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Operator: Ladies and gentlemen, welcome to Tims China's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. At this time, I'd like to turn the call over to Patty Yu, Tims China's Public and Media Relations Manager for prepared remarks and introductions. Please go ahead, Patty. Unknown Executive: Hello, everyone, and thank you for joining us on today's call. TH International Limited announced its fourth quarter and full year 2025 financial results earlier today. A press release as well as an accompanying presentation, which contains operational and financial highlights are now available on the company's IR website at ir.timschina.com. Today, you will hear from Yongchen Lu, our CEO Director; and Albert Li, our CFO. After the company's prepared remarks, the management team will conduct a question-and-answer session. You will find the webcast of today's earnings call on our IR website. Before we get started, I'd like to remind you that our earnings presentation and investor materials contain forward-looking statements, which are subject to future events and uncertainties. Statements that are not historical facts, including, but not limited to, statements about the company's beliefs and expectations are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and our actual results may differ materially from those forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the SEC. This presentation also includes certain non-GAAP financial measures, which we believe can be helpful in evaluating our performance. However, those measures should not be considered substitutes for the comparable GAAP measures. The accompanying reconciliation information related to those non-GAAP and GAAP measures can be found in our earnings press release issued earlier today. With that said, I would now like to turn it over to Yongchen Lu, our CEO Director. Please go ahead, Yongchen. Yongchen Lu: Thank you, Patty. Good morning and good evening, everyone. Thank you for joining us today. As we just celebrated the 62nd anniversary of the globally renowned Tim Hortons brand and the seventh anniversary of Tims China. We're excited to continue serving our innovative and locally relevant offers to our fast-growing loyalty guests. As of December 31, 2025, China stood as the largest international market in Tim Hortons global history by a number of stores. We continue our growth trajectory, generating total system sales of RMB 1.57 billion in 2025, a 7.6% increase compared with 2024, fueled by mainly 25 net new store openings and expanding our store network to 1,047 across 92 cities in China. Food sales as a percentage of the total revenues account for 33.4% in Q4 2025, increased from 24% in Q1 2023. Orders with food items account for 51% of total orders in Q4 2025, increased from 45.2% in Q1 2023. 2025 marks a critical transition year for the company. We further solidified our differentiated strategic positioning in Coffee Plus freshly prepared food, completed made-to-order renovation of over 74% system-wide stores while strategically pruned certain underperforming stores, especially those remote MTO express stores. On same-store sales growth, we managed to achieve overall comparable transaction growth of 2.7% in 2025, but we had to apply higher discounts on delivery business to mitigate intensified competition due to aggregator platform dynamics, which led to 2.4% decline in the same-store sales growth for system-wide stores in 2025. Despite the headwinds of fierce competition, especially from low-priced local brands, our team demonstrated strong resilience and maintained our margins well at both store and corporate levels. 2025 full year company-owned and operated store contribution margin was 7% compared with 7.4% in 2024, which was primarily attributable to the temporarily increased delivery-related costs due to aggregator platform dynamics. 2025 full year adjusted corporate EBITDA margin actually improved by 1 percentage point. With further optimized store capital expenditures and enhanced store unit economics, our 2024 vintage [ year ] company-owned and operated stores generate store contribution margin of nearly 15% in 2025 and expect to achieve a payback period of 2 to 3 years. Our 2025 vintage [ year ] stores are still new, but are ramping up right now. We believe they will have similar unit economics too. In the meantime, our company-owned and operated store in Tier 1 cities, including Beijing, Shanghai, Guangzhou and Shenzhen and in those cities with 10-plus stores generate over 10% and 7% store contribution margin in 2025, respectively, outperforming other tier cities with lower store density. We will continue adding more company-owned and operated stores in existing stores to achieve a high economy of scale. In 2025, we strategically expanded our store footprint while maintaining capital efficiency, delivering absolute convenience for our customers. Leveraging the franchisee partnerships, we accelerate market penetration entering 92 cities by year-end, including the debut of our first stores in Nanchong in Sichuan Province, Datong in Shanxi Province and Xinxiang in Henan Province during the fourth quarter of 2025. This growth strategy not only further strengthen our brand presence, but also ensure sustainable scalability through optimized resource allocation. Since we launched our individual franchise business in December 2023, we have received over 10,000 applications and successfully opened over 300 stores by the year end of 2025, showcasing continued market confidence in our franchise model. We have witnessed reasonable returns for our franchise stores. For instance, our franchisee stores in special channels, including railway stations, hospitals and highway rest areas generated store contribution margin of high teens in 2025 and are expected to achieve a payback period of approximately 2 years. We will accelerate opening franchise stores on these special channels. In the meantime, our sub-franchisee business contributed steady cash flows and profitability. Profits from other revenues achieved a year-over-year growth of 55.7% in 2025. Product innovation has always been an important strategic focus for us. In 2025, Tims China accelerate product innovation across both beverages and food, launching a total of 178 new products, 96 new beverages and 82 new food items, which contributed over 25% of our top line sales and offerings have run very strongly with customers. Seasonal beverage highlights during the fourth quarter included the pomegranate, low cheese and oat latte series, offering a diverse and differentiated flavor portfolio. We also focused on adding non-coffee beverage offerings complementary to existing product portfolio during the after cheese daypart. Total number of non-coffee beverage cups accounted for approximately 18.3% of total beverage cups sold in 2025 compared to 14% in 2024. On the food side, we continue to strengthen breakfast dayparts and launched several campaigns to promote lunch daypart in 2025. For instance, we introduced a breakfast combo with expansion of croissant lineup with new offerings such as cheese chicken and [ loaded ] coconut cheese croissants, which suits the morning routines and offering greater value, building on our classic bagel breakfast fests; the croissant combo includes protein-rich options like meat and catering to high energy needs in colder months. Meanwhile, the croissant itself like the excess frying, are perfect for those wanting highly but not very -- not overly caloric breakfast. In addition, Tims China now continue to broaden its bagel sandwich range, introducing new products, including the Black Truffle Mushroom Bagel and the Spicy Pickled Cabbage Beef Bagel, further enriching its [ savory ] menu. We continue to strengthen our leadership in the bagel platform, selling a total of over 80 million bagel and bagel sandwich products cumulatively as of the end of 2025. The fourth quarter being the holiday season saw us rolling out a series of marketing campaigns designed for these special occasions from Halloween to Thanksgiving and Christmas, we joined the festive spirit with creative promotions and theme activities to grab consumer attention. During the first quarter, Tims China continued to enhance brand relevance and consumer engagement through a series of marketing and product innovation initiatives. The company strengthened its cultural positioning through high-profile collaborations, including a limited edition partnership with the hit TV series of The Vendetta of An as well as a co-brand campaign with People's Daily [indiscernible] to celebrate China's National Day and honor everyday heroes across the country. These initiatives leverage cultural storytelling to deepen consumers' connections and drive social engagement. In parallel, Tims China advanced its sustainability initiatives by expanding its Bring Your Own Cup program and increasing the incentive to RMB 8 per cup. As of now, the program had attracted over 200,000 participants, reducing carbon emissions by approximately 8 tons, equivalent to planting around 360 trees. The company also introduced eco-friendly stores in collaboration with Tencent's CarbonXmade program using carbon capture technology to convert industrial carbon dioxide into sustainable materials. SGS certification confirms that every 100 straws store 3.185 grams of carbon dioxide, reinforcing Tims China's commitment to sustainable product innovation. As of December 31, 2025, our registered loyalty carbon members exceeded 31 million, reflecting a remarkable 29% year-over-year growth. The average number of members per store has now surpassed 29,600, serving as a strong catalyst for our growth and clearly demonstrating our consumers' ongoing support for Tims China's loyalty programs. At this time, I would like to turn it over to our CFO, Albert Li, to discuss our fourth quarter and full year 2025 financial performance in more detail. Dong Li: Thank you, Yongchen. We continue to strive for excellence in delivering high value for quality, healthy products and thoughtful services to our ever-growing customers. In the fourth quarter, we achieved positive net new store openings and continued our strong momentum in system sales, achieving a 4.0% year-over-year growth. Our overall monthly average transacting customers reached 3.43 million during the fourth quarter of 2025, a 14.3% increase from 3.01 million in the same quarter of 2024. Additionally, digital orders as a percentage of total orders rose from 86.1% in Q4 2024 to 89.3% in Q4 2025. We continue to enhance our digital capabilities to meet the growing demand for delivery and takeaway services. Total number of delivery orders increased by 33.7% year-over-year during the fourth quarter of 2025. Amidst macroeconomic volatility and intensive market competition, our team demonstrated strong resilience and achieved profitability improvement through enhanced operational efficiencies, supply chain optimization and rigorous cost controls. In Q4 2025, our adjusted corporate EBITDA margin improved by 3.3 percentage points year-over-year. During the fourth quarter of 2025, our total revenues dropped by 7.3% year-over-year, which was mainly due to the closure of certain underperforming stores, benefiting from the expansion of our franchised store network with the number of our franchised stores increased from 446 as of December 31, 2024, to 485 as of December 31, 2025. Our system sales increased by 4.0% year-over-year to RMB 359.4 million during the fourth quarter of 2025. We are committed to improving our financial performance by refining store unit economics and boosting operational efficiencies at both store and our corporate levels, setting the stage for our long-term sustainable growth. Specifically, through refinements in our supply chain capabilities and economy of scale, we reduced the 2025 full year food and packaging costs as a percentage of revenues from company-owned and operated stores by 1.4 percentage points year-over-year. We continued to streamline our operations by pruning underperforming stores, optimizing unit economics, refining staffing arrangements and optimizing store managerial efficiency. These actions led to a reduction in 2025 full year store labor costs and other operating expenses as a percentage of revenues from company-owned and operated stores by 0.8 percentage points and 0.1 percentage points year-over-year, respectively. We expanded our branding initiatives and promotional offers to drive traffic. Our marketing expenses as a percentage of total revenues increased by 1.2 percentage points year-over-year. Our adjusted general and administrative expenses as a percentage of total revenues decreased by 7.4 percentage points year-over-year, which was mainly attributable to a RMB 9.7 million, USD 1.4 million decrease in credit loss of accounts receivables. Turning to liquidity. As of December 31, 2025, our total cash and cash equivalents, time deposits and restricted cash were RMB 129.7 million (USD 18.5 million) compared to RMB 184.2 million as of December 31, 2024. The change was primarily attributable to cash disbursements on the back of the expansion of our business, partially offset by the drawdown of additional bank facilities. In the meantime, with the issuance of the USD 89.9 million 2025 senior secured convertible notes and the amendment to our existing 2024 unsecured convertible notes in December 2025, we have successfully repurchased the entire outstanding amount due under our variable rate convertible senior notes due 2026. Looking ahead to 2026, with profitability being front and center of everything we do, we will continue to enhance our supply chain capabilities and efficiencies, roll out our differentiating made-to-order fresh and healthy food preparation model to drive traffic, optimize overall store unit economics and accelerate the expansion of our successful sub-franchising. I will now turn it over to Yongchen for concluding remarks followed by Q&A. Yongchen Lu: Thank you, Albert. Before we turn to Q&A, I would like to take this opportunity to once again express my heartfelt gratitude to our customers, employees, business partners and investors for your continued support and dedication and trust. Together, we have created an overwhelming community of over 31 million loyalty club members, a unique Coffee Plus freshly prepared healthy food business model, offering the best value for quality products as an international coffee brand, differentiated and comprehensive store formats with over 1,000 stores in 92 cities, most of which are made-to-order stores with expected payback period between 2 to 3 years and a unique advantage of offering franchising opportunities as an international coffee brand. With these milestones behind us, we are steadfast in our commitment to sustainable growth and to generating long-term value for our shareholders. I will now turn the call over to Patty for today's Q&A session. Patty? Unknown Executive: Thank you, Yongchen. We will turn it over to Q&A session and open it up for our registered questions. Let's begin with our first question. Amber, please go ahead. Operator: [Operator Instructions] We will now take our first question from the phone line of Steve Silver of Argus Research Corporation. Steven Silver: So over the past few quarters now, you've highlighted franchise stores in special channels such as the railway stations, hospitals and highway rest areas. And you cited their strong contribution margins and the 2-year payback periods. So while you mentioned in your prepared remarks that you see openings under this model accelerating, can you quantify at all how much of a part of the future store mix you expect these channels to comprise? And really what impact do you expect this to have on future operating results? Yongchen Lu: Yes, sure. Thank you, Steve, for your question. I mean the beauty of the stores on special channels, especially on railway stations and highway rest areas, it's purely dine-in business. So they don't rely on delivery. And also, we don't need to give discounts on those stores in the special channels. So those stores have very high gross margins and low delivery cost despite the rent might be higher, but still those stores are generating high teens store contribution margin. And the payback is very attractive around 2 years, even lower than 2 years. So I mean, in China, there are a lot areas, there are thousands of stations, airports, rest areas in highways and hospitals. So we have generated the momentum in those channels. As we mentioned, we are the only -- essentially, we are the only international coffee brand that open to individual franchise. So we are tracking a lot of interest from those franchisee partners. So this year, we will accelerate our openings on those channels. Steven Silver: Great. And so company-owned and operated store contribution margins have now been negatively impacted by the higher delivery costs over the past few quarters. Is the company doing anything specifically to mitigate these risks in 2026 to improve same-store sales growth as well as the store contribution margins? Dong Li: Okay. Steve, thank you for the question. I think I will take this one, right? So as you have mentioned, due to those aggregator platform dynamics in 2025, which led to a very aggressive subsidies that we have been seeing. So that, I think, on one hand, drives higher delivery orders and also higher percentage of our delivery revenue mix. And in the meantime, we have also like suffering from actually increased delivery costs because of this. So I think overall, it's within our expectations because we want to manage our top line growth, our same-store sales, our margins and also our pricing well. So actually, we are taking every step to maintain or even expand our store contribution margin. So as you can see, even though I think the whole year 2025 store contribution margin for company-owned stores was slightly decreased from 7.4% to 7%, I think overall, we have, in the meantime, actually increased our gross margin. So the food and packaging cost as a percentage of revenue actually has decreased by 1.4 percentage points. And in the meantime, we are still in the process of pruning some of the underperforming stores and achieving better economy of scale. Labor costs, as you can see, the full year 2025 labor cost has also improved as well as store other operating expenses. So we will do everything we can actually to mitigate potential delivery costs and I think in the meantime, we are also like negotiating with those delivery aggregator platforms to -- actually to strike a better cost on the delivery cost. So in terms of the delivery cost per order, we want to improve the cost structure to streamline the delivery cost per order as well. And I think lastly, we are also actually increasing some of the pricing on the delivery products. So that is true to mitigate the potential headwinds from higher delivery cost. So overall, I think our goal is to at least maintain and even achieve certain margin improvement on our store contribution margin despite the -- in terms of the aggressive subsidized from those delivery aggregated platforms might still continue in 2026, but we expect that trend might be mitigated or might be like slowed down this year. Thank you, Steve. Steven Silver: That's helpful. And one more, if I may. So in 2025, net store growth was positive, but it was a little more modest than maybe what previous thoughts might have been around store expansion. Yet at the same time, the franchise applications sounds like it continues to be very, very strong. And the loyalty membership continues to expand significantly, almost 30% in 2025. So I'd love to hear your thoughts in terms of the underlying demand in terms of what we might think about for system sales growth in 2026. Yongchen Lu: Yes. I mean we are in the process of pulling the underperforming stores for the past 2 years, and we'll do so this year as well. As you know, we opened a lot of high rent stores during 2019 to 2022 and even 2023, higher rent larger store format for the brand building and also the rent back then was very high, much higher than the current situation. So we are in the process of continuing of pruning those underperforming stores. So that's why you see the revenue for company-owned and operated stores has dropped last year and this year for the last 2 years. So I mean, in this year, we will continue to prune some underperforming stores, but as we mentioned, we -- the newer base of our stores have higher store contribution margins, for the stores we opened in 2024 and 2025 have store margin around 15%. So this newer vintage of store format has been approved. So we'll continue to open such format for both company-owned and franchise stores. So we target to achieve net store openings this year of at least 100 and might even more when we see the capital secure. So I mean that's kind of the process. So we'll continue to expand the network and that's the plan for now. Operator: Our next question comes from the phone line of [ Fooly Ho from TF Securities ]. Unknown Analyst: I have 3 questions. The first one is about gross margins. Your gross margin improved by 1.4 percentage points in full year 2027. This is quite impressive. Can you explain more on the factors behind this? And how would you expect your gross margin in 2026? Dong Li: Thank you, Fooly. I think I will take this question related to gross margin. So as you have mentioned, so our food and packaging costs as a percentage of revenue from company-owned and operated stores actually decreased from 31.5% in 2024 to 30.1% in 2025, representing an improvement of 1.4 percentage points. And in the meantime, I also want to highlight that if you take a look on the fourth quarter 2025, the cost percentage was 29.4%. Actually, it represents a 2 percentage point margin improvement from the fourth quarter of 2024. So I think the overall improvement was mostly because of the following factors: the first one is better economy of scale as our overall GMV has increased and our overall store network has expanded. And two, we have tried actually many ways in terms of -- on the supply chain optimization projects. So especially on existing food and packaging materials. So we have almost renegotiated the unit cost and in terms of the overall pricing for the -- with each of the supply chain vendors. And I think thirdly, we have optimized our discounts program actually, so that basically, we have improved the average pricing a little bit, especially we have increased the pricing on delivery products, which definitely would help on the margins. And fourthly, we have also seen higher margin on our new product launch. As we have mentioned, we have actually launched nearly 180 new products -- new LTO products in 2025. And most of this like new LTO products had higher margins. And I think lastly, we have also optimized the recipe of existing core products and some other like material costs and also in terms of the transportation and freight costs. This has also contributed to our overall margin expansion in 2025. So going forward, I think we will continue to implement the above measures and plans. And we target to further reduce our food and packaging costs as a percentage of revenues by another 1 to 2 -- at least 1 to 2 percentage points in 2026. So that would be our target for this year. Thank you, Fooly for your question. Unknown Analyst: Very clear. The second one is about margin profile. You mentioned company-owned and operated stores in Tier 1 cities and in those cities with 10-plus stores generated over 10% and 7% store contribution margin in 2025, respectively, outperforming other tier cities with lower store density. Can you explain more details about the differences on margin profile of these stores? Yongchen Lu: Okay. I'll take this one. Thank you for your question. I mean it's a good question. I think the density really matters. I mean -- so I mean the more stores we have in the city, the more brand awareness we have in the city and the more efficiency on the marketing campaign and lower cost on delivery and supply chain and more efficiency on the management. So density really matters, the data clearly shows that. We have the highest margin on Tier 1 cities. And as we mentioned earlier, for the 2024 and 2025 vintage stores, our store margin is up at about 15%. And most of the stores are operating in the Tier 1 and the high-tier cities. So we'll continue to add more company-owned and even franchisee stores in existing cities to add density. And density really helps on everything. Unknown Analyst: Okay. And the last one is about store count target. What's the store opening and closure target for 2026 and expected mix between company-owned and operated stores and franchise stores? Yongchen Lu: Yes. We just answered the question -- the similar question from Steve. So we target to achieve net store openings of at least 100, including both company-owned and franchisee stores. And we are very happy to see our new ventures have very high margins. So we'll continue to open and although we will continue to prune some underperforming stores, we should be able to achieve net store openings again at least 100 this year. Operator: I'll now hand back to Patty to read any questions coming through via the webcast. Unknown Executive: It seems that we have no questions online. Is that right, [ Amber Lee ]? Operator: That's correct. So at this time, there are no further questions. So with that, we conclude today's question-and-answer session. I'd like to hand the call back to Yongchen for his closing comments. Yongchen Lu: Yes. Thank you all for your time. It's been a challenging year, but we have been able to improve our margins and achieve net store openings, and we expect to even improve our margins further this year and achieve accelerate openings this year. So stay tuned. We'll see you soon. Thank you. Dong Li: Thank you. Operator: That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.
Operator: Good afternoon, and welcome to the Ecora Royalties Investor Presentation. Today, we're joined by CEO, Marc Bishop; and CFO, Kevin Flynn, for the presentation and the live Q&A. [Operator Instructions] I'd now like to hand over to Marc to begin the presentation. Marc, over to you. Marc Lafleche: Well, good afternoon, everyone, and thank you for joining us today for a call in relation to our 2025 results. On a number of fronts, 2025 marks a year of delivery. First and foremost, we saw 2025 representing an inflection point. For the first time in this business' history, critical minerals exposures generated more than half of our overall portfolio contribution. And this is primarily driven by our base metals exposures, which grew 150% year-on-year. So all in all, we're obviously very delighted to see our critical minerals royalties demonstrate what is a portion ultimately of the true underlying potential of the wider portfolio in the past year. Second, during the past year, we acquired a producing copper stream, the Mimbula Copper royalty, which has certainly augmented our exposure to copper and pro forma for that commodity, cemented copper at the core of our commodity exposure. And last, I think one of the key highlights of the prior year relates to the rapid deleveraging, which we demonstrated following the acquisition of the Mimbula Copper stream. Following the transaction's close, our net debt was just under $130 million, and we ended the year with net debt that was roughly similar to where we actually started the year 2025. So in other words, roughly flat, inclusive of a $50 million acquisition, which is a strong outcome, an indication of the portfolio's cash generation, but also second, the active steps we took during the year to unlock value from noncore assets. So pausing to speak about the prior year. And overall, it's quite clear to us anyways that 2025 is indeed a landmark year for this business. First, in relation to the commodity complexion with critical minerals representing for the first time ever, more than 50% of coal. But second, in terms of a reduction as we look to the future of an expected reduction in the volatility of the critical minerals royalties cash flows relative to those that we've seen historically with Kestrel, which is a royalty that has been in and out of our royalty area and on a quarter-to-quarter basis has created an element of volatility that we should see far less of into the future. And third, I think this is perhaps to us the most important point on this slide. We're now looking at a source of cash flows that have mine lives that are measured in decades and that compares to Kestrel, which is always measured in much shorter increments more recently in years. So this is a very exciting step forward when we think about the producing aspect of this portfolio and the business' quality of earnings, further supplemented by the organic growth that exists within the existing Ecora portfolio. Looking back 5 years, the critical minerals portfolio really has delivered. From 2020 to 2025, we see approximately 6x to 7x increase in contribution from specialty metals, uranium and base metals. But looking to the future, we still do appear to remain very much at the foothills of the organic cash generation potential that exists in Ecora. And the next 12 months -- 12, 18 months are very key towards derisking that 2030 profile, particularly those assets that are not yet in development -- not yet in production that are at the development stage. And this is summarized on the left of this slide, where what you see is a very layered dimension to our growth profile. For those who have been tracking Ecora for as long as Kevin and I have been with the business, I think what you'll see for the first time probably ever in Ecora's history, we now have a growth profile that's layered across volume growth from assets that are in production, volume growth potential from assets that are in production being expanded by brownfield expansions or being restarted from assets that are -- once we're in production that have stopped and are intended to revert near-term development, so assets that are far along the development curve, not yet in production, but greenfield growth. And then last, early stage or assets where we see not necessarily a path to income in the next 5 or 10 years, but a path to sizable capital appreciation potential in royalties like Patterson Corridor East, for example. So with that, I'll hand it over to Kevin to talk us through the financials for the prior year. Kevin Flynn: Thanks, Marc, and thanks again, everybody, for joining us today. Turning to our financial performance slide. So as Marc mentioned, this was really an inflection point in the year. Looking at our portfolio contribution, whilst there was a small decrease in the period of about 10%, that in no means tells the full story. And we'll touch on this in a little more detail on the next page in terms of the changing complexion of the business and also the significant growth that Marc touched on that drives the next wave of our evolution. Our adjusted earnings were a bit lower in the period. This really reflects the increased finance costs we assumed with the Mimbula acquisition. Although the deleveraging kicked in, in the second half of the year, our finance costs were on average higher, reflecting higher average borrowings. In addition, our overheads, whilst a reduction in terms of our underlying cost base, the U.S. dollar to sterling exchange rate movement led to an increased reported overhead in the period. So that impacted on adjusted earnings. But we should see some improvements and increases in adjusted earnings going forward as these catalysts kick in. In terms of free cash flow, another point that's quite important to reflect on with Kestrel representing less than 50% of our income is that our free cash flow conversion significantly increases. Kestrel has a high associated effective tax rate with it. And as its proportion of our overall contribution reduces, the free cash flow conversion within the portfolio increases. This slide shows our portfolio contribution in the year, and I'll use this as an opportunity just to run through briefly some of our key assets. The first one, Voisey's Bay, had a very strong year with contribution almost tripling in the period. This reflects a 113% increase in volumes, which is reflective of the ramp-up of the operation as it continues its underground transition. And we'd expect to see in 2026 full steady-state production being achieved here, which should result in increased production levels in 2026 before that then becoming a stable platform thereafter. Voisey's Bay also benefited from a significant increase in cobalt prices in the period. It's hard to believe that it's about a year ago sitting here that cobalt prices were about $13 a pound. Today, that number is closer to $30. And this reflects actions taken by the DRC in the period to really stabilize the cobalt market following a period of significant oversupply, which resulted in the DRC announcing first an export ban and then a quota-based system, which has really stabilized the pricing environment for cobalt. So good tailwinds to come in 2026 for our cobalt asset. Mantos Blancos was certainly a highlight in the period, generating $9.5 million based on record levels of production. And actually, this amount approximates to a running cash yield of about 20%, which we're very pleased with. We acquired this royalty for about $50 million in 2019. We would expect here to see volumes in 2026 a little bit lower as they go through a period of planned lower ore grades within the body. That should recover then in 2027. Mimbula represented our copper stream acquisition around this time last year, which Marc touched on. It's worth pointing out here that the $4 million reported really only represents 2 full quarters of production because due to a nuance in the accounting, we only recognize the revenue when the units are sold. So the quarter 4 production is sold in January of 2026 and will be reported in Q1 '26. So in 2026, we should see that transitional period of reporting for Mimbula disappear. I'll just pick out a couple of other highlights. Four Mile is our uranium royalty in Australia. Similar to Mimbula, this doesn't really tell the full story. Normalized sales patterns returned to this royalty in the first quarter of last year, but similar to Mimbula, this is reported based on cash sales. So the $2.2 million really only represents 3 full quarters of production here in the period. So we should see some revenue growth to come in 2026 based on more normalized levels of sales. Looking further down, it's worth remembering we do have some gold exposure in the portfolio through our EVBC gold royalty. which generated $3.2 million in the period based on very strong gold price environment, which again shows the virtues of a diversified royalty portfolio, certainly diversification across commodities. The operator here has signaled that there's reserve potential for a further 5 years. So good to have some gold price exposure in the portfolio in a strong gold price environment. And finally, Kestrel, which is now nearing the end of its economic life for Ecora. Kestrel met guidance in the period, although reported income was down. This is due to average coking coal prices being down around 35% in the period. The midpoint guidance for tonnage next year is about 1.1 million tonnes. And thereafter, Kestrel really starts its transition outside of the group's private royalty area. But the key takeaway from this slide, certainly, as Marc alluded to, is the quality of the earnings now within the portfolio. So if we look at our base metals portfolio, which was up 150% in the year, many of these assets have reserve lives that go into decades. And if we compare that to Kestrel at the bottom, which now has only about 2 or 3 years left, that really does show the potential and the cash flow potential to be generated from our core assets going forward. So to show you how the portfolio contribution, along with some portfolio initiatives has resulted in our meaningful deleverage in the second half of the year. This slide really shows it. The portfolio contribution, which is cash flow number of $55 million, really accelerated our deleveraging in the second half of the year. Looking at our capital allocation priorities, growth still remains our firm focus, and we were very pleased on that basis to acquire the Mimbula stream about a year ago for $50 million. At the time of doing that, we increased our borrowing facility to $180 million. And a lot of the conviction that we had to take on that additional debt was the visibility that we had in the near-term cash flow potential from our portfolio, along with some of the initiatives that we undertook subsequent to the acquisition to bring down our deleveraging. Amongst those, we accelerated the remaining contingent payments associated with our Narrabri thermal coal royalty disposal a number of years ago. And we also took the opportunity to dispose of our noncore Dugbe gold royalty in the middle of last year. Both of those actions realized $28 million, which effectively refinanced over 50% of the Mimbula transaction and brought our net debt down to the end of the year to similar levels to the beginning. To remind everyone about our dividends, we paid close to $7 million in dividends in 2025, which represents about $0.0281 per share on a cash basis. With our year-end results, we've proposed a final dividend of $0.014 for the final dividend, which combined with the interim dividend would bring a final dividend -- or sorry, a total dividend for 2025 to $0.02 per share. And I think it's very important in the context of our net debt to look at the table on the bottom right of the screen. This is a table we like to include to show based on guidance that's in the public domain or the guidance that we provide when applied to consensus price forecasts shows a path to deleveraging to the end of 2026 to $53 million from $85 million at the beginning and bringing this down further to $27 million by the end of 2027. At those levels, our debt position is very comfortable. We're very comfortably within our debt covenant limits. And with a $180 million debt facility provides a significant financing flexibility to continue adding to our royalty portfolio. And with that, I'll hand back to Marc. Marc Lafleche: Thank you, Kevin. Well, all in all, I think looking across the suite of our commodities during 2025 and to some degree, through carrying forward to the start of 2026, we've seen a really strong performance across the board. Copper, cobalt, uranium, rare earths, nickel all performed quite well. I think met coal was slightly soft over the course of last year, although we've seen that rebound to levels in early 2026 that are historically in line with averages. And one of the strongest performers, which has followed -- which is delightful to see following our acquisition of the Phalaborwa rare earth royalty, our rare earth prices, which performed exceptionally strongly in 2025, in part is becoming part of a geopolitical negotiating tool between China and the United States is in relation to tariff and trade policy. From a volume perspective, looking ahead at 2026, overall, from our base metals exposures, we anticipate volume growth. Mimbula is expected to continue to ramp up towards an expanded nameplate production capacity rate. Voisey's Bay, likewise expected to continue to ramp up towards nameplate throughput levels. As Kevin mentioned, Mantos Blancos production is expected to be slightly softer this year as mining goes through a lower ore head grade portion of the ore body and is expected to normalize in the future. Otherwise, overall, we anticipate other than Kestrel, where you expect roughly half the volumes overall continued volume growth in our critical minerals. I think we've touched on the key points here at Voisey's, but just taking a moment to touch on a few additional points. Year-on-year, we'd expect 12% to 25% volume growth at Voisey's. And touching on something that we've always highlighted as being very likely at Voisey's is the life of mine expansion that we've seen here, where the volume extended to 2044. And more recently, we've seen as part of Vale's Base Metals Day in late March, additional disclosures in relation to the Voisey's Bay ore body and to the likely and possibility life of mine expansion potential that exists, which is significant and really underscores what we've been indicating for many years is a possible of multi-decade life of mine expansion potential at Voisey's Bay in excess to the existing life of mine that already runs towards the end of the next decade. We touched on most of the key points at Mantos Blancos. So just zooming in on one on the far right, and that's the Phase 2 expansion study. I think we're delighted to have seen record performance in the last year. And in addition to what were very high levels last year, there's -- Capstone has alluded to the potential to increase production to potentially 100,000 tonnes compared to production last year and just above 60,000 tonnes of copper. That feasibility study in relation to Phase 2 is expected later this year. And we're very excited for that to be released. We think that's the key next step to demonstrate the value upside of this royalty. And as of yet, with the benefit of that further detail, hopefully, that will provide sufficient financial figures and forecast for Ecora research analysts to include this potential value in our revenue forecast, but also our net asset value estimates as well. I think we've touched on the key wins on this slide. So I won't touch in too much detail on any other than to just pick out one, which is the Cañariaco royalty. And that's specifically the key point to flag is the Fortescue, the multibillion-dollar iron ore and future-facing commodity mineral royalty company out of Australia has acquired control of this project, which is an incredible step forward in terms of the projects, our operating partner quality and capability to develop this project in the future. So bringing it all together for our base metals exposures, I think what this slide clearly demonstrates is that following the Mimbula acquisition last year, we have roughly doubled our attributable annual copper production solely with the Mimbula acquisition, which is a great step forward. And beyond that, with the existing assets in our portfolio, Ecora offers a copper pipeline to more than quadruple our attributable copper in this decade and the next. So all in all, while we really do feel that this slide highlights how we've cemented copper at the core of our portfolio that's fully paid for and that is amongst, if not the leading organic copper growth profile of any royalty company. Turning to key assets in the specialty metals and uranium side at Phalaborwa and over the course of the past 12 to 18 months, we've seen a number of key derisking milestones that continue to position this project for the publication of a feasibility study and subsequently a financing process. We've seen strong increases in underlying rare earth prices over the last 12 to 18 months. And turning on the uranium side, I think it's difficult to categorize the exploration program at Patterson Corridor East as anything other than geologically exceptional. NexGen is targeting a program in 2026 to further build upon last year's program, and we're very excited to update you soon and hopefully with some very continued positive news on further progress. Kevin mentioned that this was expected to be our final year of material contribution from Kestrels and you can see why on the map on the right hand of this slide. Over the course of this year, we expect roughly half of the volumes from the prior year. And then beyond that, sort of a tail between a few hundred thousand to 500,000 tonnes between 2027 to the end of the decade. And then last, at EVBC, as a result of strong gold prices, we've seen our operator partner, Orvana communicate the possibility to continue with EVBC in production towards the end of this decade. Should that be the case, carrying this asset well past its originally expected mine life and potentially benefiting Ecora from further upside and participation in what has been a very strong gold price backdrop. So bringing it all together in terms of key points, I think, number one, we anticipate further volume growth from our key base metals royalties in 2026. We anticipate a number of key potential derisking or project development milestones in relation to some near production development royalties that we're very looking forward to and hopefully, we'll be able to update you in relation to on our next call. Commodity prices have demonstrated a level of volatility year-to-date 2026. Nevertheless, remain at historically elevated levels. And should they remain at these levels, combined with the operator -- our operator partner volume guidance, we anticipate further rapid deleveraging, which positions the business very well for further growth and diversification. And last and certainly not least, I think the royalty model as it stands is very defensively positioned to the continued inflationary pressures that we see in the market today, more recently as a consequence of a conflict in the middle in our end, but have persisted for a variety of factors for the past 5 or 6 years at a minimum, if not more. So looking ahead, we do genuinely feel that Ecora is probably at the best it's ever been with a platform of key royalties generating from the producing side, generating income that's expected to run decades with a number demonstrating only a small portion of the portfolio's true longer-term underlying cash generation potential. And over the course of the next 12 to 18 months, we hope to see further derisking events that will further underpin that next wave of growth in this business and its portfolio. So with that, we thank you for joining us, and we're happy to take any questions you may have. Operator: Thank you so much to Marc and Kevin for the presentation. We've had a number of questions that have been pre-submitted and also submitted live. [Operator Instructions] But the first question that we have is, you're talking quite positively about the year, but when I look at the numbers, it feels mixed. What am I missing? Marc Lafleche: Well, I think when you look at the numbers, you are correct to see certain parts of our portfolio performing in diverging ways. So for example, further volume growth from our base metals assets. We anticipate some degree of volume growth from our specialty metals, for example, Four Mile. Gold on the back of -- on the expected volume from our legacy exposure to EVBC, expect some form of price tailwinds. And where you'd expect to see some form of downside relative to last year is specifically the Kestrel met coal royalty. So overall, you're expecting stronger contribution from the critical minerals and offsetting a weaker contribution from the legacy met coal exposure. Kevin Flynn: I think -- just to add to that, I think you are -- if you're looking at 2025 in isolation, you are missing the nuance of the Four Mile and the Mimbula assets, which don't represent a full run rate in the period. And also, you've got a blended average price of Voisey's Bay, which is much, much lower than what we currently have and what's expected to be for 2026. Operator: The next question, you kindly provided a little bit further clarification on the following. So the expected time line for revenue growth from newly acquired assets, e.g. copper streams and base metals. And maybe you could include the Mimbula deal. It sounds good, but when will we see cash flow through? I know that has been sort of covered in the presentation, but maybe anything you want to add on that? Marc Lafleche: So I think the first thing I'd point anyone to -- I think for -- in terms of time lines and additional details on the portfolio, I'd encourage you to review this slide, which gives you an indication of what key events are expected when. And in terms of Mimbula. Mimbula is in production. Mimbula contributed to our earnings profile last year. And the Mimbula asset is expected to continue to demonstrate volume growth over the course of 2026 in addition to production that was -- to which we received as part of our stream following the acquisition last year. Operator: Now you described this as the first year for critical minerals represent a major majority of your portfolio contribution. Is there a target split you're managing towards? And what does the ideal portfolio look like in 3 to 5 years? Marc Lafleche: If you look to the future in 5 years and working -- why don't we start that and work backwards. Based on the NAV, the portfolio's NAV and the development milestones as communicated by our operator partners, the #1 exposure as a percentage of NAV, but also revenue in 5 years is expected to be copper. Secondly, it would be base metals. And then more widely, you'd have in the suite of critical minerals, uranium and vanadium and rare earths as a smaller portion of the total. When we look to the future as sort of an optimal portfolio structuring, our intent is very much to keep the core of the portfolio in base metals, and we've been very deliberate in targeting copper as our core commodity exposure. We certainly will consider the wider suite of critical minerals. But even then in that context, our strategy and our desire is to retain copper as a core commodity exposure. Operator: Thanks, Marc. Your position in Largo Resources still stands today. What is your outlook and interest in Cañariaco Copper Project in Peru? Marc Lafleche: So we touched on this briefly in the presentation. Cañariaco, if I understand the question correctly, was recently acquired by Fortescue, which is, as I mentioned, a fantastic counterparty, very well capitalized, very experienced in the mining sector, has the capability to develop this type of project in time, both the wherewithal, financial experience, execution capability. I think this is an asset that historically has not garnered a huge amount of attention in the Ecora portfolio. I think the -- hopefully, following the acquisition by Fortescue, it will. It's an asset that has the potential to generate substantial income for us in time for many decades with enormous prospectivity beyond what's already been drilled out and evaluated in the resource. So it's something that we're excited about. And hopefully, we'll see more from Fortescue as they further explore and develop this asset and move it up the development curve in the next 12, 18, 24, 36 months. Operator: Now the next question. The top 5 ranked critical minerals according to the latest watch list from the Critical Minerals Institute are copper, gallium, tungsten, uranium and rare earth elements. As it stands, your portfolio has significant exposure to copper, which looks like will increase further, which is great. However, I understand your exposure to the rest, top 5 is currently rather insignificant. Uranium and rare earth elements is no more than 10% of the portfolio. And apparently, you have no exposure to gallium and tungsten. Other interesting metals you seemingly have no exposure to are lithium, palladium and aluminum. Could you expand on your plans for exposure to future-facing critical minerals other than copper? Marc Lafleche: Yes. So look, I think the first thing to note here is that when we think about our commodity selection, and when you think about constructing a portfolio, we've taken careful steps to keep the core of our NAV in commodities that have very deep, deep markets and very much to the degree possible that are less impacted by small changes in supply and demand. And I think certain critical minerals, which certainly small -- as a smaller percentage of NAV could be interesting to Ecora as it could have a disproportionate impact should they be too large a percentage of NAV, but just by virtue of small changes in supply and demand in very small markets can have very outsized impact on price swings. So what we've sought to do is build a portfolio that, in aggregate, offsets the volatility and diversifies commodity price movements from one commodity to another. And by no means do we feel that the commodity exposure we have today is complete. We would certainly consider and evaluate many other commodities in addition to those we have exposure to, some of which we've evaluated that have already been named. But really, that being said, our core strategy still remains within the context of having a diversified portfolio of critical minerals to retain copper at the core. Operator: Thank you. A similar type of question that's coming out here, but maybe if you want to expand a little bit more, Ecora has repositioned towards future-facing commodities. How do you decide the optimal balance between bulk commodities like coal and iron ore and transition metals like copper, stroke nickel? Marc Lafleche: I think the question in some ways, is a function of the expected longer-term supply-demand balance for those commodities and the outlook for those commodities over multiple decades. I think you can certainly make the case that the outlook over 2, 3 to 4 decades for copper is much stronger than iron ore -- or excuse me, is certainly much stronger than steelmaking coal and in part why we've allocated the portfolio away from its legacy in coal towards commodities that are expected to perform much more strongly over multiple decades. And secondly, typically trade at much higher valuation multiples. So in that sense, allocating cash flows from coal, which trades at low valuation multiples to buy royalties and commodities that trade at much higher valuation multiples is actually a very accretive way to grow the portfolio. And since we've seen even in the last 5 years, when you look at Ecora's trading multiples as the balance of the portfolio cash flow has diverged towards critical minerals, you have seen multiple expansion. And that's something that we think in time will be very accretive for our shareholders and has already demonstrated that it's the case in part. In terms of the entry point beyond that, I think one of the advantages of having a broader suite of commodities is you do have some flexibility to move between underlying commodities depending on where those are in their commodity price cycles. So in other words, if commodity price A is very expensive, you could pivot and look laterally at commodity price -- at commodity B, which may offer a more attractive entry point. But underneath it all, when we choose commodities, it's fundamentally driven by a long-term analysis of supply-demand balances and what are underlying long-term trends to try to position this portfolio to strong trends that ultimately we hope will benefit in pricing exceeding our investment cases at the time of making the investment. Operator: Next question, are you seeing plenty of opportunities out there? Or are good deals getting harder to find? Marc Lafleche: Yes. This is a pretty frequent question. And I think over time, we've to date anyways, consistently found opportunities. I think we look to the future with confidence. I think there's a clear need for capital. And I think there's a very clear need for the development and incremental supply in light of the demand growth trends we -- that are expected and we're seeing to date. So when we look at our investable universe, we do sense that we're investing into a demand -- a market that has a growing demand and a growing need for capital, which I think is quite positive. And look, I think as a group, we've always advocated patience is key, maintaining our investment -- our discipline and sticking to our investment criteria is key. So I think we -- as we've always done, be very patient and wait for the right opportunity to come along. That being said, we look to the future with confidence and feel as though we have every confidence that in time, we'll be able to continue to grow the business. Operator: Next question, what is the impact the Middle East conflict is having on Ecora now and potentially in the future? Marc Lafleche: It's something, obviously, we've been monitoring very carefully. I think to date, very difficult to see any direct implication, and that's something that we've looked at in our portfolio, but also in terms of engagement with our operator partners. Depending on the length of the conflict, the ultimate form of the conflict, the disruption to global markets, the conflict may or may not eventuate. It's very difficult to assess exactly how it could impact Ecora other than to say this is something that we're clearly monitoring. There's -- obviously, there's the impact from energy and the availability of diesel in the mining sector. But also there's an impact on the availability of sulfur as a precursor to sulfuric acid, which is an important reagent or chemical used in, for example, nickel, copper to some degree, sort of SXEW operations, uranium, cobalt to a degree. So yes, I think globally, it's far beyond just the impact of energy. In some instances, it could create issues for some producers, but the exact impact to Ecora, if any, is we'll have to continue to monitor and evaluate as things progress. Operator: Next question. Net debt peaked at USD 124.6 million in Q2 2025 and stood at USD 85.5 million at the year-end. What's your target leverage level? And at what point do you feel comfortable returning to a more active acquisition strategy? Kevin Flynn: Yes, I'll take that one. I think we don't necessarily have a target level of net debt in the business. I think one of the real virtues of the royalty model is that it does provide a derisked way of gaining exposure to the mining industry. I think to provide that through an overlevered structure dilute some of that virtue. Over the past number of years, we have leveraged our cash flows in order to continue our acquisition journey. We've deployed well over $0.5 billion in that period. But we've always done so with a view to the level of confidence that we've had in the cash being generated from the business to take those levels down to very manageable levels. Most recently was the Mimbula acquisition, where we did increase our leverage as the question rightly points out. But we have some initiatives to bring that down reasonably quickly. And I think if you look at our projections for 2026, based on consensus price forecast, that would bring our leverage -- operational leverage ratio down to about 1x at the end of the year. Those are very comfortable levels, but we don't necessarily have a targeted level of debt that we are comfortable with our operational leverage. Our debt facility is $180 million. We've got a further $40 million through an accordion feature to put on top of that for the right acquisitions. So if we're seeing a path through to about $50 million of net debt by the end of the year, that leaves us a lot of headroom under that facility in order to continue the growth ambitions. Operator: Have the management looked at increasing the 20% to 25% -- sorry, 25% to 35% dividend payout ratio as the latest dividends have been very disappointing with shareholders receiving only about 23% of what they received 3 years ago? Kevin Flynn: Should I take that? I'll take that. I think the capital allocation adjustments that were made a number of years ago was very much in the context of the pivot that we are now experiencing. If we look at where we were, we had an asset in Kestrel running off. And that asset itself had a lot of volatility. So I think where we are now with the growth profile we have in the business, I think it's very important for us that dividend growth is a function of free cash flow growth. And I think we have enough visibility on that going forward to see a path to dividend growth coming in that way. At present, we're comfortable with the 25% to 35% payout range as our assets continue to show their potential. Operator: Are there specific geographies or operators you're prioritizing or avoiding? Marc Lafleche: I think generally, our investment criteria is to target well-established mining jurisdictions and high-quality ore bodies and established operators. So that has been our focus historically, and that continues to be our focus for the future. Operator: And where do you think Ecora has a structural advantage that isn't yet reflected in the valuation? Marc Lafleche: I don't think it's any -- I think the share price at Ecora has obviously performed very strongly in the last 12 -- in the last, call it, 12 months. However, even then, the company trades relative to other royalty companies at quite a big discount. And I think the opportunity for investors that we're very excited about as shareholders of Ecora, Kevin and I, is the opportunity to -- for our revenue complexion to shift from, number one, short-dated cash flows at Kestrel to number two, to multi-decade royalties; and number two (sic) [ three ] to commodities in critical minerals that trade at much higher valuation multiples. When you combine those 2 together, there's enormous potential in the Ecora portfolio that is not reflected in the share price today. And thus, we're very excited for this next phase of growth in Ecora organically, but also as we look to acquire more royalties and diversify our sources of income. Operator: What opportunities are there for direct or indirect investment participation available to international investors? Marc Lafleche: I would say -- well, Ecora has a number of listings. So we're listed on the London Stock Exchange on the ticker ECOR. Ecora is listed on the TSX. The ticker is ECOR. And you can also trade via the OTCQX platform if you're based in the U.S. and would like to sell in U.S. business hours. The ticker there is ECRAF. Operator: And what do you think the market is missing in your valuation today? And what needs to happen for the gap to close? Marc Lafleche: Well, it's amazing what 12 months will do. I think 12 months, the answer would have been this portfolio needs and was -- we would have anticipated in '25, the portfolio demonstrating a portion of its cash generation potential from the critical minerals royalties. And that has happened, and we've seen a very strong share price reaction, almost 200%, just under 200% from 12 months ago roughly to today. So in that sense, I think there's a lot more to come in that regard over the next 5 years, where this portfolio has yet to demonstrate its true underlying cash generation potential. And as Kevin has said, the portfolio in the future is expected to generate this cash flow at a much lower effective tax rate, increasing cash conversion. So beyond that, I think that's the organic growth profile in commodities that are underpinned by really robust fundamental long-term demand trends. And beyond that, we're looking to diversify our sources of royalties and our sources of income and sources of growth. So we're really quite excited, Kevin and I, for what's next. Operator: Super. Well, that is all the questions we've got time for today. Maybe, Marc, I could hand back to you just for some closing remarks. Marc Lafleche: I think the short version to say is we feel that 2025 is a very important year and an important step forward for Ecora. That being said, there's still an incredible amount of work to go. I think we're very excited by this big step forward and the foundation that we've led, but we're highly motivated and energized to continue transport to building on these foundations that we now have to, in time, take this company to far beyond where it is today. So thank you for your interest, and thank you for joining our call. Operator: I'd like to thank both Marc and Kevin today for the presentation. That concludes the Ecora Royalties investor presentation. Please take a moment to complete the short survey following the event. The recording of this presentation will be made available on the Engage Investor. I hope you've enjoyed today's webinar, and thank you for your time.
Operator: Good morning. At this time, I would like to welcome everyone to Creative Realities, Inc. 2025 Fourth Quarter Earnings Conference Call. This call will be recorded and a copy will be available on the company's website at cri.com following its completion. Creative Realities, Inc. has prepared remarks summarizing the interim results for the quarter along with additional industry and company updates. Joining the call today is Rick Mills, chief executive officer; Tamara Koshua, chief financial officer; and George Sautter, chief strategy officer and head of corporate development. Ms. Koshua, you may proceed. Tamara Koshua: Thank you, and good morning, everyone. Welcome to our earnings call for the fourth quarter ended December 31, 2025. I would like to take this opportunity to remind you that remarks today will include forward-looking statements. The words anticipate, will, believes, expects, intends, plans, estimates, projects, should, may, propose, and similar expressions, and the negative versions of such words or expressions, as they relate to us or our management, are intended to identify forward-looking statements. Actual results may differ materially from those contemplated by these statements. Factors that could cause these results to differ materially are set forth in our Form 10-Ks and other filings with the SEC. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we will present both GAAP and non-GAAP financial measures. We believe the use of certain non-GAAP measures, such as adjusted EBITDA and several important KPIs, represent meaningful ways to track our performance. A reconciliation of GAAP to non-GAAP measures is included in our public filings and in our earnings release that was issued this morning. It is now my pleasure to introduce Rick Mills, CEO of Creative Realities, Inc. Rick Mills: Thanks, Tamara. Good morning, everybody. We appreciate everyone joining today's call. I would like to start by giving some highlights of our Q4 financials and other recent developments, including our integration of the CDM business which we acquired in November. Given the sizable nature of this transaction and the transformative impact it brings to Creative Realities, Inc., it should come as no surprise that it took longer than normal to close our books for the fourth quarter. But first, I would like to take a moment to introduce our new CFO, Tamara Koshua. Tamara joined our team on December 1 — I know the date because it happens to be my birthday — so, Tamara, welcome aboard. She brings tremendous experience to the organization: thirty years of executing financial strategies across diverse industries, including manufacturing, technology, and services. Her expertise and leadership credentials include a strong dedication to achieving a high level of performance and orchestrating operational turnarounds. We believe Tamara is uniquely qualified to take on the challenges of integrating CDM into Creative Realities, Inc., finding synergies across the enterprise, ensuring margin expansion, and ultimately delevering the balance sheet, which should improve returns for our shareholders. She brings tremendous energy, is driving organizational change, is implementing value-enhancing process improvements, and is working to increase our cash flow. She is off to a great start, and we are excited to have her on board. More recently, we have also added a couple other key executives. On March 30, we added Jackie Walker as our chief experience officer. Jackie is a veteran digital transformation leader with more than fifteen years’ experience designing, operating, and scaling enterprise digital platforms at the intersection of customer experience, product vision, and commercial outcomes. She brings a combination of technical execution and business acumen, having authored the digital menu board and drive-thru strategies for seven of the top ten restaurant brands and two of the largest in-store retail media networks in the U.S. Her appointment marks an important shift for Creative Realities, Inc. as the company continues its transition into a software-first platform powered by data analytics and artificial intelligence. Jackie will be instrumental for our next era of growth. She possesses a unique ability to bridge the gap between complex engineering and the strategic needs of the world's largest brands, and we are very pleased to have her here as well. With Jackie's addition and the prior addition of Dan McAllister as our CRO, this rounds out our management team with industry-leading veterans who have track records of accomplishment at a pivotal time in our history, as we relaunch ourselves as a much bigger, more technology-focused, service-oriented leader in the digital signage space. We believe we now have the talent at the top to accelerate growth, enhance our margin, and deliver improved bottom-line results going forward. A couple other facts of the business: this past February, we completed the repurchase of all of Slipstream's 1.7 million outstanding warrants for $200,000. The repurchase of these warrants provides greater visibility for the future in our total shares outstanding, which we believe benefits the company as well as our shareholders, alleviating potential overhang on the stock. We want to thank Slipstream for their support in finalizing this transaction. Now let us review a few details of our current results. Tamara will go over the financials in greater detail, but some of the highlights: we posted revenue of $23.9 million in Q4 versus $11 million in the prior-year period, including $13.6 million of that revenue from CDM. Our fourth quarter gross profit was $11.5 million as compared to $4.9 million in fiscal 2024, and our consolidated gross margin was 47.9% versus 44.2% in the prior-year period. This reflects both improved mix and the positive impact from CDM joining the company. In addition, as of December 31, 2025, we had an annual recurring revenue run rate, or ARR, of $20.1 million versus $12.3 million at the end of the third quarter. In addition, we have $4.1 million of SaaS under contract that will come online through the balance of this year and be added to the January 2027 SaaS total. Adjusted EBITDA was $5.2 million for the fourth quarter of 2025 versus $0.5 million last year and $0.8 million in the third quarter. And just as a reminder to everybody, we closed the transaction on November 7, so our Q4 includes two months of the CDM performance, not the full quarter. We anticipate both adjusted EBITDA and our ARR will increase going forward due to the synergies and additional opportunities in our pipeline. We have substantially integrated CDM operations into Creative Realities, Inc. and we are making significant progress towards our integration goals this year. As you may recall, acquiring CDM more than doubled the size of our company and significantly increased our market penetration in Canada. CDM serves thousands of quick-serve restaurants, financial institutions, and retail establishments across North America, and the acquisition strengthened our ability to address the growth in retail media networks literally coast to coast throughout North America. In addition, we now own Canada's largest mall retail media network. This digital out-of-home, or DOOH, media network has over 750 screens with exclusive representation and revenue sharing across 95 shopping destinations. These locations include 76 of the 100 most productive Canadian shopping centers and nine of the ten busiest malls in Canada, serving approximately 750 million shopper visits annually. As previously announced, we expect synergies of at least $10 million across North America on an annualized basis by the end of this year, reflecting the operating efficiencies, margin enhancement opportunities, and the cross-pollination of our CMS and AdTech platforms. At present, we are currently north of 60% of the goal, and we continue to anticipate total company revenue to exceed $100 million in 2026, with adjusted EBITDA margin percentage in the mid-teens. Once all synergies are realized, adjusted EBITDA margins are expected to be above 20%, and free cash flow generation should be significant, allowing us to pay down debt and delever the balance sheet once again as we have done in the past after acquisitions. With all our advancements, unique applications, strong customer relationships, and proprietary technology, we have built a strong foundation for a bright future at Creative Realities, Inc. We expect revenue to accelerate, our backlog to grow, and margins to improve as the year plays out, putting us on track for a record performance in fiscal 2026. I will come back in a minute to talk about specific product and customer trends, but I will now turn it over to Tamara to share some additional comments on our financials. Tamara Koshua: Thanks, Rick. I am really excited to be part of the team during such an important time in our company's growth trajectory. An overview of our financial results for 2025 was provided in our earnings release and will be provided in our Form 10-Ks, which include the condensed consolidated balance sheet as of December 31, 2025, the statement of operations and cash flows for the three and twelve months ended December 31, 2025, and a detailed reconciliation of net income to EBITDA and adjusted EBITDA for the quarter ended December 31, 2025, as well as the preceding four quarters. While Rick reviewed our operating results briefly, let me provide more context related to our performance and outlook. In terms of the income statement, fourth quarter revenue more than doubled year over year to $23.9 million as compared to $11 million in the same period in fiscal 2024, with approximately $13.6 million from CDM. Revenue from our legacy Creative Realities, Inc. business decreased approximately 6% year over year, primarily as a result of project timing and decreased FAT. Hardware revenue rose to $6.6 million versus $3.9 million in the prior-year period, while service revenue increased to $17.3 million from $7.2 million in fiscal 2024, largely reflecting the CDM acquisition as well as deployment timing. Consolidated gross profit was $11.5 million for the fiscal 2025 fourth quarter versus $4.9 million in the prior-year period, and consolidated gross margin was 47.9% versus 44.2% in the fiscal 2024 fourth quarter. Gross margin on hardware revenue was 28% in 2025 as compared to 26.3% in the prior-year period, while gross margin on service amounted to 55.7% versus 53.9% in the fiscal 2024 fourth quarter, primarily due to an improved mix of services profit as a result of the CDM acquisition. Sales and marketing expenses in the fourth quarter rose to $2 million versus $1.4 million in the prior-year period, while general and administrative expenses increased to $8.9 million versus $4.2 million in fiscal 2024, again reflecting the acquisition of CDM which contributed approximately $3.2 million in expense. Approximately $1.2 million of G&A costs were one-time in nature, including legal, accounting, and consulting fees, as well as closing costs related to the transaction. As Rick indicated, we are well on our way to achieving the $10 million of synergies previously announced for fiscal 2026, although we are also investing in the Canadian media business and other technology initiatives meant to drive increased growth across the enterprise. The company posted operating income of approximately $0.5 million in 2025 compared to an operating loss of approximately $0.7 million in fiscal 2024. Creative Realities, Inc. reported a net loss of $1.9 million, or $0.19 per diluted share, in the quarter ended December 31, 2025, versus a net loss of $2.8 million, or $0.27 per diluted share, in the prior-year period. Adjusted EBITDA was $5.2 million in 2025 as compared to $0.5 million in the prior-year period. We anticipate adjusted EBITDA and cash flow to improve going forward as synergies are realized and, at the appropriate time, intend to reduce debt to decrease interest expense and strengthen our financial flexibility, as the company has done in the past. In terms of the balance sheet, as of December 31, 2025, the company had cash on hand of approximately $1.6 million versus $1 million at the start of 2025. As mentioned on prior earnings calls, we keep a minimum amount of cash in the bank as the company has set up a sweep instrument to apply funds against our revolving debt facility to better manage interest expense. Our gross and net debt stood at approximately $43.3 million and $41.7 million, respectively, at the end of the fourth quarter, as compared to $13 million and $12 million, respectively, at the start of 2025. The increase of our indebtedness is largely a result of financing the acquisition of CDM as previously discussed. As a reminder, we financed the transaction through a combination of debt and preferred equity, including a three-year $36 million senior syndicate term loan and $30 million of convertible preferred equity with a $3 conversion price provided by affiliates of North Run Capital. Going forward, as I just mentioned, we remain dedicated to using cash generation when possible to lower our debt and migrate to an optimized capital structure to support financial flexibility. However, in the near term, we are investing in the business to drive growth and improve technology applications across the organization. I will now turn it back to Rick for additional comments on the senior executive additions to the management team, reorganization of our sales team, some customer activities, and the CDM integration. Rick Mills: Thanks, Tamara. I have already discussed Tamara's background and unique fit for our business earlier on the call, but I do want to spend a few more moments to introduce Dan McAllister as our CRO and Jackie Walker as our chief experience officer. Dan has been a chief revenue officer at a SaaS company before. He has a history of accelerating go-to-market strategy and reengineering the revenue systems for sustainable growth. His proven track record in aligning sales, marketing, and customer service teams, along with enforcing team structure and process discipline, all lead to revenue growth. The sales organization here has been structured into vertical teams, each led by a senior executive and focused on a vertical market. By the way, this is a team of 42 folks — a sales team that has effectively tripled in size. These vertical teams fall into the following markets: sports and entertainment (also known as IPTV), QSR and fast casual restaurants, retail and financial, retail media networks including AdTech, lottery, and finally, malls and real estate (known internally as MRE). We are now better focused and prepared to go after new customers across the board. More recently, Jackie Walker has joined as our new chief experience officer. She will serve as the internal authority on how digital and physical environments converge. She brings, and will leverage, an outsider's perspective to disrupt legacy thinking, overseeing the strategic what and why of our software revolution while scaling our consulting practice into a high-growth, high-margin engine of the business. Jackie, welcome aboard. Now there is a lot of activity and news to discuss across our various business vertical markets, so let us start with the IPTV division. We have been awarded a new stadium project, which will be completed in the second half of this year. This is a new stadium build from the ground up. This is an $8 million project involving thousands of displays and IPTV throughout the entire venue. In addition, we are in the process of refreshing the entire IPTV system for a Major League Baseball team and several other stadium projects. This division, which is headed by Lee Summers, is expected to double revenue this year to over $17 million. Our QSR and fast casual restaurant division is managed by Natalie Mines, a fifteen-year veteran of Creative Realities, Inc. Our next-gen modular drive-thru digital menu board system, which we introduced in January, is continuing to increase revenue in this division. This drive-thru, version 2.0, is engineered to help operators streamline installation, simplify maintenance, and scale the drive-thru environment over time. This new system allows brands to expand from single digital screen setups to multi-screen configurations without replacing the entire structure. We are currently deploying this product for multiple customers and typically are installing ten new locations on a weekly basis, or over 500 a year. The retail, financial, retail media network, and AdTech team, headed up by Jessica Creases, has been extremely busy since the acquisition. We had a nice jump start on the year by renewing the SaaS contracts of two of the top ten largest financial institutions in North America — congrats to the team for getting that done. Our AdTech solutions are now in test by a number of large customers who are evaluating the monetization capabilities of their installed signage network. We would expect to see three or four deployments in the second half of this year. Today, we are also announcing a $6 million media network project that Creative Realities, Inc. is deploying across the lobbies of AMC Theatres in the U.S. Our partner, National CineMedia (NCM), is the leading cinema platform in the U.S., and the media representative for this new innovative network. We will install this network of 1,200-plus screens and large-format LEDs through the rest of 2026. This media network utilizes the Reflect CMS and our AdLogic AdTech software solutions. One other customer-specific update I would like to mention: North Carolina Lottery. The previously announced ten-year $54 million contract is in the process of deployment and has been migrated to the ReflectView CMS platform. The deployment of all 1,550-plus locations is expected to be completed in Q2, with a few remaining locations in Q3. Finally, let us talk about the start of 2026. We had a significant revenue impact in Q1 from the disruptive weather across the Midwest and Southeast. A major cold wave gripped much of North America from mid-January through mid-February, bringing incredibly low temperatures, snow, sleet, and freezing rain to the eastern two-thirds of the country. In addition, a very rare storm brought historic snowfalls to the Carolinas, specifically North Carolina. This caused $4 million or more of revenue to push to Q2. I want to remind everybody, this is not lost revenue — however, just delayed. Construction on many of our customers' new QSR facilities was suspended for thirty to forty-five days as the weather passed through. As a result, the February and March new location openings for these QSR customers were delayed until April, May, and some in June, including the installation of 500 locations for our lottery customer. This will shift revenue from Q1 into Q2 and maybe some into Q3. With that said, I want to be very clear. We continue to be bullish on our revenue and stand behind our earlier statements that our revenue in 2026 will exceed $100 million and our adjusted EBITDA will reach a run rate of 20% by year-end. Our pipeline remains robust. We expect to continue to land many new opportunities. We are in an excellent position to post higher growth and improved operating results going forward, and we remain on track for our best year ever. We will now open the call for questions. Operator, please go ahead. Operator: Thank you. To ask a question, please press 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press 1-1 again. Our first question comes from the line of Jason Michael Kreyer with Craig-Hallum. Your line is now open. Jason Michael Kreyer: Wonderful. Thank you, gentlemen. Rick, can you talk about scale gains and how that has changed the go-to-market over the last several months since the acquisition, or just maybe the tone of customer conversations and how that has changed? Rick Mills: Great question, Jason. The tone of conversations is totally different. Number one, most customers recognize — particularly in some of our verticals, QSR specifically — we are absolutely at the top of the food chain, and so we are now in conversations that we would never have been in before. That is number one. Number two, those conversations are very serious because they understand we are now a true leader in the QSR and drive-thru space and approach us with a very different message than we experienced in the past. Jason Michael Kreyer: Good to hear. Thank you. Rick, we have talked for the last few quarters about deals that are sitting at the one-yard line — or I think you have even talked about the one-inch line. Any updates on that? I am also curious how you see the pipeline building with your AdTech capabilities. I know the last several wins that we have discussed have been more slanted to the QSR side, so I am curious how deal flow looks on deals that have advertising embedded in them. Rick Mills: Deal flow continues to be strong. Let us go back to the one-inch-line comment. First thing I would tell you is, we pulled one across the one-inch line with an $8 million stadium project — finally got that done. Number two, we announced on a prior call a large QSR had gone through an entire RFP — over 4,000 locations in North America — and they had selected us. We have been negotiating the contract, and we expect to actually sign that contract in the next couple of weeks. It has been a long time coming, but the contract is getting ready to get executed, and that will result in additional drive-thrus, etc., moving along. Retail media networks: primarily, we have had a couple of C‑store customers — one specific large C‑store customer — that has been in test for at least five to six months and is now moving to deployment. We are in conversations with three or four other customers who are interested in retail media networks. One is a large grocer — one of the largest grocery chains in the U.S. — so we are in significant conversations. Another is a significant C‑store chain. And I would say two or three what you would call traditional retailers that tend to be more in the luxury beauty area. We are having substantive conversations with a number of them. Last but not least, our sales force has literally tripled in size. We have 40-plus folks on the sales team who are out talking to customers every day. The number of folks we are actively engaged with has increased significantly. Part of that is due to our new position and stature in the industry — as one of the big guys. Number two, it is also the fact that I have 40-plus experienced folks out beating the streets, contacting customers every day across North America. A combination of all those things is really coming into play, and we feel very bullish about the next twelve to eighteen months. Jason Michael Kreyer: That was a solid recap there, Rick. Thank you for that. Last one for me: just want to touch on the lottery sector. I think the last time we talked, you have the big deployment right now in North Carolina, but I thought there was some potential momentum with other RFPs that were coming to market. Can you give us a recap of what you think that RFP landscape looks like today? Rick Mills: That is a solid question, Jason. Unfortunately, I do not have a solid answer other than we expected in 2026 seven to eight large RFPs coming out. We have yet to see that happen. We have one that we are actively participating in. We have a couple large West Coast opportunities that we are in discussion on, but I would not call them active RFPs. We are well positioned and we are certainly talking to every lottery that is interested. One thing I would tell you about the lottery market and what we have done with our current lottery customer is we are showing significant lift, and we have results of that to show other lottery customers and potential customers — that we can achieve substantial lift which results in significantly increased lottery ticket sales. Jason Michael Kreyer: On that point, your ability to take that lottery solution into C‑stores and create a cross-sell opportunity — does the rollout of lottery help build out a greater rollout in C‑stores? Do you see a network effect there? Rick Mills: Still unproven. Today, when we have rolled out lottery, it has been dedicated to lottery. We have not done a mix of in-store promotion and then layered in lottery, like a 50/50 mix. It has been 100% lottery. We are talking to some of our C‑store customers who have networks already deployed about improving their schedule and adding lottery on those screens to increase lift, but we have no results yet to talk about. Jason Michael Kreyer: Got it. Thank you. Keep up the good work. Rick Mills: Thanks. Operator: Our next question comes from the line of Brian David Kinstlinger with Alliance Global Partners. Your line is now open. Brian David Kinstlinger: Great. Thanks so much. Solid fourth quarter results. Prior to the announced partnership, had AMC been a customer of Creative Realities, Inc. or even CDM? If so, how much revenue did AMC generate last year? And then the second part of that question is, what is the installation revenue on this contract versus the potential recurring revenue based on your AdTech and media solution? Rick Mills: Great question, Brian. How are you, sir? Brian David Kinstlinger: Great. Thanks. Rick Mills: Good. Yes, AMC has been a longtime customer of CDM. Today, I would tell you it is a seven-figure customer in terms of deploying our software and managing all of the screens throughout every AMC theatre in the U.S. They are not a hardware customer — they have always procured hardware internally — so they are a software and content customer. When the opportunity came to build out a network, it made sense that Creative Realities, Inc. was already deployed throughout their locations, and we were doing a great job, so it was a natural fit for us. In terms of the hardware and installation revenue on this particular network, I am assuming it is going to be in the typical 70/30 range of hardware and installation, out of the $6 million bucket. Then there is ongoing revenue: it is our software and AdTech that will be running it — our CMS and our AdTech — and there is a revenue share for the next five years on that screen. Brian David Kinstlinger: Great. That is helpful and a great deal. This week, I think, 7‑Eleven announced store restructuring where it is going to close something like 600 stores and open almost 300 stores over the course of maybe two years. Is there any impact on your business from the store closings? And then, you have been a preferred vendor there — will there be a new RFP, or is that under your existing contract? Just talk about 7‑Eleven and what is going on there. Rick Mills: Great question. If there is an effect on Creative Realities, Inc., it would be de minimis or minimal. The closing of the 600 stores — if those stores had digital, which we do not know — they may have us uninstall digital and reinstall it in some other stores. In the 300 new locations, those typically are going to be full-size 7‑Elevens that are likely to include at least one if not two food concepts, and we would expect to do a number of screens there. Our contract with 7‑Eleven is in the process of renewal. It has not been signed, but we are at the end game for another three-year renewal with 7‑Eleven. We do not anticipate any change — that customer continues to grow. Brian David Kinstlinger: You mentioned it was helpful that the first quarter was impacted by weather. Clearly, that is going to be the worst quarter of the year. Any thoughts on which are the strongest — maybe the second and the third quarter — based on known installs at places like AMC and North Carolina? Rick Mills: I would tell you Q3 is setting up to be a significant quarter because, with the stadium install, a bunch of hardware will ship in Q3. A bunch of drive-thrus will go in during Q3 because that is the end of the construction timeframe across the eastern half of the U.S. They want to get those restaurants open in September–October, before it gets into bad weather. So, generally speaking, that is what we expect to be significant. Then we have this 4,000 locations across North America. Tamara Koshua: The other thing that I will add is that Q4 has the largest percentage of our media revenue with the CDM acquisition, so that automatically will increase the value in Q4. We do expect Q4 to be the largest quarter of revenue. Rick Mills: Great callout — I forgot that portion about a bunch of media revenue in Q4. Thank you. Brian David Kinstlinger: Already adding value. Last question for me: remind us of the expectations for interest expense and how much is cash obligation this year? Rick Mills: That is a great question. George or Tamara, any input on what that would look like? Tamara Koshua: It will depend on the debt levels of the revolver, but generally, the term loan is going to drive the lion's share of the interest expense we would expect to see, and that generally is somewhere between $0.5 million and $0.75 million a quarter. Brian David Kinstlinger: Thank you. Rick Mills: Brian, happy to go through that in detail on our one-on-one call. Brian David Kinstlinger: Great. Thank you, guys. Operator: Our next question comes from the line of Jon Robert Hickman with Ladenburg. Your line is now open. Rick Mills: Hello? Jon Robert Hickman: Hi. Can you hear me okay? Rick Mills: I can hear you just fine, John. Jon Robert Hickman: Most of my questions have been asked and answered. I wanted to drill down a little bit on the restaurant chain that you landed last year, and then there were some issues with installation because of the size of the screens. Where are you with those guys? Did you do business with them in the fourth quarter, and what is going on? Rick Mills: There was some SaaS revenue because we had some of their locations on our SaaS platforms. However, they have halted all hardware procurement and installs until the new contract was finalized. The new contract — we and the customer had internal dates to get it done by March 15. Here we are April 14, and we still do not have it signed. We do expect it to be signed in the next couple of weeks. We thought this was a brand-new win last year, and it is — they did an RFP, we won, and it is a contract that we had to create from the ground up. Jon Robert Hickman: There are a lot of franchisees in this particular customer. Has that been an issue? Rick Mills: It has not been an issue as we have started to deploy the SaaS across the franchisees. The franchisees are responsible for hardware updates, and should they desire to upgrade to a digital drive-thru, they would be responsible for that. We attended the franchisee show in January. The verbal indications we received from the folks who came by our booth indicated significant interest. I have talked to two or three franchisees that own 30 to 50 locations each that indicated they wanted to put digital drive-thrus in all locations. As you know, we have to take that with a grain of salt, because when it is time to write the check, who knows. But we do expect to see some growth in Q3 because, even if they turned it on today, we would not be installing drive-thrus in the next sixty days — it would be Q3 or Q4 revenue once we sign this contract. That is realistically the impact. Jon Robert Hickman: Out of the total addressable market — not including the AdTech side — do you have any estimate of your market share right now? Rick Mills: Really hard number to pin down. I would tell you in North America today, we are not 2%. If we were 1%, I would be surprised, at $100 million. George, any input? George Sautter: And, John, just to clarify, are we talking about market share or market penetration? Jon Robert Hickman: Maybe we can talk about both later today. Different question: now that you are combined with CDM and can get into a different level of contracts and opportunities, has your competitor outlook changed? Are the entities you are competing with different now? Rick Mills: We have always competed against the same three, four, or five competitors. Some were larger than us. Today, they are not larger than us. We occupy a different, unique position, and in some cases I am significantly larger than they are. We represent a real strategic advantage for the end-user customer to align with Creative Realities, Inc. as a supplier. Jon Robert Hickman: That makes sense. I will talk to you later then. Thank you. Operator: Our next question comes from the line of Kevin Sheldon, Private Investor. Your line is now open. Rick Mills: Kevin, how are you? Operator: Kevin, please check your mute button. I am currently showing no further questions from the phone lines. Mr. Sautter, are there any email questions? George Sautter: No. There are not. Operator: Thank you. I would like to turn the call back over to Rick Mills for closing remarks. Rick Mills: Let me conclude the call by thanking all our shareholders, clients, partners, and specifically the Creative Realities, Inc. and CDM employees for their continuing efforts, commitment, and support. We continue to work to transform Creative Realities, Inc. into the leading brand in digital signage solutions, and for many of you who have been on these calls for the last couple of years, you have seen us really execute in the market and continue to grow. Thanks for joining the call. We look forward to speaking with you again next quarter. Operator: This concludes today's conference. Thank you for your participation. You may now disconnect.
Operator: Good morning, everyone, and welcome to the FB Financial First Quarter 2026 Earnings Call. Please note, this event is being recorded. At this time, I'd like to turn the conference call over to [ Rachel Dereski ] with FB Financial. Please go ahead. Unknown Executive: Good morning, and welcome to FB Financial Corporation's First Quarter 2026 Earnings Conference Call. Hosting the call today from FB Financial are Chris Holmes, President and Chief Executive Officer; and Michael Mettee, Chief Operating and Financial Officer. Please note FB Financial's earnings release, supplemental financial information and this morning's presentation are available on the Investor Relations page of the company's website at www.firstbankonline.com and on the Securities and Exchange Commission's website at www.sec.gov. Today's call is being recorded and will be available for replay on FB Financial's website approximately an hour after the conclusion of the call. [Operator Instructions] During the presentation, EFinancial may make comments, which constitute forward-looking statements under the federal securities laws. Forward-looking statements are based on management's current expectations and assumptions and are subject to risks uncertainties and other factors that may cause actual results and performance or achievements of FB Financial to differ materially from any results expressed or implied by such forward-looking statements. Many of such factors are beyond FB Financial's ability to control or predict, and listeners are cautioned not to put undue reliance on such forward-looking statements. A more detailed description of these and other risks that may cause actual results to materially differ from expectations is contained in FB Financial's periodic and current reports filed with the SEC, including FB Financial's most recent Form 10-K. Except as required by law, FB Financial disclaims any obligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events or otherwise. In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G. A presentation of the most directly comparable GAAP financial measures and a reconciliation of the non-GAAP measures to comparable GAAP measures is available in FB Financial's earnings release, supplemental financial information and this morning's presentation, which are all available on the Investor Relations page of the company's website at www.firstbankonline.com and on the SEC's website at www.sec.gov. I would now like to turn the presentation over to Mr. Chris Holmes, FB Financial's President and CEO. Christopher Holmes: All right. Good morning. Thank you, Rachel. Thanks to everybody for joining the call this morning. And I'll always thank you for your interest in FB Financial. I want to start today's call by calling attention to a distinguished award the company received recently and what it means first thing. The bank received J.D. Power's Retail Banking Award in the South Central region for placing #1 among the banks in the region for customer satisfaction. J.D. Power surveyed over 100,000 banking customers across our region, surveying them about their satisfaction with their primary bank. And when the results were tabulated, [ FirstBank ] #1 on the list for overall customer satisfaction. FirstBank also ranked #1 in the subcategories of client trust and quality of our people. What made this award even more gratifying was that we weren't even aware that our customers were being surveyed. So the ranking is a result of our natural service behavior and not something that resulted from any special preparation. As bank investors, we watch every basis point of margin efficiency, return, et cetera, and every penny of EPS where we can struggle to find effective relative measures of the actual driver of superior sustainable bank performance, which is our ability to attract, satisfy and retain bank clients. This award is independent tangible verification of what I've known about our team. That's when stacked against the competition, we win. I want to thank our clients, who participated in the process and our associates, who are the FirstBank story and who takes such outstanding care of our clients you are literally the best at what you do, and I'm proud to be on the team with you. So with that, now let me get into the quarter. We reported EPS of $1.10 and an adjusted EPS of $1.12 and have grown our tangible book value per share, excluding the impact of AOCI at a compounded annual growth rate of 11.6% since our IPO back in 2016. Our net income was $57.5 million or $58.3 million on an adjusted basis, and our pretax preprovision net revenue or we may refer to as PPNR during the call, was $77.2 million or $78.2 million on an adjusted basis. So even with 2 fewer days in the quarter, we were able to grow our pretax preprovision net revenue versus the prior quarter. Revenue declined slightly during the quarter, but expenses have had an even greater decrease to keep our net income and profitability metrics in line with our expectations. We kept our PPNR return on average assets near our benchmark range of 2%, coming in at 1.93% or 1.95% adjusted. We're pleased with our returns. And as Michael will cover in his comments, our growth gained momentum during the quarter, giving us optimism about the remainder of the year. We're now [ 1/4 of the ] way through 2026. We continue to believe it's a great time to be a FirstBank. Our strategic pillars of award-winning client experience high associate engagement, operational efficiency and elite financial performance are all working together to grow our franchise and position us for continued success. When you add that to our -- when you add that our geography as one of the best in the country and our size is optimal to allow for both capacity and agility, we're optimistic about our path to creating shareholder value, both short term and long term. So before I turn the call over to Michael, I do want to acknowledge that like all of you, we're following the macro events of the time of our times closely. But most of these things, like geopolitical conflicts, technology disruptions, economic shocks and interest rate volatility are things that we have to react to versus exercise control over. What we do control is our position in preparation for a range of circumstances and risk scenarios with active and prudent management of our robust capital, robust liquidity and our high reserve levels. We remain in a position of strength and believe that we have the ability to perform through the various economic cycles as they come. So that I'll now turn the call over to our Chief Financial and Operating Officer, Michael Mettee, for some more color on the quarter. Michael Mettee: Thank you, Chris, and good morning, everyone. I'll begin my comments this quarter with the balance sheet. While we started the year at a slower pace than we originally anticipated, with annualized loan growth of approximately 4% deposit growth around 5%, we are seeing momentum build across the business in the right areas. Although these growth levels fell at the lower end of our internal expectations, the underlying activity and pipeline trends give us confidence that we are positioned to execute on the core fundamentals Chris outlined and drive improved results as the year progresses. During the first quarter, we began to see a more intense wave of competitive pressure, particularly around pricing. While profitability will always remain central to our decision-making, we're focused on striking the appropriate balance between disciplined returns and sustainable growth. Our strategy remains centered on building deep, long-term customer relationships that create enduring value for our shareholders. We will continue to be disciplined in acquiring new relationships and remain committed to protecting and strengthening our existing ones, always with a focus on delivering value to both our clients and shareholders. The company has the size and scale to compete effectively and win attractive deals when it makes sense to do so and do not hesitate to aggressively [ in competitive ] situations when warranted. Ultimately, our value proposition is not about being the low-price provider, it's about delivering peer-leading customer satisfaction through strong financial advice and trusted services. By keeping the client at the center of everything we do, we believe we'll be -- we will continue to drive improved profitability over time and create the same long-term value for our shareholders. On that front, March was our strongest month of the quarter. with upper [ single-digit loan ] growth and meaningful expansion in our loan pipeline. As we move through the second quarter, we're seeing the momentum continue, with a portion of that activity beginning to translate into on balance sheet growth. We expect second quarter balances to reflect continued improvement with additional pipeline conversion extending into the third quarter and larger volumes building into the back half of the year. On a full year basis, we continue to expect both loan and deposit growth in the mid- to high single-digit range, with growth increasingly weighted towards the second half as momentum builds. Turning to earnings for the quarter. pre-provision net revenue totaled $77.2 million or $78.2 million on an adjusted basis compared to $71.1 million in the prior quarter and $77.1 million on an adjusted basis. Net income also improved quarter-over-quarter despite the shorter reporting period, coming in at $57.5 million or $58.3 million on an adjusted basis. Our net interest margin for the quarter was 3.94%, representing a modest decline, driven primarily by balance sheet mix and the full quarter impact of rate cuts implemented late in the fourth quarter. Total loan yields for the quarter was 6.51%, with yields on new production towards the end of the quarter running a bit closer to 6.6%. On the deposit side, total cost declined to 2.27%, while rates on new production were approximately 2.7% around quarter end. Both loan and deposit yields were modestly lower than the prior quarter, reflecting benchmark rate cuts across the variable rate portion of our balance sheet. As we move deeper into 2026, we expect some additional pressure on margin as competitive dynamics remain elevated, and we continue to pursue targeted growth opportunities in our market. Based on current conditions, we would expect full year net interest margin excluding loan accretion, to be in the range of 3.7% to 3.8%, representing a modest decline from our prior guidance. We would expect second quarter margin to trend towards the lower end of that range before stabilizing as the year progresses. Finally, we would note that the interest rate environment remains uncertain, particularly around the timing and magnitude of future benchmark rate movements. As a slightly asset-sensitive balance sheet, changes in rates can be both favorable and unfavorable, depending on the direction and speed of those moves. While our margin outlook assumes a continuation of current conditions, modest rate actions, either higher or lower the current levels, will impact some of the competitive and growth-related margin pressure we've outlined. We'll continue to actively manage the balance sheet and pricing strategy to position the company as effectively as possible across a range of potential scenarios. Noninterest income declined $2.4 million during the quarter, primarily driven by lower secondary mortgage volume as well as absence of several nonrecurring items recognized in the prior quarter, including a higher BOLI benefit payout. In addition, the quarter reflected fewer calendar days relative to the prior period, which modestly impacted overall fee generation, particularly within mortgage-related activity. With mortgage, we saw a really strong start to the quarter, and that slowed as the quarter progressed due to the increased interest rate volatility and heightened uncertainty in the housing market and really the world economy. Shifting rate expectations and broader market dynamics impacted borrower sentiment and transaction activity, which weighed on production as rates moved throughout the quarter. Mortgage revenue also tends to exhibit some seasonality with activity typically building as we move further into the year. On the expense side, first quarter noninterest expense totaled $95.2 million, representing an approximate 11% decline from the prior quarter or roughly 7% on an adjusted basis. Personnel costs moderated as compensation-related accruals returned to a more normalized run rate. And merger and integration expenses declined as we completed the majority of costs associated with the Southern States combination. We also saw quarter-over-quarter reductions across several other expense categories as the year reset and teams maintained strong expense discipline. As a result, our efficiency ratio for the quarter was 55.2% or 54.3% on an adjusted basis, driven in part by our [ banking ] segment, which delivered an adjusted efficiency ratio of 50.9%. Looking ahead, we remain focused on disciplined expense management, with [ banking ] segment noninterest expense expected to range between $325 million and $335 million for the year and a total company efficiency ratio anticipated to remain in the low 50% range. Turning to credit. Our provision expense for the quarter totaled approximately $3 million, with our allowance coverage ratio ending the period at 1.49% of loans held for investment. Net charge-offs were modest at an annualized rate of 11 basis points, which was a slight uptick for us, but were driven by a small number of isolated borrower-specific situations rather than any deterioration tied to broader economic stress. In evaluating the allowance for the quarter, we gave additional consideration to potential macroeconomic events stemming from the conflict in the Middle East. We reviewed the most relevant economic forecast, assessed our portfolio for direct exposure to the recent increase in energy prices. While it remains early to fully understand the broader downstream impact of operating companies, our analysis focused on a limited set of industries most sensitive to near-term energy price shocks. Our exposure to those sectors remains minimal, and we believe our reserve levels are appropriate given the current risk profile of the portfolio. With respect to capital, we continue to be in a very strong position, supported by solid capital ratios and a robust liquidity profile that provide meaningful flexibility. During the quarter, we were optimistic in repurchasing shares amid purchases or periods of market volatility, and we remain well positioned to deploy capital thoughtfully as opportunities present themselves. Our capital ratios continue to reflect that strength with a common equity Tier 1 ratio of 11.5%, a Tier 1 leverage ratio of 10.4% and total risk-based capital of 13.4%. This strong capital foundation allows us to remain flexible in supporting organic growth, pursuing strategic opportunities and returning capital to shareholders where appropriate. In closing, I want to echo Chris' congratulations to our team on earning the J.D. Power recognition. This award is a direct reflection of our associates' commitment to our core values and the strength of our franchise, and it reinforces our focus on delivering consistent value to our customers, shareholders and communities. With that, I'll turn the call back over to Chris. Christopher Holmes: All right. Thanks for the [ call ], Michael. Thanks again to everyone joining the call this morning and for your interest in FB Financial. And operator, at this time, we'd like to open the line for questions. Operator: [Operator Instructions] The first question today comes from Dave Rochester with Cantor. David Rochester: On loan growth [ than ] the guide for the year sounded positive, but it sounds like you're also expecting those competitive pressures to continue. I was wondering where you're seeing the bulk of those pressures coming from? Is it larger banks, smaller banks? Is there any variance by market that's noticeable? And are you assuming more elevated paydown activity to continue as well? And I guess you'll just originate more to offset that to get to that mid- to high single-digit range. Just any thoughts there would be great. Michael Mettee: Yes. Dave. So some of the optimism, right, is the pipeline continues to build, and you can see the kind of the closing dates and [ site ] for a lot of those deals. I would say on the loan side, competitive pressure, generally larger institutions; we're seeing it really across the board. Nashville is obviously pretty competitive, but we're seeing it in a lot of our large metro markets, so whether that's Birmingham, Huntsville, Knoxville, Memphis; we saw some large payoffs in Memphis, where competition took us out on some deals this quarter. So it really is across the board. On the deposit side, I would actually say it's both large and smaller. We see community banks that have gotten really aggressive, specifically in the kind of 12-month [ CD ] space, but even interest checking rates that will make you blush a little bit, And then for the larger institutions, we're seeing money market rates well above 4 from regional banks that actually we haven't seen advertising market in quite a while. So I'd say it's coming from both sides. The optimism is the team has put in the work, has been working with our clients, both our existing clients and new prospects. There's a lot of kind of economic excitement. Even with everything going on in the world, people are pretty positive about the economic environment. And so deal flow is happening. And I would say that's across the company, whether that's in our communities of 7,000 people or metros of 4 million people. Christopher Holmes: Yes. And Dave, you mentioned paydowns, and we've seen some of those both second half of last year and into this year. And do we think that will continue? We do. There would be some of that, Michael mentioned, a couple of payoffs. We'll continue to see some of those. But it's okay. when we know about them, it's the expected ones that gets you. And so we do expect to continue to see those. But as you've heard, kind of where the pipeline is and what things look like, we're considering that in our -- as we're talking about net growth, we're talking about net growth. David Rochester: Okay. Great. That's great color, guys. I appreciate that. And maybe just one more. Just on the talent pipeline, obviously, a lot of disruption in the market. You guys have talked about this before. It seems like a good opportunity, but of course, everybody is trying to retain their people. Can you just give us an update on on what you're seeing there, the dynamics with conversations that are going on right now? And what -- how confident are you guys that you might be able to pick up some value add there over the rest of the year? . Michael Mettee: Yes, it's a daily topic here, Dave, right, is kind of offense and defense with regard to talent. And so I'd say conversation's heated up. I mean, we added, let's say, 15 revenue producers in the first quarter. We also lost a couple. And some of that is people going to other institutions and some of its retirements, things like that. But yes, these are really waterfall events. It's not necessarily who you think is acquiring your talent. But when one person moves, it opens up a door for someone else. And so you're constantly trying to keep your key players in your key markets, and that's both large and small, too. I think a lot of it, people equate to, I'll call it, Nashville or like a [ hunt fill ], but it's happening across the board in places like Jackson, Tennessee, Birmingham, Atlanta. So I feel good about the conversations. We're hot and heavy on a lot of recruiting. It's more important to me that we have the right people that fit our culture and our business opportunities versus putting numbers on a page, even though [ it's quite ] 15, it's much more important that those are the right people. And so that's where we continue to be focused, And we think we'll get more than our fair share of those right people as we move forward. David Rochester: On a net basis, that sounds really positive in terms of the ads that you just brought in, in the first quarter. What -- just curious, what areas are they in? Are they primarily loan producers, deposit guys? Is it commercial? Where are you seeing those adds? . Michael Mettee: Yes. So one point of clarity when I'm recruiting is I expect all of our bankers to be bankers, loans and deposits. So generally not bringing in just loan people sometimes bring in just deposit people. But even those are equipped to take care of their clients. 8 or so relationship managers, a couple of mortgage people and a couple of people that are focused really on consumer and small business relationship development. So -- and we do have a couple, I guess, loan-heavy businesses, right? So yes, it's positive. And we think we can continue the momentum. Christopher Holmes: Yes, David, and I think it's always, I think, a topic. And it's a little like the customer service topic I talked about. It's important. The one thing I would say about this one, it's kind of hard to get relative measures on talent because folks look at it differently. And for us, it's become something that we know that folks want to try to get their arms around. But it's not really a key performance metric for us in terms of we don't have a goal where we say we're going to hire this many this quarter, this many in the next quarter. We're looking for the right people at the right time. And there is a lot of movement. The one thing I would say is there's probably more movement and more recruiting going on, particularly in our metropolitan markets, [ but ] Michael said that even in some of our smaller markets than we've seen across the board. And typically, you see people going from smaller banks to larger banks, but we're seeing some larger banks, some much larger than we are, that are coming in to recruiting talent from banks even smaller than we are. And so it's just -- I think it's an interesting time. But again, Michael said it, you have to play offense and defense all the time. And defense is best played by making sure you've got a great place to work, making sure you've got engaged folks and making sure that you're taking good care of them, and that's as important as anything. That's how we view it. Operator: The next question comes from Russell Gunther with Stephens. Russell Elliott Gunther: I wanted to ask on the expense side of things, so really strong first quarter results but you guys have reiterated the banking segment expense guide for the year. So it'd just be helpful to get some color in terms of what's driving that sort of pickup over the course of the year. Michael Mettee: Yes. I mean it's a dose of expectation around performance picking up, which obviously impacts -- we're a performance-based company when it comes to [ competition ]. And so we want to expect peer-leading returns. And so that drives that number a little bit higher as we look out over the year. And some of that will come with growth there, [ Russell ]. There's not any expectations of huge like technology investments or anything like that. So it's more just maintaining our run rate expectations and performance-based comp type stuff moving higher throughout the year. Russell Elliott Gunther: Okay. And then just an adjacent follow-up. So curious, deal synergies were fully realized this quarter. In aggregate, did they come in, in line with what you were expecting or maybe better than modeled? And then bigger picture, what's a good kind of core expense growth rate or range to think about [ FB Financial ]? Michael Mettee: Yes. Actually, I would say from a combination perspective, we landed pretty much right on top of our deal expense number, maybe plus or minus [ is 20,000 or so ] . Christopher Holmes: It was really close, except I was just a shame. As Michael said, it's -- the difference is really immaterial because it's like in the -- on a fairly large number, it's down less than [ $1 million ]. And I actually think it may be just a hair under, but it's right on the number. Michael Mettee: Yes. And I'd say for -- we haven't done a real merger in 5 years. So it's good to kind of get set off and resharpen the knife a little bit. So yes, we're around expectations. I think the proof, right, Russell, is getting to that kind of 50% range by year-end as we continue to efficiency ratio to year-end as we get to the combined company make sure the revenue engine is still going, which is really important when you say synergy, I think about revenue as well in maintaining our ability to grow in our legacy Southern States markets. So yes, I think we're in a good spot there. And then I'd say 4% to 5% kind of core expense growth as you look forward, if I think about '27, which is a long ways away. But that would not include, back to Dave's question, talent acquisition and opportunities to really add teams and scale, but we'll maintain our expense discipline as we kind of look forward. Russell Elliott Gunther: Got it. Okay. And then just last question for me. would be circling back to the loan growth side of things, the mid versus high single digits. What are the largest drivers that would get you to the high end versus the low end? Michael Mettee: Yes. I mean [ the Tom ] -- some of it is just the time of the quarter, I guess. But if you think about the year, we have -- it is a competitive environment. And so people stepped in, other companies [ step ] in. And sometimes, we'll get really aggressive, and some customers are more price-sensitive than others. And so you can see large deals move one way or the other. But our pipeline, when I look at it on a confidence interval, and so we're pretty confident about where we are. But you could see some payoffs come in, like Chris said, the unexpected ones. [ What ] you hope doesn't happen. If you're really servicing your clients, you should know. But sometimes we're all surprised. Christopher Holmes: Yes. The other thing I would say, Russell, it goes a little bit like we talked about on the people side, in that as people -- as bankers move, that also makes customers more vulnerable to to move it to changing banks. And so as I think about one of the -- generally, we're looking at -- as we're rolling forward, we're looking at what we have, customers that we have and things that we know or in a pipeline. So part of the optimism is, we also are having more and more conversations with really, really solid customers that have big balances both in loans and deposits that are in play. And so you certainly [ don't about ] 1,000 of those by a long shot. But the more at [ bat ] you get, the more [ hits ] you get. And so we're getting more and more at bats. And so there's some optimism around that as we get into the -- because we're having a lot of those conversations now. And as you get -- you think some of those are going to [ hit ] as you get later into the year and as you get into next year, that seems to be picking up momentum. Operator: The next question comes from Stephen Scouten with Piper Sandler. Stephen Scouten: I guess one other kind of maybe point of clarification on loan growth. Could you give us a feel for kind of maybe the cadence of growth? I mean, obviously, you said the pipelines and growth picked up in the back of the quarter, but still a little bit below your expectations. So was the cadence just that things started off a little slower? Did you see any sort of demand pullback with all the macro, geopolitical events? And then talked about payoffs, but kind of do you have any sort of numbers there in terms of quarter-over-quarter payoffs or year-over-year that if that was part of the driver for the slightly slower-than-expected growth maybe? Christopher Holmes: Yes, on cadence, I don't know that I would -- I think I'd describe things as fairly steady and normal with the exception of a few big balance things. We did have at least couple of payoffs that were just big balance things, but we've talked about that before, and we anticipated some of that. . Other things, you do see a little bit of push down the calendar, if you will, or push forward some. Maybe that's related to just some uncertainty. But I wouldn't say that's a material event. I would just say that as we have continue to do what we do, make changes here and make changes there, remember, we had the disruption second half of last year of integrating FirstBank [ and ]Southern states. And that does create a little bit of distraction. And so as you really get back on a good cadence, use your word there. you just begin to see the momentum pick up. And so I wouldn't say there's anything unusual about it. Rather than you can see things bump a little bit maybe related to, I'll call it, economic uncertainty. But again, I wouldn't read too much into that. Those tend to be small bumps, not big bumps, like I said. But if it bumps, it could bump 30 days, but that could move it between quarters. And so we do see that, but we see that every quarter. Michael Mettee: Yes. And I'd tell you for [indiscernible] we did timing-wise, that's -- if you're sitting here in January, you're saying we really a tough start to the year here coming off... Christopher Holmes: At the end of January, you look at it and go, wow, so [indiscernible] . Michael Mettee: Yes. I mean, especially coming off what I'd say, were elevated payoffs in December. I mean we're running $600 million or so in payoffs and amortization of quarter. Steve. And so then you got -- you also have people paying down lines, and then you got new lines being extended and paying up. So it's a little bit of a moving target. But that kind of that 500 to 600 range is where I expect payoffs and paydowns to occur kind of on a quarterly basis, which means you got to be growing at $600 million, $700 million to get to that mid- to high single-digit plus increases in lines and things of that nature. So it was -- I mean, the first quarter was a bit elevated, but not so much over the fourth quarter because the fourth quarter is also elevated. Stephen Scouten: Okay. Really helpful color. I appreciate that. And then on the updated NIM guidance, only a couple of basis points below kind of where you were previously. Just kind of wondering, what, if any, rate cuts do you have built into that guidance? And kind of -- I know you said maybe not an overly material change one way or the other, but I would expect if we didn't get cuts, maybe that could lead you to the higher end of the range. And then the reason kind of for the decline, would that be just increase in deposit pricing pressure? Is that the biggest delta maybe quarter-over-quarter? Michael Mettee: Yes, you nailed it. So we have a rate cut in our NIM guidance. And that's what we had and when we talked about the full year in January. So yes. And like you said -- I mean it's basically a basis point or 2 lower, so I would call that pretty stable. So the reality is rates or -- yes, if you look at the forward curve, most would say it's probably a market, which has probably rates up at this point, right? We're slightly asset sensitive. It's probably worth kind of 3 to 4 basis points in margin. But then if I think about what you just said, deposit pressure and thinner loans, you kind of get back to the same place. So there's probably a little bit of upside in flat to up rate scenario. I would say any, what I'll call, stair-step rate movement, either direction is manageable, if the elevator is up and down, which really create a lot of volatility in your margin. So the team will be able to manage through either way, but we certainly prefer that stair-step. And Chris has [indiscernible] to our team all the time, it will never get easier than today to get deposits. And so we expect that, that to continue to be challenging in the right environment. Now you've got treasuries are attractive again with where rates are. And so that's a competitive pressure outside of the banking system as well as customers need to -- or companies need to fund loan growth and economic expansion. So it's a competitive market. It always is, but it's been a little bit more fierce as we turn the calendar. Stephen Scouten: Got it. Makes sense. And maybe just one housekeeping question just on the tax rate. Anything to note there? It looks maybe slightly elevated relative to the past this quarter. How to think about that? Michael Mettee: I think it's probably in this kind of 20% to 22% range is the normal operating are. We had some franchise tax that -- in excess tax that's kind of local state related that picked up this quarter. And so that drove the higher number. And so there's community opportunities where we can invest in our communities that can move that number around a bit. And so we do those when the deals make sense, and so you can see that move around, and that's what you saw late last year. But we're a pretty normal range here, maybe slightly lower on a go-forward basis. Operator: The next question comes from Brett Rabatin with StoneX. Brett Rabatin: Wanted to start off with just a strategy question, and you guys are now $16.5 billion in assets, headed to 20, I would guess, over the next couple of years organically. And I know when you think about FirstBank, it's very community bank oriented. And so I wanted just to get an idea, one, from a philosophy perspective, would you guys start to think about specialized lines of business, equipment finance, those kinds of things that might further drive the loan pipeline? And then just secondly, you guys didn't talk about the FirstBank way. I wanted to see where you guys were in your evolution of that and just if there's anything left that you guys were trying to do in terms of the franchise and how you do business? Christopher Holmes: Yes, Brett. So [ many means ] I'm afraid maybe one of our conference room is bugged. You're hitting on some topics that have been heavy topics over the last 2 months. And so let me see if I can just kind of run down and talk about some of those. We are -- you labeled us as a community bank oriented, which I would give a strong indication that, that continues, yes, strong message that, that continues, and that will continue. We think you heard us start off by talking about what our customers think about that. And that was J.D. Power. But if you look at [ Greenwich information ], that's very strong as well. And so we think we have a formula there and sort of a special sauce [ and ] how we run -- and our community orientation is really a key ingredient there. It's not the only only ingredient, but it's a key ingredient. So we'll continue that as we scale. And so we spend a lot of time -- I talked about -- I spend a lot of time strategizing [ moving ] over the last 60 days. But part of that strategy is how do we maintain that as we scale the company. And so that's really important to us, and you're going to continue to see that. You also mentioned specialized lines of business. So part of what we're working through is how we add some specialized lines of business. We have some today, manufactured housing being one, for instance, that we excel at. How do we continue to add some other lines of business like that and continue that community bank orientation, okay? And so that's an important part of the strategy. And what you labeled FB way, sometimes we'll talk about our -- internally, we're talking about our customer-centric business model. And that those two overlap and can even be used interchangeably sometimes. But again, heavy focus on that very thing, and we'll continue to do that in -- because that's just making us better. And again, we look -- literally yesterday, we sat around the conference room, we're talking about where we ranked in customer service, and one of our goals for our executive team, for our executive team to hit our objectives for the year, we have to increase that score. Even though we're #1, we have to increase that score by a certain percentage. And so that is a continuous process for us on how we basically keep that community bank orientation and continue to scale the company. So that's critical to us. And I'll give you another line of business that we've added in the last 90 days is the [ SBA ] line, okay? We haven't had that as a loan in the company. We've got -- we've dabbled. We've got just a few small [ SBA ] things out there that we had before this, but that's now a line when we have an [ oil ] that heads that [ Lane Rod ] who joined us. And so we are -- and so that's another example. So you're going to see exactly what you described, where we continue that orientation. But we do continue to grow certain lines and some certain verticals. Brett Rabatin: Okay. That's helpful. And then the other question I wanted to ask was just around -- there's an obvious expectation that there's going to be some market disruption in the Southeast with some of the recent transactions. Would you guys view -- Chris, would you view M&A as too distracting from here? I've had some color from some banks saying that they're just -- they think, focusing organically and looking to take advantage of maybe some of the other acquisitions that have happened here recently, it was a bigger opportunity. Just wanted to see if your philosophy has changed much, if any, around M&A and potential opportunities, particularly in maybe newer markets like North Carolina, et cetera. Christopher Holmes: Again, man, I'm afraid you got to a you have us bugged here because it's a frequent topic of conversation is exactly that with the organic opportunity, is it -- do we need to or too distracting to do M&A.? The answer for us is no. It's not. But we are very conscious of distractions ourselves. And so that does cause us to look at it strategically a little differently than we traditionally looked at it and probably causes us to be even more careful and picky, choosy about what we do because it needs to be both strategically compelling and financially compelling for us. And you have to be careful about markets. okay? We can generally keep distractions away from markets that don't have any involvement through overlap in a transaction, we can limit the distraction. And so those are all the things we consider. But we will still keep that arrow in our quiver, and we could exercise that on a transaction at any point. Operator: The next question comes from Steve Moss with Raymond James. Stephen Moss: I want to start just following up on the loan pipeline here that you guys spoke is stronger. Just kind of curious, where you're seeing the pickup in demand in terms -- by loan type, if you will? Michael Mettee: Yes, [ David ], I would say it's across the board, but I would say we'll caveat that a little bit more clear, more in operating businesses. That's really where we've been focused, is developing out that strength from a C&I perspective. If you look at the -- where we've gotten smaller, a lot of that is kind of nonowner-occupied [indiscernible] for construction over the last couple of years. And so some of the pressure that we faced in payoffs this quarter and late last quarter was -- if you think back that 2021 time frame, a lot of growth out of the company, a lot of it was in that construction and nonowner occupied CRE space. So you're seeing that kind of roll off. And [ when ] we're replacing it. We're still in those businesses and taking care of quants, and we still like those asset classes. But it's not growing at the same velocity. So it's much more about operating businesses and some owner-occupied real estate type of transactions. Stephen Moss: Okay. Great. Appreciate that color there. And then second question for me here just on the margin. You talked about the core margin. Just kind of curious as to where you're thinking. Any updated thoughts I should say on purchase accounting accretion here for differing quarters? Michael Mettee: Yes, I think it's going to be in that same kind of 15 to 17, 18 basis point range. I don't think you'll see it go up unless we get even faster payoffs. But I think it's going to be pretty consistent here. Stephen Moss: Okay. Excellent. All the rest of my question -- then one more question just on capital here. You guys bought back late in the quarter with the pullback. Just kind of -- should we expect you guys to be -- continue to be opportunistic? Or sitting at [ 99 TC ], more favorable regulatory environment, do you guys press the gas on that a little bit more? Christopher Holmes: Yes. We'll continue to be opportunistic when it comes to [indiscernible]. We're watching the volatility there, but we usually regard that as opportunistic, and we really haven't changed that stance. Operator: The next question comes from Catherine Miller with KBW. Catherine Mealor: I've got one more on the margin, just on deposit costs. Do you have the spot rate of where deposit costs ended the quarter? And let's just say we are in a position where we don't have any more rate cuts until maybe the very end of the year, so basically no more for '26. Do you think that your deposit cost increase from this kind of [ 280 ] interest-bearing level? Or you were just more stable? Michael Mettee: Yes, that's at [ 2 levels ]. So we think about total new originations were 270. That's fine low [ had ] honestly, like I said, of interest-bearing [ 283 ]. I think you probably see those increase a little bit, given where you have to acquire new customers, Catherine. So market rate is significantly higher to acquire new customers. The goal there is to translate that into relationships over time in full operating business and then you get back to more of an equilibrium. There's a bit of a disconnect reality-wise of where you can fund the company either through borrowing or brokered and wholesale versus kind of where I'll call the consumer retail commercial market is. It's actually significantly, I would say, higher to go out and acquire new customers versus funding the bank. So it's a balance. If rates are up or flat, Fed funds, I think you see competitive pressure pushing deposit costs modestly higher. But our goal is always to get the full relationship. Catherine Mealor: Got it. And then new deposit costs of [ 270 ], does that include noninterest-bearing or that's just on new interest bearing? Michael Mettee: That's inclusive. Catherine Mealor: Okay. So that's relative to your kind of [ 2.27 ]. So your cost of new is still higher than where you are today? Michael Mettee: Right, yes. And I will say this too, Catherine, just to clarify, the days, I think, of loading up on noninterest-bearing deposits and not paying your customers a lot of interest or interest is we don't really see that as a long-term. We obviously want all the operating accounts we can, but we also want a fair value proposition. And with all these fintechs and competitive market, we don't expect our customers to be asleep at the wheel, and we're not going to try to [ kick ] them down then to zero. Christopher Holmes: That's right. And as a matter of fact, sometimes we even wake them up. intentionally and say, "Hey, you will give you a better deal." And so that -- the days of -- that's really key back books, we view that as quickly coming to an end, which changes a lot of competitive dynamics. And so just viewing our window strategically and how we're thinking about it. Catherine Mealor: And then by product type, where do you think you see the biggest growth in deposits that just interest-bearing demand? Michael Mettee: Yes. So that's a -- you've obviously been in our treasury meetings and our Pricing Committee. The -- so we saw money market decrease this quarter because what we're talking about the aggressive nature of other rate offerings. So there's probably some work to do there just to get back to equilibrium on money market. CDs, we continue to see CD renewals and new production CDs as a growth opportunity. We saw that in the back half of the year and through the quarter. We've been more in the short and long kind of a barbell approach. We're seeing a lot of competition in that middle ground, which I'll call 12 to 15 months. So CDs are an opportunity, but getting some of our money market business back is probably the biggest lever Operator: [Operator Instructions] The next question comes from Christopher Marinac with Green Capital Research. Unknown Analyst: Can you talk about of securities as another tool to grow NII? I know it's not the focus of loans and deposits as we were all talking about. But just curious if securities are a component of how you continue to grow revenue. Michael Mettee: Yes. Chris, I mean the investment portfolio is about 9% of the balance sheet total assets. And so there -- we've been as high in the past that kind of 14% range, but that really comes down to funding in a lot of cases. And so there's not a whole lot of times where I would sit around and say, hey, we have excess deposits, so -- to go and invest in the investment portfolio. We'd much rather deploy through organic growth opportunities. But that certainly is a lever to do that. We've been mainly in kind of floating rate government-backed stuff from an investment portfolio perspective, it's been a higher-yielding asset than fixed rate mortgages and things of that nature. So we'll continue to do that. It's not top of the list. We want to be organic in nature. And if we stick at 9% to 10% or even if it went down a bit and liquidity levels remained in that 11% on balance sheet liquidity range, I'd be a happy person. I mean we deploying through loan growth. Christopher Holmes: Yes. Chris, I'd just add to this, when we're looking at banks, we're valuing banks, and we see wholesale funding and sometimes the wholesale assets on the balance sheet, we quickly discount that to zero. And so when we're thinking about our own company, we don't do that as a matter of practice. We think, "Hey, to be successful and to continue to be creating value, we've got to be adding what we call customer and that can take a lot of different forms." But I'll broadly call it customer assets and customer deposits, we think that's what we do. And if we don't continue to do that well, we won't continue to be able to sit at this table. And so that doesn't mean that there are times where we -- that doesn't mean that there are times where we might leverage up for some specific reason or if we know something is coming or something leaving. We will use that leverage, but we keep a lot of dry powder there to use. We just don't typically use it for revenue growth purposes. And when we are -- and when we think about our portfolio, we don't keep a very large investment portfolio. And basically, it's simply a liquidity vehicle for us. So if you also look at it in there, it's very vanilla and liquid in terms of its marketability because, again, that fits that same philosophy we're really trying to plow it into the assets that we think really grow our shareholder value. Unknown Analyst: Understood. And then just a quick follow-up on new accounts that you're opening, as you look at it internally, do you see net new account growth? And is there sort of a general pace that you're looking for [ as ] the next several quarters and years play out? Michael Mettee: Yes. We actually have been quite successful in growing consumer accounts over the past year. It's interesting, [ yes ], we're going through some of this generational shift, adding -- I don't know what the youngest generation is now because I'm getting older. But I'm must say adding millennials is a different structure. And you got to add a lot of those accounts for one baby boomer that may be passing away or what have you. So that evolution of your accounts, you got to add a lot of smaller ones. We like that actually. We like granular deposits and granular loans. So we're all for it. It just takes a little bit more time to grow your balances. So the number of accounts has been quite good. but the balance growth comes over a significantly longer period of time than adding $400,000, $500,000 deposit accounts when they're coming in 2,000 to 3,000 chunks. So it's been positive. I'll also say, back to Catherine's question, we've seen some success in savings in our savings account product, which is probably an odd thing for people externally to hear, but it helps add that younger generation. You got a savings account, [ it's ] got a companion checking account, and it's of interest to people that are not quite yet adults, but it's worked well for families as people move into the stages of life. Christopher Holmes: Chris, I want to add one thing that we have had good success in growing accounts. And we are -- we still -- about half our deposits are retail. And so we had a lot of small balance accounts, which Michael said, we love that construction on our balance sheet and the granularity that gives us and all the things, all the positive things that go with that. One of the other things we have done, which is not easy to do, and I won't say we're perfect at it, but we feel like it gives us a leg up as -- traditionally, in banking, we counted accounts even some banks have gotten in trouble for that in terms of how they did that and how they motivate folks to do that. We're very aware of that. And so we actually go through and define a relationship. And so we actually count relationships because you can add accounts. But frankly, some of them aren't very valuable, and they're not really a relationship. And so we have moved into relationship county. And it's paying some dividends. But we think it's going to be big dividends as we roll forward. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Chris Holmes for any closing remarks. Christopher Holmes: All right. Thank you all for joining us. We always appreciate your participation and your interest. And any further questions from either anybody in the investment community or analyst community, you can reach out to us directly. Everybody, have a great day. Thanks. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.