and a tight governance. Before taking your questions, let's discuss guidance for 2026 and beyond. We're entering 2026 with confidence in the last 3 years. As we just discussed, we've accelerated our revenue growth to 6% per year and have grown EPS 2x faster than revenue at 12%. Operating margin has expanded by 240 basis points. We've increased EPS by 17% a year, and we have delivered GBP 2.3 billion in operating cash flow and GBP 1.1 billion in free cash flow. We've invested GBP 396 million in CapEx, GBP 211 million in acquisitions and returned almost GBP 1 billion to our shareholders. And above all, we have delivered an excellent ROIC with a 3 average of 21.4%. Our growth momentum was strong throughout 2025. And in 2026, we expect to deliver mid-single-digit like-for-like revenue growth at constant currency with high single-digit like-for-like in Corporate Assurance, mid-single-digit like-for-like in Consumer Products, Industry and Infrastructure and low single-digit like-for-like in Health and Safety and the World of Energy. We are targeting further margin progression, which combined with expected revenue growth will deliver strong earnings growth. Cash discipline will remain in place and will deliver a strong free cash flow. We plan to invest around GBP 150 million to GBP 160 million in CapEx. As you would expect, we continue to focus on delivering a strong ROIC. In terms of currency, the average sterling rate in the last 6 months applied to the full year results of 2025 will be broadly neutral at the revenue and operating level. Beyond '26, of course, the value growth opportunity is significant. We continue to expect our like-for-like revenue to be at mid-single digit and will benefit from value-accretive M&As. Margin accretive revenue growth, as we just discussed, will remain a top priority, and we are confident that there is upside to our 18.5% plus margin target. We remain very disciplined in terms of cash conversion and cash allocation to seize the organic and inorganic opportunities in the market. And of course, we'll continue to reward our shareholders with a 65% dividend payout ratio. In summary, the value growth opportunity ahead is significant. Our AAA strategy is about being the best all the time, and our commitment to all of our stakeholders is simple, demanding and compelling, quality growth assured. That's what our AAA differential strategy growth is all about. We'll now take any questions that you might have. Operator: [Operator Instructions] We'll take our first question from Rory McKenzie with UBS. Rory Mckenzie: It's Rory here from UBS. Firstly, I appreciate it's only 2 months, but can you just help us get from the November to December exit rate of 1.9% organic growth to your guidance of mid-single-digit growth for this year overall? I know your outlook comments suggested that some areas are supposed to pick up quite a bit. So could you maybe just give us some more detail on what caused that high single-digit decline in World of Energy in the end of last year and what you're seeing so far this year? And also why Corporate Assurance slowed and why you see a pickup? And then secondly, obviously, it was good to see the strong adjusted EBITA margin progression, but also restructuring charges, I think, have increased quite a bit. H2 was the highest run rate we've seen for several years. Can you share more about where those programs are targeted and why you decided to expense them this year? And also just what should we expect in terms of the payback from those charges? André Lacroix: Of course. Look, in terms of like-for-like revenue growth, there is no question that in the second half and particularly in November, December, we faced a very demanding base when it comes to the World of Energy. As I just explained, the World of Energy had a very, very, very strong '23 and '24. Just to remind everyone about the data, we had a '23 like-for-like of 8.7% in 2023 with 9.6% in November, December 2023. And then in 2024, the like-for-like revenue growth of World of Energy was 8%, and it was 10.7% in November, December last year. So if you basically put the November, December like-for-like revenue growth, which is the first part of your question in context, if you basically take that baseline effect into consideration, recognizing, of course, as I said earlier, that we saw a demand reduction in the transportation technology industry, our like-for-like revenue growth was 4.7% ex the World of Energy in November, December and was 5.4% in the full year 2025. So from my perspective, yes, you might call it a slowdown in the month of November, December, but a good reason for that. The reason why we are confident about mid-single-digit like-for-like revenue growth is pretty clear from our perspective. Let's go through each division one at a time. If you look at Consumer Products, there is no question that it's a stellar performance in all segments within Consumer Products. We have done super well in Electrical for many, many, many years, and we continue to innovate and drive growth in our all electrical operations around the world. There is no question that we've made tremendous progress in Softlines, and you can see from the numbers that we are gaining market share in the industry. We've won a lot of new contracts. And Hardlines is performing very well, but also quite a lot of new contracts, and VTS is in a good place. So from a pure consumer product standpoint, there is no question that we are very, very comfortable with our guidance for the year. Looking at Corporate Assurance. Corporate Assurance essentially always has a bit of a slowdown in November, December because this is the period where we are at peak capacity, and it's very difficult to basically go beyond the auditors capacity that we had. Having said that, the backlog is strong, and we are very, very comfortable with the guidance we are giving. And as I said earlier in the call, we are investing in expanding our auditors capacity to deliver the orders we have in the backlog. Within Health and Safety, there is no question that Food continues to be outperforming everyone in the industry. We are very, very proud of the double-digit revenue growth, and we don't expect Food to basically slow down. There is no question that there was a bit of slowdown in Chemical & Pharma in 2025 for all the reasons we talked about, but we expect that to basically bottom out in the first half and start growing in the second half. We are obviously seeing an increased order momentum from all of our clients given the temporary cuts they've done in 2025. When it comes to Industry and Infrastructure, and we are obviously comfortable with the guidance that we've just talked about with a stronger H2 than H1, if I were to say it differently. If I look at Industry and Infrastructure, look, Minerals is going from strength to strength. You would have seen our double-digit revenue growth performance well ahead of anybody in the industry. And this is because we are winning new contracts. A lot of our sourcing opportunities are coming our way, given our science-based customer excellence advantage. And here, we're going to have another very, very good year. Moody continues to thrive. And pleasingly, as expected, we've seen a rebound in terms of demand with building and construction that has a stronger H2 than H1. And here, the backlog is very, very, very good indeed. As far as the world of energy is concerned, I'm not concerned about Caleb Brett nor am I concerned about CEA. Transportation Technology, which is the automotive industry will take time to recover, but we expect the demand to start improving in the second half. So when you go division by division, you can see why we're guiding the way we are guiding and mid-single-digit like-for-like is really what we believe we will deliver in '26 after having delivered that for 3 consecutive years in the last 3 years. When it comes to restructuring, very, very important questions. As you know, 2025 was the fourth year of our restructuring program. We have another year to go. And our view is that we give the operations maximum times to fix some of the issues. But at one point of time, we need to make decisions for underperforming units. And we have taken some decisions. We've obviously taken some cost reduction in TT and CMP given the trajectory that we have seen. We've continued to streamline our overheads. We continue to streamline the operational management within our units, reducing essentially a number of layers. And then there were a few sites that come and I felt we had to basically get out of because after having tried for 2.5 years, the results were not compelling and they were starting to destroy value. So that's basically what I could say to these 2 questions. Thank you, Rory. Operator: Our next question comes from Suhasini Varanasi with Goldman Sachs. Suhasini Varanasi: Just a couple for me, please. As a reminder, the restructuring charges that you took below the line, I think I missed it, but could you help us understand the quantum of the benefit you expect to SG&A in 2026? And just to help us understand the exit rate versus the early trends, is it possible to give us some color on early trading in Jan, Feb this year? André Lacroix: The benefit in 2026 from the restructuring we did in '25 is GBP 8 million. In terms of trading, I typically don't comment on short-term trading. But as I just said to Rory, I'm not worried about the like-for-like momentum for the group in 2026. So we're in a good place. Operator: Our next question comes from Annelies Vermeulen with Morgan Stanley. Annelies Vermeulen: I have 2 questions, please. So firstly, on Transportation Technologies, you talked about customers temporary reduction of investments, but we've also seen some of the OEMs make quite big decisions around moving away from EVs, for example. So when you think about that business, do you think that there will be any need for restructuring as you try and position it to match where the growth actually is in the market? And what gives you confidence on that recovery in the second half based on what you can see today? And then secondly, just on capital allocation, no new share buyback today despite the still quite low leverage. So can we infer from that, that you expect to continue to do more deals in 2026? And how does the pipeline look in terms of what you're looking for specifically? André Lacroix: All right. Of course. Let me just double-click on TT because that's the first question you're asking. Essentially, if you look at the global automotive industry and if you look at the European brands, including here JLR, the American brands and the Chinese and Japanese brands, the Chinese market and the U.S. market have always been the biggest but also the most lucrative market for Western OEMs. And essentially, the reason why we've seen a very quick wave of restructuring across all OEMs in Europe and in U.K. here, but also in the U.S. is essentially for 2 reasons, right? The Western OEMs have basically lost massive market share in China because the Chinese OEMs have an advantage in terms of electric vehicles. So the electric vehicle segment and hybrid segment continue to grow globally. The issue is that the OEMs are losing market share in China. And for the European OEMs, the tariff obviously have increased the cost of doing business in North America, which is the second most lucrative market for all OEMs here in Europe and the U.K. So that's why you've seen this massive cost cutting in terms of R&D projects and people and dividend in the short term because these OEMs had to basically deal with short-term cash pressure. When you step back and if you look at where our footprint is for Intertek in terms of Transportation Technology, we are very strong in the United States. We are strong in China, and we've got, I would say, decent operations in Europe. Looking at the investment moving forward, I don't think that OEMs will stop investing on EV and hybrids for all markets outside of the United States because the demand continues to be very, very robust and all the Western OEMs need to dial up their EV and hybrid capabilities to compete against Chinese OEMs. The U.S., of course, we have never expected a huge growth for electric vehicles. And this is a market where the traditional combustion engine will continue to play a big role. I mean the good news for us is that in the U.S., that's exactly what we do in the automotive industry. So we are quite well positioned. My view is that OEMs cannot stop investing in R&D to improve their market share. And we believe that they will resume investments step by step. So we are optimistic for the second half of 2026. As far as the capital allocation question, we did our share buyback last year because our net debt-to-EBITDA leverage was way below our target range. Now we are at 1.3 at the bottom of our target. We basically believe that the opportunities to create additional value for our shareholders through M&A is increasing. We've seen the demand increase in terms of good businesses being for sale. We've done quite a few acquisitions, as you know, in 2025 and the last few weeks. And we believe that being at 1.3 net debt to EBITDA, we are in a good place to putting, if you want our cash to work and deliver superior returns, provide, of course, the opportunities are very significant. If at the end of 2026, we are in a situation where our leverage is below our target and below the threshold -- minimum threshold in our target, obviously, we will reconsider with the Board. But we've always said that if the group is below the minimum threshold of 1.3, we will obviously return excess cash that can be deployed for strong returns. But again, as I said in the presentation, you have seen the returns that we delivered in the last 3 years with the acquisition that we made, it's really accretive to the group. And if we find the right opportunities, we will seize this. We'll remain very, very disciplined, and we'll take a view at the end of when we sit with the Board if there is excess cash that we need to return cash to shareholders. All right. Operator: The next question comes from Virginia Montorsi, Bank of America. Virginia Montorsi: I just had 2 quick ones. One is on the margins, particularly in Corporate Assurance and Health and Safety. You've mentioned in the press release some portfolio mix effect. So could you help us understand how to think about these 2 divisions margin-wise for 2026? And then the second one, when we think about CapEx, it's increased slightly year-on-year and your guidance for next year is slightly higher. What are your priorities CapEx-wise for this year? André Lacroix: All right. Look, I think if you look at the mix effect within Corporate Assurance essentially that we have 2 big businesses, Business Assurance and Assurance and the like-for-like revenue growth was a bit lower on Assurance than on Corporate Assurance on Business Assurance, and this is what the mix effect was all about. And as I said, there was more than mix. We are investing in technology and auditors capability. And in terms of Health and Safety, there is no question that the mix effect was driven by Chemical & Pharma, which was down year-on-year, and it's a really high-margin business for us. We do not guide in terms of margin by division for the year. We give you a guidance for the overall group. We expect, obviously, to deliver margin accretive revenue growth in most of our businesses and there are opportunities in 2026 for both business -- Corporate Assurance, sorry, and Health and Safety to do better. Virginia Montorsi: And can I ask on CapEx? André Lacroix: Yes. I mean the CapEx question is pretty simple to think about it, right? We are in a unique position when it comes to seeing growth opportunities in each of our business lines. And we have obviously opened new sites in Asia Pacific, in Latin America and also in Europe. We have expanded certain of our sites in terms of building additional capacity. We, of course, have invested in technology. We are using technology to innovate and augment our value proposition. And lastly, maintenance continue to be important, and we continue also to make some investment, as you would expect in the group in terms of overall IT strategy. So that's basically what we are doing. It's pretty broad-based. There is no single business line at Intertek that doesn't have opportunities to grow with good CapEx investments, and that's what we are doing. You can see with all the announcements that we are making around the world, the type of investments we've done in 2025. Operator: Our next question comes from James Rowland Clark with Barclays. James Clark: You talked about the healthy M&A pipeline earlier. Can you just elaborate on how deep this pipeline is that you decided that, that is the priority for capital allocation right now? And how far out do you think this takes the business in terms of the sort of run rate of bolt-on deals for the foreseeable future? My second question is on margins. It's another very strong year within the Corporate Consumer Products division in terms of margin progress. You've spoken earlier about growing a little faster in Assurance, adding auditors and also you're guiding higher on growth in consumer products. Do we assume that the opportunity for margin growth is still there in those 2 divisions? Or are you adding lots of capacity to drive the growth that will maybe delay the sort of operating leverage coming through in those 2 divisions in 2026? And then my final question is on free cash flow. It looks like working capital was the reason that free cash flow was down 15% year-on-year. Are you now happy with the working capital sort of base to run off for 2026, i.e., payables and receivables days are in a normalized position now for 2026? André Lacroix: Well, thank you very much. I'll take these questions, starting with the third one. Look, I mean, you're right. I mean, we've made so much progress on cash over the last 10 years that we are now in the territory of incremental gains. But we are truly continuous improvement driven organization, and we'll continue to look at opportunities for better cash generation moving forward. There is no question that we can do much better than what we've done over the years, but we are talking about incremental gains. So I would never say that our working capital is the best you can get. I would say it's a very, very good working capital, but we are going to go for incremental gains step by step. And you're absolutely right. The free cash flow was impacted largely by the lower change of working capital between '24 and '25 compared to what happened between '23 and '24. We had a stellar cash performance in '24, as you know. In terms of margin, as I said to the previous question, we do not guide in terms of margin. But the way we operate internally is margin accretive revenue growth is central to how we deliver value for our stakeholders, right? And look, there are opportunities even within consumer products, even with Corporate Assurance to invest and continue to improve margin. And that's the way we are running the company. That's the way people are incentivized because essentially, to basically improve your margin, you've got quite a lot of levers you can pull if you run an operation. It starts with the quality of your portfolio strategy. Are you targeting the high growth, high-margin segments in the industry so that the IP that our engineers and scientists have to offer to the market are basically priced at a higher price points and are targeted to high-growth areas. The second thing is, of course, you've got to stay very, very disciplined in terms of pricing. We are the premium leader as I was explaining during the presentation, wouldn't have the productivity metrics that we have in terms of revenue per headcount, operating profit per headcount and free cash flow per headcount if we didn't have a very disciplined volume price mix management. In addition to that, the fixed cost leverage continues to be playing a big role when you want to drive margin accretion. And despite the fact that you are investing in new opportunities, you should basically always target some productivity improvement. So net-net, we expect our teams to drive margin growth year in, year out. We do not always get there for reasons that we've just talked about, but that's the way we are running the company, and that's the way the incentive scheme is based and this is why we are obviously in the situation where we're in, in terms of margin performance. In terms of M&A, look, we are very disciplined in terms of M&A. We don't have any goals. We don't say we're going to do x number of M&As. We want to be ultra, ultra careful on how we select these businesses. We only target high-quality businesses. And we believe the environment is obviously more positive for M&A in 2026 than it was in '25 and certainly in 2024. And therefore, we want to keep some firepower given the fact that we had a good place with our net debt to EBITDA at 1.3 level to seize the opportunities coming our way. Having said that, we have built lots of bilateral relationships around the world. That's our preferred way of operating. That's how we did, for instance, Envirolab, that's how we did QTEST. That's how we did Suplilab, that's how we did Aerial PV. And building this relationship takes time, and you need to make sure that the owner is ready to monetize her or his asset base at the right time. We, of course, participate in processes, which tend to be very, very competitive and there are situations where we win. But we don't have any quantified goal. It's got to make sense acquisition by acquisition. And the positive news is that we've got a very, very good integration approach. You've seen the return we delivered from acquisitions. We are very clear about where we want to invest. We target high-growth, high-margin sectors. that will augment the IP of Intertek. And we believe that 2026 will be a good year. But I can assure you, we're not going to rush to make acquisition just because we want to say we've done M&As. We do M&As if it makes sense all the way. Operator: Our next question comes from Victoria Chang with JPMorgan. Victoria Chang: I have 2 questions, please. And the first one is with the U.S. IEEPA tariff ruling last week and the introduction of the Section 122 blanket tariffs on U.S. trading partners, do you see any impact of this to your consumer testing business maybe in terms of delayed decision-making or pull forward of SKU testing to take advantage of the lower tariff rates on certain products in Asia? And my second question is on your initial thoughts on AI implementation in the business, please, how you're thinking about rolling out AI across the business to deliver efficiencies? And are there particular areas or business lines where you expect to see the most benefit in terms of the cost base? André Lacroix: All right. I think on tariff, there is no question that the news is better news for China and India than it was a few weeks ago. As you know, we are in the swing of the supply chains of our clients. We are working very closely with them. We've launched SupplyTek in 2025 to basically help our clients figure out what they could do to reengineer their supply chain based on the change potentially of economics, creating new routes, replacing routes. I would say the overriding position within our clients is wait and see. They've made no big decision because the agenda has been moving around. Having said that, there is no question that we are having lots, lots, lots of meetings with our consulting teams, helping clients to figure out would these tariff situations settle at what is expected to settle at, what it will mean in terms of economics and potentially new routes. But the overriding situation is let's not rush and take our time. And you can understand why because these supply chain changes are very, very costly, very risky, very, very timely and people only want to change their supply chain if it really makes sense not for tomorrow, but for many, many years to come. As far as -- of course, we continue to monitor that. But the net news of the new decision is that it's incrementally better for the economics in China and India. In terms of AI, look, we are called Intertek, so we use technology to augment everything we do for our clients internally. And of course, we are investing on AI. If you were to be here in the office with us here next to our conference room, we have a lab, AI lab that is made of engineers that are providing support to our teams around the world to make sure that we develop the right AI solutions for our business. How do we think about AI at Intertek? First of all, we believe there is a significant opportunity to help our clients manage the risk associated to the investment they are making in AI. If you basically take the technology company aside and largely some other industries like medical devices or defense, AI is pretty new for most corporations. I'm not talking about using large language models, which are third-party large language models. Everybody understand that, but developing your own AI algorithms and using agents to basically either improve your customer service, drive more sales or, of course, work on productivity. So that's why we've launched AI2, which is an independent end-to-end AI assurance program to help our customers operate smarter and safer and with the right trusted AI algorithm. This is the external opportunity, if you want. And this is, of course, very, very good news for us. And here, I would say we are at the cutting edge of what's happening in the industry. I think we are the only company to do that, competing with lots of very, very, very big companies like consulting firms and Big Four because we do have the expertise. In terms of using AI on how we do business, there is no question that we are looking at AI to augment the way we deliver total quality assurance for our clients, right? And I'll give you a few examples in a second. There is no question that we are looking at AI on how to improve our productivity, and I'll give you some examples on how we are seeing some benefits from a productivity standpoint. And then finally, we are looking at AI to basically get faster to the right insights and decision-making by doing data science at scale in all parts of the organization to basically see the opportunities or the issues faster and therefore, make better decisions. As you know, we've built an incredible database of financial, nonfinancial indicators that we call 5x 5. This gives us a real depth and breadth of reach in the operations. And this is where AI investments that we are making are making a big difference for us to basically look at some of the big trends and deviations and you understand all of this. When it comes to using AI on how to augment the total quality assurance value proposition of our clients, there is no question that all of our large-scale data-based platforms, the SaaS platform we've launched over the years, we have a very, very, very good position to differentiate ourselves. And we are already using AI to, for instance, provide better targeted people assurance training with our Alchemy solutions. We are using AI to help our clients use platforms like SourceClear and Intertek and RiskAware, which are SaaS-based platforms where essentially it's all about intelligent document processing, getting the right risk-based quality assurance analysis on the trends and therefore, as a client, making some pretty big decision in terms of where you are in your testing investment or assurance investments to be. When it comes to the internal use, we have invested over the years. We use Harvey, for instance, which is a pretty good platform to review client contracts to basically look at large documents when we do DD inside the data room for M&A. And then going into the operational opportunities. Anywhere where we have pretty well qualified digitized process, AI can help us obviously make much, much, much faster decisions and gain some productivity. So the areas that we're looking at, for instance, is in terms of marketing, how do you basically qualify the right leads much faster. Another area, which is an obvious opportunity for us is the quality reviews of our test report, but also our audit report, very, very important area of opportunity where we are investing a lot is resource management. So if you think about scheduling of auditors for BA or if you look at scheduling of inspectors for Caleb Brett or Moody's. And then there is no question that when it comes to global market access, we use AI to accelerate the speed at which we provide the right testing protocols to our clients when they want to go to market in other industries or in other markets -- in other geographies, sorry. And then the real opportunities is data science, right? How do you basically take the work we do for our clients in Geochemistry and Minerals. We do a lot of work for them, and most of our clients do not basically use most of the data. Well, with the intelligence we have on Geochemistry, we can help our clients go beyond the test report. So we are very, very, very excited. Obviously, early days, but I would say that we are at the cutting edge of AI in the industry at Intertek. Operator: [Operator Instructions] We'll take our next question from Karl Green with RBC. Karl Green: Just a couple of follow-up questions around the restructuring costs in the year. I just wanted to clarify, did I hear correctly that the SG&A benefits expected for 2026 would be GBP 8 million. And if so, that ratio between the GBP 37 million of charges and the SG&A savings of almost 5:1 suggests that there's possibly savings in other cost buckets beyond SG&A. Is that correct? André Lacroix: The 8 million is the total savings we expect in our cost base in 2020 -- yes, in 2026. Karl Green: That's good total cost. Okay. And then just for this year, this fiscal year, fiscal '26, how should we be thinking about likely P&L charges for restructuring costs? Obviously, it's been a consistent feature for the last few years as you've gone through this program. What ballpark number would you point people towards this year? André Lacroix: Look, we do not guide regarding restructuring costs. This is a process that Colm and I go case by case. We only do that when we believe it's the best way moving forward. I wouldn't want to give you any numbers because, frankly speaking, we're going to take every opportunity at its face value, and we'll do it very, very rigorously. We've got some clear rules on how we book this. As you can imagine, we always announce our results fully audited. So that's been through the mute review of our auditors. But this is our final year of the 5-year program we announced a few years ago, but we'll continue to be very, very rigorous. So I wouldn't want to give you any number at this stage. Operator: We'll take our last question from Ben Wild with Deutsche Bank. Ben Wild: Just one remaining for me. I think if I look back at the November trading update and compare with where you ended the year on net financial debt, you ended GBP 20 million above the guide that you gave in November. Just to understand, is there a one-off effect that reverses next year on the free cash flow? Or is there anything else that resulted in the difference between the November guide and the result? André Lacroix: It's a fair question. When we give the net debt guidance, we never include the M&A. So as you know, between November statement and year-end, we did an additional acquisition. So that's the only difference. There is nothing more to that. Operator: There are no further questions on the webinar. I'll now hand back over to management for closing remarks. André Lacroix: Well, thank you very much for your time today. I know it's a busy day. Of course, we are available would you have any follow-up questions. Thank you very much, and have a good day. Operator: Thank you for joining today's call. We're no longer live. Have a nice day.
Operator: Good day, ladies and gentlemen, and welcome to Intertek Full Year Results 2025. [Operator Instructions] I would like to remind all participants that this call is being recorded. [Operator Instructions] I will now hand over to Andre Lacroix, Chief Executive Officer, to start the presentation. André Lacroix: Good morning to you all, and thanks for joining us on our call. I have with me Colm Deasy, our CFO; and Denis Moreau, our VP of Investor Relations. 2025 marks the third consecutive year of double-digit EPS growth, and I would like to start our presentation today by recognizing all my colleagues around the world for the strong delivery of our AAA differentiated strategy for growth. Here are the key takeaways from our call today. In 2025, we have converted a 4.3% revenue growth into 10.1% EPS growth with a strong margin progression of 90 basis points. Cash conversion was excellent at 110%, providing us with the funds to invest GBP 300 million in growth and returned GBP 602 million to our shareholders. Following the launch of our AAA strategy 3 years ago, our earnings per share have grown 2x faster than revenue. Our margin progression of 240 basis points was ahead of target, and we have delivered a cumulative operating cash flow of GBP 2.3 billion. Importantly, we have increased dividend per share by 17% per year on average in the last 3 years. In 2026, we're expecting a strong performance with mid-single-digit like-for-like revenue growth, further margin progression, strong earnings growth and a strong cash generation. Let's start with the highlights of our 2025 performance. We have delivered indeed a strong financial performance. Our revenue growth was robust, up 4.3% at constant rate and 1.1% at actual rate. Operating margin was excellent at 18.1%, up year-on-year by 90 basis points. Operating profit growth was strong, up by 9.3% at constant rate and 5% at actual rate. EPS grew at 10.1% at constant rate. ROIC was excellent, 21.3% and our organic ROIC increased by 70 basis points. And as I said earlier, our cash conversion was excellent at 110%. Let's now discuss our like-for-like revenue growth performance. The demand for our ATIC solution was robust and our like-for-like revenue growth of 3.9% at constant rate was driven by both volume and price. Our like-for-like growth in consumer products, corporate insurance, health and safety and industry infrastructure combined, which represent 90% of the group's earnings was 5.4%. The World of Energy performance was driven by 2 factors. First, a very demanding base with 8% like-for-like revenue growth in 2024 and 8.7% like-for-like revenue growth in '23 as well, as you know, a slowdown in transportation technology in the second half of 2025. In the last 3 years, as you can see on the slide, our group mid-single-digit like-for-like revenue growth was broad-based and in line with our AAA targets. The acquisitions we've made are performing very well. We've made 7 acquisitions in the last 3 years to strengthen our IT value proposition in high-growth and high-margin sectors. These investments are value accretive to the group, having delivered in aggregate a margin of 34% in 2025. We are truly excited about the consolidation opportunities in our industry and we will continue to target high-quality businesses. Indeed, 2 weeks ago, we've acquired Aerial PV, a drone-based inspection business to strengthen our value proposition in the solar energy. And last week, we've acquired QTEST in Colombia to expand our Intertek electrical network in Latin America. In the industry, Intertek is recognized for its science-based customer excellence with our ATIC premium offering, delivering a superior customer service. Our high-margin and capital-light assurance business solution is the fastest-growing business. From a geographic standpoint, we've benefited in the last few years from broad-based revenue growth within each region. There's been a lot of discussion about the economy in China, and let me give you an update on the performance of our China business. We had a very strong business in China, operating a diversified portfolio with scale positions across all of our business lines. We've delivered a like-for-like revenue growth of 5.4% in 2025, in line with our 3-year like-for-like revenue growth of 5.6%. We are extremely pleased with our margin performance of 18.1%, which was up 90 basis points at constant currency. We have benefited from portfolio mix, fixed cost leverage linked to growth, productivity improvements, our restructuring programs and of course, our accretive investments. These positive margin drivers were partially offset by the cost inflation and our investments in growth. A few years ago, we announced a cost reduction program to target productivity opportunities based on operational streamlining and technology upgrade initiatives. Our restructuring program has delivered GBP 13 million savings in 2023, GBP 11 million in 2024 and GBP 6 million in 2025. We expect an GBP 8 million benefit in '26 from the restructuring that we have done in 2025. In the last few years, we've increased our margin by 80 basis points on average per year, well ahead of our AAA targets. I will now hand over to Colm to discuss our full year results in detail. Colm Deasy: Thank you, Andre. In summary, in 2025, the group delivered a strong financial performance. Total revenue grew to GBP 3.4 billion, up 4.3% at constant currency and 1.1% at actual rates. Sterling strengthened compared to major currencies impacting our revenue growth by a negative 320 basis points. Operating profit at constant rates was up 9.3% to GBP 620 million, with operating margin of 18.1%, up year-on-year by 90 basis points at constant currency and 70 basis points at actual rates. Diluted earnings per share were 253.5p with growth of 10.1% at constant rates and 5.4% at actual rates. Now turning to cash flow and net debt. Group delivered adjusted cash from operations of GBP 762 million, down from our '24 peak, largely due to EBITDA being impacted by translation and, of course, lower working capital change than the prior year. Adjusted free cash flow was GBP 352 million, down from our '24 peak due to a lower cash generated from operations, higher interest and borrowing costs, higher cash tax outflow following our strong EPS progression and higher CapEx investments. Turning to our financial guidance for '26. We expect net finance costs to be in the range of GBP 71 million to GBP 72 million, excluding FX. We expect our effective tax rate to be between 25.5% and 26.5%, our minority interest to be between GBP 21 million and GBP 22 million and our CapEx investment to be in the range of GBP 150 million to GBP 160 million. Our financial net debt guidance prior to any material movements in FX or M&A is GBP 930 million to GBP 980 million. I will hand back to Andre now. André Lacroix: Thank you, Colm. And I'll summarize our performance by division. All comments will be at constant currency. Our Consumer Products delivered a stellar performance in 2025 with GBP 983 million in terms of revenue, up year-on-year by 6.2%. Our 6.3% like-for-like revenue growth was driven by high single-digit like-for-like in Softline, mid-single-digit like-for-like in Hardlines, mid-single-digit like-for-like in Electrical and double-digit like-for-like in GTS. Operating profit was up 11% to GBP 299 million with a margin of 30.4%, up year-on-year by 250 basis points as we continue to benefit from a strong operating leverage and productivity gains. In 2026, we expect the Consumer Product division to deliver mid-single-digit like-for-like revenue growth. We grew revenue in our Corporate Assurance business by 6.8% to GBP 514 million. Our like-for-like revenue growth was driven by high single-digit like-for-like in Business Assurance and low single-digit like-for-like in Assurance. Operating profit was GBP 116 million, up year-on-year by 3% and our slight margin reduction after a strong 2024 was driven by mix and investment in growth. In 2026, we expect our Corporate Assurance division to deliver high single-digit like-for-like revenue growth. Health and Safety delivered a revenue of GBP 347 million, an increase year-on-year of 5.5%. Our 2.4% like-for-like revenue growth was driven by double-digit like-for-like in Food, low single-digit like-for-like in AgriWorld and negative low single-digit like-for-like in Chemical & Pharma after a strong baseline effect in '23 and '24 and a temporary project delays by some of our clients. Operating profit rose 2% to GBP 45 million with a margin of 13%, slightly down year-on-year after a strong 2024, driven by mix. In 2026, we expect our Health and Safety division to deliver low single-digit like-for-like revenue growth. Revenue in Industry Infrastructure increased 5.3% to GBP 858 million and our 4.7% like-for-like revenue growth was driven by a stellar performance from Minerals, double-digit like-for-like revenue growth, mid-single-digit like-for-like in Industry Services and low single-digit like-for-like in Building & Construction with a strong second half. Operating profit of GBP 95 million was up 24%, and our margin was up 170 basis points as we benefit from operating leverage, productivity gains and portfolio mix. In 2026, we expect our Industry Infrastructure business to deliver mid-single-digit like-for-like revenue growth. Revenue in our World of Energy business were GBP 729 million, 1.3% lower than '24. Our like-for-like revenue performance was driven by low single-digit like-for-like in Caleb Brett after a strong '24 and '23, where we reported high single-digit like-for-like revenue growth. Negative high single-digit like-for-like in TT was due to a temporary reduction of investments by some of our clients and a negative high single-digit like-for-like in our CEA business was due to a baseline effect following a strong double-digit like-for-like performance in 2024. Operating profit was GBP 63 million, down 15% due to mix and, of course, a lower revenue in TT and CEA. In 2026, we expect our Water and Energy division to deliver low single-digit like-for-like revenue growth. Three years ago, in 2023, we introduced our AAA differentiated strategy for growth to unlock the significant value growth opportunities ahead. And today, I would like to step back and give you a strategic update on where we are and how excited we are about the future. Our AAA strategy is all about being the best every single day for every stakeholder. We want to be the most trusted partner for our clients. We want our employees to be fully engaged. We want to demonstrate sustainable excellence in all of our operations and community. And of course, we want to deliver durable value creation for our shareholders. Our AAA commitment to all stakeholders is simple, demanding and compelling, quality growth assured. Our clients invite us into the most critical parts of the value chain because they know that our science, our independence and our ethics are nonnegotiable. Our high-quality portfolio with leading scale position is growing in structurally attractive markets where regulation, complexity and innovation are rising year after year. We target quality revenue growth, focusing on selling our ATIC solutions in high-growth and high-margin segments. Our quality revenue growth, combined with strong fixed cost control, productivity gains and disciplined investment in growth deliver continuous margin progression, resulting in strong earnings growth, which we convert into excellent cash generation. That's how the Intertek earnings models compound value over time. That's how the Intertek earnings models deliver durable quality growth. 10 years ago, we recognized that TIC solutions were necessary but not sufficient to give a superior customer service to our clients given the complexity in their global operations. We invented ATIC and today, we are the premium leader in risk-based Quality Assurance. Our systemic end-to-end Quality Assurance, combined with our scientific technical expertise is what makes us truly unique and the best in the industry. Our ATIC approach is industry agnostic, and let me show you some examples on how ATIC works across categories. Here, you can see how ATIC works for a T-shirt in the Softline industry part of our Consumer Products division. Here, you can see how ATIC works for the development of data center, the high-growth areas for electrical and building construction operations. In the fast-growing energy storage market, ATIC solutions are, of course, mission-critical for the performance and safety of batteries. And here, you can see from an ATIC standpoint, how it works in attractive LNG sector, which plays, as you know, a significant role in the energy transition. Our growth model has compounded significant value over time. Our earnings per share have grown at an average of 10% since 2004. Outstanding financial performance starts, of course, with the trust of our clients based on our science-based customer excellence advantage. At the bottom of the slide, you can see a few examples of our Your BMAs campaigns where our clients acknowledge publicly the trust they have in Intertek. And of course, there are many more examples on our website. We are very excited about the growth opportunities ahead. Every day in every industry, we pursue 3 type of growth opportunities. In the outsourced Quality Assurance market, we are targeting higher penetration with existing clients as well as the acquisitions of new clients. In in-house Quality Assurance market, outsourcing remains a significant opportunity. Of course, the most exciting growth areas is the untapped opportunity based on the Quality Assurance work that our clients don't do today and will do moving forward. Our clients indeed invest more today than 10 years ago in Quality Assurance, but they still do not invest enough given the increased risks in their operations. That's why our role of independent quality assure is mission-critical for the world to operate safely. Regulation on quality, safety and sustainability are tightening. Supply chains have become more global and more complex. The energy transition and electrifications are creating new growth opportunities. For sure, innovation cycles are shortening in all categories and consumers are demanding more choice and high-quality choices driving SKU proliferation. Finally, digitization and data-driven assurance increase the value of our science-based ATIC intelligence. Over the years, we have built a high-growth quality portfolio to seize these opportunities in every single of our business line. Moving forward, at the group level, we continue to expect to deliver mid-single-digit like-for-like revenue growth. Let me explain how we'll do that, starting with Consumer Products. Consumer Products, our largest division in revenue and profit has reported like-for-like revenue growth of 5.2% between '23 and '25, ahead of our guidance. As a result, we are upgrading our corporate guidance for Consumer Products to deliver mid-single-digit like-for-like revenue growth in the medium term. In the medium term, we continue to expect high single-digit to double-digit like-for-like growth in Corporate Assurance, mid-single-digit to high single-digit like-for-like growth in Health and Safety and Industry Infrastructure and low single-digit to mid-single-digit like-for-like growth in the World of Energy. Margin accretive revenue growth is central to the way we manage performance at Intertek. Between '15 and 2025, we have step changed our margin performance, having increased our reported margin by 220 basis points. Indeed, we have benefited from our portfolio mix and strong pricing power. We've delivered consistent revenue growth with good operating leverage. We've reduced our fixed costs, both at the operating and management levels. We have reinvented our processes to increase productivity. Our CapEx and M&A investments were made in high-growth and high-margin sectors, and these positive margin drivers were partially offset by the cost of inflation and the investments that we've made to accelerate growth. The margin accretion potential ahead is significant, and we are on track to deliver our 18.5% plus margin target. On cash and shareholder returns, we've also made significant progress between '15 and 2025 with our end-to-end cash performance management. The opportunity ahead is also significant from a cash generation and in terms of return for our shareholders. We'll continue to, of course, be very, very disciplined in terms of cash management on a daily basis. Being the best every day for our customers is mission-critical to deliver quality growth for our shareholders. We do regular customer research monitoring our performance versus our peers, and I can proudly say that Intertek is positioned as the absolute premium leader in Quality Assurance. Being the best for our customers gives us the opportunity to benefit from growing recurring revenues with our existing clients as well as win with new clients, giving us strong reputation in the industry. To deliver superior return, as we just discussed, we consistently convert our revenue growth into faster earnings growth and strong cash generation. On that slide, we provide a benchmark of our performance versus our 2 peers, and I'm pleased to report that Intertek stands out with best-in-class productivity metrics, margin and returns in the industry. Of course, a key component of our superior returns is our accretive capital allocation. We allocate CapEx in working capital, targeting 4% to 5% of our revenue to support growth. And since 2015, we've invested more than GBP 1.2 billion in CapEx. In terms of shareholder returns, our goal is to grow dividend over time with a payout ratio of around 65%. Selective acquisitions to strengthen our leadership positions are important, and we've invested since '15, GBP 1.4 billion in M&A. Lastly, our goal is to operate with a leverage target of 1.3 to 1.8 net debt to EBITDA and return excess capital when it cannot be deployed at attractive returns. Our high-quality cash compound earnings model that we just discussed has played and will continue to play an essential part in unlocking the value ahead and delivering quality growth. We have good visibility on the structural growth drivers to deliver our revenue growth targets. We are confident that we'll deliver the substantial upside to our medium-term target in terms of margin of 18.5%. We have step changed the cash generation of the group and our disciplined capital allocation policy is, as we just discussed, accretive. We'll continue to benefit year after year from the compounding effect of mid-single-digit like-for-like revenue growth, margin accretion, excellent free cash flow and disciplined investments. This is how we'll deliver durable quality growth and unlock significant value ahead. Over the years, we've built 5 enduring competitive advantage, which underpin our confidence moving forward. We operate a high-quality growth portfolio poised for global growth with leading scale position in attractive industries. We are the premium leader in Quality Assurance with our superior ATIC offering, giving us the trust of our clients. Our high-quality cash compound earnings model, deliver industry-leading productivity and returns and our high-performance science-based organization continue to attract the best talent in the industry. And finally, we operate with doing business the right way. This is part of our culture, and this is supported by strong controls, strong compliance and a tight governance. Before taking your questions, let's discuss guidance for 2026 and beyond. We're entering 2026 with confidence in the last 3 years. As we just discussed, we've accelerated our revenue growth to 6% per year and have grown EPS 2x faster than revenue at 12%. Operating margin has expanded by 240 basis points. We've increased EPS by 17% a year, and we have delivered GBP 2.3 billion in operating cash flow and GBP 1.1 billion in free cash flow. We've invested GBP 396 million in CapEx, GBP 211 million in acquisitions and returned almost GBP 1 billion to our shareholders. And above all, we have delivered an excellent ROIC with a 3 average of 21.4%. Our growth momentum was strong throughout 2025. And in 2026, we expect to deliver mid-single-digit like-for-like revenue growth at constant currency with high single-digit like-for-like in Corporate Assurance, mid-single-digit like-for-like in Consumer Products, Industry and Infrastructure and low single-digit like-for-like in Health and Safety and the World of Energy. We are targeting further margin progression, which combined with expected revenue growth will deliver strong earnings growth. Cash discipline will remain in place and will deliver a strong free cash flow. We plan to invest around GBP 150 million to GBP 160 million in CapEx. As you would expect, we continue to focus on delivering a strong ROIC. In terms of currency, the average sterling rate in the last 6 months applied to the full year results of 2025 will be broadly neutral at the revenue and operating level. Beyond '26, of course, the value growth opportunity is significant. We continue to expect our like-for-like revenue to be at mid-single digit and will benefit from value-accretive M&As. Margin accretive revenue growth, as we just discussed, will remain a top priority, and we are confident that there is upside to our 18.5% plus margin target. We remain very disciplined in terms of cash conversion and cash allocation to seize the organic and inorganic opportunities in the market. And of course, we'll continue to reward our shareholders with a 65% dividend payout ratio. In summary, the value growth opportunity ahead is significant. Our AAA strategy is about being the best all the time, and our commitment to all of our stakeholders is simple, demanding and compelling, quality growth assured. That's what our AAA differential strategy growth is all about. We'll now take any questions that you might have. Operator: [Operator Instructions] We'll take our first question from Rory McKenzie with UBS. Rory Mckenzie: It's Rory here from UBS. Firstly, I appreciate it's only 2 months, but can you just help us get from the November to December exit rate of 1.9% organic growth to your guidance of mid-single-digit growth for this year overall? I know your outlook comments suggested that some areas are supposed to pick up quite a bit. So could you maybe just give us some more detail on what caused that high single-digit decline in World of Energy in the end of last year and what you're seeing so far this year? And also why Corporate Assurance slowed and why you see a pickup? And then secondly, obviously, it was good to see the strong adjusted EBITA margin progression, but also restructuring charges, I think, have increased quite a bit. H2 was the highest run rate we've seen for several years. Can you share more about where those programs are targeted and why you decided to expense them this year? And also just what should we expect in terms of the payback from those charges? André Lacroix: Of course. Look, in terms of like-for-like revenue growth, there is no question that in the second half and particularly in November, December, we faced a very demanding base when it comes to the World of Energy. As I just explained, the World of Energy had a very, very, very strong '23 and '24. Just to remind everyone about the data, we had a '23 like-for-like of 8.7% in 2023 with 9.6% in November, December 2023. And then in 2024, the like-for-like revenue growth of World of Energy was 8%, and it was 10.7% in November, December last year. So if you basically put the November, December like-for-like revenue growth, which is the first part of your question in context, if you basically take that baseline effect into consideration, recognizing, of course, as I said earlier, that we saw a demand reduction in the transportation technology industry, our like-for-like revenue growth was 4.7% ex the World of Energy in November, December and was 5.4% in the full year 2025. So from my perspective, yes, you might call it a slowdown in the month of November, December, but a good reason for that. The reason why we are confident about mid-single-digit like-for-like revenue growth is pretty clear from our perspective. Let's go through each division one at a time. If you look at Consumer Products, there is no question that it's a stellar performance in all segments within Consumer Products. We have done super well in Electrical for many, many, many years, and we continue to innovate and drive growth in our all electrical operations around the world. There is no question that we've made tremendous progress in Softlines, and you can see from the numbers that we are gaining market share in the industry. We've won a lot of new contracts. And Hardlines is performing very well, but also quite a lot of new contracts, and VTS is in a good place. So from a pure consumer product standpoint, there is no question that we are very, very comfortable with our guidance for the year. Looking at Corporate Assurance. Corporate Assurance essentially always has a bit of a slowdown in November, December because this is the period where we are at peak capacity, and it's very difficult to basically go beyond the auditors capacity that we had. Having said that, the backlog is strong, and we are very, very comfortable with the guidance we are giving. And as I said earlier in the call, we are investing in expanding our auditors capacity to deliver the orders we have in the backlog. Within Health and Safety, there is no question that Food continues to be outperforming everyone in the industry. We are very, very proud of the double-digit revenue growth, and we don't expect Food to basically slow down. There is no question that there was a bit of slowdown in Chemical & Pharma in 2025 for all the reasons we talked about, but we expect that to basically bottom out in the first half and start growing in the second half. We are obviously seeing an increased order momentum from all of our clients given the temporary cuts they've done in 2025. When it comes to Industry and Infrastructure, and we are obviously comfortable with the guidance that we've just talked about with a stronger H2 than H1, if I were to say it differently. If I look at Industry and Infrastructure, look, Minerals is going from strength to strength. You would have seen our double-digit revenue growth performance well ahead of anybody in the industry. And this is because we are winning new contracts. A lot of our sourcing opportunities are coming our way, given our science-based customer excellence advantage. And here, we're going to have another very, very good year. Moody continues to thrive. And pleasingly, as expected, we've seen a rebound in terms of demand with building and construction that has a stronger H2 than H1. And here, the backlog is very, very, very good indeed. As far as the world of energy is concerned, I'm not concerned about Caleb Brett nor am I concerned about CEA. Transportation Technology, which is the automotive industry will take time to recover, but we expect the demand to start improving in the second half. So when you go division by division, you can see why we're guiding the way we are guiding and mid-single-digit like-for-like is really what we believe we will deliver in '26 after having delivered that for 3 consecutive years in the last 3 years. When it comes to restructuring, very, very important questions. As you know, 2025 was the fourth year of our restructuring program. We have another year to go. And our view is that we give the operations maximum times to fix some of the issues. But at one point of time, we need to make decisions for underperforming units. And we have taken some decisions. We've obviously taken some cost reduction in TT and CMP given the trajectory that we have seen. We've continued to streamline our overheads. We continue to streamline the operational management within our units, reducing essentially a number of layers. And then there were a few sites that come and I felt we had to basically get out of because after having tried for 2.5 years, the results were not compelling and they were starting to destroy value. So that's basically what I could say to these 2 questions. Thank you, Rory. Operator: Our next question comes from Suhasini Varanasi with Goldman Sachs. Suhasini Varanasi: Just a couple for me, please. As a reminder, the restructuring charges that you took below the line, I think I missed it, but could you help us understand the quantum of the benefit you expect to SG&A in 2026? And just to help us understand the exit rate versus the early trends, is it possible to give us some color on early trading in Jan, Feb this year? André Lacroix: The benefit in 2026 from the restructuring we did in '25 is GBP 8 million. In terms of trading, I typically don't comment on short-term trading. But as I just said to Rory, I'm not worried about the like-for-like momentum for the group in 2026. So we're in a good place. Operator: Our next question comes from Annelies Vermeulen with Morgan Stanley. Annelies Vermeulen: I have 2 questions, please. So firstly, on Transportation Technologies, you talked about customers temporary reduction of investments, but we've also seen some of the OEMs make quite big decisions around moving away from EVs, for example. So when you think about that business, do you think that there will be any need for restructuring as you try and position it to match where the growth actually is in the market? And what gives you confidence on that recovery in the second half based on what you can see today? And then secondly, just on capital allocation, no new share buyback today despite the still quite low leverage. So can we infer from that, that you expect to continue to do more deals in 2026? And how does the pipeline look in terms of what you're looking for specifically? André Lacroix: All right. Of course. Let me just double-click on TT because that's the first question you're asking. Essentially, if you look at the global automotive industry and if you look at the European brands, including here JLR, the American brands and the Chinese and Japanese brands, the Chinese market and the U.S. market have always been the biggest but also the most lucrative market for Western OEMs. And essentially, the reason why we've seen a very quick wave of restructuring across all OEMs in Europe and in U.K. here, but also in the U.S. is essentially for 2 reasons, right? The Western OEMs have basically lost massive market share in China because the Chinese OEMs have an advantage in terms of electric vehicles. So the electric vehicle segment and hybrid segment continue to grow globally. The issue is that the OEMs are losing market share in China. And for the European OEMs, the tariff obviously have increased the cost of doing business in North America, which is the second most lucrative market for all OEMs here in Europe and the U.K. So that's why you've seen this massive cost cutting in terms of R&D projects and people and dividend in the short term because these OEMs had to basically deal with short-term cash pressure. When you step back and if you look at where our footprint is for Intertek in terms of Transportation Technology, we are very strong in the United States. We are strong in China, and we've got, I would say, decent operations in Europe. Looking at the investment moving forward, I don't think that OEMs will stop investing on EV and hybrids for all markets outside of the United States because the demand continues to be very, very robust and all the Western OEMs need to dial up their EV and hybrid capabilities to compete against Chinese OEMs. The U.S., of course, we have never expected a huge growth for electric vehicles. And this is a market where the traditional combustion engine will continue to play a big role. I mean the good news for us is that in the U.S., that's exactly what we do in the automotive industry. So we are quite well positioned. My view is that OEMs cannot stop investing in R&D to improve their market share. And we believe that they will resume investments step by step. So we are optimistic for the second half of 2026. As far as the capital allocation question, we did our share buyback last year because our net debt-to-EBITDA leverage was way below our target range. Now we are at 1.3 at the bottom of our target. We basically believe that the opportunities to create additional value for our shareholders through M&A is increasing. We've seen the demand increase in terms of good businesses being for sale. We've done quite a few acquisitions, as you know, in 2025 and the last few weeks. And we believe that being at 1.3 net debt to EBITDA, we are in a good place to putting, if you want our cash to work and deliver superior returns, provide, of course, the opportunities are very significant. If at the end of 2026, we are in a situation where our leverage is below our target and below the threshold -- minimum threshold in our target, obviously, we will reconsider with the Board. But we've always said that if the group is below the minimum threshold of 1.3, we will obviously return excess cash that can be deployed for strong returns. But again, as I said in the presentation, you have seen the returns that we delivered in the last 3 years with the acquisition that we made, it's really accretive to the group. And if we find the right opportunities, we will seize this. We'll remain very, very disciplined, and we'll take a view at the end of when we sit with the Board if there is excess cash that we need to return cash to shareholders. All right. Operator: The next question comes from Virginia Montorsi, Bank of America. Virginia Montorsi: I just had 2 quick ones. One is on the margins, particularly in Corporate Assurance and Health and Safety. You've mentioned in the press release some portfolio mix effect. So could you help us understand how to think about these 2 divisions margin-wise for 2026? And then the second one, when we think about CapEx, it's increased slightly year-on-year and your guidance for next year is slightly higher. What are your priorities CapEx-wise for this year? André Lacroix: All right. Look, I think if you look at the mix effect within Corporate Assurance essentially that we have 2 big businesses, Business Assurance and Assurance and the like-for-like revenue growth was a bit lower on Assurance than on Corporate Assurance on Business Assurance, and this is what the mix effect was all about. And as I said, there was more than mix. We are investing in technology and auditors capability. And in terms of Health and Safety, there is no question that the mix effect was driven by Chemical & Pharma, which was down year-on-year, and it's a really high-margin business for us. We do not guide in terms of margin by division for the year. We give you a guidance for the overall group. We expect, obviously, to deliver margin accretive revenue growth in most of our businesses and there are opportunities in 2026 for both business -- Corporate Assurance, sorry, and Health and Safety to do better. Virginia Montorsi: And can I ask on CapEx? André Lacroix: Yes. I mean the CapEx question is pretty simple to think about it, right? We are in a unique position when it comes to seeing growth opportunities in each of our business lines. And we have obviously opened new sites in Asia Pacific, in Latin America and also in Europe. We have expanded certain of our sites in terms of building additional capacity. We, of course, have invested in technology. We are using technology to innovate and augment our value proposition. And lastly, maintenance continue to be important, and we continue also to make some investment, as you would expect in the group in terms of overall IT strategy. So that's basically what we are doing. It's pretty broad-based. There is no single business line at Intertek that doesn't have opportunities to grow with good CapEx investments, and that's what we are doing. You can see with all the announcements that we are making around the world, the type of investments we've done in 2025. Operator: Our next question comes from James Rowland Clark with Barclays. James Clark: You talked about the healthy M&A pipeline earlier. Can you just elaborate on how deep this pipeline is that you decided that, that is the priority for capital allocation right now? And how far out do you think this takes the business in terms of the sort of run rate of bolt-on deals for the foreseeable future? My second question is on margins. It's another very strong year within the Corporate Consumer Products division in terms of margin progress. You've spoken earlier about growing a little faster in Assurance, adding auditors and also you're guiding higher on growth in consumer products. Do we assume that the opportunity for margin growth is still there in those 2 divisions? Or are you adding lots of capacity to drive the growth that will maybe delay the sort of operating leverage coming through in those 2 divisions in 2026? And then my final question is on free cash flow. It looks like working capital was the reason that free cash flow was down 15% year-on-year. Are you now happy with the working capital sort of base to run off for 2026, i.e., payables and receivables days are in a normalized position now for 2026? André Lacroix: Well, thank you very much. I'll take these questions, starting with the third one. Look, I mean, you're right. I mean, we've made so much progress on cash over the last 10 years that we are now in the territory of incremental gains. But we are truly continuous improvement driven organization, and we'll continue to look at opportunities for better cash generation moving forward. There is no question that we can do much better than what we've done over the years, but we are talking about incremental gains. So I would never say that our working capital is the best you can get. I would say it's a very, very good working capital, but we are going to go for incremental gains step by step. And you're absolutely right. The free cash flow was impacted largely by the lower change of working capital between '24 and '25 compared to what happened between '23 and '24. We had a stellar cash performance in '24, as you know. In terms of margin, as I said to the previous question, we do not guide in terms of margin. But the way we operate internally is margin accretive revenue growth is central to how we deliver value for our stakeholders, right? And look, there are opportunities even within consumer products, even with Corporate Assurance to invest and continue to improve margin. And that's the way we are running the company. That's the way people are incentivized because essentially, to basically improve your margin, you've got quite a lot of levers you can pull if you run an operation. It starts with the quality of your portfolio strategy. Are you targeting the high growth, high-margin segments in the industry so that the IP that our engineers and scientists have to offer to the market are basically priced at a higher price points and are targeted to high-growth areas. The second thing is, of course, you've got to stay very, very disciplined in terms of pricing. We are the premium leader as I was explaining during the presentation, wouldn't have the productivity metrics that we have in terms of revenue per headcount, operating profit per headcount and free cash flow per headcount if we didn't have a very disciplined volume price mix management. In addition to that, the fixed cost leverage continues to be playing a big role when you want to drive margin accretion. And despite the fact that you are investing in new opportunities, you should basically always target some productivity improvement. So net-net, we expect our teams to drive margin growth year in, year out. We do not always get there for reasons that we've just talked about, but that's the way we are running the company, and that's the way the incentive scheme is based and this is why we are obviously in the situation where we're in, in terms of margin performance. In terms of M&A, look, we are very disciplined in terms of M&A. We don't have any goals. We don't say we're going to do x number of M&As. We want to be ultra, ultra careful on how we select these businesses. We only target high-quality businesses. And we believe the environment is obviously more positive for M&A in 2026 than it was in '25 and certainly in 2024. And therefore, we want to keep some firepower given the fact that we had a good place with our net debt to EBITDA at 1.3 level to seize the opportunities coming our way. Having said that, we have built lots of bilateral relationships around the world. That's our preferred way of operating. That's how we did, for instance, Envirolab, that's how we did QTEST. That's how we did Suplilab, that's how we did Aerial PV. And building this relationship takes time, and you need to make sure that the owner is ready to monetize her or his asset base at the right time. We, of course, participate in processes, which tend to be very, very competitive and there are situations where we win. But we don't have any quantified goal. It's got to make sense acquisition by acquisition. And the positive news is that we've got a very, very good integration approach. You've seen the return we delivered from acquisitions. We are very clear about where we want to invest. We target high-growth, high-margin sectors. that will augment the IP of Intertek. And we believe that 2026 will be a good year. But I can assure you, we're not going to rush to make acquisition just because we want to say we've done M&As. We do M&As if it makes sense all the way. Operator: Our next question comes from Victoria Chang with JPMorgan. Victoria Chang: I have 2 questions, please. And the first one is with the U.S. IEEPA tariff ruling last week and the introduction of the Section 122 blanket tariffs on U.S. trading partners, do you see any impact of this to your consumer testing business maybe in terms of delayed decision-making or pull forward of SKU testing to take advantage of the lower tariff rates on certain products in Asia? And my second question is on your initial thoughts on AI implementation in the business, please, how you're thinking about rolling out AI across the business to deliver efficiencies? And are there particular areas or business lines where you expect to see the most benefit in terms of the cost base? André Lacroix: All right. I think on tariff, there is no question that the news is better news for China and India than it was a few weeks ago. As you know, we are in the swing of the supply chains of our clients. We are working very closely with them. We've launched SupplyTek in 2025 to basically help our clients figure out what they could do to reengineer their supply chain based on the change potentially of economics, creating new routes, replacing routes. I would say the overriding position within our clients is wait and see. They've made no big decision because the agenda has been moving around. Having said that, there is no question that we are having lots, lots, lots of meetings with our consulting teams, helping clients to figure out would these tariff situations settle at what is expected to settle at, what it will mean in terms of economics and potentially new routes. But the overriding situation is let's not rush and take our time. And you can understand why because these supply chain changes are very, very costly, very risky, very, very timely and people only want to change their supply chain if it really makes sense not for tomorrow, but for many, many years to come. As far as -- of course, we continue to monitor that. But the net news of the new decision is that it's incrementally better for the economics in China and India. In terms of AI, look, we are called Intertek, so we use technology to augment everything we do for our clients internally. And of course, we are investing on AI. If you were to be here in the office with us here next to our conference room, we have a lab, AI lab that is made of engineers that are providing support to our teams around the world to make sure that we develop the right AI solutions for our business. How do we think about AI at Intertek? First of all, we believe there is a significant opportunity to help our clients manage the risk associated to the investment they are making in AI. If you basically take the technology company aside and largely some other industries like medical devices or defense, AI is pretty new for most corporations. I'm not talking about using large language models, which are third-party large language models. Everybody understand that, but developing your own AI algorithms and using agents to basically either improve your customer service, drive more sales or, of course, work on productivity. So that's why we've launched AI2, which is an independent end-to-end AI assurance program to help our customers operate smarter and safer and with the right trusted AI algorithm. This is the external opportunity, if you want. And this is, of course, very, very good news for us. And here, I would say we are at the cutting edge of what's happening in the industry. I think we are the only company to do that, competing with lots of very, very, very big companies like consulting firms and Big Four because we do have the expertise. In terms of using AI on how we do business, there is no question that we are looking at AI to augment the way we deliver total quality assurance for our clients, right? And I'll give you a few examples in a second. There is no question that we are looking at AI on how to improve our productivity, and I'll give you some examples on how we are seeing some benefits from a productivity standpoint. And then finally, we are looking at AI to basically get faster to the right insights and decision-making by doing data science at scale in all parts of the organization to basically see the opportunities or the issues faster and therefore, make better decisions. As you know, we've built an incredible database of financial, nonfinancial indicators that we call 5x 5. This gives us a real depth and breadth of reach in the operations. And this is where AI investments that we are making are making a big difference for us to basically look at some of the big trends and deviations and you understand all of this. When it comes to using AI on how to augment the total quality assurance value proposition of our clients, there is no question that all of our large-scale data-based platforms, the SaaS platform we've launched over the years, we have a very, very, very good position to differentiate ourselves. And we are already using AI to, for instance, provide better targeted people assurance training with our Alchemy solutions. We are using AI to help our clients use platforms like SourceClear and Intertek and RiskAware, which are SaaS-based platforms where essentially it's all about intelligent document processing, getting the right risk-based quality assurance analysis on the trends and therefore, as a client, making some pretty big decision in terms of where you are in your testing investment or assurance investments to be. When it comes to the internal use, we have invested over the years. We use Harvey, for instance, which is a pretty good platform to review client contracts to basically look at large documents when we do DD inside the data room for M&A. And then going into the operational opportunities. Anywhere where we have pretty well qualified digitized process, AI can help us obviously make much, much, much faster decisions and gain some productivity. So the areas that we're looking at, for instance, is in terms of marketing, how do you basically qualify the right leads much faster. Another area, which is an obvious opportunity for us is the quality reviews of our test report, but also our audit report, very, very important area of opportunity where we are investing a lot is resource management. So if you think about scheduling of auditors for BA or if you look at scheduling of inspectors for Caleb Brett or Moody's. And then there is no question that when it comes to global market access, we use AI to accelerate the speed at which we provide the right testing protocols to our clients when they want to go to market in other industries or in other markets -- in other geographies, sorry. And then the real opportunities is data science, right? How do you basically take the work we do for our clients in Geochemistry and Minerals. We do a lot of work for them, and most of our clients do not basically use most of the data. Well, with the intelligence we have on Geochemistry, we can help our clients go beyond the test report. So we are very, very, very excited. Obviously, early days, but I would say that we are at the cutting edge of AI in the industry at Intertek. Operator: [Operator Instructions] We'll take our next question from Karl Green with RBC. Karl Green: Just a couple of follow-up questions around the restructuring costs in the year. I just wanted to clarify, did I hear correctly that the SG&A benefits expected for 2026 would be GBP 8 million. And if so, that ratio between the GBP 37 million of charges and the SG&A savings of almost 5:1 suggests that there's possibly savings in other cost buckets beyond SG&A. Is that correct? André Lacroix: The 8 million is the total savings we expect in our cost base in 2020 -- yes, in 2026. Karl Green: That's good total cost. Okay. And then just for this year, this fiscal year, fiscal '26, how should we be thinking about likely P&L charges for restructuring costs? Obviously, it's been a consistent feature for the last few years as you've gone through this program. What ballpark number would you point people towards this year? André Lacroix: Look, we do not guide regarding restructuring costs. This is a process that Colm and I go case by case. We only do that when we believe it's the best way moving forward. I wouldn't want to give you any numbers because, frankly speaking, we're going to take every opportunity at its face value, and we'll do it very, very rigorously. We've got some clear rules on how we book this. As you can imagine, we always announce our results fully audited. So that's been through the mute review of our auditors. But this is our final year of the 5-year program we announced a few years ago, but we'll continue to be very, very rigorous. So I wouldn't want to give you any number at this stage. Operator: We'll take our last question from Ben Wild with Deutsche Bank. Ben Wild: Just one remaining for me. I think if I look back at the November trading update and compare with where you ended the year on net financial debt, you ended GBP 20 million above the guide that you gave in November. Just to understand, is there a one-off effect that reverses next year on the free cash flow? Or is there anything else that resulted in the difference between the November guide and the result? André Lacroix: It's a fair question. When we give the net debt guidance, we never include the M&A. So as you know, between November statement and year-end, we did an additional acquisition. So that's the only difference. There is nothing more to that. Operator: There are no further questions on the webinar. I'll now hand back over to management for closing remarks. André Lacroix: Well, thank you very much for your time today. I know it's a busy day. Of course, we are available would you have any follow-up questions. Thank you very much, and have a good day. Operator: Thank you for joining today's call. We're no longer live. Have a nice day.
Duncan Tait: Well, good morning, everyone. I'm Duncan Tait, Group CEO, and I'm joined by our Group CFO, Adrian Lewis. Here today's agenda. I'll give an update and overview on market context. Adrian will then run through 2025 results, and I'll sum up and discuss the outlook for 2026. Today's presentation is available on our website, and a recording of today's session will be available later today. After the presentation concludes, we'll take your questions. So let's begin. Inchcape delivered a strong 2025 performance against the backdrop of tariff-related disruption and economic uncertainty, reaffirming the strength of our diversified and scaled business. Our colleagues in the Americas and the Europe and Africa regions posted record PBT performances. Against a number of challenges, APAC delivered a better H2 performance, and we're working with our OEM partners and across the value chain to drive further performance improvements. We continue to execute against our Accelerate+ strategy, winning more distribution contracts and executing an acquisition in a new market for Inchcape. During the year, we returned around GBP 340 million to shareholders through dividends and buybacks, grew EPS and DPS by 13%. And with leverage of just 0.4x, we're ready to go again in 2026, starting with a new share buyback program of GBP 175 million. Now, this slide shows how we delivered against all of our key growth drivers on the left-hand side of this chart. That includes the financial metrics I mentioned, including our resilient margins as well as vehicle volumes, customer and colleague-related metrics. And on those dynamics, we continue to build on our strong customer reputation in the industry, with a 6% increase in our scores on reputation.com. In addition, our employee engagement score of 81%, up 4 points from the previous year is a clear signal of Inchcape's collaborative, entrepreneurial and high-performance culture, which is a testament to the caliber and talent of our 16,000 people across our 40 markets. Last year, we generated GBP 315 million in free cash flow, which clearly highlights our cash generative and capital-light model. This capital was deployed to drive growth and shareholder returns, with a 13% increase in dividends per share, GBP 238 million invested in share buybacks and GBP 35 million utilized on the Iceland acquisition. And we have a healthy pipeline of bolt-on M&A opportunities in place to supplement our organic growth. This delivery of our strategy enabled us to deliver return on capital employed of 29% and helped us grow EPS by 13%. And we continue to execute against our Accelerate+ strategy by scaling and optimizing our regions. Our objective here is to develop our OEM partner portfolio and geographic footprint, thereby enhancing the resilience in our earnings profile. And this will help to drive our progress against our ambition to achieve 10% market share across our markets. Last year, we grew distribution contracts won in previous years, with these contracts being a key driver of our organic revenue growth. We're also awarded 10 new distribution contracts with existing OEM brands, including New Holland in Ethiopia and Kenya, BYD in Lithuania and Latvia, XPENG in Colombia and GAC AION in Greece as well as new partners, smart in Colombia, Uruguay and Ecuador and Iveco in Hong Kong. To drive operational execution, we continue to optimize our business in a number of ways. Firstly, we further rationalized our brand portfolio, mutually exiting 4 immaterial contracts with Komatsu in Ethiopia and 3 Geely contracts in smaller markets in the Americas. In addition, we continue to recycle capital by divesting non-core assets, and we grew our third-party retail network, enabling broader in-market coverage in a capital-efficient way. We continue to drive the penetration of value-added services, in particular, growing our distribution of relatively high-margin OEM certified parts as well as delivering and developing financed insurance products by utilizing our global scale and partnerships. We also optimized our business by further collaborating with our OEM partners on product and inventory management, supported by our consistent execution and differentiated technology-based sales and operation planning processes. To that end, we positioned ourselves well for the second half of the year from a stock perspective, successfully reducing the build-up of inventory in the first half, with inventory cover at the end of 2025 remaining flat year-on-year. Our sales and operational planning processes are supported by AI in a number of areas. In our parts business, we run pricing, optimization and demand models, which enable us to trade tens of thousands of parts at optimal price points. We're also leveraging AI to drive innovation across our business. For example, we recently launched a vehicle pricing algorithm in Chile, which analyzes price to volume elasticity to ensure we price vehicles even more accurately. Back to our optimization activities, we've also taken decisive action on our cost base, reinforcing our devolved operating model, driving efficiencies and tackling challenges in certain markets. To that end, during the year, we initiated a cost reduction program across the group, with a particular focus on the APAC region. Next, I want to discuss our diversified and scaled OEM portfolio. We have long-standing relationships with many OEMs, some of which go back for over 50 years. Our role in the automotive distribution value chain is more important than ever. We continue to support these manufacturers in an increasingly complex and fast-moving environment, growing their volumes and market share in existing markets and helping them to enter new markets. We also have some relatively new OEMs in our portfolio on the right-hand side of this slide, who we've worked with for just a few years. Of those, I wanted to highlight that we are seeing BYD continuing to in-source distribution in medium to large-scale markets in Europe. This is a BYD-only dynamic, and we are seeing our other OEM partners rely on Inchcape more than ever before. On the next slide, here's some market context in what was a transforming automotive industry in 2025. In general terms, the new energy vehicle transition is becoming more of a multi-powertrain story. Importantly, as a powertrain-agnostic business and with our deep specialist market knowledge, Inchcape is well positioned to support our OEMs in their individual new energy transition journeys. Overall, market volumes across our markets grew by 2% in 2025, with the indirect impact of tariff-related disruption affecting demand in our markets in the first half of the year. Inchcape outperformed the market, growing our volumes by 3%. The macro environment improved in the second half in a number of our markets, particularly in the Americas and the Europe and Africa regions, offsetting a challenging backdrop in Asia. In the Americas, market volumes were up 8%, with a multi-drivetrain approach playing out. In Chile, our largest market there, there was a 3% TIV growth during the year with a stable market environment. Colombia and Peru experienced strong market growth, while there was a weaker growth in some markets like Costa Rica. In Europe, another multi-drivetrain story. Southern European markets like Greece and Bulgaria remained strong, while there was weakness in certain Northern European markets like Finland and Estonia. In APAC, BEV adoption continued to accelerate, partly as a result of the successful rollout of BEV in Asian markets. Chinese brands have grown market share across the region in recent years. These dynamics have created a highly competitive environment in most markets in the region. In addition, the premium segment in APAC remains weak, with consumers in that market segment continuing to hold off on buying higher-value vehicles. To date, we've not seen any similar weaknesses in the premium segment in our other regions. Finally, on APAC, Australia, one of the largest vehicle markets in which we operate, remains resilient, but it is an increasingly competitive environment. That's it from me for now. I'll hand over to Adrian. Adrian Lewis: Thank you, Duncan, and good morning, everyone. I'll take you through our results for 2025. We generated revenues of GBP 9.1 billion, with organic revenue growth of 1% and resilient operating margins of 6.2%. Distribution contract wins were the significant portion of growth during the year. Adjusted PBT was GBP 443 million, up 3% in constant currency. And our PBT performance was supported by a contribution of GBP 17 million from the gains arising from the divestment of non-core assets, while translational currency headwinds were approximately GBP 19 million. Excluding the disposal gains, our operating margins were 6% and in line with our medium-term targets. Return on capital employed was again very strong at 29%, highlighting the high-return, capital-light nature of our business. Free cash flow delivery was a highlight as we produced GBP 315 million with a stronger performance in the second half, and this was 104% free cash flow to adjusted profit after tax conversion rate and in line with our medium-term targets. Closing leverage was 0.4x, down from the 0.6 at the half year and well within our self-mandated headroom of 1x. Adjusted basic EPS was 80.8p, up 13%, predominantly as a result of a lower share count from our share buybacks. And today, we declared a final dividend per share of 22.8p, taking the total dividend per share for the year to 32.3p, up 13% from the prior year. So in summary, our performance in 2025 was a reflection of our continued operational delivery and progress against Accelerate+, which ensured we continued to deliver value for shareholders. 2025 was a year of 2 halves and as expected, and as we highlighted during the course of 2025, our second half performance was much stronger than the first half, supported by a wide range of product launches across our business. And as a result, we saw stronger half 2 growth rates across our regions, supported by product launches. And subsequently, our volumes and revenue swung from negative growth in half 1 to positive growth in half 2, helping to drive profits and cash flow in the second half. And for the year, we delivered organic volume growth of 3%, outperforming the market, which grew by 2%. And as a reminder, we have published our usual market tracker today, which shows the key market trends. Now let's look at each of the regions, starting with the Americas. We built positive momentum in the region during 2025, supported by improving market conditions, our excellent performance and our growth profile in the region highlights the success of our acquisition of Derco in 2022, as well as the other historic acquisitions and contract wins in the region. These transactions have helped us to build scale and market share. And as key markets have turned to growth, we have similarly seen a stronger performance. Market volumes and organic revenue were both up 8%, with growth from our core brands offsetting the impact of the brands we exited in 2024, and this ensured we achieved stable market share across the region. There was a strong performance in our scaled markets, including Chile, Colombia and Peru, offsetting the weakness in certain markets like Costa Rica. Operating margins were up 70 basis points to 7%, and this reflected resilient gross margins and operating leverage from higher volumes. In addition, we continued to efficiently scale our business through cost discipline and capital recycling, with an GBP 8 million contribution to profits from non-core asset divestments. And for 2026, we expect the market environment to remain supportive, with a typical seasonal weighting towards the second half, resulting in a profitable growth for the year. In APAC, our market volumes, which were down 1%, our organic revenue declined 12%. As expected, our second half performance was an improvement on the first half as a result of product launches. In Australia, our largest business in the region, it is increasingly competitive and our business remained resilient, supported by our growing and diversified brand portfolio. However, we underperformed in our Asian markets, with a proliferation of Chinese brands increasing the competitive intensity, particularly in markets where BEV penetration is high. And additionally, in some markets, the premium segment remained weak. And as a result of lower revenues, operating margins contracted by 60 basis points to 7.2%, despite a GBP 9 million contribution to profits from non-core asset divestments in half 2. Actions were instigated during the year to protect margins, including our enhanced collaboration with our OEM partners on product positioning. We also initiated a cost reduction program focused on the regional headquarters and certain underperforming Asian markets to ensure we are more agile in a fast-moving and dynamic environment. For 2026, Australia is expected to remain stable, but challenges in other markets in the region are expected to continue. We expect operating margins this year to be supported through the ongoing implementation of the management actions I mentioned. And additionally, production disruption is expected to impact certain APAC markets in half 1. This disruption relates to production reconfiguration by some of our OEMs, which will have a short-term impact on supply. On to Europe and Africa, where we again delivered well and outperformed in a growing market. Market volumes were up 3%, with our organic revenue growth ahead of the market at 6%, supported by a contribution from distribution contracts won in recent years. And as Duncan mentioned earlier, BYD continues to in-source automotive distribution in medium to large-scale markets in Europe. We have a contract with them in Belgium and Luxembourg, which contributed less than 5% of regional revenue and around 1/3 of our 6% regional organic growth. At a group level, this contract represents less than 2% of group revenue and less than 1% of group adjusted PBT. So it's a financially immaterial contract in the context of the group and the region. And while we have performed well for BYD in Belux since our appointment in '22, given the commercial approach in medium- to large-scale markets in Europe, we do not anticipate that this contract will be renewed. It expires in Q3 '27. Our role in the value chain is a critical part of how OEMs access markets where we specialize. And as Duncan mentioned, we are not seeing other similar moves by other OEMs. Now back to my regional review of Europe and Africa. Our acquisition in Iceland is performing well, and there was a particularly strong performance across our business in Southern Europe, supported by good consumer take-up of a range of hybrid products and strong growth in the market. Africa continued to grow through distribution contract expansion. Operating margins were down 10 basis points to 4.6%, but in line with historical norms with gross margin resilience and operating leverage from scale offsetting the initial dilution from immature distribution contracts. During 2026, growth rates are set to slow in certain markets, which will be partly offset by the full contribution of Iceland as well as continued operational execution and momentum across the region and the growing contribution from the multiple contracts won in recent years. And on to our financial performance, and this slide shows our income statement. We delivered adjusted operating profit for the year of GBP 563 million, down 1% in constant currency. Regional mix impacted gross margins, but this was largely offset by the continued cost discipline where our overhead to revenue ratio fell by 20 basis points. Adjusted net finance costs decreased by GBP 19 million to GBP 123 million, driven by lower average net debt and a more favorable interest rate environment. Adjusting items amounted to an expense of GBP 37 million, and this was primarily driven by one-off costs relating to acquisition and integration of GBP 10 million, mainly in relation to the final stages of the Derco integration. And there were also restructuring costs of GBP 23 million, broadly split evenly between the cost reduction actions that I mentioned earlier and the continuation of our back office restructure following the U.K. disposal. And adjusted PBT was GBP 443 million, 3% higher on a constant currency basis. And the effective tax rate was flat at 31.4%. Adjusted basic EPS was up 13% to 80.8p and up 17% in constant currency, so well ahead of our medium-term target. And this was supported by a reduced number of shares in issue as a result of the share buyback programs executed during the year and the effect of averaging from the buyback program in 2024. Now, this slide shows our net debt bridge. Inchcape has a strong balance sheet supported by consistently strong free cash flow generation, which ensures we can execute a disciplined approach to capital allocation. Having generated over GBP 300 million in free cash flow, dividend payments amounted to GBP 101 million and share buybacks amounted to GBP 238 million as we executed our capital allocation policy. There was net M&A spend of GBP 29 million, including the GBP 35 million in cash invested in the Iceland deal. And the net of these elements saw leverage fall to 0.6x EBITDA, down from the 0.6 seen at the half year, providing the group with capacity to continue to allocate capital to drive growth and shareholder value, which brings me to our capital allocation approach, which remains disciplined and returns based. We will continue to pay dividends at 40% of earnings. We will continue to act with discipline in the balance of capital allocation between the value accretion from share buybacks and value-accretive acquisitions whilst running leverage below 1x EBITDA. And having completed the Iceland deal last year, we will continue to activate our healthy pipeline of bolt-on acquisitions, acting with discipline on valuations. We see merit and strategic value in expanding the scale of the group. However, a large deal is not currently in our consideration set in the near term. And since August 2024, we have repurchased GBP 400 million in shares through our share buyback program, reducing our shares in issue by around 13%. And today, we are announcing a new share buyback program of GBP 175 million, which is expected to complete over the next 12 months. And it is worth noting that of the 2025 buyback program, where we repurchased 9% of our equity, only around half of this has been recognized in EPS, with the effect of averaging and this will provide a tailwind to EPS for 2026 of around 4% to 5%. Our capital allocation policy will help to drive EPS growth and deliver further value for shareholders, whilst retaining the capacity to expand through acquisitions. So to sum up my section, here is a reminder of our medium-term targets, which we are reiterating today. To the end of 2030, we expect to generate GBP 2.5 billion in free cash flow. We will deploy this free cash flow to drive shareholder value with a consistent dividend policy and in excess of 10% compound growth in EPS. So that's it from me. I'll now hand back to Duncan. Duncan Tait: Thanks, Adrian. So, I wanted to give you a mid-term review of how we have transformed Inchcape's investment proposition over the last 6 years, driving growth and value for shareholders. Over that period, we have become a pure-play automotive distribution business, divesting of a number of retail-only assets and ensuring our business is more resilient higher margin and generating better returns on more cash. Over decades, we have built an unrivaled diversified portfolio of global OEM partners, winning over 50 contracts with a range of the world's best manufacturers since 2019. As a distributor, our powerful commercial relationships with these partners operate across global, regional and local levels. We have continued to deliver a strong performance for them, supported by our differentiated data-driven approach, nearly doubling our distribution revenues. We've also delivered a 200 basis point improvement in our operating margins from 4% in 2019 to 6% today, increasing return on capital employed over that period from 22% to 29% Driven by this growth and strategic focus, we've generated GBP 2.3 billion in total free cash flow and raised around GBP 900 million in cash from the divestment of non-core retail-only assets. This has enabled us to return GBP 1.3 billion to shareholders through dividends and buybacks, while we continue to invest in value-accretive acquisitions. EPS grew 35% over the period. And I hope that by reinforcing our track record of delivery, this gives you a sense of what we expect to deliver in the coming years as a capital-light automotive distribution pure play. We have a compelling capital allocation policy and clear medium-term operational and financial ambitions, which we are very confident of delivering against. And to that end, as a management team, we're extremely excited about the future for Inchcape. Now, this is a reminder of our Accelerate+ strategic framework, and that's enabled our performance as we continue to scale and optimize our business. And we will continue to deliver against our medium-term ambitions, supported by our strategic enablers outlined here. So finally, for me today, on to the outlook for 2026. We expect to deliver a year of growth at constant currency, in line with our medium-term guidance. This will be achieved by the delivery of organic volume growth towards the lower end of our 3% to 5% guidance range, supported by contract wins. We expect continued momentum in the Americas and Europe and Africa regions, while we are decisively addressing the challenges in APAC. We expect to deliver resilient operating margins of circa 6% this year, in line with our medium-term guidance, supported by further penetration in aftersales and finance insurance, enhanced collaboration with our OEM partners and our actions on cost reduction. We also expect to deliver free cash flow conversion of circa 100% and EPS growth of more than 10%. Our performance this year will be skewed to the second half due to usual seasonality in the Americas and supply chain phasing in APAC. We also reiterate our medium-term targets, which will be delivered through our highly cash generative and capital-light business model and a disciplined approach to capital allocation to deliver greater than 10% EPS CAGR to the end of 2030. So just to sum up, Inchcape delivered a strong 2025 performance, reaffirming the strength of our diversified and scaled business as we continue to execute against our Accelerate+ strategy. We expect to deliver another year of growth in 2026, and our confidence about our prospects for the year is underlined by our new GBP 175 million share buyback program. So that's it for the presentation. So let's take your questions, firstly, from people here in the room, then the phone lines. And finally, from the webcast via our Head of IR, Rob. Duncan Tait: My word, what a popular morning. Dear me. James, can we go to you first, please? James Bayliss: It's James Bayliss from Berenberg. Two, if I may. You referenced you increased your value-added services penetration in the year, and I can see aftersales gross profit was up 4% year-on-year on an underlying basis. How should we be thinking about that profit stream going forward relative to vehicle distribution given everything that's going on in supply chains? And then my second question. Can you just elaborate on that BYD disintermediation piece in its larger markets? You seem quite reassured that's not a trend that should impact other OEMs in your portfolio. So any comments there? Duncan Tait: Very good. I think I'll take these. So look, first of all, in terms of value-added services, it is quite clearly a higher-margin portion of our overall business. And not surprisingly, James, I'd like to grow it. We have a number of initiatives across our finance and insurance business and our parts business to do so. You saw that coming through in 2025, where new vehicle volumes of 3%. Value-added services or aftersales grew at 4%. And to put it simply, I would like us to continue to grow our aftersales business faster than new vehicle volumes. And I think we have the opportunity to do so over time. Don't expect us to be able to pull a lever and immediately see an uptick. We have to do a lot of things across our business to grow that, but I'm confident in the team's ability to execute accordingly. Now to your point about BYD, look, let's put this in context. We have a brilliant portfolio of long-term relationships with OEM partners. We celebrated 60 years in January of this year, with one of our OEM partners in one of our markets in Europe, 50 years in Guam, Saipan and Brunei with other OEM partners. These are long-term relationships. And we've won over 50 contracts, the majority of which have been through our existing OEM stable, including some of the Chinese OEMs that we've had relationships for over 20 years like Changan and Great Wall. Now at the same time, it's become really obvious in Europe, hasn't it? The BYD has been in sourcing contracts in medium to large-scale markets, and that describes a story that we envisage in Belux. We're not seeing that with other Chinese OEMs or other OEMs, and the way I feel about it with uncertainty in the world and with the backdrop of EV transition, we're even more powerful for our OEM partners than we have ever been. Thank you. Let's stick on this side of the room, please. Andrew Grobler: Andy Grobler from BNP. Just a couple, if I may. Firstly, you talked about Australia getting increasingly competitive. Can you just talk through how that is manifesting? Is it through price or anything else? And then secondly, a few more contract wins in 2025. Can you just talk us through the tailwinds you're seeing from completed deals into '26? Duncan Tait: Yes. Sure. I'll do one and could you do 2, Mr. Lewis. So yes, look, if you think that Australia market, about 1.2 million TIV, so total industry sales last year, about flat on the previous year. We have seen more Chinese OEMs enter the market. If I go back to when I first started at Inchcape, there would have been about 55 OEMs operating in Australia. There's now closer to 80, and they'll all be fighting for share. I think what you see with our Subaru portfolio, which is we have a unique customer base that values the Subaru value proposition. We've introduced more models in 2025. We'll do so again in 2026. And also at the same time, we've launched the Foton range of trucks or utility vehicles into that market. That product launch has gone really well, and we'll steadily build up that Foton business over the coming years, but we've seen good growth already in January, if I compare it to where we exited 2025, and we've launched Changan's Deepal range of products. So we are well positioned. My intention in our Australia business is to double our market share over time, but let's recognize the market is getting a bit more competitive. Andrew Grobler: Are you seeing that impact price to any great degree? Duncan Tait: So I'm not seeing it impact pricing in the Australian market. Look, we'll continue to do what you'd imagine a brilliant distributor does, which is bringing the right products in, configuring them in a way that gives the right pricing and margins for Inchcape. And we have a team in Australia who can tell you the ins and outs of every segment of TIV growth, how pricing affects volume aspirations. And I think you can see that in the way we've positioned the Foton brand about gaining share in the right way in a way that's profitable for us and our OEM partners, what we continue to do. Adrian Lewis: And just on your question on contract wins and the tailwind it might provide us with. Look, if you go back to 2025, most of our growth in 2025 came from that contract win performance. And if I take you up to our medium-term guidance, we talk about our markets growing at around 1% to 2% in aggregate. Lots of noise within that, and you see that in our market tracker. And our ability is -- and our contract win performance will help us to outperform the market. That's what you should expect to see us continue to do in 2026. And if you think about that guidance we've provided around the average contract, 1 to 3 years as we build momentum, figure out how a brand is going to work in a particular market in years 3 and 4 and 5 is when you start to see scale. A lot of the 50-plus contracts that we've won, they're still in years 1 and 2 of their maturity curve. And so, we've got the tailwind of those to come in '26, '27 and '28. But you'll also see us act with commercial diligence. You've seen us exit 4 immaterial contracts this year where it wasn't commercially viable for us to do so. So we'll continue to see -- to make sure all of our contracts stand up and work -- stand up on their own 2 feet and work for both us and for the OEM partner. Duncan Tait: Okay. Can we go to Sanjay next, please? Sanjay Vidyarthi: Sanjay Vidyarthi from Panmure Liberum. A couple from me. First one, can you give a bit more detail in terms of the cost action that you're taking in APAC, exactly the nature of that? And would it be sufficient, do you think, to hold margins stable in the year ahead? Second question, in Europe, I guess just wanting to understand, it's more of a fragmented market in terms of market shares for you in most markets, I guess, outside of Greece. How are you thinking about kind of building the same kind of operating leverage of the infrastructure that, say, you're starting to do or doing quite nicely in the Americas. It's clearly, I guess, harder to make acquisitions. There's a small number of contract wins, but how should we think about that opportunity? Adrian Lewis: Okay. So I'll do the cost actions first. So we talked about the cost actions. And around -- if you think about that adjusting item that we posted, around GBP 10 million of the investment we made in adjusting items was related to that cost action. It is both at a regional level and in specific markets where we are trying to get flexibility in our cost base to make sure we can have the right resource structure for the market that we're facing into. So do I think it will underpin margins? That's exactly what the phrase we've been using. And of course, we've got the property contribution to lap as well. So it's going to help to offset some of that as well. So -- and I would say as well, we're going to continue to make sure we drive flexibility in our cost base and act with commercial diligence around our portfolio of brands that we operate in APAC. So we've got a bit more work to do before we're finished. So you can expect some more in the first half of 2026. Duncan Tait: Very good. Thank you, Adrian. So on to Europe and Africa, clearly, we'd like to do what you're suggesting, Sanjay. So -- and look, haven't that Europe and Africa team done a great job over the last few years? 2025, an even better performance as they gained share and delivered record top line and bottom line performance for Inchcape in the region. And if you look -- you called out Greece, but actually, we've grown market share in the last few years sustainably in Greece, Albania, North Macedonia, Romania, Bulgaria and in Belgium. So the team is executing really well. We've won a chunk of contracts in that Europe and Africa region over the last few years with companies like Changan, with BYD, with GAC and with XPENG, and I would hope a few more to come. So getting above that 10% magic number that we refer to in the company, our Europe and Africa team are very much focused on that. We've also expanded out in certain markets, and I can see the fruits of that going on in Greece, where we've been building a B2B business with small- to medium-sized businesses in Greece. We're doing the same in more markets, which I think will give us an opportunity to further scale. And look, you referenced it might be a bit more difficult to do M&A. Well, we have our Iceland deal, and my challenge to our team is to find some more. But your point about having more and more units and revenue going through an optimal cost base to generate better returns for shareholders, we're very focused on that. Thank you. I think let's be efficient and hand the mic. David Brockton: It's David Brockton from Deutsche Bank. Can I ask 2, please? The first one following up on Sanjay's question in respect of APAC. I fully appreciate the cost actions you're taking. Is there anything that can help to mitigate the pressure from a top line perspective in terms of new models that you could touch on? And then secondly, you obviously talk about the strategy to further diversify the business from a brand perspective. But equally, you talk about the virtue of rationalizing brands in the Americas for the smaller ones. Is there a minimum level where below that, it is not economic for you to act as a distributor? Duncan Tait: Very good. Let me have a go at both. And Adrian will correct me if he feels necessary. Look, on Asia Pacific, the market has been very competitive, and we are seeing intense competition in many of those markets. as I would say internally, and that's our job. That's what we do every day. In our 40 markets around the world, we compete and drive great performance for our OEM partners. I think it's quite natural for us to make sure that our cost base is at the right point for that business to protect margins. But we also have to focus on the top line to your point. Now what are we doing? We're working really closely with our OEM partners to make sure we've got the right products for those markets. I'd give you an example in Hong Kong, where we've just launched in Q4, bZ3X, which is a Toyota pure EV made in China that gave better market share in December and again in January. It's a really great product for that market. I would hope to see it in other markets across APAC. We've had new brand launches I referenced before in Australia like Foton and Deepal, which will give us some top line momentum. And then we will launch 10 new products this year in Singapore from Toyota and Suzuki across hybrid and EV range to get us back to where I'd like us to be in those markets, which is back to gaining market share. So we'll look after the bottom line through cost, and we are here to compete and win in the marketplace and drive top line. David Brockton: And the second question? Duncan Tait: And the second question, in terms of brands, look, you'll forgive me if I don't say who fits into each of these categories. But look, we've effectively classified our OEMs into As, Bs and C category OEMs. We want to build our whole business around A and B OEMs. where we can have headquarter relationships, regional relationships and, of course, local relationships. And those OEMs, we think we are fit for the market and we can make good returns for shareholders with. But there are some OEMs that don't fit into the strategic category where they just have to wash their face and make money for us and our shareholders. And when we find those brands are not able, for whatever reason to compete in that marketplace and make returns for us and gain market share, then I think the best thing for us to do is to very cordially, politely and collaboratively exit those relationships. And by the way, you should expect us to continue to do that in 2026. You already have the microphone Mr. Nussey. Andrew Nussey: Yes. Andrew Nussey from Peel Hunt. A couple left from me. First of all, the phrase enhanced collaboration with OEMs strikes me as a great catchall. So beyond sort of the model lineup, are you negotiating better inventory support? Are they helping share some of the costs? Are you getting better buying terms in those regions, which obviously are under a little bit of pressure is the first question. And secondly, specifically on the Chilean market, just your thoughts on TIV there, the penetration of your brands and the ability to keep scaling margin in that particular geography? Duncan Tait: Chile. Right. Okay. I'll take them both, and Adrian can supplement if it's okay. So in the catchall of enhanced OEM collaboration, Andrew, look, you would expect us to have really good relationships with the OEMs that we've been working with for 4 decades. And I think bringing the power of those relationships to bear on our markets is really, really important. To give you an answer about some of the more specifics of what we're doing, we're repricing certain models where we need to regain competitiveness and therefore, give us an opportunity to grow share. We've done that in a number of our markets across our OEM portfolio. We're investing in the brand and front-end salespeople and after-salespeople; aftersales, of course, being important to grow this value-added services proportion of our business. We've been investing, as you know, over the last few years in making sure that our customer satisfaction as witnessed in reputation.com is going up, up, up, up and greater than our competitors in every one of our markets, which you can see APAC grew substantially last year, and the overall group did too. And then we're working close -- even more closely with our OEMs to make sure we're getting the right products into our market to drive our competitive position. I mentioned some of them before in terms of bZ3X, for instance, into Hong Kong, more Suzuki products; similarly with Subaru, you can see what we're doing with Great Wall Motors and Changan and Foton in Australia. So even deeper collaboration, bringing our knowledge of markets with our OEMs great products to make sure we win in the market. Then in terms of Chile, where do we see that brand portfolio playing out? Look, our market shares are there or thereabouts around 23%, 24%, 25% in Chile. The economy -- the economic indicators in Chile are pretty good. You've seen a new government come into place. We're seeing interest rates in about the right place, inflation coming down, consumer sentiment in the right place for us. This year, we think the market will grow 5% or 6%, but it's still at an all-time low really, low 300s. (sic) [ 300,000 ] It might get to 330,000 vehicles this year. It's been as high as 420,000, 430,000 previously. So I think as we move -- we're not saying this year will be the year for a big recovery in Chile. Maybe in 2027, but an uptick in growth. And then look, in terms of our brand portfolio, oh my word, do we have a great brand portfolio in Chile, right, from entry-level vehicles right through to the top end. And our portfolio, I think, is -- for me, is in about the right place. You obviously see product cycles coming through where we may see one OEM dip, but another one will build up, and we have a great retail network with our own and third parties inside the country. Do you want to add anything to that? Adrian Lewis: Yes. The only thing I would add, Andrew, is for those of you that are watching the market data, do be aware that in the fourth quarter, there was some regulatory change, which I think probably pulled a bit of volume into December -- into the fourth quarter. So you saw higher rates of growth. That's not the exit rate in reality. So -- and you'll probably see a slightly weaker Q1 off the back of it. And as Duncan said, we're calling a 5% to 6% growth off a 310,000 market, 330,000 that's still a good way short of historical peaks. Duncan Tait: Very good. Good to see you're organizing yourselves very well. Timothy Ramskill: It's Tim Ramskill from Bank of America. Two questions from me, please. And I'll sort of kind of -- it's probably 2 parts to the first one. But there's obviously a lot of discussion around competitive dynamics in particularly the APAC market. So I guess my simple question is, why don't those characteristics play out as those Chinese OEMs continue to develop further in your other locations? But then linking to that, how does that play into your thoughts around M&A? You've obviously called out M&A today as an incremental focus. What are your target businesses that you're looking at facing in terms of some of the characteristics for them? They're smaller typically. [Audio Gap] Duncan Tait: [Audio Gap] through cost actions. And to your point, it's not just APAC that's seeing competition, we're seeing competition throughout Europe and the Americas and look at the results we've delivered in the Americas and Europe and Africa with a record bottom line performance in both regions and a record top line performance in our Europe and Africa business. So we have the opportunity to perform even better in APAC. And you can see that with what we're doing in our cost base and OEM collaboration to drive the top line. Then to your point around M&A, look, do I see it? If you go right back up to the top on what Adrian was saying before, in terms of our capital allocation policy, we can wisely use shareholder funds to grow this group's EPS. We will do it by continuing to reduce our share count and looking for value-accretive opportunities through M&A, the bulk of which I would say at the minute would be in our Europe and Africa regions and in the Americas. And while the APAC team super focused on driving improved performance, top line and bottom line. Abi, I think you're next. Timothy Ramskill: Can I just -- that was my first question. Sorry -- it was well hid and I recognized. Just -- sorry, the second one really quickly. There's obviously the GBP 17 million of sort of more one-off gains, which you do include in the sort of the reported adjusted PBT. Is there anything you might anticipate in the next couple of years of a similar nature? Is there any other sort of noncore tidying up that might bring with a small gain? Adrian Lewis: That's probably mine. Duncan Tait: Yes. Adrian Lewis: Thank you, Tim. Yes, GBP 17 million. If you look back over history, this group has a track record of capital recycling where we've deployed our assets around the group and where we see those assets deploying suboptimal returns because I want to be very clear, these are not sale and leasebacks. These are noncore asset disposals. And as we look forward, yes, we continue to see the opportunity to optimize some assets that continue to be deployed. There's nothing factored in for 2026, and you'll see nothing held on the balance sheet as an asset held for sale. So it's probably over -- slightly over the medium term that we see the opportunity. But let me be very clear, these are not tactical steps that are there for other reasons. These are strategic moves as we look to optimize returns and recycle capital. Abi Bell: Abi Bell from UBS. Just 2 questions from me. Firstly, on the Q4 trading trends. It looks like there was quite good volume momentum, although a bit softer than the strong Q3 you reported. How should we read your guidance to be at the lower end of that 3% to 5% range for this year? Can you specifically talk about any contract ramp-ups, losses or product launches that we should be aware of or anything else? And then secondly, just back to the BYD contract. Can you explain how the BYD contract differs to other contracts in your portfolio? You highlighted that the tenure of the relationship has been shorter than other brands. So how does that translate to the performance or the conversations you have? And can you explain why you're therefore confident in the longer-term relationships such as Changan or GAC? Duncan Tait: Sure. Adrian, do you want to [indiscernible] Adrian Lewis: Yes, I'll start off. I mentioned earlier on the question around some of the Latin American markets, we saw some real positive momentum. There was a bit of phasing in Q4, which might support that. If you look at our half 2 growth rates, where organic growth was 5%, that's probably a better guide as to the barometer. And if you think about the momentum in Asia Pac versus the momentum that we've got in Europe and Africa and the Americas, they're the offsets that get you to that lower end of the 3% to 5%. You saw a small price mix headwind as we skewed the business more towards a heavier weight in the Americas, where average selling prices are a bit lower. I expect that to be broadly neutral across the course of this year. And they are the building blocks that get us to the 3% to 5% and towards the lower end of that as we think about '26. Duncan on BYD? Duncan Tait: Thank you very much, Adrian. Well, so look, if I take a step back, BYD seems policy-driven. And you can see that in Germany, what's happened in the Netherlands with other distribution companies, what's happening in the Nordics -- so it seems to be more policy-driven. If I look at our performance in Belux, we have performed, as you would expect Inchcape to perform, really strongly. And we will collaborate as ever with our OEM partners and BYD. And look, we performed well also with the BYD contract we have in Ethiopia and in the Baltics. You then mentioned about our other Chinese partners in Changan and Great Wall in particular. Look, through the Derco acquisition, we have relationship to go with those OEMs back for 15 or 20-plus years. They are big believers, as I am, that using independent distribution enables them to drive performance. So we look after those small- to medium-sized, more complex markets. Well, they drive performance in the larger markets in the world. And I think that's exactly what you see playing out with both of those OEMs that you referenced. So if I look at Changan, of the 50 contracts that we've won over the last few years, they represent a good chunk of those would be more than about 15 contracts with many in the Americas and our Europe and Africa region and in APAC. And you've seen us call out deals with their sub-brands like Deepal,, Nevo, Avatr. We just launched Avatr in Costa Rica. So we're working super closely. We know them at headquarters, regional -- and regional levels, and we're driving performance for them. And similarly for Great Wall, where we've won more contracts in the Americas, hopefully more to come and of course, contracts in APAC. So as ever, we will be super collaborative, but I think we have a brilliant portfolio of long-term relationships and brands. Arthur? Arthur Truslove: Arthur from Citi. So first question for me. In terms of your markets as a whole, are you able to just talk a little bit about which markets you think are performing kind of above historical norms and which ones below historical norms? Second question, just on Europe. Are you able to just talk about which countries you're particularly optimistic about in '26 and which ones performed particularly well for you in '25 and indeed, the vice versa? And then finally, just on the aftersales stuff. If I remember correctly, some of your markets performed incredibly well in '21 and '22. When do you sort of think that then starts to translate into aftersales? Duncan Tait: Okay. I'm doing the second one. Adrian Lewis: Sure enough. Duncan Tait: And I'll comment on -- make a comment on your market point, Arthur. So if I start on the left-hand side of the map, and let's go through the big markets. So post the Derco acquisition, those big markets, think Chile, Colombia and Peru, where are they now? Chile at the low end of the 10-year average in terms of total sales in that market. This year, it might get to around a 330 (sic) [ 330,000 ] number. I think it will pick up in subsequent years. And the economics are set, I think, for '27 and onwards to have a nice boost in that marketplace. And I'm very pleased with our share. And in those other 2 markets, Peru and Colombia, oh my word, are we pleased we bought that Derco business. We've gained share in Colombia. We've gained share in Peru. Both those markets grew at over 20% last year. I am optimistic for their performance in 2026. And then looking -- our story in Europe is very much of super, super performance in those Southern European markets where we have gained share and the markets seem to be supportive of longer-term growth. So Greece, I think, will continue to grow for us. We're optimistic about Bulgaria. Romania has had some changes in taxation and legislation, which have moderated the market a little bit, but our performance has been super strong. And I think in Northern Europe, so if I take markets like Finland, I just think those economies might take a little while to come back. So there's still many of those markets at historic lows, including places like Estonia. Then if I move to APAC, look, I think Australia will be about flat at 1.2 million units or so this year. We saw an interest rate tick up a little bit in the fourth quarter, which generally moderates consumer demand, but we've got a good portfolio, and I think we'll grow share. Look, on our Asian markets that we operate in, they're still at their lows. Singapore still has another 3-or-so years to go in that upward COE cycle. We're getting better product into that market to enable us to access some of that growth. So I think APAC in general, those markets will grow over time, and we're working super hard with our OEM partners to make sure we have the right products that we're bringing into those markets. Adrian Lewis: And on aftersales, Arthur, let me sort of explain a little bit of the dynamic as to how this works. So -- and we've got one of our European colleagues at the back of the room, and he knows very well that some of the Japanese brands, we see vehicles staying in the retail network for the main brands well into the 10th year of a particular vehicle's life. And so we get very, very high levels of retention rates. And the opportunity for us to take the things that we do for those brands into the Chinese brands where we typically see substantially lower levels of retention is the thing that's going to drive aftersales gross profit at a faster rate than our vehicle growth. And that's the opportunity that really presents if you think about the UIO that we've got in Latin America, particularly, to take the learnings we have from the Japanese brands and deploy it into those sorts of brands across the region. I think the opportunity is really big for us. So that's some of the dynamics that will help. We're not going to give you a time frame of when we're going to do that, and we're not going to say, look, this brand in this market's -- retention in the 10 year is that, but that's our strategic intent. Duncan Tait: Very good. So I think. Adrian Lewis: We've got one on the conference line. Duncan Tait: Okay. So let's move to phone lines. Operator: [Operator Instructions] Your first question comes from the line of Akshat Kacker from JPM. Akshat Kacker: Akshat from JPMorgan. Just 2 left, please. The first one on APAC. I see you mentioned some production disruption in certain markets in the first half. Could you just give us more details on that? And if you think we can maintain the margin profile in that region to around 6% to 7% in the start of the year? Or should we be below that range in the first half? And the second question is on contract exits and wins that you've announced. So with Geely, I remember you signed a global strategic agreement in 2021 with a focus on LatAm. So does the recent development mark a full stop to distributing Geely vehicles for now? And on the other hand, I see you have been making a lot of announcements with XPENG. Could you just give us more details on discussions with these multiple Chinese OEMs and which ones should we look out for going forward? Duncan Tait: Akshat, thank you very much for those questions. So look, I think -- in terms of the first one on APAC, Adrian, if you could comment on margins, actually, you may as well comment on production as well, and I'll talk about portfolio management. Adrian Lewis: Sure. Thank you for the question, Akshat. Production disruption is very specific to some of our Japanese OEMs. And again, it's a very similar dynamic that we had last year where there's some repurposing and reengineering of some of the production lines that will impact supply in the first half and push supply and push us into a second half weighting, particularly in Australia. And to your question around margins, look, I think the work we are doing around cost and making sure we've got the right cost base across the region and in specific markets where we've got a slightly different rate of sale as to where we've had previously. I think that will all serve to underpin margins as we have seen previously. So hopefully, that gives you some reassurance around the work we are doing to make sure margins stick. Duncan, back to you. Duncan Tait: Very good. Thank you, Adrian. So Akshat, in terms of then portfolio management, the first thing to say is I expect us in 2026 to continue to optimize our portfolio with an eye on shareholder returns for OEMs that we don't necessarily have at the top end of our strategic analysis. And your specific question about Geely. So in '21, I recall us signing that relationship with Geely. And I was very clear at the time, we're going to start in Chile. And if we can make Chile work mutually for customers, for the OEM partner and for us, then we'd expand. We did take on 3 further markets. Now my view on that is that the product portfolio relative to where those markets are in their transition to new energy vehicles, it's difficult for them to be a 5% market share player or greater, which is the aspiration for that particular OEM. And our belief was that portfolio was not capable of getting to that market share. And therefore, we have been working constructively with Geely across 4, and we would call them immaterial markets in the Americas, to move those on to other distribution partners. Relationship -- and that has all been handled in a super smooth way, just as you would expect Inchcape to behave. Now at the same time, with those core OEM partners that we've been growing relationships with for 20 years, we've signed more and more contracts, Geely and Great Wall being a good example. And then we have started working with XPENG initially in Europe, in our Northern European markets. We've also taken XPENG into the Iceland acquisition, where that business is performing quite nicely. And we have just secured that XPENG in Colombia. Let's see what else happens this year. And in terms of go-forward OEMs and contract signings, look, this is a lumpy business we're in. We'll give you a regular update at each of our quarterly earnings updates. And as usual, we'll show you, and you can see it in today's pack, the last slide in our deck will go through -- in the appendix will go through wins during the year and exits too, just so you can keep close to how we're managing our overall portfolio. Final thing I'd say is we have a brilliant portfolio of long-term great OEMs. Thank you very much, Akshat. And nothing on the webcast. Very good. So look, in that case, thank you very much for coming along to hear about how Inchcape performed in 2025. We delivered a strong 2025 performance. We grew EPS greater than 13%. We intend to grow in 2026 and our midterm targets and our aspiration accordingly are in rude health. Thank you very much, everybody.
Operator: Ladies and gentlemen, thank you for joining us, and welcome to Sportradar Group AG's fourth quarter earnings call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press star nine to raise your hand and star six to unmute. I will now hand the conference over to James Bombassei, Senior Vice President of Investor Relations and Corporate Finance. Please go ahead. James Bombassei: Thank you, Operator. Hello everyone, thank you for joining us for Sportradar Group AG's earnings call for the fourth quarter and full year of 2025. Please note that the slides we will reference during this presentation can be accessed via the webcast on our website at investors.sportradar.com and will be posted on our website at the conclusion of this call. A replay of today's call will also be available on our website. After our prepared remarks, we will open the call to questions from analysts and investors. In the interest of time, please limit yourself to one question and one follow-up. Please note that some of the information you will hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue and future business outlook. These statements involve risks and uncertainties that may cause actual results or trends to differ materially from our forecast. For more information, please refer to the risk factors discussed in our Annual Report on Form 20-F and Form 6-K filed with the SEC along with the associated earnings release. We assume no obligation to update any forward-looking statements or information which speak as of their respective dates. During today's call, we will present IFRS and non-IFRS financial measures and operating metrics. Additional disclosures regarding these measures and metrics, including a reconciliation of IFRS to non-IFRS measures, are included in the earnings release, supplemental slides and our filings with the SEC, each of which is posted to our investor relations website. We may also discuss certain forward-looking non-IFRS financial measures that cannot be reconciled from the most directly comparable IFRS financial measure without unreasonable efforts. Joining me today are Carsten Koerl, our CEO, and Craig Felenstein, our CFO. I will now turn the call over to Carsten. Carsten Koerl: Good morning everyone, thank you for joining us today. In 2025, we delivered strong financial results while generating continued momentum across our business as we took important steps to further scale our business and enhance our industry-leading position. This progress builds on the strong results we have delivered over the last several years and sets us up for sustained long-term success. Early in 2025 at our Investor Day, we outlined our strategy and key growth pillars. Over the course of 2025, we delivered on this strategy, both operationally and financially, as we scaled the business in key areas, including our sports coverage, video streaming and visualizations, Managed Trading Services, and our marketing and media businesses. We also completed our acquisition of IMG, demonstrating our financial discipline as well as our ability to integrate strategic sport rights and monetize them like no one else can, given our experience and scale. Importantly, this operational success underpinned our strong financial performance for the year. Craig will cover our financial results in a moment, but in 2025 we performed ahead of the expectations we laid out at our Investor Day early in the year, achieving record revenue and Adjusted EBITDA while delivering significant margin expansion. Adjusted EBITDA margins have expanded approximately 400 basis points in the past 2 years, and we see a long runway ahead for further expansion. We also continued to deliver increasing levels of free cash flow as we expand the free cash flow conversion to 56% on an annual basis. This cash flow further strengthened our balance sheet, and given the disconnect between our share price and the fundamental strength of our business, we used the opportunity to buy back a significant amount of stock over the last 4 months. To continue to capitalize on this disconnect, our board of directors has approved a significant increase in our share repurchase authorization, raising the total planned capacity from $300 million to a total of $1 billion. With this expanded authorization, we will continue to aggressively repurchase shares as the market provides an opportunity given the long-term value creation we see across our business. We have the balance sheet strengths and free cash flow generation to take advantage of the current valuation gap without compromising our ability to invest in further growth initiatives. Turning to our key highlights in 2025. We closed the IMG acquisition in November. Thanks to our detailed pre-closing planning, we hit the ground running, immediately making IMG content available to our client base, enabling us to unlock significant revenue synergies. Leveraging our global scale and distribution network across hundreds of operators, we generated immediate financial uplift in the quarter. The customer response has been strong with the majority of our clients, including all of the tier one partners, having already signed on the IMG data odds and AV products. This early and significant progress puts us firmly on track to unlock anticipated revenue synergies of 25% for IMG in 2026. On the product side, we have successfully integrated IMG content into our core product suite and are on track to expand it into our next-gen offerings, including Foresight, Micro Markets, Player Props, and the Virtual Live Match Tracker over the course of the year. This rapid integration and uptake validates our flywheel. We can monetize this content across more customers and products to unlock significant accretive revenue growth. In terms of our sports coverage, we are unmatched in quality and depth. We cover more than 1 million matches annually, and the scale of betting content and data powers more odds generation, helps scale our video streams, and grows our MTS trading liquidity. In addition to acquiring over 70 sport rights in the IMG acquisition during 2025, we also renewed our partnership with MLB, which provides for both expanded territories and media rights. The first season of our new MLB deal performed strongly, tracking ahead of plan. We recently strengthened our soccer rights by successfully renewing IMG's German DFB Cup rights through 2032. We also continue to make great strides engaging sport fans. We lead the shift toward more personalized and interactive experience. We know sport fans and their behavior better than anybody, thanks to our unique data points that we collect. We are continually looking for new ways to engage them and enhance their experience. That is why we recently upgraded our Foresight streaming product to deliver deeper storytelling and contextual data-rich visualizations. Last quarter, we talked about one of the most exciting recent AI breakthroughs, the development of a generative foundation model for basketball, a first of its kind in sports. The model is based on a large transformer architecture which trained using billions of 3D body pose data points from thousands of NBA games, allowing the model to understand player movements, decision-making, and game flow at an unprecedented level of detail. This foundation model powers predictive insights in real time. We are using it to enhance our Foresight streaming product, bringing richer, more interactive visualizations to live broadcasts. We have plans to expand this foundation model to additional sports, including in soccer for the World Cup and tennis later this year. These innovations and the deeper engagement these products foster, combined with our increased sport coverage, are boosting our streaming activity. Last year, we streamed over 525,000 matches, which is 100,000 more than we streamed just two years ago. In 2026, we anticipate streaming over 700,000 matches across our global footprint. Switching to our Managed Trading Services, we continue to scale this business in related markets around the globe, and we see continued strong momentum ahead. Turnover for 2025 was up 26% year-over-year to $52 billion, making us a top bookmaker globally. Our proven AI-driven trading and risk management capabilities, combined with the diversity of sports on our MTS platform, enabled us to achieve a margin of nearly 11% for our clients in 2025. Turning to our media and marketing segment, our ads business delivered strong record volumes on our DSP for both the fourth quarter and the full year. In 2025, DSP volume grew 35% year-over-year, reflecting increased demand for our data-driven advertising solutions. We saw robust performance across multiple channels, which underscores both the strong ROI of our campaigns and the scalability of our platform based on our proprietary software development. At our global media business, we continue to see strong demand as sports viewership transitions from linear to digital and mobile streaming. Last quarter, we announced a partnership with NBC to develop a customized version of Foresight for NBA Basketball for Peacock's Performance Fuel. This product has drawn rave reviews from sports fans, giving them real-time stats that break down the game, including where a player is most likely to score from next. We recently announced a partnership with NBC Sports Regional Networks to enhance their fan NBA viewing experience. By leveraging our AI capabilities, we are transforming live NBA player tracking data into on-air graphics, animated replays, and customized analytics to enhance the live game coverage and experience. GenAI companies are turning to our data and media APIs to power their sports experiences. We have secured agreements with a number of the GenAI leaders to provide their users with deeper insights and real-time updates. As these platforms increasingly look to engage their audiences by integrating live sports data and insights, demand for our content and capabilities continues to grow. Turning to prediction markets. This is a rapidly developing opportunity in the U.S. and one where we are uniquely positioned to capitalize as the B2B leader in our industry with our premium sports rights portfolio and unmatched product suite. The prediction markets expand to Sports Stem by opening up the U.S. market and are a naturally high-growth extension for our core business. Our focus is to monetize this opportunity while delivering the accuracy, integrity, and scale that exchanges and market makers need to grow responsibly. We have been working with the NHL, MLS, UFC and other league partners to establish clear safeguards and standards that we will look to implement as part of any sport prediction market agreement. We are uniquely positioned to unlock meaningful commercial value. We have the ability to power this market end-to-end with our low latency official data, AI-driven technology to predict pricing and liquidity, fan engagement solutions, marketing services, and our industry-leading integrity services. We are already seeing strong demand from our marketing services from both major exchanges and our OSB clients as they look to us to help them to acquire customers. Prediction markets are an exciting new avenue of growth for our company, and we are currently in detailed commercial discussions with the key players and expect to announce more on this front soon. Now looking into 2026, we see continued strong momentum in our business as we execute on our growth strategy and as we leverage IMG's content across our larger customer base and broader product suite to realize significant revenue synergies. The 2026 FIFA World Cup in June will be a meaningful opportunity for the betting industry and for our company. There are nearly double the teams compared to the last World Cup and over 100 matches. With 200 live markets, 200 pre-match markets, as well as Player Props and Micro Markets, volumes should easily exceed $35 billion of turnover in the last World Cup. With new avenues for growth emerging, including prediction markets, we expect to continue to generate robust growth in 2026 and continue to deliver on our long-term growth strategy and guidance. We are relentless about creating value for our partners and customers, and the uptake of our product and services is a clear demonstration that our investment in content, technology, and product innovation are paying off. Our unique position as a supplier and innovator is unmatched, and we could not be more excited about the future. Thank you. I will now turn the call over to Craig, who will discuss our financial results in greater detail. Craig Felenstein: Thanks, Carsten. Thank you everyone for joining us this morning. The strong financial results and operating momentum Sportradar Group AG generated throughout 2025 once again demonstrates the demand for the robust content and product portfolio we have built as we leverage it across an unmatched global customer base. The value we are creating for our sports, media, technology, and betting partners is translating into sustained top-line growth. Given our stable and predictable cost base, we are delivering significant margin expansion and cash flow generation. The opportunistic acquisition of IMG has further strengthened our competitive position, and in the two months following close, we have already begun delivering real revenue and cost synergies related to this content. I will provide additional color on these synergies later in my remarks, but before I focus on the fourth quarter performance, it is important to recognize the meaningful value that Sportradar Group AG created this past year. Total company revenue for the full year of $1.3 billion increased $183 million or 17% compared with 2024, driven in large part by higher uptake from our existing partners, strong U.S. market growth, record Managed Trading Services turnover, and contributions related to IMG content. Our growth was broad-based with strength across our product portfolio, including betting and gaming content, Managed Trading Services, and our marketing and media services business. We generated strong gains both in the U.S. and globally with the U.S. up 23% year-on-year, now 25% of our total revenue, and the rest of the world up 15%. Importantly, the steps we have taken to align our cost base with the revenue opportunities are enabling us to deliver significant operating leverage. Record Adjusted EBITDA of $297 million for the year increased $74 million or 33% compared with a year ago. The company increased full year Adjusted EBITDA margins by over 290 basis points to 23%. The revenue margin expansion and cash flow we have generated this year puts us ahead of our year-one expectations with regards to the three-year targets we laid out at Investor Day. We expect to build on this momentum in 2026. Turning to the fourth quarter, Sportradar Group AG generated revenues of $369 million, an increase of $62 million or 20% compared with the fourth quarter a year ago, as we continue to outperform market growth by deepening our client relationships through cross-selling and upselling, as demonstrated by our customer net retention rate of 109%, which excludes the contributions from IMG. As we have discussed previously, foreign currency movements, most notably due to the U.S. dollar relative to the euro, continue to be a headwind, and revenue growth in the fourth quarter would have been approximately 22% on a constant currency basis. Looking at the individual product groupings, growth in the quarter was principally driven by our betting technology and solutions products with revenue of $305 million growing 24% versus the fourth quarter a year ago. The increase was driven primarily by 29% growth in betting and gaming content, including strong growth in both our streaming and betting engagement products, as well as odds and live data products, which saw growth from existing and new customers. With regards to IMG, we are already delivering on a variety of revenue synergies with a significant number of Sportradar Group AG customers consuming IMG content, integration of IMG content into Sportradar Group AG's broader product suite, and the sale of additional Sportradar Group AG content to IMG customers. Managed betting services grew 5% in the fourth quarter, led by the sustained momentum in Managed Trading Services, with higher volumes from our existing customer base, partially offset by lower platform revenues due to one-time installation fees a year ago. Moving to our other product group, sports content, technology and services delivered revenues of $63 million, increasing 5% year-over-year, led by a 13% increase in marketing and media services, primarily from increased uptake from technology and media companies, and from contributions related to our expanded affiliate marketing capabilities. Sports performance declined year-over-year in the quarter, primarily due to the timing of revenue, with full-year sports performance revenue growth accelerating to 8%. Similar to the full year, our growth in the quarter was geographically broad-based, with U.S. revenue up 11%, and rest of world revenue up 23%. Headwinds from foreign currency movements, and to a lesser extent, the timing of sports performance revenues, significantly impacted U.S. reported revenue. On a constant currency basis, U.S. revenue growth in the fourth quarter would have been approximately 18%. The strong revenue growth translated into significant Adjusted EBITDA growth in the fourth quarter, with Adjusted EBITDA of $89 million, increasing 48% year-on-year. Our continued focus on cost efficiencies, combined with our stable sports rights costs, enabled us to deliver significant operating leverage with our Adjusted EBITDA margin expanding approximately 450 basis points to 24.2%. Please note that as anticipated, the acquisition of IMG was margin accretive for both the quarter and year, and we have already begun to realize some of the cost synergies identified as part of the transaction, including efficiencies in scouting, audio-visual production, and general corporate overhead. Looking at the individual cost buckets, I will be speaking to adjusted expenses to provide a breakdown of the expenses that impact Adjusted EBITDA. We have detailed in the earnings release and the financial section of the earnings presentation the bridge from IFRS amounts. This past quarter, sports rights expense increased 18% year-over-year to $122 million, due primarily to the addition of the IMG premium rights and the continued success of ATP. We will remain disciplined and strategic with regard to any additional rights we acquire, and with all of our major rights deals locked in long term, we have significant visibility on sports rights costs moving forward. This visibility gives us confidence in our ability to drive operating leverage across our sports portfolio as we capitalize on the value of our high demand sports content and the premium products we have developed for our global customer base. Adjusted personnel expenses were $79 million in the quarter, up 9% year-over-year, driven primarily by IMG costs and to a lesser extent, increased headcount to support growth opportunities. We did benefit during the quarter from a lower bonus accrual versus a year ago. Importantly, our adjusted personnel expenses continued to decline as a percentage of revenue, down over 220 basis points versus last year as we closely manage headcount, focusing talent and resources on the most profitable growth opportunities. Adjusted purchase services of $45 million in the quarter increased only 2% versus last year, driven by higher cloud and traffic costs. Overall, adjusted purchase services declined by over 220 basis points as a percentage of revenue as we further leverage our existing infrastructure. Adjusted other operating expenses of $34 million in the quarter were up 25%, primarily due to costs associated with the Brazilian market and IMG. Overall, we achieved significant operating leverage in 2025, and we continue to see meaningful opportunity to deliver sustained margin expansion over the long term, given the inherent scale we have in our business and our long-term cost visibility. As we drive further revenue opportunities, including scaling IMG, we will continue to closely manage our cost structure and realize the benefits of sports rights being amortized on a straight-line basis over the life of these contracts, delivering more of every dollar of revenue to our bottom line. Looking at the full P&L, we generated a profit for the quarter of $4 million versus a loss of $1 million in the same period a year ago, driven by strong operating results as well as a $35 million lower unrealized foreign currency loss primarily associated with our U.S. dollar-denominated sports rights. The current quarter also included an income tax benefit of $6 million as compared to $20 million last year, driven primarily by the recognition of deferred tax assets as well as M&A and non-routine litigation costs this quarter. Turning to the balance sheet, we continue to be in a strong liquidity position, closing the quarter with $365 million in cash and cash equivalents and no debt outstanding. For the full year, we generated free cash flow of $167 million or a free cash flow conversion rate of 56% compared to free cash flow of $118 million or a 53% conversion rate in 2024. The increase in free cash flow was driven by strong operating cash flow, partially offset by higher sports rights payments. Cash and cash equivalents increased $17 million since the end of 2024 as the strong free cash flow generation was partially offset primarily by share repurchases, including $91 million under our share repurchase plan, with $25 million acquired during the fourth quarter. As Carsten mentioned, given the disconnect between our share price and the fundamental strength of our business, we continue to opportunistically repurchase shares and have already acquired an additional $60 million of stock in the first two months of 2026. Given the continued discount we see in our shares, the significant momentum in the business, and the value we are creating, the board has approved another significant increase in our share repurchase program, raising the total plan by an additional $700 million to bring the total authorization to $1 billion. In total, we have already purchased over $170 million of stock, leaving approximately $830 million remaining under the plan. Turning to our expectations for the year, given the sustained operating momentum we are seeing across our business and the significant synergies we are generating related to IMG, we anticipate an acceleration in growth in 2026. As we initially indicated on last quarter's earnings call, for the full year 2026, we anticipate total company revenue growth to be in the range of 23%-25% on a constant currency basis as we outperform the global market and further capitalize on our content portfolio and product suite, including further scaling the opportunity that IMG provides. Foreign currency will be a headwind at current rates. As a result, we anticipate revenue of $1.56 billion-$1.58 billion. We anticipate delivering significant operating leverage on this revenue growth and forecast Adjusted EBITDA growth to be in the range of 34%-37% on a constant currency basis. After factoring in foreign currency headwinds, we anticipate Adjusted EBITDA of $390 million-$400 million and approximately 200-225 basis points of margin expansion in 2026. At the same time, we will continue to focus on converting more of every dollar to cash flow and anticipate growing our free cash flow conversion rate above the 56% we delivered in 2025. Please note that given the timing of sporting events, including IMG content, we anticipate the strongest revenue growth in the second and third quarters of this year. Additionally, given the weakening of the U.S. dollar throughout 2025, at current currency rates, the FX headwinds will be most significant in the first quarter and, to a lesser extent, the second quarter. Overall, the integration of IMG and the investments we are making in our products and technology positions us to capture additional opportunities in an expanding global market. We are confident in our ability to deliver durable revenue growth. With a cost structure that has strong visibility and inherent operating leverage, we will continue to ramp free cash flow generation and build shareholder value moving forward. Thank you for your time this morning. Now Carsten and I will be happy to answer any questions you may have. Operator: We will now open for questions. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now. If you have dialed in to today's call, please press star nine on your telephone keypad to raise your hand and star six to unmute. As a kind reminder, please remove yourself from speakerphone and lift your handset when asking a question. Please ensure you are unmuted locally when you are asking your question. Please stand by while we compile the Q&A roster. Your first question comes from the line of Ryan Sigdahl with Craig-Hallum Capital Group. Your line is open. Please go ahead. Ryan Sigdahl: Good day, Carsten, Craig. Congrats on the strong business momentum and financials. I want to start with IMG ARENA. It has now been four months since the close of Endeavor's gift of that rights portfolio to you, plus some cash. I know you mentioned trending ahead of the medium-term financial targets. I am curious if that is IMG that is contributing to that or the core business. Then you also mentioned strong synergy realization thus far, but I am curious if you can elaborate on specifically how those customer conversations are going, if there is anything positive or negative, anything you have learned now that the deal is closed. Carsten Koerl: Hi, Ryan. Carsten here. I like this term of gift. Well, there is hard work in the gift. We have a very capable team on this, and we are working now since many months. This work is paying off, so we hit the ground running. All the tier one operators are now converted to this content. Let me remind you, the scheme here is that we get content, we put this content into our engine, and this engine has a much broader distribution. Comparing it from IMG from 50, 60 operators to us with 600 operators or 800, if we extend that scope. We have products based on this content. Most of those products had not been able, or IMG was not able, to distribute them: Managed Trading Services, visualization products, et cetera, PP. We see a strong pickup here. We are trending a little bit better than the plan, and our main focus here is the revenue synergies. We measure the revenue synergies: how much can we achieve here by this bigger engine and the more products? That is the second part of your question. We are a little bit ahead of the target. The target is 25%, and we gave the number of $140 million already earlier, which includes that 25% revenue synergies. I hope that answers your question. Ryan Sigdahl: Helpful. Second question, it would not be a conference call if prediction markets was not asked about. Chairman Selig is certainly out defending the CFTC's authority over predictive markets. You have your big customers, DraftKings and FanDuel, that are aggressively entering here. You have MLS, NHL doing marketing deals. My question is, you have done very well on the integrity side of signing deals thus far. I am curious what you need to happen and the next steps to get more direct partnerships on the data side for you in the prediction markets. Carsten Koerl: I just lost my bet, Ryan, with Craig. The bet was this is the first question for today with prediction markets. Craig has something good on my side. Look, we are working here on a clear scheme. We always said the two things which are most important are player protection and the integrity of the sports. For the integrity of the sports, like you said, we made good progress. You saw also lately our FIFA announcement that we cover now all the federations and confederations there. We are very proud of what we established with the integrity service, and all of this is AI-based, but we have now knowledge of more than 15 years in a very complex environment here. Of course, we are happy to contribute with our knowledge to make the sport safer and also with the prediction markets to install safeguards which are requested and demanded by sports. From a player protection side, we cannot do this. That is about underage gaming, money laundering, insider trading, all these topics which are relevant and important. Sport is caring about this, and we have now three of our partners, NHL, Major League Soccer, and UFC, which established a framework with the exchanges. That enables us from the next couple of weeks onwards that we can supply the official data, and that is our scheme. If our partners find a satisfying framework for player protection and integrity, where we happily contribute, we are ready to deploy the official data. If we are looking now a little bit deeper here, there are two things. There is the exchange, and there is the market maker. Maybe I get another question about the market makers, where I am happy to go a little bit deeper, but that is the general scheme to answer your question. Ryan Sigdahl: Thanks, Carsten. Good luck, guys. Carsten Koerl: Thank you, Ryan. Craig Felenstein: Thanks. Operator: Your next question comes from the line of Chad C. Beynon with Macquarie Capital. Your line is open. Please go ahead. Craig Felenstein: Chad, we cannot hear you if you are speaking. Operator: As a kind reminder, please press star six on your telephone keypad to unmute. Craig Felenstein: Operator, why do we not go to our next question, and we will circle back to Chad. Chad C. Beynon: Can you hear me now? Craig Felenstein: Yes, we have you. Yes. Chad C. Beynon: Sorry about that. Hit the star six. Just thinking about the guidance for 2026, it is kind of what you laid out last quarter. You know, some small moves in the fourth quarter with betting technology and solutions versus the sports content. As we think about the guide for this year versus how you were thinking about this before, given what we have heard from some of your partners out there, has there been any changes given some of the reduction in volume that we have seen out there and differences in hold rates, just as you think of the makeup of how you get to that revenue guidance? Thank you. Craig Felenstein: Sure. Thanks, Chad. There really has not been a change from what we talked about when we reported our third quarter results in early November. Really, the only significant change—I would not even call it significant, but the only change that has happened—is that the U.S. dollar has weakened further versus the euro over the last several months. Because of that, the reported numbers get hit a little bit from a guidance perspective. In terms of the business itself, the business continues to operate exactly as we had planned when we reported our results in the third quarter. Chad C. Beynon: Okay, great. Secondly, just shifting to iGaming opportunities this year, that seems to remain a bright spot for everybody. Can you just update us in terms of your approach to growing that business and how that looks as we look throughout the year? Thank you. Carsten Koerl: Carsten here. From an iGaming perspective, like we laid out, we chose Brazil as our test market. The thesis here is: how can we connect live betting and live betting activities and iGaming? We believe this is a huge playing field and a big opportunity for us. In live betting, we know about the latency, we know about who is sitting on the other side because we have our iPlayer installed on more than 600 betting sites. Nothing is easier than this: to match now the live content on the iPlayer together with something which is visualizing the iGaming opportunity. Let us make this very simple. Our new partner, PGA, we had our board meeting there last week, we discussed solutions like it was in TPC Sawgrass. If you are a golfer, you know hole number 17. Put a hexagon grid over this hole number 17, you have 36 fields, make the flag the green button, then you can visually overlay to the live broadcast this iGaming opportunity. This is something which we promoted the first time in Barcelona ICE. That is the biggest gaming show. The pickup was enormous on this. This is exactly the opportunity which we pick because we see we have the distribution, we have the iPlayer, we have the live scores, we have the match trackers on the bookmaker side, and we can connect this and convert. Like we all know and like we see it in the handle numbers, a client gets roughly around 4 times the value for an iGaming player comparing it to a sports bettor. Sports betting is used as the acquisition channel, and here it closes to the 360 degree because we hook it up with our ads for the acquisition. That is the scale. Chad C. Beynon: Very helpful. Thanks, Carsten. Appreciate it. Carsten Koerl: Thank you. Operator: Your next question comes from the line of Shaun Kelley with Bank of America. A kind reminder to unmute yourself locally. If you have dialed in, please press star six to unmute. Your line is open. Please go ahead. Shaun Kelley: Hey, everyone. Can you hear me okay? Carsten Koerl: Yes. Craig Felenstein: Yes. Shaun Kelley: Great. Really appreciate it. Carsten, you gave a little bit of a teaser around the prediction market piece. Maybe to go a little deeper, I think as we think about the different opportunities here, we think about a broker layer, an exchange layer, as you alluded to, and a market maker layer. Having had a few months to work on it and starting to talk to partnerships or partners in this space, could you talk to us a little bit more clearly about how you would maybe see or envision Sportradar Group AG participating at each of those three layers? I think that would be really helpful for everyone. Thanks. Carsten Koerl: Hi, Shaun. Carsten here. The real interesting thing is the live development in that sector. In-play parlays, live opportunities, that needs real-time data. Like we all know, this is where we can monetize best with the real-time data. The market maker segment is specifically interesting because they need real-time data to price this, and they need the models to lay the liquidity there. Even more, and the real goal is, can we predict the next movement better than anybody else? We can because we are sitting on this huge knowledge, we are sitting on the liquidity, and we are sitting on the deep data in real time. Our investment here, for example, in the foundation model, where we can predict the next pixel, and we do this now seven seconds for an NBA match, is super helpful to predict potential moves and to underlie them with liquidity. That is exactly where the sweet spot sits. As you hear, that makes us very optimistic that we can help the market makers with a very superior product. At the moment, we are ready to click the button that we can distribute the live data for doing the settlement. We can do this for the exchanges. Of course, we can do this also with the deeper data for the market makers. For both, we are aiming to strike a revenue share model based on the take rate. We have at the moment the negotiations around the three properties where we got the clearing from the leagues. That is NHL, Major League Soccer, and UFC. Like I said, you will very soon hear about some deals in that space. Shaun Kelley: Super encouraging. If I could, as my follow-up, there was a big NBA event hosted on the front end of the All-Star Game weekend, and obviously they are a huge partner of yours, and I think you were there as well as a bunch of other people. Any key takeaways, because it was quite interesting that a couple of the prediction market platforms were present at that, and we are curious on what was the league's message back to you or to other constituents as it relates to technology developments, because it sounds like it was quite interesting? Thanks. Carsten Koerl: Yes. I heard from this panel with eight players, and only Swiss guy on the panel was trying to moderate the temper, which heated up a little bit on the panel. I think it shows how big the opportunity is. I think the whole panel, which was Kalshi, Polymarket, the founders, we had, of course, FanDuel and DraftKings sitting on there, and BetMGM. The whole panel was agreeing this is a huge opportunity. We all agreed finally we need to put the safeguards in place to protect the players and the integrity. That is uniting everybody. The rest is kind of controversial. It is about sport needing to pave the way. I think that was then the final conclusion from the panel saying: we all want to help sport. We see an uplift opportunity, and sport by itself and the NBA by itself, I think they are pretty positive once there is the player protection and the integrity put in place. We see already three other leagues which have been granting us the right that we can sell the official data and the products to the downstream market. Operator: Thank you. Your next question comes from the line of Robin Farley with UBS. A kind reminder to press star six to unmute. Your line is open. Please go ahead. Robin Farley: Hi. Hopefully you can hear me okay. I had a follow-up question on your comment that in the next few weeks we may hear something about you selling data, some of the league data, to prediction markets. Is that included in your guidance already, or would that change your guidance? Craig Felenstein: Sure. Hey, Robin, it is Craig. Thanks for the question. We do have some minor contributions from prediction markets in our 2026 guidance, predominantly from things like customer acquisition, fan engagement tools, and a little bit of data that we would be providing. For the most part, any significant deal associated with prediction markets is not included in that guidance. Robin Farley: Okay, great. Thank you. My other question, and I apologize if this—I had a conflicting earnings call, so if you covered this already, you can go on to the next question. Just with the IMG ARENA contribution that officially closed in the fourth quarter, did you indicate—you mentioned you are able to sell that data to many more operators than IMG had. Is there a ramp? Does that take time, or is that something you are pretty much able to do? That is now going into all those additional sportsbooks by now, or is that something we would expect to ramp through the year? Again, sorry if you covered that already. Thanks. Carsten Koerl: Hi, Robin. Yes, you guessed it right, we covered this already. Next time we have to look that you have no conflicting calls at the time and we have to release. To go a little bit deeper, the main important one for us in the first two months, November and December of last year, was that we get the tier one operators on the content. Of course, we enabled for a grace period to services that everybody can test this, and that was very successful. This plan and the execution here to get very quickly a pickup was our main target, not so much initially the focus on the revenues. It was very important for us that we get this content distributed to the market, that we can then continue to build on this. That was very successful. Robin Farley: Okay, great. Thank you. Thanks for the recap. Thanks. Carsten Koerl: Sure. Operator: Your next question comes from the line of Barry Jonas with Truist Securities. A kind reminder, please unmute yourself locally or press star six to unmute. Your line is open. Please go ahead. Barry Jonas: Hey, guys. Can you hear me? Craig Felenstein: Yes. Carsten Koerl: Yes. Barry Jonas: Okay, great. Your closest competitor announced a large-scale M&A transaction recently. Did you look at that deal? How are you thinking about M&A in general here? Thanks. Carsten Koerl: We are constantly looking at what opportunities we have. You know that we laid out on the Investor Day our strategy with adjacent markets. One is, of course, advertising and our products and programmatic advertising. The opportunities which we see around this iGaming is such an opportunity, and of course we are looking into it. We are looking from a clear scheme: is it accretive for us to buy such a business? Does the growth rate fit? Does it fit to our EBITDA profile? We are deciding on this. In this case, I think the answer is clear. We did not do a deal here. We believe that at the moment it is best for the capital which we have to increase our— Barry Jonas: Great. Just for my follow-up, it is looking like there could be a lockout for the 2027 MLB season. Can you remind us what impact, if any, that would have on you? Thank you. Carsten Koerl: First, let us hope that Rob is solving the lockout issue and that the parties are coming to terms, and that we see a nice gentle start of the baseball season. I think we all hope for this. If it is not happening, for us the first thing is, do we have at this time good replacement content in the tier one category? We do. We have PGA, we have the WNBA, we have a lot of ATP matches which can cover that gap which we have with missing MLB matches. Of course, we have contract provisions and protections in place for this situation. We all hope in favor of the sport that it does not happen. For us, the impact will be very limited if there is impact. Barry Jonas: Great. Thank you. Operator: Our next question comes from the line of Jordan Bender. Kind reminder to unmute yourself locally using star six. Your line is open. Please go ahead. Jordan Maxwell Bender: Hi, everyone. Good morning, and thanks for the question. Looking at the guidance, it looks like your operating leverage or your flow through does pull back in 2026 for the implied number. Is there any incremental investment that is going into IMG, or is there anything that you can help us with or unpack some of those dynamics at play? Thank you. Craig Felenstein: Sure. Thanks, Jordan. A couple of things with regards to EBITDA flow through when you look at 2026 versus 2025. First and foremost, the biggest reason for what I would say is lower flow through is that we are now fully incorporating IMG as if it is new revenue. That revenue comes at what I would say is a margin that is higher than our base margin, but lower than our incremental margins. The incremental margins of our base business are well over 40%. The actual margins that we are taking IMG in and out are close to our, I would say, base business margin, which is someplace in the mid-20% range. That would be the first thing. The second thing that I would say is when you look at the margin expansion that we had in the fourth quarter of 2025, there were some significant savings that happened in the fourth quarter, some of which will move into the first quarter and some of which will not repeat. You had things like lower bonus accrual in the fourth quarter. You had some IT development spend in the fourth quarter that was pushed to the first quarter of 2026. It really comes down to a timing issue more than anything else. When you look at the 450 basis points of margin expansion that we delivered in the fourth quarter, that is primarily the driver of why the margin expansion in 2026 is a little bit less. Jordan Maxwell Bender: Perfect. Thank you. Craig, I will stick with you on the follow-up. On the buyback, good to see that stepping up by quite a bit. How should we think about that either on a quarterly basis, on an annual basis, with where the stock trades today? Craig Felenstein: Sure, Jordan. Carsten can add a little bit more here if he wants. When you think about how we buy back our shares, we predominantly buy back according to a grid. We have done that historically. We are opportunistic on top of that, like we were with our secondary buyback in the middle of last year. Predominantly, we buy according to a grid that allows us to be much more aggressive at lower rates and pull back a little bit at higher rates. Given where the stock is today versus the value that we are creating at our company, both in the short term and the long term, we certainly see an opportunity to continue to buy back aggressively at current levels. Jordan Maxwell Bender: Understood. Thank you very much. Carsten Koerl: To add, maybe from Carsten, yes, we are now ready for a more opportunistic approach if that gap is increasing, which we see. Operator: Your next question comes from the line of Clark Lampen with BTIG. A kind reminder to please unmute yourself locally by pressing star six. Your line is open. Please go ahead. Clark Lampen: Hopefully, you can hear me. Craig Felenstein: Yes. Clark Lampen: Okay, perfect. Maybe, first question, sort of a point of clarification. Carsten, for the league partners that have not yet granted you the right to explore or strike partnerships with some of the prediction constituents that were mentioned already, is the hurdle or consideration set any different than we have talked about so far last quarter? Today you highlighted the regulatory aspect of this. I am curious if, for some of the partners that you did not mention earlier, whether they are looking for something different or maybe their review process is a little bit more stringent. Any clarification that you can provide would be appreciated. Then the second question, just on the MTS business. You highlighted this last quarter as a key area for upsell and cross-sell efforts with IMG. I am curious if you could provide a little bit more guardrails around what we might expect for this piece of the business in 2026. Is this where the vast majority of the incremental 25% is going to show up, or has the expectation set moved at all? Thank you. Carsten Koerl: Good. Looking now to our partners, we are speaking here NBA, we are speaking Major League Baseball, we might speak PGA. They all have a different view and a different approach here. It is centered around how to protect sport and how to protect the game. For all of them, they have some nuances. Of course, we would love to see very clear signals very quickly. We are ready with the product. We have an official partnership, and it is about official data. We respect this from our partners there. We see an uptick opportunity in this year in the tens of millions if the partners decide to go quicker. We have now quite some resources on the product development on the market maker side, as you hear, because we think we can help the existing market makers significantly with real-time models to predict liquidity and to predict risk streams. That is something exciting for us on R&D side, and we use this time to get ready. We have now three partners which gave us the green light and we are beginning to deploy here the real-time information and later on the products on this. We understand that our partners are speaking with the regulators here. CFTC plays a main role in there. I think everybody is encouraged and everybody understands that regards for the protections need to be there. Still, this is a sector where we have different tendencies and where we have things. We have now 39 or 40 states, including D.C., which have a regulatory framework, and they have a position on this, as we all know. Therefore, I think it is good for all of us, and we are well advised to put two things in focus: how to protect the player and how to protect the game and the players of the game. Those are the things. We expect movements very soon from the partners which I mentioned here into a direction that they will allow us to deploy official data and the products based on this data, which are even more exciting. Looking now to IMG, the uplift, the revenue synergies, that is broad. We have significantly more clients for the live data. We have the same for the AV feeds. Of course, we put it into our products, the visualizations, the Managed Trading Services. There is not a specific product. It is broadly over the space that we see these revenue synergies. Clark Lampen: Thanks very much. Operator: Your next question comes from the line of Jeffrey Stantial with Stifel. Kind reminder to unmute yourself locally by pressing star six. Your line is open. Please go ahead. Jeffrey Stantial: Great. Good morning, Carsten, Craig. Thanks for taking our questions. Maybe starting off on AI, which has obviously been a hot topic this quarter, and we have not touched on yet in the Q&A. Carsten, I am curious for the core data business itself, obviously the transition in this industry over the past decade or so to exclusive rights contracts has created a real meaningful moat. If you look at some of the other verticals, Managed Trading, streaming, marketing, can you give us some thoughts on how you see the value in distribution and bundling and then maybe if there is risk as you see it today, if the marginal cost to develop some of these products starts to go down with the quality LLMs continuing to get better? Just any sort of high-level strategic thoughts there would be helpful. Thanks. Carsten Koerl: To keep it with Steve Ballmer very short, I was witnessing him live on stage. He said to the auditorium, “70% of you will be redundant in 18 months’ time.” He laughed about this the way our Steve is laughing. There is really a revolution ongoing, and I am very happy that we are prepared since three years on this. We are applying this massively. We acquired the best brains available from Google for the topic AI and GenAI, and I split this in two pieces. This year on the internal roadmap, the first priority is our engineering. 100% of the code from the engineers is AI-supported. There is no way for the engineers around this. This increased our lead time already by 20%, and I expect a significant uplift on those numbers. The second focus area is operations. Why should a human being not be replaced by a programmed AI agent if the data is there, if computer vision is there and video is there? There is no reason for it. We are already on 50% of our content produced with our own agents, which are working on computer vision to extract that information, tens of thousands of more data points per match, depending on the sport. These are the two key focus areas. I would love to see much speedier deployment of agents in the financial sector and in the legal sector. I think that is a big, big benefit. Statistical KPIs are something which is from yesterday. You are going to need to adapt to the market. You need to understand what is in the market and how that compares to the internal KPIs and numbers. These are areas which are not the top priority, but we are working very hard on this. Engineering and operations are the top internally. Externally, the real exciting thing is what we can do with all the data points and the deep data which we have. For this, we started now the foundation model for basketball. What it is, we have seen this foundation model because we feed the tracking data into this, and that is billions of data points. When LeBron is, for example, doing a no-look pass, we see if he is looking up, down, left, right. The human being cannot see this, but based on this and based on the position of the other players, we predict now the next pixel and the next pixel, and from this we can predict seven seconds with a high probability from where the points are scored. Imagine how cool this thing is for coaching applications, but imagine how cool it is for market makers to have that edge to predict what is the potential next move and underline it with liquidity. This is exciting stuff, and that is now possible with AI. I could speak hours about this, but these are the main sectors where we are looking into. Jeffrey Stantial: That is a really helpful overview. Thank you for that, Carsten. For our follow-up, maybe turning over to Craig. You gave some commentary on quarterly cadence for 2026, which I think was helpful. I want to drill in a little bit further and really focus on both top line and cost synergies for IMG. Can you talk about how you see the phasing of that benefit going through 2026? If we look to the back half exiting into 2027, should we think about late 2026 as a reasonable go-forward run rate? Is there still more to come that would flow through in 2027? Anything to help about the phasing as you go through the year on both top lines and cost synergies would be helpful. Thanks. Craig Felenstein: Sure. Thanks, Jeff. Appreciate the question. When you think about the IMG synergies on the revenue side, as Carsten mentioned, we are well on our way with regards to the outreach that we have had with our customers and our clients with regards to what kind of content they would like to see and what kind of content they would like to utilize. The revenue synergies and the timing of them for 2026 really comes down to two things. First and foremost, the timing of games and matches. There is less content for use in the first quarter than there is, let us say, in the second or third quarter of the type of content that we acquired. There will be a little bit of phasing related to that. The second thing will obviously be as we reach out to more and more clients and show them what we can do and offer to them, we should ramp up throughout the course of the year. You should see definitely the revenue predominantly in the second and third quarters from a benefit perspective, but there will be some benefit in the first quarter as well. With regards to revenue in 2027, before I turn to costs, the 2027 synergies will predominantly look at which content we maintain from an IMG perspective. Obviously from an IMG portfolio perspective, there is some content there that we want to keep, there is some content there that we may not want to keep. The revenue opportunity will really depend on the quantity and quality of the revenue that we are maintaining. Our customers at the end of 2026 should be all lined up and ready to go, so it would be more about the content that we decide to keep. With regards to the cost side of the house, the cost side will be more phased. You will see that roll itself through 2026. You should start to see some more margin opportunities in the back half of the year from the cost side of the house than you would see in the first half of the year with regards to IMG. Certainly, we would expect to continue to build on that in 2027 as we manage this as a combined business. You have to remember what we are buying here is effectively content, and we are managing this as a combined entity, and you will see that play itself out over 2026 and 2027. Thanks very much. Operator: We have time for one more question. This is your last question for today. It comes from the line of Bernie McTernan with Needham. Kind reminder to unmute yourself locally or press star six. Your line is open. Please go ahead. Bernie McTernan: Great. Thank you for taking the question. Carsten, just wanted to ask a broad one for you. I think we all just went through an earnings cycle with DraftKings and FanDuel, where we significantly lowered our growth expectations for the companies. I wanted to get your outlook on the U.S. market. Can this still be a major growth driver for Sportradar Group AG, relative to the rest of the world? Maybe breaking that down on the regulated OSB product versus prediction markets. Thank you. Carsten Koerl: Thanks for giving me this opportunity, Bernie, to look a bit to the broader picture. From a Sportradar Group AG lens on the broader picture, 70% of our revenues are outside of the U.S. There is a well-oiled machine; it is global. We have the global strength and power in the distribution, and we deliver the results here. Looking now to the remaining 30%, two-thirds of it, roughly, is betting in the U.S. From this, we see at the moment anything between 15%-30% somehow influenced by prediction markets. What we hear from our partners—and that is FanDuel, DraftKings, the Fanatics of this world—they see little or no cannibalization between the two things, prediction market and online sports betting. If you ask me now from a Sportradar Group AG perspective, we expect an uplift opportunity in the tens of millions of dollars, not in the hundreds of millions of dollars, from prediction markets. Looking on the global scale, yes, we have to focus to keep that machine running, which is internationally significantly bigger than inside the U.S. Bernie McTernan: Thank you for that. Just as a follow-up, Craig, I wanted to make sure I understood the synergies right. If we are thinking about where the upside is from what you are currently messaging, is it fair to assume that the potential on the revenue synergy side is probably fully baked in at this point, therefore any potential upside would be from the cost side? Could you take a moment to frame the potential cost synergy benefit versus the revenue synergy benefit? Craig Felenstein: Sure. I would say we are not saying that our revenue synergies are fully baked in. Obviously, a lot of this comes down to what sort of content our customers want to take, what kind of products we develop that we can ultimately sell to our customers. I would say there is definitely some additional revenue upside that can be had from an IMG perspective, depending on the dialogue that we have with our clients. On the cost side, I would not say that they are baked into 2026, but I would say that they are easier to identify. We know exactly the cost savings that we want to get from all the major cost buckets, whether it be scouting costs, whether it be headcount costs, whether it be general facilities, whether it be IT, whatever it might be. We have identified what we want to do on that front, we are going to roll it out throughout 2026. We know that there are some additional things that can be done if need be, but the cost base is going to match what the revenue opportunity ultimately is. We have said previously that we expect the IMG contribution to be margin accretive to the overall results from Sportradar Group AG in 2026 and beyond, and that is certainly what we expect for this year. Bernie McTernan: Great. Thank you both. Operator: We want to thank everyone for joining us for our fourth quarter earnings call. This does conclude today's call. Thank you all for attending. You may now disconnect.
Operator: Good morning, everyone, and welcome to CPS Technologies Fourth Quarter 2025 Earnings Call. [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Chuck Griffith, CFO at CPS Technologies. Chuck, the floor is yours. Charles Griffith: Thank you, Jenny, and good morning, everyone. Today, I'm joined by Brian Mackey, our President and CEO. We look forward to discussing our fourth quarter results with you. But first, Chris Witty, our Investor Relations adviser, will provide a brief safe harbor statement. Chris? Chris Witty: Thanks, Chuck, and good morning, everyone. Before we begin the business portion of today's call, I would like to point out that statements in this conference call that are not strictly historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and should be considered as subject to the many uncertainties that exist in CPS' operations and environment. These uncertainties include, but are not limited to, the ongoing conflict in Ukraine, Israel and Middle East, other geopolitical events, economic conditions, market demand and competitive factors. Such factors could cause actual results to differ materially from those in any forward-looking statement. Additional information can be found in our filings with the SEC. Now I will turn the call over to Brian to offer his perspective on the quarter, after which Chuck will review the financial results in greater detail. Brian? Brian Mackey: Thanks, Chris. Good morning, everyone. As expected, we just closed out the best year in the company's history from a revenue standpoint with sales of $32.6 million. This was a milestone accomplishment for CPS and marks a strong comeback from where we were just 1 year ago. We continue to benefit from strong underlying demand and are well on our way to selecting a new site to expand and improve our production capabilities. We also have some news to share regarding HybridTech Armor. I'll speak more to both of these topics in a moment. As previously announced, we completed a secondary offering in the fourth quarter that raised $9.5 million of net proceeds. With our newly strengthened balance sheet, we are clearly in better shape than at any time in recent memory, and we expect 2026 to position our company very well for higher growth going forward. Let me now turn the call over to Chuck to provide further details about our financial results, after which I will provide some additional perspective on the quarter and our outlook. Chuck? Charles Griffith: Thanks, Brian. The fourth quarter capped a year of significant achievement and puts the company on track for even better days ahead. CPS reported revenue of $8.2 million for the period compared with $5.9 million in the fourth quarter of fiscal 2024. As with the year in total, the increase was driven by strong product demand and higher overall shipments, benefiting from our third shift and expanded production capabilities. Revenue in Q4 was down from Q3 levels, primarily due to extended holiday periods for our customers, particularly overseas. We reported gross profit in the fourth quarter of $1.2 million or approximately 14.6% of sales compared with a gross loss of $0.3 million last year. As in other recent quarters, the increase year-over-year was due to higher revenue and greater manufacturing efficiencies. However, margins in Q4 took a step down versus Q3 due to the reduction in revenue as well as the dilutive impact on margins of the dramatically increased cost of gold. A number of our products are gold slated and historically, the expense of some of these charges was rather nominal. Now, however, these dramatically increased costs are having a dilutive impact on margins as the margin for added gold cost is nominally 0. Going forward, we expect margins to expand as we continue to implement improvements to our operations, notwithstanding any short-term impacts when we move production at the appropriate time. We remain focused on expanding margins as we increase productivity and improve asset utilization at the new facility. Selling, general and administrative SG&A expenses totaled $1.3 million for the fourth quarter versus $1.0 million in the prior year. We continue to actively manage costs while ramping up production and investing for growth. SG&A remained fairly constant for each quarter of 2025. The company posted an operating loss of about $100,000 in the fourth quarter compared to approximately $1.3 million last year. We reported net income of around $12,000 or $0.00 per share versus a net loss of about $1 million or $0.07 per share in Q4 of fiscal 2024. Turning to the balance sheet. We ended the year with $4.5 million of cash and $8.8 million in marketable securities. 3 million combined versus a combined total of $4.3 million at the beginning of 2025, which included $3.3 million securities. As a reminder, earlier completed a public offering, which raised a net proceed growth capital and funds to move to a larger manufacturing facility and further scale the business. Trade accounts receivable totaled $5.2 million in 2 $9 million sorry, December 28, 2024. Inventories rose to end of the fourth quarter, reflecting increased production and customer demand at the start of the fiscal year. Liability side, payables and accruals totaled $4.3 million at the end of the fourth quarter versus $4.0 million in 2024. Now Brian will provide a more in-depth discussion of the period and outlook. Brian Mackey: Thanks, Chuck. Let me first point out that as I'm sure our investors know, Chuck, our CFO, announced late last year he was finally looking forward to retirement. He has earned it after a full career, including the last 7 years at CPS, where he has positively impacted not only our financial reporting, but our strategy, growth trajectory and underlying operating results. Although we do not expect this to be his last earnings call with the company, I know the entire team here at CPS agrees with me that it's been a pleasure working with him these past several years, and we certainly hope retirement treats him well. Since joining the company in 2019, Chuck has been instrumental in heading the company's finance and accounting functions as well as providing overall leadership at CPS that's been crucial to driving the growth we've experienced. We are now actively searching for a successor as capable as he is, who will join the company in what we believe is an inflection point in support of future growth. This screening and interviewing effort will naturally be a key point of focus for us in the coming weeks. Now returning to our performance. We're obviously pleased with the rapid expansion of our sales and operations leading to record revenue this past year. I think it says a lot about our products, our markets and the ability of our committed team here at CPS to raise production to meet demand. However, we know we have further to go with respect to both revenue and gross margins, which is why we're looking to upgrade our manufacturing capabilities as soon as possible. As we discussed last quarter, the key impetus for the capital raise in October is a planned move to a manufacturing facility nearby, which will provide for long-term growth and product expansion. In our current facility, we simply do not have enough space to respond to the continued growth in demand we're experiencing. Using some of the funds we recently raised, we are committed to finding and relocating to a new site to address our expansion requirements. With this in mind, we recently selected DAO Corporation to serve as our general contractor. They're an experienced organization here in the Boston area. With the input and assistance of the DAO team, we will soon select the best facility, negotiate a lease and initiate a build-out to meet our manufacturing requirements. Although the specific timing will depend on the amount of work needed to upfit the selected facility to address our production plans, we anticipate initiating the move several months from now. We're upbeat about the numerous positive aspects that will result once we have relocated. In addition to addressing our current space limitations, we anticipate greater operational efficiencies, reduced facility maintenance expenses and a dramatically improved working environment for our team. The new facility will likely provide a number of other advantages as well. As we are space constrained in our current facility, this also means we are generally revenue constrained, particularly now that our third shift of metal matrix composite product manufacturing is fully operational. Our commitment to relocate demonstrates our confidence in the growth opportunities that are before us. Sustained strong demand for our products, combined with expanded floor space and the addition of targeted production equipment will position us to meaningfully increase revenue and implement targeted gross margin improvements. Now an update regarding HybridTech Armor. With the passage of the FY '26 defense bill, Kinetic Protection, our partner and the prime contractor for these efforts is optimistic that orders supporting the U.S. Navy will resume in the latter half of the current calendar year. Whereas our orders in the 2021 to 2024 time frame provided protection for crwesered weapon stations on aircraft carriers, these orders will be for a small quantity of U.S. Navy destroyers. Funding has been secured to implement ballistic shields on a handful of these vessels. Detailed contract negotiations are expected to begin in the coming months, and we will certainly keep our shareholders apprised as this continues to progress. With regard to our federally supported research activities, there's a lot to report as well. Since we reengaged with the government-funded programs in the SBIR and STTR in 2021, we have received 13 awards from either the Department of Defense or the Department of Energy. However, as our investors may know, these federal programs have not yet been reauthorized by Congress, and therefore, they lapsed at the end of the previous federal fiscal year on September 30, 2025. The negative impact on CPS has thankfully been limited. Proposals we already submitted are not being reviewed and new research topics are not being published. However, on the positive side, our 4 ongoing contracts, 1 Phase 1 and 3 Phase II programs, as we've previously announced, continue to be executed and continue to be funded without interruption. Fortunately, within just the past few days, we have seen indications Congress has reached a compromise, which will enable reauthorization of these programs with full congressional approval potentially occurring later this month. It appears this reauthorization will be valid until September 30, 2031. Once federal SBIR employees are back at their desks, we anticipate the publication of new topics to resume and our pending applications to be reviewed. At the same time, we continue to strengthen our internal capabilities supported in part by strategic deployment of federal research funding. Over the past several months, we've made significant investments in capital equipment. For our Almax product line, the newly installed higher capacity mill now allows us to process ceramic fiber at twice our previous rate. With the system now fully up and running, we are producing a broader range of samples to support customer engagement and business development efforts. Also in September, we launched Phase 2 of our controlled fragmentation tungsten warhead program funded by the Army. As we have now installed a new sintering oven in our laboratory, we have established a fully operational work cell for manufacturing these alloys at CPS. Although still early in Phase II, we are now producing 40-millimeter warhead samples with unique geometries designed to exceed Army performance benchmarks. These new internal capabilities also enhance our ability to work with other centered metals and advanced ceramics. Collectively, these investments carefully integrated within our new facility and supported by our growing team will accelerate product development and strengthen our competitive position. The additional space at our new location will enable us to commercialize engaging emerging product lines as we pursue sizable market opportunities. This includes radiation shielding, where research continues with ongoing funding from the DOE where we are now actively working to develop and test larger scale samples while we continue to evaluate applications of lightweight MMC radiation shielding across multiple industries. Overall, we expect these complementary processes to unlock new opportunities for our company that build upon and expand our existing intellectual property and manufacturing capabilities and ultimately lead to a greater array of offerings for our customers. In summary, we expect 2026 to be a year of solid revenue as we complete the relocation and lay the groundwork for sustained long-term growth going forward. Once fully operational in the new facility, we will be well positioned to meet increasing demand, implement additional initiatives targeting improved gross margins and expand into large and attractive new markets. We can now open the call up for questions. Ken? Operator: [Operator Instructions]. Our first question is coming from Chip Moore of ROTH Capital. Alfred Moore: Congrats, Chuck, on retirement. Maybe just to start for me on the facility move. It sounds like you're obviously very close and you've got it down to a couple of sites. Just walk us through in a little more detail how you're thinking about timing and some of the moves in preparation for that? And then any early thoughts on capacity and future expansion? Will you have room to grow? And how are you thinking about some of those dynamics? Brian Mackey: Yes. Thanks, Chip. We do have -- we've narrowed -- we've looked at a number of sites. We've narrowed it down to a very small list. And again, with the input of the DACO team evaluating all the different bones of those places, whether it's electrical plumbing, et cetera, to meet the various needs that we have for our production requirements. So that will probably take a few months. As I mentioned, to upfit the selected facility, at which point we will begin executing a move and sort of work center by work center over time. What you've seen on our balance sheet is the growth of our inventory levels so that we have inventory to pull from -- at least for the products where we can do that during the time that we're shut down to implement the move. And the timing and structure of that move will be led by which work cells need to be up and operational most quickly to support our customers. Of course, we have to revalidate our production equipment, et cetera. So it will naturally be disruptive, but we're taking a variety of steps to mitigate that as much as possible. And we do expect to initiate that move a few months from now, and it will take several months to get everyone from here to there. We have a number of facilities that we're looking at that are all relatively close to our facility here. So we don't expect much negative impact on our talented workforce because the commute probably won't change too much. That was a key for us as well. Chuck, anything you want to add to that? Charles Griffith: Yes. Just -- so I think Brian had mentioned several months, but I think probably I would expect we'll have a decision on this specific facility within maybe a month, do you think... Brian Mackey: Yes, some number of weeks. Charles Griffith: Yes, several weeks, maybe a month. So once that happens, we'll let people know. Alfred Moore: Okay. Yes, it sounds like final negotiations. So yes, that's helpful. And maybe if I step back, just on demand, I guess, for PSI in particular, you had a big customer re-up in October. Just broader demand there. And I think you've talked in the past about potential for another large customer out there, just given some of the capacity constraints. But what are you seeing in that market? Brian Mackey: Yes. We continue to see that demand. That customer does order that you mentioned that orders their typical pattern for a 12-month need. So we're working to fulfill that as well. And as I mentioned, that's one of the items where we can build inventory ahead to satisfy their needs as we relocate. And coming back to that, you had asked a question about capacity. We do expect to increase capacity in the new facility. There's some equipment that we're ordering that will get delivered to the new facility. And we will also have additional floor space that will be available, but generally uncommitted in the short term because we simply know that these other opportunities continue to blossom. So we've got floor space earmarked to be able to take advantage of those in a way that we cannot in our current facility. And yes, that new potential customer that continues to play forward. They're working to validate the performance of our product, as you would expect before they make a larger commitment and those tests and discussions are ongoing. Alfred Moore: Excellent. Excellent, Brian. And maybe one more for me on how to think about margin trajectory near term, right? I think the gold prices, how big impact is that now with gold continuing to move higher? And can you offset that at all? And then HybridTech Armor coming back, that should be beneficial to margins. It sounds like maybe that's not big volumes initially and a little later, but any more thoughts there? Charles Griffith: Yes. Thanks. I think I hope gold is about as high as it's going to get. It's pretty much -- I think it's more than doubled since about a year ago, and that's always been a factor in our equation. But just the fact that we're billing more for gold, but also spending more for gold just has a negative impact on the margin percentage. Obviously, the margin -- the bottom line margin is not going to change at all or very little, I should probably say, maybe to the good, but not -- it probably impacts the margin by maybe 1 point or 2 depending on the volume in any given quarter. And then I think the other factor that's been a bit of a an issue with margin is the fact that we're growing inventory. And we try to be conservative in terms of our inventory valuations, our standard costs for our inventory. And so that basically means that as we build inventory, we're expensing costs that don't get picked up with the corresponding sale until sometime later down the road. So as we build inventory, I think that's sort of a headwind when it comes to margins as well. But expect that when we do move and during that period, when we're not producing, we should maybe see the opposite impact. Again, I can't tell you that that's going to be 1 point or 2 points or 3 points, but certainly, it should be a tailwind instead of a headwind, I think. Operator: [Operator Instructions]. Our next question is coming from Steven Fuse, a private investor. Steven Fuse: I was going to ask about the facilities move, but that's pretty well taken care of. I do have a quick question about -- I probably asked this before, exposure to rising aluminum costs, if that's a potential margin issue because it's kind of linked with the price of copper as well. I don't know about your particular grades of aluminum, but... Charles Griffith: So aluminum is a relatively small percentage of our overall cost of making a product. So it doesn't have a huge impact. Again, you could view it as perhaps a headwind, but it's also something that -- because it's not occurring immediately, it's going up. So it does give -- for many of our products, it does give our sales force the opportunity to incorporate that into new pricing. And obviously, the guy that places the one order a year that can't be adjusting their price all the time. But on the other hand, there's certainly a lot of other folks that are placing orders monthly or quarterly and so we can pick that up. I don't think it's a huge issue, though, because, again, the cost of aluminum is relatively small piece of the cost of an A base. Brian Mackey: And some of our sourcing decisions have changed as well. I would say, to your point, Steve, that the market has been more dynamic than maybe in some points in history. So our purchasing team has been -- needed to be more nimble for those reasons to find the best available cost. Operator: Our next question is coming from [indiscernible] who is a private investor. Unknown Analyst: I'd like to just ask a question about tungsten alloys. I understand you've got a process called binder jet additive manufacturing to create high-density tungsten oils -- alloys, excuse me. And you're moving away from a depleted uranium. So my question is, what is the potential dollars on this? And secondly, would this process create a moat for your company that would prohibit other competitors to enter? Brian Mackey: Joe, what you're speaking to specifically is some of the SBIR funding that we were awarded in 2025, particularly for Phase 1 related to U.S. Army artillery, who is trying to move away from depleted uranium and our proposal to accomplish that was the binder jet approach that you discussed as a way to construct a product, a layer from tungsten, which is cost effective. We had nice technical results from that funded effort. We're looking to continue that work in relevant directions. That's something that will continue to play out over time. But I think it's a good example of the places where we are using our historic intellectual property and know-how and our manufacturing equipment to develop new technologies for just the reason you described. We want that protective moat around these things that we're bringing to market. Our new facility will enable us the space not only in a much bigger laboratory area, but also that undedicated floor space to move into when we go to small quantities or large quantities. So in the bigger picture of our portfolio, that's exactly what we're trying to do is have more intellectual property for that protective moat. That one specific opportunity will continue to play forward. That's not going to be significant revenue in 2026 or anything like that, but it's a great example of the types of things that we're broadening into but staying close to home in our material science space. Unknown Analyst: That's a good answer. But do you have -- can you give me just kind of a ballpark on what kind of dollars you're potentially looking at in sales? Brian Mackey: The long-term picture for that will be very large. If the Army engages that solution to use for its artillery. That's a very large market, and that's kind of the view we have of any number of these markets. I mean, with very minimal exception, I mean we're not looking for needles in a haystack. These are haystacks. We don't spend a ton of time deciding if it's a huge haystack or a large one because, frankly, we're a $32 million revenue company from 2025. So that's a very large market potential as are many of these things because it could potentially be a solution that the Army engages for its artillery, and those are big numbers. Operator: Well, that appears to be the end of our question-and-answer session. I will now hand back over to Brian for any closing comments. Brian Mackey: Super. Okay. Thanks, everyone, for joining us and for your ongoing interest in CPS. We look forward to speaking to you again at the end of our first quarter. If you have any questions in the interim, please reach out to Chris Witty, our Investor Relations Adviser. Operator: Thank you very much. That does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. We thank you for your participation.
Operator: Greetings, and welcome to the Civeo Corporation 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 your host, Regan Nielsen, Vice President, Corporate Development and Investor Relations. Please go ahead. Thank you. Regan Nielsen: And welcome to Civeo Corporation’s Fourth Quarter and Full Year 2025 Earnings Conference Call. Today, our call will be led by Bradley J. Dodson, Civeo Corporation’s President and Chief Executive Officer, and E. Collin Gerry, Civeo Corporation’s Chief Financial Officer and Treasurer. Before we begin, we would like to caution listeners regarding forward-looking statements. To the extent that our remarks today contain anything other than historical information, please note that we are relying on the safe harbor protections afforded by federal law. These forward-looking remarks speak only as of the date of our earnings release and this conference call. We undertake no obligation to update or revise these forward-looking statements except as required by law. Any such remarks should be read in the context of the many factors that affect our business, including risks and uncertainties disclosed in our Forms 10-Ks, 10-Qs, and other SEC filings. I will now turn the call over to Bradley. Bradley J. Dodson: Thank you, Regan. And thank you all for joining us today for our Fourth Quarter 2025 earnings call. I will start with a few key takeaways for the quarter and the year and then summarize our consolidated and regional performance. After that, Collin will provide further financial and segment-level detail. I will conclude our prepared remarks with our initial guidance for 2026, along with the qualitative outlook by region, then open the call up for questions. Here are the four key takeaways for the call today. One, significant progress on our share repurchase authorization, including repurchasing 17% of our common stock during 2025 alone. Subsequent to year-end, we have repurchased an incremental approximately 500,000 shares, resulting in reaching 95% completion of our current buyback authorization. Two, strong performance in Australia, driven by growth in our integrated services business and the contribution from our May 2025 village acquisition. Three, meaningful margin recovery in Canada, as cost-reduction initiatives continue to bear fruit. And four, we are entering 2026 with an improved cost structure and balance sheet strength, positioning Civeo Corporation to capitalize on anticipated North American infrastructure development opportunities. Moving on to capital allocation, during 2025, we repurchased 2,300,000 common shares for approximately $54,000,000, representing 17% of our common shares outstanding at last year-end and significant progress toward completing our authorization to repurchase 20% of our outstanding shares. Subsequent to year-end, we repurchased another 500,000 shares, resulting in 95% completion of our current buyback authorization. As a reminder, our current capital allocation policy announced last April, Phase One included a 20% repurchase authorization, which is now substantially complete. Today, we also announced a new authorization to purchase up to 10% of our outstanding shares, which will become effective upon the completion of our existing authorization. As of 12/31/2025, our net leverage ratio is 1.9x, and we are comfortable with that. We remain committed to completing our current buyback authorization as soon as practicable. Turning now to the operational results for the quarter and the full year, overall, the fourth quarter and full year results reflect disciplined execution in a challenging macroeconomic environment. On a consolidated basis, in Q4 2025, revenues were up 7% year over year with adjusted EBITDA up 90%, a testament to our cost-reduction efforts in Canada and the successful integration of our May 2025 Australian acquisition. In Australia, we delivered record annual revenues in 2025 of $460,000,000, reflecting growth in our integrated services business and the contribution from our May 2025 acquisition in the Bowen Basin. Revenue and adjusted EBITDA in Australia for the fourth quarter increased 9% year over year, driven primarily by the additional acquired villages and growth in our integrated services. Importantly, our integrated services business in Australia continues to scale and remains on track toward our goal of $500,000,000 in annual revenue by 2027. In Canada, while overall lodge occupancy remained under pressure from customer spending discipline in the oil sands, cost-reduction initiatives undertaken in late 2024 and early 2025 drove substantial margin improvement. In the fourth quarter, Canadian revenues increased 4% year over year, while adjusted EBITDA improved from negative $5,400,000 in 2024 to positive $3,400,000 in 2025. This performance reflects the structural cost actions we implemented last year. Overall, we believe that we are executing on our strategic priorities in each region. Our Australian business continues to generate strong cash flow supported by integrated services growth and the expanded village footprint, and our Canadian business is demonstrating improved profitability at current activity levels while positioned for anticipated demand from North American infrastructure projects. With that, I will turn the call over to Collin. E. Collin Gerry: Thank you, Bradley. Thank you all for joining us this morning. Turning to the income statement, we reported total revenues in 2025 of $161,600,000 compared to $151,000,000 in 2024, an increase of 7%. The year-over-year increase in revenues was primarily driven by higher activity in Australia, including contributions from the May 2025 acquisition and growth in our integrated services business. Net loss for 2025 was $6,500,000, or $0.56 per diluted share, compared to a net loss of $15,100,000, or $1.10 per diluted share, in 2024. During the fourth quarter, Civeo Corporation generated adjusted EBITDA of $21,700,000 compared to $11,400,000 in 2024, an increase of 90%. This increase in adjusted EBITDA was primarily driven by significant margin improvement in Canada, resulting from the structural cost actions implemented earlier in 2025, as well as contributions from the Australian acquisition and continued integrated services growth. Operating cash flow in Q4 2025 was $19,300,000 compared to $9,500,000 in the prior year quarter. For the full year 2025, we generated revenues of $630,800,000 and adjusted EBITDA of $88,200,000 compared to revenues of $682,100,000 and adjusted EBITDA of $79,900,000 in 2024. The year-over-year revenue decline was primarily driven by lower activity levels in Canada, partially offset by Australian growth, including the contribution from the Bowen Basin acquisition. Despite the revenue decline, the adjusted EBITDA increase of 10% was primarily driven by the cost-reduction initiatives in Canada. Turning to our segments, I want to first point out a change. Prior to 2025, corporate SG&A included corporate IT expenses managed on a worldwide basis that were not allocated to individual segments in Australia and Canada. To better align segment results to the profitability measure used by management, these SG&A costs are now allocated to Australia and Canada beginning with the fourth quarter and year ended 12/31/2025. For any prior period results discussed on this call, we have adjusted financial figures to conform to the updated 2025 presentation. In Australia, fourth quarter revenues were $119,500,000, up 9% from $110,000,000 in 2024. Adjusted EBITDA was $22,400,000, up 9% from $20,600,000 in the prior year quarter. The year-over-year increase in revenues was primarily driven by the contribution from the four owned villages acquired in May 2025 and continued growth in our integrated services business. These gains were partially offset by modest softness in portions of the legacy owned village portfolio, reflective of the sub-$200 per ton metallurgical coal pricing environment that our customers experienced in the majority of 2025. The increase in adjusted EBITDA reflects the incremental contribution from the acquired villages and continued integrated services growth. Australian billed rooms in the fourth quarter totaled approximately 705,000 compared to approximately 637,000 in 2024. Average daily rates were $76 compared to $77 in the prior year quarter. For the full year 2025, Australian revenues were $460,300,000 compared to $427,000,000 in 2024. Turning to Canada, fourth quarter revenues were $42,100,000 compared to $40,700,000 in 2024, an increase of 4%. Adjusted EBITDA was $3,400,000 compared to negative $5,400,000 in the prior year quarter. The year-over-year increase in revenues was primarily driven by higher average daily rates due to improved occupancy mix, as billed rooms were essentially flat year over year. Significant improvement in adjusted EBITDA was driven by structural cost-reduction initiatives implemented earlier in 2025, including overhead reductions, lodge rationalization, and field-level cost alignment. Canadian billed rooms in the fourth quarter totaled approximately 359,000 compared to approximately 360,000 in 2024. Average daily rates were $100 compared to $94 in the prior year quarter. For the full year 2025, Canadian revenues were $178,600,000 compared to $245,100,000 in 2024. Full year Canadian adjusted EBITDA was $17,100,000 compared to $18,200,000 in 2024. The decrease in revenues and adjusted EBITDA was primarily driven by lower oil sands activity, with the adjusted EBITDA decline mitigated by the impact of cost-reduction initiatives implemented in 2025. Looking at our capital structure, as of 12/31/2025, total liquidity was $90,400,000, total debt was $182,800,000, and net debt was $168,400,000. Our net leverage ratio was 1.9x at year-end. Finally, capital allocation. Capital expenditures for the full year 2025 were $20,200,000 compared to $26,100,000 in 2024. Capital expenditures in both periods were primarily related to planned maintenance spending on our lodges and villages. Specifically, in 2025, $11,200,000 was associated with maintenance CapEx and $9,000,000 was related to growth projects, including the reactivation of our Buffalo Lodge in Canada and Wi-Fi infrastructure improvements in Australia. During 2025, we repurchased approximately 2,300,000 shares for approximately $54,000,000, reducing our share count by approximately 17% during the year. As Bradley mentioned, as of today, we have repurchased approximately 500,000 additional common shares year to date in 2026, resulting in 95% completion of our current authorization. We will look to complete the current authorization as soon as practicable, at which time we will be able to transition into our new share repurchase authorization for up to 10% of our outstanding shares. With that, I will turn the call back over to Bradley. Bradley J. Dodson: Thank you, Collin. I like that. Now, I will turn to our outlook for 2026. For the full year 2026, we expect revenues of between $650,000,000 and $700,000,000 and adjusted EBITDA of $85,000,000 to $90,000,000. We are also giving initial CapEx guidance for 2026 of $25,000,000 to $30,000,000. Looking at the regions, in Australia, metallurgical coal prices weakened in the back half of 2025, contributing to modest activity softness across our Bowen Basin owned village portfolio. Entering 2026, metallurgical coal pricing has improved, creating a more constructive economic environment. If prices remain above $200 a ton through the upcoming producer budgeting season, we could see improved activity levels in the back half of the year. Our base outlook assumes generally stable occupancy in our owned villages, with the full-year impact of our May 2025 acquisition largely offsetting potential softness in our legacy operations. In our integrated services business, we expect continued revenue growth as we advance toward our 2027 revenue goal. In Canada, we expect oil sands activities to remain stable but muted by historical standards, consistent with the spending discipline demonstrated by our customers throughout 2025. But importantly, we enter 2026 with a structurally lower cost base. Let me back up and say the key investor themes to watch for Civeo Corporation in 2026 are: One, continued strong results in the Australian business with occupancy upside in our owned villages if metallurgical coal sentiment continues to improve, and continued organic growth in our integrated services. Two, in Canada, continued stabilization in occupancy at our oil sands lodges with upside from asset deployment from North American infrastructure construction, data centers in the U.S., and LNG and power-related infrastructure in Canada. And lastly, continued return of capital to shareholders through the buyback authorization. We believe 2026 will be a year focused on positioning the company to capitalize on anticipated infrastructure development in Canada and accelerating data center construction activity. While we do not expect these projects to materially impact 2026 results, we believe we are well positioned to support this demand as it develops. Overall, we expect 2026 to reflect continued solid performance from Australia, stable conditions in Canada, and meaningful progress positioning the business for potential infrastructure development growth beginning in 2027 and beyond. We will now open the call for questions. Thank you. Operator: We will now be conducting a question-and-answer session. You may press 2 if you would like to remove your question from the queue. It may be necessary to pick up your handset before pressing the star keys. Our first question will come from Stephen Gengaro with Stifel. Bradley J. Dodson: Good morning, Stephen. Stephen Gengaro: A couple of things for me. The first on the Canadian cost-cutting side, did you see the full impact of that in the back half of 2025, or is there more that will show up in the margins in 2026? Then on the asset deployment potential for the assets that are available in Canada and potentially in the U.S. market, can you talk a little bit about, I guess, two parts to the question? One is the types of conversations that are ongoing, and, when a decision is made, how long would it take to get assets deployed and start generating revenue and profits? Bradley J. Dodson: We saw most of it. There will be some continued full-year impact on a comparison basis in the first half of 2026. But the vast majority of it, we had done by June 30 last year. So, yes. Thanks. And then on the asset deployment potential for the assets that are available in Canada and potentially in the U.S. market, the status of the conversations is that we are providing detailed bidding proposals both in Canada and in the U.S. In Canada, they are largely related to pipeline, LNG infrastructure, things like PRGT, Coastal GasLink, Cedar LNG phase two, LNG Canada phase two, and also Alaska LNG. And then in the U.S., it is all about data centers. In terms of speed to market, it depends on the asset deployment. If the asset deployment is from our mobile camp fleet, we can begin to have rooms up and running within three to four months on the first phase, and then phase in rooms over time. So we could have first meals within three to four months. If we are moving multistory, I would say that is nine to twelve months to get the first view, from getting the authorization to mobilize. It includes a signed contract. Stephen Gengaro: Great. That is helpful. And just one final one to Jeff. You gave some of the CapEx levels and the EBITDA guide for 2026. Any big other moving pieces from a working capital perspective we should be thinking about when we are trying to calibrate free cash flow? E. Collin Gerry: I think I would say working capital is a plus or minus. I think the one thing, in looking at free cash flow, you have to remember is we have about $20,000,000 U.S. of cash taxes to assume and about $10,000,000 of interest expense. So that should get you there, and then working capital should be plus or minus off of that. Stephen Gengaro: Great. Thank you. Operator: Our next question comes from Stephen Michael Ferazani with Sidoti & Company. Stephen Michael Ferazani: Good morning, everyone. Appreciate all the detail on the call. I do want to follow up the last question just thinking about how you are looking at capital allocation now that the 20% share repurchase is essentially complete. Your net leverage still under 2x. As we think about cash generation, at least until, or hopefully, eventual ramp-up on some of the mobile camp deployments, how do you think about cash flow generation? Does that go directly toward your 10% share repurchase authorization? Do you try to maintain 2x net leverage? How are you going to balance that? And is the number one focus remaining share repurchases, or does that change as the initial 20% is complete? When we think about the CapEx guidance for this year, you only spent about $20,000,000—I think you said $11,000,000 was maintenance CapEx. You are guiding now for $25,000,000 to $30,000,000. Are there any larger projects that pushed out from last year, or how should we think about where the spending is going in that 25 to 30 range? In terms of mobile camp opportunities versus where you stood three months ago, have you seen progress? Are you having more conversations? Are we getting a little bit closer? Can you provide some color? Does that differ at all in terms of the data center progress, where maybe that can happen a lot faster than some of these really large infrastructure projects that require pretty significant funding? Bradley J. Dodson: There have been no changes to the capital allocation framework that we laid out last April. We are completing Phase One here shortly with the initial repurchase of 20%. We used more than 100% of free cash flow, I might note. Our leverage has stayed in that 2x range. And the second phase is to use no less than 75% of annual free cash flow to continue to buy back stock. The 10% share authorization will allow us to continue, and that would maintain leverage at 2x or less. E. Collin Gerry: Yes, thanks. This is Collin. I will take that one on CapEx. $11,000,000 in maintenance this year is—I do not want to say low watermark—but that is a pretty low number for us. Repeatability is aspirational. We will certainly try for that. But I would also offer that, historically, at this stage of the year, we line out what the capital plan looks like. There are have-to-haves, and then there are should-dos. And as the year goes on, that list is refined, and I think our track record is that we have done pretty well relative to guidance on the capital side as we really dial in the main requirements throughout the year. So that is kind of the spirit behind the increase, but I would also say that the $11,000,000 in maintenance that we spent last year was largely driven by some pretty material cuts in Canada, and we may have to get back to a normal run rate this year. And I will also point out that this time last year, CapEx guidance was the same range. Bradley J. Dodson: On mobile camp opportunities, conversations continue. I would say opportunities are increasing. For the most part, in both markets, quite frankly, we are bidding on work that does not have full FID at the customer level yet. And so, to a great degree, the wait-and-see is now clarifications to your question, and we are completing those with our clients but moving on to waiting for them to get to FID. As a general answer on data centers, yes, those can move faster, although there is potential that infrastructure projects could move sooner rather than later. Stephen Michael Ferazani: Okay. Fair enough. Thanks, guys. E. Collin Gerry: Thank you. Operator: And we will go next to David Joseph Storms with Stonegate. David Joseph Storms: Good morning, and thank you for taking my questions. Just want to start maybe with the Canadian market. There have been several geopolitical developments since we last spoke that have impacted oil prices. How is this changing your conversations with customers? I know a lot of this is going after budgeting. Just curious as to whether anything materially has changed or customers are looking through that. Sticking with Canada, you signed that contract in Ontario. Is this a playbook for more to come, or was this an opportunistic one-time contract? How would you characterize that? And then just one more for me. It sounds like you could be picking up some momentum in 2026, especially if metallurgical coal stays above that $200 level and cost cutting continues. Should we expect a similar seasonal trend as usual, or would you expect to see maybe a little bit more of a ramp going into 2027? Bradley J. Dodson: I think it is too soon for making any material decisions based on moving oil. I do not expect them to do anything. Certainly, Canada as an oil producer is interesting in times of geopolitical uncertainty, given the security of that resource. So if it is maintained over a longer period of time, it would be positive. But in the short term, I do not expect any material changes. Very pleased with the win in Ontario. It is our first work over there. It is on the integrated services side, so adding a new geography and increasing the integrated services contributions in Canada, North America as a whole. And, yes, we would like to build off of it. Excited by the first win, excited about what we can do with that opportunity, and looking forward to expanding further. On seasonality, one thing that we have kind of always been asked at this time of the year—because Canadian turnaround season in particular is strongest in the second and third quarters—we typically add 60% to 65% of our annual EBITDA in the middle half, if you will, the second and third quarters. I think that will be slightly more muted. Second and third quarters will still generate the majority of the cash flows as opposed to the first and the fourth, but I do not believe it will be as strong. So a more smooth EBITDA progression throughout the year. Operator: Dave, is there anything further? David Joseph Storms: Apologies. I was on mute. No. Thank you for taking my questions, and good luck this quarter. Bradley J. Dodson: You bet. Appreciate it. Operator: And this now concludes our question-and-answer session. I would like to turn the floor back over to Bradley J. Dodson for closing comments. Bradley J. Dodson: Thanks, Carrie, and thank you everyone for joining the call today. We appreciate your interest in Civeo Corporation. We look forward to speaking to you on our first quarter earnings call planned for April. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today’s teleconference. You may disconnect your lines. Have a wonderful day.
Operator: Greetings and welcome to the Vitesse Energy, Inc. Fourth Quarter and Full Year 2025 Earnings Call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. Please note this conference call is being recorded. I will now turn the conference over to the Director of Investor Relations and Business Development at Vitesse Energy, Inc., Ben Messier. Thank you. You may begin. Ben Messier: Good morning, everyone, and thanks for joining. Today, we will be discussing our 2025 results and our expectations for 2026. Our October earnings release and acquisition announcements were released yesterday after market close, and an updated investor presentation can be found on the Vitesse Energy, Inc. website. I am joined this morning by our Chairman and CEO, Robert W. Gerrity; our President, Brian J. Cree; and our CFO, James P. Henderson. Before we begin, please be reminded that this call may contain estimates, projections, and other forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are subject to several risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. Please review our earnings release and risk factors discussed in our filings with the SEC for additional information. In addition, today's discussion may reference non-GAAP financial measures. For a reconciliation of historical non-GAAP financial measures to the most directly comparable GAAP measure, please reference our 10-Ks and earnings release. I will now turn the call over to Vitesse Energy, Inc.’s Chairman and CEO, Robert W. Gerrity. Robert W. Gerrity: Thank you, Ben. Good morning, everyone, and thanks for joining today's call. In 2025, we continued to return capital to shareholders. We distributed $2.25 per share during the year and have now paid $6.325 per share since our spin-off in January 2023. We are committed to continuing that track record of returning capital across commodity cycles. We accomplished a great deal in 2025. We continued to convert our undeveloped asset base to producing wells, closed and fully integrated the Lucero acquisition, which is performing as expected, successfully settled a multiyear lawsuit, and maintained a conservative balance sheet, all while navigating a volatile oil market. Last Sunday, we signed a definitive agreement to acquire non-operated assets in the Powder River Basin of Wyoming for $35 million of Vitesse Energy, Inc. shares effective 01/01/2026. These assets consist of over 6,000 net acres and 29 net undeveloped locations, producing an anticipated average of 1,400 net BOE per day in 2026, with EOG and Continental serving as the primary operators. We expect to close this accretive acquisition at the beginning of the second quarter. Last week, our Board declared a first quarter dividend at an annual rate of $1.75 per share. With the majority of our 2026 oil production hedged at prices that support this distribution and a capital-efficient drilling program, we believe this dividend allows us to allocate capital to high-return investment opportunities while keeping our balance sheet conservative. For the first time, our 2025 dividends were classified as return of capital for tax purposes. We expect the majority of our 2026 dividends to be treated the same. I will now turn the call over to my partner and company President, Brian J. Cree, to provide more detail on our operations. Brian J. Cree: Good morning, everyone, and thanks, Bob. Production for the quarter averaged 17,653 barrels of oil equivalent per day, bringing our annual production to 17,444 barrels of oil equivalent per day. As of 12/31/2025, we had 22 net wells in our development pipeline, including 6.1 net wells that were either drilling or completing and another 15.9 net locations that have been permitted for development. Since the beginning of 2025, over half of our AFEs received have been three- or four-mile laterals, leading to our highly capital-efficient guidance for 2026. At year-end, proved reserves were 47.8 million barrels of oil equivalent, up 19% from 2024, driven primarily by the Lucero acquisition. PV-10 was $472.7 million, with 88% proved developed. The year-over-year reserve value was impacted by a nearly $10 per barrel decline in SEC pricing for oil. We also believe our acreage includes extensive locations not currently classified as proved under SEC guidelines. With the hostilities in the Middle East over the weekend and continuing, we opportunistically layered on hedges. For 2026, we have approximately 64% of our oil production hedged through swaps and collars. Our swaps have a weighted average fixed price of $64.95 per barrel and our collars have a weighted average floor of $58.64 and a ceiling of $67.50 per barrel. For gas, we have just under half of 2026 natural gas production hedged with attractively priced collars at a weighted average floor of $3.73 and a ceiling of $4.91 per MMBtu. Both percentages of hedged oil and gas are based on the midpoint of our annual guidance. Thanks for your time. I will now hand the call over to our CFO, James P. Henderson. James P. Henderson: Good morning, everyone. Thanks, Brian. I want to highlight a few items from our financial results for the fourth quarter and full year of 2025. Please refer to the earnings release and 10-Ks, which were filed last night, for further details. As Brian mentioned, our production for the year was at the top end of our guidance at 17,444 BOE per day, with a 65% oil cut. For the year, adjusted EBITDA was $179.3 million and adjusted net income was $30.4 million, while GAAP net income was $25.3 million. Free cash flow for the year was $48.9 million after development capital expenditures of $121 million. You can see the reconciliation in our press release filed last night. Cash CapEx and acquisition costs for the quarter were $29.8 million, bringing the full-year cash cost to $127.7 million, which was just above our guidance, mainly due to the timing of capital expenditure payments. These costs were funded all within our operating cash flows. At the end of the year, we had total debt of $124.5 million, giving us net debt to adjusted EBITDA of 0.69x. We are also providing guidance for 2026. On a two-stream basis, we anticipate production in the range of 16,000 to 17,500 BOE per day for the full year of 2026, with an anticipated oil cut of 60% to 64%. Cash CapEx for the year is anticipated to be $50 million to $80 million. This decrease from 2025 reflects both the commodity price-driven reduction in operator activity, their focus on drilling their most economic inventory, and the timing of capital payments, as we have accelerated some payments of certain accrued development costs into 2025. This guidance includes the Powder River Basin acquisition discussed earlier, but it excludes the impact of any additional near-term development acquisitions, which we are continually evaluating and pursuing once they meet our return hurdles. With the recent uptick in oil prices, we are hopeful to see even more development on our assets, which will drive our CapEx spending higher. With that, let me now pass the call back to the operator for Q&A. Operator: Thank you. At this time, we will be conducting a question-and-answer session. Our first question comes from Chris Baker with Evercore. Your line is now live. Chris Baker: Good morning. Just hoping, Bob, you could maybe step back and just walk through the updated sort of decision tree. Obviously, the dividend getting reset lower, along with lower capital, looks like it is about free cash flow this year, but just maybe frame up how those moves kind of support the sustainability. And then it sounds like a platform for continued M&A here would be great. Thanks. Robert W. Gerrity: Yes. Thanks, Chris. Thanks for joining the call. So when we spun, we started with a $2 dividend, and we were able to comfortably maintain that through this whole period. We—well, let us step back a second. Gwen, Brian, and I founded this thing in 2010, and most other companies that got formed during that time are not here anymore, and a large reason for that is they had too much debt. So first and foremost in our mind is our balance sheet, and we want to make sure that is always conservative, which gives us an operating—which gives us life. So that is the number one goal. It was a Board decision to drop the dividend last week simply to preserve that balance sheet. So that took precedent, Chris. And with regards to the capital spend, we spent a lot more capital last year than we had anticipated. Most of that was because our operators, especially Chord, started drilling three- and four-mile laterals in areas where we had a high concentration of acreage. Very efficient capital spend. We are thrilled with the three- and four-mile laterals, and we think that trend will increase continuously. That said, we do not have really good visibility of what the capital spend will be from the operators in 2026. So we are taking a very conservative look at 2026. The capital, as Ben said, that they are spending has a terrific rate of return, especially now that the AFE costs have been reset. So in terms of M&A and that landscape, 2025 was the year that we looked at more deals than we had at any time in our history. We were very disciplined on leaning into making acquisitions, both primarily for shares and also for cash. The landscape out there, Chris, is there is a lot of money chasing deals, and there is some ABS financing, there is some private financing. That makes the deal landscape very competitive. We do not know if that is going to continue. We were able to do this $35 million deal with a very sophisticated seller over the weekend. We would love to do more of those deals, but I tell you, capital discipline, clean balance sheet, return cash to the shareholders—that is how we view the world. So M&A for 2026, Chris, we have got a lot of different deals in the shop. We would love to do this $35 million deal in scale. But again, discipline. Chris Baker: That is great. Thanks, Bob. And then to your point, obviously, a lot of volatility makes sense to set a pretty wide range in terms of production expectations for the year. Can you just maybe drill down in terms of the top two or three variables that are kind of in the high and low end of that range? Robert W. Gerrity: Brian, do you want to handle that one? Brian J. Cree: Sure. Absolutely. I would love to. So, Chris, obviously, a big chunk of our guidance is going to be based off what we think operators are going to do. And as Bob mentioned, there has been a lot more development activity in our areas of the field where we own higher working interest, and so we look forward to seeing more of that. But look, the rig count is in the upper twenties right now in the Bakken, and even though we have a very high percentage of those rigs running on our acreage, we cannot know exactly what our operator is going to do, especially given what happened over the weekend. From our perspective, we would certainly welcome as much CapEx as our operators want to provide. If you look at 2025, we had a very high CapEx profile; a lot of that had to do with some of the large near-term development acquisitions we made in 2024 that carried into 2025. If you look at our activity in 2025 from an acquisition standpoint of near-term development, I think we spent $6 million compared to mid-20s in 2023 and 2024. It is a situation that, as Bob mentioned, there is a lot of capital competing for those acquisitions. We have remained very disciplined. At this point in time, we just did not want to feel like we should put too much emphasis on how much near-term development acquisitions we would be able to make in 2026. But the combination of how much we can acquire from near-term development and how much our operators will continue to accelerate drilling if these prices remain higher is why we have a pretty good range. Operator: Our next question comes from Lloyd Byrne with Jefferies Group. Your line is now live. John White: Sorry about that. I was on mute. You have John on for Lloyd. Just congrats on getting the deal across, team. Seems like it was at a pretty attractive valuation. Just wanted to get some further details on what sort of activity you anticipate for this year on that acreage, and then what you would anticipate any sort of changes to your maintenance run rate would be from the additional production activity? Thanks. Ben Messier: Hi, John. You have got Ben here. Thanks for joining our call. Look, we expect this asset we acquired in the Powder River Basin to have fairly flat production for the next few years, with anywhere from $4 million to $6 million of CapEx per year. It is a great asset. It comes with 29 net locations in the formations that are already proved and have nearby drilling activity. We believe there is upside to that if some of the stacked pay in the Powder River Basin, the Shannon and the Sussex, end up coming to fruition. So we think this asset blends really well with the rest of our story of having exposure to technology upside down the road. In terms of maintenance CapEx, I would say that has not really changed from the $85 million to $90 million range to hold our Q4 production from 2025 flat. As things get more efficient with time, I would expect that to go down as we see more of these three- and four-mile laterals. But for a current outlook, I would say $85 million to $90 million, which is why you see a really capital-efficient program this year at the midpoint with slight production decline from last year. But again, it just depends on what production level you are trying to hold flat. John White: I think that makes sense. Thanks. And then, just on the update from the hedge book—was pretty positive. Just thoughts around what we are looking at from here. Is there a goal that you guys would like to hit in terms of a maximum and then, as you get more capital efficient, does that number change going forward? Lower reinvestment rate, you might not need to cover as much of your base capital. Thanks. Ben Messier: We reset the dividend last week to a level that we are really happy with in this current commodity price environment. Our goal with our hedging program is to protect that and to reduce, really, volatility in our share price. We have some room in 2026 on our PDP capacity—we can only hedge up to 85% of our PDP at any given time—so we are being patient with the last remaining piece of that, really to see what happens with the Strait and the situation in Iran. But we would look to add more hedges, which would really max it out, just depending on how that situation evolves. And then we were fortunate to add hedges on Sunday right when the market opened, really through 2027, and got good prices on that. And so we will look to extend into 2027 as well, as long as we are happy with the price level there. Robert W. Gerrity: Great. Thanks. Yeah, John. This is Bob. Hedging always has been and will always be a fundamental core value of ours. So we love to be hedged out as far as we can, and we look at the hedge book pretty much every day. So— John White: Great. Appreciate the color. Operator: Our next question comes from Jeffrey Scott Grampp with Northland Capital Markets. Your line is now live. Jeffrey Scott Grampp: Good morning. Was curious—hey, Bob—on the proportion of these four-mile laterals that you guys are seeing, I was curious if you have any data or longevity of production histories from some of those to kind of quantify, I guess, in terms of the better economics, in terms of rate of return or F&D cost basis. Do we have that data, and how material of a benefit are those for the economics of your capital program? Robert W. Gerrity: I will let Brian answer it a little bit more specifically, but Chord themselves say that the economics that they are getting in the three- and four-mile laterals in the outer part of the field are as good or better than their two-mile laterals in the core, and we are seeing that. Again, from an IRR standpoint, they are improved, but from an ROI standpoint, they are substantially improved. This is going to be the trend in the Bakken, and you are going to see a lot of companies swapping acreage to be able to drill the three-mile, four-mile wells. We have actually started seeing some U-turns in two-mile acreage to pick up a four-mile lateral. So this is going to be a trend, Jeff. Brian, do you want to expand on that? Brian J. Cree: Yes. Good comment, Bob. Jeff, what I would say is that early on, we were cautious when they were drilling the three miles. We wanted to make sure that we felt like the story behind a flatter decline curve was actually going to be seen. And so, for us, that certainly played out for the three mile. The four-mile development—a lot of those wells we were in—some of those are pretty new in the Bakken. The first wells came on in 2025. We have been watching the production from very early on, and they look really good. So we are probably less cautious on the four mile than we were on the three mile and think that those four-mile results so far have looked good. And what I can tell you is that the operators are really starting to dial in the AFE costs. Early on, those AFE costs were really high for both three mile and four mile. They have come down substantially. So the economics of the three- to four-mile development that we are seeing are really strong. Jeffrey Scott Grampp: For my follow-up on the CapEx side of things, I just wanted to clarify on the guide: Do you guys have kind of a rough split of organic D&C versus near-term acquisition assumptions? I thought maybe I heard you in the prepared remarks mention that there was not any kind of near-term acquisition assumptions in the CapEx guidance. I want to clarify what is baked and what is upside. James P. Henderson: Yes, Jeff, this is Jimmy. That is correct. We have very minimal near-term development CapEx built into the budget. I think Brian described it pretty well. It has been so competitive, and we are very disciplined about the rates of return that we target. We hope to see that market return to something that makes sense for us. We will add to it as we go. But where we sit coming into the year, we did not want to give guidance assuming that we would be able to return to what we have seen in the past in that market. But we are a very active participant. Our team is a very well-oiled machine looking at those transactions. We have weekly meetings to walk through everything that is available. So we are hopeful, and we think that we will have near-term development activity as we go through the year; we just did not want to start off with that in our guidance. Operator: Our next question comes from Noel Parks with Tuohy Brothers. Your line is now live. Noel Augustus Parks: Hi, good morning. Hey, well, I had a few questions about the transaction in the Powder River Basin, and I was wondering if you could just talk a little bit about the state of play out there. You mentioned in the release that EOG and Continental are among the operators, and I think of EOG having at times placed the Powder kind of at the top of the heap of its plays and then not talked about it for a while. I just wonder what you are seeing out there as far as ongoing development. Brian J. Cree: Sure. I will take the first crack at that. Again, I am going to circle back to our review of acquisitions and near-term development opportunities. I think what I would tell you is that every week we are probably looking at an AFE or some type of development opportunity in the Powder River Basin, and over the last couple of years, we have not added to that Powder River Basin position because it has been challenging. This is a PDP acquisition that has some great potential upside. There are really good operators—you just mentioned EOG, Continental, Devon, others—that are absolutely working very hard to break the code. And EOG has, interestingly enough to us, probably spent more capital in the Powder than they have in the Bakken, where we think they still have some great development opportunities. So this was a great chance for us to add to our exposure to the Powder River Basin with a good PDP profile, fairly flat. Ben mentioned that he thinks that with the continued development that we have got right now built into it, which again I think is conservative, we should be able to remain pretty flat on a production basis there. But what is exciting to me is all those undeveloped locations. So if that Niobrara and that Mowry formation, kind of technological breakthrough, happens, we are going to have some great locations up there. Noel Augustus Parks: Gotcha. Thanks. And speaking of the technological learning curve, my impression is that the play—I guess it depends on area to a degree—featured a lot of customization, I believe on the completion side, as well as to work which formations work where. I think, I guess, Niobrara, Mowry, and then Turner as being pretty variable. So do you—maybe in terms of inning towards that sort of cracking the code—do you think what is this particular inning that the industry is in with the Powder these days? Robert W. Gerrity: Yeah. Noel, this is Bob. Very, very good question. We valued this acquisition purely from a PDP standpoint. We put zero value on the undeveloped, even though we know that there is a lot of value there. You are absolutely right. The Powder is a customization basin. You just cannot do the same thing on every well. So that is why we leaned in strongly with Continental and EOG, and as Brian said, EOG has spent a ton of money up here, and the wells that they have drilled that we are owners in now have done extremely well. But you cannot value the undeveloped like you can with the Bakken, which is pretty much a blanket formation. So it is a very good question. We did not value the undeveloped. Noel Augustus Parks: Okay. Great. And I guess just my last one—maybe I will talk a little bit about the transaction. It does seem notable that it is an all-stock transaction. I just wondered, of those potential transactions you are seeing these days, are you seeing sellers increasingly willing to accept stock, or is it more of a traditional, they have an interest, they want to cash out, and that is their motivation? James P. Henderson: Hey, Noel, this is Jimmy. We see both, clearly. It just depends on the seller. In this case, a very sophisticated seller saw value in our stock and will become a shareholder for the foreseeable future, and so they saw upside. Now, obviously, we negotiated this transaction prior to the events over the weekend, and we do have sellers like that that want to ride the upside of the shares they are getting and have exposure and are not ready to cash out. But there are always others that are more cash focused and want to get their returns, meet their hurdles, etcetera. So we look at both. We love using stock in these kinds of transactions because it is a very efficient use of our equity, but we are not dedicated to only that style of transaction. We look at everything, frankly. Noel Augustus Parks: Great. Thanks a lot. Thanks, Sean. Operator: There are no further questions at this time. At this point, I would like to turn the call back over to Robert W. Gerrity for closing comments. Robert W. Gerrity: Again, thanks, everybody, for joining. Ben Messier is available to answer any other questions, and the management team would be happy to talk to anybody. Thank you very much for your support. Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Thank you for standing by, and welcome to the Upland Software, Inc. Fourth Quarter 2025 Earnings Call. All participants are in listen-only mode. Later, we will conduct a question-and-answer session, and instructions for that will be given at that time. The conference call will be recorded and simultaneously webcast at investors.uplandsoftware.com. A replay will be available there for 12 months. By now, everyone should have access to the fourth quarter 2025 earnings release, which was distributed today at 8:05 AM Central Time. If you have not received the release, it is available on Upland Software, Inc.’s website. I would now like to turn the call over to Jack McDonald, Chairman and CEO of Upland Software, Inc. Please go ahead, sir. Jack McDonald: Alright. Thank you, and welcome to our Q4 2025 earnings call. I am joined today by Michael D. Hill, our CFO. On today’s call, I will start with a Q4 review, and following that, Mike will provide some detail on the Q4 numbers and our guidance. We will then open the call up for Q&A. But before we get started, Mike will read the safe harbor statement. Mike? Michael D. Hill: Yeah. Thank you, Jack. During today’s call, we will include statements that are considered forward-looking within the meanings of securities laws. Detailed discussion of the risks and uncertainties associated with such statements is contained in our periodic reports filed with the SEC. The forward-looking statements made today are based on our views and assumptions and on information currently available to Upland Software, Inc. management. We do not intend or undertake any duty to release publicly any updates or revisions to any forward-looking statements. On this call, Upland Software, Inc. will refer to non-GAAP financial measures that, when used in combination with GAAP results, provide Upland Software, Inc. management with additional analytical tools to understand its operations. Upland Software, Inc. has provided reconciliations of non-GAAP measures to the most comparable GAAP measures in our press release announcing our financial results, which are available on the Investor Relations section of our website. Please note that we are unable to reconcile any forward-looking non-GAAP financial measures to their directly comparable GAAP financial measures because the information which is needed to complete a reconciliation is unavailable at this time without unreasonable effort. And with that, I will turn the call back over to Jack. Jack McDonald: Alright. Thanks, Mike. The headlines in Q4: revenue, adjusted EBITDA, and margins came in roughly as expected. Our Q4 core organic growth rate was flat due to a tough compare to Q4 2024 which contained some lumpy additional usage volume revenue. As we have said on previous calls, our core organic growth rate will bounce around a bit from quarter to quarter. The general trend has been improving. The growth rates were negative 2% three years ago, negative 1% two years ago, roughly 1% positive last year, and we are targeting 1% to 2% this year. So a generally improving trend. Annual net dollar retention rate was 96% in 2025, consistent with the prior year. Q4 2025 adjusted EBITDA of $15,300,000 resulted in an adjusted EBITDA margin of 31%. Free cash flow for Q4 was $7,200,000, stronger than expected due to successful collection efforts, which brought our full-year 2025 free cash flow to $24,400,000, exceeding our $20,000,000 target. We welcomed 110 new customers to Upland Software, Inc. in Q4, including 15 new major customers. We also expanded relationships with 199 existing customers, 27 of which were major expansions. These new and expanded relationships continue to be spread across our AI-powered product portfolio. On the product front in Q4, I would note that we continue to perform well based on insights from customers, as evidenced by earning 49 badges in G2’s Winter 2026 market reports, highlighting consistent value and customer validation for our products. Upland Software, Inc. was recognized as a Major Player in the IDC MarketScape Worldwide General-Purpose Knowledge Discovery Software, 2025 Vendor Assessment, which was published in November 2025. Upland Software, Inc. believes its recognition in this report highlights the value of our AI-powered knowledge management solution, Upland Right Answers, which is driving scalable, smarter support for enterprise contact centers and help desks. Upland Software, Inc. was recognized in the Gartner Market Guide for RFP Response Management Applications, which was published in October 2025. We believe our inclusion in that report showcases the impact of our AI-powered RFP response and proactive sales proposal creation software of Qvidian. So our Q4 results support and illustrate improvements that we have made in the business. Adjusted EBITDA margins expanded from 2024 and 2025, again, up to north of 30% in the fourth quarter. We continue to see healthy cash flow. We are targeting continued strong cash flow in the $20,000,000 range for the year. In other important news, last week we announced the fact that Sean Nathaniel is going to be joining Upland Software, Inc. as our new CEO. I will be transitioning to Chairman as a part of that. I am just super happy to announce this news. Sean has deep familiarity with our business and our operating model, and our customers and our products having been with Upland Software, Inc. from 2013 to 2020, and previously serving as our CTO, but also serving in senior general management roles across a significant chunk of our product portfolio. Significantly, Sean brings highly relevant experience, particularly around AI initiatives that are focused on enterprise knowledge and content and data. I welcome folks to take a look at some of the materials that Sean has published over the last few years on AI and the importance of solid knowledge and content and data foundations as a prerequisite for successful enterprise AI implementations. Sean’s vision really centers on reinforcing Upland Software, Inc.’s role in enabling organizations to convert that knowledge and content and data into trusted operational intelligence to support AI- and agent-driven operating models, which is obviously where the market is going. Upland Software, Inc. already has meaningful capabilities aligned with this vision, and Sean’s priority moving forward is going to be to sharpen that execution and translate those capabilities into measurable customer and shareholder value. So Sean will be joining us, will be on, I think, our next call, and then will be running the calls going forward. You will have an opportunity to hear directly from Sean his vision and for the business going forward, and I am just super happy to welcome Sean back to Upland Software, Inc. and to support him in executing his vision, and looking forward to that. So with that, I am going to turn the call back over to Mike. Michael D. Hill: Alright. Thanks, Jack. I think Jack covered most of the main points in the financials for the quarter, so I will just take a few additional comments here. For the Q4 income statement, revenues were as expected when taking into consideration our divestitures in Q1 2025. Q4 gross margin continued to represent an increase from earlier in 2025, as expected, as a result of the higher margins realized on our ongoing product lines. Our adjusted EBITDA and adjusted EBITDA margin came in as expected with our adjusted EBITDA margin of 31%, up from 22% in the fourth quarter of 2024, so a big improvement there. For the fourth quarter 2025, GAAP operating cash flow was $7,300,000 and free cash flow was $7,200,000, making our free cash flow for the full year 2025 of $24,400,000. That exceeded our target free cash flow of $20,000,000. On the balance sheet at the end of Q4, we had outstanding net debt of approximately $290,000,000, factoring in the approximately $29,000,000 of cash on our balance sheet. At year-end, our net debt leverage was 3.6x trailing adjusted EBITDA, which came in better than our target. For guidance, for the quarter ending 03/31/2026, we expect reported total revenue to be between $47,000,000 and $50,000,000, including subscription and support revenue between $44,800,000 and $47,300,000, for a decline in total revenue of 24% at the midpoint from the quarter ended 03/31/2025. Just a reminder, this year-over-year decline is primarily due to the divestitures completed in Q1 2025. First quarter 2026 adjusted EBITDA is expected to be between $11,900,000 and $13,400,000, which at the midpoint is a decline of 3% from the quarter ended 03/31/2025. First quarter 2026 adjusted EBITDA margin is expected to be 26% at the midpoint, which is a 500 basis point increase from the 21% adjusted EBITDA margin in the year-ago quarter. For the full year ending 12/31/2026, we expect reported total revenue to be between $194,200,000 and $206,200,000, including subscription and support revenue between $103,600,000 and $193,700,000, for a decline in total revenue of 8% at the midpoint from the year ended 12/31/2025. This year-over-year decline, as I mentioned earlier, is primarily due to divestitures that we completed in Q1 2025. Full year 2026 adjusted EBITDA is expected to be between $52,600,000 and $58,600,000, which at the midpoint is a decline of 4% from the year ended 12/31/2025. Full year 2026 adjusted EBITDA margin is expected to be 28% at the midpoint, which is a 100 basis point increase from the 27% adjusted EBITDA margin that we had for 2025. And so to recap, our product portfolio is now much more focused around the KCM market, knowledge and content management market. As Jack mentioned, our core organic growth rate is in a positive multiyear uptrend from negative 2% three years ago to negative 1% two years ago to roughly positive 1% last year in 2025, and we are targeting 1% to 2% positive here for 2026. The big new customer wins during 2025 have validated our product-market fit in several key markets, and those major wins have validated our product AI strategies. Our adjusted EBITDA margin is in a significant multiyear expansion trend with adjusted EBITDA margins expanding from 20% in 2024 to 27% last year in 2025 to our guidance midpoint of 28% here this year in 2026. Cash flows, as we mentioned, remained strong as we generated over $24,000,000 of free cash flow in 2025, and we are targeting around $20,000,000 of free cash flow here this year in 2026. I will note that we beat our 2025 free cash flow target by over $4,000,000 really due to early receivables collections, which would have otherwise occurred in 2026. So without those early collections, our 2026 free cash flow target would have actually been higher. Alright. And with that, I will turn the call back to Jack. Jack McDonald: Alright. Thanks, Mike. We are ready to open the call up for Q&A. Operator: Press star and then the number one on your telephone keypad. Your first question comes from the line of David E. Hynes with Canaccord Genuity. Please go ahead. David E. Hynes: Hey. Thank you, guys. Jack, congrats to you on the transition. I know you are still going to remain, you know, involved in the business, but appreciate all the help over the years. Maybe we can just start on the customer metrics a bit. So look, new customer adds flat year-over-year. Majors were down. Expansions down year-over-year. It is just hard to put context around those metrics, given the business is different than it was a year ago with the divestitures. So just how would you characterize sales execution in the quarter? Do you have comparable metrics for continuing ops? And I guess most importantly, like, what is the pipeline look like going into 2026? And any color there would be helpful. Jack McDonald: Yeah. We had a stronger Q3 in terms of, I would say, winning sizable major deals. When we look at the pipe, so a little bit disappointed in the Q4 bookings performance. But the pipeline for this year looks decent, particularly around some of the core knowledge management growth products where we are starting to build a healthier pipeline of larger deals. But, you know, we have got to execute against it. And, yeah, the Q4 numbers could have come in a little bit better. David E. Hynes: Okay. And then, Mike, for you, just so EBITDA margins north of 31% the last couple of quarters obviously shows the earnings power of kind of the new leaner Upland Software, Inc. I look at the guide for 28% margins, it is obviously a bit of a step down from where the business has been running the last couple of quarters. Just talk about what is contemplated in that guide and why we would see a step down in margins from where the business has been running? Michael D. Hill: Yeah, DJ. So, you know, as you may remember, typically our EBITDA margins through the course of the calendar year, we tend to exit the year at the highest margins, and we start the year at the lowest margins. Things like, you know, calendar-based payroll taxes kind of take a bigger hit in Q1 and Q2. So we have always had sort of a tilted, you know, if you will, calendar year ramp-up, and so that is mainly what we are seeing here this year again. David E. Hynes: Okay. Alright. Got it. Thank you, guys. Operator: Your next question comes from the line of Scott Randolph Berg with Needham & Company. Please go ahead. Scott Randolph Berg: Hi, everyone. Thanks for taking my questions, and I hope you can hear me okay. It is quite windy where I am at. Two questions. First of all, Jack, why step down now? Why the change in CEO leadership today in particular? Did not know if there is anything that drove it specifically, or was it just time to maybe relax on the beach a little bit? Jack McDonald: Well, I would say principal reason is that the business has changed. Right? At one point, we were really about growth through acquisitions. And now the focus is really more on advancing our AI-enabled product portfolio. And Sean is a product-centric and AI-focused CEO. And so I think he is the right person for the job. He knows our products and our markets and our customers. And so, you know, from an operating perspective, I think that is the kind of executive we need driving the business. Scott Randolph Berg: Got it. Understood. And then I know you all made significant changes to your go-to-market strategy the last couple of years and with all the divestitures and whatnot. Do you think you are with those changes? Are we eighth to ninth inning? You are in full execution mode. Is there any more of that that still gets some change that need to be unveiled? Just help us understand with everything that is going on as you enter 2026, is this the right, I guess, right horsepower, you know, properly framed to really drive the growth that, you know, you all are seeking? Jack McDonald: Yeah. I mean, one of the things I wanted to get done before doing this transition was taking really the first phase of streamlining the business. And, obviously, we sold a number of assets. We got the debt refinanced. So really wanted to sort of clear the decks on that and hand over a business that is on firmer footing. It will be interesting to see what the next few years bring with AI and its impact on enterprise SaaS. I think we have got some products that can do well in this environment. We have got some other products that are going to face some headwinds. But I like Sean’s vision, which I think aligns closely with what Dan Dohmen has been driving in the business and doing a great job on. And so, you know, I think we have got a core set of products that can do well in this environment. I think there is obviously execution that needs to happen, and, you know, we are here to support those guys. Scott Randolph Berg: Well, understood. Thanks for taking my question. Operator: Your last question comes from the line of Jeffrey Van Rhee with Craig-Hallum. Please go ahead. Jeffrey Van Rhee: Great. Thanks. Thanks for taking the questions. Got a couple. First, maybe, Jack, just trying to get maybe a brief refresher on what the revenue mix is now in terms of the core capabilities. How would you bucket the revenue streams by the focus of the underlying software or the underlying capability? Michael D. Hill: Well, Jeff, this is Mike. So roughly two-thirds to three-quarters of our revenue, maybe even a little bit more than that as I think about it, is really our growth products versus our specialized markets products. And those growth products, you know, most of those are AI-enabled. So really, the vast majority of our products are in this sort of knowledge and content management market area and using the AI winds as a tailwind as opposed to a headwind. Jeffrey Van Rhee: Yep. Got it. And, Jack, when you look at AI, you mentioned it. I mean, it is front and center for all SaaS companies right now trying to figure out winners and losers. You know, high level, when you are looking at the SaaS landscape, and obviously we can compare to what you own, but when you look at the SaaS landscape, what models do you think are defensible, and what do you think will ultimately get consumed by AI? Jack McDonald: Well, I think the products that we have that are systems of record I think are going to have the strongest moat. And there are opportunities there to become a key part and to be a key part of larger enterprise AI implementations. Also, the products that we have that form an enabling layer of infrastructure, that intelligence layer that Sean calls it. You think about products like BAI. And so I, you know, I look back over the past year, and it is funny, Jeff, because on the one hand, it has been a tougher market environment because of AI. But on the other hand, we landed over the past 12 months some of the biggest bookings we have had in the past few years. When you look at major hospitality companies that are doing 40,000,000 customer touches a year and spending big on agentic AI implementations, and then bringing in products like Upland Right Answers because they need a trusted, auditable, governable knowledge layer to train that AI on so that you get the kind of output that you need. So that is one example. Or some of the work we have done with major consulting firms around global enterprise AI-driven portals for customers and for internal use. Some of the bigger sales we have had to major hyperscalers for their own internal use, and then some of the partnerships that we have now got underway in the market with some of the brand name hyperscalers to bring the capabilities of products like Upland Right Answers and BAI into their customer base. So it is sort of a tale of two markets in that regard. So I think those products that can get positioned as enabling tech or systems of record or, you know, and in some cases, systems of process, will be more defensible, and others will not be. Jeffrey Van Rhee: Yep. Got it. Great. I will leave it there. Thanks so much. Operator: That concludes our Q&A session. I will now turn the call back over to Jack McDonald. Jack McDonald: Alright. Thank you so much, and we will see you on our next earnings call. Operator: Ladies and gentlemen, that does conclude our conference call. Thank you all for joining, and you may now disconnect. Everyone have a great day.
Octavio Alvidréz: Good morning, everyone. Thank you for joining us today. My name is Octavio Alvidrez, and I'm the CEO of Fresnillo plc. Here with me this morning, we have Mario Arreguin, our CFO. I'm joined also by our Chief Operating Officer, Tomas Iturriaga of the Central Region; and Daniel Diez of the Northern Region; and our Vice President of Exploration, Guillermo Gastelum. I would like to welcome to our full year results presentation. Before we begin, and as always, I would like to point out to our disclaimer, but I will quickly move to set out what we will cover in our presentation. I will take you through the investment proposition and some of the 2025 highlights and also our key recent HSECR initiatives. Guillermo then will go -- well, before then -- before Guillermo, Tomas and Daniel will provide an operational update from their respective regions. Mario will provide our financial update. Guillermo will talk us about resources and reserves. And then I will come back to close the presentation with some final comments and the outlook. I'm pleased with the performance of our business. As we have already reported, gold exceeding guidance and silver was in line with guidance. I believe this shows how we have stabilized our operations and are now in a strong position to capitalize on future growth opportunities. We remain, and this is going to be a continuous effort, very focused on control of the cost and mitigate the first initial signs of inflation that we see in our operations. Let's remind that in 2025, we achieved cost savings for $46 million through a number of initiatives, most of them and the majority of them in the Herradura district. But this will continue to be our focus in 2026. Of course, having the ounces and controlling the cost, even decreasing for 2 years, I would say, '24 to '25, and having in the ounces, we are enjoying the record prices and turning that into a record financial performance. In 2025, we delivered also on our mergers and acquisition strategy with the acquisition of Probe Gold in Canada. This is an outstanding asset, which added 10 million ounces of gold to our resource base, and we look forward to taking the right steps to develop this exciting project in due course. This goes along our strategy of acquiring quality assets. And in terms of exploration, we will see the Probe Gold acquisition to turn into a district for exploration for many years. Finally, we returned $950 million to shareholders in dividends, a record amount. So turning to our investment proposition. We are still the largest producer of silver in the world and Mexico's leading gold miner. We benefit from a large portfolio of high-quality assets with over 2 billion ounces of silver resources and 44 million ounces of gold resources. Let's comment that this does not include the most recent acquisition of our project in Canada, as we closed that transaction in January of this year. We have strong EBITDA margins and low costs and remain very focused on running our operations efficiently. This approach has seen us generate significant free cash flow of over $2 billion alongside very strong earnings per share, which has enabled us to reward our shareholders with strong returns in the form of dividends. As you can see, we have distributed 69% of earnings in 2025, well above our stated dividend policy. Though I should be clear, our policy remains in place. Some highlights on the financial performance. This is a record performance as we are announcing it today. Revenue was up strongly. But as you can see, our overall profitability was up sharply with significant margin improvements as we continue to focus on costs across the business so we can fully capitalize on the high precious metals price environment. And we have delivered considerable value to our shareholders, while retaining an extremely strong balance sheet. I should state here, we believe the strong balance sheet is a competitive advantage. We have generated significantly cash flow, returning value to shareholders ahead of our stated dividend policy, but we also continue to look for opportunities, which we believe will be value enhancing in the long term. And our balance sheet give us the flexibility to be able to act quickly if we feel our shareholders will be better served by other uses of capital, then, of course, we will act on that accordingly. Some few comments on gold and silver markets. We continue to see strong fundamentals driving demand for both silver and gold. As we have seen sadly this weekend, global economic instability, geopolitical tensions and trade disputes have increased demand for safe haven assets like gold and silver. We are seeing growing interest in precious metals as an investment class, which has boosted demand. Gold has hit record highs in the period, reflecting geopolitical tensions, while we are also seeing a strong underlying support from central banks. We expect these themes or aspects to continue for the foreseeable future. We have also seen increased demand not just from traditional drivers such as jewelry for silver, but in particular, in use in various industries, including electronic solar panels and automobiles, increasing industrialization has contributed to rising silver prices. And as we can see on the silver graph, I mean, it is one trend from 2018 to 2020, but increasingly use and demand from 2020 till now. So that is quite a healthy market, I would say, increased because the scarcity of silver projects also increased the foundations for this market. Finally, and most significantly, we are seeing supply constraints, as I mentioned, not only in gold, but also in silver. In short, we remain very confident in the outlook for silver and gold prices. Moving quickly to HSECR highlights. Safety is at the heart of everything we do. And as we can see in the graph, I mean, the trend is quite positive, decreasing the long-term injury frequency rates as well as total recordable injury frequency rates. But still, the two fatalities we had this last year is a strong reminder that we can -- we should continue putting across all of our operations, our policy and protocols and our philosophy, "I Care, We Care." So we continue and finally achieve a year with no fatalities. On the environment front, our work on improving our carbon emission performance is also ongoing as we work towards decarbonizing our operations, improving water recycling rates and upgrading our mining fleets. We achieved 78% renewable energy consumption in the period, ahead of our target. As I said before, we are not still increasing that target as we have some other mining projects that will increase our footprint. And therefore, that target remains at the same level that we have stated at 75%. On community relations, in particular, I would like to highlight local health campaigns where we have provided nearly 7,000 medical consultations and our new water initiatives on San Julian in partnerships with Metals for Humanity. As I highlighted before, our relationship with our communities is central to our license to operate, and we continue to make a huge contribution to our communities, both in terms of investment, employment and taxes we pay. I now would like to turn the presentation to Tomas Iturriaga and then after to Daniel. Do you want to present over there or... Tomas Iturriaga-Hidalgo: Okay. Thank you, Octavio, and good morning, everyone. So let's move to the following page here to start giving you some color on the operations performance. I would say that accounting for the different realities of the -- and challenges of the three mines, as a whole, the Fresnillo district had a solid year, meeting production expectation and achieving relevant progress in the different projects across mines. Getting to the mine-by-mine details at Fresnillo, we managed to stop the production decline that we have seen during the past 2 years with the silver grade increasing 10% year-on-year. That offset by a throughput decrease of the same magnitude due to lower bandwidth and/or shorter stope lengths at the San Alberto, Santa Elena and Candelaria areas. I think we've made significant progress adjusting our mine operations to the new reality of the mine at depth, improved our dilution control discipline as seen in the silver grade increase year-on-year. During 2023, it's key that we advanced development of and mine infrastructure at San Mateo and San Alberto areas required to support grade and throughput increases expected in 2027 and 2028. We saw good results at Fresnillo in the reserves front with 20 million ore tonnes at almost 200 grams per tonne of silver in reserve and most of it in the proven category, replenishing mine tonnes during the year and adding some to the reserve inventory. Moving into Saucito, another solid year at Saucito in terms of production with a very slight decrease in silver production due to lower volume processed, mainly driven by lower equipment availability and some delays on ventilation robbins due to permitting. Development meters were also impacted during the year by these same factors. But as we already have obtained the permits for these ventilation robbins, and we have established a very rigorous availability program improvement with our mine equipment OEMs. We are expecting an improved 2026 performance. Lead and zinc production were both strong at Saucito, helping a good financial result at the mine. Key for this year will be the interconnection of the deepened section of the Jarillas shaft is scheduled to be completed by Q3 this year, for what we need to shut down the shaft in a couple of weeks with some impact to this year's production and cost. But very positive impact expected starting in 2027 and on. So once we have this project conclude, we should see improvements in our cost per tonne due to decreased haulage. I think the team did a very good job keeping the operations stable and under control at Saucito, which is becoming a complex mine to manage. We saw also good results in the reserve front at Saucito with almost 17.5 million tonnes of ore at above 200 grams per tonne of silver and also most of it in the proven category. Finally, on to Juanicipio, where we had another very good year of operations with production of silver and the rest of the byproduct metals right or above expected levels and considering that silver grade decrease was expected and accounted for. So it was not a surprise, good year at operations. For this year, the conclusion of and commissioning of our underground conveyor project scheduled for midyear. It's very key. We will need to shut down the San Jose del Bajio, main haulage ramp for the installation of this conveyor, which is going to impact our cost this year, but we'll see relevant cost benefits starting in 2027 and on. Good result also in the reserve for -- in the reserve front at Juanicipio. 10.3 million tonnes of ore in reserve at about 200 grams per tonne of silver, pretty much all of it in the proven category. So efficiency and improvements and cost control initiatives will continue to be a focus in the district for this year. And just to counterbalance the inflationary pressures as well as exchange rate pressures. So we will keep a very disciplined approach to cost and efficiency. And just to reiterate that I think we have a strong performance at the Fresnillo district all-in-all for the year. Thank you. On to my colleague, Daniel Diez. Daniel Diezas: Thank you. Good morning, everybody. Happy to present the results of the operations in the Northern District, starting with Herradura. This was a very solid year in terms of results, consolidating the efforts on optimizing our operation and stabilizing first and now starting the process of growth and to optimize the installed capacity that we have for the coming years. First of all, our annual gold production was significantly above expectations, both on target and the overall guidance. As you see, this was a strong support for surpassing the company guidance for 2025. A slight decrease compared to previous year, 1.2%, but as mentioned, was above our internal expectations. So all-in-all, a very solid year in Herradura. The foundations of the results are the operational excellence and cost control initiatives that we started in 2023 and were consolidated in 2024. In particular, I'm highlighting this year, together with the efforts of the last year, mostly around the mine side of the operation. This year, in particular, we put a strong focus on optimizing the drilling patterns for increased recovery that was becoming one of the issues in our heap leach and also some enhancements on the DLP plants for throughput increase, supporting the results that we have right now. In parallel, we are executing several structural projects to optimize our operation. The first one that we started, it's the construction of the new Carbon in Column plant that we are finalizing that during this month. And in parallel, we are working on the engineering for the Sulphides Crushing Circuit and for the ADR plant that we expect to have built and operating during somewhere next year. Some capital deployment, it's included, and you see some increase in our overall capital profile. The structural projects that we are executing in Herradura, together with the sustaining, we are totalizing around $170 million for this 2026. These projects that I'm mentioning here, all of them have been strictly evaluated. All of them have between 8 months and 1.5 years of payback period, so are very accretive in terms of returns for the company is what we're trying to do, continue a very strict capital allocation policy, trying to invest in smart investments to optimize our operations. And in particular, in 2026, we have a strong focus on the district optimization. We have been explaining and communicated the view that we have in Herradura as a new gold-producing district. In this year, we are going to finalize the integrated planning, including all the assets that we are putting into production that we'll mention later on and maximization of the returns on the installed capacity that we have there. Moving to Cienega. Cienega, we had a more difficult year this year. 2024 was very successful. In 2025, we experienced some specific issues around metallurgy that hit us mostly on silver production. As you can see, we decreased from 4.8 million ounces on '24 to 2.8 million during 2025. However, the good news is that, that was specific to one zone of the mine that we expect to deplete during the first half of this year. So after that, that specific problem will be solved. In exploration, we're very happy with the results that we're having. I think we mentioned this on the previous announcement during midyear, the new discovery on a new high-grade gold zone called Victoria Complex, has been starting to deliver results starting in Q4 2025, and it's going to be the base of production for '26 and '27 in Cienega. And we also have some optionality through a few satellite deposits, in particular, one that we are finalizing to engineer and going through the permitting process to hopefully being able to complement production from Cienega. In terms of cost profile in Cienega, it's higher than expected due to lower production. However, during this year and next, we expect to be below $2,000 all-in sustaining cost with, which is still very healthy in terms of margin and still accretive as part of our portfolio. And finally, in San Julian, also a very positive year. If you recall, one of the main challenges in San Julian for us was to being able to transition successfully from the operation with two deposits and plants to only one. That has been done with very positive results. In terms of production, we have surpassed gold production and sustained silver production, which is very good. In terms of unit cost, as expected, it is slightly higher because operations in Vein is slightly more costly than operating the DOB. However, it's within the range that we set as a target that was having an all-in sustaining cost below $20, and we delivered $19.8 during 2025. So we're very happy with the results. And also on the exploration side, some very good results on exploration and new discoveries. We expect to extend the mine life in San Julian. The current life of mine goes all the way up to 2030. We expect to extend that lease for 2 additional years, and we continue to have new discoveries. So we have an operation that is well controlled in terms of cost performance and also with possibilities to extend. So it's also a good part of our portfolio. Handing over to Guillermo. Guillermo Gastelum: Good morning, everyone. Well, a few comments about our resources and reserves. Most of it is all good news. And I would like to remind you that the number that you're looking at are current as of April 2025. So those numbers have not benefited yet from the current higher precious metal prices. We took a hit though of minus 8.5% in our silver resources due to the application of the RPEEE principle, which is being required, we formalized later on this year as a requirement for the disclosure of resources, that's a reasonable prospectus of eventual economic extraction. So we lost -- we lost some silver resources. However, on the other hand, the remaining silver resources have a much higher probability to be converted into reserves in the future. The rest of the numbers are very positive. The resources in gold grew 14%, mostly due to good exploration results at the Herradura district and at Lucerito and other projects in Mexico. On the reserve side, the silver reserves grew 9.4%, as you can see. So most of the reserves were replenished at the Fresnillo district. And also our gold reserves grew 7.4% mostly coming out from the Herradura district. So those are good numbers. And as Octavio mentioned before, this number do not include any of the new resources that we came to Fresnillo with the acquisition of Probe Gold. Highlight for 2025 was, of course, the acquisition of the Canadian junior company, Probe Gold, which has a very significant asset at one of the premium locations of the Val d'Or mining camp in Quebec, along one of these major structural breaks that cost millions of ounces of several other mines around. So the Novador project, that's a flagship asset now of Fresnillo in Canada is located about 25 minutes drive east from the Val d'Or town site. So it's an excellent location. So overall, this acquisition is adding around 10 million ounces of gold resources, and most of them are located in the Novador project, which has a good potential to be -- well, and we are going to turn it into a producing asset, expecting to deliver in 2030 -- 2032, if I'm correct. So very importantly, we have continued the work that was being carried out by Probe Gold. We are drilling right now, and we have good plans for additional geological and geophysical studies in the rest of the properties. I would like to highlight a couple of issues here that this acquisition didn't come only with Novador, but with a significant land position in two major mineralized gold belts in Quebec. It's very important to say as well that the -- after the transaction, the key personnel of Probe Gold was retained. So -- and most -- and basically all of the professionals and technicians working at Val d'Or are now working for Fresnillo. So we haven't had any issue in continuing the operations and the exploration plans at Val d'Or. Now a few comments about some highlights of what we did in 2025. We spent $175 million drilling slightly over 800,000 meters overall in all of our projects in Mexico, Peru and in Chile. As usual, we have a very strong focus on brownfields exploration. We allocated about 80% of the budget to brownfields, which is coming out of the normal, say, exploration programs by the mine exploration teams following their targets of converting resources, adding new resources to the mine operations and also infill drilling in the reserves to increase the certainty of the reserve for medium- to long-term planning. And the remaining 20% was allocated mostly in the advanced exploration projects such as Guanajuato, Orisyvo, Rodeo, Tajitos, and the emerging Lucerito project, which is delivering good results in the latest exploration. So, all of this work is supported by a significant land that we owned -- in the land concessions that we own in all the countries where we operate, we can see the numbers to the left of the triangle there. And our focus for 2026 will be an increase of the exploration budget up to $308 million. Now we're seeing a shift of more investment being put in the advanced exploration project and 35% of this total budget will be devoted to the advanced exploration projects that you see in the upper levels of the triangle, like places like Valles, Noche Buena at the Herradura district and also the Herradura underground also in Herradura and the other advanced projects I just mentioned. But also some investment will continue to be made on the early-stage projects to keep our portfolio alive and dynamic with the -- still the brownfields around San Julian and Fresnillo and some of the projects that we have in Peru and Chile and now in Canada. We'll finalize this slide just by mentioning that we continue to have the deployment of regional prospecting teams in the four countries where we operate, trying to advance new projects to make -- to show some progress or to make decisions as to optimizing the land that we control. Okay. Having said that, now we will turn into a more detailed description of our project pipeline, and we will start talking about the brownfield projects. And of course, you all know that the advanced exploration projects are now being sponsored and championed by our COOs. So, we will start out of Valles. So I will hand this over to Daniel. Daniel Diezas: Thank you, Guillermo. As mentioned before, part of the efforts of optimizing our portfolio, in particular, on the Herradura district is about capturing short-term opportunities and increase value where possible. What you see here, and I think this is the first time in some time that we present what we're doing in the different projects, it's exactly that. What opportunities we can capture in the short term while we keep -- we remain optimizing our portfolio and our production profile in the district moving forward. To begin with, we have Valles. Valles is an underground operation that will run in parallel with Herradura. We are pretty much starting production next year. We completed the detailed engineering during the last year and the beginning of this one. The operational model is completed, the section that will be operated by contractors. So we have selected our main contractor in there as well. And the rehabilitation works in the underground mine will start on Q3 this year. We expect production to commence by mid-2027. And the expected average production will be in the range of 60,000 to 80,000 ounces per year. That will be processed through the same processing facilities in Herradura. So it's going to be an increase in gold ounces through higher grades by using the same capacity. So the capital is very limited, a very accretive project that we expect to have running for 7 years with a possibility to extend the mine life through exploration that depth is still open. So we're very excited about Valles coming online. On the right-hand side, Noche Buena. Noche Buena, as you probably know, it's an open pit that operated up to 2022, where the reserves were depleted at that point in time. Some potential remained. So we kept analyzing opportunities. And together with some good exploration results and the new price scenarios, we rerun an evaluation, and we are actually restarting operations. We expect early next year. We have completed the studies for that. We expect an average production of between 40,000 and 50,000 ounces additional for the next 8 years in Noche Buena. So another very good news for the district and for the production profile of the company. This is not included in our forecast so far. That is in the short term. And by the end of the presentation, Octavio will show a general time line of our project pipeline. But in the longer run, as we mentioned before as well, we have Herradura Underground that is the main portion of the deposit at depth. We completed conceptual studies. This is on earlier stages. So we expect production between 120,000 and 160,000 ounces per year. This is a longer implementation project. It requires some development in the open pit in order to be able to start. So we expect to start by 2031. We have scheduled the definitive PEA during 2026 as part of the exercise that I mentioned before around the optimization of the district. And with this new long-term view of prices, what is the right transition between open pit and underground and how they coexist in the long run. We expect to comment on that by midyear this year. And finally, it's a greenfield, but also part of the Herradura district is Tajitos. I will leave to Guillermo to comment a little bit on that one. Guillermo Gastelum: Thank you, Daniel. Well, Tajitos is a disseminated gold deposit, very similar to Noche Buena. It's located in the Herradura district, as already mentioned, and it has a resource around 1.1 million ounces, most of it in the indicated category. So that's the -- for us the Tajitos as we know it now, but in 2025, we discovered additional mineralization west of it. So the district is much larger. We have -- we are exploring a vein system, which is outcropping that has very good gold grades and is amenable to underground mining. And also, we have defined additional exploration targets for disseminated mineralization west of the non-resource. So that's a good news. And we will be advancing studies at the PEA level in the first half of this year at Tajitos. Now moving forward. And in this slide, you are seeing the advanced greenfield projects. Starting off with Rodeo, you'll just mention a few words before letting Daniel go into the details. Rodeo is also a disseminated deposit. It's not much a vein-type. It's a different style of mineralization hosted in volcanic rocks, which are thoroughly oxidized through depths in excess of 300 meters, which is -- allows for very good metallurgical recovery and also has good exploration potential, and we have four rigs spinning right now at Rodeo looking for additional mineralization at this project. So Daniel, would you like to continue on the plans? Daniel Diezas: Yes, quickly around. As you can see, we have been making significant efforts in order to optimize and put more focus on the development of our project's portfolio. Rodeo is one example. It's an open pit, as Guillermo commented. During 2025, the focus of what we call an advanced PEA was on two fronts. The first one was extension and metallurgical drilling, and we successfully completed a campaign with 25,000 meters with good results. And the second objective was the metallurgical test work. That is the key for a Heap Leach operation. We completed that, very detailed test work for a PEA, and the results are quite promising. So we're very confident on what's coming for Rodeo. That just was completed in December this year -- last year. So we are starting by the end of this month, the PEA study for the optimization, and we expect to have that completed before the end of Q2 this year and hopefully start the PFS stage moving forward. What we expect out of Rodeo, it's a production for what we know now, we think we have a possibility to slightly increase. But what we know now is between 75,000 and 90,000 ounces of gold per year, potentially starting in 2029 with a life of mine of between 8 and 9 years. Guillermo Gastelum: Then moving on to the next project, which is Guanajuato, Guanajuato Sur. Remember that Guanajuato is a historical mining district located in Central Mexico. But now we are exploring in new parts, new portions of this district where significant silver and gold veins have been discovered, brand-new structures, which were discovered by the use of epithermal methodology for going about exploring this type of deposits. And we had a very successful 2025 exploration results. So Tomas, would you like to comment on the progress work? Tomas Iturriaga-Hidalgo: Thank you, Guillermo. So during 2025, we concluded conceptual level studies with excellent results. This is a high-grade silver-gold project, very strong on the financial side at the conceptual level, very well located, rather accessible land, flat land at a very mine-friendly state as Guanajuato. So we're very excited with the results of the conceptual studies. We have selected already the ramp development and shaft sinking technology. Those are the critical path items in the project. So, we have already selected the technology and we are proceeding with detailed engineering of those pieces of infrastructure. We will immediately continue to pre-feasibility level studies this year. And like I said, very, very interesting project. Potential is still open. The geological potential is still open at length and depth. So that's why Guillermo and his team are focusing very heavily on exploring the site. And the expected start of the production is by 2033 at this point. Do you want to comment Orisyvo, let me tackle that? Guillermo Gastelum: Yes. Just let me mention about Orisyvo that is also significant that you've seen this name around for some time, is a significant disseminated gold deposit, the largest of its type ever discovered in Mexico. But fortunately, this system, which costs around 10 million ounces of gold has a core of higher rate, and that's been -- that we are targeting now. And that's -- about these studies, Tomas will continue on explaining. Tomas Iturriaga-Hidalgo: Yes, Orisyvo. So this is a gold project up in the mountains in Chihuahua, as you know. During the year, we concluded the pre-feasibility A studies. And given the capital intensity of the project and some OpEx requirements, we decided to do a third-party review of that pre-feasibility A with very good results. We were able to -- during this review to improve the project economics. So we will continue to pre-feasibility B during the year and advanced permitting engineering, which at this point is a critical part of the project, the permits. So we are already on it. Expected average production of Orisyvo is between 180,000 and 220,000 ounces of gold a year, also with the start projected for 2033 at this point. Guillermo Gastelum: Okay. I will finalize this section just by adding a few words on Novador. One of the targets when we get up to Val d'Or, and after the acquisition, it was not to disrupt the activities that were in progress. So we were able to continue the exploration drilling. As I said, we have six rigs now in operation and also a very strong focus, of course, on the development of Novador. And for that reason, we have a number of consultants, which are supported by Fresnillo's technical services team to continue to advance the pre-feasibility level studies. So we are expecting results of the pre-feasibility by midyear, around July. And a little mistake there, production is scheduled to commence in 2032. So I think with this, I will hand the microphone over to Mario Arreguin. Mario Arreguín: Thank you, Guillermo, and good morning to all of you. So, it's always a pleasure to be back here in London and to have the opportunity to share with you our financial numbers, especially when those numbers are record high numbers. So it's easier. As you can see in the lines which are highlighted in yellow, gross profit was above last year by 114%. Operating profit was 142% above last year. Profit for the period was almost 600% above last year and EBITDA was above 81% last year. So very, very good numbers. But let me start with gross profit. Again, as you can see, we were up by $1.4 billion. And here, what I would like to touch on are basically two line items. One has to do with adjusted revenues, which grew up by $1 billion. And that combined with the fact that we have a lower adjusted production cost compared to last year of almost 11%. Well, that resulted in great margins for us. So let me start again with adjusted revenues. Okay. As you can see from this slide, in terms of sales volumes, as expected, and this was included in our guidance. Volumes sold were lower compared to last year. In the case of silver, we sold 11% less, which had a negative effect of $293 million. We sold less gold by 4.5% compared to last year, which had a negative effect of $94 million. So in general terms, in terms of sales volume, the total effect was a negative $429 million. Fortunately, that was more than compensated by the higher average prices that we saw both in gold and silver. In the case of silver, (sic) [ gold, ] silver (sic) [ gold ] went up by 44%, the average price, which had a very positive effect, of almost $651 million. And silver went up by 51.5%. As a matter of fact, the average price of silver (sic) [ gold ] last year was $43.6. And currently, the spot price is almost twice that for this year. So things are looking good. And like I said, that had a positive effect of $781 million. Let me share with you the main reasons behind the decrease in the adjusted production cost. And let me start first with the factors that are outside of our control. For example, in column #5, you will see the favorable impact that the devaluation of the Mexican peso had. We're talking here about the average exchange rate for both years. So the average exchange rate in 2024 was MXN 18.3 per dollar. And in 2024, (sic) [ 2025, ] it was MXN 19.22. So that translated into a 5.1% devaluation, again in terms of average exchange rate. Because I'm sure you've all seen that the peso has been coming down quite substantially throughout the year. However, what we take into consideration is the average exchange rate. So that had a positive effect of reducing our cost by almost $52 million. Now when you combine that with the other factor, which is outside of our control, which is basically shown in graph #1, cost inflation, excluding the effect of the exchange rate was 3.2%, that had a negative effect of $45.8 million, which pretty much offset the benefit of the devaluation. But still, net, we had a positive effect. And let me just go back to the previous slide. This is what we call our consolidated cost inflation, which basically takes into consideration our own consolidated basket of goods and services. And when you combine the two effects, the exchange rate effect together with inflation, this is what we obtained for 2025, a 0.24% deflation, if you will. So fortunately, for us, in 2025, inflation was not an issue when you look at it in dollar terms. So to sum it up, when you look at the increase in gross profit of approximately $1.4 billion, there are two bars that stand out here. Clearly, prices, the higher prices shown on the #1 column, had the most important impact, which was estimated at $1.4 billion. And again, if you look at bar #9, that was a bit offset by the lower sales volume that I just mentioned. Other favorable aspects were the lower depreciation that had a benefit of $129 million. The lower treatment and refining charges, which are worth mentioning because it's been a very favorable market for us, and that had a positive effect of $60 million. The devaluation, which I already mentioned, $52 million. And the rest are smaller numbers, but you can see them in the graph there. Let me just go back to the income statement to comment on a couple of line items. I'm not going to go through each one of them, but worth mentioning here perhaps is the exploration expenses line, which was $174 million. I would say, invested in exploration, which was 6% higher compared to that last year, and that was again expected. Actually, we were below what we had budgeted of close to $187 million. And one additional line item that I would like to comment on is the income tax expense. And I guess maybe some of you may be wondering why income tax expense decreased by 19% when profit before income tax increased by almost 180%. That's a bit strange for some. And the answer to that is, and I'm sure you're familiar with this now because this has been happening for some years now, is the effect of the exchange rate on the deferred taxes. For example, in 2024, if you look at the $390 million tax expense that we recognized in that year, this is equivalent to an effective tax rate of 52.5%, which is way above the 30% statutory tax rate. What happened there? Well, we had an initial exchange rate back then in 2024, at the beginning of the year of MXN 16.9 per dollar and a year-end exchange rate of MXN 20.8 per dollar. So we had an important devaluation, which resulted in this effect in recognizing a 52.5% effective tax rate. Whereas in 2025, we had exactly the opposite effect. The beginning exchange rate was MXN 20.8 and the year-end exchange rate was close to MXN 18. So that's the reason why you see this effect. The exchange rate is generating a lot of volatility in this line item. And I guess, it's bit difficult for my friends, analysts to be able to predict this. You would need to have a lot of information in order to model this. But I just wanted you to be aware of this. Moving now to the cash flow statement. Okay. So what I would like to point out here is basically in the first column at the bottom, a record high cash balance at the end of the year of almost $2.8 billion, which compared to our initial cash balance of almost $1.3 billion that resulted in a net increase of almost $1.46 billion. Main source of cash, of course, is the top line, the operations, which generated $2.8 billion, almost 80% higher compared to last year. I think it's worthwhile commenting on some of the main uses of cash. And of course, one that I believe you would be interested in getting a little bit more detail would be the third line, which is income tax special mining rights. And as you can see, we had a very important increase from $97 million in 2024 to $369.5 million this year. Let me just remind you that in this particular line, we have three items that make most of this. One has to do with the provisional tax payments that are done on a monthly basis from January to December and which is basically an advanced payment of taxes related to 2025. That alone was $250 million compared to the previous year, which was only $98 million. The other item, which is important is the year-end tax return that we do in March and which is related to the previous year. So what you do is you calculate your taxes and net the previous year provisional tax payments and you only pay the net amount. So in March 2025, we paid $72 million corresponding to the 2024 fiscal year. compared to only $5.4 million in 2024. And last but not least, is the special mining right corresponding to 2024 again, but it's paid in March 2025. And here, we're talking about $63 million. So those are the three main items which confirm this number here. I do want to make you aware that in 2026, provisional tax payments will be higher. Remember, provisional tax payments is a factor that you apply to your revenues. So with higher prices, higher revenues and a higher factor, because it will be based on the 2025 tax payments, you can expect to see higher provisional tax payments. And in March, when we conclude our tax return for 2025, the provision tax payments that we made in '25 will not be sufficient to cover the year-end final calculations. So you can expect that in March, we will have a very important cash out to pay for taxes, just to make you aware of that. Of course, another important use of cash was CapEx, $400 million. Dividends paid to our friends at Pan American in December, $105 million, minority shareholders of our Juanicipio project. And of course, dividends paid to our majority shareholders of $654 million. Lastly, and to close, I never make many or any comments on our balance sheet. But I thought it would be worthwhile pointing out the line that you see in yellow there, which is basically short-term liabilities, which grew quite substantially from $339 million to $903 million, almost $500-and-so million, and that's precisely related to tax payments that we will make next year. So again, just to make you aware of that, so you can include that in your cash flow projections. Other than that, very sound balance sheet, of course. And now moving on to something that I think is more of your interest, which is capital allocation. Let me start by saying that our dividend policy remains unchanged. And you know our dividend policy has been historically since we did the IPO to pay out between 33% to 50% of our profit after tax, after making certain adjustments, of course. But even though we have that range, we should point out that we have always paid a dividend of at least 50% or more. So that range is really just conceptual because we have paid at least 50%. In 2025, we have just announced a total dividend of $950 million, which is above our traditional dividend policy. In other words, it's above our 50% policy. And this is made up of $797 million final dividend that we just announced, together with the $153 million interim dividend that was paid back in September last year. So as I just mentioned, we closed the year with $2.76 billion. But just bear in mind that some of the important uses of funds that we see -- of course, payment of the final dividend, which will be made in May of approximately $800 million. Our CapEx budget for this year is $765 million. The acquisition of Probe Gold, which was paid in January this year, required $550 million. And our exploration budget for this year is $308 million. So that adds up to an important amount of money. Just to continue with capital allocation. Over the next 5 years, we are prepared to invest around $3 billion in growth projects to align with our project time line. These are basically all the projects that you are familiar with in our pipeline. And just in the next 5 years, if everything goes as planned, we would be requiring around $3 billion. Of course, we will continue to analyze opportunistic acquisition targets with a long-term view and in accordance with our very strict returns criteria. We will follow a criteria similar to the one that we applied when we purchased Probe Gold, right? And in line with market expectations, we remain bullish on precious metal prices, although our balance sheet strength and cash generation ensure we are prepared for the cyclical nature of prices. You never know when those prices may come down, and we need to be prepared just in case. And lastly, we maintain our disciplined approach to capital allocation. And if the strong price environment persists by year-end, we are committed to shareholder returns. So with that, I will pass it on to, I believe, Octavio. Octavio Alvidréz: Thank you, Mario. Just a few words on our outlook before turning to your questions. And as we see here, I mean, 2026, we see it as a transition year, very specific aspects that have affected our guidance for silver in 2026, as Tomas mentioned, in the Fresnillo district. Fresnillo, we are preparing zone of the area in the mine. And this year, we are not bringing those higher grades from that area. And also the connection of the Saucito shaft in addition to what Daniel mentioned also in Cienega, Cienega is turning into more of a gold mine than silver, a lower production there. But then after having that or be better prepared in Fresnillo and with the connection of the Saucito shaft, we are expecting to increase the silver production '27 and '28. Gold as well, another transition year, I would say, in the Herradura district. But the good thing is that in 2027 and 2028, we are expecting to bring brownfield project production that has the best returns, lower investment and those ounces will be there through Valles and Noche Buena as well. As well as higher production in Herradura. As you can see on the base metal side, I mean, higher zinc production coming out of the Fresnillo district as we go to deeper areas as well. On the CapEx side, and Mario mentioned part of that. I mean, we are preparing or making additional investments across our mines, as well timely so that we continue to have a strong position and a strong production outlooks at each one of the mines. As we mentioned, we are also increasing in 2027 and 2028. In the following years, '27 and '28, lower CapEx expected. And as you can see here, I mean, we have adjusted our timetable for the different projects described by Tomas, Daniel and Guillermo. This is a more sensible table or time table according to longer permitting process in Mexico. But as we stated that 2 years ago, our focus was going to bring initially brownfield production. And you see reflected production from Valles, Noche Buena, and whenever we are at a deeper area in Herradura pit as well and bringing stronger projects in Rodeo, Tajitos by '29-'30. And Novador is reflected there, as Guillermo mentioned, the outlook to bring that into production, Orisyvo and Guanajuato. I would like to finalize this chart by saying that one more of our very important strategies is to operate in districts, in which we can be operating for many years. We have, as you know, the Fresnillo district, Fresnillo Saucito and Juanicipio for many years. The Herradura cluster of the Herradura district as well is proven to be the case, a strong gold production. In the future, we have Guanajuato in which we have identified, as Guillermo mentioned, not only the project, Guanajuato Sur, but also several targets from the historic areas of Guanajuato into the south to our project. And one more is Novador. Novador is coming not only with those 10 million ounces in resources, 8 of those in the Novador project, but also a large exploration package that has identified already some exploration targets for many years to be explored as well. Just to conclude, I mean, we have record financial performance for Fresnillo this year. We have been able to capitalize on a higher precious metals price environment with a stable production performance, combined with a strong cost control for 2 years despite inflationary pressures. As a result, we have delivered considerable shareholder returns, including a record dividend payout in 2026 of $950 million. We are also making good progress on our brownfield development pipeline with the ounces that provide a better return. And we are also advancing the greenfields, as we mentioned. And with that, I would like to turn to your questions. Yes, Jason? Jason Fairclough: Jason Fairclough, Bank of America. A couple of questions, one for Mario and then one for Tomas. Mario, I mean, strong numbers. And then on top of that, it was a big beat versus consensus. And it just seems to be in the revenue line. And I think maybe part of that is TC/RCs. Maybe we didn't realize how much better they were getting for you. But is there something else going on in the revenue line there? Did you sell more metal than you produced? Tomas Iturriaga-Hidalgo: No, we did not sell. If you look at the variation in inventories, actually, it increased. So we didn't sell more than... Jason Fairclough: Was it provisional pricing then or... Mario Arreguín: It's purely pricing. Purely pricing. As you saw, actually, we produced less, sold less volume. So the real reason behind our revenue increase is prices. Jason Fairclough: And in terms of the TC/RCs, is this the new normal? Or could they go down further? Mario Arreguín: Well, it's hard to predict how treatment charges are going to behave. But during the last 3 years, we've seen a downward trend, pushed a lot by the Chinese. It's putting a lot of pressure. And one of the things that we are concerned about, that you mentioned it, is the possibility of this continuing and the Chinese getting more market participation. And if some of the smelting and refining companies go out of business and with the Chinese have all the -- gather all the basically all the volume that might have a very unfavorable and sudden change. So we have to watch this very carefully. Jason Fairclough: Just a quick one... Octavio Alvidréz: That is correct, Jason. And I would say, I mean, that trend, as Mario mentioned, continues. We operate on a long-term agreement with Met-Mex. And when you compare -- I mean, those long-term agreement treatment charges and refining charges for silver continue to trend lower, but it's still a difference to the spot treatment charges that are quite very different. Jason Fairclough: Just to add, Tomas, a quick one. So quite a different trend in cost per tonne between Saucito and Fresnillo. I think Fresnillo was up 17% year-on-year and then Saucito down 10% year-on-year. Again, is this the new normal? Or is there some one-off effects in here? Tomas Iturriaga-Hidalgo: I would say Saucito is a one-off, and we're going to see probably a bit of an increase this year because of the cost related to hauling while we interconnect the shaft. And Fresnillo tends to be normalizing at those levels. Jason Fairclough: So we should think about it being normalized at these new higher levels, cost per tonne, even by volume? Tomas Iturriaga-Hidalgo: Yes. The volume is impacting and that's a normal level. Octavio Alvidréz: Daniel? Daniel Major: Dan Major from UBS. First question, just looking at the project pipeline and your outlook for CapEx. It seems like, again, we appreciate the more details on the projects. But if I look at Page 38 and 39, those of us that have been following the company for some time, these charts look fairly familiar. And then most years, the one on Page 39 moves a little bit further to the right, and really the Canadian projects, any new one in there. I guess the first part of the question, what is included in your CapEx guidance, production guidance in terms of the pipeline of projects? Is it just the two brownfields that are entering production? Or what else have you factored in? And then I guess to add to that, you've identified $3 billion of potential spend. What is -- how much of that is included in your CapEx projections for '26 to '28 already? And how much is incremental upside, assuming the projects move forward? Octavio Alvidréz: Yes, you're right. I mean, as I mentioned it, I mean, this is a more sensible thing in terms of timing, how to develop the next projects. But as we have stressed and we are achieving that, initially, as we were realizing the greenfield projects were going to be -- take a bit longer to be developed, we prioritized the brownfield production, Valles and Noche Buena, which is a good surprise. And then a more sensible approach to the rest of the greenfields. So on the CapEx side, in 2026, we have the shaft connection in Saucito. We have leaching pads in Herradura and the carbon project, the carbon recovery gold project in Herradura and also the conveyor belt in Juanicipio. Also, we continue to put some studies and in Orisyvo and also in Guanajuato Sur as well, as Daniel mentioned, that is included there. But the only one CapEx investment reflected in 2026 that will provide additional production is what we are investing in Valles in 2026. Daniel Major: Sorry, just to follow up on that. So if Valles is the only one out of the $3 billion bucket, is it fair to say that if the projects progress as you suggest, you've got sort of $600 million, $800 million per annum upside to what you're guiding in CapEx out to 2030? Is that the right way we should be thinking about it? Octavio Alvidréz: The right way to see it is with the time line of projects, for example, Rodeo, which is pointing to the start of production in 2029, 2 years or 1.5 years, you will start to see the deployment of the CapEx that we will provide at some other time, at Tajitos as well. But I mean the large majority of that CapEx that Mario mentioned would go with the higher CapEx projects such as Orisyvo, Guanajuato, Novador at that time, yes, in some 4 years, 5 years to come. Daniel Major: All right. And then just next question, one for Mario. On the tax side, quite complicated. Could you just provide us some more basic guidance? What would you expect cash tax and P&L effective tax rate to be in 2026 if current prices stay the same? Mario Arreguín: I would expect in terms of income tax recognized in our income statement. Again, it depends on the exchange rate. And I've been very much surprised by the strength of the Mexican peso. As you can see, currently, it's around MXN 17.4 -- MXN 17.3 per dollar. So if that continues to be the case and it remains strong, then you will see, again, another revaluation of the Mexican peso this year. So that might have, as a consequence, again, a lower effective tax rate compared to the 30% statutory tax rate. But having said that, you never know. We've seen some volatility if the peso at the end of the year because what you take into consideration is basically the end of the year spot exchange rate. It depends on that. But assuming no exchange rate effect, zero, which is a very important assumption, then we would expect to see something close to 30% effective tax rate. Daniel Major: And the cash tax, I noticed that the increase in provisional tax payments increased by $565 million. Mario Arreguín: Cash tax. Okay. As I mentioned, we will be finalizing our tax return in March this year for the 2025 fiscal year. And there, just for that, we are expecting something close to $500 million just to add to the provisional taxes that were paid in 2025. That's related to that year. Now during 2026 from January to December, we will be paying the provisional tax payments as an advanced tax for the 2026 fiscal year. And those are going to go up quite substantially. Why? Because of the higher prices? I said this is a factor or a percentage that you apply on revenue. If we foresee the current spot prices being maintained throughout the year, that will translate into higher revenue with a higher factor, so higher provisional tax payments. That will have an effect on the cash flow, not in the income statement though. Daniel Major: Okay. So somewhere in the region of $500 million cash tax more than the P&L tax. Is that the simple way of thinking about it? Mario Arreguín: $500 million more? Daniel Major: Yes. Additional cash tax to the P&L tax? Mario Arreguín: Yes. Marina Calero Ródenas: Marina Calero from RBC. A couple of questions on my side. Can you give us a bit more color on the trends that you're seeing in your sustaining CapEx? Is it fair to assume that $600 million is the new normal you need for to sustain production at your operations? Octavio Alvidréz: For 2026? Marina Calero Ródenas: Yes, and going forward as well. Octavio Alvidréz: And going forward. Yes, for 2026, let me -- I mean, as you know, I mean, the majority is mining works. And that has not varied because the development rates at our mines, underground mines keep at a similar level, approximately $180 million, sustaining, $250 million to $280 million more or less. Tailings dams, I mean, that's a large part of our investments every year. In 2026, we continue to do tailings at Saucito, at Fresnillo, Herradura as well. So that's a large investment, approximately $150 million or so. Then the projects that I mentioned at Saucito, Herradura and Juanicipio, very much, I mean, you -- and then the investment for brownfields and greenfields, as I mentioned, is Valles, some in Orisyvo and some in Guanajuato. Yes. And then after, I mean, as we have already in 2026, invested in tailings dams, that will -- CapEx will decrease in 2027 and 2028. The connection of the shafts and the other conveyor belts and everything, I mean, we will not have that, and that's why the CapEx goes a bit lower and also a sustaining part as well. Marina Calero Ródenas: Just one follow-up on that. If I recall correctly, your old guidance was roughly $500 million for this year. How do you explain the difference to the $760 million that you're guiding today? Octavio Alvidréz: Yes. What we used to mention before was for the set of operating mines, sustaining and mining works and everything should be around $500 million, $550 million per year. Daniel Diezas: Marina, on the addition of Valles to the portfolio that is already included in these numbers. It requires around $40 million per year in mine development just in Valles. So that tops off on the $500 million guidance that we provided before. Marina Calero Ródenas: Okay. That's very helpful. And just one final question. On M&A, you commented that you keep looking for opportunities. In which jurisdictions are you finding more compelling opportunities? Is it Mexico more attractive relative to the rest of the world? How are you thinking about that? Octavio Alvidréz: Yes. We continue to see the projects in Mexico. There are some good discoveries in silver. We continue to see mostly in countries with geological potential, of course, and the mining culture. You know that we've been exploring in Peru and Chile for quite some time. This year, we are starting drilling in Peru in some of our very interesting projects there. But for M&A, we continue and we've looked in Canada. And as we mentioned, I mean, we had a very good acquisition there. Canada is one of those countries with good exploration potential, mining culture. In the U.S., we've seen some in the past. I mean, but given -- Novador is a very good example of what we try to do. It has to be value accretive, of course, has to have some exploration potential. We have looked in those -- in the recent 2 to 3 years, some operating mines. However, given the expectation on the current record metal prices, I mean, the prices paid for those assets have been out of our expectation for value creation. So we continue to look. We will continue to look, but under a very disciplined approach as well. Unknown Analyst: This is Fernando of Morgan Stanley. A question on the portfolio mix. So we see a very high gold focus in your pipeline and also we have the Probe Gold acquisition. So are these things reflective of a broader strategy to increase the exposure to gold in your portfolio going forward? Octavio Alvidréz: Well, that has happened through times. If we look back at what we did from 2008 to 2018, initially, we grew faster on the gold side, bringing into production Noche Buena and then Soledad-Dipolos at that time. Then after we had Saucito that took longer to be developed, vein system there, the expansion of Saucito. So it depends on the portfolio we have. From what we have reflected in the chart, yes, you're right. The brownfields will come first, Valles and Noche Buena, then after Rodeo and Tajitos, because those are not complex -- so complex projects to be developed and the larger investments in terms of silver will come with Guanajuato. And that's because we -- the veins and the values start what, 600, 700 meters below. Guillermo Gastelum: Around 500 meters below the surface. Octavio Alvidréz: It takes time. Amos Fletcher: It's Amos Fletcher from Barclays. I just wanted to ask a couple of questions. First one was just on cost inflation guidance. Mario, what would you be guiding us to in terms of dollar per tonne milled for 2026 inflation, excluding the impact of the peso? Mario Arreguín: Typically, when you have such huge increases in the price of gold and silver, following that, you see some sort of inflationary pressure. For budgeting purpose, what we have considered for 2026 is approximately a 6% increase in cost inflation. But again, we are in a very volatile environment. But if you're asking me what we're expecting, it would be somewhere close to 6%. Amos Fletcher: Okay. And then I just wanted to ask also, you've obviously given the list of potential projects on Page 39. Could you give us sort of indicative CapEx numbers for each of those projects to the extent they're available? Mario Arreguín: Yes. Yes, I can give you a bit more flavor on that. Bear with me for a second. Octavio Alvidréz: You have to realize, before Mario, that these projects are at different stages, of course. And according to that stage, we have the plus/minus percentage in terms of CapEx and everything. Go ahead, Mario, please. Mario Arreguín: Yes. Thank you. So here, I'm going to talk only about Orisyvo, Rodeo, Guanajuato Sur, Novador and the possibility of bringing back Soledad-Dipolos to operation. So considering those projects, for example, in 2027, in total, we're expecting there something around $250 million just on those projects alone. And in 2028, around $560 million. In 2029, somewhere around $800 million, just for those projects, excluding sustaining CapEx. Amos Fletcher: Okay. And then one final follow-up, I guess, was just to ask from the sort of the CapEx guidance you've given on Page 38. Just to clarify, I guess, what projects are included in that guidance? Octavio Alvidréz: This is only CapEx for the current operations. There is no CapEx for projects there with the exception of 2027 for Valles, that I mentioned and a bit for Orisyvo and Guanajuato. Jason? Jason Fairclough: Slightly bigger picture question. So we're starting to see people increase the metal prices that they're using to calculate reserves and resources and also increase the metal prices they're using for mine planning. Can you just remind us what you're using to calculate your reserves for gold and silver? And how do you think about potential changes to your operating philosophy at some of the mines? Is it time to allow for more dilution? Octavio Alvidréz: Do you want to mention the prices? The answer is no. What is the question, Jason? But let me -- for the resources and reserves that have been reflected in this statement, we use for reserves $2,102.650 and for resources $2,300.030. Those are the ones in the statement. We are -- we are starting that process again, and we are increasing those up to $2,800 gold for resources and $33 for silver for reserves and $30.35 for resources. And to your question, I mean, dilution is always a killer. I mean, when you dilute, of course, that tonne does not come with any value. So despite the fact that the higher prices will give us the possibility to mine profitably what used to be marginal blocks now are economic, but reducing dilution as much as possible. Jason Fairclough: Are you able to give us any color on the sensitivity of the reserves and resources to change in the prices? So for example, if you raise your long-term gold price from $3,000 to $4,000, how much do reserves increase by? Octavio Alvidréz: If you want to comment, also memo, in the Fresnillo district, the value per tonne of ore is above -- well above the cost that we have right now. So it will not bring a huge increase whenever we use higher prices. When we will see sensible ore will be probably in Cienega, a bit more help there. San Julian probably. Daniel Diezas: Marginal, I would say the main impact it's around the Herradura when you increase the price, size of the pit. And as mentioned during the presentation, the exercise of finding the right transition moment between underground and open pit is exactly that. Now the pit grows significantly. However, those are ounces that would come online in 2050 or beyond that. So we are in that trade-off of when is the better timing to bring production forward from the underground with higher rates. Guillermo Gastelum: I will just reinforce what Daniel said is the resources and reserves will be more sensitive in the -- for the open pit, the disseminated deposit that we just described for you. However, we're reaching -- it doesn't matter how much higher you go, there is a limit to the geology. I mean, and to grade. So there's nothing further to add once we get to extremely high prices. And also in the underground operations, some of the narrow veins or lower vein material may be back into resources. But I don't know if in reserves because a more deeper analysis is required as to what sort of infrastructure and services are required to reach some sections of the mine that were left for some reason. So it all comes to the detailed engineering work for the reserves, no matter how the prices may go high, because it will give you less margin if we force things to be mined out just because at any given scenario, it turn economic, but the margin will decrease significantly. Daniel Major: Dan from UBS again. Just to kind of follow-up on Jason's question. What is the projected cost of production and the restart at Noche Buena? Daniel Diezas: We expect between $2,100 and $2,200 all in. Daniel Major: Yes. Okay. And sorry, I could probably take it offline, but I didn't actually catch. The first set of numbers of $2,100 and $2,300 for gold reserves and resources. Is that what you use for your 2025 calculation? And then the second set of numbers are what you're considering for your '26? Octavio Alvidréz: That's correct. Yes. Daniel Major: Okay. And then just a final one on the balance sheet and capital returns. You obviously, healthy payout this year. You've outlined the Probe Gold acquisition, more capital, more projects. Is there a threshold of net debt or cash on the balance sheet above which you'd pay out 100% of free cash flow? Octavio Alvidréz: Mario? Mario Arreguín: That's a decision for the Board to make, but we want to make sure that we have sufficient funds to be able to fund all of the $3 billion pipeline that we have defined. And what we -- what I can tell you is that definitely by year-end, if prices do remain where they are, we will definitely have a much bigger cash balance, and we will reevaluate again the possibility of paying an extraordinary special dividend. That I can tell you. How much? That's for the Board to decide. Octavio Alvidréz: All right. Thank you very much for joining us today. Thank you, guys.
Operator: Ladies and gentlemen, thank you for standing by. I am Geli, your Chorus Call operator. Welcome, and thank you for joining the OPAP S.A. conference call and live webcast question-and-answer session to discuss the fourth quarter 2025 financial results. At this time, I would like to turn the conference over to Mr. Jan Karas, Chairman and CEO of OPAP S.A. Mr. Karas, you may now proceed. Jan Karas: Thank you, Geli Good evening or good morning to everyone. We are glad to welcome you here and present to you our solid set of full year 2025 financial results. Hope you have enjoyed the presentation distributed earlier today, and we would be glad to answer any questions related to our financial performance. We are pleased with our 4.9% GGR growth for the year, in line with our provided outlook and remain optimistic that Greek operations will continue to be a strong asset of the combined Allwyn and provide significant contribution to its future success. Let's proceed directly to the Q&A together to make the discussion more engaging. Geli, over to you. Operator: The first question is from the line of Kourtesis, Iakovos with Piraeus Securities. Iakovos Kourtesis: A number of questions from my side. First question has to -- we're glad to see that Hellenic Lotteries license was secured. I was wondering if there is an update for the big license that expires in 2030, if you have something to comment on this. Second thing from my side is about the expected acquisition of Novibet. As far as I remember, the whole process goes on the Competition Committee. If you have any update on this front? And maybe I have another follow-up. Can you comment on this, please? Jan Karas: Apologies, what was the third point? Iakovos Kourtesis: The third question? Jan Karas: After Novibet, the third point? Iakovos Kourtesis: Yes. The third point is about -- recently, we have a new draft bill on illegal betting. Obviously, this should move on the positive side for you. If you have any comments for the new draft bill on illegal betting and how it affects -- you expect to positively affect your business? Jan Karas: Clear, thank you very much. Thank you for all the questions. Apologies, we had some technical issue here. We couldn't hear you properly on the last part, but all questions are clear. So let me take them one by one. Point #1, about the licenses, thank you for your kind words, just for the sake of full transparency. We have been recently informed that the Court of Auditors greenlighted the signing of the concession agreement for Hellenic Lotteries. And as such, we expect that soon we will be called to sign the agreement. After that, the agreement must be ratified by the parliament and the relevant law will be issued in the government gazette. That is just a point where the full process will be completed. At this moment, given these developments, we don't expect any delays, and we expect that we will start from the beginning of May, operating with the new concession, the new 12-year concession. So that's just on the clarity on the Hellenic Lotteries. When it comes to the legacy games, as we have stated before, many times, we are certainly interested to extend our exclusive games rights beyond 2030, for sure. At this moment, we don't have any update on this front. But again, you will be the first one to know once there will be any progress here. When it comes to Novibet and the HCC, this is something for our Allwyn colleagues to comment on our side. We don't have any comments and updates on the developments there. For the illegal betting on the other side, this is something very much relevant to us, and we obviously have welcomed the new legislation when it comes to illegal gaming. This is in many elements of what is being proposed is meeting the demands or suggestions we have been stating with our ongoing conversations with the authorities. Our interest is obviously aligned with the state -- with the Greek state here. We want to protect our players. We want to make sure that Greek state doesn't lose taxes in favor of illegals. So we are absolutely looking forward to explore the new opportunities to fight illegals that this new bill should bring. As for the expected impact, it's a bit, obviously, too early to judge. The final law should be voted in the coming months, hopefully soon. So then we will see the full definition of it. And very importantly, we will be with the authorities cooperating to the maximum to explore the benefits of the new legislation and translate it into actions in the real world leading into minimization of the illegal betting in Greece. So as stated by the government also on our side, we certainly expect a significant impact of this law on our business for the coming year, and in our case, positive impact in the coming years. Iakovos Kourtesis: Okay. Since this is the last time I suppose that you report results as OPAP, as a sole entity. I would like to thank you for your collaboration and give my congrats to the IR team. They've been extremely helpful all these years, and I'm so glad that they will continue this collaboration with us. Thank you very much. Jan Karas: Thank you for your kind words. We will come to that at the end of our call, but it's very much appreciated that you feel this way. And yes, don't worry, we will not disappear. We will stay in touch for sure. Operator: The next question is from the line of Draziotis, Stamatios with Eurobank Equities. Stamatios Draziotis: Can I -- well, just a couple actually. Can I start with Q4? If you could comment on 2 items, please. Firstly, the increase in expenses, I know you said there were some one-off elements, but just wondering to what extent we should expect this to continue in FY '25? And also the decline in online, you obviously said that this is mainly attributed to the customer-friendly results in sports betting. If you could maybe isolate the effect of the latter. And secondly, on '26 I think you mentioned that you expect this to be a year of great success in your remarks. I'm just wondering what this means exactly in terms of revenue and profitability for the Greek and Cypriot business. Pavel Mucha: Okay. Thank you. Good afternoon from me. Yes, the increase in expenses in Q4 is largely related to the digital agenda, both in retail and in online, where we are strengthening the team. So that's why the payroll expenses are coming higher. Also on the marketing side, both in terms of CRM, communication and sponsoring assets. And last but not least, on the technology front, again, digitalization, both in retail and ongoing improvement of customer propositions in online. Really, these 3 categories are related -- are driving the increase in costs. Obviously, you asked what to expect going forward. It's not that the OpEx would be increasing at this pace every quarter going forward. But we've reached a certain level by now. And this was all cautiously managed. It wasn't something out of control or out of a blue. That's why we also guided that when we provided the guidance for '25 that we will be heading towards mid-30s towards the 35% levels. And if you exclude the one-off expenses, indeed, the margin for the whole year came to 34.7%. So not only we delivered the outlook on the GGR, but also on the expenses. Now on the second, maybe. Jan Karas: For the outlook? Pavel Mucha: For the online. No, for the online and customer-friendly results. Jan Karas: Yes. Well, we don't have a -- you were asking for the specific impact of the results versus anything else. I think it's important to say that while we don't exactly have this split, and it would be a bit difficult to calculate anyway. What is important is that we see now in Q1, the business back on track. So the underlying solid performance of the sports betting continues. So we really have seen the Q4 as a disturbance that doesn't have any continuous trend for Q1. If I may also on your -- this is -- a small bridge towards your question about 2026 expectations. We are not officially providing any outlook for the Greek operations for obvious reason. Allwyn has already provided some initial guidance and more details will certainly be announced during the upcoming Full Year '25 Allwyn International Analyst Conference Call. Yet what we expect for the Greek operation is 2026 to be another year of great success entering the new year of the company with really good prospects. So we are quite confident of not only continuation but further strengthening of what we do here. Stamatios Draziotis: Okay. That's great. And thank you for the open dialogue over the years. And as you move into the next phase with Allwyn, we look forward to seeing the same transparency, hopefully, that has underpinned the OPAP's equity story to date. So thank you. Jan Karas: As in any other area, we -- our ambition is to be same and better. So hopefully, we will meet and exceed your expectations going forward on this front as well. Thank you for your trust. Operator: The next question comes from the line of Pointon, Russell with Edison Group. Russell Pointon: A couple of questions, if that's okay. First of all, just to come back on this digital investment in Q4. Does this -- with more investments in digital staff, does this mean that you're looking for a greater rate of innovation in the digital activities in the coming year or so? And the second question is just a minor question really in terms of the retail lottery business. I think the revenue went backwards a little bit in Q4. I was just wondering if there was anything in particular that affected the retail lottery business? Jan Karas: Thank you. So when it comes to digital investments, it is indeed a big topic for us. The whole 2030 strategy that we have recently introduced to our employees and partners, and we will be sharing with the investment community shortly is all around digital-first customer experiences. So the next day that we are looking at is certainly focused on attracting new generation players and that's not only in online, but also in retail. So while evolution and exploring the prospects of the online world continues to be very high on our priority list. The second close is now upgrade of the retail experiences with the implementation of a completely new digital layer. So if you want moving from paper cash agent into a fully autonomous digital gameplay in our retail stores where especially the new generation players will be able to benefit from digital interactions that are personalized where their interaction is rewarded and appreciated. And generally, the gameplay is of a new generation -- of a kind. Here, probably one picture better than thousand words. So we will be bringing you more information on that front shortly. So what is the necessary driving vehicle of that is the technological evolution that powers all these customer experiences from implementation of fiber connectivity in our stores all the way through to development of the apps estate, so that we will be merging all the different apps we have today into one digital ecosystem with one app that comes first and makes the interaction for customers way much more simple. One customer account, one app, one wallet, many new things coming that should simplify gamers or customers' life when it comes to gaming and as always, improve the entertainment factor as well as the rewards; and very importantly, the simplicity of gameplay. So it is really much more than for -- compared to the past where we have done some digital upgrades in the stores like bringing the SSBTs. This time, we are really taking it to the next level, and we see it more as a historical milestone of a step change from the traditional analog world towards a completely digital world of the future. Hope that helps. Pavel, on the second comment, if you may? Pavel Mucha: Yes. On retail lottery, look, we were really pleased with the performance of the lotteries in retail in Q4. It was very solid performance, not only on jackpot games, but also on KINO. If your question implied that it was a bit -- not so strong performance. So I just remind the tough comparisons with Q4 2024, where we entered the year in January with building up record jackpot in JOKER. And that those jackpots were already building during December. So it's more the comps with the 2024 very good performance, which may imply that the year-on-year growth in Q4 in retail lottery was not so significant. Russell Pointon: That's great. And let me reiterate the thanks to the team. Operator: The next question is from the line of Nekrasov, Maksim with Citi. Maksim Nekrasov: I have a few questions. The first is a continuation on the online sports betting right, and it looks like it has been declining for a few quarters in a row. But I just wanted to ask if you can provide any color on the competitive dynamic and on your market share dynamic in particularly in the sports betting online? And also, if you can remind us about the status of the prediction market platforms in Greece and whether you have seen some impact from those platforms? And finally, since we're rebranding, it would be interesting to hear what's the initial customer feedback? Is there something that surprised you? And if there is any color on the -- if the traffic has changed to some extent to the rebranded stores versus nonrebranded? So yes, any color on that would be appreciated. Thank you. Jan Karas: Well, when it comes to the big picture of the of the sports betting and iCasino market share, while we may be facing some headwinds here and there, we generally see us being on a very right track to protect our market shares and continue performing strongly. The recent rebranding of not only Allwyn, but also Stickiman (sic) [ STOIXIMAN ] is something that should further help in remaining and not only remaining relevancy to the younger audiences, but even further strengthening it. The new generation players are of our utmost importance. So we really remain confident in maintaining and further improving -- aiming for further improvement of our leadership in this market. Second question was on the prediction markets, we don't see any impact here. Obviously, with the acquisition of PrizePicks, this is a gaming vertical that is of our utmost interest, and we will be exploring the opportunities in this area. But at this moment, this is not something that we see as a gaming vertical significantly influencing sports betting in the Greek market. And the third question was on? Rebranding. First impressions of the rebranding are very positive. I think we have done a good job in 2025, preparing the Greek market for the rebranding with all the communication and campaign of OPAP being part of Allwyn. And as such, now the transition starting January 19, where we have changed the consumer-facing brand from OPAP to Allwyn has been really smooth. Overall, there is a positive reception from both customers as well as our agents and rest assured that our retail partners are always a very good thermometer of making the right customer moves. So we are very confident that we are on a good track. To let some numbers speak, currently, we are around 50% of awareness of the society about the Allwyn brand, and that's something that we will continue to build. So this exercise is far from over. The whole year 2026 is about building the brand awareness and building the attributes of the brand like the trust, like giving back to society, like winability to assure that our customers believe not only they haven't lost something, but that they have stepped into the new era that is better than before. And that is our ultimate commercial goal for this year. And so far, it's going well on this front. Thank you for your question. Maksim Nekrasov: Understood. And good luck in the new chapter of the company, and thank you for all the years of -- all the presentations and special thanks to the Investor Relations team, Nikos and John. It's really helpful and a very transparent reporting. So we hope that we will continue going forward. Thank you so much. Jan Karas: Thank you so much for your kind words. Much appreciated. Operator: The next question is from the line of Zouzoulas, Constantinos with Axia Ventures. Constantinos Zouzoulas: Two questions from my side. Some more color on the good performance of the VLTs, especially I'm referring to the increased visits per year. What can you tell us about this? And my other question has to do with Hellenic Lotteries. Now with the new -- you're going to be operating the new concession, do you have any plans for -- to refurbish the other games of this vertical? Jan Karas: On the second -- I will ask you for some clarification on the second question. But let's start with the. Constantinos Zouzoulas: We're talking about the scratch. Yes, we're talking about the scratch and the lottery tickets. The performance has not been that great during the past few years. Are there any plans to do something on this front? Jan Karas: Yes, yes. Sorry, I got confused when you said the other products. I was not sure I understand. So you are interested in what we will do with the Hellenic Lotteries portfolio, right? Constantinos Zouzoulas: Correct. Correct, correct. Jan Karas: And I will comment on that. Okay. Great. Thank you. So the first question? Pavel Mucha: VLT's performance. Jan Karas: VLT's performance. We are very happy for the performance we observed this year. And we are very clear as to where it is coming from because this is a return on investment into upgrading the customer experiences in our Play stores and in our -- with the new terminology Allwyn stores. We have -- as we have presented in our presentation, we have upgraded now a very significant part of the estate with much better customer experiences when it comes to game play. At the same time, we have invested a lot of efforts into the loyalty schemes that are appreciating and rewarding for the customers for being with us and for their activity with us. And last but not least, we are doing a lot of promotion events in the stores themselves so that we improve the entertainment element of the experience. And we don't stop here because going forward, our main focus is actually in significant upgrades of the venues where, believe it or not -- but the ones we have now, we have built some of them also already 10 years ago. So we are proceeding with a significant refresh of the stores, and we will be refreshing not only the color schemes, but very importantly, the look and feel. So the stores from the outside will be much more open, much more transparent, much more visible, much more inviting for the customers walking down the street, and we will be moving from the current, in most cases, white non-see-through facets and shop windows into something that allows you to see what is inside and that something is happening inside and will be bringing you in. Alongside of the technology upgrades like big digital screens, et cetera, that should help us in this important gaming vertical where we are not allowed to communicate too much and the shop windows communication plays an important role to bring people in the store. This should have further positive impact on the overall performance, especially when it comes to visitation and number of visits per customer per month. So overall, good momentum that we expect to not only continue but further strengthen. On the second question of Hellenic Lotteries, that is super exciting because as we say, everything bad is good for something. So obviously, the Hellenic Lotteries change of the license has a lot of administrative technical implications that do imply a certain degree of disruption of the business, and we are doing everything we can to minimize this impact on the customer experiences in our stores. It also brings a lot of benefits and one of them is that we will be, as of May 1, able to launch a completely new portfolio of scratch products. And we will be doing so certain -- building on some of the successful ones that we will keep, bringing some new ones that will be new in the market and overall strengthening the families, the 3 big families in scratch. So a refresh of the portfolio and complete refresh of the design of the whole portfolio. Zooming out from a customer perspective, the whole new license environment should bring new refreshed product portfolio, new gaming experiences because we are changing also the -- some of the games that we provide under scratch. And we are also looking at upgrading and refreshing the more traditional products like Laiko or Ethniko or the special editions of Laiko that you will see and our customers will benefit from during the year 2026. So hopefully, that covered your question. Thank you very much. Constantinos Zouzoulas: Thank you. Also from my side, thank you for the communication all these years and looking forward to continue the cooperation with you, Nikos and John. Thank you. Jan Karas: Thank you so much. Thank you very much. Operator: Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Karas for any closing comments. Thank you. Jan Karas: Thank you so much. Thank you, Geli. Thank you, everyone. Thank you for many of your kind words already expressed during the Q&A. And obviously, also from my side before we conclude today's call; not only on my side, on behalf of Pavel Mucha, myself, Nikos, John, the whole IR team and everybody who is supporting us on this journey. I would like to share some closing reflections on what I think is truly a historic milestone for our organization. We are -- very excited to embark on this new era that is ahead of us. And as we move towards the final stages of our business combination with Allwyn, I want to reaffirm our unwavering commitment to the investment community, to all of you here with us today as well as to those who could not be with us today that you have supported us and supported OPAP throughout this journey. And on behalf of both Pavel and myself, I want to express our deepest gratitude to our shareholders themselves and to our analyst community. Your support and collaboration over these years have been certainly the key of our success. Together, we have achieved financial robustness, created significant value, allowing us to enter this next chapter based on really solid foundations. For so many years also, the Investor Relations team in Athens has been the heartbeat of our communication, their expertise and deep-rooted relationships have been vital to OPAP's success and to the trust we share with you. As the cornerstone of our strategy remains transparency and accessibility, values that are at the very core of Allwyn as well, I'm really pleased to confirm to all of you that our IR team in Athens, led by Nikos Polymenakos, will continue to provide the high-quality support you have come to expect. And as such, while we are expanding our horizons, your points of contact in Greece remain unchanged. To better serve our new global footprint, our Athens-based colleagues will be fully integrated into a larger unified IR team working in daily collaboration with our partners in the London office. And this collaborative structure hopefully ensures that whether your inquiries are local or international, you will still benefit from a broader pool of expertise and global coverage. Finally, we are proud that the combined entity will retain its listing on the Athens Stock Exchange, soon Euronext Athens, remaining a central pillar of the Greek capital market. We look forward to this next chapter together as a leading listed lottery and global gaming operator. Thank you so much for your partnership, your trust and for being an integral part of this remarkable journey. We look forward to speaking with you again soon from this new global platform that I'm sure will be as exciting interactions and connections as until now, as we have stated before. Ladies and gentlemen, thank you very much. Dear colleagues, thank you very much. Last but not least, dear Geli, thank you so much for all the years of your fantastic support. Thank you all, and we will stay in touch. Have a nice rest of the day. Goodbye.
Michel Gerber: Good morning, everybody, and welcome to VAT's Fourth Quarter and Full Year Results Presentation. We have today with us, as usual, our CEO, Urs Gantner. I think it's the second or the third time, right? Yes, the third time that you are doing this since you took over. And of course, Fabian Chiozza, whom you know very well, too. We published our annual report, the media release or presentation this morning. I apologize for some delays for you who got it in the inbox directly at a somewhat later stage, only shortly before 7:00, not 6:30. But the e-mail provider, EQS had issues with sending out the e-mails to the recipients on the mailing list. So on Bloomberg Reuters, you already have seen the news, but you only got it a little bit later in your personal inbox. So apologies for that. So without further ado, I would like to hand over to Urs for the presentation together with Fabian. Then we have the normal Q&A session, taking questions from the room, but also from people on either the webcast or over the phone. And then after that, for those who are here in present, they can then also join us for a small buffet lunch later on for further discussions. So with that, Urs, the floor is yours. U. Gantner: Thank you, Michel. Thanks for the introduction. And also from my side, welcome. [Foreign Language] Happy that I see more and more faces that I already know. So as Michel mentioned, my third time now, and the last 2 years, I was always promising that the ramp was coming, right? And what you will hear today, the ramp is here. So it's certainly a special day also for me today. So you have -- we released our numbers already early in January. So you will notice no big deviation on that, no big changes, except that we can really confirm the ramp is coming. I always say semiconductor in any part of the cycle, in any phase of the cycle, it's really an exciting field and an exciting industry. At the moment, it's really vibrant. We see that with our customers, with the end users. You see the numbers are going up almost every day, what will happen. And often, it's not really rational what we hear. So there will be a kind of a leveling out over time. So what we show -- what we -- today, we will go through the highlights shortly, review on 2025. And then I will hand over to Fabian, who will do a deep dive in all the financials and then maybe the most exciting and what you are most interested in the outlook for 2026 and beyond that. We will also have enough time in the end for Q&A. So the same setup for those who are online, use the chat box. And of course, we will also answer the questions coming up here in the room. So let's turn to Slide #4 on the presentation that is also online available. So 2025 was a year about a broad adoption of the AI investments. And also this turned in the end in wafer fab equipment. Often, we say semiconductor is cyclical. But if you see the wafer fab equipment, basically in the last year, it was always a growth and then it kind of went on a plateau and then it grow again. And at the moment, we are just at this stage where we strongly believe that the growth will come again. Also for 2025, wafer fab equipment was a new record. Depending on the models, it was roughly USD 115 billion means roughly 12% growth compared to 2024. For VAT, the highlights, 2025, it marked our 6 years anniversary. So we had some celebrations, of course. And while the best gift we could give ourselves is come up with new records. And we had new records last year. One of it is factory output. It was the record high in factory output. We had new records in spec wins, specification wins. So this is our future business. And also financially, we had a fantastic record in free cash flow. Orders, what you see we were kind of flat year-over-year, but actually about 6% up on constant currency. Sales was up 14%. And also here, constant currency would have been up 20%. And as I mentioned, innovation, this is the driver. This is -- also my heart is this innovation. This guarantees that we are ready for the future and shows our power and the collaboration with the customers with 150 spec wins and also a record in investments in R&D. It underlines that we are investing in the future. Last year, we also launched new products called our [ Mod ] Horizon 2 products, we call it. So the first time we are also reporting our gas inlet, the ALD valves that were launched last year and also very interesting for us, the inauguration of the innovation center. So we have now a new home, a new home where all the engineers are under one roof, very close to operations. And this is the strength of VAT that we bring people together and innovate. So we not only had a new building in Switzerland with the innovation center. We also had the opening of our new facility in Romania. It acts at the moment as an internal supplier, but also gives us much more flexibility in the long run to scale up in this region. Financially, Well, we had headwinds. You know that pretty well. But despite these headwinds, I think we came up with very strong results with an EBITDA of 30%. And as mentioned, with a free cash flow of CHF 230 million, which is a record for VAT. This also shows resilience. Whatever happens outside in the world, our flexible operating model is agile. We can adapt fast to come up with outstanding results. And now before we move on, I would also like to take a moment to thank the global VAT team for these outstanding results. Their commitment and agility, they know they have to react fast. They know our market. And I already mentioned them this year, well, it's going the other direction, but it's not being a quiet year at all. So I often say once in such a phase of the cycle, it's like a diesel engine that was idle for some time. When you start it again, it makes some noise and smoke and then it runs smoothly. And I think this is how the industry works now, a lot of expectation going forward, but it will also a few months that it runs smoothly. On Slide 5, we see the split in our segments. So there is no big change. So it is roughly 80% in valves and 20% in service. About 80% of our service -- of our business is in semiconductor with about 20% in the service business. Regionally, you see it's more and more moving to Asia. So almost 3/4 of all our business, our products go into that region. That's, of course, the customers in Asia or Western OEMs that are Asian-based. So -- and in China, still about 30% of the business is in China. You might remember that after half year, that ratio was even higher so that China business was a little bit half year, first half year front-loaded and then muted or the others did pick up in the second half. So overall, let's say, 1/3 of the business going directly into China. Yes, on Slide 6, we update our market share numbers for our core products for our valves, our vacuum valves. And here, these underlying numbers are still preliminary, so not completely finalized from the market research. But we continue to have a very comfortable market share of 71% in semi and semi-related. And if you would go only in semi, valves, it remains on the 75%. Outstanding still is our market share in control valves. So the most advanced products, it is clearly above 80%. As we go to Slide #7 and also here, it's important to mention that all these providers are still gathering also the data for wafer fab equipment. We see that the growth was roughly 11% year-over-year. Interestingly, we see that the vacuum-related wafer fab equipment did win about 5 percentage points. And this is also what we always told if the leading edge is kicking in, more and more vacuum will be required, and this is what we see also compared to 2024. Also spending in new technologies, so we differentiate between the node size below 7-nanometer and above. Also here, we saw a growth of 37%. And China, also an interesting lost a little bit, but actually in absolute dollar value was kind of stable. It's also important to mention that some of these investments, not all of these investments are greenfield. So they are not all of them are equipped new fabs. It's also a lot of upgrades, especially last year in the NAND business, there was a lot of upgrades and some of these upgrades, we could -- we are not participating because it's not related to the vacuum systems. We will have some more details about the wafer fab equipment and how this will evolve in the third part of our presentation in the outlook. On Slide 8, we see one of another record. I already mentioned the growth in spec wins. So we achieved about 150 specification wins. About 70% of it is in the semiconductor-related environment and about 18% in our so-called adjacent products. This means the advanced modules, motion components and the gas inlet valves. Well, what does that show -- what does it mean to me? It shows that our customer, they are, first of all, feel comfortable to work with us on IP-related topics and prepare the future with us. And secondly, it demonstrates that we are spec-ed in and we are ready and will grow once the adoption of these new tools go to the market. Growing with the adjacencies, I mentioned it's about 18% of the spec wins also helps us to increase our share of wallet on the tool. So we have a very high share on valves and with the adjacent products, we increase the share of wallet on the tool, and this is also a big part of our future growth story. So broadening the footprint across the tool architecture gives us resilience also in the long run. With that short feedback, I hand over to Fabian, who will give us a deep dive now in all the financial numbers. Fabian Chiozza: Fantastic. Thank you, Urs. So good morning, everyone, and also a very warm welcome to those of you who are listening in on the webcast. 2025 was a year that demonstrated both the strength but also the resilience of our organization. We delivered solid results and made tangible progress on our strategic priorities despite operating in an environment that remained demanding and uncertain throughout the year. Volatile markets, external shocks and FX swings require continuous focus and disciplined execution. Against this backdrop, our teams performed exceptionally, managing complexity, adapting to changing conditions and ensuring ramp readiness. On the following pages, we'll take you through the financial highlights, key drivers behind our performance and also the opportunities in 2026. Let's start with a recap of orders on Slide 10. Order intake 2025 amounts to almost exactly the same number as the year before, CHF 1.033 billion, up about CHF 60 million or 6% on constant currencies. Seemingly no change in order flow. However, the underlying trends have seen a shift whereas '24 and also the first half of 2025 was mainly driven by mature nodes and China. The acceleration in leading-edge build-out was noticeable in the second semester of last year. Furthermore, global service, a key leading indicator for fab activity, saw a 76% rise in retrofit orders in the second semester and a 21% increase in demand for consumables as memory fabs are running at higher utilization rates. Let me also remind you about the preorders we mentioned in the high-level release mid of January. This CHF 30 million to CHF 35 million were predominantly driven by price increases for 2026, which come into effect during the current quarter. On the next slide, we show the development of orders in Q4 and full year. The number that stands out is the acceleration of order intake in Q4. Orders grew 28% quarter-on-quarter. Book-to-bill increased to 1.2. This also helped the order book to grow 18% quarter-over-quarter. Sales were flat Q4 versus Q3 or just 1% up on a like-for-like basis. Overall, for 2025, orders shared a mixed pattern with a trend of increasing leading-edge activity accelerating orders but also sales. Moving on to Slide 12. As you know, adjacencies is one of our pillars of growth in order to deepen our customer intimacy and to expand our share of wallet. Adjacencies is thus a great indicator for leading -edge build-out and activity. As you can see, we saw a 23% growth year-over-year in adjacency revenue. At circa 9% of group sales, we are progressing to our target of 15% of total sales in the near term. We also added a tangible example of how we are expanding our content in a customer jewel. On the right-hand side, we see a generic schematic based on actual customer example of VAT gaining share by selling load locks and also transfer chambers, being able to offer our pin lifters and gas inlet valves on top of it. In the future, this approach will enable us to get to our target of 3% to 5% share of wallet. Why are we certain to reach this? Worth mentioned our 150 specification wins at the start. Around 18% of these were in adjacencies, providing us good visibility on future growth opportunities. Following last year's strong gross profit improvement, we saw a slight decline by 2 percentage points to 64%. The main driver was a reversal of our net working capital buildup we saw in 2024. Further pain points were the FX development with ongoing strengthening of the Swiss franc against all major currencies. Our continuous improvement program, DarWin, again yielded about 2% gross savings on gross profit, which not only softened adverse FX and working capital effects, but also compensated raw material price increases, such as our main commodity aluminum. On the next chart, 14, we see the stability of our EBITDA margin, testament to the resilience of our flexible operating model. As previously discussed, significant working capital reduction of 8 percentage points versus prior year down to 25% over sales burdened our P&L. We adapted our structure to market demand and established our global business service hub in Malaysia to cope with ongoing FX challenges. Together with our DarWin program and favorable hedging gains, we increased the H2 margin to 30.4% while at the same time, continuing our R&D spend that reached also a record level of CHF 75 million, up 22% versus prior year. Let's now get to the bottom line with some of the other financials on Slide 15. D&A increased by about 11% on the back of our front-loaded infrastructure investments. EBITDA thus reached CHF 273 million, a margin of 25.4%, slightly below prior year. The net finance result is reflecting the ugly side of FX developments with a revaluation on bank balances and intercompany financing. Taxes slightly increased to 16.7% versus 16.1% a year before, mainly due to higher profit share earned abroad with higher statutory tax rates. Taking all of that together, net income increased slightly to CHF 214 million or an EPS of CHF 7.15. Once again, I want to remind you about the economic value creation potential of VAT. We measure this as return on invested capital and cash return on invested capital. Both metrics despite record R&D spend and continued ramp readiness preparations are significantly above our weighted average cost of capital. With major CapEx projects in place and operating leverage to kick in during 2026, we expect continued expansion of both KPIs in the near term. Free cash flow generation is shown on Chart 17. Free cash flow increased to all-time record levels of CHF 230 million, up 26% year-over-year. While VAT always demonstrated its strong cash generation ability, 2025 certainly was a year of strength. VAT increased free cash flow as a percentage of sales to 22% and the conversion rate rose above the long-term average to 72%. Slide 18 addresses our CapEx, which amounted to CHF 68 million in 2025 or about 6% of sales. Last year, we have completed major infrastructure projects around the world, including our innovation center in Switzerland, moved into a new enlarged factory in Arad, Romania, and established infrastructure in Malaysia to further expand in a targeted manner as demand builds. Our commitment to customers of 30% quarter-over-quarter ramp-up capability is in place, and we work closely with customers to ensure our part of the supply chain delivers. R&D reached, as I said, new records of CHF 75 million, up 22%. Spec wins up 14% to maintain VAT's technology edge and drive future growth. When summarizing the full year 2025 financial performance, we can state that our preparation for the ramp over the last years is complete. Major infrastructure needed to satisfy demand is in place. We maintained readiness for market growth over the year, focusing on current and future capabilities. We proved EBITDA resilience within communicated range of 30% to 37% despite internal and external headwinds. Strict financial discipline, focus on free cash flow generation demonstrated premature repayment of our term loan facility in January 2026 and the replacement through an incremental RCF facility. In this year, the start of the ramp is critical to get right, and we continue to remain disciplined around cost and monitor our customer requirements. We continue to build out core capabilities in close coordination with those requirements. We will maintain a high degree of R&D spend to ensure VAT retains its competitive edge to generate the next generation of products. We will also enter the last stage of our ERP project with the implementation of D365 in the sales and service entities during this year. Last but not least, managing geopolitical risks as well as mitigating continuing FX volatility will remain a key element of our financial steering. To conclude my remarks on a positive note, after maintaining a stable dividend for 2 years, we decided that the increased free cash flow allows us to also propose to distribute a slightly higher dividend of CHF 7 per share, up 12% compared to 2024. With that, I conclude my remarks on the financial performance, and I would like to hand back to Urs for the market expectations and the outlook. Thank you very much. U. Gantner: Yes. Thank you, Fabian. Yes, I'd say, fantastic numbers. Congratulations to the entire team again. And now we are at the beginning of 2026. And can say that just at the beginning of January, it came for many of us a little bit as a surprise when the latest -- when we attended all the ISS, this is an industry strategy conference, always very early in January. And suddenly, this $1 trillion market where we were always postulating that this will come in 2030, suddenly came in that said, well, maybe this will happen in 2028. Some said, well, no, it will for sure happen in 2027. And the totally crazy one we already said, well, this is happening this year. So it's at least 3 years pull in. What you also see here that we postulate now that about in 2027, the semiconductor market, the chip market will grow to this USD 1 trillion. So quite an acceleration. Of course, one is based on pricing as well. You have seen that also chip pricing increased quite a bit over the last quarters and months. And secondly, of course, the build-out of the entire AI structure, so the sheer demand of chip contribute as well. So what we are entering now is kind of -- we call it a structural change in semiconductor. So the first step now is the creation of this new infrastructure. So all the data centers, what is invested now by the hyperscaler. I think it was about $400 billion last year and will nearly double for this year. So there's a lot of money invested in all this infrastructure for AI. And then we can also see, well, our -- today's devices, I think they will change. They will change. The AI will also be a kind of an inflection point that our smartphones, our laptops and I think I'm sure there will be a lot of creativity there that we can use then also the AI center and bring AI also to the edge. So this will be in a second wave that is coming. And so that means that there will be a multiyear of growth in semiconductor continuing. And what we see just at the moment, also 2026, there is a tightening of the chip manufacturing. So some of the fabs are already sold out since quite some time. And of course, this increased also the pricing. So this means investment must happen. Almost every day, these wafer fab equipment numbers are going up and up. So we are still kind of on a level that we say the 130 is a reasonable number for this year. But we already see now in 2027, the highest was about 180. Yes, maybe the demand would be here, but for sure, the infrastructure is not ready. So where they should deliver this 180, they need a fab, right? So maybe you already heard that some fabs, they're already buying old fabs because they don't have enough clean room. This is what they mean. They don't have the shell to put in all the equipment. So new bottlenecks are coming up. So -- but these, of course, are the interesting challenges to overcome because this is growth. And here, we have to align always with our customers, what do you need when shouldn't -- do not overshoot our time. These are the maps now at fab. We always postulated that as well. These are from semi organization. It's more than 100 fabs currently built. But this 100 fab, they are not enough for this $1 trillion. And if you go one decade to 2023 -- 2035, so 10 years ahead, then they already say it will be a $2 trillion market. So it's huge. So if you compare to normal industries with the GDP growth, semiconductor will always outgrow this market by the demand. I also have to mention here, we think computing is already mature. We are using it every day, everywhere. But historically, we will say that this is actually the beginning of the computing. So we are not yet there. We will change a lot going forward as well. Very interesting to be in that phase of growth, there will be, as I mentioned, challenges as well. The whole machine has to start. Supply chain has to start. There might be bottlenecks coming up. Industry is pretty small as well. So we know each other very well, and we will overcome all these challenges going forward. Now why all these investments are needed? Why AI needs now suddenly completely different tools and microchips. I think the main issue is an energy problem. that AI, the current chips are using too much energy that almost 50% of, for example, of a country would just use the energy for data centers on the AI use. This means we have to reduce the energy consumption of the chips, and this goes with miniaturization. Smaller chips and at the moment, we are at this inflection point of this gate-all-around technology. So for the last 12 to 15 years, it's always called FinFET. It's a technology and architecture of the microchips and now moving into gate-all-around technology. And why it becomes suddenly more challenging? Of course, first of all, it goes to the atomic size, atomic level. And secondly, what we try to show here on the picture, it's not only, for example, etching and deposition in one direction, but it goes in 2 directions. And how can you do that? Just try to drill a hole in one direction, yes, I can do that. But then suddenly go to the other way, it becomes challenging. And they are doing that, so that the fabs, the microchip manufacturers, they find ways to do things like that. That's art. For us, it means the purity level goes up, particle is very important and the matching of the chamber, matching of the component that they always behave the same way, it's even more critical than before. Often get asked about China as well. So how is China? So we have the, let's say, the Western world meanwhile, and then we have China. China is building up its own ecosystem as well. They are already clear #1 in all the mature chips. So in volume, they certainly are producing most of the mature chips. But of course, they strive for leading-edge chips as well. With the restrictions they got to that they don't get some of the technologies, they have to invent on their own to find -- to develop their own tools. Overall, wafer fab equipment in China will be probably flat with single-digit growth. Interesting will be that the self-sufficiency rate also on the wafer fab equipment tool will go up. Today, it's around 15% to 20%, depending on the application. And the clear goal from China is that this will go up to 70% by 2030. So this means a lot of innovation is happening in China and also Chinese OEMs, they need the technology from the West. They are working with component suppliers to make that happen. One word to our service business. Service, always the most profitable business. So we track that in the installed base, what kind of installed base we have in the market. So it needs repair, upgrade, consumable business. This kick in quite nicely in Q4 last year. And with the fab utilization now going up and almost being at the max, for example, for DRAM, also here, we will see quite a growth in this year. And also, we anticipate by 2030, the installed base of our valves will also double. So it's about the same doubling we had since the IPO in 2016. And now in the next 4 to 5 years, we will double again. And of course, the installed base is kind of the foundation then for our service business going forward. The non-semi business, we reported about 14% of our sales in 2025. So this is kind of -- we are focusing here on some critical vacuum applications. I always say it's kind of our scouting as well, what's coming up. So 20 or 30 years ago, semiconductor was very small as well. So you need some scouts and get the foot into the door if something is growing. Here, we see certainly growth in the field of scientific instruments, metrology also semi-related business in one way. Research is always very close to our heart at VAT as well because the first valve was delivered to R&D at that time as well. And of course, there, you see what's going on, what kind of application could make it to the industry and high volume. Interesting for us also the energy market. So of course, solar at the moment, muted, but this will come back maybe in 2027, 2028, all the nuclear business as well. So the uranium enrichment kind of a revival as well that everybody understands we need the energy and maybe more in the long term, fusion as well. So we are very deep in fusion technology as well. They need huge vacuum systems to run fusion reactor but of course, that's not in the midterm plan. But here, we learn about ultra-high vacuum application, extreme conditions. And I think that's the field we want to be in as well. A good example also so ADV Advanced Industrial, a lot of project business. Another good example for project business is the display. There is a lot of investments ongoing as well, especially in OLED. So in the future, all the laptops and all the eye-care relevant displays will be OLED, and there is investments ongoing, especially in Korea and China. And over the last years, we did win a lot of market share on these new tools. You see a picture and also the size of a human being, how big these tools are. It's massive. It's hundreds of meter vacuum systems where they produce these panels and a lot of investments going in there. It will remain a cyclical business as well, but it's always good in the long run that you can participate in such investment cycles. So summary, the ramp this year. I think that's the most important. That's exciting. And what we expect for 2026 will be new records again this time, records in orders, records in sales and again, records in free cash flow. So very promising for 2026. This is what we want to achieve. At the same time, we want to also improve EBITDA, EBITDA margin and net income compared to 2025 and this is all based on these investments now in AI, wafer fab equipment going up, fab utilization on record high that we have a service business and also ADV kicking in with some interesting markets. We keep investing about CHF 70 million to CHF 80 million in CapEx and also R&D investments will remain very high. This is our future. This is where we want to invest. So the guidance for Q1 is roughly CHF 240 million to CHF 260 million with a substantial above 1 book-to-bill ratio. This we can promise you already. Then 3 things you should take home from here. First, 2025 was a year of record for VAT. So looking back, especially factory output, we ramped that, and we are ramping again in our Q1 factory output. We completed major investments in R&D center in our facilities, record high in the R&D spend, so with record high of specification wins. And certainly, Switzerland remains the hub for R&D, new product development. The second, as I mentioned, 2026, finally, the ramp is here and coming. This will change the behavior in the market quite a bit. The USD 1 trillion semiconductor market is very close. So it's an acceleration in the market. We will ramp up the factory in Penang in Romania, but you always have to be also cautious, and we will, as Fabian also mentioned, invest very disciplined as well because we know the market. It can change tomorrow again. So we have to be ready and alert on and keep stay flexible. And beyond 2026, I think it's still a fantastic growth story. The sub-2-nanometer chip manufacturers will continue. As I mentioned, the FinFET was about 12, 15 years and now gate-all-around starts. And this is not one technology. This is again a road map to the next one. And this is just starting with all the challenges the industry will have, and we are very well positioned to benefit on that. With that, I think future is bright. I will hand over to Michel Gerber. Michel Gerber: Okay. Thank you very much, Urs. What is always a little bit frustrating to me is when you start talking about the time beyond 2030. And unfortunately, we are not at liberty to give you yet too much detail about what's happening there, but I'm sure it's going to be very exciting. And maybe at the next Capital Market Day, we can tell you a little bit more. Anyway. Thank you very much. Michel Gerber: So the Q&A, you know the drill. I'll take questions from the room. Carol will help us with the microphone because, as you know, we have people on the phone, we have people on the webcast. [Operator Instructions]. And with that, I would start here. And ladies first, Maybe I can give you mic closer. Laura Bucher: Laura Bucher with Octavian. I have 2. First, very straightforward. On your outlook for Q1, you mentioned book-to-bill substantially above 1. So just trying to understand your use of the terminology there. Does that mean we should expect something similar to Q4 '25? That would be the first one. U. Gantner: Yes, similar to Q4 is a good assumption, yes. Laura Bucher: Okay. And the second one, you mentioned factory output increase, preparation for the ramp is done. Can you comment a little bit on the trajectory of the margin in '26, maybe something a bit more tangible than the outlook. We know there will be a big FX impact. Is there anything else you need to do from your side that would prevent you from reaching already the higher end of the guidance by year-end? Are you just waiting on volumes? Just looking for some comments there. Fabian Chiozza: Yes. Thanks for your question, Laura. I think we have to disaggregate a little bit on the margin, what is gross profit and what is EBITDA because especially on the FX side, you have negative effects on gross profit. But then on the other hand, all your hedging gains support your EBITDA. So on a -- let's say, on a like-for-like basis, I would not expect any substantial impact from the FX going forward on EBITDA. Whereas on the gross profit, we will definitely see now a reversion of the negative impacts that we have suffered during the course of 2025 as we were reducing the inventory now going again into a ramp, I would expect there a bit in accretive development from trade working capital buildup. And then last but not least, as I have also mentioned, VAT has always been very exposed to strong operating leverage once we saw growth kicking in. And I mentioned that the capacity is in place. So I would expect our bottom line EBITDA margin and also to certainly hover in the, let's say, first half of the communicated margin band most likely towards the upper end of it. Michael Foeth: Michael Foeth, Vontobel. Two related questions. The first one is if you can comment on your current lead times, if customers put an order in today, what's the -- approximately what's the lead time on those orders? And if you could also -- that's the second question, provide us with a sort of relate the Q1 sales guidance to the high Q4 order intake so that we understand why we're quite a bit below that -- below the order intake. U. Gantner: Yes. Thanks for that question. Lead time, I think lead times are completely different than maybe some of you had in mind during the COVID time where there were clear shortages first in aluminum, then in chips and then in elastomers at the moment that supply chain certainly is ready. It doesn't mean that there might pop up other challenges as well, especially also if you see geopolitics as well. I never know what's happening there. But lead times are back to the 8 to 12 weeks normally. And anyway, with our large customers, we have our consignment programs. So there is always a buffer. I think the biggest challenge also for our customers at the moment is which configuration they will need when. And this already shows that at the moment, there's no way to just ship something. So we also need to know what kind of configuration they will need for their customers. And this also translates already a little bit in the second question. So as soon as it's not fully clear what configuration they will need for the production in which fab we cannot ship. So we can, of course, already ship the base. That's fine for high runners. But the specific configuration for this -- what I showed this gate-all-around technology, which is completely new. That's not 100% clear, and we need here close alignment with the customers. Furthermore, Q1 is always kind of also -- has also a seasonal impact as well with the many holidays, especially in Asia, and you have seen 75% of our business goes to Asia. And basically, some of the counters are really shut down for 2 weeks as well as we do, of course, for Christmas break. And I think this year, even Ramadan is also in Q1. So that is more a seasonal impact. So that's why at the moment, it's very positive on all the order intake, the collaboration with the customer, a very close alignment, what they need when. I think that's the message, maybe less -- the Q1 is now not the fantastic sales, but what we are doing now is ramping up capacity. Factory output will go up quite a bit in Q1, and this will then turn into sales the following quarters. Nabeel Aziz: It's Nabeel Aziz from Rothschild & Co Redburn. The first one was just on your major Western semi cap customers have guided revenues '26 kind of up 20%. Your China semi cap, if you look at consensus, are up kind of 30% this year. Other than FX, is there any reason why VAT shouldn't deliver similar sorts of revenue growth in 2026 for semi valves? U. Gantner: No, if they order, we are ready. No, I think that's certainly in line what we see. I think the configuration, as I mentioned before, it will be critical. Do they more legacy tools or they go in leading-edge tools. This will also then impact our sales growth. Nabeel Aziz: Yes. Very clear. And then one of the topics that often comes up in our discussions is the topic of localization in China and specifically valve localization. So if there's a localization theme from the semi cap side, could you provide some more color in terms of what it is that's difficult to replicate about a VAT valve and what it is that makes your valves more resistant to disintermediation by a local supplier? Anything on that would be really helpful. U. Gantner: Interesting questions. And of course, you can imagine we are discussing this topic quite a bit as well. I think, first of all, valves are still a niche. It's a niche product in an ecosystem. And as also mentioned, China they have to do a lot of development on their tools to bring that to the leading edge. And there are multiple components. And I think as long as they can, they rely on something that exists and works. It's proven in the market. Why you should do something in your bill of material, maybe valves are roughly in the 2%, right? Why you should focus now on valves, a critical component, but not changing your entire pump structure as long as you get the kind of the confidence that you get the products. So here, valves for such a tool, if you take the leading-edge tools, of course, my engineers don't like if I say that what it's like a screw for such a tool, right? It's not very critical in purity and ceiling and -- but still, they have other issues to solve than thinking about valves. And I think that's something that's very important. And then it's -- also I mentioned the semiconductor is a small industry still. People know each other and also here, very human being relationship is very important and supporting each other. Yes, you can replace anything if you want. But I think the strength of a company is always if something goes wrong, how to solve an issue. And there you can prove that you are the right partner. So coming from a supplier, we were clearly suppliers 20 years ago. And today, we are more partners in the industry. And losing a partner is something hurts, right? Replacing a supplier, you can do. Michel Gerber: Okay. So maybe I take one more question from the room at the moment, [indiscernible] for you, and then we go to the questions that we receive over the phone. Unknown Analyst: [indiscernible]. First one is on price increases. You mentioned that you had -- if I understood you correctly, you had preorders because you will increase your prices in Q1. I was just trying to understand, so you -- I guess you stick to your 2x wafer fab equipment growth that you can achieve. So how much -- so let's assume that's volumes. So how much would come on top in terms of pricing for 2026? I mean what's your idea or plan on price increases for 2026? Fabian Chiozza: Maybe I can take that question. Look, I think the semiconductor industry is one of stable prices, not just the end product for the customers, it should remain affordable and economically viable. But I think we also learned how to ensure we work with our customer on this ever-increasing pressure of cost reductions. So we don't just adjust prices on a regular basis. Therefore, we have had, let's say, a pause on it. And after 2 years, we ran selective price increases that that's important. And we're certainly not exploiting the position that we have. So you can assume that those price increases have been placed in areas where, for instance, our margins suffered extremely under currency devaluations or also where we have not been able to get the required volumes in the past. So to quantify that, I said previously that the price increases are low to mid-single digit in percentage and the contribution of those are very low 2-digit million Swiss franc number. So it's definitely nothing that we will have to highlight on one of the slides when we would disaggregate volume from price in our growth. Unknown Analyst: Okay. That's very clear. And a second one on the clean room space. I mean you read it obviously everywhere, yes, that there is an issue with clean room space, so basically fab space. I was just wondering what's your opinion on, let's say, the CHF 130 billion wafer fab equipment and next year, you showed on the graph, CHF 148 billion. I mean, at what point would you think it's becoming a real issue and actually stopping that accelerated growth in the next couple of years because still someone has to build those factories, yes? U. Gantner: Well, here, I think the ones who invested ahead of the cycle, they are ready, right? They will win again. And I think that's typical in semiconductor. We have to invest ahead of the cycle to be and benefit. So we do it on our level as well with our factories in Romania and Malaysia. And the fabs are doing the same. The OEMs are doing the same. So they invest, they are ready. And some of the fabs, we see now that maybe they did not invest enough and more got surprised that their products, for example, DRAM is just ramping like hell at the moment, and they try to find fabs at the moment. So the issue for -- I think it's not a general issue, but for some companies, they might have an issue and might also then lose or they have to deprioritize the fabs to go to the leading edge. That's how they manage -- they have to manage that in the future. So certainly good that there is not enough clean room space. I think there is another element as well that every region and sometimes every country wants to get self-sufficiency. U.S. is doing a lot of -- because they want to have self-sufficient. China is doing -- the only country that is self-sufficient is Taiwan. Of course, they don't need a lot, but they have really the leading edge and also South Korea is very close to that. All the others are dependent on each other. So this is also a driver why they are building the fabs as well. And also even in Europe, there are some fabs, but maybe not fast enough. Michel Gerber: Good. Thank you very much. So with that, I would turn over the Q&A to people on the phone. And operator, please, the first question. Operator: The first question from the phone comes from Meihan Yang from Goldman Sachs. Meihan Yang: [Technical Difficulty] Michel Gerber: Can you please repeat the question? You were breaking up a bit here. Meihan Yang: Yes, sure. [Technical Difficulty] basically your aluminum exposure. Michel Gerber: Well, our exposure is to raw material and raw material price increases, I think you... Fabian Chiozza: Yes. Okay. Yes. Thanks for that question. Look, we were already exposed to raw material inflation during the course of 2025. But thanks to our continuous improvement program, we could not only mitigate that effect, but also have had a positive net effect on our gross profit. And with these, let's say, measures being sustainable in our cost base, and we continue to deliver further improvements. I do not expect a negative impact from raw material swings during the course of the next 6 months, at least, as we also hedge our key commodity aluminum for about the annual volume that we expect. So the LME increases that we have seen, let's say, from $2,400 now to about $3,300, $3,200 will not directly impact our P&L. And hence, I'm pretty comfortable that we can sustain, if not slightly increase the gross profit margin that we have reported now for 2025. Meihan Yang: On services margins. do you see your global [Technical Difficulty] and if you could remind us [Technical Difficulty] geographically? U. Gantner: Well, I think service margin are always higher than what you do with an OEM. That's I think probably in every business like that. And I think we are on a very healthy level. And of course, as soon as also volume is kicking in, this will be getting even better. So the different -- on the different product lines, so consumables, spares, upgrades, retrofits. And certainly in consumables, it's -- normally, it's single parts, it's higher margin. And if it comes to upgrades, then it goes more into complete products like valves. And of course, there is margin then lower than in single parts as this is just normal probably also here in different businesses. Fabian Chiozza: Yes. And maybe just to quantify that a little bit. So we have seen a nice increase of the EBITDA of our service business in the second half to about 47.6%. And this was mainly driven by the increased absorption of the cost structure. So with the strong increase in order intake, I would also see that level to sustain well into 2026. And on the margins, again, we have for spares and repairs, we have definitely the highest margins together with the upgrade and retrofits. And then on some of the consumables, as Urs has already said, it is slightly lower. But overall, the service business will definitely return as a very accretive driver to our bottom line margin in 2026. Operator: Next question comes from Oliver Wong from Bank of America. Oliver Wong: My first question is on China growth. So I think you guys [indiscernible] mid-single digits, and you're expecting [indiscernible] I was just wondering given your mix more important to domestic semi cap, which as we mentioned, some of them grow [indiscernible] Could that be potential upside that may grow more than the market? U. Gantner: Yes, certainly. As mentioned, maybe total wafer fab equipment spend in China will be flat, maybe single digit up. And as mentioned as well, the domestic wafer fab equipment tool manufacturers they will grow to increase the self-sufficiency rate. But also here, it's -- visibility is not that clear because they also have to go through the qualification. So their tools need also to go to the level that the next node can be produced. Once it is qualified in China, it can be -- go extremely fast. So you always have to be ready in China to deliver yesterday and not tomorrow. So -- but first, they need, of course, to qualify the tools as well. I expect that the China business will certainly grow for VAT this year in the region of -- as the OEMs will grow as well in the 20%. Oliver Wong: And my third question is on [indiscernible] what should be expect progressively higher orders especially [Technical Difficulty] kind of how you see the revenue, any kind of impact upon the preordering for that [Technical Difficulty] rest of the year? U. Gantner: I think the preordering in the end, if you look at the whole year will be not that material. So it will be quite almost noise. I expect that the order pattern will grow what we see at the moment, what's going on in the market that is more and more clarity coming on the fabs going online. So I expect that the order cadence will grow. There could be kind of, let's say, shocks out there. If there is somewhere a shortage, then suddenly customers start ordering more without the business impact. So similar behavior as during the chip shortages, right? They just started to order full year. And then it can, of course, be not a cadence. It can be a peak and then maybe go back. So the behavior is hard to say. At the moment, I think the communication is quite open through all the supply chain. I don't expect it at the moment, but something like a shortage somewhere kind of trigger something like that. Operator: The next question comes from Jörn Iffert from UBS. Joern Iffert: I will take them one by one. [indiscernible] the first one is the outlook [indiscernible] is there any anything you're seeing [indiscernible] for example others, which is a [indiscernible] first question, please. U. Gantner: Well, you're now focusing on one segment in the wafer fab equipment, particularly the lithography. I think there, the EUV, if you see the numbers, is up at least 2x this year. So -- but in general, of course, still lithography is a smaller business for VAT overall. The biggest business is always going to the deposition and etch application. But EUV certainly is also growing this year, what we heard from the customer side, and that's a very interesting growth business for us as well. Joern Iffert: Okay. So just to clarify [Technical Difficulty] This was more or less... U. Gantner: Yes, you say correctly up to 2x. So there is some room. Yes, there's no reason. Now if the investments are coming, especially in the leading edge fabs, we are on track. And if all these major OEMs equip the fabs where we are specified where we had a spec win in the past, then, of course, we are on that track. Joern Iffert: And then the second question [indiscernible] on the CMD in May, you had this CHF 1.6 billion revenue target for '27 [indiscernible] CapEx. Now I see in your slide that you mentioned CHF 135 billion, I assume it's a typo or has something changed here? And then after this one, maybe a follow-up to this related, please. U. Gantner: No, you see that at the moment, it's a very dynamic market. I also showed that some already displayed that it's CHF 180 billion wafer fab equipment. In the end, it's all about what can the industry digest in the end? Is there enough shelves there? Do they really understand what technology they need is also the chip manufacturers already ready to do high volume or are there process issues? This is still in floating. It's not just that like in automotive, you have a new car, you build a factory and you want to produce 100,000 cars a year. And this is planned and they will achieve probably plus/minus 1%. Here, I try to show you it's an atomic layer, atomic level what they have to do. They have to drill these fancy structures. Sometimes they don't know yet how they want to -- they can do that. The guys in [ IMEC ] they did it. They know it works, but now they have to bring it to high volume with a certain yield on a wafer as well. And I think that's the big challenge the industry has. And that's why, yes, the forecast looks brilliant, but there are a lot of technical challenges as well. And that's why this wafer fab equipment can, of course, also you see that a little bit shift or pull in or push out. So that's always critical. So overall, under these circumstances, yes, we're still confident that we can achieve this CHF 1.6 billion with all the FX and headwinds that come, but it's certainly a good reference for you what you want to achieve by then. Joern Iffert: Okay. [indiscernible] revenue on an underlying CapEx of CHF 125 million. And now in the earnings slides, I see that this is now based on the equipment CapEx of CHF 135 million. My question was really, is it a typo or has something changed regarding the correlation here. U. Gantner: I don't have it at the moment in the mind, so maybe we can do that offline with Fabian. Fabian Chiozza: No, Jorn, I can take that. It's not a typo and your house was actually pretty bullish on the WFE number. So you certainly also indirectly drove that up. And I think ultimately, the answer lies in what Urs was explaining that, yes, of course, we also observed these numbers. At times, we're also surprised of the volatility and the dynamic that the researchers bring into the WFE development. And at the end of the day, there are 2 thoughts I just want to give you. The first one is we always have to remember that we are a Swiss franc reporter and WFE numbers are in U.S. dollars. So was the reference at the Capital Markets Day, which was at -- I think it was CHF 0.835 at the time. And secondly, also mentioned by Urs, I think we need to see how the phasing of these investments is ultimately happening and how the supply chain is digesting this massive amount of CapEx into industrialization of tools. So I think overall, we are ready. We are cranking up the machine. And if investments are going to develop into the heights that are stipulated right now by market observers, then obviously, VAT's revenue will also develop accordingly. Michel Gerber: Okay. So we just heard that there was a bit of an echo on the questions. But now maybe next question, please operator. Unknown Analyst: I would like to ask on China again [Technical Difficulty] probably still close to 50% exposure there. Then I recall you said China is the highest margin market for individual valves. If you now expect the market to grow China by 0% to maybe 5%, but you expect the Western market to grow maybe 15% to get to this 11% market growth, would that mean a negative mix effect for you? And can you maybe a little bit elaborate on the impact here. That would be my first question. Fabian Chiozza: Yes, we have stated before that the China business certainly has a higher margin profile than our long-standing huge Western customers. But as you can imagine, China has grown quite a bit over the years. And also these guys have to work on cost-down initiatives. They have to ensure that the yield gets into an economically viable pattern. And therefore, these margins will also adjust over time. Now talking about 2026, I do not expect a material negative mix effect on the bottom line. As I have stipulated before, we expect very good contributions from our service business. We are ramping significantly the output of Malaysia, which will also help. We are also continuing to ramp the new factory in Romania. And then also on the personnel cost side to soften the impact from the Swiss franc. We established a new legal unit in Malaysia, and we're now also starting to provide shared services out of Malaysia. So all of that together will help to still provide an increased margin profile and make us even more resilient as we move forward. Unknown Analyst: Understood. Second question on operating leverage. You mentioned that [Technical Difficulty] at the same time I would assume that VAT is mostly an assembly company. So if you want to raise output, you want to raise volume, you raise staff -- safety staff, which gives you a relatively small operating leverage. But I would assume that you have certain staff quantities in place as of today that allow you to ramp to a certain extent without adding people. Could you maybe give us a little bit of an idea how -- where the utilization rate is at the moment, which then allows us to calculate incremental volume without adding too much new people, if that makes sense. Fabian Chiozza: Yes. Look, we are running our operations always with 2 mindsets. There's also the vigorous debates I have with my COO colleagues. On the one hand side, obviously, we have the cost discipline. On the other hand, we have the scalability, the ramp capability. Now fortunately, we have developed over the years a model that really allows us to timely adjust capacities, both down, but then also up. We talked at the end of summer last year that we have taken out in Switzerland about 110, 115 people. And you can imagine that some weeks ago, we started to bring them back on board, and this is continuing. So therefore, the personnel cost effects are pretty well synced also with the increase in factory output, which then translates into revenue. And therefore, the biggest lever for me is really the measures that I have just discussed a moment ago in combination with a much higher fixed cost absorption. Remember, we have about 30% of our costs are fixed. So any additional franc of revenue will substantially help to bring more bottom line profit. With regards to the utilization rates, we are in Switzerland, still in the low 60s. That is now cranking up. And in Malaysia, in the existing factory, we're operating around 90% right now. And as I said before, the second factory is basically ready. It is right now working as an internal machining supplier. And once we see now demand unfolding, we will bring in the clean rooms and then also switch this factory on for end product production. Michel Gerber: Now maybe one question from the webcast still. I'd like to ask you, Fabian. And it's more a little bit of a clarification to a statement you made earlier. and it has to do with the 2026 EBITDA margin expectation range or whatever. And the question is whether you said the top half of the 30% to 37% corridor or what kind of like statement. It was a little bit misleading. Fabian Chiozza: Yes. No, I said that I want to move back in the upper end of the first half of that band. So the first half being 30% to 33.5%, I hope that clarifies it. Michel Gerber: Okay. Thank you very much. So as they say, time flies when you're having fun. We're already past the hour. We don't have any more questions neither from the webcast nor over the phone. And I think for the guys who we likely -- we'd like to invite you now to a quick standing lunch. It's one floor down. And there will be, again, opportunity for additional questions unless you have one burning one that you want to express now to be heard over the air. So otherwise, I would like to thank you, Fabian and Urs for today. Thank you for coming. And next results will be on the 16th of April, our Q1 trading update. And we're confident that we can show you the nice book-to-bill ratio that we alluded to today. So thank you very much, and see you later with drinks and something to eat.
Operator: Good day, and welcome to the Netlist Fourth Quarter 2025 Earnings Conference Call and webcast. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Mike Smargiassi, Investor Relations. Please go ahead, sir. Michael Smargiassi: Thank you, Nick, and good day, everyone. Welcome to Netlist's Fourth Quarter 2025 Conference Call. Leading today's call will be Chuck Hong, Chief Executive Officer of Netlist; and Gail Sasaki, Chief Financial Officer. As a reminder, you can access the earnings release and a replay of today's call on the Investors section of the Netlist website at netlist.com. Before we start the call, I would note that today's presentation of Netlist's results and the answers to questions may include forward-looking statements, which are based on current expectations. The actual results could differ materially from those projected in the forward-looking statements because of the number of risks and uncertainties that are expressed in the call, annual and current SEC filings and the cautionary statements contained in today's press release. Netlist assumes no obligation to update forward-looking statements. I will now turn the call over to Chuck. Chuck Hong: Thank you, Mike, and hello, everyone. In 2025, we strengthened Netlist's long-term strategic position as we made substantial progress across product and IP initiatives. We saw significant improvement in full year financial results, both the top and bottom line, and we ended 2025 with revenue more than doubling in the fourth quarter. Financial performance was driven by strong demand for memory in the second half of 2025 and the strong execution of our sales and marketing teams in delivering the value of our products to customers across key markets. Rapid growth in AI has created a supply-demand imbalance leading to a global memory chip shortage and sharp price increases across all product categories. These industry dynamics are expected to persist through this year and into 2027 when new fab capacity is expected to come online and increase supply of memory chips. In the current environment, Netlist is well positioned to grow its product business. Sales volume for Lightning, Netlist's overclocked and low latency DDR5 line of products, is ramping up nicely in the system integrator market segment. Adding to this, we've completed qualifications at a global server OEM, and they, in turn, are currently in testing with many of their end customers. We anticipate continued growth of our existing customers as well as new customers in high-frequency trading and high-performance computing applications. On the legacy products front, industrial and networking customers continue to require DDR4-based Netlist custom solutions. We will support these customers through 2026 and into 2027 through last-time buy agreements that were concluded in 2025. As AI workloads continue to drive demand for higher performance and higher capacity memory, we are investing in strategic R&D for next-generation technologies. Those include CXL NVDIMM and low-power MRDIMM. We are sampling our CXL NVDIMM proof-of-concept products to Intel and AMD for testing and validation on next-generation platforms. NVDIMM was invented by Netlist over a decade ago, and we are now moving this storage backup solution onto the CXL channel. As DDR5 DIMM speeds continue to increase, MRDIMM and LPMRDIMM are projected to become the primary memory module used in high-capacity, high-performance server applications. Netlist is developing a unique solution in this space. which takes LPDDR5 DRAMs currently used in mobile devices and deploying them in high-end servers via our unique LPMRDIMM design. On the IP front, we continue our defense of multiple favorable jury verdicts. We secured important appellate affirmances of the validity of our patents and expanded enforcement actions covering next-generation DDR5 and HBM technologies that are foundational to AI computing. In December, the ITC or the U.S. International Trade Commission instituted an investigation into Samsung, Google and Super Micro based on the complaint Netlist filed in September. The investigation centers on the importation of Samsung memory products that infringe on 6 Netlist patents: The '366, the '731, the '608, '523, '035 and '087. Each of these patents reads on one or more of the following products: DDR5 memory modules such as DDR5 RDIMM, UDIMM, SODIMM and MRDIMM and high-bandwidth memory, HBM. In 2025, the validity of Netlist's '608 and '523 patents were affirmed by the U.S. Court of Appeals for the Federal Circuit, upholding the PTAB's IPR decisions. As a result, Samsung is not able to challenge the validity of these patents going forward. The ITC has assigned the investigation to an administrative law judge and the procedural schedule has been set. The Markman hearing is scheduled for April and the trial is set to start on November. A ruling in Netlist's favor would direct U.S. Customs and Border Protection to stop Samsung memory products that infringe these patents from entering the U.S. The discovery phase of the ITC investigation will take place over the coming months. In the federal courts, Netlist filed 4 separate actions in 2025 in the U.S. District Court for the Eastern District of Texas against Samsung and Micron and their distributor, Avnet. In these actions, Netlist is asserting newly issued patents covering DDR5 memory modules and HBM for AI computing. They include the '087, '731 and '366 patents, which read on memory products that represent tens of billions in annual revenue for these defendants. In the breach of contract case against Samsung in March 2025, the Federal Court for the Central District of California found that Samsung materially breached the joint development and license agreement Netlist and Samsung signed in 2015. This was actually the third separate time Samsung has lost this case. Samsung filed its appeal -- appellate brief in December, and Netlist will file its brief in the coming weeks. We estimate that the briefing process will be completed this summer with a possible hearing before the U.S. Court of Appeals for the Ninth Circuit before year-end. In other appellate activity, Micron's appeal of the $445 million jury award to Netlist is in the briefing process with oral arguments expected in mid-2027. In the $303 million damages award against Samsung, the appeal has been companioned with the IPR appeals of Netlist's '319, '918, '054, '106 and '064 patents, which were asserted in this case. Oral arguments on these appeals will be heard on March 6, 2026, this Friday in Washington, D.C. Regarding other IPRs in late February, the Federal Court of Appeals affirmed the October '23 final written decision by the PTAB upholding the validity of Netlist's '314 patent in an IPR brought by Micron. Micron has 90 days from the CAFC's judgment to file a petition to the U.S. Supreme Court. This is the third time within the past 12 months that the Fed Circuit appellate court has affirmed the validity of Netlist patents against -- asserted against Micron and/or Samsung. These affirmances of the validity of these patented technologies attest to the Netlist's role as a technology leader in memory subsystems. The '314 and the '508 patent, which was also affirmed by the CAFC are asserted in Netlist's case against Micron in the U.S. District Court for the Western District of Texas, which is currently stayed. Finally, we expect oral arguments before the CAFC for the '912 and the '417 patents later this year. Netlist continues to advocate for the rights of patent owners from meeting government officials to urging Congress to take action on proposed patent reform legislation. In the fall, we provided our comments in support of the Patent and Trademark Office's Notice of Proposed Rulemaking, NPRM. The proposed rules seek to level the playing field between small technology innovators and big tech in the patent dispute process, especially when it comes to IPRs. We will be participating in the upcoming IPWatchdog Conference in Arlington, Virginia at the end of March. The conference will bring together leaders in the intellectual property community and will feature speakers from the USPTO leadership as well as district court judges. I look forward to being part of the panelists discussions. In summary, 2025 was a year of progress for Netlist. We entered 2026 well positioned to build on our success and capitalize on the transition to next-generation memory through our products and IP assets. I will now turn the call over to Gail for the financial review. Gail Sasaki: Thanks, Chuck. For the 12 months ended December 27, 2025, revenue was $188.6 million, an increase of 28% from 2024. We ended the year with strong fourth quarter performance as revenue improved 121% as compared to the fourth quarter of 2024. Top line results reflect the current industry environment, which Chuck noted earlier, with solid demand from both OEM and resale customers as well as significant price increases, which supported gross profit margin improvement for both the full year and quarter. While we do not formally guide, given booking and shipping for the first quarter of 2026 to date and subject to the visibility we have today, we currently expect total first quarter revenue to show further improvement from the fourth quarter of 2025. Operating expense for the full year 2025 declined 36%, driven by reductions in IP legal fees and SG&A cost controls. We ended 2025 with cash and cash equivalents and restricted cash of $42.1 million compared to $20.8 million at the end of the third quarter with minimal debt. In the fourth quarter, we strengthened our cash position, raising $10 million through a registered direct offering. With a $10 million working capital line of credit and approximately $74 million available on our equity line of credit, we continue to maintain significant financial flexibility and liquidity going forward. As always, we manage the operational cash cycle very carefully as inventory turn improved by 32 days over 2024 and days sales outstanding improved by about a week year-over-year. I would note that we will once again be attending the ROTH Annual Conference in March and look forward to meeting with investors. Operator, we are now ready for questions. Operator: [Operator Instructions] The first question will come from Jared Osteen with ROTH Capital Partners. Jared Osteen: This is Jared Osteen on for Suji Desilva. In relation to the current market supply and demand environment, Chuck, can you share your perspective on the current memory supply and demand environment? I know you shared a little bit in the formal remarks. And how much of this is being driven by the transition to DDR5 versus AI capacity driven? And then with the new fabs that have been announced, do you think these are sufficient to meet demand or is more needed? Chuck Hong: Jared, there's a global shortage of memory chips, really the raw material for all computing hardware really from laptops to mobile phones to servers and AI servers. While we focus mostly on high-end servers, servers for AI, we're feeling the effects of the access to raw material, the shortage of DRAM -- mostly DRAM raw material and some NAND. But on the other hand, the ASPs, the prices of all products that are related to memory have increased significantly. So that is offsetting the lower volumes in supply. And I don't know that any of this is impacted or due to transition to DDR5. A lot of it is driven by AI. I think OpenAI committed to some 40% of the output of HBM over the next few years. But they're not buying that yet. And then you've got commitments to companies like NVIDIA and AMD for HBMs. So that's taking up a lot of the DRAM components that are going into mobile phones and PCs that are now allocated for HBMs. And fundamentally, until there is new capacity, this capacity that's in place has been -- it was a CapEx that was invested some 3, 4 years ago. So there's really not too many ways to increase the overall capacity. It's kind of a zero-sum game. If you allocate more to one segment of the market, you get less on the other side. And until there is new capacity that comes online towards second half of '27, I think all sectors of computing will continue to face this memory shortage. Jared Osteen: And then to go a little bit deeper into demand and pricing, how do you see the demand environment playing out for the remainder of the year? Do you expect it to be front-loaded as customers grab all the product supply that they can today? And do you think that the significant price increases for memory that we've seen in the past couple of quarters will hold? Chuck Hong: There's 2 different points -- price points that we look at in our industry. One is the OEM pricing that are to manufacturers from the DRAM manufacturers being sold to computer manufacturers. And then there is the spot pricing, kind of the broker market. So the -- in the last 6 months, the OEM pricing for DRAMs have gone up probably 3 to 4x, the spot market has gone up probably 7 to 8x. So it's kind of unprecedented type of increase. We think most of that price increase will hold through this year, which means revenues for people that are able to secure supply of DRAMs for most people that are in this industry should go up despite the fact that unit supply and unit sales will likely go down for most people. So I think if you're able to secure supply, I think you're in a good position. And over time, if supply becomes an issue, I think it's going to become more difficult. Jared Osteen: Switching topics a little bit. Now that you have 2 CAFC-affirmed patents, the '314 and the '608, what are the next steps to get the stayed Micron case in the Western District of Texas moving? And is there anything else that might keep it stayed? Chuck Hong: Yes. I think this case now is open to being unstayed now that the patents have been affirmed by the appellate court. So our outside lawyers will take steps to reopen this case and get it moving again. So it's a legal motion practice that they'll undertake to get the cases -- get this case back open and on track. Jared Osteen: And then in terms of litigation expense cadence expectations for 2026, it seems like there's a little bit more activity in the pipeline this year with the hearing at the end of this week, some additional IPR deals and ITC in November. How are litigation expenses expected to track in the remainder of calendar year '26 relative to 2025 levels? Any color would be helpful. Gail Sasaki: I'll take that. So we believe it will be about the same as 2025. As you can see, I mean, even if the Western District of Texas case is unstayed, it won't happen in 2026. So there won't be any court cases in 2026. Obviously, the ITC will be spread out throughout the year, even though the trial is not until the end of the year. But we don't expect expenses to be much higher than 2025. Jared Osteen: Great. And then my final question in terms of products. How do you see Lightning revenue building in 2026? And what's your visibility into the duration of the process from proof of concept to material order process? Chuck Hong: Well, we've gone through this process. We're kind of at the tail end of the qualification and validation at the major OEM, our top customer, and they have their end customers. So we're finalizing those validations. We've been -- it's been ongoing for 6 to 9 months. In terms of the system integrator market, we're already shipping in some good volume, and that is ramping up. And the demand in that side of the market is very strong, not just because of the shortage, but people moving to overclock higher-speed DRAMs, both for high-frequency trading and a lot of these applications that require very fast execution, trade executions. So yes, we're seeing good traction, and we look forward to seeing continuing growth of this product line through the course of this year. Operator: This concludes our question-and-answer session as well as conference call. Thank you for attending today's presentation. You may now disconnect.
Octavio Alvidréz: Good morning, everyone. Thank you for joining us today. My name is Octavio Alvidrez, and I'm the CEO of Fresnillo plc. Here with me this morning, we have Mario Arreguin, our CFO. I'm joined also by our Chief Operating Officer, Tomas Iturriaga of the Central Region; and Daniel Diez of the Northern Region; and our Vice President of Exploration, Guillermo Gastelum. I would like to welcome to our full year results presentation. Before we begin, and as always, I would like to point out to our disclaimer, but I will quickly move to set out what we will cover in our presentation. I will take you through the investment proposition and some of the 2025 highlights and also our key recent HSECR initiatives. Guillermo then will go -- well, before then -- before Guillermo, Tomas and Daniel will provide an operational update from their respective regions. Mario will provide our financial update. Guillermo will talk us about resources and reserves. And then I will come back to close the presentation with some final comments and the outlook. I'm pleased with the performance of our business. As we have already reported, gold exceeding guidance and silver was in line with guidance. I believe this shows how we have stabilized our operations and are now in a strong position to capitalize on future growth opportunities. We remain, and this is going to be a continuous effort, very focused on control of the cost and mitigate the first initial signs of inflation that we see in our operations. Let's remind that in 2025, we achieved cost savings for $46 million through a number of initiatives, most of them and the majority of them in the Herradura district. But this will continue to be our focus in 2026. Of course, having the ounces and controlling the cost, even decreasing for 2 years, I would say, '24 to '25, and having in the ounces, we are enjoying the record prices and turning that into a record financial performance. In 2025, we delivered also on our mergers and acquisition strategy with the acquisition of Probe Gold in Canada. This is an outstanding asset, which added 10 million ounces of gold to our resource base, and we look forward to taking the right steps to develop this exciting project in due course. This goes along our strategy of acquiring quality assets. And in terms of exploration, we will see the Probe Gold acquisition to turn into a district for exploration for many years. Finally, we returned $950 million to shareholders in dividends, a record amount. So turning to our investment proposition. We are still the largest producer of silver in the world and Mexico's leading gold miner. We benefit from a large portfolio of high-quality assets with over 2 billion ounces of silver resources and 44 million ounces of gold resources. Let's comment that this does not include the most recent acquisition of our project in Canada, as we closed that transaction in January of this year. We have strong EBITDA margins and low costs and remain very focused on running our operations efficiently. This approach has seen us generate significant free cash flow of over $2 billion alongside very strong earnings per share, which has enabled us to reward our shareholders with strong returns in the form of dividends. As you can see, we have distributed 69% of earnings in 2025, well above our stated dividend policy. Though I should be clear, our policy remains in place. Some highlights on the financial performance. This is a record performance as we are announcing it today. Revenue was up strongly. But as you can see, our overall profitability was up sharply with significant margin improvements as we continue to focus on costs across the business so we can fully capitalize on the high precious metals price environment. And we have delivered considerable value to our shareholders, while retaining an extremely strong balance sheet. I should state here, we believe the strong balance sheet is a competitive advantage. We have generated significantly cash flow, returning value to shareholders ahead of our stated dividend policy, but we also continue to look for opportunities, which we believe will be value enhancing in the long term. And our balance sheet give us the flexibility to be able to act quickly if we feel our shareholders will be better served by other uses of capital, then, of course, we will act on that accordingly. Some few comments on gold and silver markets. We continue to see strong fundamentals driving demand for both silver and gold. As we have seen sadly this weekend, global economic instability, geopolitical tensions and trade disputes have increased demand for safe haven assets like gold and silver. We are seeing growing interest in precious metals as an investment class, which has boosted demand. Gold has hit record highs in the period, reflecting geopolitical tensions, while we are also seeing a strong underlying support from central banks. We expect these themes or aspects to continue for the foreseeable future. We have also seen increased demand not just from traditional drivers such as jewelry for silver, but in particular, in use in various industries, including electronic solar panels and automobiles, increasing industrialization has contributed to rising silver prices. And as we can see on the silver graph, I mean, it is one trend from 2018 to 2020, but increasingly use and demand from 2020 till now. So that is quite a healthy market, I would say, increased because the scarcity of silver projects also increased the foundations for this market. Finally, and most significantly, we are seeing supply constraints, as I mentioned, not only in gold, but also in silver. In short, we remain very confident in the outlook for silver and gold prices. Moving quickly to HSECR highlights. Safety is at the heart of everything we do. And as we can see in the graph, I mean, the trend is quite positive, decreasing the long-term injury frequency rates as well as total recordable injury frequency rates. But still, the two fatalities we had this last year is a strong reminder that we can -- we should continue putting across all of our operations, our policy and protocols and our philosophy, "I Care, We Care." So we continue and finally achieve a year with no fatalities. On the environment front, our work on improving our carbon emission performance is also ongoing as we work towards decarbonizing our operations, improving water recycling rates and upgrading our mining fleets. We achieved 78% renewable energy consumption in the period, ahead of our target. As I said before, we are not still increasing that target as we have some other mining projects that will increase our footprint. And therefore, that target remains at the same level that we have stated at 75%. On community relations, in particular, I would like to highlight local health campaigns where we have provided nearly 7,000 medical consultations and our new water initiatives on San Julian in partnerships with Metals for Humanity. As I highlighted before, our relationship with our communities is central to our license to operate, and we continue to make a huge contribution to our communities, both in terms of investment, employment and taxes we pay. I now would like to turn the presentation to Tomas Iturriaga and then after to Daniel. Do you want to present over there or... Tomas Iturriaga-Hidalgo: Okay. Thank you, Octavio, and good morning, everyone. So let's move to the following page here to start giving you some color on the operations performance. I would say that accounting for the different realities of the -- and challenges of the three mines, as a whole, the Fresnillo district had a solid year, meeting production expectation and achieving relevant progress in the different projects across mines. Getting to the mine-by-mine details at Fresnillo, we managed to stop the production decline that we have seen during the past 2 years with the silver grade increasing 10% year-on-year. That offset by a throughput decrease of the same magnitude due to lower bandwidth and/or shorter stope lengths at the San Alberto, Santa Elena and Candelaria areas. I think we've made significant progress adjusting our mine operations to the new reality of the mine at depth, improved our dilution control discipline as seen in the silver grade increase year-on-year. During 2023, it's key that we advanced development of and mine infrastructure at San Mateo and San Alberto areas required to support grade and throughput increases expected in 2027 and 2028. We saw good results at Fresnillo in the reserves front with 20 million ore tonnes at almost 200 grams per tonne of silver in reserve and most of it in the proven category, replenishing mine tonnes during the year and adding some to the reserve inventory. Moving into Saucito, another solid year at Saucito in terms of production with a very slight decrease in silver production due to lower volume processed, mainly driven by lower equipment availability and some delays on ventilation robbins due to permitting. Development meters were also impacted during the year by these same factors. But as we already have obtained the permits for these ventilation robbins, and we have established a very rigorous availability program improvement with our mine equipment OEMs. We are expecting an improved 2026 performance. Lead and zinc production were both strong at Saucito, helping a good financial result at the mine. Key for this year will be the interconnection of the deepened section of the Jarillas shaft is scheduled to be completed by Q3 this year, for what we need to shut down the shaft in a couple of weeks with some impact to this year's production and cost. But very positive impact expected starting in 2027 and on. So once we have this project conclude, we should see improvements in our cost per tonne due to decreased haulage. I think the team did a very good job keeping the operations stable and under control at Saucito, which is becoming a complex mine to manage. We saw also good results in the reserve front at Saucito with almost 17.5 million tonnes of ore at above 200 grams per tonne of silver and also most of it in the proven category. Finally, on to Juanicipio, where we had another very good year of operations with production of silver and the rest of the byproduct metals right or above expected levels and considering that silver grade decrease was expected and accounted for. So it was not a surprise, good year at operations. For this year, the conclusion of and commissioning of our underground conveyor project scheduled for midyear. It's very key. We will need to shut down the San Jose del Bajio, main haulage ramp for the installation of this conveyor, which is going to impact our cost this year, but we'll see relevant cost benefits starting in 2027 and on. Good result also in the reserve for -- in the reserve front at Juanicipio. 10.3 million tonnes of ore in reserve at about 200 grams per tonne of silver, pretty much all of it in the proven category. So efficiency and improvements and cost control initiatives will continue to be a focus in the district for this year. And just to counterbalance the inflationary pressures as well as exchange rate pressures. So we will keep a very disciplined approach to cost and efficiency. And just to reiterate that I think we have a strong performance at the Fresnillo district all-in-all for the year. Thank you. On to my colleague, Daniel Diez. Daniel Diezas: Thank you. Good morning, everybody. Happy to present the results of the operations in the Northern District, starting with Herradura. This was a very solid year in terms of results, consolidating the efforts on optimizing our operation and stabilizing first and now starting the process of growth and to optimize the installed capacity that we have for the coming years. First of all, our annual gold production was significantly above expectations, both on target and the overall guidance. As you see, this was a strong support for surpassing the company guidance for 2025. A slight decrease compared to previous year, 1.2%, but as mentioned, was above our internal expectations. So all-in-all, a very solid year in Herradura. The foundations of the results are the operational excellence and cost control initiatives that we started in 2023 and were consolidated in 2024. In particular, I'm highlighting this year, together with the efforts of the last year, mostly around the mine side of the operation. This year, in particular, we put a strong focus on optimizing the drilling patterns for increased recovery that was becoming one of the issues in our heap leach and also some enhancements on the DLP plants for throughput increase, supporting the results that we have right now. In parallel, we are executing several structural projects to optimize our operation. The first one that we started, it's the construction of the new Carbon in Column plant that we are finalizing that during this month. And in parallel, we are working on the engineering for the Sulphides Crushing Circuit and for the ADR plant that we expect to have built and operating during somewhere next year. Some capital deployment, it's included, and you see some increase in our overall capital profile. The structural projects that we are executing in Herradura, together with the sustaining, we are totalizing around $170 million for this 2026. These projects that I'm mentioning here, all of them have been strictly evaluated. All of them have between 8 months and 1.5 years of payback period, so are very accretive in terms of returns for the company is what we're trying to do, continue a very strict capital allocation policy, trying to invest in smart investments to optimize our operations. And in particular, in 2026, we have a strong focus on the district optimization. We have been explaining and communicated the view that we have in Herradura as a new gold-producing district. In this year, we are going to finalize the integrated planning, including all the assets that we are putting into production that we'll mention later on and maximization of the returns on the installed capacity that we have there. Moving to Cienega. Cienega, we had a more difficult year this year. 2024 was very successful. In 2025, we experienced some specific issues around metallurgy that hit us mostly on silver production. As you can see, we decreased from 4.8 million ounces on '24 to 2.8 million during 2025. However, the good news is that, that was specific to one zone of the mine that we expect to deplete during the first half of this year. So after that, that specific problem will be solved. In exploration, we're very happy with the results that we're having. I think we mentioned this on the previous announcement during midyear, the new discovery on a new high-grade gold zone called Victoria Complex, has been starting to deliver results starting in Q4 2025, and it's going to be the base of production for '26 and '27 in Cienega. And we also have some optionality through a few satellite deposits, in particular, one that we are finalizing to engineer and going through the permitting process to hopefully being able to complement production from Cienega. In terms of cost profile in Cienega, it's higher than expected due to lower production. However, during this year and next, we expect to be below $2,000 all-in sustaining cost with, which is still very healthy in terms of margin and still accretive as part of our portfolio. And finally, in San Julian, also a very positive year. If you recall, one of the main challenges in San Julian for us was to being able to transition successfully from the operation with two deposits and plants to only one. That has been done with very positive results. In terms of production, we have surpassed gold production and sustained silver production, which is very good. In terms of unit cost, as expected, it is slightly higher because operations in Vein is slightly more costly than operating the DOB. However, it's within the range that we set as a target that was having an all-in sustaining cost below $20, and we delivered $19.8 during 2025. So we're very happy with the results. And also on the exploration side, some very good results on exploration and new discoveries. We expect to extend the mine life in San Julian. The current life of mine goes all the way up to 2030. We expect to extend that lease for 2 additional years, and we continue to have new discoveries. So we have an operation that is well controlled in terms of cost performance and also with possibilities to extend. So it's also a good part of our portfolio. Handing over to Guillermo. Guillermo Gastelum: Good morning, everyone. Well, a few comments about our resources and reserves. Most of it is all good news. And I would like to remind you that the number that you're looking at are current as of April 2025. So those numbers have not benefited yet from the current higher precious metal prices. We took a hit though of minus 8.5% in our silver resources due to the application of the RPEEE principle, which is being required, we formalized later on this year as a requirement for the disclosure of resources, that's a reasonable prospectus of eventual economic extraction. So we lost -- we lost some silver resources. However, on the other hand, the remaining silver resources have a much higher probability to be converted into reserves in the future. The rest of the numbers are very positive. The resources in gold grew 14%, mostly due to good exploration results at the Herradura district and at Lucerito and other projects in Mexico. On the reserve side, the silver reserves grew 9.4%, as you can see. So most of the reserves were replenished at the Fresnillo district. And also our gold reserves grew 7.4% mostly coming out from the Herradura district. So those are good numbers. And as Octavio mentioned before, this number do not include any of the new resources that we came to Fresnillo with the acquisition of Probe Gold. Highlight for 2025 was, of course, the acquisition of the Canadian junior company, Probe Gold, which has a very significant asset at one of the premium locations of the Val d'Or mining camp in Quebec, along one of these major structural breaks that cost millions of ounces of several other mines around. So the Novador project, that's a flagship asset now of Fresnillo in Canada is located about 25 minutes drive east from the Val d'Or town site. So it's an excellent location. So overall, this acquisition is adding around 10 million ounces of gold resources, and most of them are located in the Novador project, which has a good potential to be -- well, and we are going to turn it into a producing asset, expecting to deliver in 2030 -- 2032, if I'm correct. So very importantly, we have continued the work that was being carried out by Probe Gold. We are drilling right now, and we have good plans for additional geological and geophysical studies in the rest of the properties. I would like to highlight a couple of issues here that this acquisition didn't come only with Novador, but with a significant land position in two major mineralized gold belts in Quebec. It's very important to say as well that the -- after the transaction, the key personnel of Probe Gold was retained. So -- and most -- and basically all of the professionals and technicians working at Val d'Or are now working for Fresnillo. So we haven't had any issue in continuing the operations and the exploration plans at Val d'Or. Now a few comments about some highlights of what we did in 2025. We spent $175 million drilling slightly over 800,000 meters overall in all of our projects in Mexico, Peru and in Chile. As usual, we have a very strong focus on brownfields exploration. We allocated about 80% of the budget to brownfields, which is coming out of the normal, say, exploration programs by the mine exploration teams following their targets of converting resources, adding new resources to the mine operations and also infill drilling in the reserves to increase the certainty of the reserve for medium- to long-term planning. And the remaining 20% was allocated mostly in the advanced exploration projects such as Guanajuato, Orisyvo, Rodeo, Tajitos, and the emerging Lucerito project, which is delivering good results in the latest exploration. So, all of this work is supported by a significant land that we owned -- in the land concessions that we own in all the countries where we operate, we can see the numbers to the left of the triangle there. And our focus for 2026 will be an increase of the exploration budget up to $308 million. Now we're seeing a shift of more investment being put in the advanced exploration project and 35% of this total budget will be devoted to the advanced exploration projects that you see in the upper levels of the triangle, like places like Valles, Noche Buena at the Herradura district and also the Herradura underground also in Herradura and the other advanced projects I just mentioned. But also some investment will continue to be made on the early-stage projects to keep our portfolio alive and dynamic with the -- still the brownfields around San Julian and Fresnillo and some of the projects that we have in Peru and Chile and now in Canada. We'll finalize this slide just by mentioning that we continue to have the deployment of regional prospecting teams in the four countries where we operate, trying to advance new projects to make -- to show some progress or to make decisions as to optimizing the land that we control. Okay. Having said that, now we will turn into a more detailed description of our project pipeline, and we will start talking about the brownfield projects. And of course, you all know that the advanced exploration projects are now being sponsored and championed by our COOs. So, we will start out of Valles. So I will hand this over to Daniel. Daniel Diezas: Thank you, Guillermo. As mentioned before, part of the efforts of optimizing our portfolio, in particular, on the Herradura district is about capturing short-term opportunities and increase value where possible. What you see here, and I think this is the first time in some time that we present what we're doing in the different projects, it's exactly that. What opportunities we can capture in the short term while we keep -- we remain optimizing our portfolio and our production profile in the district moving forward. To begin with, we have Valles. Valles is an underground operation that will run in parallel with Herradura. We are pretty much starting production next year. We completed the detailed engineering during the last year and the beginning of this one. The operational model is completed, the section that will be operated by contractors. So we have selected our main contractor in there as well. And the rehabilitation works in the underground mine will start on Q3 this year. We expect production to commence by mid-2027. And the expected average production will be in the range of 60,000 to 80,000 ounces per year. That will be processed through the same processing facilities in Herradura. So it's going to be an increase in gold ounces through higher grades by using the same capacity. So the capital is very limited, a very accretive project that we expect to have running for 7 years with a possibility to extend the mine life through exploration that depth is still open. So we're very excited about Valles coming online. On the right-hand side, Noche Buena. Noche Buena, as you probably know, it's an open pit that operated up to 2022, where the reserves were depleted at that point in time. Some potential remained. So we kept analyzing opportunities. And together with some good exploration results and the new price scenarios, we rerun an evaluation, and we are actually restarting operations. We expect early next year. We have completed the studies for that. We expect an average production of between 40,000 and 50,000 ounces additional for the next 8 years in Noche Buena. So another very good news for the district and for the production profile of the company. This is not included in our forecast so far. That is in the short term. And by the end of the presentation, Octavio will show a general time line of our project pipeline. But in the longer run, as we mentioned before as well, we have Herradura Underground that is the main portion of the deposit at depth. We completed conceptual studies. This is on earlier stages. So we expect production between 120,000 and 160,000 ounces per year. This is a longer implementation project. It requires some development in the open pit in order to be able to start. So we expect to start by 2031. We have scheduled the definitive PEA during 2026 as part of the exercise that I mentioned before around the optimization of the district. And with this new long-term view of prices, what is the right transition between open pit and underground and how they coexist in the long run. We expect to comment on that by midyear this year. And finally, it's a greenfield, but also part of the Herradura district is Tajitos. I will leave to Guillermo to comment a little bit on that one. Guillermo Gastelum: Thank you, Daniel. Well, Tajitos is a disseminated gold deposit, very similar to Noche Buena. It's located in the Herradura district, as already mentioned, and it has a resource around 1.1 million ounces, most of it in the indicated category. So that's the -- for us the Tajitos as we know it now, but in 2025, we discovered additional mineralization west of it. So the district is much larger. We have -- we are exploring a vein system, which is outcropping that has very good gold grades and is amenable to underground mining. And also, we have defined additional exploration targets for disseminated mineralization west of the non-resource. So that's a good news. And we will be advancing studies at the PEA level in the first half of this year at Tajitos. Now moving forward. And in this slide, you are seeing the advanced greenfield projects. Starting off with Rodeo, you'll just mention a few words before letting Daniel go into the details. Rodeo is also a disseminated deposit. It's not much a vein-type. It's a different style of mineralization hosted in volcanic rocks, which are thoroughly oxidized through depths in excess of 300 meters, which is -- allows for very good metallurgical recovery and also has good exploration potential, and we have four rigs spinning right now at Rodeo looking for additional mineralization at this project. So Daniel, would you like to continue on the plans? Daniel Diezas: Yes, quickly around. As you can see, we have been making significant efforts in order to optimize and put more focus on the development of our project's portfolio. Rodeo is one example. It's an open pit, as Guillermo commented. During 2025, the focus of what we call an advanced PEA was on two fronts. The first one was extension and metallurgical drilling, and we successfully completed a campaign with 25,000 meters with good results. And the second objective was the metallurgical test work. That is the key for a Heap Leach operation. We completed that, very detailed test work for a PEA, and the results are quite promising. So we're very confident on what's coming for Rodeo. That just was completed in December this year -- last year. So we are starting by the end of this month, the PEA study for the optimization, and we expect to have that completed before the end of Q2 this year and hopefully start the PFS stage moving forward. What we expect out of Rodeo, it's a production for what we know now, we think we have a possibility to slightly increase. But what we know now is between 75,000 and 90,000 ounces of gold per year, potentially starting in 2029 with a life of mine of between 8 and 9 years. Guillermo Gastelum: Then moving on to the next project, which is Guanajuato, Guanajuato Sur. Remember that Guanajuato is a historical mining district located in Central Mexico. But now we are exploring in new parts, new portions of this district where significant silver and gold veins have been discovered, brand-new structures, which were discovered by the use of epithermal methodology for going about exploring this type of deposits. And we had a very successful 2025 exploration results. So Tomas, would you like to comment on the progress work? Tomas Iturriaga-Hidalgo: Thank you, Guillermo. So during 2025, we concluded conceptual level studies with excellent results. This is a high-grade silver-gold project, very strong on the financial side at the conceptual level, very well located, rather accessible land, flat land at a very mine-friendly state as Guanajuato. So we're very excited with the results of the conceptual studies. We have selected already the ramp development and shaft sinking technology. Those are the critical path items in the project. So, we have already selected the technology and we are proceeding with detailed engineering of those pieces of infrastructure. We will immediately continue to pre-feasibility level studies this year. And like I said, very, very interesting project. Potential is still open. The geological potential is still open at length and depth. So that's why Guillermo and his team are focusing very heavily on exploring the site. And the expected start of the production is by 2033 at this point. Do you want to comment Orisyvo, let me tackle that? Guillermo Gastelum: Yes. Just let me mention about Orisyvo that is also significant that you've seen this name around for some time, is a significant disseminated gold deposit, the largest of its type ever discovered in Mexico. But fortunately, this system, which costs around 10 million ounces of gold has a core of higher rate, and that's been -- that we are targeting now. And that's -- about these studies, Tomas will continue on explaining. Tomas Iturriaga-Hidalgo: Yes, Orisyvo. So this is a gold project up in the mountains in Chihuahua, as you know. During the year, we concluded the pre-feasibility A studies. And given the capital intensity of the project and some OpEx requirements, we decided to do a third-party review of that pre-feasibility A with very good results. We were able to -- during this review to improve the project economics. So we will continue to pre-feasibility B during the year and advanced permitting engineering, which at this point is a critical part of the project, the permits. So we are already on it. Expected average production of Orisyvo is between 180,000 and 220,000 ounces of gold a year, also with the start projected for 2033 at this point. Guillermo Gastelum: Okay. I will finalize this section just by adding a few words on Novador. One of the targets when we get up to Val d'Or, and after the acquisition, it was not to disrupt the activities that were in progress. So we were able to continue the exploration drilling. As I said, we have six rigs now in operation and also a very strong focus, of course, on the development of Novador. And for that reason, we have a number of consultants, which are supported by Fresnillo's technical services team to continue to advance the pre-feasibility level studies. So we are expecting results of the pre-feasibility by midyear, around July. And a little mistake there, production is scheduled to commence in 2032. So I think with this, I will hand the microphone over to Mario Arreguin. Mario Arreguín: Thank you, Guillermo, and good morning to all of you. So, it's always a pleasure to be back here in London and to have the opportunity to share with you our financial numbers, especially when those numbers are record high numbers. So it's easier. As you can see in the lines which are highlighted in yellow, gross profit was above last year by 114%. Operating profit was 142% above last year. Profit for the period was almost 600% above last year and EBITDA was above 81% last year. So very, very good numbers. But let me start with gross profit. Again, as you can see, we were up by $1.4 billion. And here, what I would like to touch on are basically two line items. One has to do with adjusted revenues, which grew up by $1 billion. And that combined with the fact that we have a lower adjusted production cost compared to last year of almost 11%. Well, that resulted in great margins for us. So let me start again with adjusted revenues. Okay. As you can see from this slide, in terms of sales volumes, as expected, and this was included in our guidance. Volumes sold were lower compared to last year. In the case of silver, we sold 11% less, which had a negative effect of $293 million. We sold less gold by 4.5% compared to last year, which had a negative effect of $94 million. So in general terms, in terms of sales volume, the total effect was a negative $429 million. Fortunately, that was more than compensated by the higher average prices that we saw both in gold and silver. In the case of silver, (sic) [ gold, ] silver (sic) [ gold ] went up by 44%, the average price, which had a very positive effect, of almost $651 million. And silver went up by 51.5%. As a matter of fact, the average price of silver (sic) [ gold ] last year was $43.6. And currently, the spot price is almost twice that for this year. So things are looking good. And like I said, that had a positive effect of $781 million. Let me share with you the main reasons behind the decrease in the adjusted production cost. And let me start first with the factors that are outside of our control. For example, in column #5, you will see the favorable impact that the devaluation of the Mexican peso had. We're talking here about the average exchange rate for both years. So the average exchange rate in 2024 was MXN 18.3 per dollar. And in 2024, (sic) [ 2025, ] it was MXN 19.22. So that translated into a 5.1% devaluation, again in terms of average exchange rate. Because I'm sure you've all seen that the peso has been coming down quite substantially throughout the year. However, what we take into consideration is the average exchange rate. So that had a positive effect of reducing our cost by almost $52 million. Now when you combine that with the other factor, which is outside of our control, which is basically shown in graph #1, cost inflation, excluding the effect of the exchange rate was 3.2%, that had a negative effect of $45.8 million, which pretty much offset the benefit of the devaluation. But still, net, we had a positive effect. And let me just go back to the previous slide. This is what we call our consolidated cost inflation, which basically takes into consideration our own consolidated basket of goods and services. And when you combine the two effects, the exchange rate effect together with inflation, this is what we obtained for 2025, a 0.24% deflation, if you will. So fortunately, for us, in 2025, inflation was not an issue when you look at it in dollar terms. So to sum it up, when you look at the increase in gross profit of approximately $1.4 billion, there are two bars that stand out here. Clearly, prices, the higher prices shown on the #1 column, had the most important impact, which was estimated at $1.4 billion. And again, if you look at bar #9, that was a bit offset by the lower sales volume that I just mentioned. Other favorable aspects were the lower depreciation that had a benefit of $129 million. The lower treatment and refining charges, which are worth mentioning because it's been a very favorable market for us, and that had a positive effect of $60 million. The devaluation, which I already mentioned, $52 million. And the rest are smaller numbers, but you can see them in the graph there. Let me just go back to the income statement to comment on a couple of line items. I'm not going to go through each one of them, but worth mentioning here perhaps is the exploration expenses line, which was $174 million. I would say, invested in exploration, which was 6% higher compared to that last year, and that was again expected. Actually, we were below what we had budgeted of close to $187 million. And one additional line item that I would like to comment on is the income tax expense. And I guess maybe some of you may be wondering why income tax expense decreased by 19% when profit before income tax increased by almost 180%. That's a bit strange for some. And the answer to that is, and I'm sure you're familiar with this now because this has been happening for some years now, is the effect of the exchange rate on the deferred taxes. For example, in 2024, if you look at the $390 million tax expense that we recognized in that year, this is equivalent to an effective tax rate of 52.5%, which is way above the 30% statutory tax rate. What happened there? Well, we had an initial exchange rate back then in 2024, at the beginning of the year of MXN 16.9 per dollar and a year-end exchange rate of MXN 20.8 per dollar. So we had an important devaluation, which resulted in this effect in recognizing a 52.5% effective tax rate. Whereas in 2025, we had exactly the opposite effect. The beginning exchange rate was MXN 20.8 and the year-end exchange rate was close to MXN 18. So that's the reason why you see this effect. The exchange rate is generating a lot of volatility in this line item. And I guess, it's bit difficult for my friends, analysts to be able to predict this. You would need to have a lot of information in order to model this. But I just wanted you to be aware of this. Moving now to the cash flow statement. Okay. So what I would like to point out here is basically in the first column at the bottom, a record high cash balance at the end of the year of almost $2.8 billion, which compared to our initial cash balance of almost $1.3 billion that resulted in a net increase of almost $1.46 billion. Main source of cash, of course, is the top line, the operations, which generated $2.8 billion, almost 80% higher compared to last year. I think it's worthwhile commenting on some of the main uses of cash. And of course, one that I believe you would be interested in getting a little bit more detail would be the third line, which is income tax special mining rights. And as you can see, we had a very important increase from $97 million in 2024 to $369.5 million this year. Let me just remind you that in this particular line, we have three items that make most of this. One has to do with the provisional tax payments that are done on a monthly basis from January to December and which is basically an advanced payment of taxes related to 2025. That alone was $250 million compared to the previous year, which was only $98 million. The other item, which is important is the year-end tax return that we do in March and which is related to the previous year. So what you do is you calculate your taxes and net the previous year provisional tax payments and you only pay the net amount. So in March 2025, we paid $72 million corresponding to the 2024 fiscal year. compared to only $5.4 million in 2024. And last but not least, is the special mining right corresponding to 2024 again, but it's paid in March 2025. And here, we're talking about $63 million. So those are the three main items which confirm this number here. I do want to make you aware that in 2026, provisional tax payments will be higher. Remember, provisional tax payments is a factor that you apply to your revenues. So with higher prices, higher revenues and a higher factor, because it will be based on the 2025 tax payments, you can expect to see higher provisional tax payments. And in March, when we conclude our tax return for 2025, the provision tax payments that we made in '25 will not be sufficient to cover the year-end final calculations. So you can expect that in March, we will have a very important cash out to pay for taxes, just to make you aware of that. Of course, another important use of cash was CapEx, $400 million. Dividends paid to our friends at Pan American in December, $105 million, minority shareholders of our Juanicipio project. And of course, dividends paid to our majority shareholders of $654 million. Lastly, and to close, I never make many or any comments on our balance sheet. But I thought it would be worthwhile pointing out the line that you see in yellow there, which is basically short-term liabilities, which grew quite substantially from $339 million to $903 million, almost $500-and-so million, and that's precisely related to tax payments that we will make next year. So again, just to make you aware of that, so you can include that in your cash flow projections. Other than that, very sound balance sheet, of course. And now moving on to something that I think is more of your interest, which is capital allocation. Let me start by saying that our dividend policy remains unchanged. And you know our dividend policy has been historically since we did the IPO to pay out between 33% to 50% of our profit after tax, after making certain adjustments, of course. But even though we have that range, we should point out that we have always paid a dividend of at least 50% or more. So that range is really just conceptual because we have paid at least 50%. In 2025, we have just announced a total dividend of $950 million, which is above our traditional dividend policy. In other words, it's above our 50% policy. And this is made up of $797 million final dividend that we just announced, together with the $153 million interim dividend that was paid back in September last year. So as I just mentioned, we closed the year with $2.76 billion. But just bear in mind that some of the important uses of funds that we see -- of course, payment of the final dividend, which will be made in May of approximately $800 million. Our CapEx budget for this year is $765 million. The acquisition of Probe Gold, which was paid in January this year, required $550 million. And our exploration budget for this year is $308 million. So that adds up to an important amount of money. Just to continue with capital allocation. Over the next 5 years, we are prepared to invest around $3 billion in growth projects to align with our project time line. These are basically all the projects that you are familiar with in our pipeline. And just in the next 5 years, if everything goes as planned, we would be requiring around $3 billion. Of course, we will continue to analyze opportunistic acquisition targets with a long-term view and in accordance with our very strict returns criteria. We will follow a criteria similar to the one that we applied when we purchased Probe Gold, right? And in line with market expectations, we remain bullish on precious metal prices, although our balance sheet strength and cash generation ensure we are prepared for the cyclical nature of prices. You never know when those prices may come down, and we need to be prepared just in case. And lastly, we maintain our disciplined approach to capital allocation. And if the strong price environment persists by year-end, we are committed to shareholder returns. So with that, I will pass it on to, I believe, Octavio. Octavio Alvidréz: Thank you, Mario. Just a few words on our outlook before turning to your questions. And as we see here, I mean, 2026, we see it as a transition year, very specific aspects that have affected our guidance for silver in 2026, as Tomas mentioned, in the Fresnillo district. Fresnillo, we are preparing zone of the area in the mine. And this year, we are not bringing those higher grades from that area. And also the connection of the Saucito shaft in addition to what Daniel mentioned also in Cienega, Cienega is turning into more of a gold mine than silver, a lower production there. But then after having that or be better prepared in Fresnillo and with the connection of the Saucito shaft, we are expecting to increase the silver production '27 and '28. Gold as well, another transition year, I would say, in the Herradura district. But the good thing is that in 2027 and 2028, we are expecting to bring brownfield project production that has the best returns, lower investment and those ounces will be there through Valles and Noche Buena as well. As well as higher production in Herradura. As you can see on the base metal side, I mean, higher zinc production coming out of the Fresnillo district as we go to deeper areas as well. On the CapEx side, and Mario mentioned part of that. I mean, we are preparing or making additional investments across our mines, as well timely so that we continue to have a strong position and a strong production outlooks at each one of the mines. As we mentioned, we are also increasing in 2027 and 2028. In the following years, '27 and '28, lower CapEx expected. And as you can see here, I mean, we have adjusted our timetable for the different projects described by Tomas, Daniel and Guillermo. This is a more sensible table or time table according to longer permitting process in Mexico. But as we stated that 2 years ago, our focus was going to bring initially brownfield production. And you see reflected production from Valles, Noche Buena, and whenever we are at a deeper area in Herradura pit as well and bringing stronger projects in Rodeo, Tajitos by '29-'30. And Novador is reflected there, as Guillermo mentioned, the outlook to bring that into production, Orisyvo and Guanajuato. I would like to finalize this chart by saying that one more of our very important strategies is to operate in districts, in which we can be operating for many years. We have, as you know, the Fresnillo district, Fresnillo Saucito and Juanicipio for many years. The Herradura cluster of the Herradura district as well is proven to be the case, a strong gold production. In the future, we have Guanajuato in which we have identified, as Guillermo mentioned, not only the project, Guanajuato Sur, but also several targets from the historic areas of Guanajuato into the south to our project. And one more is Novador. Novador is coming not only with those 10 million ounces in resources, 8 of those in the Novador project, but also a large exploration package that has identified already some exploration targets for many years to be explored as well. Just to conclude, I mean, we have record financial performance for Fresnillo this year. We have been able to capitalize on a higher precious metals price environment with a stable production performance, combined with a strong cost control for 2 years despite inflationary pressures. As a result, we have delivered considerable shareholder returns, including a record dividend payout in 2026 of $950 million. We are also making good progress on our brownfield development pipeline with the ounces that provide a better return. And we are also advancing the greenfields, as we mentioned. And with that, I would like to turn to your questions. Yes, Jason? Jason Fairclough: Jason Fairclough, Bank of America. A couple of questions, one for Mario and then one for Tomas. Mario, I mean, strong numbers. And then on top of that, it was a big beat versus consensus. And it just seems to be in the revenue line. And I think maybe part of that is TC/RCs. Maybe we didn't realize how much better they were getting for you. But is there something else going on in the revenue line there? Did you sell more metal than you produced? Tomas Iturriaga-Hidalgo: No, we did not sell. If you look at the variation in inventories, actually, it increased. So we didn't sell more than... Jason Fairclough: Was it provisional pricing then or... Mario Arreguín: It's purely pricing. Purely pricing. As you saw, actually, we produced less, sold less volume. So the real reason behind our revenue increase is prices. Jason Fairclough: And in terms of the TC/RCs, is this the new normal? Or could they go down further? Mario Arreguín: Well, it's hard to predict how treatment charges are going to behave. But during the last 3 years, we've seen a downward trend, pushed a lot by the Chinese. It's putting a lot of pressure. And one of the things that we are concerned about, that you mentioned it, is the possibility of this continuing and the Chinese getting more market participation. And if some of the smelting and refining companies go out of business and with the Chinese have all the -- gather all the basically all the volume that might have a very unfavorable and sudden change. So we have to watch this very carefully. Jason Fairclough: Just a quick one... Octavio Alvidréz: That is correct, Jason. And I would say, I mean, that trend, as Mario mentioned, continues. We operate on a long-term agreement with Met-Mex. And when you compare -- I mean, those long-term agreement treatment charges and refining charges for silver continue to trend lower, but it's still a difference to the spot treatment charges that are quite very different. Jason Fairclough: Just to add, Tomas, a quick one. So quite a different trend in cost per tonne between Saucito and Fresnillo. I think Fresnillo was up 17% year-on-year and then Saucito down 10% year-on-year. Again, is this the new normal? Or is there some one-off effects in here? Tomas Iturriaga-Hidalgo: I would say Saucito is a one-off, and we're going to see probably a bit of an increase this year because of the cost related to hauling while we interconnect the shaft. And Fresnillo tends to be normalizing at those levels. Jason Fairclough: So we should think about it being normalized at these new higher levels, cost per tonne, even by volume? Tomas Iturriaga-Hidalgo: Yes. The volume is impacting and that's a normal level. Octavio Alvidréz: Daniel? Daniel Major: Dan Major from UBS. First question, just looking at the project pipeline and your outlook for CapEx. It seems like, again, we appreciate the more details on the projects. But if I look at Page 38 and 39, those of us that have been following the company for some time, these charts look fairly familiar. And then most years, the one on Page 39 moves a little bit further to the right, and really the Canadian projects, any new one in there. I guess the first part of the question, what is included in your CapEx guidance, production guidance in terms of the pipeline of projects? Is it just the two brownfields that are entering production? Or what else have you factored in? And then I guess to add to that, you've identified $3 billion of potential spend. What is -- how much of that is included in your CapEx projections for '26 to '28 already? And how much is incremental upside, assuming the projects move forward? Octavio Alvidréz: Yes, you're right. I mean, as I mentioned it, I mean, this is a more sensible thing in terms of timing, how to develop the next projects. But as we have stressed and we are achieving that, initially, as we were realizing the greenfield projects were going to be -- take a bit longer to be developed, we prioritized the brownfield production, Valles and Noche Buena, which is a good surprise. And then a more sensible approach to the rest of the greenfields. So on the CapEx side, in 2026, we have the shaft connection in Saucito. We have leaching pads in Herradura and the carbon project, the carbon recovery gold project in Herradura and also the conveyor belt in Juanicipio. Also, we continue to put some studies and in Orisyvo and also in Guanajuato Sur as well, as Daniel mentioned, that is included there. But the only one CapEx investment reflected in 2026 that will provide additional production is what we are investing in Valles in 2026. Daniel Major: Sorry, just to follow up on that. So if Valles is the only one out of the $3 billion bucket, is it fair to say that if the projects progress as you suggest, you've got sort of $600 million, $800 million per annum upside to what you're guiding in CapEx out to 2030? Is that the right way we should be thinking about it? Octavio Alvidréz: The right way to see it is with the time line of projects, for example, Rodeo, which is pointing to the start of production in 2029, 2 years or 1.5 years, you will start to see the deployment of the CapEx that we will provide at some other time, at Tajitos as well. But I mean the large majority of that CapEx that Mario mentioned would go with the higher CapEx projects such as Orisyvo, Guanajuato, Novador at that time, yes, in some 4 years, 5 years to come. Daniel Major: All right. And then just next question, one for Mario. On the tax side, quite complicated. Could you just provide us some more basic guidance? What would you expect cash tax and P&L effective tax rate to be in 2026 if current prices stay the same? Mario Arreguín: I would expect in terms of income tax recognized in our income statement. Again, it depends on the exchange rate. And I've been very much surprised by the strength of the Mexican peso. As you can see, currently, it's around MXN 17.4 -- MXN 17.3 per dollar. So if that continues to be the case and it remains strong, then you will see, again, another revaluation of the Mexican peso this year. So that might have, as a consequence, again, a lower effective tax rate compared to the 30% statutory tax rate. But having said that, you never know. We've seen some volatility if the peso at the end of the year because what you take into consideration is basically the end of the year spot exchange rate. It depends on that. But assuming no exchange rate effect, zero, which is a very important assumption, then we would expect to see something close to 30% effective tax rate. Daniel Major: And the cash tax, I noticed that the increase in provisional tax payments increased by $565 million. Mario Arreguín: Cash tax. Okay. As I mentioned, we will be finalizing our tax return in March this year for the 2025 fiscal year. And there, just for that, we are expecting something close to $500 million just to add to the provisional taxes that were paid in 2025. That's related to that year. Now during 2026 from January to December, we will be paying the provisional tax payments as an advanced tax for the 2026 fiscal year. And those are going to go up quite substantially. Why? Because of the higher prices? I said this is a factor or a percentage that you apply on revenue. If we foresee the current spot prices being maintained throughout the year, that will translate into higher revenue with a higher factor, so higher provisional tax payments. That will have an effect on the cash flow, not in the income statement though. Daniel Major: Okay. So somewhere in the region of $500 million cash tax more than the P&L tax. Is that the simple way of thinking about it? Mario Arreguín: $500 million more? Daniel Major: Yes. Additional cash tax to the P&L tax? Mario Arreguín: Yes. Marina Calero Ródenas: Marina Calero from RBC. A couple of questions on my side. Can you give us a bit more color on the trends that you're seeing in your sustaining CapEx? Is it fair to assume that $600 million is the new normal you need for to sustain production at your operations? Octavio Alvidréz: For 2026? Marina Calero Ródenas: Yes, and going forward as well. Octavio Alvidréz: And going forward. Yes, for 2026, let me -- I mean, as you know, I mean, the majority is mining works. And that has not varied because the development rates at our mines, underground mines keep at a similar level, approximately $180 million, sustaining, $250 million to $280 million more or less. Tailings dams, I mean, that's a large part of our investments every year. In 2026, we continue to do tailings at Saucito, at Fresnillo, Herradura as well. So that's a large investment, approximately $150 million or so. Then the projects that I mentioned at Saucito, Herradura and Juanicipio, very much, I mean, you -- and then the investment for brownfields and greenfields, as I mentioned, is Valles, some in Orisyvo and some in Guanajuato. Yes. And then after, I mean, as we have already in 2026, invested in tailings dams, that will -- CapEx will decrease in 2027 and 2028. The connection of the shafts and the other conveyor belts and everything, I mean, we will not have that, and that's why the CapEx goes a bit lower and also a sustaining part as well. Marina Calero Ródenas: Just one follow-up on that. If I recall correctly, your old guidance was roughly $500 million for this year. How do you explain the difference to the $760 million that you're guiding today? Octavio Alvidréz: Yes. What we used to mention before was for the set of operating mines, sustaining and mining works and everything should be around $500 million, $550 million per year. Daniel Diezas: Marina, on the addition of Valles to the portfolio that is already included in these numbers. It requires around $40 million per year in mine development just in Valles. So that tops off on the $500 million guidance that we provided before. Marina Calero Ródenas: Okay. That's very helpful. And just one final question. On M&A, you commented that you keep looking for opportunities. In which jurisdictions are you finding more compelling opportunities? Is it Mexico more attractive relative to the rest of the world? How are you thinking about that? Octavio Alvidréz: Yes. We continue to see the projects in Mexico. There are some good discoveries in silver. We continue to see mostly in countries with geological potential, of course, and the mining culture. You know that we've been exploring in Peru and Chile for quite some time. This year, we are starting drilling in Peru in some of our very interesting projects there. But for M&A, we continue and we've looked in Canada. And as we mentioned, I mean, we had a very good acquisition there. Canada is one of those countries with good exploration potential, mining culture. In the U.S., we've seen some in the past. I mean, but given -- Novador is a very good example of what we try to do. It has to be value accretive, of course, has to have some exploration potential. We have looked in those -- in the recent 2 to 3 years, some operating mines. However, given the expectation on the current record metal prices, I mean, the prices paid for those assets have been out of our expectation for value creation. So we continue to look. We will continue to look, but under a very disciplined approach as well. Unknown Analyst: This is Fernando of Morgan Stanley. A question on the portfolio mix. So we see a very high gold focus in your pipeline and also we have the Probe Gold acquisition. So are these things reflective of a broader strategy to increase the exposure to gold in your portfolio going forward? Octavio Alvidréz: Well, that has happened through times. If we look back at what we did from 2008 to 2018, initially, we grew faster on the gold side, bringing into production Noche Buena and then Soledad-Dipolos at that time. Then after we had Saucito that took longer to be developed, vein system there, the expansion of Saucito. So it depends on the portfolio we have. From what we have reflected in the chart, yes, you're right. The brownfields will come first, Valles and Noche Buena, then after Rodeo and Tajitos, because those are not complex -- so complex projects to be developed and the larger investments in terms of silver will come with Guanajuato. And that's because we -- the veins and the values start what, 600, 700 meters below. Guillermo Gastelum: Around 500 meters below the surface. Octavio Alvidréz: It takes time. Amos Fletcher: It's Amos Fletcher from Barclays. I just wanted to ask a couple of questions. First one was just on cost inflation guidance. Mario, what would you be guiding us to in terms of dollar per tonne milled for 2026 inflation, excluding the impact of the peso? Mario Arreguín: Typically, when you have such huge increases in the price of gold and silver, following that, you see some sort of inflationary pressure. For budgeting purpose, what we have considered for 2026 is approximately a 6% increase in cost inflation. But again, we are in a very volatile environment. But if you're asking me what we're expecting, it would be somewhere close to 6%. Amos Fletcher: Okay. And then I just wanted to ask also, you've obviously given the list of potential projects on Page 39. Could you give us sort of indicative CapEx numbers for each of those projects to the extent they're available? Mario Arreguín: Yes. Yes, I can give you a bit more flavor on that. Bear with me for a second. Octavio Alvidréz: You have to realize, before Mario, that these projects are at different stages, of course. And according to that stage, we have the plus/minus percentage in terms of CapEx and everything. Go ahead, Mario, please. Mario Arreguín: Yes. Thank you. So here, I'm going to talk only about Orisyvo, Rodeo, Guanajuato Sur, Novador and the possibility of bringing back Soledad-Dipolos to operation. So considering those projects, for example, in 2027, in total, we're expecting there something around $250 million just on those projects alone. And in 2028, around $560 million. In 2029, somewhere around $800 million, just for those projects, excluding sustaining CapEx. Amos Fletcher: Okay. And then one final follow-up, I guess, was just to ask from the sort of the CapEx guidance you've given on Page 38. Just to clarify, I guess, what projects are included in that guidance? Octavio Alvidréz: This is only CapEx for the current operations. There is no CapEx for projects there with the exception of 2027 for Valles, that I mentioned and a bit for Orisyvo and Guanajuato. Jason? Jason Fairclough: Slightly bigger picture question. So we're starting to see people increase the metal prices that they're using to calculate reserves and resources and also increase the metal prices they're using for mine planning. Can you just remind us what you're using to calculate your reserves for gold and silver? And how do you think about potential changes to your operating philosophy at some of the mines? Is it time to allow for more dilution? Octavio Alvidréz: Do you want to mention the prices? The answer is no. What is the question, Jason? But let me -- for the resources and reserves that have been reflected in this statement, we use for reserves $2,102.650 and for resources $2,300.030. Those are the ones in the statement. We are -- we are starting that process again, and we are increasing those up to $2,800 gold for resources and $33 for silver for reserves and $30.35 for resources. And to your question, I mean, dilution is always a killer. I mean, when you dilute, of course, that tonne does not come with any value. So despite the fact that the higher prices will give us the possibility to mine profitably what used to be marginal blocks now are economic, but reducing dilution as much as possible. Jason Fairclough: Are you able to give us any color on the sensitivity of the reserves and resources to change in the prices? So for example, if you raise your long-term gold price from $3,000 to $4,000, how much do reserves increase by? Octavio Alvidréz: If you want to comment, also memo, in the Fresnillo district, the value per tonne of ore is above -- well above the cost that we have right now. So it will not bring a huge increase whenever we use higher prices. When we will see sensible ore will be probably in Cienega, a bit more help there. San Julian probably. Daniel Diezas: Marginal, I would say the main impact it's around the Herradura when you increase the price, size of the pit. And as mentioned during the presentation, the exercise of finding the right transition moment between underground and open pit is exactly that. Now the pit grows significantly. However, those are ounces that would come online in 2050 or beyond that. So we are in that trade-off of when is the better timing to bring production forward from the underground with higher rates. Guillermo Gastelum: I will just reinforce what Daniel said is the resources and reserves will be more sensitive in the -- for the open pit, the disseminated deposit that we just described for you. However, we're reaching -- it doesn't matter how much higher you go, there is a limit to the geology. I mean, and to grade. So there's nothing further to add once we get to extremely high prices. And also in the underground operations, some of the narrow veins or lower vein material may be back into resources. But I don't know if in reserves because a more deeper analysis is required as to what sort of infrastructure and services are required to reach some sections of the mine that were left for some reason. So it all comes to the detailed engineering work for the reserves, no matter how the prices may go high, because it will give you less margin if we force things to be mined out just because at any given scenario, it turn economic, but the margin will decrease significantly. Daniel Major: Dan from UBS again. Just to kind of follow-up on Jason's question. What is the projected cost of production and the restart at Noche Buena? Daniel Diezas: We expect between $2,100 and $2,200 all in. Daniel Major: Yes. Okay. And sorry, I could probably take it offline, but I didn't actually catch. The first set of numbers of $2,100 and $2,300 for gold reserves and resources. Is that what you use for your 2025 calculation? And then the second set of numbers are what you're considering for your '26? Octavio Alvidréz: That's correct. Yes. Daniel Major: Okay. And then just a final one on the balance sheet and capital returns. You obviously, healthy payout this year. You've outlined the Probe Gold acquisition, more capital, more projects. Is there a threshold of net debt or cash on the balance sheet above which you'd pay out 100% of free cash flow? Octavio Alvidréz: Mario? Mario Arreguín: That's a decision for the Board to make, but we want to make sure that we have sufficient funds to be able to fund all of the $3 billion pipeline that we have defined. And what we -- what I can tell you is that definitely by year-end, if prices do remain where they are, we will definitely have a much bigger cash balance, and we will reevaluate again the possibility of paying an extraordinary special dividend. That I can tell you. How much? That's for the Board to decide. Octavio Alvidréz: All right. Thank you very much for joining us today. Thank you, guys.
Douglas Constantine: Good morning, and thank you for joining us today for Progressive's fourth quarter Investor event. I am Doug Constantine, Treasury Controller, and I will be a moderator for today's event. The company will not make detailed comments related to its results in addition to those provided in its annual report on Form 10-K and a letter to shareholders, which have been posted to the company's website. This quarter includes a presentation on a specific portion of our business, followed by a question-and-answer session with members of our leadership team. The introductory comments and the presentation were previously recorded. Upon completion of the previously recorded remarks, we will use the balance of the 90 minutes scheduled for this event for live question and answers with the leaders featured in our recorded remarks as well as other members of our management team. As always, discussions in this event may include forward-looking statements. These statements are based on management's current expectations and are subject to many risks and uncertainties that could cause actual events and results to differ materially from those discussed during today's event. Additional information concerning those risks and uncertainties is available in our annual report on Form 10-K for the year ended December 31, 2025, where you will find discussions of the risk factors affecting our business, safe harbor statements related to forward-looking statements and other discussions of the challenges we face. These documents can be found via the Investor Relations section of our website at investors.progressive.com. To begin today, I'm pleased to introduce our CFO, John Sauerland, who will kick us off with some introductory comments. John? John Sauerland: Thanks, Doug, and good morning, everyone. While we're already in March, I would like to take a couple of minutes to review the very strong year that we had in 2025. Following a year of incredible growth in 2024, we added almost $9 billion in net premiums written in 2025 and almost 3.7 million additional policies in force. When we look at statutory results for the private passenger auto market through the third quarter of 2025, we believe we picked up close to an additional 2 points of market share versus last year to move to around 18.5% market share. However, what made 2025 even more exceptional was that along with that growth came remarkable profitability. We earned almost $13 billion in comprehensive income across our operating and investing units or a comprehensive return on equity of 40%. Profitability across our businesses was excellent, and policy in force growth was also positive across all the businesses with personal vehicles leading at 12% or almost 3.5 million more policies than last year. That equates to almost 5.5 million more vehicles insured by Progressive versus year-end 2024. Property profitability was the beneficiary of a lighter-than-average catastrophe year and is also a reflection of the significant work we've done to manage the risk in this product. As we indicated in our Q2 2025 investor call, we're much more comfortable with the property line and are actively looking for ways to increase growth in property through bundling. In Commercial Lines, PIF growth was primarily from business auto and contractor risks while growth in trucking was challenging as the industry continued to face headwinds. Commercial Lines also had an excellent profitability in contrast to what we believe was an underwriting loss for the Commercial Auto insurance industry. As you know, Progressive is very focused on our underwriting operations, and we believe this is the primary driver of our success. We focus on our 4 strategic pillars to win in the marketplace and grow as fast as we can at less than or equal to a 96 combined ratio at the enterprise level as long as we can provide high-quality customer service. These 4 pillars have served us quite well since we established them formally as our strategy in 2015. Our culture and our focus on the growth and profitability operating mandate are supported by a very efficient capital model and strong risk-adjusted portfolio returns. This leads to high comprehensive returns on equity over the medium and longer term. We view our comprehensive return on equity along with growth to be the ultimate measures of our financial success. And we believe success on these measures drives higher multiples for Progressive stock. As you can see from the slide, return on equity in our industry is correlated with price-to-book ratio. Additionally, we believe growth plays a considerable role in our multiple being substantially above the line derived from the large public property and casualty competitors. Comprehensive return on equity is a function of the operating discipline we so frequently discussed on these calls and also very much a function of discipline around our financial policies. Today's discussion will go deeper on those policies, highlighting recent changes in operating leverage, providing insight around our variable dividend and detailing our approach to managing our nearly $100 billion portfolio at year-end. At the same time we execute our capital-efficient strategy, we need to ensure that we give ourselves maximum flexibility as we encounter uncertainty. While we believe strongly in our operating model, we are unable to predict broader geopolitical and macroeconomic changes with certainty. Therefore, we have set up a model that allows for flexibility in both our capital allocation and our investment risk. Since we run with higher operating leverage and a fair amount of financial leverage, we need to make sure that we can retain more capital when we believe it is beneficial to the business. We believe that our variable dividend policy and a liquid more conservative investment portfolio give us the capital we need to grow when growth is significant and an off-ramp when we hit periods of volatility. As an example of how our model balances these goals, if we look back to the 2022 to 2023 period, Progressive saw faster premium growth that required a significant amount of capital. On top of that, margins were volatile due to the surge of auto-related inflation. Further, that same inflation drove significant investment market volatility. In response, we are able to significantly reduce share repurchases and variable dividend payments, take down investment risk, and raise debt capital in order to ensure the fuel for our strong organic growth in 2022 and beyond. This flexibility allows us to aim for strong growth while also operating with a high degree of capital efficiency. More recently, capital generation has been very strong. In 2025, we earned almost $13 billion in comprehensive income across our operating and investing units. Our below 90 combined ratio, along with more than a 7% return on the investment portfolio, drove historically high profits for Progressive. The combination of the strong capital position in which we entered 2025, robust income generation and increased operating leverage allowed for Progressive to reward our shareholders with a $13.50 per share variable dividend in January. This came on top of modestly higher pace of share repurchases in recent months. Given this pace of income generation, the variable dividend and the announced change in our operating leverage last year, we thought this would be a good time for us to review with you how we think about capital, leverage, capital allocation and investment risk at Progressive. While we focus on comprehensive ROE for the purpose of benchmarking, I want to share the history of results around ROE. Over the medium and longer term, our model has produced returns on capital that have outperformed not only our P&C peers, but most other financial firms. In order to achieve this continued outperformance, we have to not only be disciplined on the operating side, but also with our investments and our capital allocation. A key consideration around capital allocation is our operating leverage or, in other words, premium to surplus ratios at our insurance companies. As we conveyed in our Form 10-Q for the third quarter of 2025, we have received approval from our regulators that oversee most of our operating entities to move our operating leverage up to a maximum of 3.5:1 premiums to surplus. As a reminder, The Progressive Corporation is a holding company, and we own 45 insurance entities and some non-insurance companies. Insurance companies follow statutory accounting rules and are subject to regulation in their state of domicile. Surplus in statutory accounting is essentially equivalent to equity in GAAP accounting. Statutory accounting differs slightly from GAAP accounting, primarily around recognition of expenses more in line with cash flow and investment-grade bonds are valued at amortized cost versus mark-to-market. Regulators have numerous tests to monitor and regulate insurance company solvency. Premiums divided by surplus is one ratio for which limitations are set by regulators to ensure that insurance companies have the capital necessary to pay out policyholders when needed. For our core vehicle lines of business, we have always believed that based on our rigorous underwriting acumen, conservative investment posture and relatively modest reserve development that we did not need to hold as much capital as regulators were expecting us to. Those same factors are generally considered in risk-based capital ratios that regulators use to monitor solvency, and in extreme cases, to force changes in the management of insurance companies. Our risk-based capital ratios are very good in most of our insurance companies, and this fact helped us receive approval to hold less capital or surplus at most of our operating subsidiaries. We hold a significant amount of capital outside the insurance companies as well, and we'll talk more about that in future slides. As you can see, there's a wide range of operating leverage models in the property and casualty insurance industry. Progressive, with our consistent operating results, is normally near the top. This exhibit shows just the surplus in our insurance subsidiaries relative to net premiums written. As noted previously, The Progressive Corporation is a holding company, and we hold surplus in the insurance companies and generally balance those insurance companies to our target premiums to surplus ratios towards the end of each year. At year-end, we generally hold contingent and additional capital at the holding company level. At year-end 2025, we held around $13 billion in an investment subsidiary of the holding company. In January, we paid almost $8 billion in a variable dividend out of that $13 billion. Naturally, the next question is what this change in operating leverage means for our overall capital position. We think of capital in terms of 3 different layers, which are regulatory, contingent and additional capital. As I previously mentioned, our regulatory capital is overseen by our state regulators. However, our contingent capital layer is fully determined by our risk appetite and controls. It is currently set at an amount in which it would take a one in 200-year modeled scenario to go from the top of our contingent capital to our regulatory layer. As the name is contingent, our goal is for that layer to generally not be fully eroded to the point of reaching the regulatory layer. So we normally hold some level of capital above the contingent layer. How much additional capital we hold on an ongoing basis is a function of factors such as operating and investment volatility and financial leverage and the potential opportunity to deploy capital towards investments, acquisitions or share repurchases. While we will always be open to holding on to additional capital for future opportunities, management is very focused on Progressive's return on equity over the medium and longer term. We won't do a deep dive on our reinsurance program today, but it is certainly worth noting that our reinsurance program is integral to the size of our contingent capital layer. Relative to our balance sheet, we have fairly modest retentions in our reinsurance program, and our catastrophe limits are relatively high. This naturally allows us to need to hold a lower level of contingent capital all else equal. As you can see from the graphic on this slide, the change in our premiums to surplus means lower capital needs at our insurance subsidiaries but does not require us to hold any more capital at either our contingent or additional layers. Therefore, this move has the potential to incrementally raise Progressive return on equity due to the lower capital needs. I will also note that the incremental $1.6 billion freed up in 2025 resulting in our premiums to surplus ratio at the enterprise level to move closer to 3, relative to an average of 2.8 over the previous 5 years. Our insurance company subsidiaries are subject to numerous regulations on capital beyond net premiums written to surplus. So while we may have approval from the state of domicile to move to 3.5 for the net premiums to surplus ratio, additional regulations may limit at what pace we may move to that ratio and how close exactly we get to that ratio. Our intent is to work to move closer to 3.5 going forward. Our operating leverage has historically helped us to achieve industry-leading returns on equity and this change will naturally further that positioning. And while operating leverage is important, it is only one element of our capital model. Now to continue the discussion on financial leverage and capital allocation, I will pass it along to our Treasurer, Maureen Spooner. Before I do that, allow me to give a brief bio on Maureen and our Chief Investment Officer, Jonathan Bauer. Maureen has been with Progressive more than 20 years and has previous experience in Treasury at another public company as well as public accounting. During her tenure at Progressive, she has held controller roles in our special lines and IT groups, managed our comparison rating offering in our direct group served as our Ohio Auto Product Manager and most recently, our Audit Business Leader. Jonathan Bauer has been with Progressive almost 20 years, all within our investment management group and has previous experience in investment banking in New York and London. Thank you again for your time this morning. And now to you, Maureen. Maureen Spooner: Thanks, John. While operating leverage is important, it does not tell the full financial or capital picture. First, because it only reflects the capital needs at our insurance subsidiaries. Second, it does not differentiate between equity and debt capital. So it does not consider financial leverage. And finally, it doesn't include our capital allocation policy or it does not consider where we can invest. So I will briefly review our financial policies while sharing our capital allocation process. First, we want to ensure we have the capital we need to write as much profitable insurance as we can. This is our best use of capital. We want to ensure we have the regulatory surplus plus contingency capital to grow our business at less than or equal to a 96 combined ratio. While our decisioning is not linear, we have a decision tree on the next few slides to demonstrate how we think about capital allocation. Once we have determined we have excess capital over and above our operating needs. If we have excess or additional capital, we then consider how we would deploy that excess capital, and we consider the valuation of each opportunity. We consider 3 areas of potential investment. Additional capital may be deployed for corporate development or acquisitions and strategic investments, for share repurchase or for increased investment risk. Jonathan Bauer, our Chief Investment Officer, will be covering investment risk here shortly. In all three instances, we evaluate the investment and valuation and determine if the return is attractive for the investment. With respect to corporate development, we introduced our Three Horizons framework to you back in 2019, which covers our strategic approach, including acquisitions. Horizon 1, our products within our current constellation of businesses. Horizon 2 are products that are adjacent to our current product footprint. Then Horizon 3 includes businesses outside of the P&C insurance landscape that we currently play in. We continue to fully integrate and optimize our previous two acquisitions, and we have continued to work on our skill set throughout the organization in preparing for future investments. Secondly, we may use excess capital to repurchase shares. Our policy is to repurchase shares to neutralize the impact of employee stock compensation. We also consider repurchasing shares if the share price is attractive to what we believe is our intrinsic value. We have not repurchased a significant number of shares over recent years, even though we have board authorization to repurchase 25 million shares annually for the past 9 years. In some recent periods, our growth rate was high enough that we needed to preserve capital to support growth. At other times over recent years, we had additional capital available to repurchase shares but we did not view the market price of our shares to be attractive or below our view of intrinsic value. Over the past few months, we have begun to be more active with repurchases, but obviously not yet at a significant level. As highlighted in the chart, in January 2026 in 1 month, we repurchased shares at a value similar to the repurchases made for all of 2025 as we felt the share price was attractive. Once we have exhausted considering capital needs for both business growth and investments, we consider returning underleveraged capital to shareholders via dividends. For greater flexibility, we modified our dividend policy in 2019, moving to a modest quarterly fixed dividend of $0.10 per share and an annual variable dividend that is no longer formulaic and is completely variable. Before 2019, we tied the annual variable dividend to our gain share factor, which is a score we use internally to calculate annual cash bonuses for all Progressive employees. We made the change because there were times that the formulaic approach had us returning capital via dividends and at the same time, needing to raise capital to support growth. The annual variable dividend is entirely at the discretion of the Board, which considers current capital levels relative to prospective expected capital needs and determines generally in December of each year, if to pay a variable dividend, and if so, how much. The $13.50 annual variable dividend declared in December and paid in January 2026 largely reflected robust capital generation in 2025 from both underwriting and investments, along with the shift to higher operating leverage at our insurance subsidiaries. As John noted, we held $13 billion of capital at the holding company level at our year-end and naturally net of the declared dividend, that number was $5 billion. There's obviously judgment here, and we believe it's prudent to retain some capital above our operating needs for growth above our expectations, stock repurchases, investment risk, other strategic opportunities or contingency growth. And the $5 billion, along with our ongoing earnings, certainly provides us that flexibility. Once we have determined how much capital we are retaining for operating growth and investing, we need to consider what is the right mix of equity and debt. We have a publicly stated guideline of keeping our leverage under a debt-to-capitalization ratio of 30%. That does not mean that we will take any dramatic action if it drifts over that level. but that our intention will be to have it under 30% over the longer term. You might ask why 30% is the right limit. Given Progressive's very steady stream of earnings and cash flow generation, we could likely support a more leveraged balance sheet. While we always keep challenging ourselves as part of Progressive's culture. At the current moment, we believe that the 30% level strikes the right balance between efficiency and having a strong balance sheet, which gives us strong debt ratings and allows us to prosper through economic cycles. When reviewing our historical monthly financial leverage ratio, we did surpass the 30% guideline of debt to total capital during the financial crisis and then again briefly in 2022, largely due to unrealized losses in our investment portfolio. However, in both instances, we brought the ratio in line with our guidelines through the normal course of business. While we have a goal of staying below 30%, we do not have a policy regarding a minimum amount of leverage as we want to give ourselves maximum flexibility. Over the last 18 months, you can see that we have been trending below our historic range. The main drivers of that decrease have been significant income generation in 2024 and 2025 from both our underwriting business and investment portfolio. Also, when you look at our financial leverage relative to our stock insurance company competitors, you'll note it is broadly in a similar range. Ultimately, we believe that an appropriate amount of financial leverage will help ensure a strong balance sheet and along with our now higher operating leverage, maintain our industry-leading return on equity. In summary, while operating leverage is important, strong financial discipline is also a focus. We ensure we have enough capital for our operating growth or to write as much insurance as possible at less than or equal to a 96 combined ratio. We allocate additional capital where it can be beneficial to the business in corporate development, share repurchases or increased investment risk, while also neutralizing impact of employee stock compensation. We look to return underleveraged capital to shareholders via dividends and we maintain a debt to total capital target below 30%. That covers our financial policies at a high level, and I'll now turn it over to Jonathan Bauer, our Chief Investment Officer, to discuss our close to $100 billion investment portfolio. Jonathan Bauer: Thanks, Maureen. I'm happy to get a chance to speak about how our investment risk decisions are part of the overall Progressive model that has driven strong shareholder returns over time. Given the relatively high operating and financial leverage that we spoke about earlier in the presentation, along with a focus on capital efficiency, our investment leverage defined as invested assets over shareholders' equity runs relatively high. This means that gains and losses are more magnified than many of our peers, who run with a more significant capital base. Therefore, we tend to run with a more conservative investment policy, especially in times of significant operating growth. So if we go back to the broader discussion of our capital deployment, if we have excess capital, we could deploy it towards corporate development, share repurchase and another option is to take more investment risk. In order to assess this decision, we think it might be useful to take a step back to review our investment policy since it has been a few years since we have engaged on this topic. We have two different parts of the portfolio that are managed distinctly. Our fixed income portfolio, which currently makes up about 95% of the portfolio is actively managed by our team. Our equities portfolio, just under 5% of the portfolio is a passive replication strategy to the Russell 1000 Index. We decide how much to allocate to equities, but after that, you should expect returns to broadly match the index. Our goals are twofold for the portfolio: first, we want to ensure that the operating business has all the capital it needs to grow as fast as it can at a 96 or better combined ratio. Second, after we have comfort in the capital position, is to achieve a strong risk-adjusted return over the longer term. If we look at two distinct periods over the last 6 years, you can see how our priorities are borne out in specific actions. In 2020, as COVID caused immense volatility in both the world and financial markets, we were in a strong enough capital position to both support our internal growth and take on additional investment risk at attractive levels. However, in the inflationary period between 2021 and 2023 that we spoke about earlier, the combination of incredibly strong growth with volatility in both operating margins and investment markets meant that a reduction in investment risk was appropriate to ensure no hindrance to our growth model. If we take a step back, we can see that over the last 10 years, Progressive's explosive premium growth has led to a portfolio that neared $100 billion at the end of 2025, up from $21 billion at the end of 2015. The portfolio growth is even more impressive when accounting for the significant dividends paid out over that time. We thought it might be useful to review how the different elements of our portfolio flow through our financial statements. The investment income that you see on our income statement is mostly driven by our interest income, along with the dividend income from our equities portfolio. These flow through into our operating income and are generally viewed as more recurring in nature. As we will talk about on the next slide, we have seen strong growth in this category over the last 10 years. Further down our income statement, you will see the realized gains and losses in our fixed income portfolio as well as the holding period gains and losses within our equities portfolio. This is driven by the actual sales in our portfolio and any change in the unrealized value of our equities. The final element of our investment returns and flows is the changes in unrealized gains and losses in our fixed income portfolio. This number does not flow through to our net income, but only through our comprehensive income. If we think about the significant interest rate volatility felt across the insurance industry over the last 5 years, that has been mostly seen through comprehensive income. But the important point that I would want to get across is that we manage the portfolio on a total return basis as opposed to a book yield or an investment income number. We believe this allows us greater flexibility in our investment decisions and allows for a longer-term thinking in our strategy. Our portfolio growth as well as the shorter duration nature of our portfolio has combined with rising interest rates to create significantly larger investment income flows over the last few years. We believe that if valuations improve in the fixed income credit markets over the next few years that we could have a further opportunity to drive additional returns. As John mentioned earlier, 2025 was an incredibly strong year for capital generation. Our investment portfolio returned 7.33%, with strong results coming from both our fixed income and equity portfolios. On the fixed income side, the combination of lower interest rates and tighter credit spreads drove strong absolute gains. The after-tax contribution of our investment results was just short of $5 billion, which combined with our operating results made up the almost $13 billion in comprehensive income. As mentioned earlier, Progressive continues to be a company with significant growth and we run with higher leverage. So it's important that we have the right guidelines in place for our investment team. You can see some of the more important guidelines on this slide. Our Group 1 allocation is a combination of what we consider our riskiest or at least most volatile assets in the portfolio, which include high-yield bonds, certain preferred stocks and common equities. As you can see, we are nowhere near our limit due to our view on where valuations sit amongst these assets. The second guideline measures our duration or interest rate risk. As can be seen, we are in the upper half of our range as we have been shifting our duration higher since mid-2022. The third guideline establishes our minimum average credit rating on the portfolio as A rated or better. While the team does its own credit work on all securities in the portfolio, we feel it's an important benchmark for our stakeholders to have a general idea of the credit strength of our portfolio. At year-end, the average credit rating of the portfolio was AA- as the current valuation environment does not lend itself to significant investment in lower-rated securities. The last guideline addresses the financial leverage that Maureen spoke to earlier, which even after our significant variable dividend remains below 20%. Our investment team is based in Stamford, Connecticut and manages over $95 billion using year-end numbers. As mentioned earlier, the portfolio is split between an actively managed fixed income portfolio and an equities portfolio that is managed through an index replication strategy. This split in strategy is based on the view that active management and fixed income can provide value that is more difficult to achieve on the equity side. The goals of the investment portfolio are to both support the operating business while also achieving a strong risk-adjusted return on the portfolio. That portfolio return is measured versus a benchmark on a 1- and 3-year basis. We believe we are able to attract unique talent to our team, both due to Progressive's culture and the structure of our team that allows for employees to rotate amongst different asset classes and industries throughout their career. The investment group is split up into three units: Our economics team provides macroeconomic research and analysis to both the investment team as well as broader Progressive. They've done a great job of helping with investment strategy through some significant swings in growth, inflation and employment. As our operating business has dealt with a very dynamic insurance marketplace, the economics team has partnered with them to understand and model out labor and claims trends. Our core investment research team drives our portfolio strategy as well as our security selection. Our model is somewhat different in that after spending several years in an asset class, we will rotate those individuals around to other portfolios. We believe this broader investment knowledge assists our portfolio managers and analysts in determining relative value across different investment types. Our trading and execution team supports all of our fixed income trading as well as the company's share repurchase program. I should also take this time to mention that we have an incredibly strong investment reporting and accounting group based in Cleveland that reports separately up through John. Each of our investment professionals are informed by the team's macroeconomic views, but are focused on detailed analysis at the security level. They are examining not only the credit risk, but the relative value versus other securities in their sector and other asset classes in the portfolio. The incentive compensation of the team is partly measured based on the overall portfolio performance. This is meant to encourage collaboration and discourage building the size of one's portfolio if there is no absolute or relative value. One of the major focuses of the investment team is our interest rate risk, which is measured by duration. The investment team spends a significant amount of time on macroeconomic analysis and engagement with our internal economics team to determine our interest rate positioning. You can see at year-end, we were close to 3.5 years in duration, which is close to the highest we have been over the last 25 years. This is up from 2.75 years in mid-2022 and 1.6 years in 2014. The movement to a higher duration over the last couple of years has been driven by a view that we had turned the corner on inflation and the Federal Reserve was likely to move to an easing posture. Our portfolio duration is reported monthly in our earnings release. The other major focus of our investment team is on credit risk. We invest across the fixed income universe, including asset-backed securities, commercial mortgage-backed securities, corporate debt, municipal bonds, preferred stocks, residential mortgage-backed securities, short-term or cash and U.S. treasuries. There are not fixed sizes of any of these portfolios, and we will shift our exposures around significantly over the short, medium and long term. One great example of that is our municipal bond portfolio, which has shrunk significantly over the last decade due to corporate tax reform, which has made municipal bonds significantly more attractive to high net worth individuals as opposed to corporations. As we look at comparisons versus our competitors, we see that Progressive has historically held more common equities than our public peer group, but significantly less than the mutuals and conglomerates that we compete against. We have not historically invested in the alternative space viewing public fixed income and public equities as a better risk return and liquidity profile. However, as some of those alternative markets develop, we will continue to search for the best way to achieve our goals of capital stability and strong total returns. Our relative fixed income performance has been strong over various time periods. The drivers of that outperformance come from interest rate risk and credit risk throughout the portfolio. We believe that our ability to take a long-term view towards investment valuations has allowed for us to continue to outperform our benchmarks over time. With a portfolio that is extremely liquid with mostly publicly traded securities, even though we have grown to a significant size, asset allocation changes are not difficult to execute. An easy example to look at is how quickly we were able to generate the cash needed for our variable dividend from under $2 billion at the end of October to over $10 billion at the end of December, we were able to satisfy the dividend needs with very low transaction costs. To bring the conversation back to where we started, Progressive's #1 focus is to grow as fast as we can at a 96 or better combined ratio. We believe that goal, along with our incredibly strong culture will continue to drive Progressive's growth over time. The focus of this call has been to try to inform about how we can best translate that growth and a capital-efficient structure into strong financial results. We believe that higher operating leverage, combined with an appropriate amount of financial leverage and a relatively more conservative investment portfolio can provide Progressive with both a strong financial position that can withstand volatility while also generating significant returns over time. With that, I will pass it back to Doug. Douglas Constantine: This concludes the previously recorded portion of today's event. Before we take questions today, our CEO, Tricia Griffith, would like to take a few minutes to discuss changes in our executive leadership. Tricia? Susan Griffith: Thanks, Doug. As we stated in our recent news release, our CFO, John Sauerland announced he will be retiring in July of this year. And as you know, we are planning for Andrew Quigg to assume that role in July. I thought it would be great if you started to sit in on the IR calls and today, before we start Q&A, I've asked Andrew to talk a few minutes -- take a few minutes to introduce himself to all of you. Likely, you've seen him over the years if you've covered us for a longer period of time. Andrew? Andrew Quigg: Thank you, Tricia, and good morning, everyone. I'm excited to join you for this earnings call as I transition to the role of CFO of The Progressive Corporation, when John Sauerland retires in July. My background is available on our Investor Relations site. I thought I might provide three themes you'll see in that bio. First, I know Progressive. Since joining Progressive more than 18 years ago, I've been inspired by the extraordinary people of Progressive. What has kept me energized is how deeply our core value is aligned with my own values. Our culture and people give me confidence in our ability to continually innovate and bring value for our customers, while also delivering industry-leading returns for shareholders. I'm also very proud of the past 7 years during which I served as Chief Strategy Officer, reporting to Tricia. I've been a member of the executive team that has led our company through the pandemic and the subsequent cost inflation environment. This period has been great training for the CFO role. The second theme is that I'm a lifelong learner. I received a Bachelor of Science from Yale University. I earned an MBA from Harvard Business School, graduating as a Baker Scholar. I've grown through many roles in investment banking, finance at General Mills, consulting and a handful of different opportunities at Progressive. I enjoyed learning about new aspects of Progressive and our industry. I'm bringing that mindset to the CFO role. Finally, I love solving big problems. My career at Progressive began as a Personal Auto product manager, a core role where we balance growth and profitability. In particular, I led a turnaround of our Massachusetts Personal Auto business, after we entered the state and found we were underpriced for the environment. I also led our Direct Media team, buying advertising for our direct-to-consumer businesses. My first investor presentation came at this time in 2013. And as I shared insights into the marketing and competitive advantages we achieved from [ Dana ]. In 2015, I moved to be a General Manager in customer relationship management. where my team created experience improvements for our customers. I spoke to investors in 2016 about the science around our experience and retention efforts. During these years, I was proud to pioneer notable advancements as the business sponsor for our first big data project and the data science team that implemented our first AI chatbot. Nearly 8 years ago, I was asked to build a new strategy organization at Progressive from the ground up. This has included creating corporate strategy and corporate development teams. The strategy organization has also started Progressive life insurance and recently Progressive pet insurance as we add products around our market-leading vehicle insurance a franchise. In 2019, I spoke with investors for the third time, sharing our plans to grow across the Three Horizons. Just a final word of thanks to Tricia and our Board of Directors for providing me with several months to learn from our current CFO, John Sauerland. John is an institution at Progressive, and I am accelerating my learning to have a smooth handoff from John. I'm excited for this opportunity and look forward to connecting with you all on future investor relations calls. Thank you. Douglas Constantine: Thanks, Andrew. We now have members of our management team available live to answer questions, including presenters Maureen Spooner and Jonathan Bauer, who can answer questions about the presentation. [Operator Instructions] We'll now take our first question. Operator: Our first question comes from Bob Huang with Morgan Stanley. Jian Huang: My first question is on severity. On the 10-K, when we look at auto severity, it does look like it's marginally deteriorating, but it looks very manageable. It really hasn't spiked as the way I think we all thought it would have at the middle of 2025. Just curious, as we head into 2026, can you maybe comment on your thoughts on severity? Is it still a big concern for you going forward? Or do you feel in the current environment, the inflationary pressure is just simply not going to be there? Susan Griffith: Yes. I think overall, severity isn't as concerning. It's been relatively flat for both the trailing 12 and the quarter. Probably the one area that we watch closely is BI severity. And of course, we report incurred. And we see that through more attorney reps, larger loss costs. We've been seeing more specials in generals. But overall, we will continue to watch as the world evolves. And we do see some parts prices increasing, a little bit higher than labor rates. So we'll continue to watch that with the supply and demand of both parts and labor. Jian Huang: Okay. My follow-up is on autonomous. Previously, I believe, 3 quarters ago, but I'm probably wrong on that. You were saying that the progress in autonomous has been faster than you previously thought? But just curious as we're seeing more autonomous becoming gradually commercially viable, I just curious how you plan to navigate the future of autonomous from a Personal Auto insurance context? And also from a Commercial Auto insurance context as well so. Susan Griffith: Yes, absolutely. There's a longer answer to that question. I'm going to have Andrew answer it because his team is split into three areas and one is what we call a process group. And for years, they have looked at what we call runway. So the addressable market across the board, but specifically for private passenger auto. But before Andrew speaks and kind of goes into what his team models. And in fact, they just are wrapping up a model for our next 3-year strategy. I want to reiterate both what Maureen had talked about and also Andrew mentioned, and that was our Three Horizons. So many, many years ago, not long after I took this role, my team and I really thought about how are we going to position ourselves for the future. And we used the construct, it was from McKinsey for the Three Horizons. And so at that point, we were a little bit over $20 billion overall in written premium. And so we really thought about, okay, how are we going to use these Horizons, and really make sure we're investing in all three of them concurrently. So the first one, and you saw Maureen's side was execute. We want to execute the heck out of increasing more Commercial Auto and more private passenger auto, and we did just that. We maintained our #1 spot in Commercial Auto. And we went from #4 in private passenger auto to #2. So we're very proud of that. But we also knew we wanted a diversified portfolio. So as we thought about Horizon 2, we thought about sort of adjacent products we could do. And most of those fell into Commercial Lines. So think of our relationships with TNC providers where we've learned a lot about autonomy. We bought protective insurance to kind of expand our fleet. And now we've been really focusing on the last 5, 6 years on BOP, which we now are in 46 states and really ready to grow on that in small fleet. So having that diversity is really important. And then, of course, Andrew just mentioned what we work on in terms of a little bit further field, but products that where we think we have the ability to win, and we believe we can win. And that is a couple that we've done so far, and we have more in the pipeline, direct-to-consumer life and pet insurance. Those are products that people want, but also they help with retention for our auto. So looking at those Three Horizons, execute, we've been doing that. We're going to continue to do that. Grow as fast as we can at 96. Expand, we are going to continue to work on relationships with both mobility and overall in our commercial business specifically. And then explore, Andrew's team and our next CSO, will continue to work on really thinking about exploring, again, where we have the right to play and the right to win. So I just wanted to kind of set that in motion before I have Andrew answer the question on autonomous vehicles. Andrew Quigg: Yes, Bob, thanks for the question on autonomous vehicles. We've been thinking about advanced safety technology for more than a decade. We initially provided thoughts to our investor community in 2013 by providing long-term trends on frequency, severity and ultimately, the size of the insurance market. In 2017, we provided investors with thoughts and projections while providing modeling on outcomes that we could see in the future. The framework from those presentations are still applicable today, we think. As Tricia mentioned, we continue to invest in modeling future scenarios, including both personal and commercial, as you indicated. We have recently updated our projections. And we would say, even with strong assumptions around the efficacy of vehicle safety technology, we still project personal and commercial vehicle insurance in the United States will grow robustly for decades. It's also worth noting that our projections of the U.S. vehicle insurance market have consistently underestimated actual market growth. I'd like to spend just a couple of minutes talking about how we think about the modeling and also how we think about Progressive's position within the industry. First, on the modeling side. We do expect safety technologies like autonomous driving to continue to be added to vehicles. We often see these new technologies, first arriving in the most expensive new models. In addition, the ramp-up of voluntary new technologies and new vehicles can take a long time. The average vehicle on the road is about 13 years old. So even when mandated after a certain model year, fleet penetration is slow. To be specific, we have tracked different technologies over time. An example is electronic stability control, which we consider to be fast. We find it takes about a decade for 1% of vehicles to have a new technology like ESC and 20 years for it to reach 45% of the fleet. Reaching 90% of vehicles can take more than 3 decades. When we model on the frequency side, we consistently see that vehicle technology can lower the rate of accidents. It's worth noting that sometimes safety statistics don't provide incremental improvement above what is already present in the fleet. Double counting is a persistent challenge that we and others have to navigate through. On modeling severity, we also see that these technologies can increase the cost of claims. An example here is Tesla vehicles. I recently saw a model for the size of the auto insurance industry that assumed Teslas were already fully autonomous vehicles, providing much lower frequency with similar severity. In Progressive loss experience, we see that Tesla Model 3s have higher loss costs than similar EVs. This is due both to higher frequency and higher severity. We're also aware of some pilot insurance programs for FSD on Teslas. Teslas represent less than 1% of vehicles on the road. Only a portion of these vehicles have an FSD subscription and FSD is used on less than 100% of trips. So in total, it represents a small opportunity today. This is not to say that Teslas will not lower pure premium in the future, it just isn't in our fleet data currently. One additional aspect in the modeling that is not often called out, if drivers aren't required to monitor vehicles all the time in L3 to L5, we may see consumers increase the amount of vehicle miles traveled as they substitute personal auto transportation for other forms of transportation. So access per mile may be reduced, but the VMTs might go up. It's also worth noting that 3.2 trillion miles are driven annually in the United States. As you mentioned, we've seen companies like Waymo that seem to be leading in the commercialization of autonomous vehicles. But over the past decade, it appears that Waymo has about 200 million AV miles, which is a very small fraction of overall VMTs. On the Progressive side, we think Progressive is well positioned for changes in mobility whenever they may come. Progressive continues to invest in segmenting risk down to the vehicle level. Not all technology is equal, not all technology impacts every line coverage equally. We continue to invest in the data and the math to be extremely accurate, and we believe the proliferation of safety technology will make this focus even more valuable. Beyond the vehicle level, our UBI capabilities allow us to understand how a driver performs using this technology. Progressive has access to tens of billions of driving miles annually to observe changes in driving behavior and technology. With our Snapshot, customers now allowing us to continuously monitor their driving behavior, we will pick up any tech-enabled changes in loss costs over time and adjust our rates as individual drivers harness technologies to different degrees. We also have the capability to accept data streams directly from OEMs and third parties on an individual vehicle basis with consumer consent. This has been part of our UBI technology for many years, and our UBI capabilities extend beyond our own devices and our own applications. Progressive also has over a decade of experience in insuring transportation network companies. We believe this infrastructure on our Commercial Line side can be leveraged for further commercial deployments like robotaxis. Finally, Progressive has historically been able to compete very effectively at a local and state level. Auto insurance is regulated at a state level. And as regulations adapt, we expect that this local knowledge will continue to be critical. We certainly don't know how the world will change in the coming decades, but we believe that our competitive advantages, our very robust data assets, our leading analytics and of course, our history of execution will serve us well as safety technology changes. Susan Griffith: Thanks, Andrew. I hope what you got out of that, Bob, was that we do a lot of modeling, a lot of detailed modeling, have been doing it for decades, and rely on that, and we put some conservatism, but we believe that there's a lot of runway under all of our Horizons. Operator: Our next question comes from Michael Zaremski with BMO. Michael Zaremski: Congrats to John and to Andrew. My first question is specifically on premiums for Personal Lines policy. I know there's a lot that goes into this but I believe the overarching theme is it's been slightly negative because of just healthy competition and also price reductions in Florida. If you agree with that, just kind of curious where should we expect that ratio to stay negative in '26 or maybe it will revert back to positive territory later in the year as the Florida pricing decreases kind of level off? Susan Griffith: Yes. It's hard to say how the year will unfold. We're going to continue to grow as fast as we can at or below 96. So if we see states where we might want to reduce new business rates in order to grow, we might do that. Florida was one big piece of it. But we're always adjusting our rates accordingly. And now we're doing more small bites to the apple of a little bit up, a little bit down. But you're right, when you look at the kind of difference between net premium growth and PIF growth, a lot of it is reducing some of those new business rates in order to grow. Some of it is highly influenced by mix. So as we've opened up our aperture to grow more in the last couple of years. Our mix has shifted back to probably more pre-COVID levels. And that's okay because every customer that comes in, we believe we have the data to make sure that we get to our target profit margin. So that's one piece of it, and wouldn't necessarily have that be your barometer. And then we are selling more 6-month policies, which is about half the premium you get in a 12-month policy. Again, just trying to kind of balance that affordability for customers that want to stay insured. Michael Zaremski: Got it. That's helpful. My final question is on technology. I'm curious if advances in recent months or quarters have kind of materially changed Progressive's view on the ability for the, let's say, the combined ratio, the LAE ratio to benefit from efficiencies on claims and underwriting. Susan Griffith: Are you talking to more in like the artificial intelligence technology, the technology that Andrew was speaking of on the vehicles? Michael Zaremski: Correct. AI specifically. Susan Griffith: Got you. Yes, here's what I would say. This is probably a longer answer than you need, Mike. But we have a history of innovation. And so we are really concentrating on AI across the board and have win for a while. But if you go way back, into 1995, we were the first to put our auto rates online, like we saw the future, and we did that and that was before Google was even in existence. And what a great bet that was because over half of our private passenger auto is on the direct side and increasing more of our Commercial Auto. So we're going to continue with the history of innovation, including our usage-based insurance where we evolve and are getting better and better and more closely to price to the whole curve with surcharges and discounts. And more than that, using technology for our customers. So we've talked about our accident response. That's a really powerful message when people get into accidents and they're unable to call an ambulance or a tow truck, we're able to do that for them. So we've talked I think a little bit over the last year or 2 years, maybe even longer on what we've worked on in predictive AI, a lot of models using unstructured data, voice data to trigger models, and we'll continue to do that. And I think 2 quarters ago, we had someone from claims come in and talk about Gaussian Splatting for our claims analytics. So know that we are working a lot on AI and have a lot that we are focused on. I'm not going to share with you all that we're doing. We have an inventory of items that we're doing across really the enterprise, and we're speaking across the enterprise to make sure we're doing the right thing for our customers, our employees in order to make sure -- just making insurance easier and just easier to understand, easier to work with. So whether it's digital or agentic, we're going to continue to focus on that. I did talk in my letter about marketing commercial that we did called, Drive Like an Animal, that was all AI generated with the exception of Flo's voice. And we did that in so much less time than a regular commercial and so much less money and more importantly, it worked. So we measure our new prospects, and it worked very well. So we're excited about that as well. We're going to have business models, rigorous controls and we're going to continue to invest in this, and we're going to continue to lean into now Gen AI. We recently formed an AI Strategy Council. And so while we're working on sort of the next year and here's where we're at and working with vendors and making sure that we're testing things to make sure it's a really fluid process. This AI Strategy Council is sort of looking to where the puck is going in the next 3 to 5 years. So think of how -- one, clearly efficiencies, we're going to want those. But how is this going to change our industry? How is it going to change Progressive? How is it going to change how customers shop, et cetera? And they should report to my team in a few months, and we're going to continue to evolve that because we think the puck will move because this is going really fast. Here's what I would say. Lastly, I'm super excited about the promise that AI holds for Progressive and I'm excited about all the work we're doing. As with past innovations, I'm confident we will be a leader in our execution, and we'll do it responsibly. So that's where we're at. We are getting -- we're seeing efficiencies when you look at our data, and I think that will continue. Operator: Our next question comes from Peter Knudsen with Evercore ISI. Peter Knudsen: Just another question on AI. I'm wondering if you could talk a little bit about how you think AI agents potentially could change the Personal Lines distribution, specifically for Progressive, but also the market overall? Susan Griffith: I mean I think it's probably a different answer if I'm talking about our direct business versus our agency business. Our direct business, I think it could change it dramatically because if we have agentic agents for some policies. So I think there'll still be the desire for more complexity to talk to a human. But for some easy policies, and if I think it flows well, we should be able to change as these evolve and get better and better. Independent agents, I think it's a little bit different. Oftentimes, customers go to independent agents for more complexity of needs, feeling confident in their decisions. We've seen that especially on the Commercial Line side, where it's a little bit more of a complex policy coverage contract, and so they want to be able to kind of have that knee to knee. But I do think it's changing. If we can make it easy for our customers, one of our strategic pillars, John shared those is broad coverage. We want to be aware when and how customers want to shop and be serviced and some of that might be through an agentic AI agent. Peter Knudsen: Okay. And then one thing I've seen in the past cycles is that frequency on first-party coverages has bounced back 1 year or 2 after we've seen auto prices moderate. And so I'm wondering if you would sort of agree with that hypothesis, if you have seen any evidence of this in your book? And then if yes, basically, how is that changing your assumption for frequency in the coming year now that we've seen a softer prices? Susan Griffith: Yes. I think frequency is obviously -- there's so many attributions that happen, but we have seen that. John, do you want to take a little bit more detail on that? John Sauerland: Sure. We are always analyzing frequency at the coverage at the state, at the most finite level we can and our product managers are constantly assessing what they think the future looks like to ensure that our prices that we are setting today ensure that 96 or better combined ratio moving forward. You're right. When the market tightens up, we do -- we believe it's tough to see it exactly. But when the market tightens up, there is some change in claiming behavior. And as the market loosens, we do think sometimes we see some loosening in claiming behavior. It's, again, tough to tease out relative to everything else going on in the marketplace. Additionally, we watch coverages very closely when things like recessions happen because claiming behavior changes there as well. So yes, we are certainly in a softening environment. The availability of insurance is certainly opening up relative to where it's been, and that can have influences on first-party claiming behavior. I won't try and put a number on it for you today. And I would tell you, it's not a large number ever, but it does have some influence in the direction of frequency. Operator: Our next question comes from Katie Sakys with Autonomous Research. Katie Sakys: Can you hear me? Susan Griffith: Yes, Katie. Katie Sakys: My first question is really on the regulatory environment. I think as you guys are well aware, there have been several state legislatures that are looking to push forward legislation that would focus on consumer affordability. Several states have pointed to Progressive specifically as an example of ways in which the auto insurance industry can be further regulated to support this goal. I'm just kind of curious how you guys are thinking about the potential for additional regulatory changes over the next year or 2? And really what that might mean for your overall approach to underwriting in those states. Susan Griffith: Yes, it's hard to say, except for where we have the data, and that's from Florida. And so you saw the tort reform, the House Bill 837 that they put into play. And that has had a tremendous effect on affordability for Floridians. And in fact, if you bought a policy today versus 1 year, 1.5 years ago, you're going to pay on a new policy, 20% less, which I think is really significant. So that's been pretty powerful. I know Governor Hochul from New York is, I think, proposing some legislation on to reduce fraud and lawsuit abuse in New York, we think we support that. So we support that because we do think affordability is an issue, and competitive prices, again, is one of our strategic pillars, and we want to make sure that we take into account things like affordability. I'll talk about some of the other things we've been doing internally, though. So we will abide by the rules of any state. We know how to work, state to state. We've done that for nearly 90 years. But we internally also have felt it important to make sure that we take actions to help with affordability. So specifically on the CRM side, and we've talked about this before as it relates to PLE, we have something called customer preservation team. And customers can call in and we can talk about maybe changing coverage. We'll do a whole policy review. So maybe it could be changing coverages, lower deductibles and we can kind of work our way around different types of that. Sometimes when people call in, they will have a different product model. We rewrite that. But the 4 million customers that called in, in 2025, had an average decrease of 21%, which is significant for those customers. We also do proactively call out to customers that we think might defect to kind of help them work through the policy review. Another piece that we've had for a long time are our loyalty rewards. So think of loyalty for tenure, for minor child discounts, accident forgiveness, things like that. And that's equated to about $1.5 billion in savings in 2025. I've talked about this for years, especially during and after the pandemic, Snapshot. If you -- Snapshot whether it's the OBD device or the mobile device, if you're a good driver, you can have really, really generous discounts because we understand that rate to risk. And then we try to be flexible with what's happening in our country at any given time. So when the federal government shut down, we made sure if those employees called in that we gave them some lenience in terms of when they would pay their bill. And I know that really helped a lot of our federal employees. We talked a little bit about reducing some new business rates where we want to grow, and I think that is important. We feel like right now, we're in a really great competitiveness from a price perspective, there's a lot of shopping, and it is a soft market. But we are having really high conversion. In fact, the highest we've had in decades. So we do feel really good about that. But we applaud any reforms that can make insurance more affordable. And we think Florida is a perfect example of that. Katie Sakys: I appreciate the extra color there. I guess maybe zooming in on Florida then, it was great to see that loss trend on the Florida Personal Auto book sort of came in below you guys' expectations last year and drove a lot of the favorable development on that book. On the flip side, that also translated to the policyholder credit charge growing to $1.2 billion by the end of last year. How are you guys thinking about rate relief in Florida over the course of '26? And how that might translate to a policyholder credit charge, if any, taken this year? Susan Griffith: Yes. We're watching our combined ratio there closely. You sort of think of it's a 3-year rolling, so you've got '24 and '25 sort of in the book with this credit. In '26, we'll continue to watch. We've reduced rates 3x in the last year. The hard part about that area of the country is catastrophes usually come towards the end of the year. But I know Pat's team is watching that. And if we feel like we need to take more new business rate decreases, we'll do that. So more to come on that. I will tell you, we're watching it very closely and modeling it continuously. Douglas Constantine: That was our last question. And so that concludes our event. Daniel, I'll hand the call back over to you for the closing scripts. Operator: That concludes The Progressive Corporation's Fourth Quarter Investor Event. Information about a replay of the event will be available on the Investor Relations section of Progressive's website for the next year. You may now disconnect.
Operator: Good morning, and good evening to all, and welcome to the Sea Limited Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions] And finally, I would like to advise all participants that this call is being recorded. Thank you. I would now like to welcome Mr. Elson Choi to begin the conference. Please go ahead, sir. Elson Choi: Hello, everyone, and welcome to Sea's 2025 Fourth Quarter and Full Year Earnings Conference Call. I'm Elson from Sea's Investor Relations team. On this call, we may make forward-looking statements, which are inherently subject to risks and uncertainties and may not be realized in the future for various reasons as stated in our press release. Also, this call includes the discussion of certain non-GAAP financial measures such as adjusted EBITDA. We believe these measures can enhance our investors' understanding of the actual cash flows of our major businesses when used as a complement to our GAAP disclosures. For the discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP measures, please refer to the section on non-GAAP financial measures in our press release. I have with me Sea's Chairman and Chief Executive Officer, Forrest Li; President, Chris Feng; and Chief Financial Officer, Tony Hou. Our management will share strategy and business updates, operating highlights and financial performance for the fourth quarter and full year of 2025. This will be followed by a Q&A session in which we welcome any questions you have. With that, let me turn the call over to Forrest. Forrest Li: Hello, everyone, and thank you for joining today's call. 2025 has been a great year for Sea. We generated a record $23 billion in revenue, representing 36% year-on-year growth, an acceleration from 2024. At the same time, we improved our bottom line profit. Our full year net income reached $1.6 billion and adjusted EBITDA reached $3.4 billion, representing a 260% and a 75% year-on-year increase, respectively. All our businesses scaled well in 2025, exceeding our initial growth expectations. This broad-based robust growth is healthy and sustainable, underpinned by the growing scale of users that we serve. In 2025, Shopee served around 400 million active buyers and 20 million sellers, achieving $127 billion in GMV. Monee gained over 20 million unique first-time borrowers and grew its loan book beyond $9 billion, while maintaining stable risk. And Garena connected with over 100 million players on average every day throughout the year, generating almost $3 billion in bookings. We were successful in 2025 because we chose the right set of strategies and we executed them well. 2026 will be a continuation of this approach. Our strategies will be consistent and execution remains key. We will double down on operational excellence and work towards delivering another year of strong growth and healthy profit. With that, let me take you through each business' performance. First, starting with Shopee. Shopee achieved another record second quarter with new highs in GMV, gross order volume and revenue. Our full year GMV grew 27% year-on-year alongside significant profit improvement. We generated a full year adjusted EBITDA of over $880 million in 2025. Our strong GMV growth was driven by tangible improvements we made for both buyers and sellers. We made product discovery easier, broadened our assortment of offerings at competitive prices and widened access to fast, reliable shipping. We also improved our monetization further in the fourth quarter. Ad-paying sellers increased by more than 20% and their average ad spend increased by more than 45% year-on-year. As a result, ad revenue grew over 70% and ad take rate increased by more than 80 basis points year-on-year. The strong set of 2025 results is a validation of the effectiveness of our strategic choices for Shopee. We have shown our ability to enhance monetization as demonstrated by our consistently improving take rate over the past 2 years. For the near term, we choose to prioritize growth while upholding financial discipline. For 2026, we aim to grow Shopee's annual GMV by around 25% year-on-year with its full year adjusted EBITDA no lower than 2025 in absolute dollars. We believe this is the right strategy to optimize Shopee's long-term profitability. Let me highlight a few areas where we are investing to further enhance our scale and market leadership. This includes our continued efforts into logistics, Shopee VIP membership program and expansion of our content ecosystem. The objective is clear. We want to serve more users and engage them better. In 2025, monthly active buyers and average monthly purchase frequency increased by 15% and 10%, respectively, compared to a year ago. In 2026, we will remain focused on executing these priorities well. It will benefit us with deeper structural moats that can further differentiate Shopee from its peers. First, logistics. Our logistics capabilities have become an increasingly important differentiator for Shopee. SPX Express now processes on average over 30 million parcels every day, making it one of the largest e-commerce logistics solution providers in our market. In 2025, we improved speed and cost efficiency across our markets while customizing delivery options for different user needs. In dense urban areas, we scaled instant and same-day delivery for buyers who value speed and convenience. We expanded instant delivery into additional use cases, including partnering with local supermarkets and suppliers to deliver fresh groceries in Thailand in as little as 1 hour. Our faster delivery services reached a double-digit share of order volume in greater metropolitan areas such as Bangkok and Jakarta by the end of 2025. Buyers using instant and same-day delivery also spend around 15% more on average after adoption. At the same time, we scaled economical shipping to serve buyers seeking affordability. In Indonesia, orders using economical shipping more than doubled year-on-year in the fourth quarter. With our delivery capability well scaled, we started to roll out fulfillment service in various markets across 2025. We are seeing encouraging adoption trends from both buyers and sellers with double-digit order penetration in some markets. In 2026, we plan to expand fulfillment further across all our markets and aim to double our fulfillment order penetration by the end of the year. Second, the Shopee VIP membership program. In 2025, we introduced this program to deepen engagement among our most active buyers. This paid program gives subscribers more generous free shipping entitlements, daily vouchers and exclusive discounts. We have now rolled out Shopee VIP to all our Asian markets. Total subscribers surpassed 7 million at the end of the year, more than double the number from a quarter ago. Across every market where it has launched, the program has consistently produced double-digit spending uplift by members after they join. In Indonesia, VIP members have been spending about 30% to 40% more than before joining. In some markets, VIP members already contributed more than 15% of total GMV in the fourth quarter. Building on Shopee VIP's success in Asia, we plan to launch it in Brazil in the coming months. Third, our content ecosystem. We strengthened our content and affiliate ecosystem in 2025, making discovery more engaging and supporting higher purchase conversion. We saw strong momentum in our partnership with YouTube, with orders driven by YouTube content more than tripling in the fourth quarter year-on-year. Our collaboration with Meta has also scaled well since its launch in October. By the end of the year, more than 3 million affiliates had linked their Shopee and Facebook accounts. This partnership has extended our ecosystem coverage across multiple channels to the benefit of both our buyers and sellers. I would also like to highlight our strong achievements in Taiwan and Brazil. In Taiwan, GMV growth accelerated to double digits in 2025. Our wide product assortment, highly competitive pricing and differentiated logistics have made us the clear e-commerce leader there. In particular, our large-scale network of Shopee collection points, including automated locker stores, has reinforced our popularity in Taiwan. It addresses Taiwanese buyers' desire for convenience while lowering our cost to serve, allowing us to offer free shipping at a much lower minimum spend. By the end of the year, our network has grown to over 2,800 locations. This last-mile delivery model has contributed to broader user adoption and stronger repurchase behavior while creating a structural moat that is difficult for any peers to replicate at scale. We still see much headroom to strengthen our market leadership and improve e-commerce penetration in Taiwan. Brazil was our fastest-growing market in 2025, delivering robust GMV growth and market share gains while remaining profitable. Mass market penetration improved, thanks to our ability to offer free shipping at the lowest cost structure in the market. Upmarket penetration also improved as our fast, reliable delivery made us more attractive in higher-value categories. In the fourth quarter, buyer waiting time improved by around 1.5 days year-on-year. Over the same period, we onboarded more than 300 new brands to Shopping Mall and Shopping Mall GMV more than doubled year-on-year. With these efforts, newer buyer cohorts are showing higher average spend levels. In 2026, we will accelerate the rollout of our fulfillment capability in Brazil. This will enable us to attract and serve even more sellers, especially in higher-value categories and keep improving our average basket size. Shopee delivered an exceptional 2025, setting new growth records every quarter. This has proven the effectiveness of our strategic choices. It has also validated the efforts we made across the year to constantly improve our execution capabilities. In 2026, we will remain consistent on both our strategies and our focus on high-quality execution. We believe our strong growth momentum and healthy profitability will continue into the year ahead. Next, moving to Monee. We are very proud of the progress Monee has made in both growth and profit while maintaining a healthy risk profile. In 2025, Monee's annual revenue reached $3.8 billion, representing 60% year-on-year growth. Adjusted EBITDA exceeded $1 billion, representing 43% year-on-year growth. Credit business remains our primary driver of growth and profit. In 2025, we grew our credit business in three ways: acquiring more new users, deepening engagement with existing users and expanding credit use cases. First, we acquired many more new users by shifting from a whitelist-based approach to a broader all-can-apply approach. We progressively rolled this out across our markets for both SPayLater Pay and personal cash loans. New user cohorts scaled well with generally positive unit economics. In the fourth quarter, we added 5.8 million unique first-time borrowers. Our active credit users crossed 37 million at the end of the quarter, up more than 40% year-on-year. Second, we deepened our engagement with existing credit users for borrowers with longer credit track record. We offered access to higher loan limits and longer tenure. To target more prime users, we introduced differentiated pricing and more product features, such as first-month interest-free loans. By the end of the fourth quarter, average loan outstanding per user was around $240, a 27% increase year-on-year. Third, we expanded credit use cases beyond Shopee into more consumer spend scenarios, letting us penetrate a much larger addressable market. Off-Shopee SPayLater has evolved from a nascent offering into a meaningful contributor to our overall loan portfolio. By the end of 2025, off-Shopee SPayLater loans grew over 300% year-on-year, accounting for over 15% of our total SPayLater portfolio. In Malaysia, close to 30% of SPayLater usage was already off-Shopee. Our success with off-Shopee SPayLater has been driven by the close attention we pay to user experience. We took great efforts to ensure that SPayLater could be activated in seconds and used seamlessly for in-store purchases. We integrated SPayLater with national QR payment systems across key markets, making it much easier for consumers to use in day-to-day purchases. We also expanded the use of SPayLater into higher ticket offline categories such as electronics and 2-wheelers. We are encouraged by the early traction we are seeing with off-Shopee SPayLater and see substantial headroom to expand its use cases. Our credit business expansion in 2025 was made possible by improvement in our risk underwriting capabilities. This improvement tapped on our rich ecosystem data and advancement in AI. Over the year, we made good progress training our risk models to better understand and map how user behavior evolves over time. We are better able to access individual repayment capacity alongside evolving market risk and dynamically adjust the credit limits as needed. Enhancing our models precision and performance enabled us to scale rapidly in 2025, while still maintaining a stable risk profile. Our 90-day NPL ratio held steady at 1.1% as of the end of the fourth quarter. Looking ahead, I'm incredibly excited about Monee's growth potential. Many of our initiatives are still in early stage with huge opportunities we have yet to capture. We are also making good progress growing our products and services beyond credit from digital banking to insurance and more. We believe Monee will be a significant long-term profit contributor for us. Next, turning to Garena. 2025 was a blockbuster year for Garena. Bookings grew 37% year-on-year and adjusted EBITDA grew 38% year-on-year. Free Fire expanded its reach and scale globally, and we saw solid momentum across our broader portfolio from Arena of Valor to new titles such as Delta Force and EA SPORTS FC Mobile. Free Fire's journey over the last 8 years has been truly special. It is remarkable for a franchise of this vintage to still be growing so fast. Free Fire has now achieved two consecutive years of bookings growth exceeding 30%, with 2025 bookings nearly double the level reported in 2023. Even at this massive scale, average daily active users in 2025 continued to grow year-on-year. Free Fire's success is driven by our ability to consistently deliver high-impact experiences that bring communities together. 2025 was a defining year in this regard, showcasing our excellent execution across a full spectrum of major in-game and real-world initiatives. We delivered a content pack year. In Q1, we launched NARUTO SHIPPUDEN Chapter 1. In Q2, we released our eighth anniversary map, Solara. And in Q3, we launched the Squid Game collaboration and NARUTO SHIPPUDEN Chapter 2. This blockbuster year was the product of more than 2 years of intense preparation, collaboration and game development. We started working on the NARUTO SHIPPUDEN project in 2023 when the global game industry was struggling with the post-pandemic headwinds. We knew this project required a long development time line. In that difficult time, the easier path would have been to focus on smaller shorter-term wins, but we were convinced that this was the right thing to do and remain committed to the long-term vision we had for the project. Our conviction, patience and hard work has been hugely rewarded with the collaboration's resounding success. Garena's culture of always prioritizing what is best for our players even through hard times has sustained Free Fire's popularity and relevance, making it an evergreen game. 2025 was also a big year for our Esports ecosystem. The Free Fire World Series Global Finals held in Jakarta in November marked a historical moment for the franchise. More than 600,000 players competed worldwide across grassroots qualifiers, regional leagues and global finals. This earned Free Fire the Guinness World Records title for the Largest Mobile Team-Based Esports Tournament. Over the past 8 years, we have built Free Fire into more than just a game. It is now a global franchise spanning gameplay, social engagement and real-world experiences. This approach has deepened the game's emotional connection with players and continues to fuel its organic growth. We are already laying the groundwork for Free Fire's next phase, including preparation for its landmark 10th anniversary in 2027. Beyond Free Fire, EA Sports FC Mobile has delivered a strong early performance. Since its launch in October, it has become the most downloaded mobile game in Vietnam according to Sensor Tower. We hosted FC Pro Festival 2025, a flagship esports and fan event in Ho Chi Minh City. The event was incredibly popular, reaching 18 million viewers online. To build excitement for event, we brought in global football icons, Luis Figo and Ricardo Kaka to play with local footballers and influencers in a friendly match. Our success with this game demonstrates our ability to localize the global franchise through deep engagement with fan communities on the ground. We look forward to further strengthening our long-standing partnership with EA. We are very proud of Garena's sustained success across Free Fire, our long-standing published games and the exciting new titles we have added to our portfolio. Garena is entering 2026 with strong momentum. We will keep delivering high-quality content and experiences to our global gaming community. As we enter 2026, we see exciting opportunities across our businesses and markets. Our excellent performance in 2025 has strengthened our conviction in our operational strategies. We will double down on executing these strategies with excellence in the year ahead. As always, we greatly appreciate your trust and support along the way. We look forward to delivering another strong year. With that, I invite Tony to discuss our financials. Hou Tianyu: Thank you, Forrest, and thanks to everyone for joining the call. For Sea overall, total GAAP revenue increased 38% year-on-year to $6.9 billion in the fourth quarter of 2025 and 36% year-on-year to $22.9 billion for the full year of 2025. This was primarily driven by growth in Shopee and Monee. Our total adjusted EBITDA was up by 33% year-on-year to $787 million in the fourth quarter of 2025 and up by 75% year-on-year to $3.4 billion for the full year of 2025. On Shopee, gross orders increased 30% year-on-year to $4 billion in the fourth quarter of 2025 and GMV increased by 29% year-on-year to $36.7 billion in the fourth quarter of 2025. Our fourth quarter GAAP revenue of $5 billion included GAAP marketplace revenue of $4.3 billion, up 36% year-on-year and GAAP product revenue of $0.6 billion. Within GAAP marketplace revenue, core marketplace revenue, mainly consisting of transactional fees and advertising revenues was $3.6 billion, up 50% year-on-year. Value-added services revenue, mainly consisting of revenues related to logistics services was $0.7 billion. For the full year of 2025, GAAP revenue of $17 billion included GAAP marketplace revenue of $15 billion, up 34% year-on-year and GAAP product revenue of $2 billion. Shopee adjusted EBITDA was up by 33% year-on-year to $202 million in the fourth quarter of 2025. Full year adjusted EBITDA was $881 million for 2025 compared to a full year adjusted EBITDA of $156 million for 2024. Monee GAAP revenue was up by 54% year-on-year to $1.1 billion in the fourth quarter and up by 60% year-on-year to $3.8 billion for the full year of 2025. Adjusted EBITDA was up by 25% year-on-year to $263 million in the fourth quarter of 2025 and up by 43% year-on-year to $1 billion for the full year of 2025. As of the end of December, our consumer and SME loans principal outstanding reached $9.2 billion, up 80% year-on-year. This consists of $8.2 billion on book and $1 billion of booked loans principal outstanding. Nonperforming loans past due by more than 90 days as a percentage of total consumer and SME loans was 1.1% at the end of the quarter. Garena bookings grew 24% year-on-year to $672 million in the fourth quarter and grew 37% year-on-year to $2.9 billion for the full year of 2025. GAAP revenue was up by 35% year-on-year to $701 million in the fourth quarter and up by 26% year-on-year to $2.4 billion for the full year of 2025. The growth was primarily due to the increase in our active user base as well as the deepened paying user penetration. Garena adjusted EBITDA was up by 26% year-on-year to $364 million in the fourth quarter and up by 38% year-on-year to $1.7 billion for the full year of 2025. Returning to our consolidated numbers. We recognized a net nonoperating income of $62 million in the fourth quarter of 2025 compared to a net nonoperating income of $28 million in the fourth quarter of 2024. For the full year of 2025, nonoperating income was $296 million compared to nonoperating income of $117 million for the full year of 2024. We had a net income tax expense of $210 million for the fourth quarter of 2025 compared to net income tax expense of $89 million in the fourth quarter of 2024. For the full year, our net income tax expense was $651 million compared to $321 million for the full year of 2024. As a result, net income was up by 73% year-on-year to $411 million in the fourth quarter of 2025. For the full year, net income was $1.6 billion as compared to net income of $448 million for the full year of 2024. Elson Choi: Thank you, Forrest and Tony. We are now ready to open the call to questions. Operator? Operator: [Operator Instructions] Your first question comes from the line of Pang Vitt from Goldman Sachs. Pang Vittayaamnuaykoon: Two questions from me. The first question is on Shopee. Can you provide more details on how you plan to achieve the target growth in 2026, while maintain at least flat year-on-year absolute EBITDA? What assumption in specific are you making regarding the competitive landscape? And given the trajectory of lower year-on-year margin potentially, what are the key investment areas? And how long should we expect the investment to last? That's question number one. Question number two, this will be on Monee. The loan book grew very strongly, closing the year more than 80% year-on-year. Can you elaborate on the key drivers of this strong performance? Was this primarily driven by new products, new market pricing or stronger demand? Or how should we think particularly about growth in this year, 2026? Likewise, how should we think about the EBITDA margin trend going forward as well for the segment? Hou Tianyu: If we start from the Shopee side, the first question, I think the -- as Forrest mentioned in the opening, there are a few areas we are investing for growth. If you start with the South Asia, essentially, there are kind of two core elements of this. The first element is to increase the share of wallet of the core users. Second is to increase the buyer base. If you start with the first one, the thing we are doing essentially are kind of similar to what we did before, but further enhanced in 2026 is to have better user experience through our logistics. For example, the instant delivery, same-day delivery, so users have a better experience. On top of the general improvement of our delivery qualities, if you're in South Asia, if you try our services, you will see a general faster deliveries and better reliability over the year. We want to continue to do that. The second part is to have a bigger fulfillment network. And I think this will both, reducing the speed of user will receive item because we can move the items closer to the users before the user actually ordered the items. I think in South Asia, most of countries have seller concentrated in the capital regions. So if you're after capital regions, having a warehouse closer to your area is a big speed improvement. But not only the speed, but also the reliabilities of the services and also helping the seller to offload many of their work, essentially to make it easier for sellers to sell our platforms. The other area is to increase the wallet share of the VIP programs, not only sort of like offering better service for our own -- through our own platforms, we are working with many different external partners to offer benefit to the VIP users as well. As you probably can see that we work with OpenAI and ChatGPT. We are also working with many local partners in different countries, and there are many global and local partners pending in the process. The -- again, this is on top of the many other things we are doing, for example, the price initiatives to make sure that our platform is always price competitive. We also continued the effort on the content side. Our content share of businesses has been growing over the years, more than 20% already. And I think that trend still will continue, not only for our own content, but we work with external partners like YouTube, like Facebook apps, and we are discussing more collaboration for the external content providers as well for this. Again, this is a broader segment of increasing the wallet share for our core users. Another part of the effort, as I shared earlier, to increase the buyer base. I think the -- if you look at where we are right now versus, let's say, a year ago, one of the difference, you will see that our gross unit economics has been improved meaningfully with the high take rate through the ad effort and also part of the commission effort, we have essentially a higher take rate on the top line, but also reduce our cost to serve essentially for the logistics plus payment. Essentially, this is the raw cost to serve with the better gross margins, there are more and more users we can serve in a profitable way. So this enables us to be able to essentially serve a larger group of users. And what we are doing in 2026 is essentially to reach out those users to convert them to our platforms and hence, enhance the overall -- the MTUs -- the MAUs for our platforms. So that's kind of a broader theme of what we are doing in South Asia. In Brazil and Taiwan, many things are similar, but I just want to highlight a few things that's specific to the market as well. In Brazil, we have been operating with a much efficient logistics network compared to what's available to our -- to the other players in the market with much lower cost. And we are able to run the businesses profitably with sort of a much lower basket size. With this, we would like to essentially build on top of this to serve the high-end customers well over time in a higher basket size categories. In order to do that, there are essentially three things that's important. One is to increase the speed of deliveries. I think as Forrest mentioned in the opening, we have reduced the shipping speed over time meaningfully. -- like if you compare Q4 this year versus Q4 the year before -- sorry, I mean 2025 versus 2024, you will see 1 to 2 days difference on the delivery time in Brazil. I think that's very important to make sure that the user gets the item faster with a lower cost without impacting the cost. That's very important. Second one is the fulfillment network that we are building in Brazil. We have been ramping up this in the past quarter, but 2026 is really time that we're going to grow this much larger. I think we spent quite a few months to get all the detail right, the system right, get the location right, get the process right. I think it's a time to actually to grow this much faster. The third one is to make sure we have all the right sellers for certain particular categories, like, for example, auto electronics, et cetera, but also for the more branded sellers coming to our platform. I think with all the three elements coming in place, I think this will enable us to reach out to a new segment that we are not able to serve in the market, right? I think in Taiwan, we have a kind of quite special network we built for our deliveries. I think in order for us to capitalize on that, we also start building the fulfillment part as well to have an integrated operation. So not only sort of just, but it's an integrated operation with our local networks. So we are able to serve the users in a much lower cost end-to-end, but also faster speed compared to what they experience before with the other networks in the market. Yes. So all in all, this is kind of the things we are doing. And many of this has an investment cycle as well. If you look at the fulfillment network, there will be a period of time we build it up, but there's a clear investment cycle come with it rather than that is ongoing perpetual investment that, for example, if you look at the faster deliveries we're building, I think there is a pure time that we will scale the delivery fleet, et cetera. It's a separate fleet from the typical SPX services. For example, if you look at the VIP program, there's a pure time that we will kind of educate the market, but -- and also attract our partners. As we get everything in place, I think the cost structure will be a lot better. I think it's been proven in many other markets, as you probably been aware. If you look at the sort of the overall profitability margins, our Q4 EBITDA margin is around 0.55 as you can see. Compared to the year before 2024, we are actually improving on the margins. If you look at over the years, in the early part of the year in 2025, we guided the market to grow around 20% for our top line. Over the year, we actually realized that we are able to grow the businesses much faster. We end up with much higher than that. If you look at the year-to-year growth, if you look at Q4 growth, we grow much larger, much higher than 20%. I think essentially over the year, we've realized that there are areas we are able to drive the market to grow. And we also learned that there are different levers that we can pull to drive the market growth. And 2026 essentially is extension from where we are in Q4 2025. And if you look at sort of like Q4 2025, if you look at the end of the year 2026, I do believe that we are able to expand the profitabilities, the margin there as well. And this trend can continue over the years. And I think we talked about the 2% to 3% margin for e-commerce businesses over time. I think the belief is still clearly there, and we will demonstrate it to the market over the years. And at the same time, we also believe that the market potential is probably larger than kind of many projections before. And the 2026, as we shared earlier, we are able to grow around 25%. And of course, the -- we will observe how the market behave over the years and over the quarters. I think the core thing for us is, I think the business is I think, is in a shape that we are very confident that there are things we can do to drive the business growth and the things are within our control and the things we are doing has a clear investment cycles that we can drive over time. Regarding your question on the competitive landscape, I think what we observed is relatively stable competitive landscape across most of our markets. Yes. And I think that we didn't observe anything very different from what we see from last quarter. I think that's the sort of a question to the e-commerce side. On the Monee businesses, there are multiple drivers driving the growth. On the broader scale, we see that there is a different phase of our businesses that will roll out in different markets. There are also different products we roll out in different markets in different phases. For example, the early market that we start our financial service businesses was Indonesia. So clearly, Indonesia was the first country that grow much faster than others. Then over time, we started kind of like the services in countries like Thailand, Malaysia, et cetera. So these kind of countries will catch up on the growth. And the initial phase of those new market clearly will grow faster than the market has been there for quite a period of time. Another example would be like Brazil. If you look at -- essentially, it's actually our latest market when we launched many of our products, Brazil also in a pretty high growth phase as well. The other drivers on the product side as well. In most of the countries, we started with SPayLater, which is our consumption loans. So that's the first growth driver. And then later, we roll out the cash loans, the personal cash loans. We also roll out the off-Shopee's and then the cash loan and off-Shopee -- off-platform loans will be the growth driver. So if you look at the growth, the on-Shopee side, we still see more penetration possible on Shopee. And even within SPayLater, we have differentiated products for different users, especially for the more higher income segment. We offer a differentiated product with longer tenure, slightly lower interest rates, et cetera, to those segments. So we still see opportunity to grow this segment. And for the off platform lending, I think we shared quite some in the opening as well. For example, in some countries like in Malaysia, we see the off-Shopee SPayLater has been 30% of the overall portfolio already. And I think all these are driving the growth for our loan book. Regarding the margins, I think the margin influenced quite a lot by the country mix, product mix and also whether we see a good opportunity to acquire users. I think it might fluctuate a little bit quarter-to-quarter. But the fundamental of this is how is our risk management capabilities that we see. We are seeing very stable risks. If you look at a particular product for a particular market, the risk is very stable for us. You can see this from our NPL number as well. And we track this very closely internally to make sure that we don't sort of like grow the loan book because we want to grow the loan book on the top line. We want to do it very prudently. At the same time, we actually upgrade our risk management models over the years, especially with many of the new AI technology. We're experimenting with the new AI -- new risk model with the transformer structure as well to do a sort of a long sequence data training fit into our model to utilize many of the e-commerce data that we are not able to use in the traditional risk modeling, and it has been showing us very good performance. And so many of this will help us to manage our risks to reach out to the user base we are not able to serve before so that we can grow the loan books over time. Operator: Your next question comes from the line of Piyush Choudhary of HSBC. Piyush Choudhary: First question is on Shopee. You have elaborated on various investment buckets. Could you also elaborate on how long these investment cycle could last in the context of how we should think about margins for 2027? And what are the likely deliverables from your partnership with Google to deepen AI-powered solutions for Shopee? And second question is on Garena. Could you talk about the outlook for the booking growth in 2026, pipeline for any IP collaborations which you can share? Hou Tianyu: For the investment cycle, as I shared earlier, I think for different initiatives, there are different investment cycles and also for different markets, there are different investment cycles. So it's a little bit sort of like tricky to generalize it, I guess, from a top-down perspective. But I -- as we guided in the opening that we do want to make sure, number one, that the total probability in the absolute numbers in 2026 is better than 2025. And also, if you look at the profitability levels, I do believe that if you look at sort of like end of the year -- over the years, I think it will not be worse than Q4 2025 and it should be able to grow over years. And if you look at -- we're not providing guidance, let's say, for FY 2027 yet, but as a medium-term to long-term trend, I think the 2% to 3% EBITDA margin, I think it's well achievable based on what we see so far. It's in a way, our choices on how much we want to draw on the margins versus the growth levers that we have in our hand. From what we see, it's -- we don't have any concern on that. In terms of the partnership for -- with Google, we are still in the process of developing the product. And I think it shouldn't take too long, I believe. I think when we have the product ready, I think we'll be able to share with everyone. It's largely sort of working with -- we've been working with Google for many years on Google Shopping and Google Ads and many other things like YouTube as well, so this is extension of our partnership. Forrest Li: Regarding the outlook for Garena, at this moment, we still see the double-digit growth for Garena for 2026. And in terms of the collaborations pipeline, as we shared, we are super excited and motivated by seeing the success of the collaboration with IP such as NARUTO. Actually, this year, we're going to extend that IP collaboration. So this probably the delivery will be around Q3, so based on our current time line. And we are also actively working with other potential like IP collaboration. Meanwhile, this year is a big football year for FIFA World Cup. So -- and we realized actually the global football community has a very, very high overlap with our global gamer community. So during the FIFA World Cup time, so we're going to have a lot of like football-related promotion as well. Operator: Next question comes from the line of Alicia Yap of Citi. Alicis a Yap: Two questions here. Number one, could management provide some insights into the retentions and also the renewal rates for your VIP member subscription program? And then furthermore, if you can give us how does the VIP members influence the different purchasing frequencies and also the preferred product category? And also, are there any difference between the behavior in the customer profile across the different countries? And how does this affect your strategy? And then second question is on AI. So I wanted to ask, given like can management share with us on your investment priority given how are you prioritizing your investment given -- so how are you prioritizing investment between the e-commerce, Fintech and AI amid the latest competitive environment, and also the importance of the AI initiative. So if management can share how you are leveraging your synergies between your three core business to strengthen your competitive advantage and also to enhance your ecosystem value? Hou Tianyu: For the Shopee VIP program, it has been growing quite a lot over the past few months. In some countries, it has been more than 15% of our total GMV for the VIP members. I think we do believe that this will grow further to double or triple from where we are right now. The retention has been pretty good actually. The renewal rate -- so one of the core challenge historically for similar program in our region is the payment success rate sort of when they roll from sort of 1 month subscription to another, many people drop off simply because there's no credit card available for many of our users in our region versus if you look at the more credit card market. I think we saw this by working closely between Shopee and Monee to enable the smooth payment process for our VIP program. And as a result, our kind of the subscription retention rate has grown from 40% to 70%, let's say for Indonesia over the past few quarters. This is a big achievement for us in terms of how we can retain the VIP members on an ongoing basis. And in term -- for most of the VIP members, if you look at the average purchasing, we do see that much higher frequent purchase and sometimes with a higher basket as well. I think overall, if you look at the general number, the VIP members spend 30% to 40% more than the average. For different markets, actually, we see quite similar behaviors in different market. I think probably the difference, I guess, in the market is probably the offerings because there are different preferences in different market in terms of user behaviors and what people care about. So we actually tailor the VIP offering quite customized tailored for each of the local market. I think that's probably more the difference than the sort of the other behaviors. On the investment front, so if you look at our different businesses, our Monee businesses is a very profitable businesses. And for most of the new user growth or for most of the new initiatives, it comes with a quite positive customer life cycle value. So it's kind of like -- so in a way, every initiative has a positive ROI. I think if you look at the e-commerce side, we do spend quite a lot of effort on the AI. I think you mentioned about AI investment there. For every -- for the investment on the e-commerce for AI, we also look at the positive return of investment across the initiatives. For example, if you look at one of the area we spend on AI is our search recommendation and also ad systems. The uplift on our ad take rate is a consequence of many of our AI efforts. For example, how do we actually expand the description for our products, we can understand the product better. For example, how can we expand the queries from the users, we can understand user intention better. Recently, we also rolled out a multimodal search in our platform as well. So user can search a picture plus a long description, and we are able to serve that just similar to how Gemini or ChatGPT would do. I think all those AI investment has a clear ROI. We also spent quite a lot of effort using AI to help our sellers. For example, if you go to many of our countries, you can talk to the sellers with the help of AI already. So we built an AI chatbot for our sellers. Our sellers can customize it for their own purposes. This will help the seller to reduce their manpower and also make it not only reduce cost, but also have the better upsell for the buyers. And we also have tools for the seller to create videos and picture descriptions for their products, et cetera. All those typically come with a fairly positive return on investment for our ecosystems. For the synergy across our businesses, clearly, there is a lot of synergy between e-commerce and financial service businesses. The financial services are essentially leveraging a lot of data, a lot of user behaviors from Shopee to be able to risk assess the users. And we still believe, as I shared earlier on the previous questions, we still believe there's a sizable room for the money to penetrate the Shopee user base there, not only for credit, but also for our banking businesses, insurance businesses, our payment business, et cetera. Our payment -- our Monee business also work with our game site to help the game on the payment process as well that is a collaboration with gaming business from Shopee as well in terms of the merchandising, in terms of the user acquisition side. So there are different type of collaboration among our businesses. Operator: Your next question comes from the line of Divya Gangahar of Morgan Stanley. Divya Kothiyal: My first question is on the Brazil space. So could you comment if you expect GMV growth in Brazil to accelerate this year given all that we are doing on the fulfillment capability? And what kind of impact would that have on our AOVs? Are the AOVs still significantly lower or 1/3 of the market leader? And what kind of gap do you expect to be able to cover with this fulfillment uplift? Could you also comment on what the penetration levels for Shopee PayLater in Brazil are? And should that also see a significant uplift this year? So that's my first question on Brazil. And my second question is on the content ecosystem that you alluded to. Could you comment on where do you see the e-commerce content ecosystem plateauing in ASEAN specifically? And what are the unit economics now versus shelf e-commerce for us? And how is our market share trending in this? Hou Tianyu: For Brazil, we come with a pretty high growth rate in 2025. We do believe the growth will continue in 2026. We don't have a guidance for a particular country on the growth rate. But in general, we will see pretty good growth in the market. We also believe that we will outgrow the overall market in Brazil. On the AOV, we do believe that the AOV will, over time, grow. The gap with [indiscernible], I think it will still have, but I think we will narrow down the gap over time. For the SPayLater penetration in Brazil, it's still in a very early stage, honestly. I think we grew quite a lot in Brazil. And the penetration in Brazil is still -- I think essentially, we start Brazil a lot later in other countries. And the penetration level in Brazil is still similar to the early time of what we observed in our early markets. So we believe the trend will continue in terms of the penetration of SPayLater in Brazil in 2026, similar to what we observed in other Asian markets. For the content ecosystem, we don't think it's plateauing yet for our platform. I wouldn't comment on other platforms, but for our platform, we do believe there are further room to grow in the coming quarters. The unit economics has been improving over years. I mean, sometimes there's a slight fluctuation from month-to-month, but general direction is the economics still improving over the time. I think the gap between the content ecosystem and the non-content unit economics will be narrow over time, and it will not be too much difference in the future. Operator: This concludes our question-and-answer session. I would like to turn the conference back to Mr. Elson Choi for any closing remarks. Elson Choi: Thank you all for joining today's call. We look forward to speaking to all of you again next quarter. Operator: Thank you for attending today's call. You may now disconnect. Goodbye.
Operator: Ladies and gentlemen, thank you for standing by. I am Geli, your Chorus Call operator. Welcome, and thank you for joining the OPAP S.A. conference call and live webcast question-and-answer session to discuss the fourth quarter 2025 financial results. At this time, I would like to turn the conference over to Mr. Jan Karas, Chairman and CEO of OPAP S.A. Mr. Karas, you may now proceed. Jan Karas: Thank you, Geli Good evening or good morning to everyone. We are glad to welcome you here and present to you our solid set of full year 2025 financial results. Hope you have enjoyed the presentation distributed earlier today, and we would be glad to answer any questions related to our financial performance. We are pleased with our 4.9% GGR growth for the year, in line with our provided outlook and remain optimistic that Greek operations will continue to be a strong asset of the combined Allwyn and provide significant contribution to its future success. Let's proceed directly to the Q&A together to make the discussion more engaging. Geli, over to you. Operator: The first question is from the line of Kourtesis, Iakovos with Piraeus Securities. Iakovos Kourtesis: A number of questions from my side. First question has to -- we're glad to see that Hellenic Lotteries license was secured. I was wondering if there is an update for the big license that expires in 2030, if you have something to comment on this. Second thing from my side is about the expected acquisition of Novibet. As far as I remember, the whole process goes on the Competition Committee. If you have any update on this front? And maybe I have another follow-up. Can you comment on this, please? Jan Karas: Apologies, what was the third point? Iakovos Kourtesis: The third question? Jan Karas: After Novibet, the third point? Iakovos Kourtesis: Yes. The third point is about -- recently, we have a new draft bill on illegal betting. Obviously, this should move on the positive side for you. If you have any comments for the new draft bill on illegal betting and how it affects -- you expect to positively affect your business? Jan Karas: Clear, thank you very much. Thank you for all the questions. Apologies, we had some technical issue here. We couldn't hear you properly on the last part, but all questions are clear. So let me take them one by one. Point #1, about the licenses, thank you for your kind words, just for the sake of full transparency. We have been recently informed that the Court of Auditors greenlighted the signing of the concession agreement for Hellenic Lotteries. And as such, we expect that soon we will be called to sign the agreement. After that, the agreement must be ratified by the parliament and the relevant law will be issued in the government gazette. That is just a point where the full process will be completed. At this moment, given these developments, we don't expect any delays, and we expect that we will start from the beginning of May, operating with the new concession, the new 12-year concession. So that's just on the clarity on the Hellenic Lotteries. When it comes to the legacy games, as we have stated before, many times, we are certainly interested to extend our exclusive games rights beyond 2030, for sure. At this moment, we don't have any update on this front. But again, you will be the first one to know once there will be any progress here. When it comes to Novibet and the HCC, this is something for our Allwyn colleagues to comment on our side. We don't have any comments and updates on the developments there. For the illegal betting on the other side, this is something very much relevant to us, and we obviously have welcomed the new legislation when it comes to illegal gaming. This is in many elements of what is being proposed is meeting the demands or suggestions we have been stating with our ongoing conversations with the authorities. Our interest is obviously aligned with the state -- with the Greek state here. We want to protect our players. We want to make sure that Greek state doesn't lose taxes in favor of illegals. So we are absolutely looking forward to explore the new opportunities to fight illegals that this new bill should bring. As for the expected impact, it's a bit, obviously, too early to judge. The final law should be voted in the coming months, hopefully soon. So then we will see the full definition of it. And very importantly, we will be with the authorities cooperating to the maximum to explore the benefits of the new legislation and translate it into actions in the real world leading into minimization of the illegal betting in Greece. So as stated by the government also on our side, we certainly expect a significant impact of this law on our business for the coming year, and in our case, positive impact in the coming years. Iakovos Kourtesis: Okay. Since this is the last time I suppose that you report results as OPAP, as a sole entity. I would like to thank you for your collaboration and give my congrats to the IR team. They've been extremely helpful all these years, and I'm so glad that they will continue this collaboration with us. Thank you very much. Jan Karas: Thank you for your kind words. We will come to that at the end of our call, but it's very much appreciated that you feel this way. And yes, don't worry, we will not disappear. We will stay in touch for sure. Operator: The next question is from the line of Draziotis, Stamatios with Eurobank Equities. Stamatios Draziotis: Can I -- well, just a couple actually. Can I start with Q4? If you could comment on 2 items, please. Firstly, the increase in expenses, I know you said there were some one-off elements, but just wondering to what extent we should expect this to continue in FY '25? And also the decline in online, you obviously said that this is mainly attributed to the customer-friendly results in sports betting. If you could maybe isolate the effect of the latter. And secondly, on '26 I think you mentioned that you expect this to be a year of great success in your remarks. I'm just wondering what this means exactly in terms of revenue and profitability for the Greek and Cypriot business. Pavel Mucha: Okay. Thank you. Good afternoon from me. Yes, the increase in expenses in Q4 is largely related to the digital agenda, both in retail and in online, where we are strengthening the team. So that's why the payroll expenses are coming higher. Also on the marketing side, both in terms of CRM, communication and sponsoring assets. And last but not least, on the technology front, again, digitalization, both in retail and ongoing improvement of customer propositions in online. Really, these 3 categories are related -- are driving the increase in costs. Obviously, you asked what to expect going forward. It's not that the OpEx would be increasing at this pace every quarter going forward. But we've reached a certain level by now. And this was all cautiously managed. It wasn't something out of control or out of a blue. That's why we also guided that when we provided the guidance for '25 that we will be heading towards mid-30s towards the 35% levels. And if you exclude the one-off expenses, indeed, the margin for the whole year came to 34.7%. So not only we delivered the outlook on the GGR, but also on the expenses. Now on the second, maybe. Jan Karas: For the outlook? Pavel Mucha: For the online. No, for the online and customer-friendly results. Jan Karas: Yes. Well, we don't have a -- you were asking for the specific impact of the results versus anything else. I think it's important to say that while we don't exactly have this split, and it would be a bit difficult to calculate anyway. What is important is that we see now in Q1, the business back on track. So the underlying solid performance of the sports betting continues. So we really have seen the Q4 as a disturbance that doesn't have any continuous trend for Q1. If I may also on your -- this is -- a small bridge towards your question about 2026 expectations. We are not officially providing any outlook for the Greek operations for obvious reason. Allwyn has already provided some initial guidance and more details will certainly be announced during the upcoming Full Year '25 Allwyn International Analyst Conference Call. Yet what we expect for the Greek operation is 2026 to be another year of great success entering the new year of the company with really good prospects. So we are quite confident of not only continuation but further strengthening of what we do here. Stamatios Draziotis: Okay. That's great. And thank you for the open dialogue over the years. And as you move into the next phase with Allwyn, we look forward to seeing the same transparency, hopefully, that has underpinned the OPAP's equity story to date. So thank you. Jan Karas: As in any other area, we -- our ambition is to be same and better. So hopefully, we will meet and exceed your expectations going forward on this front as well. Thank you for your trust. Operator: The next question comes from the line of Pointon, Russell with Edison Group. Russell Pointon: A couple of questions, if that's okay. First of all, just to come back on this digital investment in Q4. Does this -- with more investments in digital staff, does this mean that you're looking for a greater rate of innovation in the digital activities in the coming year or so? And the second question is just a minor question really in terms of the retail lottery business. I think the revenue went backwards a little bit in Q4. I was just wondering if there was anything in particular that affected the retail lottery business? Jan Karas: Thank you. So when it comes to digital investments, it is indeed a big topic for us. The whole 2030 strategy that we have recently introduced to our employees and partners, and we will be sharing with the investment community shortly is all around digital-first customer experiences. So the next day that we are looking at is certainly focused on attracting new generation players and that's not only in online, but also in retail. So while evolution and exploring the prospects of the online world continues to be very high on our priority list. The second close is now upgrade of the retail experiences with the implementation of a completely new digital layer. So if you want moving from paper cash agent into a fully autonomous digital gameplay in our retail stores where especially the new generation players will be able to benefit from digital interactions that are personalized where their interaction is rewarded and appreciated. And generally, the gameplay is of a new generation -- of a kind. Here, probably one picture better than thousand words. So we will be bringing you more information on that front shortly. So what is the necessary driving vehicle of that is the technological evolution that powers all these customer experiences from implementation of fiber connectivity in our stores all the way through to development of the apps estate, so that we will be merging all the different apps we have today into one digital ecosystem with one app that comes first and makes the interaction for customers way much more simple. One customer account, one app, one wallet, many new things coming that should simplify gamers or customers' life when it comes to gaming and as always, improve the entertainment factor as well as the rewards; and very importantly, the simplicity of gameplay. So it is really much more than for -- compared to the past where we have done some digital upgrades in the stores like bringing the SSBTs. This time, we are really taking it to the next level, and we see it more as a historical milestone of a step change from the traditional analog world towards a completely digital world of the future. Hope that helps. Pavel, on the second comment, if you may? Pavel Mucha: Yes. On retail lottery, look, we were really pleased with the performance of the lotteries in retail in Q4. It was very solid performance, not only on jackpot games, but also on KINO. If your question implied that it was a bit -- not so strong performance. So I just remind the tough comparisons with Q4 2024, where we entered the year in January with building up record jackpot in JOKER. And that those jackpots were already building during December. So it's more the comps with the 2024 very good performance, which may imply that the year-on-year growth in Q4 in retail lottery was not so significant. Russell Pointon: That's great. And let me reiterate the thanks to the team. Operator: The next question is from the line of Nekrasov, Maksim with Citi. Maksim Nekrasov: I have a few questions. The first is a continuation on the online sports betting right, and it looks like it has been declining for a few quarters in a row. But I just wanted to ask if you can provide any color on the competitive dynamic and on your market share dynamic in particularly in the sports betting online? And also, if you can remind us about the status of the prediction market platforms in Greece and whether you have seen some impact from those platforms? And finally, since we're rebranding, it would be interesting to hear what's the initial customer feedback? Is there something that surprised you? And if there is any color on the -- if the traffic has changed to some extent to the rebranded stores versus nonrebranded? So yes, any color on that would be appreciated. Thank you. Jan Karas: Well, when it comes to the big picture of the of the sports betting and iCasino market share, while we may be facing some headwinds here and there, we generally see us being on a very right track to protect our market shares and continue performing strongly. The recent rebranding of not only Allwyn, but also Stickiman (sic) [ STOIXIMAN ] is something that should further help in remaining and not only remaining relevancy to the younger audiences, but even further strengthening it. The new generation players are of our utmost importance. So we really remain confident in maintaining and further improving -- aiming for further improvement of our leadership in this market. Second question was on the prediction markets, we don't see any impact here. Obviously, with the acquisition of PrizePicks, this is a gaming vertical that is of our utmost interest, and we will be exploring the opportunities in this area. But at this moment, this is not something that we see as a gaming vertical significantly influencing sports betting in the Greek market. And the third question was on? Rebranding. First impressions of the rebranding are very positive. I think we have done a good job in 2025, preparing the Greek market for the rebranding with all the communication and campaign of OPAP being part of Allwyn. And as such, now the transition starting January 19, where we have changed the consumer-facing brand from OPAP to Allwyn has been really smooth. Overall, there is a positive reception from both customers as well as our agents and rest assured that our retail partners are always a very good thermometer of making the right customer moves. So we are very confident that we are on a good track. To let some numbers speak, currently, we are around 50% of awareness of the society about the Allwyn brand, and that's something that we will continue to build. So this exercise is far from over. The whole year 2026 is about building the brand awareness and building the attributes of the brand like the trust, like giving back to society, like winability to assure that our customers believe not only they haven't lost something, but that they have stepped into the new era that is better than before. And that is our ultimate commercial goal for this year. And so far, it's going well on this front. Thank you for your question. Maksim Nekrasov: Understood. And good luck in the new chapter of the company, and thank you for all the years of -- all the presentations and special thanks to the Investor Relations team, Nikos and John. It's really helpful and a very transparent reporting. So we hope that we will continue going forward. Thank you so much. Jan Karas: Thank you so much for your kind words. Much appreciated. Operator: The next question is from the line of Zouzoulas, Constantinos with Axia Ventures. Constantinos Zouzoulas: Two questions from my side. Some more color on the good performance of the VLTs, especially I'm referring to the increased visits per year. What can you tell us about this? And my other question has to do with Hellenic Lotteries. Now with the new -- you're going to be operating the new concession, do you have any plans for -- to refurbish the other games of this vertical? Jan Karas: On the second -- I will ask you for some clarification on the second question. But let's start with the. Constantinos Zouzoulas: We're talking about the scratch. Yes, we're talking about the scratch and the lottery tickets. The performance has not been that great during the past few years. Are there any plans to do something on this front? Jan Karas: Yes, yes. Sorry, I got confused when you said the other products. I was not sure I understand. So you are interested in what we will do with the Hellenic Lotteries portfolio, right? Constantinos Zouzoulas: Correct. Correct, correct. Jan Karas: And I will comment on that. Okay. Great. Thank you. So the first question? Pavel Mucha: VLT's performance. Jan Karas: VLT's performance. We are very happy for the performance we observed this year. And we are very clear as to where it is coming from because this is a return on investment into upgrading the customer experiences in our Play stores and in our -- with the new terminology Allwyn stores. We have -- as we have presented in our presentation, we have upgraded now a very significant part of the estate with much better customer experiences when it comes to game play. At the same time, we have invested a lot of efforts into the loyalty schemes that are appreciating and rewarding for the customers for being with us and for their activity with us. And last but not least, we are doing a lot of promotion events in the stores themselves so that we improve the entertainment element of the experience. And we don't stop here because going forward, our main focus is actually in significant upgrades of the venues where, believe it or not -- but the ones we have now, we have built some of them also already 10 years ago. So we are proceeding with a significant refresh of the stores, and we will be refreshing not only the color schemes, but very importantly, the look and feel. So the stores from the outside will be much more open, much more transparent, much more visible, much more inviting for the customers walking down the street, and we will be moving from the current, in most cases, white non-see-through facets and shop windows into something that allows you to see what is inside and that something is happening inside and will be bringing you in. Alongside of the technology upgrades like big digital screens, et cetera, that should help us in this important gaming vertical where we are not allowed to communicate too much and the shop windows communication plays an important role to bring people in the store. This should have further positive impact on the overall performance, especially when it comes to visitation and number of visits per customer per month. So overall, good momentum that we expect to not only continue but further strengthen. On the second question of Hellenic Lotteries, that is super exciting because as we say, everything bad is good for something. So obviously, the Hellenic Lotteries change of the license has a lot of administrative technical implications that do imply a certain degree of disruption of the business, and we are doing everything we can to minimize this impact on the customer experiences in our stores. It also brings a lot of benefits and one of them is that we will be, as of May 1, able to launch a completely new portfolio of scratch products. And we will be doing so certain -- building on some of the successful ones that we will keep, bringing some new ones that will be new in the market and overall strengthening the families, the 3 big families in scratch. So a refresh of the portfolio and complete refresh of the design of the whole portfolio. Zooming out from a customer perspective, the whole new license environment should bring new refreshed product portfolio, new gaming experiences because we are changing also the -- some of the games that we provide under scratch. And we are also looking at upgrading and refreshing the more traditional products like Laiko or Ethniko or the special editions of Laiko that you will see and our customers will benefit from during the year 2026. So hopefully, that covered your question. Thank you very much. Constantinos Zouzoulas: Thank you. Also from my side, thank you for the communication all these years and looking forward to continue the cooperation with you, Nikos and John. Thank you. Jan Karas: Thank you so much. Thank you very much. Operator: Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Karas for any closing comments. Thank you. Jan Karas: Thank you so much. Thank you, Geli. Thank you, everyone. Thank you for many of your kind words already expressed during the Q&A. And obviously, also from my side before we conclude today's call; not only on my side, on behalf of Pavel Mucha, myself, Nikos, John, the whole IR team and everybody who is supporting us on this journey. I would like to share some closing reflections on what I think is truly a historic milestone for our organization. We are -- very excited to embark on this new era that is ahead of us. And as we move towards the final stages of our business combination with Allwyn, I want to reaffirm our unwavering commitment to the investment community, to all of you here with us today as well as to those who could not be with us today that you have supported us and supported OPAP throughout this journey. And on behalf of both Pavel and myself, I want to express our deepest gratitude to our shareholders themselves and to our analyst community. Your support and collaboration over these years have been certainly the key of our success. Together, we have achieved financial robustness, created significant value, allowing us to enter this next chapter based on really solid foundations. For so many years also, the Investor Relations team in Athens has been the heartbeat of our communication, their expertise and deep-rooted relationships have been vital to OPAP's success and to the trust we share with you. As the cornerstone of our strategy remains transparency and accessibility, values that are at the very core of Allwyn as well, I'm really pleased to confirm to all of you that our IR team in Athens, led by Nikos Polymenakos, will continue to provide the high-quality support you have come to expect. And as such, while we are expanding our horizons, your points of contact in Greece remain unchanged. To better serve our new global footprint, our Athens-based colleagues will be fully integrated into a larger unified IR team working in daily collaboration with our partners in the London office. And this collaborative structure hopefully ensures that whether your inquiries are local or international, you will still benefit from a broader pool of expertise and global coverage. Finally, we are proud that the combined entity will retain its listing on the Athens Stock Exchange, soon Euronext Athens, remaining a central pillar of the Greek capital market. We look forward to this next chapter together as a leading listed lottery and global gaming operator. Thank you so much for your partnership, your trust and for being an integral part of this remarkable journey. We look forward to speaking with you again soon from this new global platform that I'm sure will be as exciting interactions and connections as until now, as we have stated before. Ladies and gentlemen, thank you very much. Dear colleagues, thank you very much. Last but not least, dear Geli, thank you so much for all the years of your fantastic support. Thank you all, and we will stay in touch. Have a nice rest of the day. Goodbye.