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Operator: Good morning, and welcome to the disclosures. Before starting, I would like to remind you that once the presentation is over, and as usual, we will move on to the Q&A session. [Operator Instructions] So we're going to start with the presentation. We have Mikel Barandiaran, the CEO of Dominion; and Roberto Tobillas, the Director General; and Patricia Berjon, who's the Director for Corporate Development. Unknown Executive: Well, good morning, everybody, and many thanks for attending this call for 2025, and many thanks for being so patient, too, because we are starting somewhat later because of a technical issue. So many, many thanks, many thanks for waiting. But before talking about the figures of the year and to understand how this evolution has been in the different business areas, I think that what we should do is mention how the year 2025 has evolved and also refer to the many events that have happened at the global level that have had a direct impact on the company's evolution. And I think that compared to previous years, geopolitics has now become an ingredient that we have to take into account because we are facing a context where what is improbable has become something possible. And this global paradigmatic shift also includes other things like elections in those countries in which we have a significant presence like in Chile and the paradox that still exists in France where it's difficult to carry out structural reforms. But as regards to macroeconomic events, the most relevant ones have focused on the tariff war that was kicked off in April by the North American government and the effect that this has had for global trade. But although this has not affected the company directly, it has done so indirectly because it has affected the decision-making of some of our customers or different economic agents. And another consequence, another relevant consequence is the strong depreciation of the North American dollar, which has produced significant exchange rate differences and conversion differences in the figures of this year. And what this proves what we already observed since we presented our current strategic plan or our most recent plan, and it shows that there's more uncertainty, which is not disappearing. It's only increasing. But as regards to the strategic plan, this fiscal year of 2025 has been a year in which we have consolidated the transformation that we initiated in the previous fiscal years, and we materialized many of the objectives that we had set ourselves within the pillars of recurrence, simplification and sustainability, which are the 3 fundamental pillars of the plan. So in the year 2025, we initiated the new reporting where the businesses and environmental activities for the industry have their own strategic area structure on the Global Dominion environment. And the creation of these 2 major areas, Global Dominion Environment and the rest of the businesses under Global Dominion Tech Energy want to simplify and regroup the activities in such a way that it's easier to understand the company and also be able to value its elements. And this also means that we can work on different options to develop the strategic area of GDE, where the company has put its focus on organic and inorganic growth, which is the end result of the potential that we can see nowadays where the buildup opportunities are numerous and where the optimization of markets by geographies and activities is a fact. This process has already been addressed in the second part of 2025 with several acquisitions of companies and infrastructures, and we hope that we will add more in the short and medium term. And at the same time that we are developing greenfields in different strategic locations like the case of Tarragona and the United Arab Emirates. And finally, and as regards to the simplification process, we already made the most relevant divestitures of activities in previous fiscal years. And in the month of July, we carried out the divestment of the PV facilities we had in the Dominican Republic that has improved the balance sheet. And we also divested our activities in France where the possibilities of growth were below our objectives. And this divestment doesn't have any impact on the year's figures because this was as of December 31, but in any case, it's going to change things in 2026. But apart from the qualitative improvements, if we were to have to underscore the figures of the year, well, we are growing organically by 4% and we are doing so because both GDE as well as GDP services, in other words, the recurrent areas of the company are growing above the guidance. They're growing at levels of 6%. And this means that this year, the projects have not contributed as much as in other previous years. And we also have to underscore that the simplification of nonstrategic activities is improving our profitability. It's growing and our EBITDA over sales margin is 13.7%, which is a maximum figure for the company, a historic maximum figure. Thirdly, the depreciation of the dollar affects the balance sheet as well as our net profits and this has a one-off effect because of the correction of the divested assets in the Dominican Republic. And this one-off is EUR 18.5 million. And without that correction, our net profits would have been 10% higher compared to the figure reported in 2024. But an important thing is a strong reduction in the net financial debt, which at the end of the fiscal year is EUR 137 million, and this is 25% lower than the figure reported in '24 and 35% -- sorry, and 34% lower than the figure we saw in the first half of the year. So that means that the leverage ratio is 0.9x EBITDA. But before talking about the figures in detail, I would like to remind you that the figures for 2024 have been pro forma to be able to compare identical parameters because the divestitures are significant. And we have applied a pro forma formula. So in other words, these divestments, it's EUR 134 million and EUR 7.5 million in and EUR 5.2 million in net profits. So we are going to compare this with this figure with this pro forma figure that gives us a real snapshot of what this looks like. We've closed the year with a business figure of EUR 1,045 million, which means that an organic growth of sales of 4% with lots of inorganic growth and also growth of ForEx because ForEx has taken off 2% and inorganic growth, 11%. And although there's been a slowdown of projects whose causes that I will be describing later on in the information divided by segments. And as I said, we are growing at a very good speed over in -- especially in activities, the recurrence of GDE and GDT services and the margins are growing and EBITDA has reached a maximum figure of 13.7% of the sales, which shows that this simplification has been very handy with the divestitures of those activities that had lower margins, and we focused much more on activities and businesses that have much more profitability than are related to the environmental world. And the results of 2025, some of them stand below EBITDA, and it's important to detail this and the most important things would be a progressive reduction of financial expenses that finishes with a reduction of 8%, another EUR 2.5 million less in absolute terms. And this reduction came from the reduction of interest rates, which we expect will continue in the next quarters, motivated by 2 factors because there's been a reduction of the financial debt in our balance sheet and the normalization of the interest rates, especially in the United States, where the company also has debt denominated in dollars, interrupted operations. And well, we have the relative figures for the Cerritos wind farm and losses have been reduced by EUR 3 million compared to 2024. And this reduction is mainly due to a reduction of financial expenses associated with the funding of the wind farm and with the commissioning of it, which would generate income. And this commissioning of the wind farm was one of the necessary conditions to carry out the divestment in the infrastructure, which started in the second half of 2025. And right now, we are working on the negotiation of a PPA with different companies so that we can maximize the value of this infrastructure. And finally, this correction that has been brought about by the depreciation of the North American dollar in the assets of the Dominican Republic represent an extraordinary effect of EUR 18.5 million. So the attributable net profit is EUR 10.2 million without taking into account that one-off of EUR 18.5 million. So the figure would be EUR 28.7 million, which compared to 2024, it's a recurrent profit that is 10% higher. But let's now review -- let's review each one of the segments, each one of the business segments, starting off with Global Dominion Environment. And this segment has a turnover of EUR 472 million in the fiscal year, which is equivalent to an organic growth of 5.9%, which is nearly 6% that we mentioned before, a percentage that stands above the guidance of the strategic plan. And so this, we have to add positive in organic growth totaling 1.1% as a consequence of these acquisitions that we announced in Q3. In other words, we're talking about Ecogestion de Residuos and UREC, which is a recovery unit for water in Cartagena, which is in the area of circular economy and the German company, ZCR that operates in the area of decarbonization. But sales have had a negative impact on ForEx of about minus 3% and this area has reached a contribution margin of 10.3% of sales, which is somewhat higher compared to the figure reported in the previous fiscal year. And as mentioned on other occasions, within this area, there are different activities with very different margins. And we have those margins of circular economy that are higher than the rest. And right now, the circular economy represents 25% in the area of GDE. So as the weight of circular economy grows, the objective would be that this should reach something like 50-50, and then the margins will carry on growing. Regarding the total figures of the company, this segment, GDE accounts for 45% of our turnover and 28% of the total margin of the company. So -- and in relation to what we've already said about the strategy of the company in this area, we are working on a relevant pipeline with lots of acquisition possibilities, and we're looking for new capacities, new capabilities and a new position so that GDE can become a European reference in terms of environmental services and infrastructures. And not only that, we also have the organic development of this area, which is very significant. And I have to underscore that as regards to the circular economy, we're signing new contracts for the recovery of hydrocarbons and both in Spain and Latin America, but especially in Chile and Peru, where this activity -- where this automatic cleaning activity is a new development, and it's something that only we do and where we are consolidating our presence, and this is becoming a recurrent activity. As regards to decarbonization, we're still signing new contracts with existing and new customers. And we've signed the first thermal optimization contract in the United States. So we're opening up this market to this activity, and this has an enormous potential. Let's move on now to Global Dominion Tech Energy. And here, we explain the 2 segments, GDT Services and GDT projects. On the one hand, GDT Services closes the fiscal year with a business figure of EUR 460 million, which is organic growth of 5.8%. And this segment is what actually has the divestitures -- the divestments are focused on this segment, and they subtract 23% of the turnover, and we have to add that ForEx is subtracting 2%. So this year, anything that is related to this area is affecting us in other areas, too. And the GDT Services segment accounts for 44% of the total sales. But if we were to add this segment to GDE, we'd be talking about 90% of the company's turnover. And these segments are recurrent, as I said before. So therefore, we have achieved this objective, this recurrency objective in the plan that is exceeding 60% of our total and also 60% of the contribution margin related to recurrent activities. And these recurrent activities are the ones that have grown organically above the guidance. So this gives us lots of visibility in terms of turnover and in terms of future cash flow generation. So we have the margin -- the contribution margin in the segment that reached 19.7% over sales. And as regards to the total figure of the company, GDT Services accounts for 53% of the company's contribution margin. Finally, GDT Projects closes the fiscal year with a figure of EUR 113 million, which is 14% lower than what we reported a year ago. And as mentioned, not only in this period of time, but this behavior has to do with the temporary slowdown in the execution of projects. And this is a consequence of the situation of geopolitical uncertainty that we're facing and also because there's been a change. There's been a change of strategies in renewable projects where we do not execute anything until we incorporate a financial partner. So we want to have a greater financial discipline. So this slower rhythm of execution does not represent the loss of any projects or the collapse of any projects. So our pipeline is still strong and will eventually become income for us. And on the closing date of the fiscal year, the pipeline is EUR 413 million, which I think is well more than 2 years of project execution. The contribution margin now reaches 28.5% of sales in the year. And in Q4, the percentage has been higher, much higher than the average, and this can be explained by the reversal of some provisions because of costs that we have not incurred in a project that has already finished. So we made an adjustment and the adjustment was positive, and it's the transmission line or transport lines in Angola. As regards to the total figures of the company, GDT projects accounts for 11% over sales and 30% of the contribution margin. So once -- now that we've taken a look at the P&L, both globally and by segments, let's move on now to the main movements of the balance sheet. With regard to fixed assets, we have -- they have remained in line because this has coincided with the amortization of the CapEx of the year and also with the changes of perimeter. And there have been changes in the infrastructural assets where this reduction of nearly EUR 62 million comes from divesting in the photovoltaic assets in the Dominican Republic. The variation of the operational net circulating capital -- working capital is -- represents a net investment of EUR 250 million and there's also variation in the rate of exchange and elimination of the debt positions associated to renewable assets in the Dominican Republic. With regards to financial debt, well, it now stands at EUR 136.6 million, which means that it's a reduction of 25% compared to December of 2024 and 34% compared to the last debt figure reported in June 2025. And this reduction has been brought about by the generation of operating cash flow in the year and also because we've collected EUR 70.3 million because this operation was signed in dollars and in euros, it means that we'll be collecting EUR 70.3 million for the divestment of the wind farms in the Dominican Republic. So that means that the leverage of the company is equivalent to 0.9x EBITDA. So in other words, it's 0.9x for this fiscal year. So this generation of operating cash flow was EUR 71.7 million. So that means 5.4% higher compared to the operating cash flow that we generated in 2024. And of course, in 2024, we generated EUR 76 million in cash flow, but we have to discount a number of activities. So the figure for comparative purposes is EUR 78 million. Cash generation has been used to pay an earn-out totaling EUR 1.2 million that corresponds to the acquisition of the Gesthidro company in 2023 and also for the payment of dividends to the shareholders were EUR 50 million in July as well as the minority shareholders, EUR 1.9 million and the investment of C&O related to the divestment in the Dominican Republic and EUR 6.3 million that correspond to interrupted operations. In terms of CapEx, it has to be underscored that in addition to the EUR 20.1 million of maintenance CapEx, which is a figure that remains stable year-on-year, and we've even managed to optimize our levels, we have destined EUR 37 million to the expansion of different activities, among which we have the renting business for mobile devices, the development of renewable infrastructures and greenfields in the area of circular economy in Fujairah and in Tarragona. So as a conclusion of these results in this year, we have achieved the targets established for the fiscal year. So this is thanks to the transformation we've carried out with a very positive evolution, and we have materialized many actions that were geared towards the simplification exercise established in the plan. And we've done so within the context that is pretty turbulent too, with lots of complications. So therefore, we have reached this final year of the strategic plan with most of the changes made and decisions taken in order to carry on progressing in our focus on the environmental world through Global Dominion environment. And we also confirm that in 2026, we will be presenting a new strategic plan where we will lay down the foundations of Dominion of the future and where each strategic area will play a very important role. And before finishing, I would like to remind you that the dividend policy establishes a payment of 1/3 of the attributable net profit. But even so, the Board is going to suggest or propose to the AGM that we pay a much higher figure, much more than the EUR 3 million that would result from applying that policy. And this is so that we can preserve the remuneration to the shareholders. So we will suggest a dividend of EUR 8 million in 2026, which is equivalent to about 50% of the net profit of the continued activities, in other words, without taking into account those activities that were interrupted. And I would also like to remind you about another operation in the area of our shareholder composition, which was done about 1 month ago with the departure of Mahindra. Mahindra owned 4.16% of our shares. And the relevant thing in this case is that this figure, 4.16% has been acquired by the main company shareholders that is by the biggest shareholder we have as well as by the Chairman and the CEO by the company, therefore, increasing their possibilities. So I would like to thank you for your attention, and we can now move on to your questions. So you can either write them in or you can raise your hand on the screen -- zoom screen. Thank you very much for your attention. Unknown Executive: Okay. Well, let's start off with the questions then. [Operator Instructions] So let's start off with the Q&A session and give the floor to the people that have raised their hand. And please make sure that microphone is muted. Firstly, we have Carlos Javier Trevino from Group of Santander. Carlos Javier Treviño Peinador: I've got a couple of questions. Could you please give us an indication of the levels of growth that you expect for 2026? And could you perhaps give us some reference divided by businesses? That would be very grateful. And the second question is when do you think that growth in project can be reactivated because the 2 quarters have been pretty weak. And I would like to ask you specifically about the situation of the construction of the wind farms in Italy. When you signed an agreement in January last year, you spoke about 2 wind farms that would be built towards the middle of the year. And I want to ask you about that. And then could you please explain the reclassification that you've done with GDT services? And what kind of contracts have you got there? Could you please explain the nature of what's happened there? Unknown Executive: Yes, as regards to the growth guidance for 2026, we are continuing with the current strategic plan. And therefore, we have to be over and above that figure of 5%. And that's what we have in our forecast, too. So we have to grow above that figure of 5%. And then you were asking about the issue of wind farms in Italy. Well, the first 4 projects that we had, we had an agreement with the partner. Well, these are already underway. And we're now seeing what kind of new project we could do. We think that it could be another 4 or 5 projects that could be incorporated once again with this partner with IPT. We'd carry out another search. But in any case, so that we can build these projects based on the fact that we have already identified the majority buyer from 70% to 80% up to 100% even, and this is what we have in Italy. And then -- as regards to the reclassification issue, well, that's a very minor issue. Well, yes, it's -- let's say, that this has to do with the quarterly aspect because this is something that I think that you do perfectly well because we have an activity in which we provide logistics services and these logistics services have to be recognized as an income based on added value. And this doesn't have to do with the logistics business, but it has to do with the added value associated with our logistics services. And in this regard, we've had some accounting entries that came from previous quarters that we've had to reclassify and adjust. But in any case, this is an accounting system. Well, as you can see, the figure for the year is the same one, but it's basically a focus between the third and the fourth quarters. Carlos Javier Treviño Peinador: And when do you think that project growth can be reactivated? And when do you think you'll be going back to normal rates again, normal rates of growth? Unknown Executive: Well, Carlos, the truth is it's very difficult to forecast anything because they are currently involved in public tenders. And you know that these projects are binary. But this year, we have good expectations. And I think that we'll be carrying out a project in Chile. And I think that green after divesting in the Dominican Republic will produce the development of new projects in Latin America. Yes, I would say, in the Dominican Republic, where we've identified the partner, and it's basically the 2 main pension plans of the company -- of the country, and we have the right partner. We have the projects. So well, the -- there was -- 7 or 10 days ago, there was a PV tendering process with storage and we expected this for August or September last year, but this has been postponed 5 or 6 months. And the process -- well, towards the end of April, that's when we'll know what's going on. I think that the prospects are very good, and we will have a very significant reactivation as from the second or third quarter in relation to Dominican projects. We -- in Italy, as I say, business as usual. And in Spain, we have some differences that to the extent that they can become self-consumption things, we could have a minor pipeline too to construct and to execute. Unknown Executive: Let's give the floor to David Lopez from [ JB ] Capital. David Sanchez: I have a question on the growth CapEx because this year, you've invested EUR 37 million in expansion CapEx. But could you please give me some more details on what activities are involved? And especially the level of recurrence, what level of investment or expansion should we consider for 2026 because the levels for this year, the levels were very similar compared to what we saw in 2024. Unknown Executive: Well, yes, in that growth figure or CapEx figure, we have the CapEx that is related to the renting of mobile devices, and that would be well just over 1/3 of that total CapEx of EUR 37 million. And then we have the developments that are taking place in the area of renewables. We have developments in Italy, in the Dominican Republic and which, as you know, we've invested part in that development so that we can then allow our partners to join and then carry out the conversion of the EPC where you allocate much more capital. And we do this in the minority manner by -- well, by the arrival of the partner, we've recovered most of what we spent on developments. And then we have what we have invested in the greenfields in the GDE greenfield in the area of circular economy. And we'd be talking right now about something like, well, in Tarragona, where we've invested in the purchase of land in Fujairah, where we are also going to create a MARPOL plant. In other words, a circular economy facility, whatever is for MARPOL. It has to do with sea pollution. So this is going to focus on the circular economy applicable to polluted water, seawater. And these are the 3 chapters that is devices, renewables and GDE. David Sanchez: And what about 2026? What level of CapEx and expansion should we consider? Unknown Executive: Well, I think that lower as regards to the development of renewables because they are much more mature. And then what we are starting to see now are greenfields that have been better identified in the case of GDE. So I don't know. I think that perhaps and perhaps with a different kind of distribution, we'd be able to reach those levels, although it's very difficult to forecast anything like that straight of the cup. So yes, but as Robert said, it will be a different kind of distribution where GDE would be more present. Unknown Executive: Okay. We're now going to review the questions that have to be answered from the chat. And if you want to send in any more questions, it would be the time to do so before finishing. Let's start off with Luis Padron. He's already asked several things. But anyway, when do we expect to present the new strategic plan? That would be the first one. Why are we reducing the dividend when there's a significant improvement of our debt? And the final one is that would you be considering a buyback of shares. And that's why the dividend has been reduced. Unknown Executive: Well, as regards to the presentation of the strategic plan in the second half of the year, well, after the summer, we'll give you the specific date, we would like to present that on the Capital Markets Day, which is when we'll be able to analyze the different issues in greater depth. And then as regards to the dividend, as you point out quite rightly, I think that there's an issue here, like Patricia pointed out, that has to do with net profits without bearing in mind the interrupted operations, we've increased this up to 50%. And compared to previous year, previous years, cash generation has been significant and the levels of net debt have been reduced, and we're comfortable underneath 1x EBITDA. But I think that on our road map, we have attractive investment ideas. And as Patricia pointed out, we've tried to compensate things. And we've tried to be adequately reasonable in our remuneration to the shareholder, although we know that there are internal projects that will generate value -- more value for the shareholder. Yes. Well, this is linked to an aggressive investment plan. And then we have the issue of the buyback, the buyback of shares. Well, this is also something that is being dropped into. It's an issue that we would analyze under the new strategic plan as from this year. Unknown Executive: Let's move on to the questions from David [indiscernible] from Scotiabank. And both of them are asking us about GDE. So there are questions on Q4 in 2025 with a business figure of EUR 140 million and contribution margin of EUR 8.9 million, which represents 6.4%, which is much lower than previously reported figures. And why has there been this slump in the margin over sales? Unknown Executive: Well, this always happens to us in the most individualized part of GDE and Q2, Q3, well, these are much more powerful in the Central Europe or East Europe. But this is part of the company that we are individualizing and which -- what happens is that in December, when they achieve 100% of what they've committed to, we become a little bit more relaxed, but this doesn't really mean anything else. There's no really no significant element here to be considered. Unknown Executive: There are several questions here on Cerritos. So we're going to group them up. Okay. [ David ] from [ Destino Fortunato ] is asking if the situation in Mexico is affecting the negotiations for the sale of Cerritos. And then Diego Martinez and [ Ignacio Joaquin Andreu ] are asking us about our forecast for the net debt once Cerritos has been sold. Unknown Executive: Well, I'd say this is something that we mentioned with Cerritos. And Cerritos 2, 3 years ago became a problem because of the policies that were in place. It's no longer an issue. Now I don't know if this is going to be done on April 1 or May 1. But as you know, this is a project that is rated as an operation available for sale. So the value is about $100 million with a debt of about $85 million or $90 million because this is in euros. And we believe that the net asset value is properly reflected, and we're also actively working to round off the value of the project and defend its worth with an interesting PPA, something bankable, something that can be much more attractive for sale purposes and the sale for it to be operational. We -- well, we are going to -- we're now talking about 3 or 4 main leaders with whom we are negotiating things. and 3 or 4 bidders. And I think that this is a project that will become liquid. It's going to become liquidity, and we're now focusing a little bit on the details of if we can or cannot recover the accounting value or the book value, and that's what we're really focusing on. And I can't really say much more about Cerritos. Unknown Executive: Let's move on to the last questions from Ruben Alonso. But I would like to remind you if you have any further questions, this will be the time to send them in before we finish. Unknown Executive: Okay. Ruben, we've got 3 or 4 extensive questions. And the net asset value, well, we reaffirm what we have in our books because I think that there's an amount there for infrastructure that we will recover in the next 2 or 3 years. In other words, 20% of the Dominican Republic, we expect to recover this in 3 years. And we are also looking into if we have to perform any operations, as you point out, with the rest of renewable assets, because the idea is to focus completely on this rotation strategy that we initiated in the year '23. So this is what we can see. Although, obviously, together with the operating cash flow and according to the amount we would obtain in these recent divestments, I think that what we would really focus on is a company with 0 debt or 0 cash. And of course, it's very difficult because we're working on a new strategic plan, which I think is what Patricia mentioned and what the CEO said too. And we are focusing a lot on the greenfields and organic growth in the area of the environment where we have a number of interesting ideas that have to be carried out in the next few months, and it's very difficult right now to give you a debt and generation guidance. But we feel comfortable with 1x EBITDA. And I think we said that in the call of the third quarter, we said that we had an EBITDA of 1x. And I think what I'm missing is the debt that we had committed. But in any case, the important thing is that we have the basic elements to relaunch in this simplification strategy, the Dominion that we want to see in the future. Yes. And I think that I've answered practically everything with that comment. Unknown Executive: We have one final question from Luis Padron from GVC. What profitability do you expect from the aggressive investment plan of GDE? Is it possible to have a buyback of shares? Unknown Executive: Well, yes, of course, because we have an ambitious plan, and we have the right people, the right team for that. And we are now -- well, it's like when we were listed in 2017 and the segment -- the sector was highly segmented. And we wanted to achieve a lot of growth inorganic and organic growth. But as regards to this part of the plan, we are going to be aggressive. So in other words, the GDE figures of the last 3 years have multiplied EBITDA by 2, and the EBIT is 2.7x. We think that there are lots of very interesting opportunities on the table. And this is where we believe that it's worthwhile getting something done. So we will obviously remunerate the shareholder, but we think that here that there is -- I don't know, there is the possibility of generating a significant amount of value. Well, yes. And considering that we are in the year 10 since we were listed, we were first listed in 2016, and we reached the market -- we reached the market with a promise of EUR 43 million in EBITDA. It was EUR 150 million plus the green through. And all of that capital expansion via dividend and buyback has gone back to the shareholder. In others, we've given back to the shareholder much more than we initially predicted in 2016. But now we have another plan, which is a very aggressive plan, as Robert has just put it out in GDT, we will have lots of organic growth and very good performance. It's a very good business that we dominate and we are doing things even better, and it's very diversified, too. And the truth is that we're very happy with it. And GDE is a very ambitious project, and we expect to receive some very important news in the next few years. And that's what we're currently working on, and this is what our strategic plan is also focusing on, too. Unknown Executive: There are no more questions. So we will close the presentation here. Thank you all for listening. Thank you. Unknown Executive: Thank you very much. Goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Johan Svanstrom: All right. Now we officially start. So good morning, and welcome to the presentation of Rightmove's Results for 2025. I'm joined today by Rory Hook, our CFO, sitting here, who'll be here in a second. First, a couple of takeaways. Our 2025 performance showed strong continued delivery in a competitive market, and we will step up the pace further in '26. We continue to deliver compelling value from and across our platform to both core and other partners. We have a very strong position with consumers, partners and our data. And with our AI capability, we're enhancing all of that even further. We continue to deliver our proposition. We're executing our strategy. We're excited about all future opportunities to further digitize the U.K. property sector. Now we delivered some really strong KPIs for last year. Revenue growth of 9% was supported by ARPA and membership increases in the core business as well as contribution from growth in our strategic growth areas. Underlying operating profit growth of 9% reflects our revenue growth and ongoing investments in people, technology and product delivery. Underlying EPS grew by 11%, and we increased capital returned by 21%. And finally, time on site at 16.8 billion minutes was the second highest on record, only beaten by the COVID exceptional burst in '21. Said differently, the equivalent of 32,000 years of time was spent on Rightmove platform last year. We made some strong operational progress as well right across the platform last year. So from the left, over 85% of that large audience came through direct and organic traffic and we grew our app users by strong 11%. We continue to evolve to meet consumers wherever they are and we doubled their engagement numbers in social media channels. We saw a strong penetration of our top packages in Estate Agency and New Homes as well as a very fast start for our latest and market unique Estate Agency own product, Online Agent Valuation. Our Agency retention was the second highest in over 10 years, and third-party surveys showed record positive sentiment scores for Rightmove. We continued our strategic and operational progress and growth in the strategic growth areas. And all of this was delivered through Rightmove's platform and leading data. We did over 6,000 tech releases. And after a multiyear build, we now have 31 live strategic AI projects at year-end. It's an increase of 4 on our November update, and we tripled the number of data models used to process our proprietary data in the platform. This strong stance is down to purposeful work and investments over the most recent years and has a strong trajectory for future product delivery. And finally, on people, we have a world-class, engaged and energized team. 89% of our team described Rightmove as a great place to work. So my sincere thanks to all hard and smart working Rightmovers for delivering our results of last year. It is a competitive market out there, but our position is stable and it's strong. And that's because we keep delivering great value for both consumers and partners. We remain the leading place for consumers looking to make a move in U.K. property. And while facing various competitive dynamics, over time, we have, for years, averaged over 70% share of portal time on similar web and over 80% on Comscore. In December '25, we were at 75% and 89%, respectively. And that love and trust from consumers drives frequency, leads and, of course, a lot of data signals. And those enable us to drive strong outcomes and value for our over 19,000 U.K. estate agents and New Homes partners. Now I want to touch on that value point a bit. We operate in a competitive market, and we always gauge how we can do even better. So we commissioned third-party surveys quarterly with over 1,600 independent agents contributing responses. The top left chart here shows that the total positive sentiment scores from those surveys. These are -- there are 2 big takeaways. One, just in absolute terms, we've seen a positive trend and a new record high actually by the end of last year. Market conditions and general sentiment out there often impact survey responses. So in the context of the weaker Q4 in the property market through the U.K. budget hesitance, that's actually an excellent result. And two, in relative terms, you can see a 1.7x differential between Rightmove and the main portal competitors. Now we ask for feedback at branch frontline, branch management level and company management levels, and we also go deep on several subcategories. You can see that we lead across subcategories across business results, value and inclusive services at the bottom of this chart. So we rate really well in what's a competitive market, yet we, of course, always look for opportunities to improve and for all partners. Part of the value and those strong scores come from our Building Success Together program, which we launched in early 2024. We invest resource in supporting our partners' business objectives. We also help them to understand what happens in the market and where Rightmove can bring. And as noted top right, this comes in many forms and at true scale. Dedicated account management in the field, our Rightmove Plus and Rightmove Hub tools, which are both available to all partners regardless of package levels. We're sponsoring and collaborating with several leading industry organizations across the Estate Agency, New Homes and Rental operators. We continue to invest in and progress these 2. Rightmove Plus, as an example, is the business management tool for partners. Last year alone, had new features and enhancements introduced over 25x. And our partners' engagement value from Rightmove Plus is clear, 28 million sessions recorded in the year. So in summary, we deliver Rightmove outcomes and value from a broad range of solutions, packages, products, data, insight, training, dedicated servicing through our account management and support teams and we measure these results. Now let's move to the property end markets for a bit. Within sales, top left here, it was really a year or 2 halves. H1 was strong, building on 2024 and with successive Bank of England rate cuts. H2 was weaker year-on-year due to the fears around the late autumn budget. If you take them together, 2025 as a whole, so 10% more completions versus '24, and that was in line with long-term averages. Looking at the year ahead, top right, there's been a clear post-budget bounce back in available stock, which is now at a 10-year high. This has caused slower price growth, which is, of course, supportive for buyers in the market. Now these elevated levels of resale stock is less helpful for New Homes developers. So on the bottom right here shows New Homes as a proportion of total for sale stock on our site. And with approved planning applications at an all-time low, we don't expect a material recovery of the development numbers in the market in H1 this year. With the rentals, bottom left, increased supply and reduced demand continues to improve the more extreme imbalance seen in previous years and which we have talked about. So the 2025 average of 10 inquires per available property is still above the pre-COVID average of 6 to 7 though. And of course, all these segments, of course, mortgage rates is a key driver, and it continues on a steady downward trajectory. At the 31st of January, the average 5-year fixed rate was 4.35%, that's 55 bps lower than a year earlier, and that's per Rightmove's daily mortgage tracker. So with that, let me pass over to Rory for more detail on our financials. Ruaridh Hook: Thank you, Johan. Good morning, everyone. I'm delighted to present our financial results for 2025. Overall revenue grew 9% compared to 2024 with strong growth across the business. Starting with Agency, Row 1 in the table, revenues increased by 9% to GBP 305 million. If you look at the chart on the right, the light blue bars showed that this growth was driven primarily by ARPA-led games, which continue to be mainly discretionary. An additional contribution of GBP 6 million came from increased Agency membership numbers. And moving down the table to New Homes, revenues here also rose 9% to GBP 75 million. This was in spite of continued headwinds in the New Homes end market with new builds coming to the market remaining subdued. You can see the impact of this in the chart with the dark green showing revenue growth contribution of less than GBP 1 million from higher average membership increasing by 1%. The ARPA growth contribution remained strong, contributing GBP 5 million. At the bottom of the table, our strategic growth areas delivered another strong performance. Revenue increased by GBP 5.7 million, up 25% to GBP 29.1 million. Commercial revenues grew 13% to GBP 15.3 million as we continue to focus on customer acquisition with membership increasing 29% year-on-year. Mortgages revenue was up almost 50% to GBP 6.8 million. This was weighted towards the first half of the year, mainly reflecting the timing of interest rate changes and hesitancy in the property market around the budget, impacting activity in H2. Rental Services made up of our Lead to Keys product, referencing ancillary services, saw revenues up 35%, driven by strong growth across the Lead to Keys product. For completeness, the non-SG&A parts of other revenues being data services, overseas and third-party advertising grew 2% year-on-year. Revenues outside the core represented 11% of group revenue, up from 10% last year. Compared to December 2024 across Agency and New Homes, membership increased by 225, up 1% to 19,272. This increase was due to growth in Agency membership, which increased by 261, up 2% on December 2024. This was due to high Agency retention of 90%, continued growth in Agent formation as well as current partners opening new branches. Within New Homes, we saw a year-on-year decline of 36 developments, down 1% at year-end. You can see in the bottom right chart, a decrease of traditional developments in orange of 113, offset by an increase in housing associations in teal of 77. New developments coming on site remain low. We are not seeing a pickup in build rates and have seen traditional developments fall to their lowest level since January 2018. We do not see this changing in H1, but continue to be optimistic that developers will be encouraged to build more by H2 and in future years. Overall ARPA increased by GBP 97 to GBP 1,621. 60% of ARPA growth was product-led with similar percentage in both Agency and New Homes as our partners chose to upgrade or purchase incremental product. The remaining 40% of ARPA growth came from contract renewals, which all proceeded as expected. Given partner engagement with our strong suite of value-adding products, we expect a similar split this year. In terms of product ARPA growth, we saw upgrades in Agency come from multiple sources, ranging from upgrades through the package ladder from lower threshold packages to new joiners joining straight into the top package. You can see this in the pie chart for Optimiser Edge joiners in the middle of this slide. The migration of the old top package, Optimiser 2020, has gone well and will be fully retired by H1. Joiners in New Homes to the advanced package, shown top right, similarly came from upgrades and new joiners. We had a new top package, Ascend, launched in May with 818, 28% of developments live at the end of the year. We expect a similar split of upgrades going straight into this top package, but flagged that the advanced package remains highly attractive, especially for smaller developers. So expect to still see good inbound into advance next year. Taking these 2 pie charts together, you can see that key for both New Homes and Agency is that we do not rely on a single source of joiners to the top package and expect penetration to continue to increase in both. The other driver of ARPA growth comes from incremental product purchase. You can see from the charts at the bottom for both Estate Agency and New Homes. ARPA increases at the initial upgrade in month 1. This is the column marked upgrade. Then we see ARPA increase across the first year and the second year. In both Estate Agency and New Homes, you can see that ARPA keeps growing far past the initial upgrade. This happens as partners choose to purchase more of the same products or add additional products to their package mix. We have shown the previous top package in Agency Optimiser 2020 and in New Homes Advance to illustrate how we have seen this before. And that the initial months of the new top packages in both Agency and New Homes are performing as we expect and have seen previously. We know that continuing to provide great value and superior outcomes to our partners through continually evolving and new products sees them choose to engage further. Also, at the end of last year, we added online agent valuation exclusive to optimize our Edge partners and with an average price of GBP 170, providing both another reason to upgrade to the top package and also encouraging existing partners to increase their current product spend. Moving on to costs. Underlying operating costs increased by GBP 11 million year-on-year, resulting in a 70% underlying margin as we invested with discipline and within our cost framework. The main driver of costs remains our investment in people, up GBP 4.6 million or 7%. The other main cost component was our continued investment across technology with an increase of GBP 4 million. In the year, there was GBP 9 million of internal labor capitalization with total CapEx at GBP 10 million. As guided in November, we expect to see an increase in labor capitalization in 2026 with total CapEx to be around GBP 16 million, less than 4% of revenue. In 2026, we will see investment as outlined last November, which will mainly be in people. We anticipate over 100 joining before the end of the year in roles across data, product and engineering. A few of these roles will be through our new flexible resource provider, which will provide us with the flexibility of headcount over the investment phase. Other material increase in cost will be the AI-powered operations area with work on the back office initial phase already commencing. All in, post capitalization, this incremental investment is expected to total around GBP 12 million in 2026 as guided in November. We remain highly cash generative with a cash conversion ratio of 107% of operating profit. As we continue to grow the strong cash generation of our business, this leaves us well placed to return surplus cash to shareholders. This year, a total of GBP 220 million was returned to shareholders, GBP 141 million via share buybacks and GBP 79 million via dividends, an increase of 21% year-on-year. We reduced our share count by 2%, meaning over 40% of issued shares have now been repurchased and returned 6% of our year-end market capitalization in the year. This morning, we announced a final dividend of 6.59p, bringing the total dividend to 10.64p. There will also be a share buyback program of GBP 90 million until the 31st of July. This will be funded by the growth in earnings, but also reducing cash reserves from December's GBP 43 million to around GBP 20 million by half year, which we see as sufficient to manage the working capital of the business going forward. Our capital allocation policy remains prioritize investment in the business, evaluate value-accretive M&A and return all surplus cash to shareholders via a progressive dividend linked to earnings and buyback thereafter. Turning to financial guidance. This remains the same as set out in November. Looking at the right hand of this slide, revenue growth in 2026 will be between 8% and 10%. We expect H1 growth to be lower than the full year 2026 growth with a higher growth percentage in H2. This is due to the high comparator in H1 last year, particularly in Mortgages, which saw significant activity in H1 2025 due to the stamp duty changes and falling interest rates. And in New Homes due to the full year impact of 36 developments, fewer developments, contributing a negative revenue comparator of around GBP 1.5 million. For Core, we anticipate that membership will grow around 1% and we lifted ARPA growth to between GBP 110 to GBP 120. At an overall level, for the SGAs, we anticipate growth to be around 20% to 30% range. Underlying operating profit will grow by 3% to 5%, resulting in an underlying operating margin no lower than 67%. With no change to our longer-term target set out in November, we anticipate underlying operating profit growth in later years to be at similar levels to revenue growth as we still see no reason for a margin lower than 67%. That concludes the financials. I'll now hand you back to Johan. Johan Svanstrom: All right. Thank you, Rory. So our investment case outlined here will be familiar to most and this summarizes our approach to value creation at Rightmove. On the left, Rightmove has exceptionally strong foundations. We have established a differentiated leading platform at the heart of the U.K.'s large and structurally growing property market. The platform is digital, low-cost, capital-light, driving higher returns on capital. The subscription-based B2B model has a proven ability to deliver and generate value in all market conditions. Moving to the middle of the diagram. We're using powerful data and profound network effects to deliver that value to all stakeholders. And with it, we're executing an expanded growth strategy with targeted investment and delivering data and AI-backed product innovation and that is done through a high-caliber and very energized team. We're entering now our 27th year with confidence to deliver a larger, diversified, yet very connected Rightmove platform. All said, this will continue to deliver compelling financial outcomes. Now our strategy is to develop the leading digital ecosystem for the whole moving experience, powered by exceptional data and network effects. And our people, data and platform really are the foundations and strong differentiators for the 3 business pillars of Core Partner, Consumer and New Growth. The property market is a huge economic activity, and we think there's a long runway to deliver more digital value and grow our business. And that, of course, includes the use of AI. Now there's been a lot of debate who the winners and losers might be, both for classifieds and more recently across a range of industries, really. So I want to talk to property classified specifically. In my view, there are really 4 components you need to win to compete effectively also in an AI world, consumers, partners, data and AI capability. We're really well positioned across all of these. We were well positioned before gen AI, and we will be with the next generations of AI as well. And here's why. We're a technology company. We built up market leadership through deep knowledge, digital leadership and deep layers of servicing our industry in the first 3 of these 4 components and that's been done over 25 years and at an increasing pace. We keep doing that day in, day out, improving all the time. The numbers are leading and they're deep. Now the most recent components of these 4 is, of course, AI capability. AI models and tools, they're fast developing, it's dynamic and they're not fully defined yet. Here's the thing, though. Anybody can get a hold of AI capability. It's an enabling technology that you can buy, skills you can hire and that you can learn to operate. We've done exactly that and for several years already. So what Rightmove has? It's a very, very solid performance and performance platform and business model. It's creating the fundamental attributes that are mentioned here, important to any business success. And in turn, they all boil down to 2 things, which, again, deliver true business results and sustained leadership, trust and vertical innovation. Now we obviously thought a lot about this. In our view, in the case of property classifieds is that LLMs or start-ups running on LLMs are missing or are quite far away on 3 of these 4 components that matters so much in this particular vertical. ChatGPT has been around now for 3 years, yet referral traffic to us is still under 0.5%. And actually, their U.K. app downloads and traffic has leveled off in the last 5 or so months. But more so, I don't think they or other horizontal LLMs can or want to service our vertical as deeply and focused as we and others do, nor to innovate as relentlessly and deep in the specialty of it. Now I'll be very open-eyed and give the large LLMs the upper hand of AI capability and AI innovation overall. But remember, again, they actually enable and sell that capability to buyers like ourselves. So as we add this AI capability to Rightmove, we combine it with the first 3 components that we already have and that are so strong. We're in the best place of anybody to innovate and service this vertical in new and even better ways. I'm actually going to go and cover these 4 components in a bit more detail because it's so important and so topical. Let's start with consumer and partner. You're familiar with network effects and how they're part of a great business like Rightmove and how we invest in them. But I think it's very important to understand that in case of home exchanges, there are 3 special aspects of these network effects, which make them even stronger for property classifieds and certainly in the U.K. So first, in the middle, property transactions, they're high value, highly personal, take a particularly long time in this country and they're very often done in joint deliberation with another person. There's also an incredible amount of browsing done on properties because of 2 things: homes, they're fun to dream of or to be inspired by; and also becomes -- because finding the right one and really deciding when it's time to move is such a serious and important life decision that comes at a high price. So the habit loops are therefore massive. This is very different from a number of B2C categories like e-commerce or research of different kinds, where AI or agents can provide an alternative and shortcut path. And secondly, to the left here, the same consumer actually plays multiple roles, to consider the 4 key roles who use Rightmove and their multiple use. Very often, a buyer is also a seller, and the seller is also a buyer. In the same chain of events or at different points in life. There are 2.5 million private landlords in the U.K. renting to tenants. And those landlords, of course, themselves live and move. There are parents who help their kids with a rental or a first-time purchase, while they themselves might be downsizing or buying a second home. So here's the point. The individual gets value from the same property platform for many different needs. They've seen it in the past. They know what the quality is and they are being in different roles. So the platform is trusted. It's specialized. It has all these different audience roles. So in a way, this forms like a consumer side, individualized network effect in itself, not just across to the other side of the platform. And again, that's very different to, for example, e-commerce and other verticals where the consumer might only be a buyer. And thirdly, of course, in the U.K. property vertical, there's a diverse nature of our partner base, the Estate Agents, New Homes developments, developers, rental operators, commercial and smaller niches. And even in a single branch, an Estate Agency, you can have sales, lettings, commercial, potential financial services, a business owner and branch staff. The U.K. partner is very fragmented and with low barriers to entry. There are many, many different roles that benefit from being on the platform. Agents are local property experts and they can access a highly effective audience platform and with a lot of services included to power their business goals. So in our view, when you combine these 3 points, property complexity, consumer multiuse and agent diversity, you realize that the trusted and vertically specialized UX of the portal will not be replaced by generic or horizontal AI interfaces. Now let's talk about the fourth component, AI capability. We've been building a great tech and data AI capability for a few years now as we reported on several times since 2023. And the simplified, and I know it's simplified tech stack view on the left here, outlines how our Core platform is built on Google Cloud with logically connected enterprise tools like Big Query, Looker, Model Armor, Vertex AI and so forth and is running AI models from Google, like Gemini, Nano Banana and so forth. Now we have a close strategic and product team collaboration also with Google. And we are actually working together, and we have a good view on what's coming in the future. Now we have orchestrated the platform, the stack, the pipelines to nevertheless be flexible, performant and trustworthy. So we have relationships with and we also use Microsoft, OpenAI, Anthropic and a host of smaller solutions. Some of those smaller ones are pure-play AI, some of the more AI-enabled existing software. Our data science team, they can build and connect proprietary Rightmove data models or external models or a combination of them. In November, we showed you one example of the proprietary model and how it uplifts the results, something that is only possible for us because we're in the stack. At the end, the stack enables us to deliver more value and differentiated outcomes for partners and consumers and, of course, gain operational leverage and productivity for ourselves. The 31 strategic initiatives plus a whole host of many more AI tests across the business today will soon be less of a number counting exercise and rather it's going to be completely infused in an organic way of operating. We're perfectly set up to leverage AI capabilities. Now I'll come back to very crucial component, data. We estimate that over 90% of our data is proprietary. It's also interconnected and we leverage it with human expertise and usage in mind. This data is not available anywhere else and it keeps compounding inside our ecosystem. We've shown you many examples of large data sets in the past. Here, just outlining a few examples, but to illustrate how unique and valuable this data is. For property, as an example, we have over 28 million unique properties on our Rightmove optimized UPRN address framework. And someone might say, "Well, that's all scrabble, isn't it?" Fact is that over 50% of the metadata underpinning a Rightmove listing is not scrapable from the face of our site. And for partners, we have, for example, built 57,000 defined geographic agent patches. We dynamically optimize them with our data and also with input and tailoring from our partner agents. That drive unique insights, products and great outcomes. For consumers, for example, again, the 69 billion first-party signals, they don't only provide that strong habit loop that I mentioned before, but they, of course, convert to outcomes through moving auction strength of buyers and sellers. Again, they also drive unique products, insights and recommendations and provide fodder for what we develop next. And the real magic and protection is how those and many more data points are interconnected in the platform. There are a few more examples in the middle, the data compounds and the fortifies. And finally, in the third column, but not to be forgotten, we overlay our human expertise to enrich this data being completely vertically focused. We also make sure it delivers real outcomes and value for humans that is using the data. All said, we hold the living map of U.K. property moving. The value is not in AI itself. It's what AI can deliver when it sits on the best property data in the U.K. So to sum it all up, we combine these 4 components. What we have is one connected ecosystem already powered by data and it's enhanced by AI. All right. So over to some of the concrete product delivery that drove the 2025 results and a bit of a glimpse towards '26 and onwards as well. We increased the pace of delivery in '25 with only a few of the features illustrated here. And I'm going to talk to the renters checklist on the left. It's an important example because it's part of our rental market solutions to digitally enable more of the moving journey. We've seen some strong growth metrics in 2025. A few of them are noted here. And with this renters checklist for consumers, we put all the tenancy admin in one place on My Rightmove, seamlessly integrating it with things like open banking and verifications and what to do next. The average user revisited their checklist 8 times. The information is stored in their Rightmove account, so it can be reused. That, of course, builds a lifetime value opportunity for us. And like many other products, this product also helps the other side of the platform, in this case, lettings agencies. They benefit from operational efficiency through the enhanced leads and seamlessly have those in their CRM. Now they can also operate the entire flow digitally in the Rightmove Plus environment from referencing deposits and many more things, all the way to contracts. A quick step back to the outline from November of how we're accelerating the consumer demand going forward. Number one is that we are adding and enhancing ways of searching. Number two is that we're accelerating our services in a consumer home-moving journey, what we call Beyond Find (sic) [ Go beyond Find ]. And here, I've got 2 examples of what we're working on. The Move Journey Assistant set up for sales and the expansion of My Rightmove into My Home, a full-service hub for homeowners. Now across the consumer domain, we have around 25 key releases or so planned for 2026. And for context, that's more than the entire platform consumer and partner sites together delivered in 2023. Now I want to expand a bit on conversational search, no surprise, which we launched only a few weeks ago to a limited amount of traffic. So here's just a demo of what it looks like. I'm going to talk over while you follow this. So this experience and features built through our partnership with Google Cloud it's using Gemini models. It's trained on and interrogates our listings, text and images and we use over 1 billion proprietary image database and many attributes that goes into the listings. As of today, it links straight into listings on the main site. And we'll evolve this tool led by the data that we see and our design expertise and we're going to make sure that we deliver a high-quality experience. Data so far from thousands of conversations tells us that users seem to have a pretty good idea of what they're looking for. They continue to explore and engage with tools in the main flow of listings and on the site. And so far, those who engage with conversational search are almost 3x more likely to send a lead versus the control group. Overall, feedback has been very positive. Now I want to consider a little bit the conversational assistance in searching a bit more strategically. Now first, on the left here, this is really, in many ways, it's just a continuum of changes. However, you discover, we have you covered, right? So we're entering another search modality or paradigm for consumers, and our position is the same as it has been with previous changes. Discovery is key, right? The classic behavior of visual scrolling and comparing properties, I believe, will always be there. But longer term, I also think this holds a real amplification opportunity for Rightmove. Conversational search will enable hyper-personalization and new utility for consumers on our platform that I couldn't get before. So AI assistance will be useful up and down the funnel and seamlessly provide complementary information along a complex moving journey on the platform. This will drive 2 things: higher platform engagement; and substantially more intent and behavioral data signals. And we can convert that data signal to increased value and targeting for Core partners and for diversified revenue opportunities, just like we have done in the past. Now we have already started a few years back to build many more of these consumer features with exactly that in mind. And you can see some of this in the graph and in the table metrics here. Impressive growth, and a lot of that comes from well-defined features and, of course, the scale of the audience and traffic that we can apply them to. Every feature we built is research and data-backed. It brings utility, frequency and data to us on an ongoing basis. And with it, as noted right here, we create enhanced partner value and, of course, revenue opportunity for Rightmove. Some of these improve or enable new products for Core partners. For example, the enhanced lease to lettings agents with the appointment bookings with the New Homes Ascend package. Others are monetized separate through commercial relationships that we have, like, for example, mortgages or ancillary lettings products. And here's the thing, as we scale and compound this data, we just increased the revenue and profit opportunities. Now over to the partner side. We released significantly more product and optimization source of partners in '25. A few key ones are set out in this slide. And I want to highlight online agent valuation on the left, as Rory mentioned before. It's soft launched in the fall and it's off to a great start. This tool works on both sides of the platform. It enables consumers to receive a digital valuation estimate from an Estate Agency with a quick turnaround and it's an opportunity for agents to start a new online relationship with a potential vendor through our platform. It leverages and reinforces our existing valuation domain on various tools, slotting in very logically with instant valuation, local valuation alerts, best price and premium price guides and so forth. And agents, in this case, can also choose to use an AI tool to support the responses in OAV. And for those that do, we have seen so far in the data that the response times are 16% faster on average, and the cohort actually books 20% more visits. So OAV, I think, is a good example of where AI is an enhancer of an already great digital product with real value. But AI is not the entire product itself. Finally, with OAV, Rightmove's platform also gets more data signals through up-to-date photos and property attributes supplied by the consumer. And this is before the property becomes a listing gets put on the market. That, of course, can feed into our AVM, which is a business line on its own and also powers many other things internally that we can build on for the future. Both '25 and '26 show how we are developing across several product lines and segments much more in parallel than in the past. And with AI bringing more efficiency and marketing opportunity to partners. Moving on from Core to the strategic growth areas. These grew, as you heard from Rory, by 25% as a group and that's close to 3x the Core growth rate. Operationally, we've taken some great strides forward in the year. For commercial, we added 275 new members to the platform. This year, we will launch our new search pages. And at that point, every aspect of the user web journey will have been completely overhauled to commercial-first experience. We'll also be launching our first chargeable product in the segment during the year. In Rental Services, revenues grew by 35%. And as we set out in November, we started to roll out the upfront modules of inquiry manager and enhanced leads to dual agents within their Core subscription. It's a process that is ongoing over '26. This is an exciting market penetration step-up. It brings efficiency to agents, to landlords and to tenant applicants and it's a true market scale. And in Mortgages, we saw strong growth overall. You will have seen that we announced a new exciting partnership with NatWest, the U.K.'s leading digital mortgage lender, which will be introduced in April across both sites and our apps, and we'll also continue to build out the broker opportunities over the course of this year. And finally, again, and importantly, a reminder, the SGAs all strategically reinforced the Core platform, drives user utility and frequency, and again, thus the great data sets that we have. Now this slide is a reminder of the 3 focus areas that we described in November. We are positively stepping up the pace with an eye to the medium-term opportunity of a more diversified and technically advanced platform. We're driving towards that larger digital opportunity in the U.K. property ecosystem. Now also as a reminder, we set some really ambitious midterm target KPIs for these initiatives. And I'm glad to report that all of this is mobilized in one way or another and the capabilities will be built and realized throughout 2026. We're going to see results along the way. One example, of course, being the successful launch of conversational search already in the very beginning of the year. So we'll come back to these areas and the KPIs over time. And I hope you can see that we drive this business with discipline, high quality and our goal is to deliver strong value and returns. So in conclusion, here are the key takeaways I showed you at the start of the presentation, and I want to repeat them. We're happy with the strong results in '25. It was a record year for innovation for Rightmove. We look forward to an exciting 2026. And as you can see in the graph, we're stepping up our innovation and delivery considerably yet again. We will grow revenue and profit in line with guidance, adding to strong financial returns in both the short and medium term. And with that, we're going to go to Q&A. Johan Svanstrom: So Rory is going to join me up here. Please raise your hands. Yes, some already did. Say your name when you're passed a microphone and let's aim for 2 questions in the first instance. We can double back if it's fine. Jessica Pok: Jessica Pok from Peel Hunt. I've 2 questions, please. The first one, just on the ARPA guide, Rory, GBP 110 to GBP 120. Can you give us an idea of how we should think about that Agent versus New Homes given the trends that we've seen last year? And then the second one, maybe on Mortgages. The new relationship with NatWest, any color on what triggered the change and what we can expect from that relationship in the near term? Ruaridh Hook: So on ARPA guidance, GBP 110 to GBP 120 is the blended ARPA guidance. Expect Estate Agency to be towards the bottom end of that and New Homes well above the blended rate. I would flag that in both EA and New Homes, we expect their ARPA growth to be higher than they saw in 2025. Johan Svanstrom: All right. And on NatWest, yes, we're very excited about entering a new partnership here. We've had a great partnership with our other partner for the last couple of years. NatWest is really the #1 mortgage lender in digital channels. So that tells you, I think, something about the vision alignment that we have. We continue to work deeply with one partner because we're quite keen to both build the business, of course, give more -- consumers more utility on the platform, but really also try to innovate along the way in this industry, which is still very fragmented and analogous and off-line and so forth. So those are really the few simple reasons behind it. William Packer: It's Will Packer from BNP Paribas. A couple of questions. Firstly, could we talk a little bit about agent relations? So from today's update, the survey data looks very encouraging, although I know we didn't see the absolute numbers, but that would be interesting. Retention is at record levels. You've got new agent additions. But then in contrast, if you read the trade press, it all sounds a bit grim. You've got the court case coming. And I think there's a perception that your relations with your customers are more adversarial versus some of your peers globally. How do we square that circle? Is it -- there's a few loud adversarial agents, but the median agent is getting happier. Can you just give us a bit of color there? And then secondly, your framing around the labor intensity of Rightmove is a little bit different to some of your peers within classifieds and other platform businesses. You're growing headcount aggressively. It sounds like that's going to continue for a little while. Could you frame that for us? Is that catch-up investment because the previous management team didn't hire enough people? When can we see the labor force to stabilize? Any color there would be useful. Ruaridh Hook: I'll take. You can jump in. Look, the first one, you mentioned some of those KPIs, which I think stand out, right? High -- second highest retention in a decade, highest take-up of our new product, OAV. We had record uptake of Optimiser Edge. That shows customers are engaging with our products and really happy with the outcomes. That, for us, is a real sign of strength in terms of relationship we have with customers, of which over 80% are now with us for 5 years. They know us well. They know our products well and we work with them to grow their businesses. You're always going to have a small minority, might be louder than the majority, but I would say that those KPIs, what we look at to show the strength of our products and the value that we provide our customers. We also, as we showed today, do monitor sentiment and we're delighted to see that sentiment not only much higher than competitors, but growing. So we don't rest on our laurels. We take it very seriously, and we keep our finger to the pulse in terms of how agents are feeling. And we support them as the property market ebbs and flows. And ultimately, for us, key coming back to providing those great products, and I think that take-up really shows it. In terms of the labor intensity, yes, we're adding over 100 and those 100 people are going to be building some fantastic products and fantastic assets. They're going to make Rightmove stronger and on our path to higher growth. That, for us, is a short-term investment. It's going to allow us to build many of the things that will enable us across the domains that Johan talked about. And we've provided a flexible resourcing partner as well to help us accelerate or pull back in that recruitment as we see fit. For us, this is about driving higher profit growth. And this is about us building things that we're really excited about that we see great ROIs from and that requires some head count in the short term. But what you will see and what we look forward to bringing to you on a regular cadence is some of the really exciting products that they're going to build. William Larwood: Will Larwood from Berenberg. Firstly, just obviously integrating a lot more AI functionality going forward, consumer with like conversational search, et cetera. How can we expect sort of the cost profile of the business to shift particularly thinking about sort of using more compute going forward? And then secondly, you mentioned it very briefly in terms of the mortgage broker side of things, but if you could provide an update on that, that would be great. Johan Svanstrom: Yes. Yes, I'll start with AI. So look, we obviously anticipate and budget for compute cost that didn't exist in the past because of this. But I think there are a couple of important things to remember, a, again, back to that slide of how we set things up. We set it up in a very organized, very orchestrated away, and we have fantastic control over this just like we have on other costs. Here's the thing. It's a cost to deliver opportunity, right? And if you look at token cost overall, I mean, they keep coming down by 80%, 90% on an annual basis across the world, right, both because models become more efficient themselves and because there's a lot of competition out there. So it's an item to keep track of, but it's not something that concerns us particularly, right? Yes. So Mortgages, I'll go to that one as well. So we are -- I think we talked a little bit about this before. So we have brokers on the platform, but it's a small part of what we do today. A lot of attention has been on the MIP product, building awareness with consumers seeing what that does and obviously deliver great results. What we did last year was prepared a little bit more to be able to scale the broker side of the business as opposed to one-to-one relationships with brokers because there's literally 5,000 of them in the U.K. And it's also really about looking at this as -- I think of this as an inevitable trajectory kind of thing. Because of who we are, the interest in properties, the fact that 2/3 of properties needs to be financed, us having some kind of service in this space makes sense and that's evidenced already. But it's a long-term thing to build. There's still awareness. They're still optimizing it. There's still -- we're still, but what we're trying to do again is build a better experience and an experience that doesn't exist anywhere else. That takes some optimization. It's 2% of our revenue today. We're happy with the growth, but there's going to be a test and learning as we go along with it and we're executing on it really well. So over time, there will be broker options as well. And it's about understanding the consumer. And again, because of all the consumers that we have, what's their mindset, right? Are they close to transaction or they're really out shopping and still want to get an affordability check. So segmenting that and dissecting and making very logical for them and, therefore, funnel them to different opportunities for financing is important. And that doesn't come just from saying we do one thing on the website, right? But again, fantastic opportunity going forward and lots of money in this space, and I think we have a real right to play. Andrew Ross: Andrew Ross from Barclays. I've got 2 on AI. First one is about the conversational search you've rolled out on platform. What are you observing in terms of the conversion rate from search into leads or any kind of outcome-based metric that you track from and kind of what impact is it having on clicks on to featured and promoted listings as part of it? That's the first question. And then the second one is you guys have obviously applied to put an app into ChatGPT. Can you just give us some context as to what the thought process was as to why do that? On the one hand, you're kind of feeding the beast. On the other hand, first-mover advantage is where the users are. What were the kind of puts and takes? How are you thinking about it? Johan Svanstrom: Yes. And so when it comes to conversational, again, I outlined a few stats, right? We -- because of our traffic and in spite of having it on a minority of that traffic already, we've seen thousands of conversations, lots of messages, very good flow-through in terms of people getting the results that they wanted and also, as expected, coming back over to the main site and digging around and using different tools and so forth. We have seen that uptick of about 3x the sort of lead sending propensity. But to be honest, is that cause a correlation? It could be the most qualified users that have been on Rightmove before and so forth. Or is it a novel way and, therefore, they become interested? I think it's too early to say. And anyone who talks about these data points, I think it's important to give that kind of context. Now again, I point back to this as an opportunity, right? The fact that how consumers experience the site and the listings and what they do with it? First of all, this is a first version of integration. And how partners show up in that? That will, of course, evolve over time, right? It depends on how much of a traction this will see from consumers, small minority or complement to -- for a lot of people to what they do, it's just simply too early to tell. But again, the opportunity, if you think about it, it's a much more personalized and engaged consumer in different ways doing this. And that further qualification of someone's behavior has value. So the fact that there's potentially new or, for sure, different commercial opportunity around this is also there and that goes through our heads, right? But it's early days. And the second one on ChatGPT, yes, I think you maybe outlined it well, puts and takes, consideration. Look, today, they're just -- they're meaningless in terms of a feed or a platform for people actually looking for and going after homes. So as we said, with those stats, right? And I think most of the peers report the same numbers, very, very small. But look, it is a tool that lots of people use for different things. So for us, this is a test-and-learn, right? We want to be where some consumers are and see what we can learn from that. And very importantly, of course, it's an app that we created. It basically displays listings and consumers then go back and do much more of the experience where they have all that experience and again, all the data and tools in their own history and so forth on Rightmove and that's what we expect going forward as well. Andrew Ross: And you keep all the data, right? Johan Svanstrom: Yes. Joseph Barnet-Lamb: Joe Barnet-Lamb from UBS. Two for me. First one, a technical modeling one, but I think it's important for the interpretation of ARPA guidance. So historically, forecasting agency was simple as ARPA times by the average membership. But we now have a growing proportion of non-ARPA revenue within Agency. So can you just clarify which revenue streams within Agency are non-ARPA? How big they were in '25 and how you expect that to change into '26? Then the second question is just on buybacks. We see you're effectively restarting and spending excess capital generation beyond dividends and spending half of the GBP 40 million that you've accrued, whilst you weren't buying back. Can you just give a bit of color on why you aren't spending all of the excess cash to get you back down to 0? And a sort of general commentary on sort of the merits of running a net cash balance sheet given where your share price is? Ruaridh Hook: Sure. Two for me. Yes, you're right. ARPA used to be much easier. You took kind of customer numbers, multiplied by ARPA and you got roughly our revenue number. There is a non-ARPA element, which is because we don't count agent accelerator in our ARPA calculation because it's a program rather than a package and also insurance revenue in the rental services part of the business because that's insurance to consumers and landlords. So therefore, it's not counted under the average ARPA. Those 2 together, used to be almost 0 a few years ago. Great to see them grow, and they're around about GBP 3 million. So that's what you should add on once you take your average ARPA times by your customer numbers. In terms of the share buybacks, great, we -- first thing to flag, we return all of our surplus cash to shareholders, and we don't see that changing. We've reduced our cash reserves from GBP 40 million to GBP 20 million, which we think is sufficient to run the business from a working capital perspective going forward. For those that have been with Rightmove for a long time, GBP 20 million was always the number that we used to have and feel very comfortable that, that's a manageable cash reserves for our working cap. So flag that. In terms of looking at debt for share buybacks, I think is what you're asking, we're not philosophical about no debt on the balance sheet. At the same time, we see there's many pros and cons of having no debt on the balance sheet. It's something that we continually evaluate and discuss with our advisers and with the Board. At the moment, we don't have plans to leverage up. But I would say, as always, nothing is off the table, and we'll continue to evaluate all of our options. Joseph Barnet-Lamb: Just one follow-up maybe on Agent Accelerator -- on Agent Accelerator, obviously, with what we're seeing with new agent formation, is it fair to assume that the Agent Accelerator will grow faster in '26 than the average of Agency? Ruaridh Hook: It's Agent Accelerator, low ARPA. So don't get too carried away. Great to see the agent formation come back. I wouldn't expect to see that continually rising given its record levels. So I'd just be cautious about that, but great to see that market open up. Marcus Diebel: Marcus Diebel with JPMorgan. Johan, just one question again on investments. And clearly, we've seen '26 is going to be a peak year. Again, we're going to guide for like 3% to 5% operating profit growth. Given where the shares are and you're prioritizing, obviously, buybacks and those things, I mean, how critical is it really for you that '26 is really sort of a one-off in terms of operating profit growth and things bounce back relatively quickly, i.e., do you feel that some investments that you clearly had in mind are now a bit more put on hold longer term? Is that the case? Just a question for what is the mood? How critical is to see a meaningful margin bounce already in '27? And then the second question, just in general, because you touched on this value-accretive M&A. Are we then talking about sort of like investments in tech? Do you feel there are some tech assets out there that you should get to? Any comments would be interesting because it feels there won't be much. I just want to be really clear on this. Johan Svanstrom: Yes, I'll have a go. Maybe, Rory, you can fill in. But look, we -- when it comes to the investments, right, as we outlined, and I say it again, we have a great foundation, a great tech platform. We're doing this because we think there's more opportunity in this market. We look at the U.K. property market, our position and what we can do together with others over the medium term. we want to step up that pace. That's what we're doing. And in terms of how that's shaped, we've guided to '26 and what that means on both revenue growth and operating profit growth. And we're not going down, as we said before, to be specific year-by-year. But of course, you can assume that the profit growth will start aligning more to the revenue top line in the years following, right? So that's kind of all we can say. And as usual, you look at the business and you look at the opportunities or sometimes challenges ahead and you adjust after that. But we're very happy with what we're doing right now and off to a great start with it. Secondly, on M&A and maybe value -- well, value creation and what kind of companies. Yes, I mean, look, there's always been a plethora of proptechs in the start-up space. And now many of them come with AI after them. So I can tell you in some conversations we've had with agents directly, some of them, of course, use AI already. It's like, "Hey, here's a quicker way to do admin or whatever it is." They're start seeing some of the AI-enabled products that we actually equipped them with, and they're also inundated, right? They get so many pitches from that dot AI and the other dot AI on an ongoing basis. So it's a little bit confusing. And as usual, there's a lot of promise. Again, as I said before, I mean, AI is one thing, right? You got to -- you actually got to build it on something. And it's a filter and automation tool, right? But it certainly doesn't provide the whole experience. So that doesn't mean that there aren't interesting companies, and we keep a good eye on them. We have conversations with several of them. But for now, our organic growth path and with the capability we have is clearly how we operate mainly. Marcus Diebel: Maybe in this context, it's actually quite interesting. I mean, yes, we see a lot of start-ups approaching agents, very early, very small niche. But do you feel that the large players, the open AIs of the world also go directly to agents and asking them to upload and work closer together. Is there anything that you see you or hear? Ruaridh Hook: Nothing, I would say, particularly on, let's say, the big LLMs from an enterprise perspective. And first of all, because our 16,000 memberships typically consist of very small, medium-sized businesses. But the fact, again, that many of them are interested in using tools, right, whether that's a free user or paying GBP 20 a month. And some of them are, of course, more advanced in trying to figure out what's happening either on their own or again, sold by someone else. But I don't think that's a particular thing that we see, no. Annick Maas: Annick Mass from Bernstein. The first one is on ChatGPT, again. So can you tell us a bit more about how the user data is shared in between ChatGPT and youself? At what point do you get access to the user and actually can follow them around and actually can collect the data exclusively? And the second one is on Opti Edge. When agencies don't decide to upgrade, generally, why is that? Do they keep the money and they don't invest? Do they go for something else? Can you just tell us a bit through the challenges that you hear when you're meeting with agencies? Johan Svanstrom: I'll take one. You can take two. Yes, so on ChatGPT, again, what we built is an app and it has an end point and it sits within -- or will sit within the ChatGPT environment, right? And what the consumer will experience is to be able to do conversations that -- and answers will come partly from ChatGPT. And in the case of serving up property listings that are relevant, that will come from us. And what I think others have reported and what you can expect, it's a fairly simple outline, right? Yes, it's possible to find our brand there. You can find it today, but now we can find it in a slightly more organized fashion. And consumers will be very encouraged and already know where to go and find the full experience. So that's kind of the outline right now. And that means that the really valuable aspects of data on how people navigate and what they've done before and what they want to do in the future will remain in the Rightmove platform. And of course, remember, again, we're building a conversational interface on Rightmove, right? People already have that habit loop. It's like, "Hey, I can do all of this conversation, including complementary information on Rightmove." So yet another reason, I think, to not worry too much about some other alternative universe being built out. But again, interesting enough to test it. That's the way we view it. Ruaridh Hook: On Optimiser Edge, we actually don't want all customers on Optimiser Edge. We cater packages for all different types of customers and different types of businesses. And we want them to have choice and Optimiser Edge doesn't see all customers. low stock, low value, depending on where you are in the country, depending on competitiveness, funding, lots of different reasons. The strength of our account management team is knowing what products work for which customers. And the way that they start the conversation isn't about which package to be on, but which packages or which products are going to help you grow the business. And depending on that product mix is what then will generate a recommendation of which package to be on. And so for some, Essential is absolutely the right package to be on, and we don't expect them to move. Others, we'll see them move from Essential to Enhance to Opti and others will come straight in. And that was a little bit of what I wanted to show earlier was the variance of how we see the inbound into the Optimiser Edge package. The other stat I would flag is that over 50% of our customers are choosing to purchase products above their committed levels. So again, they can engage and see value in our product without having to move up the package ladder. So for us, it's about coming back to offering a plethora of different products that suit whatever needs a business has, but also fit whatever the property market is doing because the property market, as we all know, in the U.K. can change a lot. So we want products that suit them whatever is happening in the property market. Sean Kealy: First question, Johan, I was really pleased to hear you describe ChatGPT is meaningless at the moment, given they're 0.5% of your referral traffic. First question from me, from both a technical and sort of market power point of view, if it came to it, would you have confidence in blocking LLMs, not just from scraping data for training, but also for the grounding process in search? And sort of what would be the puts and takes? And how would you look at that decision? And then secondly, where you've rolled out market capabilities, for example, in conversational search? Are you finding that the major LLMs are good enough off the shelf? Or are they requiring quite a bit of fine-tuning customization to work with the data that you've got and Rightmove effectively, only Rightmove has? Johan Svanstrom: Got it. Yes. So look, on the first one, technically, you can choose to be in an environment and you can choose not to be in an environment. And so I think that option is already there. Again, it's an interesting environment to test and learning, probably very small meaning at the moment. It might grow, and then it will be relevant to be there. So we'll see how that goes over time, simply. But the optionality is absolutely there. I think on the conversational side that we've done ourselves. So again, we operated the current version with Gemini models from Google. And again, it has the benefit of -- it's all very tied up through our stack. But we have also built that capability to switch that out for literally any other large LLM. We have those relationships and conversations as well. So it's off the shelf in the sense that the general LLM is there. Now as you know, every week or 2 or whatever, there's another dot-something version coming out. And the 3 things that we optimize for is it's not just cost, right? Again, that's kind of a tailwind over time because it's going to continue to come down. But it's cost, it's quality and it's performance, right? Quality is very important. And performance as in speed and response rates. And already today and even as a consumer, at least if you pay, right, you can see for yourself how the models act a little bit differently. And of course, we have a fantastic platform and capability in the teams to judge these older things, right? So we built this stack where we can plug and play on the side and then we decide what we take live. And we run concurrent what's called evaluation models. So models that evaluate the models on an ongoing basis. So it will continue to go along that way simply. Then maybe the last point. Yes, of course, the generic LLM capability is one thing. The really interesting thing to create a fantastic experience and relevant experience for the consumers to combine it with the data that we have. And again, the more people actually use this and/or any other personalization features on our sites, the more tailor that experience can be. And a lot of that comes -- or the vast majority of that really comes from our own platform. Giles Thorne: Giles Thorne from Jefferies. Back on Mortgages, please. The attributes, Johan, you used earlier to describe what pulled you towards NatWest, I'm pretty sure the things that were used to describe nationwide when the MIP product was first developed. So I'm still a little bit none-wiser as to what went wrong with the nationwide partnership and what NatWest now solves. So I wanted to push you on that a bit harder. And then the second thing still on Mortgages is just to hear your latest thinking on how you solve for the problem of the broker product only appearing after a failed MIP, if that's even still the case? So an update there. Johan Svanstrom: Okay. Thank you. So I'll leave you to judge your own wiseness, Giles. But we've -- as I said before, we've had a great relationship with Nationwide and what we are looking at now, where are we now, what are our own plans, what have we learned from all the data. And we have selected NatWest as our partner going forward for what we think are really good reasons. And on the second question, yes, the broker path to a large extent has been -- because we have been focused so much on understanding the MIP path has been focused on, okay, who doesn't get a MIP for what reasons? And over time, of course, as I said before, we want to expand those choices for consumers through our segmentation, seeing what they do on the site and potentially what they are outright requesting. Some of that experimentation has been going on already, and that's going to continue in the future. Giles Thorne: And just a follow-up. Where is the remortgaging product? I think that was due to be second half of '25 -- I forget the exact date, but I'm pretty sure we passed the original signal around when you're going to launch that. Johan Svanstrom: No, it's launched. It's on the site. Again, it's not the main focus. Remember that we had a lot of first-time buyers, of course, on the site. And for lender partners, often, they want to try to get a hold of new customers. Now the remortgage product is absolutely there, has been there for a while. But it's sitting as we have said before, logically connected, so closer to the home valuation tools, for example, where people might be in that mode of, "Hey, I'm tracking the value of my property. That might be because I'm thinking about selling or I'm thinking about refinancing because I'm staying." So that's where that is. And again, over time, that's an opportunity to obviously build that out further, but it's going to come with -- in the right placements and as we see fit. Ruaridh Hook: Great. Well, I think that's -- well, I'll squeeze you in, Andrew, last one. Andrew Ross: So another on one AI and about kind of Agentic. And I appreciate there's a whole separate conversation about whether you'd actually want your personal agent to be searching for a house. But in a future world where that could be possible from a technology perspective, what's your view about whether you'd let agents be searching on your site, how you kind of set up the technology to do it? Do you let them call and do whatever they want on any sites? Do you make sure you have a commercial relationship where it has to be free your flow? Like how are you thinking about the Agentic journey? Johan Svanstrom: Yes, a little bit, let's say, early, but clearly, the Agentic opportunity keeps growing. But again, I just -- what you said yourself, remember property, particularly. AI is a filter, an advanced form of a filter, humans make decisions, right? It goes for a lot of processes. So the level of filtering assistant, obviously taking out admin tasks and so forth, big opportunity in AI, but humans need to be in the loop still for a lot of things and even more so for other things, including this one. So we'll see how that evolves over time. I really can't talk to the technology of it or who we might have a relationship with. There are interesting precedents on Amazon shutting down. I think it was Perplexity's Agentic rolling around. I don't know where that sits, right? But it's something that we'll deal with over time, just like we deal with other opportunities. Ruaridh Hook: I would say thank you all for your good questions today, and I wish you the best of the day. Johan Svanstrom: Thanks, everyone.
Operator: Good afternoon. Thank you for joining Romgaz Group Conference Call on the preliminary results for 2025. Following a brief introduction of our speakers, Mr. Razvan Popescu, Chief Executive Officer, will provide an overview of the preliminary results recorded by Romgaz Group in 2025, after which, we will proceed to the Q&A session. Please be advised that this conference is being recorded for internal purposes. On behalf of the company, the following speakers attend this conference. Mr. Razvan Popescu, Chief Executive Officer; Ms. Gabriela Tranbitas, Chief Financial Officer; Mr. Radu Moldovan, Energy Trade Director; and Mr. Ion Foidas, Production Department Director. With that, I will now invite Mr. Razvan Popescu for the opening presentation. Razvan Popescu: Good afternoon, everyone, and thank you for joining our conference call to discuss the preliminary results for 2025, which we published today, and it comprises the key economic and unaudited financial results for the group in the selected period. Also, an overall presentation will be available on our website in the Investors section. I would like take this opportunity to address certain aspects regarding the market context last year with impact on our group's performance. Natural gas consumption in Romania rose by 1.1% last year according to our estimates, with gas imports recording a significant advance to a 30% weight in the national gas consumption. The Romanian Commodities Exchange posted again weak trading liquidity as a result of the current regulation in force, and we estimate that the average wholesale price increased by almost 30% year-on-year. On the Central European Gas Hub, the average monthly reference price also rose around [17%] in 2025 according to the data provided by the NAMR. With respect to the fiscal environment in the gas and energy sector, Romgaz activity were mainly impacted by GEO no. 27, which was effective from April 1, 2022, and subject to subsequent amendments in GEO no. 6 that started in April 2025. We would like to remind the main provision that applied to gas producers last year, regulated gas selling price of RON 120 per megawatt hour for the gas sold to households and supplier of households, heat producers and their suppliers for the production of thermal energy for households and to the transmission operator and gas distributions to a maximum of 75% of the technological consumption. This price level is applied starting from April 2024 and up to the end of March 2026. For the gas sold under regulated prices, payment of the windfall profit taxes is exempt and gas royalties are computing based on these regulated prices. Regarding the operational and financial performance recorded by Romgaz in 2025, we can highlight the following main activities. Natural gas consumption amounted to 4.95 bcm, marginally adjusted by 0.2% year-on-year, favorably within the strategic objective of the natural decline threshold of 2.5%. We achieved this important performance through continuous efforts aiming to consolidate the potential of our onshore production, which included completion of investment work to extend production infrastructure, allowing us to stream into production 6 new wells, specific investment works in active or low flow wells resulting in reactivation of 175 wells that generated a total flow of over 300 million cubic meters continuous rehabilitation project of our main and mature gas reservoirs in order to maximize production and increase the recovery factor. Also, we completed drilling of one new production well, finalized 7 surface facilities while other 23 are in different proprietary stages. We can also highlight that all these measures led to a significant 47% increase of our condensate production to over 54,000 tonnes in 2025 due mostly to higher production in the Caragele field. Regarding the Caragele Deep, works are progressing with the 76 Rosetti well in production test, 54 Damianca well that is being prepared for production test, and 78 Rosetti well in prod -- that is already in production, while other 7 wells are in different stages of drilling preparation. For the last quarter alone, we can mention that gas production amounted to 1.28 bcm, adjusted only by 0.9% from the 1.29 bcm record output that was recorded in Q4 2024 and significantly up by 7.4% compared to the 1.19 bcm that was produced in Q3 2025. We reported total revenues from gas sold of over RON 6.9 billion, marginally adjusted by 0.3%. This was the combined result of a lower average selling price while gas volumes sold increased by 5.5% to 4.82 bcm in 2025 compared to 4.57 bcm in '24. This is based on net volume extracted and sold from our underground storages and lower deliveries to the Iernut power plant. Thus, we hold a substantial position on the Romanian gas market. According to our assessment, Romgaz continued to rank as the leading gas supplier in Romania in the last year, with a significant contribution of 50% in total gas delivery. Also, we are strongly positioned in gas consumption covered from domestically produced gas, holding a substantial share of 71% last year according to our internal estimates. Revenues from storage services also advanced by 10% year-on-year to RON 562 million with injection-related revenues higher by 56% and capacity reservation activities having the largest weight, 55%. We succeeded to increase our revenues from electricity by almost 2% to RON 382 million, while production of our old power plant has expectedly decreased to 750 gigawatt hour in the last year. The Iernut power plant is still contributing to the security of supply in the energy market in Romania. Overall, the group recorded total revenues amounting over RON 8 billion, higher by 1.2% compared to 2024, based mainly on the strong contribution of our upstream segment. Regarding the expenses, the windfall tax recorded a 36% increase year-on-year to RON 767 million, mostly due to higher gas volumes sold at the regulated prices. Gas and UGS royalties adjusted by 6% to RON 559 million. Altogether, the 3 main taxes, windfall tax, royalties and the duty to the energy transition fund decreased by 26% year-on-year, but still represented a significant expense of RON 1.34 billion in 2025, having thus a positive effect on our profitability. Bottom line, we reported a historical annual net profit of RON 3.35 billion, higher by more than 4% compared to the RON 3.21 billion recorded in 2024 and representing the highest annual value ever recorded by the group. All profitability rates were substantial last year, with net profit margin rose to the highest historical annual value of 41.7%. And both EBITDA and EBIT margin continue to be significant at 54.9% and 46.2%, respectively. For the last quarter alone, we can underline a net profit of RON 912 million, 70% higher compared to the quarterly average of the past 3 years and a net profit margin of 46%. Regarding our CapEx, the Romgaz Group invested a consolidated amount of RON 3.86 billion in 2025. Investment in Romgaz Black Sea Limited, which basically is the Neptun Deep, representing RON 2.74 billion from Romgaz alone. And with respect to our flagship offshore project, we can mention that it is currently in the execution phase, in line with our programs and budget and the execution calendar. During 2025, significant milestones of the projects included not only start of the construction works at the microtunnel in Tuzla, but also the achievement of all 4 reservoir targets in the Pelican South field by drilling all the 4 wells that were in the drilling program. Also, it is important to mention that in December 2025, the Romanian government approved Addendum no. 7 to the Concession Agreement for the Neptun Block, extending the exploration phase in Neptun Deep. Anaconda-1 exploration well will be drilled in the deepwater area with the aim to identify, evaluate and exploit further the energy potential of the Black Sea. Another important objective is the combined cycle gas turbine power plant in Iernut, for which the completion rate is around 98% for the overall Turkey project and 90% that was remaining from the last EPC contract. Following the termination of works contract with Duro Felguera as executive of this project on October 13, Romgaz became the general contractor and we are in process to assign the contracts for the essential subcontractors and directly purchase the services and products necessary for the testing and commissioning of the plant. The commissioning of this investment may not exceed December 31, 2026, according to the government decision that was taken at the end of 2025. Another important event was the approval of the company's decarbonization strategy for the 2050 target on October 22 by the Romgaz Board. This strategy was developed in the context of European and national policies aiming to mitigate greenhouse gas emissions. Our net zero trajectory shall be periodically reassessed based on technological progress, availability of funding and the clarity of regulations. I would also like to mention that the second issue of the bonds under the EMTN program, which were oversubscribed 8x on October 28, our new EUR 500 million issue of bonds has a maturity of 6 years and an annual coupon of 4.625%. The success of the second issuance of bonds confirms the confidence of the institutional investors in the company's development strategy. At the end of the presentation, I would like to emphasize the significant performance recorded by the Romgaz stock on the Bucharest Stock Exchange. SNG share price doubled over the last 12 months period, leading to a current market cap of around EUR 9 billion, Romgaz representing the third largest domestic stock and blue chip on the Bucharest Stock Exchange. With this, I would like to close our presentation, and thank you all for your attention. Thank you. Operator: [Operator Instructions] So we have a question from Ms. Daniela Mandru. Unknown Analyst: What I see -- just compared to my estimates, I've seen some large deviation in the income tax expense. I don't know, you recorded some deferred income tax or something in the last quarter? Unknown Executive: For 2025, it's still in -- still valid, an ordinance issued a few years ago, which provides for certain discounts, let's call them, on taxation if equity increases. Considering the increase in equity from 2024 to 2025, the income tax benefited from a 14% decrease. Unknown Analyst: Sorry, can you detail what equity increase? Unknown Executive: So equity in the balance sheet. Unknown Analyst: Equity in the balance sheet. Yes, please. Unknown Executive: Increased from RON 14 million in December 2024 to RON 17 billion in December 2025. Unknown Analyst: And sorry, I don't know what is this regulation -- not regulation, but this exemption referring to. So if this equity increase, you can -- so can you please detail this tax exemption, or what it is? Unknown Executive: Yes. It's based on an emergency ordinance, 153 issued a few years ago, I don't recall the exact year. Just a second. So it was issued in 2020. And it has several discounts. One of them is if equity increases compared to 2020, it benefits from discount of 3%. Then another discount is if equity has an annual increase between 20% and 25%, it benefits from a decrease of 9%. And there's another 2% decrease if... Unknown Analyst: Okay, I understood. I understood the logic behind. But this discount of 3%, 9% is applied to what, to the full year? Unknown Executive: Yes, for the full year. Unknown Analyst: Yes, to the full year, but applied to what? To the normal income tax? Applied to what? Unknown Executive: Yes, the current income tax. Yes. Unknown Analyst: To the current income tax. Okay. And I was not from the very beginning, but can you disclose the quantities sold at kept prices in Q4, please? And what do you expect for 2026 if it's possible? Razvan Popescu: '26, unfortunately, we can't -- we don't have the final ordinance. So the ordinance has not been published. The ordinance not having been published, we do not have the current quantities right now. For the entire year of 2025, around 80% of our entire production was sold at regulated prices -- over 80% was sold at regulated prices. Unknown Analyst: Okay. And now regarding the -- I didn't see the note, but I believe you don't publish them. Regarding the financial cost, and regarding the capitalized interest costs, can you disclose the total interest cost capitalized in the full year or... Unknown Executive: Yes. Just a second. So of the total income -- finance cost of RON 183 million, we capitalized RON 69 million for the full year. Unknown Analyst: RON 69 million? Unknown Executive: Yes. Unknown Analyst: Okay. So please help me a little bit here. I'm not quite familiar with these capitalizations and so on. So when the investment will be fully functional, these costs will be -- all these interest costs will be reflected in the financial results? Unknown Executive: No. It will be included in the value of the investment, and it will be depreciated based on the useful life of the investment. So it will... Unknown Analyst: Yes, it will be as depreciation, yes. Because I see that [ DG, ] they did the same, but all the capitalized interest, they put in the financial results. So I'm just wondering if you will do the same. I don't know the reason why. Okay. But for the first quarter of the year -- of this year, do you know the volumes at the regulated prices, yes? Razvan Popescu: For the first quarter of '26? Unknown Analyst: Yes. Razvan Popescu: Yes, they are the same. So it's around 80%, 81% for the first quarter of 2026. So they are basically the same. Unknown Analyst: It's basically the same compared with the last quarter, with Q1 2025? Razvan Popescu: A bit over 10 tera for the first quarter of '26, it was a little over 10 tera as well for the last quarter of '25. Unknown Analyst: Okay. And regarding the execution of the guarantee, I don't know because I didn't have time to go through all the notes, the report you published. Have you registered them in -- yes? Razvan Popescu: Yes. We registered them. Unknown Executive: Yes, we recorded the amount that was executed around RON 60 million. We still have to recover around RON 20 million. The provider of the guarantee would not say the amount that he owes us. So that amount was not recorded yet. But we are taking action -- legal action against them. Unknown Analyst: So probably, this amount will be recorded. So there are -- you can record the remaining of RON 21 million in the first quarter of this year or later? What is your estimate? Razvan Popescu: It depends what they are going to pay. We cannot estimate right now. Operator: Ms. Irina Railean, we are ready for your questions. Irina Railean: I hope you hear me well. My first question is regarding these changes on the regulated gas market. I mean, the expected change from regulated gas prices to some kind of administrated gas prices. How does this impact Romgaz? I understand you don't have the volumes for this year. But in general, what is the difference for a producer, let's say? And also here related to your supply segment strategy, I mean I see you plan to expand to the supply business? Will you enter also this administrative price scheme? If you could give us more details here? Razvan Popescu: Yes. Thank you for the questions. From our analysis, the impact for the producer is, of course, going to be the [indiscernible] difference, that is going to be assigned to the regulated price. So this is going to be the impact. But of course, it depends right now on the quantities that are going to be allocated because in the past years, we had a fluctuation from 55% up to 100% of our quantities on this ordinance. We expect for it to be published if it's going to be published probably next month, and we'll have the allocation of quantities in order to have a correct calculation and impact on the profitability. Regarding our supply. For us, we've started works on integrated and creating this line of business last year. The team from a commercial, economic, IT has been working around the clock. From a technical perspective, we will be ready to be able to cover the supply for the small household consumer and nonhousehold probably starting from 1st of April. But of course, this is relative compared to the quantities that are going to be allocated because right now, Romgaz is not a supplier to this household. So we do not have a portfolio in order for quantities to be allocated to ourselves. So probably, the bulk of our quantities will be again allocated to the thermal energy producers and to the suppliers of the house. Also, there is another ordinance, again the [indiscernible] ordinance that was published in November that kept our current workforce number and also the spending that we can make and the hiring that we can have to the levels of the end of November. We have a memorandum that is -- currently, we have pushed it to be approved by the government, but this has not happened as such. So at this point in time, we have a couple of unknowns to the supply business. Irina Railean: So basically, you don't know exactly the quantities, but does this prevent you from further trying to develop the supply business? I mean, even though if you have to deliver some of your -- part of your production, so this heating producers and suppliers of households, does this prevent you from like developing further your own portfolio? Razvan Popescu: No, we will develop our portfolio. It depends on how this ordinance will be published for our strategy for the supply business, we'll see how we'll approach, probably the commercial, the small non-household commercial that will be on the free market. We will not stop developing this supply business, but we need to see exactly how we'll draw our strategy, given the quantities that are going to be allocated because, of course, this will impact our pricing power because we are basing the synergies that we have from the production to the supply business and the fact that we are the producer. So basically, the entire supply, our supply business was drawn up from our own internal production. Irina Railean: Okay. So a lower share in this case will be more favorable for Romgaz because -- okay, because you'll have a remaining larger part to support your supply business? Razvan Popescu: Correct. Irina Railean: Okay, okay. And you said you don't have contracts for households, but what was the situation on the smaller commercial or industrial clients? Do you have any discussions there or potential clients for this supply business? Razvan Popescu: We do have even without having this typical supply and integrated supply business, we actually did offer gas to small non-household suppliers that ask for it. So Romgaz somewhat is already in the non-household let's say, business even now. We have the [ fleet, ] and we also have a couple of thousand people in the [ fleet ] that are registered to Romgaz already. So basically, we have a small foothold in the supply business. But in order to make it commercial on a larger scale, we do need available quantities in order to be able to be, let's say, favorable and get the market share in this respect. Irina Railean: Okay. And regarding Azomures, if you can provide us some update if you have in a favorable, let's say, situation, any estimated CapEx besides the acquisition that you will need to allocate if the transaction concludes? And what are generally the scenarios that can materialize this year regarding this acquisition? Razvan Popescu: We are currently in negotiation. We are negotiating the asset purchase agreement with Azomures. And we have made a nonbinding offer on interval price to them and we are expecting for them to come back. We'll see if it will conclude or not. Until then, I cannot give any details regarding CapEx or other investments. Irina Railean: Okay. And regarding Azomures, there were some discussions in the press and I'm not sure if you could provide more transparency here that you provided or the price was mainly the issue here. And as you view the acquisition price lower than the partner. So that's why I'm asking about the scenarios. What if you don't agree on the price, what if you -- or what are the possible solutions or situations or outcomes here? Razvan Popescu: So the possibilities are 2. We either do the acquisition or not. Of course, it is a matter of price. As I stated on Monday, we view Azomures as a distressed asset. We view the issues that the entire petrochemical industry is having in Europe because of the high gas, prices because of the [indiscernible] regulation, because of the CO2 pricing. So our offer was in accordance with this scenario, with the maturity of the asset and of course, with the modeling that we've done on the asset. Romgaz has to view this acquisition also as commitment to an investment for the foreseeable future. So for us, we took everything into account when we made this offer. Operator: We have a question from Laura Simion. What is your production estimate and what volumes will be sold in 2026 at regulated price? Razvan Popescu: Our production estimate for 2026 is keeping our 2.5% decline in production in check. As you've seen for the last 2 years, we've been doing this actively, and we've not lowered our production. So we are hoping to keep it around to 4.9. bcm for 2026, again with the wells that we need to put into production with workovers that we're going to have on our mature fields. At regulated prices, we really don't know what the allocation is going to be. We have the entire quantity sold for Q1, and around 47% of our production is sold to the end of 2026. So it has to be somewhere in the vicinity of around half of our production probably at a regulated price. Operator: Another question from Ms. Laura Simion. What is your estimate for 2026 power production? Razvan Popescu: This is a bit complicated because for our energy business, we are looking to start the -- restart the works in the Iernut power plant. Right now, our old power plant is shut down. We've been having some technical issues with it. So this is going to be very, very volatile to say so. The moment that we'll start testing in the new Iernut power plant, then the old Iernut power plant is not going to be put into production. We had up until 2 weeks ago, the plant was working at full capacity. We'll probably be trying to have it work again for a couple of months. But after that, given the progress in the Iernut side, it's going to be probably stopped. Operator: The next question from Laura Simion. When will you start retail business for gas? Razvan Popescu: As I said, it depends a lot on the quantities that are going to be allocated on the ordinance in 2026. Technically, we want to be ready starting for the 1st of October. So in terms of processes and in terms of technical capability. Operator: Ms. Simion wants to know what will happen with Trident Block after Lukoil retired? Razvan Popescu: So officially, Lukoil has not retired yet. This is mostly a question for the Naryan-Mar. The concession agreement and the exploration phase for Lukoil and for -- at the end of this year. But it is interesting to see if Lukoil will divest and who will be the new investor in Lukoil. Of course, Romgaz will work closely with any company that is trying to develop that block. We have a 12.2% stake there. So right now, what we can do is only wait to see how these things will work out. Operator: Another question from Ms. Simion. Do you estimate that quantities sold at regulated prices in 2026 will be more or less than 2025? Razvan Popescu: For us, it's probably going to be less because we already have quantities sold in 2025. But if you take into account the Q1 quantities, which is basically at over 80%, they could be in the same vicinity of 2025. Operator: And finally, the last question from Ms. Simion for store quantities, will it remain the obligation to be registered at regulated prices after the 1st of April 2026? Unknown Executive: So far, we have -- we do not have gas at regulated prices in our storage facilities. And we do not know what happens with the remainder. Operator: We have a hand raised from user ending in 85, Mr. Tamas Pletser? Tamas Pletser: Yes. Can you hear me? Operator: Yes. Tamas Pletser: Yes. I got two questions. First of all, you mentioned the Lukoil stake in Trident Block. Would Romgaz be interested to acquire Lukoil stake? I think you suggested on your answer that you may be not interested, but I'm just curious what is the reason that you are not interested, if you are not interested? And if you are interested, please explain us why would it be interesting for you? That would be my first question. And my second question would be regarding the Iernut power plant. Last time you said that you would finish the project by yourself. Is this the case right now? Will you make the last part of this investment by yourself? Razvan Popescu: Yes. Thank you for the question. So regarding the Trident block, from the information that we have right now, Lukoil is also selling this asset in a complete deal with its other assets. So it's not for sale separately and it has not been offered for sale for Romgaz, first of all. So they are looking to have a complete sale of their entire asset. This included, but I cannot talk on behalf of them. The Iernut power plant, indeed, Romgaz will act as an EPC. Yesterday, we went into auction for the site management, which is one of the most important contracts. We have companies that have extensive expertise in offering site management in such recovery projects. And for us, this is one of the most important things that a site manager needs to know is to know how to recover such project that they cut some corners in order to put it into production from the companies that have made the bid for the site management. Some of them have seen the site, and they are confident that the plant can be put into production by the end of 2026. Operator: We will proceed now with Mr. Oleg Galbur. Oleg Galbur: Yes. I hope you can hear me well. I have several follow-ups. First of all, can you please disclose the exact volume of gas sold at regulated prices in Q4 '25? And what level of realized gas price has Romgaz recorded in the last quarter of last year? And also since we don't have yet a full report with a full disclosure, it would be very helpful if you could disclose the profit before tax by segment. I mean by upstream, storage and power for the full year or last quarter of '25. And then I have two more general questions. The first one refers to the production outlook. So it is my understanding that for this year, you would rather expect a flat level of gas production. Please correct me if I'm wrong. But otherwise, it would be also interesting to know what is your expectations longer term, let's say, for the next 3 years, according to your strategy. Do you see the possibility to keep the production stable? Would you rather see small production declines? So putting in the longer-term perspective would be very helpful for us to understand which way you see developing? And lastly, on the upstream production costs and here, I refer to all costs excluding taxes, windfall taxes and royalty expenses. So if I look correctly at those expenses -- production costs, sorry, then I calculate a level of RON 320 per 1,000 cubic meters for the full year of '25 and that would imply a 22% increase year-over-year, which would be in line with the cost inflation seen by other oil and gas producers in the region. So first of all, if you could confirm whether I'm not wrong with my calculation. And second of all, it would be helpful to hear your comments about the cost development, whether you see some high cost inflations coming from labor, from services, coming from other angles and whether you have a strategy in mind or already an action plan how to contain this growth or even maybe improve your cost base? So that would be my -- those would be my questions. Razvan Popescu: So regarding the sales in the fourth quarter of 2025, we sold 10.23 tera at regulated prices, ut on an average selling price of RON 134 per megawatt. In the first quarter of 2026, we expect around 10.38 tera to be sold at regulated prices at a bit higher price, around RON 137 from our estimates. Regarding the cost inflation, we do not publish necessarily our production cost. Yes, it can be computed. You are not far from the truth. We have been seeing inflationary pressures on -- especially on the services side. Given the fact that Romgaz's mature fields need heavy investment, heavy investment in compressors, heavy investment in the well workovers, it's quite hard to keep production at this level without sizable investments. That's why we are investing in the Caragele field as well. That's why we are drilling in the Caragele field as well. We've seen inflation also stepping to the -- to our contracts for drilling the rigs. So yes, we have been seeing pressures. And one way that we are trying to mitigate this is through our SIRCOSS branch. Given the fact that we do most of our well workovers with internal sources, it helps us keep the costs in check. So this is why I think we've not seen such a big inflationary pressures on our production cost. Also, we are working in digitalizing these fields. This is one of the main pillars of strategy that we are trying to implement, and we are implementing right now. We are implementing the well production, well production type of analysis, and this will help us with the well workovers and also to be able to have a more clear picture on the production and what we can do to keep it at this level. Looking forward, onshore production in Romania, except for the Caragele field and the Boteni project, there aren't that much prospects that we can work on. This is why we invested in the Neptun Deep. This is why we have gone offshore in order to be able to have this production capacity and in order to keep gas as a transition fuel up to 2050. But our onshore is getting difficult year after year because of our mature fields and the fact that without having these investments, so we are talking around EUR 200 million each year only in keeping production at this level, we will have a much higher decline somewhere in the 8% region in our mature fields under operation. Oleg Galbur: That's extremely helpful. So in other words, just to check if I understood correctly, the strategy is to continue investing into -- if not maintaining, at least lowering the production decline in the next years and I'm talking about the current portfolio, onshore portfolio, not including the new developments. Razvan Popescu: Correct. Correct. This has been kept in check through well workovers around, let's say, 6% of the, let's say, counter decline of production and from new wells around 3%. So this is how we manage to keep the production, the production in check. We are, of course, investing in new drying station. We are investing in new compressor station and also the deep wells that we have been drilling at Caragele in 2025. We had the deepest well ever to be drilled in Romgaz history, 5,056 meters. We are trying to open the Caragele field deep gas reservoirs in order to counter this decline in production that we have from our mature field in the Northwestern Romania. Operator: Ms. Ioana Andrei has sent us some questions. First, a follow-up question on supply business. Do you have a target beyond the next year? Razvan Popescu: Beyond next year, of course, we're putting into production the Neptun Deep and starting the complete liberalization of the price in 2027. We will keep our strategic approach in order to be the supplier, the main supplier in the years to come for the Romanian household and non-household consumer. Operator: The second question from Ms. Andrei, Ioana. Regarding Neptun Deep, since drilling has begun on the second perimeter, can you confirm whether the drilling results from the first perimeter validate the anticipated volumes? Razvan Popescu: Yes. Operator: Please also share whether there is any deviation from initially estimated volumes? Razvan Popescu: I cannot share that as of yet. Operator: Is there a regional trading strategy? Could you please share? Razvan Popescu: Right now, the trading strategy for the Neptun will be devised after we know what we're going to do with the Azomures and how it will and approach our estimates for the supply business and Moldova. But right now, we are more focused on delivering the Neptun Deep with OMV Petrom, the operator. We are supporting the operator in finalizing the drilling and continuing the drilling on the Domino field. It's going to be, let's say, a year, not necessarily, but very intensive year in terms of investment, technical exploration there, and we are trying to be more concentrating on that. Operator: And the third question from Ms. Ioana Andrei regarding power prices. What is the estimate impact of vertical corridor on gas transit, especially considering the influence of LNG? Razvan Popescu: We see the vertical corridor as a complementary source of gas, but as a possibility of diversification in Europe. And if the -- and when the vertical corridor will be operationalized, it will give, let's say, a connection with the TTF with the Henry Hub prices. So for us in this region, it will have a beneficial impact from the perspective of possibility of gas supply and diversification. Operator: Regarding Caragele, what is the current status of the project? Please share something on the volumes? Razvan Popescu: The current status of the project is evolving. As I said, we have drilled 3 deep wells in Caragele. One is already in production, 2 of them are waiting to be finalized in order to be put into production. So basically, the drilling was finalized in Caragele. Around 8% of our entire production stems from this field and 97% of the gas condensate production comes from this field. So yes, we can expect a continued increase in the Caragele fuel production. Operator: The next question, we will take from Ms. Daniela Mandru. Unknown Analyst: Yes. So regarding CapEx, how much did you invest up to now in Neptun Deep? Yes, this is the question, first. And the other one is regarding an update on Iernut. I'm not sure if I know anymore when this new power plant will be commissioned. So I want some clarification, please, on the issue. Razvan Popescu: So for the Neptun, this year, we've invested around RON 2.74 billion. We've invested around a bit less than RON 4 billion last year. And for this year, we anticipate around RON 3.5 billion, around 70% of our entire investment in Neptun is going to be the highest CapEx here in Romgaz's history. For the Iernut power plant, as I said, we went into auction and procurement for the site management. There, after the site management, we are working on 58 different contracts in order to negotiate with subcontractors that have already worked in the site. And we are confident that we're going to start works in the site starting from late March to early April. When these works will start, we'll update the market, and we will continue to update the investors regarding how works are going to go forward and be finalized. Romgaz is going to act as an EPC, and we are the ones that are going to do all the contracting for this power plant. But of course, with the support of well-renowned site manager and with the support of General Electric that is the producer of the equipment in the site. Unknown Analyst: Yes. Here some more clarification. I've read in the newspapers, I don't know if it's true or not. So regarding the grant for this Iernut plant, I read that if you don't commission the plant by June '26, you will be forced to reimburse the grant? This is true? Razvan Popescu: It's always been like that. So it has been prolonged, but it's 31st of December '26. Unknown Analyst: So now it's prolonged to the end of '26? Razvan Popescu: In December '25, it has been prolonged up to the 31st of December '26. So we have almost a full year in order to finalize and put it into production, but at the parameters, it should work. Unknown Analyst: So just to conclude for now, you don't know exactly when this plant will start producing power? Razvan Popescu: No. We need to have everyone back in the site. We need to have General Electric and the subcontractors in the site, and we need to have the site manager to see if we can put it into production as soon as possible. For us, it's very important to start the test as soon as possible and to be able to put it into commercial production by the end of this year. But of course, it has a number of factors that it depends. Operator: So finally, questions from the user with the number ending in 85. Could you please unmute your microphone? Tamas Pletser: I wanted to ask about dividends. I know what you've been communicating in the recent past that before the start of production at Neptun, you don't see dividend levels coming to the historical of about 50%. But still for last year, for 2025, a year with quite good results. How should we think about the dividend payout? Would you see it staying at the previous 2 years' levels? Or do you still see room for some increases? So any comments on this matter would be very helpful. Razvan Popescu: Thank you. Given the fact that we've prioritized the Neptun Deep project, and given the fact that 2026 is the highest CapEx intensive CapEx years from this company's history, we would like to have a balanced approach of the dividend payout. So in our opinion, the dividend payout has to take into consideration the fact that we still have some long way to go until the Neptun Deep will be put into production. We keep our estimates that just after when Neptun Deep will be put into production, the dividend payout will somewhat, again, be raised to, let's say, more historical standards. Operator: Are there any further questions? So if there are no further questions, we would like to conclude today's conference call. For any additional information, please contact our Investor Relations team. And on behalf of Romgaz, thank you for joining us today. Razvan Popescu: Thank you, everyone.
Operator: Good morning, ladies and gentlemen. Welcome to Fourth Quarter 2025 Earnings Call. This conference is being recorded, and the replay will be available at the company's website at auraminerals.com/investidores. The presentation will also be available for download. This call is also available in Portuguese. [Operator Instructions] [Foreign Language] [Operator Instructions] Before proceeding, we would like to clarify that any statements that may be made during this conference call regarding the company's business prospects, operational and financial projections and goals are the beliefs and assumptions of Aura Executive Board and the current information available to the company. These statements may involve risks and uncertainties as they relate to future events and therefore, depend on circumstances that may or may not occur. Investors should be aware of events related to the macroeconomic scenario, the industry and other factors that could cause results to differ materially from those expressed in the respective forward-looking statements. Present at this conference, we have Rodrigo Barbosa, President and CEO; and Kleber Cardoso, CFO. Now I will turn the conference over to Rodrigo Barbosa. You may begin the conference. Rodrigo Barbosa: Thank you, and good morning, all. I'm super proud to be here sharing a few information, not only the results, but all the strategic advancements that Aura is pursuing. If I remind all the investors here and analysts about our strategy, we are very much executing right on track on our strategy. The strategy is, number one, to increase production through development of greenfield projects. Number two, to increase resource and reserves as we see significant potential in our current deposits to increase the reserves. And number three, continue to grow through M&A and address our daily trading volume or multiple that is still discounted compared to our peers. And doing all these 3 while we continue to pay significant dividends to our shareholders. And I'm glad today that I will be able to walk you through that we've been executed in all of those 3 areas while we pay dividends. So number one, first, going to the results, and I ask to put on the first page. In terms of executing greenfield projects and also improving the results, we see, again, the company going on record high production on a quarterly basis and also on a yearly basis. On a quarterly basis, which we have already disclosed to the market, we produced 82,000 ounces gold equivalent ounces, 11% up compared to Q3 '25 and 23% compared to Q4 last year. On annual production, 280,000 ounces of production, 9% up at constant price. And at guidance prices, excluding MSG acquisition that was not on the budget and was not on the guidance, we were very much in line with the middle and actually slightly above the middle of the guidance with the market. The combination of higher production, cost under control and higher gold prices drove us to hit $208 million in the quarter with a gold price of $4,090, while MSG only 1 month and Borborema is still on the final phase, achieving nominal capacity. When we look to the year, we reached $548 million of EBITDA with the gold price $3,400. If I remind the investors, since '23, we've been doubling the EBITDA coming from $135 million, $270 million, now $540 million. And if you take into account the last EBITDA of $208 million with the gold and put the new gold price and then put a higher production, we'll see that we'll be able to, during this year, perhaps maintaining this gold price, double again our EBITDA if the current gold prices continue to be as strong as it is today. On the all-in sustaining cash cost, we are glad also to disclose to the market that we have not only reached the guidance, but we are slightly below the low end of the guidance, and we will talk more through this during the presentation. Higher gold price, cost under control, we have a very also strong recurring free cash flow of close to $100 million on last quarter, understanding that we are also investing in inventories, investing in developing the mines, which put some low grade into the inventory. So some working capital is allocated as an inventory as low grades -- we leave the low grades of the mines that are entering production to the further years while we now focus on higher grades. And I will talk more about this also during the presentation. Combination of strong cash flows. And although we acquired MSG, we continue to be in a very -- and paid dividends. We continue to be at the low leverage ratio. Kleber is going to walk you through that always being able to grow without even leveraging our cash flows that coming from the operations being more than enough to fund our acquisitions and our greenfield projects, while we also count with leverage to fund those projects, freeing more cash to be distributed to our shareholders. A good news, it's a net loss of $20 million. That means that gold price continues to appreciate. And if you take out the noncash nonrecurring losses, we'll see that during the year, the adjusted net income was $206 million, and Kleber is going to walk you through all the details how to achieve this $200 million. For the year 2026, we have a strong -- continue to have a strong production coming from our operations and some increase in all-in sustaining cash costs, some increase also in CapEx due to positive news. We are now expanding Almas. We are coming from Almas, we built a 1.3 million tons plant. Last year, we finished above 2 million tons. We are now upgrading to 3 million tons to the plant. That means that we have to develop the mine that needs to raise the tailings then. We are also advancing in Era Dorada. We just announced Era Dorada early works. We also acquired MSG for $76 million. MSG has structurally a higher sustaining CapEx and a higher CapEx during the year of the turnaround and structurally will be higher than our average. However, the price that we paid for MSG more than justified this higher CapEx, sustaining CapEx and also higher sustaining cash cost, which we will walk you through also during the presentation. Very important additional events. Again, we closed MSG. We got the license for early works in Era Dorada, which we already started the early works. We are now finishing all the analysis, all the studies to be able to go and approve in the Board the full construction. Yesterday, we also announced a major milestone for Borborema, which we obtained the license to move the road, reaching now 1.5 million ounces just with the reallocation of the road freeing additional 670,000 ounces of reserves into the project, while we continue to analyze during the next few weeks for the AIF or 20-F to be released by the end of March, we are updating our resource and reserves based on higher gold price, which means lower cutoff that will free more reserves into all across our operations. Major milestones that we conquered also is after listing in NASDAQ and after the new issuance in $200 million all came from in 1 year, $1 or $2 million being traded per day, now reaching $100 million per day, addressing the low trading volume that we had now being attractive for major investors to invest in the company. And finally, not least, announcing again a very strong dividend of $0.66 per share on a quarterly basis, which gives us a yield on the last 12 months of 6.2% to our shareholders while we made acquisition, while we ramp up Borborema and while we're doing all these growth projects. So in summary, we can see that we are very much delivering on the long-term strategy. Number one, we are increasing production and developing the greenfield projects. Borborema last year, again, on time, on budget, commercial production in September. Then we also acquired MSG. This is the third avenue is continue to grow through M&A. Add daily trading volume. So on the third avenue, we acquired MSG, and we significantly increased daily trading volume, which is helping us to attract more bigger investors, although yet we are still discounted compared to our peers. And the second avenue to increase resource and reserves, again, with the Borborema, we increased Borborema reserves by 82% of reserves, significantly increasing cash flows of this project. And I can also walk you through a little bit the importance of this additional 670,000 ounces, which I will do during the presentation. So very much increasing production, increasing resource and reserves and address the multiple through daily trading volume and also new acquisitions. In terms of safety, super proud. And again, now -- all those numbers are putting Aura as a benchmark in the world in the sector. Not only we had the full year without any single lost time incidents, but now we're achieving over 18 months with no lost time incidents, which put our in a benchmark in the world in terms of safety. Any well-managed company will give you strong levels of safety and also strong results. In terms of stability of the structures, again, we make reviews every quarter, every month through external consultants and all our geotechnical structures are in satisfactory levels. Next slide. So when we look on the quarterly basis on the production that we have already disclosed, now we see since Q1 2025, a constant growth on production through a combination of the ramp-up of Borborema and lastly, still not only December, the acquisition of MSG. For the further quarters, we should see now continue to grow in terms of production on a quarterly basis as MSG now comes a full quarter and then gradually, we should also improve our production from our other operations. When we look on the guidance, we see that Aranzazu, the production, when you consider the same metal prices of the budget, we see that we were very much in line with the guidance in terms of production. I will get attention for those that are not used to looking carefully our numbers, Aranzazu, we have -- we sell copper and gold concentrate. And then we convert all the copper into gold equivalent ounces. When you do that, you get just the revenues, the revenues from copper and you divide by the gold price. The higher the gold price, the lower the conversion into the gold equivalent ounces. So when you look at the number of Aranzazu and you see the gold equivalent ounces decreasing along the last year, it's not because we are decreasing production, but it is mostly because our gold price is appreciated, which is positive for our whole company and that conversion goes to a lower gold equivalent ounces, which also translates to higher all-in sustaining cash cost because you divide by the total cost by the gold equivalent ounces gives -- and the gold equivalent ounces is lower. So that gives us a higher all-in sustaining cash cost. But that is because of a good news of gold appreciating. Apoena, we've been able to develop faster than where we were projecting during the year, so we could also produce above the guidance. Minosa very much in line with the guidance. Almas also very much in line with the guidance. And Borborema is where we were a little bit below the guidance. That's because we had the project, we had some minor issues with the agitators of the CIL tax that did not jeopardize the ramp-up. But as this drove to a lower -- was driving to a lower recoveries, we decided just to put for a couple of months very low grades instead of high grades, not to lose the long term, not to lose recoveries on that project that droves the production down while we preserved those -- that high-grade gold when we could finish the fix on the CIL tanks, which took us just a couple of months, not jeopardizing the ramp-up again, not jeopardizing reaching our capacity and not jeopardizing the recoveries that we reached after we changed those parts on the CIL tanks. Next. So in terms of all-in sustaining cash cost, excluding MSG, I'm proud also to show the market that we also could not only be within the guidance, which is the next slide, but also slightly below the low end of the guidance, fulfilling what we promised to the market in terms of production and also in terms of cost. If we take out the MSG, our all-in sustaining cash cost for Q4 would have been $1,363. And as we know, as we acquired MSG, we know MSG had over $3,000 of all-in sustaining cash cost, which doesn't scare us. I think that was the positive point on acquiring MSG was to see those high all-in sustaining cash costs and project and believe that during the turnaround of this year, we'll be able to drive that all-in sustaining cash cost to below $2,000 for the years ahead, not this year, but for the years ahead. Next, so just quickly going to the guidance. I just -- I mentioned to you, in terms of production, very much in the middle, slightly above the middle of the guidance. On the cash cost per gold equivalent ounces also, we reached the finish the year at $1,070. The low end of the guidance was at $1,078. All-in sustaining that translates also to a lower all-in sustaining cash cost finishing $1,368 and the low end of the guidance at $1,374 and also very much in line with the guidance in terms of CapEx, understanding that there was a year that we also built Borborema and decided to move forward with the expansion of Almas, the first phase, and now we are going to the second phase of the expansion of Almas. Next. So for the 2026, an overview here of the guidance and then Kleber can go in a little bit more detail in the next slide. But in terms of production, now we project full year of Borborema, full year of MSG, although MSG still during this year on 2026 in MSG, we are not focusing to produce the most at the lowest cost. We are focused on preparing that mine to be able to produce over 80,000 ounces per year and below 2,000 for the next years. So this year is a turnaround, although during this year, imagine that we should we projected a producing 50,000 to 60,000 ounces of production. Even if the cost is above $3,000 per year all-in, we have -- the price -- gold price today is $5,200. So it's $2,200 of free cash flow margin in a turnaround year for MSG. That price converted to 50,000 or 60,000 ounces means that the free cash flow and the EBITDA will be way above this is $120 million, $130 million in this project that we acquired for $76 million in the year that yet we are not focused on production. We are not focused on cost. We are focused on preparing that mine to higher production along the next years. In terms of -- and that higher all-in sustaining cash cost, which Kleber is going to explain, is translated to -- from MSG is translated to higher cash cost in our consolidated levels, higher all-in sustaining cash costs also in our consolidated levels and Kleber is going to explain that 65% to 80% of this increase is explained by MSG. And then we have other factors that we will disclose in more details during the presentation. In terms of CapEx, it's the same situation. It's a year that we are investing in MSG. We are expanding Almas, Almas we're doing the pushback of the pit to fast access also the underground development. We are expanding the capacity of the plant. We are already doing in this expansion project is not the full investment in Era Dorada, but yet already the first groundwork and the first early works. So there's a lot of capital that's been committed for good news, which we are expanding production, expanding to go at 600 or even above 600, preparing the company goes above 600,000 ounces of gold equivalent on the upcoming years. In terms of production, again, Aranzazu, that decrease comes from mostly metal prices, although Aranzazu is where we are more stable and getting more lower grades during the next years, while we continue to explore opportunities to decrease the cost of mine and the cost of plan to offset this slightly lower grades in Aranzazu. Borborema, the range of 65,000 to 77,000 ounces. This is also accounts that we are working, and we should publish our new resources and reserves, the old AIF, now the 20-F by the end of March. That means that we are updating our resources and reserves and all the mine plan of the company based on the new cutoff with a higher gold price. That means with the higher gold price, we reduce the cutoff, we can free and release and convert more resources into the reserves. On the other hand, the grades -- average grade goes down. But all in all, it builds value. It's a positive news because we are now assessing grades that was not economically viable in the past with this higher gold price. We've been able to access more ounces on total, although it's lower than former grades that we were projected in the past. So that is a positive news that has -- on the long term, that has minor impact on the short term. So next slide. Kleber? João Cardoso: Yes. Sure, Rodrigo. So good morning, everyone. So let's start with understanding the main drivers behind the impact of the increase in first in the all-in sustaining cash costs. We expect all-in sustaining cash cost in 2026 is expected to increase between $262 and $407 compared to 2025. And as we can see here on the right side on the top, the main driver for the increase by far is MSG that's bringing up our weighted average cash cost explains 70% to 80% of this increase. Metal price effect that Rodrigo was explaining, the gold equivalent conversion because gold prices on average in '26, if you take market projections are above the average of '25, so accelerated more than copper price, so explains another 5% increase. And the second impact that we have is in Almas. Almas due to mining sequencing this year, we're doing a pushback in the mine and having higher strip ratio. So the costs and lower grades also due to mining sequencing. So the cost is the increase this year. This is not expected to be repeated, for example, in 2027. And we also have tailings dam expansion this year in Almas. So in Almas mostly nonrecurring this effect. And then other impacts are marginal. We have slightly minor worse cash costs in Minosa, for example, but better cash costs in Apoena, so they compensate each other. So then on the bottom, understanding the main increases behind the sustaining CapEx is a similar story. So 75% to 70% of the increase. We're expecting to see an increase in '26 compared to '25 between $15 million and $17 million, of which about 2/3 are MSG. First, because it's an underground mine, so it has a higher sustaining cash cost. So we should not expect going forward to see sustaining CapEx for MSG comparable to the other open pit Brazilian mines. So it's going to be higher. But also it's a turnaround year as we have been communicating, we're going to be allocating some additional capital, especially in maintenance in MSG. And Almas is the same reason Almas explains another 15% to 20% of the increase in the sustaining CapEx for the same reason. The pushback a portion of the waste is capitalized the sustaining CapEx and explain also a portion of this increase. And finally, of course, Borborema is going to be operating for a full year. In '25, we had just 3 years of commercial production for Borborema -- 3 months, sorry. And then in '26, we have 12 months. Of course, that brings a higher sustaining CapEx. And finally, when we look at the expansion CapEx, what is in our guidance for '26 mainly is Almas underground development and the plant expansion that we are investing to increase the plant capacity to 3 million tonnes until the end of the year. Apoena, we have the second year of the North pushback that we are planning in '25, '26 to invest in the North Phase 3 pit to have higher grades from '27. So this is the second year. In Borborema, we have a filter press expansion. So the filter press now is the current bottleneck that we have at the plant. So by expanding the filter press, we can go beyond the nominal installed capacity that we have today at the plant. And also is going to help us prepare for potential expansion of the plant in the future. And also, we're going to be investing in engineering studies for potential expansion now that we were able to get the permits to move the roads. Era Dorada as well, we're investing in the early works, and we have then some other impacts such as Matupa and some investment in the projects. Rodrigo Barbosa: Thank you. So I think one major milestone that we also achieved, again, go to the next slide, is the license that we've been discussing with the national authorities that we finally signed an agreement of partnerships to move the road. That is releasing 670,000 ounces of gold on the mine sequencing. Just hypothetically, if you get the gold price as of today, $5,200 and then you imagine our all-in sustaining cash cost of $1,500, which according to our mine sequencing is below this. We see -- and then you multiply by the 670,000 ounces, you'll see that the company with this is we'll be able to generate along the years more than $2 billion, $2.5 billion pretax in this project. That's the size of the magnitude that these additional ounces can generate. And of course, we don't want to go from -- we already have 15, 16 years old, 16 years of life of mine, that will expand to above 20, 25. We don't want to do this. That's why we made the plant flexible. And now we are advancing our engineering studies and water access in order to expand the capacity of the plant perhaps up to 4 million tons that will drive us to a significantly higher production after we finish and conclude the expansion. We are now working on engineering. We are now working on water access. And we believe during the second semester, more towards the fourth quarter, we'll be able to present a detailed and a new feasibility study for this project using now a higher capacity. While we also were doing and we should expect for the 20-F by March. This project is very sensible to cutoff grades. So as gold price is going up, we are changing the price for cutoff, which means that we can now access, as I was mentioning, lower grades that was not economically viable in this project now becomes viable. So we should expect further increase in reserves by the end of March when we publish the new resource and reserves for the entire company, particularly here in Borborema. Again, I mentioned that we are delivering on the greenfield projects on time, on budget. Remind Borborema, the first Almas now Borborema. We are delivering on new acquisitions. We closed MSG in December. And we also told the market -- we've been telling the market for the last many years that we had to address the daily trading volume. And here, it is the very successful results of our listing in NASDAQ moving from TSX and listing in NASDAQ that coming from $1.52 million per day, now reaching on average in February, $100 million per day with a combination of NASDAQ plus B3. So that will also help us address the multiple. According to the analysts, we are still traded with a discount compared to our peers, and we will not only change the peers coming from the production of 300,000 ounces on average last year or this year to above 600,000 ounces. And then also with the higher daily volume and higher reputation as we are delivering on our projects, we should address this discount compared to our peers and maybe even be with a premium compared to our peers as we continue to grow. So with that, I conclude here the more high-level analysis. Kleber is going to drive and walk you through the details of the results, and then I come back for questions. João Cardoso: Okay. Thank you. So we start with a summary of the main financial KPIs that we are reporting for the quarter, for the year and also comparing with the previous quarters. As we -- Rodrigo mentioned and we see the results here, a combination of higher gold prices in the fourth quarter and increasing production in the fourth quarter as well. There was a substantial increase in our net revenues, closing the quarter with $322 million and bringing our annual revenues beyond $920 million in 2025. The adjusted EBITDA, it's the sixth quarter in a row that we delivered record high adjusted EBITDA at $208 million, considering Q4 average gold prices close to $4,000 per ounce. And bringing our annual EBITDA to $547 million as well and also the last 12 months, also the 6 in a row that we see increasing. When we move to net income, we're reporting a net loss of $20 million basically for the same reason that we reported losses in some of the previous quarters due to the sharp increase in gold prices during the quarter, which is good news, but it brings noncash losses related to our outstanding gold derivatives. Excluding those noncash losses, which amounted about $82 million in the quarter and certain other noncash items, we see that we had also an improvement in the adjusted net income, reaching $73 million in the quarter. And then in terms of cash and net debt, we see we continue in a very comfortable position in terms of balance sheet. There was some increase in our net debt in the quarter, but that's basically because in Q4, we paid for the acquisition of MSG. And unlike many other cases, many other companies when we make acquisitions, there are maybe some reduction in dividends. We didn't reduce the dividends. In Q4, we kept paying dividends above our minimum dividend policy because our balance sheet allows for it. So -- and then we can see, as a result, we closed the year also with a low -- very low net debt over EBITDA in the last 12 months, below 0.3x. Now moving to understanding the main items between the adjusted EBITDA and net income for the quarter. If we see a breakdown of the adjusted EBITDA of $208 million, Almas and Borborema were the top performers, about $50 million in the quarter each. We highlight, of course, Borborema considering it was only the first quarter of commercial production and is almost our highest EBITDA. So it shows all the potential that we have in this mine. Minosa and Aranzazu also coming very strong at $48 million and $41 million, respectively, Apoena delivering EBITDA of $22 million and MSG, $10 million. MSG also, I'd like to highlight for a couple of reasons. First is was just one-off, and one that we didn't see yet any impact of any turnaround in terms of production and in terms of cost. And we already -- with gold prices at much lower levels that we have today, and we already generated $10 million in a month for an investment for an acquisition that we paid $73 million. So it shows the type of returns that we should expect for this acquisition. When moving to financial expenses, I mentioned already, we had $82 million noncash losses related to the outstanding gold hedges. And we also had $22 million realized losses related to derivatives that expired during the quarter. Income tax expenses increased compared to the previous quarters, basically because our results from the operations also increased. So it's in the same proportion. On this quarter, we had nonrecurring other expenses that's mostly related to provisions that we did on year-end related to potential partial nonrecoverability of certain VAT credits that we have mostly in Honduras and also in Brazil. Then with that, we see our net income of minus $20 million, but then bringing back the noncash items, mostly the unrealized losses with derivatives, we come to adjusted net income of $73 million. Now moving to understand in detail the change in the cash position during the last quarter. We see on the left side of the page, we started the quarter with about $350 million in cash. Here on this more left side page, we can see what's the cash flow -- recurring free cash flow, which is the cash flow generated by now the 6 mines in production not including any investment to expand our business. We see we generated $94 million already deducting the realized losses with the gold derivatives. That cash was almost enough to pay for all the capital allocated to growth, the business in the last quarter. We invested $103 million, mainly the MSG acquisition and also expansion CapEx, the first steps in Almas mainly here for the underground mine development and plant expansion. And to the right side, more the financial items, highlighting, as I indicated before as well, $40 million dividend payments. Next page. And then when we move to the year, the cash flow by the mine in production generated over $250 million in cash, which was more than enough to pay for all the investment in growth and 2025 was 1 year that we invested significantly in growth. So we invested to Borborema construction, the second year of Borborema construction, the acquisition of MSG, acquisition of Era Dorada, acquisition of Altamira shares. Investment in exploration to increase our mineral reserves and resources that was funded -- entirely funded by the cash flow -- recurring free cash flow from the operations. And to the right side, the more financial items, we highlight the cash we returned to our shareholders, mainly through dividends, $116 million and the net proceeds we received from the NASDAQ IPO to $100 million, and that brings our cash position close to $290 million at the end of the year. This is the last slide, and then we open to questions. Thank you. Operator: [Operator Instructions] Our first question comes from Henrique Marques with Goldman Sachs. Henrique Tavian Marques: So quickly on guidance. I mean, there's still a lot to be made during 2026. So I just wanted to make sure here, what is already implied in this guidance because there are technical report updates coming up, which should impact reserves and eventually grades, which might weigh on production. But at the same time, you have some processing capacity expansion expected for this year. So I just wanted to confirm exactly try to better understand what is already implied in this 2026 guidance that you guys just released? And also on a second topic, a lot of things going on. I think that's great, but it would be also great if you guys can just help us map everything that is going on. So just any update on timing for Era Dorada or Matupa to be taken to the Board to eventually increase the processing capacity for Almas. What is the timing for that? And just to confirm, is Almas expansion already Board approved, the processing capacity? And lastly, just any timing for Aura to join the GDX index. Is there any prerequisite missing for that? That's it. Rodrigo Barbosa: Thank you for the question, Henrique. And yes, as you mentioned, a lot of going on in Aura. And again, another year that we continue to prepare the company to reach over 600,000 ounces of production. So going step by step, what you should expect. And then first question is for the budget of this year, we are not considering old gold price. We're already using new gold price based in new cutoffs that we will update the market. So there's this lag a little bit on what we forecast on the budget and what we will publish now by March. So we are already reducing the average grade of some of the mines based on lower cutoff and higher gold price, which is a good news because we're going to free ounces in terms of reserves for the long term and for overall, it generates NPV for the company, although in some cases, might slightly be -- drive to a lower production. So that's part of the question that you made that I could answer. Then there are a few things that's going on in. So you also asked about Almas. It's already included on the budget. It's already included on the CapEx for us to expand the capacity and also to raise the tailings dam to prepare the tailings dam for this new capacity up to 3 million tons of the plant already preparing this to receive higher grade material as an underground while underground is not totally developed, we'll put average and medium grade that's already on the stockpile because the mine is working faster than the plant, and we have some important stockpile that to use on the higher capacity of the plant. While we don't want to finish that. We go -- we should finish the year or early next year at 3 million tons per year at the plant. But we have projects to go up to 4 million tonnes, but that will depend on some more positive geological information that we are investing in the project. So we should expect this 3 million tons already hired, approved and should be implemented by early -- should be already in full production by early next year or by the end of this year, while we have projects and we have ideas and have discussions to go up to 4 million tons, but that will depend on more exploration results that we are conducting as we speak right now. On this -- also on this -- for this year, Borborema, we are -- as Kleber mentioned, we are increasing capacity of the filters that will give us a possibility to go beyond the nominal capacity that we should reach along the second semester, while, again, we are also preparing this doing engineering that's already approved in the Board and doing now studies for water assessments to double the capacity, and we would like to be able to approve this in the Board by the end of this year for the new capacity for Borborema. On MSG, it's a year of turnaround. We are -- although we are generating positive cash flows, we are not focusing on production and not focusing on short-term gains. We are focused on building the right plan and the right structure so that we can finish the year with a very good view that for the next years, we'll be able to produce above 80,000 ounces with below $2,000 of all-in sustaining cash cost. So that means that we are preparing the mine, we are doing underground development and advancing. Again, if I remind the investors, one of the reasons that MSG lost productivity and lost production and the plant become idle is that they are doing -- the mine 6 is they lost productivity to doing underground development and they start doing top bottom that increased dilution that reduce the speed. So that creates a lot of complexity. So now we need to do all the proper underground development in order to do from bottom to up. That means 1 year of a lot of underground development and preparing this so that we can do the right methodology underground. And then fulfill the capacity of the plant that will drive us to produce extra ounces and significantly reduce dilution, significantly reduce also the all-in sustaining cash cost. So -- and the final question you made was... Henrique Tavian Marques: It was regarding the index, the GDX -- yes, just if there's a prerequisite missing. Rodrigo Barbosa: No, I think we are reaching, but we need to reach for 2 consecutive quarters. And each quarter, you need to prove that your daily trading volume was higher on the last 2. So we believe we'll be eligible for GDX, although there are some -- it's not 100% sure because there is some analysis that the team do, but we believe that we'll be eligible to GDX by the second semester between third to fourth quarter of this year. Operator: Our next question comes from Edgard de Souza with Itaú BBA. Edgard de Souza: So my first question regarding the -- still on the guidance, production expectations came in slightly softer than what we were expecting, in particular at Borborema. I wanted to understand, I don't know if Glauber is connected here, but maybe if not, for sure, you can help me, Rodrigo. How much of this lower production profile in Borborema is a direct consequence of incorporating material that was previously above the cutoff? And at a broader portfolio level, how are you approaching cutoff optimization in the current gold price environment? To what extent are you trading near-term grade and free cash flow for longer life of mine and higher total value extraction, let's put this way. Then my second question, moving to the main positive news from the release is regarding the expansion at Borborema and the road relocation. So I wanted to understand the next steps from here. What is the expected time line for the physical relocation of the road? You mentioned that the capacity could reach around 4 million tons. How much of this incremental processing capacity could be gradually added in a brownfield scenario similar to what you did in Almas? How much of the expansion would require a more significant CapEx, maybe a new ball mill? And how should we think about water availability as a constraint until which levels can you produce with the current water availability that you have? And for which levels this would require a more significant investment for water availability there? Those are my main questions. Rodrigo Barbosa: Okay. I will start, and then I think Glauber is here with us, he can finish. But on the production for Borborema, mostly of the reduction in production comes from a lower grade that comes from a lower cutoff, right? And then we always -- we don't -- and that's one thing that we do in our and that actually, it's this mine that drove us to be here today with a successful story. We don't take decisions to favor only short term. We think the company as a whole, what builds the best value, although sometimes hurts the short term. And this example of Borborema is a very good example because we know that we have a lower production. But overall, as we should see during the publications of the 20-F, we'll see an increase in resource reserves. So that means we are significantly increased NAV of the company, although that on the yearly -- on this yearly basis means slightly lower grades, which is translated to a lower production. On the CapEx, I'll let Glauber explain, but I'll give an overview of the plant. It takes probably 2 years in terms of construction to relocate the road, which is the same time that we will do a next plant expansion. And the plant expansion will require a CapEx. The plant is not at 4 million tons. The plant was built for 2 million tons, flexible and prepared to receive new investments and then go to 4 million tons. But I'll let Glauber walk you through more and what we are thinking about on this expansion. Is Glauber here otherwise or the mic is off. Glauber Rosa-Luvizotto: Okay. Sorry. Good morning, everyone. So yes, as Rodrigo comment, so we -- this drop on grade is a positive thing. In fact, it's much more ore becoming economical right now with this new price. And what we are doing right now can bring some impact in the short term, but it is a big benefit in the long term. So in fact, we are preparing the mine for higher capacity or higher production that we are doing the engineering in the plant. In the CapEx, to answer your question. So it's basically built a new parallel plant. So now what we are doing is the bottleneck the filter area is the constraint that we have right now to increase capacity, but we already approved. We already hired all the service and construction, and we will build -- we will implement the new filters in this year. We expect to be done in the beginning of the next semester of this year. In parallel, all the engineer to expand the plant. We don't have the total CapEx right now, but we need to expand the CIL circuit, the mill circuit and the crusher circuit it means that everything. It's prepared to expand because we just need to connect without impact the actual production. but it's something that require CapEx to be done. Rodrigo Barbosa: And in the meanwhile, we are doing all the water assessment. That's ideas, there's projects also to do to increase the capacity to treat gray water from the city or receive gray water from other cities. So there are a few discussions going on right now, and it takes time, but we don't believe it's going to be the issue. Operator: Our next question comes from Guilherme Nippes with XP. Guilherme Nippes: Can you hear me? Rodrigo Barbosa: Yes. Guilherme Nippes: Okay. So I have Two questions here on our side as well. My first one is on the reserves report. So could you guys share any key shifts, any takeaways from the reserve report? And also if you have any shifts on geological interpretation and also on long-term assumption for gold prices as well? And if you could guys share also news on the underground mining for Almas, Borborema plant expansion and the increased reserves at Matupa. So any news on the updated reserves report? And my second question is on capital allocation. Of course, you guys have a lot of projects going on, but we still see balance sheet room for -- as gold prices are holding higher as well, we still see room for further acquisitions. So I would like to understand what are the priorities now? And if you guys are also looking for acquiring other assets here in Brazil as well and in Latin America as well. Rodrigo Barbosa: Okay. Thank you for the question. Unfortunately, we cannot disclose what will be on the AIF yet. That will be published on the -- by the end of March. But as you mentioned, we are working on the new cutoff for the current mines that we have that can affect some of the mines and not affecting other mines depending on the distribution of the grades in that mine. Borborema, as I mentioned, has some sensitivity to this. So it can be affected by a lower cutoff than increase, which is already translated on the budget. So we will see already the grades going down. As you mentioned, we are working on Matupa. We're doing analysis on [ Saguis ], doing analysis also in those Pezão Pé Quente that we acquired and perhaps some of those already be able to incorporate into the X1. So we should expect also the new report, including part of the resource and reserves of the X1 and also Pé Quente. Then underground, we continue to do underground development and also reaching the right level, then we continue to do intensify exploration. That -- although we've been having a very important and interesting interception that confirms the underground mine, that takes more time. So we should expect more towards the end of the year that we can consolidate all the information. But we don't want to waste time. That's why we're already doing all the underground development because we believe that this will become a mine, and we don't want to waste time doing all the studies while we develop the underground. So in terms of M&A, as you mentioned, the company, it's significantly increasing EBITDA and cash flows. Again, if you take it back in the last 2 years, we doubled -- every year, we doubled the EBITDA, '23, $136 million, then '24, $270 million, '25 now $540 million with the last quarter of $210 million with the gold price $4,000 and MSG only 1 month, you can already imply that we are significantly already on the running rate above the last year. And that, of course, although we can -- although we've been able to -- if you look what has happened to our in the last 4 years, we have the highest dividend yield in the world, of our gold price. We acquired Borborema, we built Almas, we built Borborema, we acquired MSG and yet we have a low leverage. And that was with a gold price of [ 32,500 ]. Now we are with the gold price at [ 550,200 ] with higher production. So we should expect for the upcoming years more than we've done in the last years in terms of we'll be able to generate higher cash, pay more dividends. Now we have more cash also to do more acquisition. We want to continue to do acquisitions. We know very much how to get to beyond 600,000 ounces that we published last year, but that by itself is going to generate a lot of value to us, but we know that the right multiple starts when you get closer to 1 million ounces. So we want to continue to pursue growth through M&As. We are America players. We don't feel -- we have the knowledge and expertise for the other continents. But in the Americas, we like gold, and we also like copper. So we should expect from our acquisitions, either in gold and also in copper, most in countries that we feel that has democracies, some institutional -- strong institutional entities. So that give us the minimum security to invest. We also like a project that has -- it's well developed in terms of geology, maybe needs further exploration, but just to convert resources into reserves and then implement our projects that are already, as we saw brownfield that we believe that's not perhaps the core of other companies that they might sell. So if you see an angle to buy them and reduce and generate [indiscernible], that's what we see. Basically, what you should see for Aura for the upcoming years is what we've done in the last years with now higher production and higher gold price, higher cash flow, so more intensified. Operator: Our next question comes from Marcelo Arazi BTG. Marcelo Arazi: A few questions on my side as well. We can see that we are seeing a slightly wide range of production guidance than what we were used to. Can we say that is this related to a more conservative approach and a large number of assets or it can be read as a sign of a more challenging or more hard to predict conditions? And a second one on CapEx. Is this level of sustaining CapEx, the new reality for the company or the full year 2026 print is inflated by the turnaround project in MSG? Can this eventually impact the dividend distribution given your policy of 20% of the EBITDA minus the sustaining CapEx? And just a final one, if I can. On the Guatemala CapEx, the guidance is already accounting for the early-stage investments. But with the eventual project approval, can we expect some CapEx revision for this year? Rodrigo Barbosa: Marcelo, for the questions. And I think for this higher all-in sustaining cash cost and higher CapEx, this is neither more challenging, neither more conservative. Actually, it's a good news. It's a good news that the company is being able to buy MSG for $76 million in only 1 month without -- as Kleber mentioned, we have $10 million of EBITDA. MSG structurally has a lower all-in sustaining cash cost. MSG structurally has higher all-in sustaining cash cost and higher also sustaining CapEx. But that's how we generate returns. We put this asset into our consolidated basis, affect negatively, but doesn't mean that it's a challenge. Actually, we see this more as an opportunity because during this year, we'll be able to do the proper work, and we are very confident that for the upcoming years, we will see that we'll be able to reach above 80,000 ounces and below $2,000 of all-in sustaining cash costs. Nevertheless, in a single [indiscernible], we generate $10 million without any new -- any turnaround. So -- and the other increase that we have comes from positive news also again, Almas, we've seen a very strong opportunity to increase capacity. So that increased also our CapEx. Another factor that increased the CapEx is Era Dorada because we felt that we got the license that the former company could not get for several years. So we already started early works. And then going to the final questions that you made, we are -- it is not on the CapEx, the full construction of Era Dorada. So as we go to the Board and as we approve the full construction of Era Dorada, this is when we then we will add a new CapEx for the project as we published already last year, the updated feasibility study, the CapEx of this project is close to $380 million. Of course, it doesn't happen in the full year. Actually, most of the CapEx goes towards the end of the investments. So -- but if we approve the Board, then we will incorporate on our guidance this year. So again, the higher CapEx that you see in this year is way more as an opportunity rather than a challenge. Marcelo Arazi: And just a quick follow-up. Could this impact the dividend distribution given your policy? Rodrigo Barbosa: No, we've been able to do everything. So our policy is 20% of the EBITDA minus recurring CapEx. Actually, we've been able to pay 50%, 60% above the policy. And we see no reason that we affect this for the upcoming years, except that there's some major acquisition that we believe that is super high return and super high value added, then perhaps we go to the policy, but we should expect the policy are above the policy for the upcoming quarters. Operator: Our next question comes from Lawson Winder with Bank of America. Lawson Winder: Could I actually start by asking maybe a bit of an expanded question on the index inclusion. So there are U.S. indices for which Aura would technically qualify like some of the Russells and are even much more widely followed than the gold indices. I mean, is there any discussion of potential inclusion or potential inclusion in the Russells on the horizon? Rodrigo Barbosa: We are monitoring, and we have a plan this year to be included in all the indices that we can fulfill. So we already were included in about 30 different indexes. But as you mentioned, I think we have way more opportunity to reach those major indexes that can not only help with the pricing on the multiple, but we also increased significantly our daily trading volume. So definitely is in our agenda. Lawson Winder: Okay. Fantastic. On Borborema, could you just confirm that the recoveries in Q1 '26 to date are now hitting design capacities? And if not, what's left? And sort of in what quarter should we think about that hitting the design recovery rates? Rodrigo Barbosa: Glauber, do you want to answer this, but we are at the design end... Glauber Rosa-Luvizotto: Yes, we are at the design. So it's not an issue. In fact, to run the plant in the capacity that was designed, it hasn't been an issue for us. So the difference in production is mainly related to the grades that we are feeding into this strategy to expand the pit with these new reserves and new cutoffs. Rodrigo Barbosa: So just continue the answer Lawson, that was a good question. The mill is running super well. Actually, we see room in the mill to run even above capacity. CIL tanks is the same. That's why Glauber mentioned that where we have now, although we are already at a nominal capacity, the filters are the bottleneck. Once we do the investment, the filters, then we can go beyond nominal capacity because everything else is running super well. Lawson Winder: Okay. If I could ask about Matupa from both the point of view of CapEx and annual production. So one, you guys have been investing a fair bit in exploration into Matupa. Does that have any implications for what your anticipated annual production rates will be? Like, I mean, at least, for example, at the Investor Day, you highlighted 55,000 ounces a year from that asset. And then conversely, I mean, if that's the case, what are we looking at in terms of a magnitude of potential increase in upfront CapEx for Matupa? Rodrigo Barbosa: Matupa, I think we continue to have this view of 55,000 ounces. We are not changing the nominal capacity of the plant. What we are doing now is invest in exploration to expand the resource and reserves. This project has a resource of 400,000 ounces, slight below in terms of reserves. But with [indiscernible] and with also, we see a significant room to expand the resource and reserves, which then we feel that's the right time to start the construction. And as we did with Almas, we prefer to build this project, prepare the plant to be flexible and expand because we know that we will even continue to expand resource and reserves beyond what we have today, beyond what we will publish in the AIF so that we can then increase the plant. And understanding that if you change too much the design of the plant as of today, even though we might see an opportunity, it's a whole different new environmental license process. So we prefer to respect what is in the license of environmental. And then during the years, talk to the agency and see opportunities to do amendments and then increase gradually the plant. Lawson Winder: Okay. Fantastic. And if I could ask one more question just on Apoena. I mean, that mine continues to impress. You guys are planning to mine much higher grades than we had modeled at that asset in 2026. Are these higher grades now sustainable into 2027? Rodrigo Barbosa: I think, yes, we should reach higher grades by the second semester, and then we'll last towards a couple of years. So it will be maintained. I think we believe that we can put this mine into 50,000, 60,000 ounces of production on the running rate after the second semester of this year, if not go beyond depending on some of other exploration that we are doing at the mine. It's a difficult mine, but full of potential. Operator: Our next question comes from Matheus Moreira with Bradesco. Matheus Moreira: My first question is on Almas. I would like to better understand the rationale behind the production guidance for the mine. I mean, considering the ongoing plant expansion and the fact that the mine is already operating at an annualized run rate above the published guidance, the numbers appear somewhat conservative to us. Are there maybe any operational bottlenecks or specific factors that you have already identified that could justify this more cautious approach? So that's my first question. And my second question on M&As. I would like to hear to explore a little bit more on this topic. Within Aura's capital allocation framework and considering that the company is now operating at a different level of cash generation than in the past, what type of assets in terms of size makes sense for the company today? And if possible, could you comment on geographic preferences? You've already touched on this a little bit earlier. But in the past, you mentioned the potential expansion into North America. Does that still make sense strategically? Rodrigo Barbosa: Thank you. So in Almas, we are operating at 2 million tons, but we will go through expansion and reach 3 million tons by the end of the year. So this is a process that is going to happen during the year. So today, we are still yet below what we expect to be until the end of the year. So that is also reflected on the production. Almas also first year started with a higher grade. So there is lower grades coming in now during this year. We will add higher grades again when we have the underground coming in. So we should expect Almas for the next year after the underground then continue to increase production together with the higher capacity. And if we have positive results on exploration, then we can even expand further to 4 million tonnes, and then we'll see another step up. So Almas, I think you should see that some conservative scenario during this year, but gradually continue to grow while we continue to expand capacity and then access higher grades when the underground mine come online. In terms of projects, I think we won the way to reach to 1 million ounces. I think that's where companies start to become relevant and then also start to get a fair multiple. We know very much how to get to 600,000 ounces. So to go beyond this, we will need a few acquisitions. Of course, as you mentioned, that we are growing and we have a larger balance sheet, and we have a larger also higher production, so that a meaningful -- more meaningful acquisitions should be coming online. But again, the higher the production, the higher the acquisition is the higher also the CapEx. So we will balance the internal rate of returns where is the right size, 80,000, 100,000, 150,000. We saw sometimes even above 150,000, but that will really depend on the return we see and with the angle for Aura to generate value, right? It's Americas, as I mentioned, and you asked about North America. I think it's intuitive to think that down the road, Aura will expand into North America. But yet, we feel that our multiple is too discounted. We believe that in North America, there's always -- probably always be a higher multiple compared to the players in Latin America in general. However, it cannot be that high gap. So we need to narrow this gap. We have a homework to do first to narrow this gap first to then be able to do accretive acquisition and not a dilutive acquisition to our shareholders. But if something shows up that we believe that it is accretive to our shareholders, we will do. We look and we are ready, and that's part of our strategy. Operator: Our next question comes from Tathiane Candini with JPMorgan. Tathiane Candini: I think most of them were already replied. I would just like to explore maybe a little bit two more. The first one, and again, you already explored a little bit of this, but this is regarding the cost of MSG. So I know that like more long term for 2027 is to reach lower cost. I would just like to understand a little bit of the pipeline for this? Like what are the plans for reach those guidance? And if there is like any type of hurdle that you imagine that you can reach? And the second one is regarding the CapEx of Era Dorada, which again, you already explored a little bit, but I'd just like to understand how is the pipeline for getting this approved for what I understood this year. But this is like a 22-month plan. Do you have like deadlines if it's not approved by any type of months, this could like have a little bit of an impact on 2028 production? Just trying to have a little bit more clarity on the months going forward. Rodrigo Barbosa: Okay. So for Era Dorada, we are now analyzing our internal analysis. We did -- we conducted during the last year, over 1,000 hours of dialogue with community leaders and community representatives. We brought some of the leaders also to visit our operations. So there was a very intense work on socializing this project. We moved back to underground, which drove attention from also national authorities that they understood that was a positive move. That's why that the result of this was the license to initiate the groundwork. I think we feel now even more and more confident to go to full production. It's our full construction. And we should expect this decision between first and second quarter this year. That's how we are thinking. And then it's a moving part, right? Tathiane, as you mentioned, 22 months of construction. And depending on the date that we started, it will affect the final production for sure. And the first question you mentioned was -- I forgot. Tathiane Candini: Regarding the MSG cost, just to try to understand like what is the plan to reach the guidance for lower cost by 2027? Rodrigo Barbosa: The plan is already under execution. We know very much how to improve efficiency. We know very much how to decrease the cost. We are now detailing in executing this plan as we speak. As I mentioned, we need to do a significant underground development because the mine today is connected to the plant. So any problem at the mine means that the plant is going to receive the ore. That's why we've been seeing in the last few years, a decrease on the plant production. So it's becoming idle. It has 20%, 30%, 35%, even 40% of idle capacity at the plant because the mine cannot fulfill. So in order to accelerate the production of the mine, we need 1 year of underground development to proper prepare the stopes, proper dual bottom-up approach. We have prepared the mine also to receive the veins are 1, 1.2 meters .They'll be mining at 1.80 at 2 meters. Now we want to mine at an narrow at 1.5, prepare the mine for 1.5, which means lower dilution, higher average grade. So all of those -- all of those strategies already being implemented, but we need time. We need up towards the end of the year to really see that the mine will be prepared to produce at its full capacity. On the hurdle rate, as we mentioned, we believe that we can prepare this for the medium to long term to be able to produce above 80,000 ounces per year at all-in sustaining cash cost of $2,000 or below. Operator: The Q&A section is over. We would like to hand the floor back to Rodrigo Barbosa for the company's final remarks. Rodrigo Barbosa: So again, thank you for the opportunity. I'm super proud, again, to be diligently executing on our strategy, diligently executing on implementing greenfield projects with the Almas on time, on budget, Borborema on time, on budget and a few others now and Era Dorada now prepared to go and hopefully, during the first quarter, second quarter, approved to implement. Also diligent execution on increasing resource and reserves. We just added 670,000 ounces of reserves, one project that's already derisked, already invested the CapEx, already generated cash flows that will give not only an opportunity to increase the NAV, but we'll also be able to increase production, while we continue to invest in exploration, as we mentioned, on Matupa, underground Almas and also Borborema has also potential to significantly increase. So diligently executing also increasing resource and reserves of the company. And third, also diligently executing on acquisitions. We just acquired MSG now closed in December, then -- we also addressed the daily trading volume now trading $100 million per day, while we've been able to pay dividends. And the higher CapEx and the sustaining CapEx we see today, as I mentioned, is not a challenge, it's an opportunity. We increased this because the company is growing. We increased this because we see opportunity to further expand the plant. We increased this because we see an opportunity to buy one asset that has a significant potential to expand capacity in terms of MSG in terms of production and then reduce the cost. Overall, in terms of results, again, super proud. If you take the EBITDA from '23, you doubled to '24, then we doubled again to $25. And if you take the EBITDA of last quarter with the gold price at $4,000, now you use $5,200 plus higher production Borborema plus higher production in MSG on the full quarter, you'll see that we are already on the running rate also lining going towards maybe perhaps even to double or even more during this year. So very much on track and what we promised to the market, delivering results, delivering on resource reserves, delivering on strategic agenda and also strong dividend. So thank you all. And hopefully, down the road, we have a new calls with the new quarter. And then again, between first or second quarter this year, take a look on Era Dorada and see if we feel ready to go to the Board and approve. Operator: Thank you. Our conference is now closed. We thank you for your participation and wish you a nice day.
Operator: Good morning, and welcome to Innovex's Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this call is being recorded. I will now turn the call over to Eric Wells, Chief of Staff. Please go ahead. Eric Wells: Good morning, everyone, and thank you for joining us. An updated investor presentation has been posted under the Investors tab on the company's website, along with the earnings press release. This call is being recorded, and a replay will be made available on the company's website following the call. Before we begin, I would like to remind you that Innovex's comments may include forward-looking statements and discuss non-GAAP financial measures. It should be noted that a variety of factors could cause Innovex's actual results to differ materially from the anticipated results or expectations expressed in these forward-looking statements. Please refer to the fourth quarter and full year 2025 financial and operational results announcement that we released yesterday for a discussion of forward-looking statements and reconciliations of non-GAAP measures. Speaking on the call today from Innovex, we have Adam Anderson, Chief Executive Officer; and Kendal Reed, Chief Financial Officer. I will now turn the call over to Adam Anderson. Adam Anderson: Good morning, and thanks for joining us today. First off, I want to recognize our team, which has worked tirelessly to deliver margin improvement, organic share growth, improved on-time performance and strong free cash flow since the merger with Dril-Quip in September of 2024. We've asked a lot of the organization, and I'm proud of what we've accomplished. In 2025, we made tangible progress against the goals we articulated at the time of the merger and the results we are discussing today are a direct reflection of the commitment and collaboration of our global teams. A defining characteristic of Innovex is our no Barriers Culture, the belief that to drive the best outcomes for our customers and shareholders, we must tear down barriers between ourselves, our customers and internally across the entire company. This mindset of working effortlessly across product lines, geographies and functions has enabled us to build a leading global oilfield service company from a standing start less than a decade ago. Our fourth quarter and full year results demonstrate the power of our no barriers approach. On today's call, I will discuss our fourth quarter and full year results and highlight the key developments shaping our performance, starting with continued market share gains, synergy capture from recent acquisitions, customer-led product innovation and progress against our key operational initiatives. After these operational and commercial updates, I will turn the call over to Kendal, who will discuss our financial results and provide more detail on our balance sheet, capital allocation priorities and our outlook for Q1. Turning to performance. We delivered a strong finish to 2025, exceeding the high end of our fourth quarter revenue guidance while generating substantial free cash flow and further strengthening our balance sheet. Fourth quarter revenue totaled $274 million, up 14% sequentially. That performance was driven by higher-than-expected subsea deliveries, continued momentum in our drilling enhancement and well construction portfolios and revenue synergies from recent acquisitions. Strong Q4 revenues reflected some pull forward of subsea deliveries that were previously expected for Q1 2026, which will impact sequential comparisons. As a reminder, we recognize revenues from those large subsea projects upon customer delivery, which can drive quarter-to-quarter volatility. Despite a softer macro environment, we grew market share across U.S. land, offshore and international markets. We continuously invest in innovation across our portfolio of big impact small ticket products. While our products represent just a small portion of the wells cost, they are critical to a wells function. And therefore, our customers' purchase decision is driven more by product performance than achieving the lowest possible price. We've curated a portfolio of primarily single-use technologies, which allows us to operate in a capital-light manner. We leverage a diverse and nimble supply chain, which combined with our product portfolio keeps CapEx low, historically less than 3% of revenue, which allows us to convert a significant proportion of our adjusted EBITDA to free cash flow. We generated strong free cash flow, which we plan to redeploy into disciplined M&A, customer-led innovation and shareholder returns. Operational execution was strong across the platform. In U.S. land, we outperformed underlying activity levels by realizing revenue synergies and introducing new technologies. The integration of Citadel and DWS provides a clear example of this execution in action. We acquired Citadel for its strong cultural alignment with our no barriers philosophy and its portfolio of highly engineered single-use technologies designed to reduce our customer cycle times and improve operational efficiency. At the time of the acquisition, we noted limited customer overlap between our legacy Innovex business and Citadels, creating a clear opportunity for revenue synergies, which we are now beginning to realize. Our drilling enhancement product line, which largely came to us through the acquisition of DWS has also driven cross-selling opportunities across the customer base. Together, these integrations demonstrate exactly how our M&A playbook is designed to work, disciplined acquisitions translating into execution, revenue synergies and market share gains. In offshore and international markets, execution remains solid. During the quarter, we delivered our first products under our global alliance with OneSubsea, validating the strategic importance of our partnership. The alliance enables us to supply OneSubsea with industry-leading wellheads for EPCI or bundled contracts, increasing our addressable market for subsea wellheads and improving OneSubsea's competitive offering. During the quarter, we also completed our 10 successful XPak expandable liner installation in Brazil's pre-salt fields. XPak is a differentiated technology that we acquired from Dril-Quip, which we believe has broader applicability across offshore basins. We also leveraged this technology onshore, an example of how we create value through innovation, customer relationships and distribution. In the quarter, we successfully delivered our first onshore XPak Express installation for a major independent in U.S. land, adapting this offshore expandable liner technology to support some of the most technically complex wells in the Permian. In Mexico, we substantially completed deliveries of subsea wellheads and large-diameter tubulars for a major offshore development, reflecting strong project execution and coordination across our global supply chain. In Saudi Arabia, we increased revenue sequentially and strengthened our local content position with the inauguration of our manufacturing facility in the Dammam industrial area. Overall, we exited 2025 with strong momentum, a differentiated and expanding technology portfolio and a clear runway for continued execution. I'm excited about the trajectory of our Subsea business with new orders in Q4 and at the start of Q1. We have been awarded significant projects for subsea wellheads and associated specialty items in Asia Pacific and the Mediterranean. In Brazil, we signed a landmark subsea contract with an IOC we have not worked for in over a decade. We have additional significant opportunities in the subsea pipeline we expect to win this year, setting up a strong outlook for our Subsea business. We plan to build on our commercial momentum this year while remaining focused on improving margins, enhancing the customer experience and unlocking long-term value for our shareholders. Our execution in 2025 gives me confidence that we're building a platform capable of delivering value for our employees, our customers and our shareholders. I will now turn the call over to Kendal, who will walk through our financial results and outlook in more detail. Kendal Reed: Thanks, Adam, and good morning, everyone. I'd now like to review our fourth quarter and full year 2025 financial results. For the fourth quarter of 2025, revenue was $274 million, which is a 14% sequential increase from the third quarter and a 9% increase compared to Q4 2024. Adjusted EBITDA for the quarter totaled $52 million, resulting in an adjusted EBITDA margin of 19% and free cash flow for the quarter was $43 million. Our strong Q4 performance was driven primarily by our Subsea business, which over the past several years has seen a seasonally strong Q4 followed by a weaker Q1, an effect further amplified this year by some deliveries occurring prior to year-end, which we previously expected to fall in Q1, a credit to our team's ongoing efforts to improve manufacturing on-time delivery. From a geographic perspective, NAM land revenue increased sequentially by 5% to a record level of $139 million. Our NAM land business continues to outperform underlying activity levels, driven by market share gains, strong execution and increased cross-selling across the Innovex platform. Customers increasingly deployed multiple Innovex solutions together in the same wellbores, reflecting the value of our integrated sales approach and supporting strong margins and cash generation. We do expect slightly lower NAM land revenues in Q1 due to the impact of weather on U.S. land activity, but we continue to improve our market position and feel very positive about our organic and M&A growth opportunities. International and Offshore revenues increased sequentially by 25%, benefiting from significantly higher subsea deliveries during the quarter, including approximately $15 million of deliveries we previously expected to fall in Q1 2026. We want to thank our team for the incredible effort to meet our customers' needs in Q4, and we remain pleased with the long-term outlook of our International and Offshore business with significant orders building for late 2026 and 2027. As expected, Q4 margins were impacted by the completion of several lower-margin legacy subsea projects as well as costs associated with the ongoing exit of the Eldridge facility. These factors will continue to weigh on margins during the first half of 2026. Importantly, the planned exit of the Eldridge facility, which we expect to complete by the end of the second quarter, is a foundational element of our margin improvement plan. Our reduced manufacturing footprint, improved on-time delivery and more disciplined bidding practices are expected to drive meaningful margin expansion as we progress through 2026. Selling, general and administrative expenses for the full year 2025 were $129 million, representing 13% of revenue. This is a significant decrease from our 2024 level of 18% of revenue. This improved efficiency comes as a result of our focus throughout the year on fully realizing synergies from all recent acquisitions and improving our cost structure wherever possible. As a result of these cost savings, despite a challenging product mix in Q4 and ongoing Eldridge exit costs, adjusted EBITDA for full year 2025 was $188 million, resulting in margins of 19%. Capital expenditures in the fourth quarter of 2025 totaled $9 million, representing approximately 3.3% of revenue. Full year 2025 capital expenditures were $35 million, representing 3.6% of revenue. 2025 CapEx was slightly elevated relative to Innovex's historical range of 2% to 3% of revenue related primarily to facility integration efforts, and we expect this slightly elevated spending to continue through Q2 2026 as we complete the exit of Eldridge. However, we believe significant efficiency gains and long-term margin improvement will be unlocked by these onetime investments. Free cash flow was $43 million for the quarter and $156 million for full year 2025. We converted approximately 83% of our adjusted EBITDA into free cash flow in both the quarter and full year 2025, a phenomenal result, well above our normalized conversion target of 50% to 60%. This performance reflects our countercyclical cash conversion profile, which we have previously discussed. During periods of slower activity growth, we typically convert a higher percentage of our adjusted EBITDA into free cash flow as working capital unwinds. Conversely, during periods of accelerating activity, we see the opposite effect as we build inventory to meet growing customer demand. In addition to this dynamic, 2025 benefited from harvesting cash from the legacy Dril-Quip balance sheet, driving further outperformance. As a reminder, we do typically see our lowest seasonal free cash flow in the first quarter of each year due to timing of certain annualized cash payments. I'm thrilled with our cash flow performance in 2025 as our high free cash flow conversion reflects the through-cycle strength of our capital-light business model and our disciplined working capital management. We ended the year with approximately $203 million of cash and cash equivalents and no bank debt, providing significant financial flexibility. Our balance sheet strength supports continued execution of our disciplined capital allocation framework, including selective high-return M&A opportunities and opportunistic share repurchases. We continue to see numerous opportunities to enhance our portfolio and drive market share growth through accretive acquisitions of businesses that fit our big impact, small ticket engineered product thesis, and this remains our top capital allocation priority for 2026. Return on capital employed for the full year 2025 was 10%. While this remains below our long-term target, we expect ROCE to improve as margins expand, lower-margin legacy projects roll off, integration benefits are fully realized and we utilize cash for high-return M&A or return it to shareholders. Looking ahead to the first quarter of 2026, we expect revenue in the range of $225 million to $235 million and adjusted EBITDA of $38 million to $42 million, with the sequential decline in revenue driven by seasonality and delivery timing in our Subsea business and some weather-related impacts on U.S. land activity. Our ongoing share gains on U.S. land, further recovery in Saudi Arabia and Mexico as well as the subsea wins Adam mentioned should drive further growth in 2026. While subsea mix and remaining transition costs will continue to impact margins early in the year, we remain confident in our margin improvement trajectory as 2026 progresses. Our M&A pipeline also remains active with several high-quality capital-efficient businesses that align with our strategy under review. I'll now turn the call back to Adam. Adam Anderson: Thanks, Kendal. To close, I want to again recognize the Innovex team for their execution and commitment throughout 2025. We strengthened our foundation, delivered strong financial results and positioned the company for the next phase of growth. We're building a business that can perform across cycles, leveraging our strong balance sheet, disciplined capital allocation and a differentiated portfolio of technology-driven, high-return products. As we move into 2026, we remain focused on continuing to enhance customer experience, capturing additional market share and driving sustained margin expansion towards our long-term target of 25%. Thank you once again to our employees, customers and investors for your trust and partnership. Operator, we can now open the line for questions. Operator: [Operator Instructions] We'll take our first question from Derek Podhaizer at Piper Sandler. Derek Podhaizer: Maybe just to start, hoping to unpack the first quarter margin guide a little bit further. You've talked about the Subsea margins weighing on company margins, these low-margin projects continue to weigh first half of the year. I know you have the exit costs associated with Eldridge. You talked about optimizing your bidding process. I'm just trying to get an understanding of what happened, what's causing these margins to be weighed upon? And how should we think about the improvement over time and just thinking about any structural headwinds to that long-term 25% target that you've laid out? Adam Anderson: Derek, thanks for the question. So first, I would say, hey, point you to Q4, and we had a really strong result in the quarter. Some of that was a result of pulling forward. Some of the subsea deliveries that we were expecting in Q1 got pulled into Q4, which I think on balance is good for us, but makes Q1 a little bit lighter. We'll still have a couple of low-margin subsea deliveries Q1, Q2 that will weigh margins down a little bit. And then as you know, we're working on a lot of things around improving margins. The single biggest of that is the Eldridge exit, which has pushed back a little bit like we were originally forecasting that probably early-ish in Q1. That's probably going to slide into Q2 as we finish out some customer orders here for the Western Hemisphere. So I think all in all, like a very good Q4. Yes, Q1 is a little bit -- we're seeing a little bit of seasonal decline there and a little bit of that pull-through effect we mentioned earlier. But I don't think any of this impacts how we're thinking about the long-term margin progression, both seeing a little bit of improvement as you particularly as you get in the back half of this year as well as in '27 and beyond. Derek Podhaizer: Got it. Okay. That's encouraging. I appreciate that. And then I guess on the integrated cross-selling opportunities, I mean, this is pretty exciting, just given this shows the unique platform that you guys have as far as bringing on these acquisitions and putting them on the larger Innovex platform. Maybe could you help us provide some maybe real tangible examples of how you've been able to expand the drilling enhancement well construction with DWS and Citadel because it feel like this sets the playbook for your future M&A opportunities that I know you guys are focused on as we move through the year. Adam Anderson: Yes, I agree. I think we're really excited about that, both what we've accomplished in the couple of those really great acquisitions we've done over the last 1.5 years or so as well as our pipeline of M&A opportunities. So if you look at the drilling enhancement product line that came to us through the DWS acquisition, that business is performing great. And then we're seeing both benefits in U.S. land, where that team has some really strong relationships with a couple of larger independents Innovex historically hadn't worked for that we're seeing some product pull-through already. So that's exciting. And then conversely, we're seeing really good adoption of those products into the Middle East, which is going to be very difficult for that business to go attack on a stand-alone basis, like we're seeing really good uptake in Oman, UAE. We're doing some good work there with some of those independents coming in to do unconventional work there in the Middle East. And then a similar story, albeit a little bit earlier with respect to the Citadel deal, another business that's performing -- was performing great in the acquisition has continued to do well. And then we've seen some cross-selling opportunity in North America. And then we're really excited with what those -- that product set can do internationally and the likes of Argentina. We're in the middle of a trial test right now in Saudi with the trench foot wet shoe product that came to us through the Citadel acquisition. So yes, we're seeing a lot of good early tangible benefits from those deals, which gives us more confidence not only in where those deals are headed, but also executing on the string of other -- of really other attractive businesses that we see in front of us. And to be clear, we normally don't bake any of these revenue synergies into underwriting new deals. We look at them on a stand-alone basis and any kind of revenue synergies, we usually keep as upside. Operator: Next, we'll move to Don Crist at Johnson Rice. Donald Crist: It's been about 15 months or so since you closed Dril-Quip. And I know a lot of investors probably don't realize the kind of length of order schedule on the offshore side. So just kind of curious as to -- are you fully finalized all of the kind of Dril-Quip initiated orders on the Subsea side now and maybe that's the reason why your margins are coming in a little bit? And kind of when did your sales team really take over after the Dril-Quip merger to where you're actually driving the pencil versus inheriting some of those orders? Can you tell us where you are in that kind of structure? Adam Anderson: Yes. Don, thanks for the question. Yes. So to be clear, like I wouldn't -- some of the contracts, these are long-term 4-, 5-year contracts, some of which are very attractive. Other -- some stuff comes in a little bit less margin. We're going to see margin improvement going forward, both through cost structure reduction, for example, not having as many really large under manufacturing plants and really consolidating a lot of that or all of that subsea demand into a singular manufacturing plant is going to be a really big benefit. We do have a couple of specific one in particular subsea project flowing through the books right now that's at lower margin than we expected. And to be perfectly frank, that was bid under our tenure. That was bid post the deal closing. We just made some assumptions we were too optimistic in some of our assumptions there. So we'll see that order still weigh a little bit in Q1, start to bleed off in Q2, and then we're rebidding that as we speak. And would expect both a little bit of incremental price improvement as well as a little bit of cost reduction on that specific one, but that's kind of the broader theme. Donald Crist: Okay. And then can you give us an update kind of on the Far East manufacturing expansion, Vietnam and China and that kind of where you are in that process of kind of moving everything over? I mean, are we pretty much done with the CapEx on that and ready to kind of go full force there? Adam Anderson: Yes. No, I would -- I think we're kind of mid-innings. I think we've got two big projects going on there. We're moving a lot of the subsea manufacturing to our existing footprint in Singapore. As Kendal said on the call, we saw some CapEx impact in Q4 of that. We'll probably see a little bit more in the first half of this year. Then to be clear, that's both for some manufacturing footprint in Singapore as well as repositioning our Gulf U.S. offshore operations here, we need some CapEx to probably sustain that as we move out of Eldridge. And then on the downhole world, we acquired a business, a manufacturing facility in Vietnam last year. That's still -- we're ramping slowly into that. I think that's one over the next year or 2, we'll see continued growth there. There will be a little bit of incremental CapEx there, but that's kind of baked -- again, kind of baked into our earlier comments. I think both of those, we really haven't started to see any of the impact of the efficiencies that will come with having lower overall footprint and then a really high-quality but low-cost, high-volume facilities there in the Far East that we can lean on. We'll maintain a pretty robust supply chain in many of the markets we operate like the U.S. We'll always have a pretty good-sized manufacturing capability to respond to our market needs here in the U.S. But as we channel some of the higher volume and some of the Eastern Hemisphere demand into these plants, we'll see some nice benefit over the next year or 2. Donald Crist: Okay. That's very, very helpful as you expand around the world. And just one final one for me. We're -- as analysts, we're talking a lot about the broader Middle East and Northern Africa region. And can you just tell us just broadly speaking, kind of when you get brought into conversations if somebody is bidding on one of those big tenders? Is it 6 months before the project starts? Or is it kind of when the project starts? Because I know a lot of the guys from the U.S. are over there consulting and presumably, they like your equipment here in the U.S., they would bring it over there. Adam Anderson: Yes. So it depends a lot based on the project and the operator. For example, if you look -- some of the quickest hit stuff, if you look at some of the IOCs that are putting rigs to work and like a Bahrain or the UAE, we're seeing some benefit from that right now and some guys that we work with in the U.S. have showed up over there, and we're seeing some of that. That's on the smaller side just because that's -- those are smaller dollars. When you look at some of these big, big contracts that are let across the Saudi or Kuwait, some of those, we don't -- the benefit of being these kind of big impact small ticket products is that we're not always included in those big, big tenders that can be pretty aggressively priced. And we have these niche products that are sold a little bit later than those big projects. So it can kind of run the gambit from we get them brought in right away to, hey, we're a little bit more just in time as the rigs are getting stood up and start to go to work. Donald Crist: Okay. But you are seeing demand from friends over there that have moved from the U.S. that like your product? Adam Anderson: Yes. Yes. We have definitely seen some of that. I mean to be -- it's not nearly as big. And these IOCs, you're not running nearly the same rig count as some of the big NOCs in the region. But yes, we're seeing a little bit of benefit from that. And then in general, we're seeing some of that reactivation of rigs in Saudi, continued growth in other countries in the Middle East. So we'll start to see the benefit of that as we progress throughout this year and go into '27. Operator: We'll move next to Keith Beckmann at Pickering. Keith Beckmann: I just kind of wanted to hit around the M&A side of things again. I wanted to know if you could give us a little bit of a better sense on maybe the current M&A landscape you see, whether it's private equity companies in the U.S. or are there even any opportunities internationally? And maybe what areas of the business do you think could be improved? You guys have a lot of products, but maybe is there any areas from an M&A perspective that you think you're missing that could help you improve? Kendal Reed: Yes. Thanks, Keith. So as you know, M&A is definitely a core part of our strategy. So we're constantly looking for opportunities to grow and improve the business through acquisitions. And I would say right now, we're very excited about the opportunity set. Our M&A pipeline is probably as active right now as it's ever been. We mentioned on the call, we have multiple opportunities under review. Some of those are progressing nicely. And I think to your question on what are the most kind of actionable opportunities there. We have a handful of things, but I would say the most near-term impactful ones for us are probably going to be add-on style acquisitions where we can add kind of a specific differentiated product or a small portfolio of products to our overall portfolio and then look to grow those through the global distribution network. That could be private equity-backed, could be founder-backed, but generally speaking, more U.S.-based, a little bit smaller companies that have a lot of the abilities to both help us and we can help them kind of allow the DWS and Citadel playbook. I think that continues to be a really interesting space for us to play. We are looking at a few bigger, more transformative, more international style deals as well. But as you know, those tend to be take much longer or harder to handicap what's going to come to fruition there. But overall, I think based on what we're seeing, we really think M&A remains a great way for us to deploy capital in the near term. But as we've always said, we screen these deals against our buyback program and look to allocate capital in a way that drives the best long-term shareholder returns. Keith Beckmann: Awesome. That's very helpful. And then my second question was just going to be kind of around free cash flow conversion. And I know you guys hit on this a little bit, but the free cash flow improvement, I mean, I think you guys had 83% free cash flow conversion for the year, which is just a substantial structural improvement, along with some help from working capital, I know. But I think you've described 50% to 60% is kind of the normal business run rate conditions. I just wanted to get an idea on throughout 2026, if we should expect some further structural improvement maybe with some self-help still or 50% to 60% is maybe a good way to think about a good chunk of this year? Kendal Reed: Yes, it's a good question. I mean we're thrilled with the free cash flow conversion in 2025, and you kind of see it showing up on the balance sheet gives us a lot of capital to go look at some of these great accretive M&A opportunities as well as do some different things. So very pleased with how that's played out. I do think the 83% is probably on the high end, benefited from harvesting some cash off the Dril-Quip balance sheet, like we said. But that 50% to 60%, that's kind of our normalized through cycle number that we target. So in a year like 2026, I mean, we're not giving out full year guidance, but I think it probably in the market feels generally flattish, maybe some areas of growth, some areas of some slow decline. But if you're not expecting a huge ramp-up, we don't need to build the inventory to support the customer needs in that scenario. And I think we'd look to still continue to have a healthy free cash flow conversion. So yes, probably something more akin to that range, but maybe on the higher end of that 50% to 60% target. Operator: We'll move next to Eddie Kim at Barclays. Edward Kim: We don't get too much detail on the magnitude of your Subsea product bookings. But just curious if you could share even just directionally how 2025 Subsea product bookings trended versus '24 levels? And looking ahead to this year, do you expect Subsea orders will be up versus last year's levels? Or do you expect that to be more of a 2027 event? Adam Anderson: Yes. Eddie, yes, fair question. We probably in '25 in aggregate subsea orders would have been down a little bit versus '24, but it's pretty lumpy. So the first half was down a little bit. What I would say, though, is in Q4 through the beginning part of this year, there's been a lot of projects that have kind of been a little bit slow to come that we've seen show up in Q4, Q1. So we have a number of big projects in the Far East that we've gotten contract awards on. We got a nice project in the Mediterranean awarded, and then we have a bunch of things we're waiting to see what happens in Asia. So I would think that our order volume for '26 is probably going to be up pretty nicely versus '25. And we're going to start to see a little bit of the fruit of that into this year and as we move into '27. So we're really happy with the trajectory of that, but there was a little bit of a lull there back half of '24, start of '25 on those orders, I would say. Edward Kim: Got it. Got it. That's very helpful. And then just with the exit of the Eldridge facility at the end of 2Q, and the slide in your earnings deck is a good one and an 80% reduction in that footprint. I'm sure that facility was set up for an activity environment far beyond current levels. But to the extent we do get an offshore activity recovery here really in 2027 and for the next several years, how confident are you that your reduced footprint is going to be able to support an increase in subsea product demand? Adam Anderson: Yes. We're very confident that we can serve that market even with the reduced footprint that we're seeing here that as you said, that Eldridge a wonderful facility just built for a different time in that market. I think from here forward, we can still sustain a very nice increase in activity levels across the Subsea business globally. Operator: And we'll move next to Josh Jayne at Daniel Energy Partners. Joshua Jayne: Adam, I feel like you've been one of the more balanced with respect to offshore outlooks as we work through this white space period over the last 12 to 18 months from a rig activity standpoint. But I'm curious if you've seen enough things announced recently with respect to term on some contracts and maybe the subsea tree awards that we've seen where you could provide more of an outlook outside of Q1 on the Subsea side and how you see the business going, maybe an international offshore walk-through sort of through the end of this year and into 2027 would be helpful. Adam Anderson: Yes. Josh, Well, yes, fair question. We can be probably qualitative in how we respond to that. We're not putting out quantitative guidance beyond Q1. What I would say is I would -- I think we're seeing some nice project opportunities pop up for us, as I just referenced to Eddie's question that we -- things we've been waiting for a little while that came in, a couple of things that have been a little bit of a nice positive surprise in the offshore award world over the last few months for us that I do think, again, getting back half of this year into '27, we should see some nice growth there in the offshore -- our offshore business, our Subsea business. When you look at the other international markets, I would think the other really important places for us like Saudi and Mexico, which were down in '25, they have started to come back a little bit. They're still probably closer to a trough than a peak, but I think both of those markets will see some nice growth this year. And then we're seeing pockets of other countries in the Middle East that are admittedly smaller for us, but we're seeing some nice green shoots of growth there. So I think in general, yes, probably it will take a little bit of time. But I think, again, back half this year into '27, we'll see some nice overall international offshore growth. Joshua Jayne: And then if you've referenced this before, I apologize what the cycle times you highlighted. But when you think about shortening your cycle times from order to delivery on the subsea side of the business, could you remind me what your initial targets were? So for example, from the time in which an order was placed right after the acquisition of Dril-Quip closed to ultimate delivery, what that time frame was like? And then how you see that playing out sort of for something ordered middle of this year or end of this year and how your targets on ultimately how much cycle times will compress and since you started this journey, if there was upside to your initial target would be helpful. Kendal Reed: Yes. So I think with respect to specifically from the time line from order to delivery, that has not changed too much. I mean it varies to some extent, but rule of thumb, I would say, for a subsea order, we're generally getting that a year or so before delivery, plus or minus. I think the big thing we've really been focused on is improving that on-time delivery in that Subsea business, which we've continued to see really nice progress with that. I think it was very low when the deal started has kind of consistently ticked up and we're around 80% on-time delivery in that subsea product line in Q4 with the target, obviously, of getting that to 95-plus percent. So I think that's the big area we've been focused of really pulling that in, making that run efficiently and consistently hitting that delivery date that we schedule. Adam Anderson: The other thing I would point out, and I don't know that we've talked about this a lot publicly, but it's definitely -- when you look internationally, it's definitely you get an order, you build it over x period of time and then deliver it and that model will probably persist. In the Gulf, the U.S. offshore, we're seeing some transition to more of a consignment model where, hey, we have a contract. We are built -- for example, we're building stuff right now against a contract that will really only recognize the revenue once we install it for the customer, whereas in prior subsea cycles, that would have been -- we've been recognizing revenue as we speak right now for that stuff. So that also is going to contribute to a little bit of this lag in revenue versus what you would historically have seen as the Gulf makes this transition, which ultimately will be good for us and good for our customers as we're able to standardize products, build more things in volume across a wider customer base versus just do one-off project stuff, but there's a little bit of an air pocket there on revenue as you make that transition, if that makes sense. Joshua Jayne: It does. Operator: And that concludes our question-and-answer session and today's conference call. We thank you for your participation. You may now disconnect.
Operator: Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Sunstone Hotel Investors Fourth Quarter Earnings Call. [Operator Instructions] I would like to remind everyone that this conference is being recorded today, February 27, 2026, at 12:00 p.m. Eastern Time. I will now turn the call over to Mr. Aaron Reyes, Chief Financial Officer. Please go ahead, sir. Aaron Reyes: Thank you, operator. Before we begin, I would like to remind everyone that this call contains forward-looking statements that are subject to risks and uncertainties, including those described in our filings with the SEC, which could cause actual results to differ materially from those projected. We caution you to consider these factors in evaluating our forward-looking statements. We also note that the commentary on this call will contain non-GAAP financial information, including adjusted EBITDAre, adjusted FFO and hotel adjusted EBITDAre. We are providing this information as a supplement to information prepared in accordance with generally accepted accounting principles. Additional details on our quarterly results have been provided in our earnings release and supplemental, which are available in the Investor Relations section of our website. With us on the call today are Bryan Giglia, Chief Executive Officer; and Robert Springer, President and Chief Investment Officer. After our remarks, the team will be available to answer your questions. With that, I would like to turn the call over to Bryan. Please go ahead. Bryan Giglia: Thank you, Aaron, and good morning, everyone. Despite the various headwinds that impacted our industry in 2025, our portfolio finished the year on a high note with fourth quarter operating results that exceeded our expectations, driven by broad-based strength across the portfolio. The fourth quarter capped off a productive year at Sunstone, where we made further progress on our 3 strategic objectives, which include recycling capital, investing in our portfolio and returning capital to our shareholders. Earlier in the year, we completed the sale of the Hilton New Orleans at a mid-6% cap rate inclusive of required near-term capital and fully recycled the proceeds into the repurchase of our stock at a compelling discount and a higher implied yield. In addition, we completed several capital projects, including the debut of the Andaz Miami Beach, which despite its later opening, had a solid festive period and good momentum heading into this year. Lastly, we returned more than $170 million of capital to our shareholders through a well-covered dividend and accretive share repurchases. These strategic accomplishments will drive growth in per share earnings and NAV in the years to come. We will share additional details on our outlook and our expectations for 2026 shortly, but I'll start with a quick recap on the fourth quarter results. As I noted at the top of the call, our results came in better than expected with total RevPAR growth of 7.4% in the quarter or 12.5%, including the contribution from Andaz. Our resorts led the portfolio driven by solid performance at the Wailea Beach Resort. As we shared with you on our recent calls, our results in Maui were hampered through much of last year as market demand normalized. We were pleased to see the green shoots we witnessed at the resort in the fall continue into year-end, leading to 19% RevPAR growth in the quarter. On the opposite side of the country, Andaz Miami Beach delivered year-end results that were ahead of expectations, and the outperformance has carried into the early parts of this year, positioning the resort well to deliver on our expectations for 2026. We are pleased with the demand our renovated resort is attracting, including high-profile business around some key events in the market that should help the resort further build awareness. Performance at our Wine Country resorts was also stronger than expected with Montage Healdsburg capping off a better year with 15% total RevPAR growth in the quarter and just over 9% for the year. Overall, our resorts were our strongest performing segment in Q4, and we expect that to continue into 2026, but now with the added benefit of a full year contribution from Andaz Miami Beach. At our urban hotels, we were pleased with our quarterly performance at Marriott Long Beach Downtown, which continued to benefit from its brand conversion in 2024 and generated total RevPAR growth of 12%. Similarly, the Portland market continues to recover with the Bidwell Marriott turning in nearly 13% growth. This strength was partially offset by a softer market and tougher comps in Boston and New Orleans. While top line growth was less robust at our urban hotels, we continue to work with our operators to control costs and managed to grow margins during the quarter. Our convention hotels turned in better-than-expected performance with RevPAR growth of 2.8%, even with some headwinds from the meeting space renovations that we had underway in San Antonio and San Diego. Excluding these 2 hotels, our convention hotel RevPAR growth was 5.3% during the quarter. San Francisco was once again a standout performer, which added to solid top line results in the first 3 quarters of the year to generate more than 12% total RevPAR growth for the year. We continue to be encouraged by how the market and our hotel are setting up for additional growth this year with group pace up in the low double-digit range and a strong start with good group activity in January and the Super Bowl in February. The Renaissance Orlando at SeaWorld also had a solid quarter with total RevPAR growth of more than 10% on a better mix of business. Group revenue production for the current and future periods in Orlando increased over 10% last year, and the hotel is pacing for better performance in 2026. Operating results in San Antonio were softer in 2025 on a lighter group event calendar and some displacement from our completed meeting space renovation, but 2026 should benefit from increased production and the renovation. As we shared with you on prior calls, performance last year in Washington, D.C. was less robust than initially anticipated and was impacted by government spending cuts, changes in policies and the government shutdown. Similarly, our results in San Diego were hampered by softer transient demand and a less constructive backdrop for international travel. On the expense side, we were pleased with our operators' ability to drive efficiencies in response to continued cost pressures. We knew coming into the year that 2025 would be particularly tough on margins as contractual cost escalations at certain of our larger hotels were adding to general inflationary pressures across the portfolio. I am pleased to report that we made significant progress in managing costs and delivered comparable portfolio margin growth of 40 basis points during the year on total RevPAR growth of 3.5%. This was a much better cost management outcome than we expected at the start of the year. While some of the efficiency measures that were additive in 2025 will be harder to sustain as we move into this year, we will continue to work with our hotel teams to manage costs, increase productivity and defend margins. As we look into 2026, we see some reasons to be optimistic about the year ahead. Andaz Miami Beach is starting off well with impressive year-to-date occupancy above 80% at a mid-$500 rate. In addition, the resort has nearly 8,000 group room nights already on the books, representing more than half of our budgeted room nights for the year, which is very strong for a market with a shorter-term booking window. The property is building momentum, which will continue this year with the opening of Bazaar Meat and our membership Beach Club. We are seeing additional positive signs as market recovery continues in Northern California, fundamentals in Biolea are more constructive, and there is the potential for industry-wide lift from special events such as F1 in Miami, which we missed last year, America 250 celebrations and the World Cup. At the same time, our focused portfolio will experience headwinds from softer transient demand in San Diego and continued uncertainty in D.C., 2 of our larger markets, which will offset some growth. That said, both hotels had better-than-anticipated transient demand in January and February, which, if current trends continue, could result in a better-than-anticipated year. While there are many encouraging signs, the industry and Sunstone have been disappointed by various headwinds over the past 2 years, making us more cautious. That said, we are excited about our prospects this year. And if costs remain controlled and some of these events produce more than our modest expectations, we could be positioned to see performance accelerate as the year progresses. The guidance that Aaron will share with you later attempts to balance these factors and reflect an outlook that we believe is reasonable and achievable based on how we see things today. As we move through 2026, we will continue to execute on the 3 components of our strategy: recycling capital, investing in our portfolio and returning capital to shareholders. While the transaction market has been quiet the last couple of years, we are clearly seeing some incremental activity, and we are looking for ways to thoughtfully demonstrate the value of our portfolio. In the meantime, we are focused on delivering profitability growth from operations and realizing the benefits of our investment projects. We expect these actions will support our capital return objectives in the coming year. And with that, I'll turn the call over to Robert to give some additional details on recent capital investment activity and our plans for 2026. Robert Springer: Thanks, Bryan. 2025 was a busy year for us on the operations and investment front. We debuted Andaz Miami Beach in the second quarter and the fully renovated resort looks great and is gaining traction. We have been pleased with recent transient booking velocity and the progress we have made attracting high-quality group business. We will round out the resort this year with the addition of the Beach Club and the introduction of Bazaar Meat, the resort's signature dining destination. Performance in the initial weeks of 2026 has been encouraging with year-to-date RevPAR of nearly $475 and the resort is well positioned to deliver earnings growth this year and into 2027. Earlier in 2025, we completed a rooms renovation at Wailea Beach Resort and are happy to see the demand backdrop turning a corner on the island. We have the opportunity for meaningful growth at the property as occupancy rebounds and we benefit from our recent investment. We are seeing good progress with RevPAR index increasing 17 points sequentially into the fourth quarter as the market normalizes and the resort reestablishes its competitive positioning. In the fourth quarter, we completed a renovation of the meeting space in San Antonio, which complements the room renovation done just prior to our acquisition, and the hotel now looks great from top to bottom. In San Diego, we are putting the finishing touches on a renovation of the meeting space there as well, which should allow the hotel to maintain its leading position in this premier group event destination. We are completing this work in phases to minimize disruption, but will have a modest amount of earnings headwinds in the first quarter. The project remains on schedule and on budget. This year, we will also be performing some maintenance projects at our Renaissance Orlando, facade work and a rooms refresh at Oceans Edge, Resort and Marina as well as some smaller routine projects across the rest of the portfolio. As Bryan alluded to earlier, we are seeing some incremental signs of life in the transaction market. While we are hopeful this will provide a more constructive backdrop to execute on our capital recycling strategy, we expect to remain disciplined in our approach and mindful of other capital allocation opportunities available to us. With that, I'll turn it over to Aaron. Please go ahead. Aaron Reyes: Thanks, Robert. As we noted at the top of the call, our earnings results for the fourth quarter came in ahead of expectations as stronger leisure performance at our resorts added to modestly better performance across most other hotels in the portfolio. Rooms RevPAR grew an impressive 9.6% in the quarter, including a 540 basis point benefit from Andaz Miami Beach. In a continuation of the trends we saw earlier this year, growth in ancillary spend outpaced rooms and contributed to total RevPAR growth of 12.5%, including a 510 basis point benefit from Andaz. This stronger top line performance and ongoing cost controls contributed to full year earnings that were ahead of the midpoint of our guidance range, including adjusted EBITDAre in the fourth quarter of $57 million and adjusted FFO of $0.20 per diluted share. We continue to benefit from a strong balance sheet with net leverage of only 3.5x trailing earnings or 4.7x, including our preferred equity. In early January, we drew the remaining $90 million balance from a previously arranged term loan and used the majority of the proceeds to repay our Series A notes at their scheduled maturity. Following this repayment, we have addressed all debt maturities through 2028. As of the end of the quarter and pro forma for the January payoff, we had over $200 million of total cash and cash equivalents, including our restricted cash. Together with full capacity available on our credit facility, this equates to over $700 million of total liquidity. Included in our press release this morning are the details of our outlook for 2026. As Bryan noted earlier, while we see reasons to be optimistic about the year ahead, we remain cautious, while still in these initial months. Based on what we see today, we expect that rooms RevPAR for all hotels in the portfolio will increase between 4% and 7% to a range of $234 to $241. This reflects the full year benefit of Andaz Miami Beach, which is expected to contribute approximately 400 basis points of growth at the midpoint. For 2026, we are also introducing guidance for total RevPAR, which is expected to increase between 3.5% to 6.5% and which would imply a range of $385 to $396 with a similar 400 basis point benefit from Andaz. We anticipate that our first quarter will be our strongest growth quarter of the year as the contribution from Onda and better performance in Maui will more than offset the challenging comp in D.C. from the inauguration and in New Orleans from the Super Bowl last year. This should result in first quarter RevPAR and total RevPAR growth being above the high end of the full year ranges just discussed and then the subsequent quarters being between the lower end and the midpoint. This revenue growth is expected to translate into adjusted EBITDAre in the range of $225 million to $250 million. Excluding onetime items and an asset sale, which together contributed approximately $10 million to our 2025 results, the midpoint of our 2026 EBITDA range reflects 5% growth in earnings over last year. Based on where we sit today, we expect our FFO per diluted share to range from $0.81 to $0.94. Adjusting for the same onetime items in the prior year, the midpoint of our FFO range reflects growth of 8% relative to 2025 as the benefit of our share repurchase activity adds to the growth in hotel earnings. In terms of the distribution of our earnings by quarter, we anticipate that the first quarter will represent approximately 25% of our full year projections at the midpoint. This is a bit higher than our historical run rate, but reflects the added contribution from Andaz Miami Beach. As is typical for our portfolio, the second quarter is expected to be our largest contributor at approximately 30%, with the balance split more or less evenly across the third and fourth quarters. Moving to our return of capital. Since the start of 2025 up to the middle of this week, we have repurchased approximately $108 million of common stock at a blended price of $8.83 per share. In addition, we have also purchased $3.1 million of our preferred stock at a blended price of $20.46 per share or an 18% discount to its liquidation value. This common and preferred stock repurchase activity has been accretive to both NAV and earnings per share. As we noted in our press release this morning, our Board of Directors has reauthorized our repurchase program back up to $500 million. And while we retain capacity and appetite for additional share repurchases, our 2026 outlook does not assume the benefit of additional common stock buyback activity. In addition to our share repurchases, our Board of Directors has also authorized a $0.09 per share common dividend for the first quarter and has also declared the routine distributions for our Series HNI preferred securities. Before we conclude our prepared remarks, I'll turn it back over to Bryan for some additional thoughts. Bryan Giglia: Before we open the call to questions, I want to highlight our 2026 objectives. The management team and Board are focused on realizing the value of our portfolio. Over the past few years, we have actively sold hotels at what have proven to be attractive valuations and redeployed proceeds into the most accretive option available at the time. While most of the proceeds went to repurchase common or preferred stock at a discount, we also acquired assets when our cost of capital became more competitive. We will continue this practice in 2026 while evaluating other potential transactions to realize and return the value of this portfolio to our shareholders. As I mentioned last quarter, the Board and management remain committed to maximizing value for shareholders and are open to any alternative that would reasonably be expected to result in value creation. With that, we can now open the call to questions. Operator, please go ahead. Operator: And your first question comes from the line of Cooper Clark with Wells Fargo. Cooper Clark: Curious if you could walk through some of the puts and takes as we think about the 1.5% midpoint of '26 RevPAR growth ex-Andaz within the context of 2.1% growth last year and what should be a continued recovery in markets like Hawaii? Bryan Giglia: Sure. Cooper, when you look at the remainder of the portfolio ex Andaz, you're absolutely right. Maui is a market where we are seeing growth. We talked about it last year where we mentioned that for the hotel to get back to where it needs to be, the Kaanapali market needed to stabilize, which is something that we saw happening in kind of the late third quarter, fourth quarter of last year. And that continues to happen going forward. We went from the high -- mid- to high 90s occupancy index to at the end of the year, over 100%. We should stabilize around 110%. So that is absolutely moving in the right direction. As I said earlier, we're seeing continued transient demand as we recapture that index. And so far, the first 2 months of the year have been a pleasant surprise to see that continue. The group business in Maui is -- the pace is down a little bit this year. We do have this one piece of business that is on for a couple of years and then off and it's off island this year. But we are seeing a transient pace is up about 53%, and that will help cover that shortfall. When we look at the rest of the portfolio, continued strength in San Francisco in wine country, other markets and one that we highlighted on the call, D.C. is a market that we faced a lot of headwinds last year, not only with government shutdown at the end of the year, but then also cutbacks and impacted a lot of the group business there. Our -- the amount, the percentage where groups would actually actualize as compared to their blocks was down to historic averages. And so while we anniversary that coming up shortly, and so the year-over-year comp will get easier, we do -- we are cautious. And then we are also seeing in D.C. a pickup in transient business that we were not seeing in the middle part of last year. And so some of the government transient, we're starting to see that come back. Again, with what the impacts and the headwinds that we saw last year, we're approaching the D.C. market with as cautious. And if we continue to see these trends, we would expect that we could be in a position where that midpoint would move up a little bit. But D.C. is one of the markets right now that we're keeping an eye on and is pulling that average back. Cooper Clark: Okay. Great. That's helpful. And then could you talk through the expense growth implied in guide, both including and excluding the Andaz and what are some of the key drivers there? Bryan Giglia: Sure. I mean I think roughly, we're on expenses, we're right around 3% total. Labor over the last couple of years has been sort of in that 4-ish range. It's coming down a little bit this year into the 3s. Energy prices are up a bit this year. And then there are a couple of the larger fixed expenses that will unfold as the year goes on. Our insurance renews in June, and that's something that we had good renewals with last year. There were not any major cat hits in our portfolio. So that should be helpful. But we go into the year, and we expect there to be some growth in those rates. And so if that -- if we get a year like last year, that could be a benefit. And then property taxes have been down over the last few years, we're kind of assuming that those are going to normalize. And then on the Andaz side, overall, I don't think it's going to make a material difference in that overall percentage. Aaron Reyes: Cooper, it's Aaron. And just maybe to add to what Bryan was saying. So as we move through last year, as we noted in the prepared remarks, we were much more successful in managing costs relative to where we thought that they would be at the beginning of the year. And so we ended up with margin expansion to the tune of about 40 basis points on RevPAR growth of about 3.5%. From a cost growth perspective for the comparable portfolio, so the 13 hotels ex Andaz, expense growth is in that kind of that 3-ish percent or so area. What we'll feel a bit differently this year is just that, as you noted, the blended RevPAR growth rate for that comp set is -- for that set of hotels is a bit lower. So we'll expect some margin headwind for the comp portfolio in '26. If we add in Andaz, things obviously do get a little bit noisier given that it was only open part of the year last year will be open all of the year this year. We'd look at probably a total overall expense growth rate of around 5% or so, which starts then align with where the midpoint of the RevPAR range is for the total portfolio. So a good chance of margin being able to defend margins as we move from '25 to '26 for the total portfolio, and then we'll be hopeful that we have an outcome like we had last year, whereas the year went on, we were a bit more successful on the cost side. Operator: Your next question comes from the line of Duane Pfennigwerth with Evercore ISI. Duane Pfennigwerth: A call earlier today talked about the expectation for being a net seller of assets. I wonder if that's your expectation as well. And if you have any update on the marketing process around the Wine Country assets. Bryan Giglia: Sure. In the fourth quarter, we started to see a pickup in transactions, either closed transactions or announced transactions. And I think as we have more clarity into this year and debt markets continue to be strong. I think that we'll continue to see an uptick in transactions. I think thematically, it will be similar. I think that there is a lot of demand for luxury assets. I think there's a lot of demand for cash flowing assets. And so those obviously can support the highest debt balance. And we're still seeing for midsized transactions, enough equity out there as you start to get to a larger assets, the bidder pool is still thinner. I do think we're seeing that improve. And so our view is really no different than what we were doing last year and when we sold New Orleans at a very attractive cap rate and then redeployed those proceeds into our common stock. We're going to look to realize private market values for where we can for those -- for hotels and resorts that we have, where we see the biggest gap between the public and private market values. And basically, we'll continue to try to unlock value where we can and then go and deploy that in the most accretive manner. We don't comment on transactions prior to announcement. But we have been clear and I think our actions have been very clear is that our major pillar of our strategy is recycling assets. So there's always going to be a point in time where we'll have one or more assets that in some form of marketing or discussion with potential buyers. And we don't think that this year will be any different. The question then comes is what is that most accretive allocation of that redeployment of that capital. And that depends on a lot of factors. It depends on where the stock is, where our cost of capital is, where our stock is trading, what -- and on a risk-adjusted basis, what is make more sense to repurchase stock or preferred? Does it make more sense to acquire an asset? And over the last few years, I think we've demonstrated that we've been able to pivot between those sometimes in shorter time periods, but we've been able to effectively deploy that capital, whether it be through the acquisitions of [indiscernible] or buying back stock. Operator: Your next question comes from the line of Smedes Rose with Citi. Bennett Rose: I just had another question about your guidance, just in terms of total RevPAR being a little bit lower than your RevPAR outlook. Usually, they're sort of at least in line or maybe total RevPAR would be a little bit higher. So I was just wondering if you could just speak to that for a moment. Bryan Giglia: Sure, Smedes. Having a focused portfolio with some larger assets, D.C. being one of them I spoke about and then San Diego also that had a -- we finished up a pretty substantial meeting space renovation or we finished a portion of it, and we'll finish the rest of it in the quarter that's impacted on those 2 big hotels. On the group side, that's going to impact some of our ancillary spend, getting some of that back in Andaz. And quite honestly, I would expect an increase in our total RevPAR, if we continue to see the transient trends in D.C. somewhat, but more importantly, the transient trends we're seeing in Wailea with the additional spend that comes from the transient rooms, that will help buoy our total RevPAR. But right now, it's more a function of some of the limited displacement in the first quarter in San Diego and then a slower group pace in D.C. it's more that. Bennett Rose: Okay. And then I was just wondering if you could talk a little bit more. You mentioned in your opening remarks some transient weakness in San Diego. Is that specifically to your hotel? Are you seeing that kind of market-wide? And maybe just if you could just speak to kind of just the broader market in San Diego, what you're seeing just maybe on the group side, what's happening with the convention calendar there, et cetera? Bryan Giglia: Yes. In San Diego, we saw some ups and downs last year. Some of it government related. There's a lot of defense contractors. So we saw it slow down last year. We've seen that pick up. Towards the end of the year, the leisure time period, whether it's some international travel not coming in, some Canadian markets come to that area. What we're seeing now, the first 2 months have been pretty promising in San Diego, DC2, we mentioned. And so I think we're starting to see government transient come back. And part of that might just be certain segments and what San Diego pulls from is the defense contractors. And so that can be a positive for the market. And so we'll see over the next few months, but we are seeing positive signs as the year goes on right now in San Diego on the transient side. Operator: Your next question comes from the line of Michael Bellisario with Baird. Michael Bellisario: First one for Aaron. Just on this Ohana preferred, can you just remind us like what are the mechanisms there for you to take that out? When and by how much is that coupon ratchet? And then just on capital allocation, is this a potential use of capital if you were successful with dispositions? Aaron Reyes: Yes, Mike, thanks for the question. So the Ohana is referring to is our Series G preferred, which is issued in connection with our acquisition of Montage. That one does have a mechanism where the yield there is tied to a greater of the hotel yields or a fixed rate, which is currently now 6.5%. So overall, it came in at $66 million in size, so it's a manageable amount of capital. We kind of view our preferred, I would say, as a total bucket. So all in the $280 million at a pretty attractive blended price of just around 5% or so. But as you saw in our results for our fourth quarter, we did take the opportunity to look at some buyback on the preferred side, and we'll continue to do that as a way to kind of just manage the overall preferred dividend exposure and ensure that we're mindful of that -- of the mechanism on the Series C, which does step up. So I think as we think about this year, I wouldn't expect that our preferred dividend would increase in '26 relative to where it was in '25, even with the escalation on the Series C, just given that we'll manage the overall outstanding balance. So we'll take another look at it as we move through the year. I mean, certainly, as we noted, we have $200 million of cash that we could readily put to use to address that Series G. And the function there is it's callable solely in our discretion. Bryan Giglia: And it doesn't have to be in the total amount either. So we can take out pieces of it at a time. Michael Bellisario: That's helpful. And then just 2 little modeling follow-ups, maybe I missed them. What's your EBITDA expectation for Miami this year? And then what are some of those onetime items that you mentioned that's impacting the year-over-year growth rate? I think it's like $7 million net of the New Orleans sale, if my math is right? Bryan Giglia: Okay. I'll start with -- so in Miami, our expectation is consistent with where we were before. We think it's low to mid-teens EBITDA this year. And our what we've seen starting in kind of really in December and December, we hit close to 70% occupancy. The comp set was right around 70%. Our rate granted was lower than the -- than our luxury set. We were in the 500s. They were in the 900 plus. So we have plenty of room to grow. We're building a very good base. Our group room nights have doubled quarter-over-quarter. We've got a lot of good momentum going into F1 and FIFA later in the summer, which is a great time for that piece of business to be there. So our expectations are consistent with where we were last quarter with Miami. And if we have a strong summer, my expectation is that we are at the upper end of that. Aaron Reyes: And then, Mike, just on the second part of your question as it relates to the onetime items that we called out for '25. It's a total of around $10 million or so, and the components would be about $3 million contribution from the Hilton New Orleans, which we sold last year, so won't repeat this year, a cost recovery that we had in connection with one of a settlement at one of our properties and then just some incremental interest income that we generated last year given where deposit rates were and where our cash balance was at the time that we wouldn't expect to repeat in '26. Operator: Your next question comes from the line of Chris Woronka with Deutsche Bank. Chris Woronka: So I understood everything you said, Bryan, about any potential transactions in Wine Country. My question on it is kind of do you think any sale process is having any kind of impact on operations right now? It looks like in '25, you had pretty good results at the Montage, both big Four Seasons, maybe a little bit less so. So is there anything to draw from that? And what's kind of embedded in your guidance as to how those perform this year? Bryan Giglia: Yes. I mean both resorts were on pace to have very good years. As you probably remember, there was a fire close to Four Seasons that impacted the third quarter last year and a little bit trickled into the fourth quarter. So adjusting for that, that was probably about $1 million of EBITDA. So adjusting for that, one, your question, not commenting on a sale process, but typically for a managed hotel. The management contracts are long term and stay in place, so that doesn't really impact the day-to-day operations of the hotel. Four Seasons has fantastic group pace for this year. I think group pace is up about 22%. And so we have really great expectations for that. Again, the San Francisco market has been doing better, which then leads to more weekend trips or extensions of convention trips out to Wine Country. The high-end luxury traveler continues to be very strong and spend quite a bit. And then on the other side of the valley, we -- we've had great success with group at Montage. Group is not as strong as Four Seasons this year, but they're moving from a much larger base. And our transient demand over at Montage has been phenomenal. So I think transient pace is up 25% year-over-year. So just like San Francisco, a lot to look forward to in the Bay Area and Wine Country. And so there, again, with the impact of the fire last year was sort of a unique impact to Four Seasons, both hotels should have very good years. Chris Woronka: Okay. Appreciate all that color, Bryan. Maybe to kind of keep it in the San Francisco area at the Hyatt. I know there was probably a Super Bowl benefit back in January. This hotel is running single-digit margin in '24 and '25. Is there any expectation this year that whether it's, again, outside of Super Bowl, but with AI and back to office and other group things that are happening in San Francisco, is there a hope or an expectation on your part that, that hotel starts meaningfully improving margins? Bryan Giglia: Yes. I mean our location in that market has become the primary location. And so our basic -- with the office that surrounds it, the inflows of new tenants, AI-based, but really, the center of San Francisco has moved into the Embarcadero financial area. And so we have -- we're benefiting from a recently renovated hotel that while it still has quite a ways to go to get back to where we were, we finished '25 at 78% occupancy, which is 10 points of occupancy down from where we were. We have a $300 rate. There's still quite a bit of room in the rate. And so we have great pace this year. Transient pace continues to grow. The market had a great Super Bowl. World Cup is -- we're just starting to see bookings for that, and that's something that will help compress the summer as we get into it. So look, I think that given the continuing increase in health of the San Francisco market, our location, our product, our meeting space, we still have a very good run ahead of us and are very -- are looking forward to the next several years in this market. Operator: Your next question comes from the line of Daniel Politzer with JPMorgan. Unknown Analyst: This is [ Michael Harris ] on for Dan today. Congrats on a nice quarter. For my question, you noted in the press release that the operating environment could be impacted both positively or negatively by events outside of your control. Could you speak to some of those events or macro environment that you contemplated for this year, when putting together your guidance? Bryan Giglia: Yes. Look, I mean, if you look over the last few years, starting each of the years, expectations were higher and then there were various headwinds that popped up and went away and came back throughout that time frame. I think D.C. is a good example of what is our -- what are our expectations in D.C. Like I said, they're cautious this year. There was -- we did not expect the impact to government business, government shutdown, those things for a large 800-room hotel in our portfolio. Those were things that were not fully -- we weren't expecting last year and impacted operations. Could elements of that happen again? Sure. If we look at '26 in D.C., it's just starting off. It's a tough comp. You had inauguration the year before. We had storms in January and you have midterms later in the year, which means Congress won't be in session a lot as much. So those are things that keep us cautious, especially from the framework of the prior year's experience. But then on the other side, you look at the positives there. You've got the America 250 celebrations. You have an Indie race that was just scheduled for August that's happening. Our transient pickup for January and February has been stronger than we thought. The negotiated transient demand for the next 6 months is up 11%. Part of that is still the benefit we're seeing from the conversion to Westin. Some of it is business that's coming back to the market. When you look at our transient demand for January and February and you put it against the backdrop of we had weather issues this January. We didn't have an inauguration this year, but yet our transient demand is greater than what we had last year. That points to strength. And so that makes us very optimistic. The question is we probably need to see a few more months of this before our -- before we can have our outlook reflect that for the rest of the year. Unknown Analyst: And then for my follow-up, more modeling related. On your CapEx guidance for $95 million to $115 million, could you speak to the timing and allocation of those dollars between the different projects? Bryan Giglia: Yes. Let me start with that, and then Aaron can go through some more specifics. We are working through and finishing the meeting space in San Diego. Keep in mind that it's a 1,200-room hotel. It's a lot of meeting space. So there's $25 million of that number right there. A portion of that does come from the FF&E reserve. And so that's a big piece of it. There's some additional bills that are being paid and finish up work from Andaz. And then throughout the portfolio, we have various other projects, some HVAC projects, some roofing projects, some elevator modernizations. Those are spread out more throughout the year. The biggest chunk -- single chunk will come from the San Diego piece, which will be in the first and second quarter as it gets paid out in. Aaron? Aaron Reyes: Yes. Bryan basically got the punchline there. The largest projects will be front-loaded. So I'd expect about 1/3 of it happens in Q1, but -- and then Q2 will be the second largest contributor and the rest will trickle into the back half. But work largely performed in Q1 and then the payments in Q1 and Q2. Operator: There are no further questions at this time. I will now turn the call over to Bryan Giglia for closing remarks. Bryan Giglia: Thank you, everyone, for your time and interest in the company. We look forward to seeing many of you in -- at upcoming conferences and property tours that we have in our portfolio. Thank you. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Operator: Hello, everyone, and thank you for joining the PharmaMar Full Year Results 2025. My name is Gabriel, and I will be coordinating your call today. [Operator Instructions] I will now hand over to your host, José Luis Moreno, Head of Capital Markets and Investor Relations. Please go ahead. José Martinez-Losa: Thank you, Gabriel, and good morning to everyone, and thank you for joining us for today's PharmaMar Earnings Conference Call to discuss our 2025 Financial Results. On the call with me today are María Luisa de Francia, Chief Financial Officer; Luis Mora, Managing Director of PharmaMar; and Pascal Besman, the Senior Vice President of Strategic Development. After our comments, we'll open the floor for your questions. And before we begin, please note that certain statements made during this call may constitute forward-looking statements, and these statements are based on current expectations, and actual results might differ materially from those projected. A full safe harbor statement is available in the corporate presentation on our website and together with the press release and the results report issued this morning. We undertake no obligation to update these statements, except as required by the applicable law. All right. Well, I'm pleased to say that 2025 was a very strong year for the company with clear progress, both strategically and financially. Strategically, a key milestone in 2025 was the U.S. approval of Zepzelca as first-line maintenance therapy in October. And this, of course, represents an important step for patients and a meaningful catalyst for the business. Financially, we delivered very strong -- very solid performance. Revenues grew 27% year-on-year, reflecting strong execution and the increased scale of our business. Our top line growth translated into a significant step in profitability with EBITDA up by roughly 5x versus '24 and net income up 187% year-on-year. Importantly, we achieved these results ahead of the expected European approval for Zepzelca, which is granted, it should provide an additional tailwind to revenues and further reinforce our growth trajectory. And with that, I will hand over to María Luisa to walk you through the financials in more detail. And then Luis Mora will update you on our development plans for the years ahead. María Luisa? María de Francia Caballero: Thank you, José Luis. Good morning, and thank you all for joining us in the 2025 results conference call. Regarding the financial statements for the year just ended, we would like to highlight the following points. First, a substantial increase in revenue from all of the company's sources of income, sales plus 20%, royalties plus 4% and licensing revenues 66%. We expect this trend to continue in 2026 with growth in sales due to the potential approval of Zepzelca for Europe and also growth in royalties due to the approval of Zepzelca as a first-line maintenance treatment last October, which will increase sales for our partners in the U.S. in 2026. Another point is the maintenance of R&D expenditure at the same level as last year and in line with our expectations for next year with the projects we are involved in, which Luis Mora will detail below. We had also a slight increase in operating expenses, for example, in commercial expenses, where activities have been carried out to prepare for the eventual launch of Zepzelca in Europe in 2026. This increase has been -- this increase in expenses -- in operating expenses has been partially netted out by the European grants obtained its first the Sylentis project. All the above has led to EBITDA of EUR 68 million, approximately 5x that of the previous year, as José said before, and to a net profit of EUR 75 million. Finally, and also noteworthy is the generation of operating cash flow amounting to EUR 53 million. This has enabled us to close the year with cash and financial investment of EUR 168 million, while debt remains at similar levels to 2024. This financial situation enabled us to continue with our ongoing projects without any pressure as Luis Mora is going to explain right now, and I pass the floor to Luis Mora. Luis Capitán: Okay. Thank you, María Luisa. 2025 has been a great year for PharmaMar with significant milestones achieved for both patients and the company. We obtained the approval in the United States and Switzerland for Zepzelca in first-line maintenance non-small cell lung cancer. The compound was licensed to Merck for Japan and both the pivotal trials, LAGOON and SaLuDo trials continued successful according to schedule. We also submitted the registration dossier for Zepzelca in Europe for first-line maintenance non-small cell lung cancer and the compounds P54 and PM534 are continuing day-to-day development. The total revenue as María Luisa described it has grown by 27%. I would like to highlight the growth of Zepzelca in Switzerland and especially in France under the early use model with a 31% increase. This clearly demonstrates that Zepzelca is changing the treatment paradigm for the patients. I also want to highlight to increase Yondelis raw material sales to our partners with a 20% growth compared with '24 as well as the growth in Yondelis royalties in the U.S.A., which have more than doubled compared with 2024. This means that Yondelis continues to grow, being considered a standard treatment for soft tissue sarcoma. In Europe, where there are already 6 approved generic version of Yondelis, the unit sales have grown by approximately 4% compared with '24. This help us to introduce in the future lurbinectedin in leiomyosarcoma in first-line treatment. Regarding Zepzelca in the United States, the royalties have decreased by 12% compared with '24 for 2 reasons. One is the exchange rate Euro-U.S. dollar, which has had a negative impact 7.5% and another to enter a new competitor into the market. However, in this last quarter, we have seen a significant change that we expect that will continue to grow in 2026 with the approval of [indiscernible] in first-line small cell lung cancer maintenance therapy. Finally, looking ahead to the next 12 months, important milestones are on the horizon that will be transformative for the company. The European registration dossier for Zepzelca for first-line maintenance non-small cell lung cancer is currently under evaluation by EMA, and we expect the opinion likely in the first quarter of this year. If this is the case and given the European Commission time lines, we could begin marketing the product in some European countries in the second half of this year. In fact, our entire marketing, sales, market access, medical affairs, logistics team is working intensively on this. We expect it to grow in commercial expenditure in 30% over the next [ 2 ] years. The LAGOON trial for second-line treatment non-small cell lung cancer is expected the top line results in the second half of this year. If the results are positive in either arm where Zepzelca is administrated either as a single agent or in combination with irinotecan. It will lead to another registration dossier likely in the second half of this year for the second line, and this is the objective of the company to any patient with small cell lung cancer will have the opportunity to take lurbinectedin in first on the second line. The SaLuDo trial, which compares Zepzelca plus high-dose doxorubicin, Zepzelca plus low-dose doxorubicin against doxorubicin alone is expected to complete enrollment in the first half of this year ahead of the schedule. We expect the results in the first half of '27, and if positive, they will lead another registration dossier in 2027 with potential approval in '28. The other 2 products we have in the clinical development pipeline, PM54 has already reached the recommended dose in both infusion regimens included in the separated Phase I trials, and we expect it to show the data in the next ESMO Congress in Madrid in October as we have observed very manageable safety and promising efficacy. This encourages us to begin a very ambitious plan in 2026 with expansion as a single agent for different tumor types as well as initiating combination trial with another chemotherapy agent and immunotherapy. In fact, the FDA already approved the new IND for this combination trial with immunotherapy at the end of 2025. Similarly, PM534 is in dose escalation in 2 different Phase I trials with 2 different institution regimens, and we expect to begin expanding 1 of 2 regimens in different tumor types in the second half of this year. In summary, '25, we executed as planned and '26 will be a transformative year for the company with significant milestones, both commercially and in the development for our compounds. Now I pass across to [indiscernible] Thank you. José Martinez-Losa: Thank you, Luis. And well, with this, we conclude our speech today, and we open the floor to questions. Gabriel? Operator: [Operator Instructions] Our first question is from Joseph Hedden from Rx Securities. Joseph Hedden: It's been the first quarter since Zepzelca's label was expanded for first-line use. So 90 million sales in the U.S. Can you just tell us how that compares to your internal expectations? And perhaps any feedback that you've received from U.S. docs or any kind of usage metrics other than the sales that you may have? Pascal Besman: All right Joe, Pascal here. We're not going to tell you what our projections are and Jazz doesn't give you what their projections are. So unfortunately, not much that I can help you with. And in terms of inventory levels that you're asking, that's not something that we make public other than if there was a situation where there was a problem with inventory, then we would feel that would be material. But obviously, we were expecting to see an uptake after the October FDA approval in the first-line maintenance setting. That happened with a 13% quarter-over-quarter bump, which we're pleased to see. And we expect, personally, we as PharmaMar expect that to continue, as Jazz indicated on their call earlier in the week. Joseph Hedden: Okay. Fair enough. And then perhaps if I could have one on Yondelis. It was interesting to see that U.S. sales climbing again there after the NCCN inclusion. Do you expect that trend to continue through this year of having a much better year with royalties coming from J&J sales there? Luis Capitán: Yes. We expect that continues to grow if you compare '26 with '25. In fact, from the inclusion in NCCN guidelines, the combination of Yondelis plus doxorubicin in first-line leiomyosarcoma, the use of Yondelis is increasing dramatically, and we expect that to continue to grow in 2026. Joseph Hedden: Okay. And then perhaps if you could just reconfirm your expectations for generic entry for Yondelis in the U.S.? Luis Capitán: I don't know. This is not -- remember, it's J&J territory, it's not PharmaMar territory, then we don't know where they will potentially enter the generics. So we don't know. I can advise you not -- in principle, not in 2026. Operator: Our next question is from [ Rowan Ropali ] from Santander. Unknown Analyst: Can you hear me? Luis Capitán: Yes. Unknown Analyst: Okay. Perfect. So I have a few questions. The first one is on the potential approval of Zepzelca in the first-line maintenance setting in Europe. Are there any updates on the pricing negotiation process that we should be aware of? And have you already initiated discussions with the relevant national authorities in key European markets? The second one was concerning the M&A and in-licensing. How is the process progressing at this stage? So should we expect any concrete developments or announcements this year? And that would be everything. Luis Capitán: Okay. Thank you very much. As I said in my speech minutes ago, we expected accordingly the calendar from the EMA opinion at the end of this quarter for first-line small cell lung cancer maintenance therapy. That is we expected. And then accordingly, the European Commission time lines, they have 2 months after the EMA opinion to send us the authorization for commercialization in this territory. This is the time line. Regarding the pricing, the procedure in all the European countries, you can start the submission dossier for pricing and not before the EMA opinion because at the end of the day, you negotiate the pricing and reimbursement from one particular label. And the label is included in the EMA opinion, then you can negotiate before you have this label, okay? But in fact, this is all the PharmaMar team regarding this matter as working more than 1 year ago. Then in order to be ready, the dossier for submission immediately after the EMA opinion. And regarding the licensing here, okay, we can't disclose the [indiscernible] and the process. We have some options in the table. And when we will arrive some type of agreement, we will disclose. Operator: We will now move on to text questions. So I will hand over to the management team. Please go ahead. José Martinez-Losa: Thank you. Now we have some written questions that we received. And we can start with these ones about Zepzelca. The first one says, now that the FDA has approved lurbinectedin as a first-line maintenance therapy for small cell lung cancer, could we expect significant increase in U.S. royalties by 2026? Luis Capitán: Yes, that is what we expected in the second line, you compare with the first-line maintenance therapy. First of all, the number of cycles in the IMforte trial, if we compare with the basket trial, is quite a double and it's about 30% of the patients potentially in this disease. Then we expect the royalties will be growing across 2026. José Martinez-Losa: We have another question about some regulatory issues also regarding with Zepzelca. Could you please confirm whether IMforte has been officially approved in Uruguay and Ecuador as mentioned by [ Adrian ]. Luis Capitán: Yes, Uruguay was approved in the last quarter 2025 and Ecuador in this year, January. José Martinez-Losa: We have another question also in regulatory issues. As the dossier for IMforte being submitted in the Japanese authorities for approval? Luis Capitán: Well, I want to remember it's not about territory. We license the drug to Merck, and this is the Merck task. And when Merck decide to disclosed or not, this process is a Merck decision. It's not PharmaMar decision. José Martinez-Losa: Okay. More about pricing. When do you anticipate receiving reimbursement for IMforte in Switzerland? Luis Capitán: Well, we are in the negotiation process actively. This is a normal process. We expected in the middle of the year, finalize this process in order to have the price and reimbursement for first-line maintenance therapy. But I want to remind you that from the commercial point of view, we are already selling in first line, but we're waiting for final pricing and reimbursement. José Martinez-Losa: So in that regard, there's another question of the same person that he asked about if you could say anything about the pricing that we have in Switzerland for [indiscernible]. Luis Capitán: No, it's in the negotiation process. You can't disclose that. José Martinez-Losa: Okay. All right. We have other questions about other molecules in the pipeline, PM54. So the FDA has approved IND for the new Phase I/II of PM54 with immunotherapy since the trial targets multiple tumor indications, could we expect to include several immunotherapies as well? Luis Capitán: Well, we are in the decision process when we will start the trial, we will announce. We have several options like in the synergistic effect is already demonstrated with this type of compounds. We have several options, and we will start the trial, we will disclose, okay? Could be atezolizumab, pembrolizumab, durvalumab, et cetera, et cetera. José Martinez-Losa: In this regard, there are also questions about what's the time frame when we could start. You've mentioned that we'll start this year. What can we expect about starting point and endpoint? Luis Capitán: Yes, we are already prepared every seeing the protocol. We already contacted with the centers to start the trial, and we expected to start the trial in the first half of this year. José Martinez-Losa: All right. We have a question about Sylentis. And if you could provide any update on SYL1801 and specifically, is the Phase Ib trial expected to start surely. Luis Capitán: Well, when the SYL1801 was disclosed the data, the team are still analyzing the data. They have worked so hard in the preclinical setting in order to be focused in the next trials in some subtype of DCC. And when we will start the trial, we will announce. We are working on that. José Martinez-Losa: Thank you. We're receiving more questions. Here's another one. R&D investment decreased from EUR 103 million to EUR 95 million this year. Does this reflect a natural tailing of late-stage trial costs? Or is a strategic decision to be more selective in early-stage compounds like PM534, PM54? Luis Capitán: No, this is a normal one. When you have several Phase III ongoing or you finalize the Phase III, the investment in R&D are down, in fact, given the Phase III ongoing. But according to María Luisa's speech, we expect the similar numbers in 2023 than 2025, but this is the major reason. José Martinez-Losa: Okay. We have another one about Zepzelca. With the FDA approval of Zepzelca in combination with atezolizumab, how does management expect this change in treatment paradigm to impact the long-term peak sales estimates compared to the previous second-line monotherapy use? Pascal Besman: Well, to echo what Luis said recently, maybe I'll add a little bit more. Out of 100 patients who are diagnosed with extensive stage small cell lung cancer, about 95% are treated in first-line induction. About 75% have been seen to be treated in first-line maintenance, about 50% to 60% in second line. So right away, you can see by having the first-line maintenance label, there are more patients in the pool. In addition, as Luis also mentioned, the number of cycles that are seen on a mean or median basis is about double from 4 to 8, moving from second line to first line. And a third key point is to consider market share between atezolizumab and durvalumab, which are both approved insofar that these 2 drugs are widely seen as Coke and Pepsi, especially in small cell interchangeable duopoly. And therefore, if atezo plus lurbinectedin is better than atezo, it's seen that atezo lurbinectedin is better than durva. In addition to that, in terms of market share potential, atezolizumab has a version that's been approved in the U.S., U.K. and Europe and Switzerland of a subcutaneous, whereas durvalumab does not and will not have one. So with all that said and with the caveat that we're not making predictions that Jazz hasn't themselves made, we expect sales to be improved starting this year as they were in the last quarter after the first -- the approval in October. José Martinez-Losa: Thank you, Pascal. We have received -- talking about Jazz, we have received some other questions about the patent situation in the U.S. and we cannot answer these questions. I guess these are more questions for our partner, Jazz, who's doing a great job in the U.S. The final question here says the company spent EUR 34 million on share buybacks in '25. Given the cash position, how is management balancing further buybacks against potential M&A or licensing opportunities to diversify the oncology portfolio? I'll take this one. We do not -- I mean, from the company, we do not see either doing one or another. I mean the fact that we're doing share buybacks program does not mean that we cannot consider, as Luis has mentioned now, in-license deals or any other deals. So we could do both, and we're happy to look at everything. Talking about share buybacks, if we're going to do further buybacks, as you know, we decide that on a yearly basis, same as the dividend policy. I mean, from our perspective, from the company perspective, our first priority is investment in R&D. And once we've covered all that and we have room for more stuff like dividend increase or the share buyback, then we decide on the year. But again, the fact that we do additional share buybacks, if we do it or whatever, does not mean that we're not going to consider in-license agreements or M&A or any other deal. And I think these are all questions that we received in written. So in summary, just to wrap up, our 2025 results demonstrate robust growth driven by rising Zepzelca revenues and a meaningful advance across our clinical development portfolio. And in addition, we expect a strong flow of important news in the near term. And with this, we conclude our call today, and we would like to thank you all for joining us and Gabriel. Operator: Thank you. This concludes today's PharmaMar Full Year Results 2025. Thank you for joining. You may now disconnect your lines.
Operator: Ladies and gentlemen, good afternoon. Welcome, everyone, to the BlackRock TCP Capital Corp. Fourth Quarter Earnings Call. Today's conference call is being recorded for replay purposes. [Operator Instructions] Now I would like to turn the call over to Alex Doll, a member of the BlackRock TCP Capital Corp. Investor Relations team. Alex, please go ahead. Alex Doll: Thank you, operator. Before we begin, I'll note that this conference call may contain forward-looking statements based on the estimates and assumptions of management at the time of such statements and are not guarantees of future performance. Forward-looking statements involve risks and uncertainties, and actual results could differ materially from those projected. For more information, please refer to the risk factors discussed in our most recently filed report on Form 10-K and the Form 8-K filed with the SEC today, along with the associated press release. Any forward-looking statements made on this call are made as of today and are subject to change without notice. Additionally, certain information discussed and presented may have been derived from third-party sources and has not been independently verified. Accordingly, we make no representation or warranty with respect to such information. Earlier today, we issued our earnings release for the fourth quarter and full year ended December 31, 2025, and posted a supplemental earnings presentation on our website at www.tcpcapital.com. To view the slide presentation, which we will refer to on today's call, please click on the Investor Relations link and select Events and Presentations. These documents should be reviewed in conjunction with the company's Form 10-K, which was filed with the SEC earlier today. Now I will turn the call over to our Chairman, CEO and Co-CIO, Phil Tseng. Philip Tseng: Thank you, Alex, and thank you to our investors and analysts for joining us today. I'll begin with an overview of our fourth quarter and full year 2025 performance. Our President, Jason Mehring, will then provide details on our portfolio and investment activity, and Erik Cuellar, our CFO, will review our financial results. Then I'll provide closing comments before we open the call up for your questions. We are also joined today by Dan Worrell, our Co-CIO, who will be available to answer questions. Since we preannounced our preliminary fourth quarter results on January 23, I will focus my remarks on providing more detail on the results and the key factors behind our performance. I'll begin with an overview of our financial results. Full year 2025 adjusted NII was $1.22 per share compared to $1.52 in 2024. Annualized NII ROE for the year was 12.3% compared to 14.5% in 2024. Adjusted NII was $0.25 per share in the fourth quarter compared to $0.30 per share last quarter and $0.36 per share for the fourth quarter of 2024. The decline in NII primarily reflects the impact of portfolio markdowns and nonaccruals as well as lower base rates and tighter spreads year-over-year. Fourth quarter NII includes the benefit of a voluntary waiver by our adviser of 1/3 of the base management fee, which added approximately $0.02 per share. As of December 31, 2025, nonaccrual debt investments represented 4% of the portfolio at fair market value and 9.7% at cost compared to 5.6% at fair market value and 14.4% at cost for the fourth quarter of 2024. NAV declined 19% to $7.07 per share as of December 31, 2025, from $8.71 as of September 30, in line with the midpoint of the range we previously provided on January 23. The portfolio markdowns for the quarter largely reflect issuer-specific developments during the period. Six portfolio companies contributed approximately 67% or $1.11 per share of the NAV decline. Now I'll provide details on these 6 investments. Our investment in Edmentum, an educational technology business is comprised entirely of preferred and common equity, making it inherently sensitive to changes in enterprise value. Edmentum's valuation declined as a result of overall underperformance in the fourth quarter and lower anticipated future growth. This markdown accounted for 23% or $0.38 per share of the NAV decline for the quarter. Razor and SellerX are Amazon aggregators that have been restructured previously and continued to underperform during the quarter, resulting in further reduction to their outlooks. Razor contributed $0.24 per share or 15% of the NAV decline, and we have now fully written our position down to 0. SellerX contributed $0.22 per share or 13% of the NAV decline. On Renovo, as discussed on our last earnings call, we moved forward with writing down our investment in the fourth quarter. This negatively impacted NAV by $0.15 per share, in line with the expectations we communicated previously. Next is Hylan, a provider of telecom and wireless engineering and construction services, which was also previously restructured. Due to ongoing underperformance in this quarter as well as liquidity concerns, we marked down this position, which includes both debt and equity. This resulted in a $0.06 per share impact to NAV. And last, we marked down our position in InMobi, a digital advertising company. Our remaining exposure consisted solely of warrants for equity that we retained after the company fully repaid its term loan. Based on InMobi's underperformance in the fourth quarter and an associated impact on the company's outlook, we reduced the valuation of this position, resulting in a $0.06 per share impact to NAV. Looking at the reduction in NAV for the quarter more broadly, approximately 91% was from investments that we underwrote in 2021 or earlier. Certain of the companies, including Amazon aggregators and e-learning platforms benefited from high levels of pandemic era demand but have since seen results soften. All of these positions were underwritten in a significantly lower base rate environment and have faced challenges adjusting to sustained higher interest rates. Regarding our challenged investments, we continue to work diligently with our borrowers, their sponsors and creditors to optimize recovery values, including pursuing restructurings and other transaction-driven outcomes when appropriate. Now I'll share an update on capital allocation, starting with our dividend. Our Board declared a first quarter dividend of $0.17 per share payable on March 31, 2026, to shareholders of record on March 17, 2026. As we have said before, our goal is to maintain a dividend that is both sustainable and covered by NII. As part of our commitment to supporting our shareholders, we repurchased 515,869 shares of TCPC stock during the fourth quarter at a weighted average price of $5.84 per share. We also purchased an additional 233,541 shares after quarter end at a weighted average share price of $5.50 per share. Now I'll turn the call over to Jason to discuss our portfolio as well as our recent investment activity. Jason Mehring: Thanks, Phil, and welcome, everyone. I'll begin with an overview of our portfolio composition. At year-end, our portfolio had a fair market value of $1.5 billion invested across 141 companies in more than 20 industry sectors with an average position size of $10.9 million. 92.4% of our portfolio was invested in senior secured loans, all of which were floating rate and 7.5% was in equity investments. Our largest investment based on fair value represented 7.2% of our portfolio and our 5 largest investments accounted for 23.1%. Investment income was distributed broadly across our diverse portfolio with more than 75% of our portfolio companies each contributing less than 1%. During 2025, the average size of our investments in new portfolio companies was $5.8 million compared to an $11.7 million average position size at the end of last year, demonstrating our ongoing effort to reduce concentration risk. All new portfolio company investments during 2025 were in first lien loans, bringing total portfolio exposure to first lien loans to 87.4% on a fair value basis, up from 83.6% last year. At the end of the fourth quarter, the weighted average effective yield of our portfolio was 11.1% compared to 11.5% last quarter. Investments during the quarter had a weighted average yield of 9.7%, while those we exited had a weighted average yield of 11.1%. Current yields reflect lower base rates and spread compression during the period. In the fourth quarter, in line with our strategy, we deployed $35 million into senior secured loans across 5 new and 3 existing portfolio companies. Our largest new investment was a $4.5 million first lien term loan to a highly scaled wealth management platform with a focus on high net worth individuals. This financing was made in connection with the recapitalization where BlackRock Private Financing Solutions, or PFS, was the second largest lender in a $2 billion credit facility. The PFS platform has been a lender to this business since early 2024, and the opportunity was a natural fit for TCPC given our past success investing in the wealth management sector. In addition to attractive industry fundamentals, we were drawn to the company's high client retention rate, strong management team and brand recognition. Our second largest investment was a $4 million first lien loan to Coalfire, a leading cybersecurity services and solutions provider. This investment was part of a $375 million first lien financing in which BlackRock PFS provided approximately 30% of the facility. We believe Coalfire is well positioned to benefit from increasing cybersecurity regulation and complexity. Given our focus on direct origination and borrower relationships, incumbency continues to be an important competitive edge for TCPC. And during 2025, 65.4% of our deployments came from existing portfolio companies. We continue to find opportunities within our portfolio where our deep relationships and industry expertise help as we evaluate risk. Paydowns this quarter were $80.7 million compared to $140 million in the prior quarter. Before I turn the call over to Erik, I want to briefly comment on the software sector, which has been the subject of considerable interest among investors in the press. While public equities in this sector are experiencing a valuation reset following a long upward run, we haven't seen that widely translate into lower operating results in our portfolio companies, although we will continue to monitor developments going forward. In addition, we believe software is not monolithic as some segments are fundamentally more resilient than others. For some time, we have considered the potential for AI disruption in our underwriting of potential software investments, and we have sought to continue to actively pursue businesses where we believe AI is more likely to positively augment the company's offering rather than displace it. Now I'll turn the call over to Erik, who will discuss our financial results, capital and liquidity positioning. Erik Cuellar: Thank you, Jason. I will begin with a review of our financial results for the fourth quarter and year ended December 31, 2025. As detailed in our earnings press release, adjusted net investment income excludes the amortization of the purchase accounting discount resulting from our merger with BCIC and is calculated in accordance with GAAP. A full reconciliation of adjusted net investment income to GAAP net investment income as well as other non-GAAP financial metrics is included in our earnings press release and 10-K. Gross investment income for the fourth quarter was $0.52 per share. This included recurring cash interest of $0.41, nonrecurring income of $0.01, recurring discount and fee amortization of $0.02, PIK income of $0.06 and dividend income of $0.02 per share. PIK interest income for the quarter was 10.9% of total investment income, up from 9.5% last quarter and included no new names. Operating expenses for the fourth quarter were $0.25 per share, including $0.18 per share of interest and other debt expenses. As of December 31, 2025, our cumulative total return did not exceed the total return hurdle, and therefore, no incentive compensation was accrued for the fourth quarter. Additionally, as Phil mentioned, we waived a portion of our base management fee again this quarter. Net realized losses for the quarter were $73.9 million or $0.87 per share, with Anacomp and Astra being the most significant portfolio company contributors. Net unrealized losses were $66.5 million or $0.78 per share, primarily due to the unrealized markdowns on the 6 investments Phil discussed earlier. The net decrease in net assets for the quarter was $118.3 million or $1.39 per share. Now I'll discuss our balance sheet and liquidity positioning, which remains solid. Total liquidity at year-end was $570.2 million, including $482.8 million in available borrowings and $61.1 million of cash. The weighted average interest rate on debt outstanding at year-end was 4.9%, down from 5.0% at the end of the third quarter. Unfunded loan commitments represented 8.4% of our $1.5 billion investment portfolio or $129.2 million, including $53.7 million in revolver commitments. Net regulatory leverage was 1.41x at year-end compared to 1.2x at the end of the third quarter, resulting in a total debt-to-equity leverage ratio of 1.74x. Subsequent to year-end, our net regulatory leverage ratio has improved to 1.34x as a result of paydowns. We expect to reduce leverage further over time as we exit additional investments. On February 9, 2026, we paid down the entire $325 million principal amount of our 2026 unsecured notes, resulting in current liquidity of approximately $290.8 million. Our diverse leverage program now includes 3 low-cost credit facilities, an unsecured note issuance and an SBA program. Now I will turn the call back to Phil for his closing remarks. Philip Tseng: Thanks, Erik. While the write-downs in the fourth quarter were disappointing, we continue to actively manage our investment portfolio with the goal of seeking to maximize recoveries and reposition our portfolio to deliver attractive returns to our shareholders over time. Our highest near-term priority is to improve the credit quality of our investment portfolio by working diligently to resolve challenged credits. At the same time, we continue to implement the refined investment strategy we set forth last year. This includes seeking to, one, deploy capital selectively into senior secured first lien loans where we are a lender of influence; two, build a well-diversified portfolio in terms of industry sectors and investment size to reduce concentration risk; and three, fully leverage the unparalleled resources of BlackRock's platform. There is work to be done, but we're confident in our strategy. As Jason mentioned, in 2025, we increased first lien investments to 87.4% of the portfolio on a fair value basis, up from 83.6% last year. In addition, we improved our portfolio diversification by reducing the average size of new investments made in 2025 to $5.8 million each or 38 basis points compared to the $11.7 million average position size at the end of 2024. We are proud to be part of BlackRock and believe the substantial resources of this industry-leading platform will support our efforts to reposition our portfolio and enhance our capabilities. We are already seeing the benefits of an expanded pipeline of investment opportunities that supports our objective of deploying capital very selectively into what we believe are high-quality investments that align with our investment strategy. I want to thank our investors for your continued support as we reposition our portfolio. And now I'll turn the call back to the operator for questions. Operator: [Operator Instructions] Our first question comes from Robert Dodd from Raymond James. Robert Dodd: I appreciate all the color you gave about the individual businesses. And obviously, you've discussed kind of the new allocation efforts going forward. At what point -- and this is really a question for the Board rather than you, to be fair. But at what point does it make sense to take maybe more aggressive overall strategic adjustments to the BDC rather than continue in the current efforts. I mean it shrunk -- leverage is up. If you buy back stock, leverage will go up even more unless you shrink the portfolio. There's a lot of issues that are going to take a -- with your best efforts, and I applaud them, and I think you put it in those best efforts, it's going to take a long time to turn this business around. At what point does it make sense to do something more aggressive on the strategic front? Philip Tseng: Yes. Thanks, Robert. I appreciate the question. We continually evaluate ways to optimize returns for the shareholders. And at this time, we believe the best path forward is to continue to focus on improving the credit quality of the portfolio and executing on the investment strategy that we've been discussing. This includes an ongoing rotation of the portfolio into first lien loans, which we've made progress on. It's up to 87.4% now versus 83.6% a year ago and also increasing portfolio diversification, which, as you know, has been an area that's been suboptimal and causing some of the credit losses so far. And we've made progress on that front as well, where the average size of new investments have decreased to about $5.8 million per position or about 38 basis points. And of course, we're working on continuing to leverage the broader resources that BlackRock's platform has to offer, which has been yielding some benefits, as you heard from the prepared remarks on a couple of the new investments that we put into the portfolio this past quarter. Robert Dodd: I appreciate that. Now going on to the portfolio assets. I mean, several of them, as you mentioned, have been previously restructured. This is not a theme just in your portfolio. We've seen several other assets and other BDCs this quarter and in more recent quarters that have been previously restructured and are back on nonaccrual or back getting marked down. What -- how should we take that or how should investors take that in terms of when -- over the last few years, it looks like restructurings seem to stick less often than maybe was the case if we go back further, that's just a sense, right? So I mean what's your view on that -- on when you do the initial restructuring of an asset, do you need to be more aggressive on that, maybe equitize more of the debt or take -- if you can take the keys quicker? Or what is it? I mean, again, this is not just in your book, it's elsewhere, but obviously, you've had a fair number of them. So what's your thought on how restructurings need to be done going forward? Philip Tseng: Yes. Restructurings, they can play out in several different ways. The road to recovery, as we've discussed on past calls, are not always linear. In fact, they're rarely linear. So it's hard to predict when they may recover. And these businesses oftentimes recover into -- from a capital structure standpoint with a loan and equity component. And equity investments, as you know, are more sensitive to enterprise value changes just given that they're at the bottom of the capital stack, whereas the debt is obviously more insulated from enterprise value changes. We think, Robert, we have a robust process in place, certainly bringing to bear the resources of the broader BlackRock platform to actively manage these challenged investments. But I appreciate your concern around when we can call bottoms on some of these restructurings, but it's challenging. Operator: Our next question comes from Finian O'Shea from Wells Fargo. Finian O'Shea: Just to piggyback on the first topic with Robert. So listening to the issuer-specific developments, and I appreciate those, but they just don't sound like that big of changes in the context of their outstanding underperformance. And in the history of BDCs, these NAV drawdowns do happen from time to time, but I can't remember another Friday night 8-K. So the question is, is there sort of more to the story, perhaps a change in personnel, a change in procedure on the valuation team that was brought to the Board and led them to rethink and push this out there? Jason Mehring: Fin, it's Jason. Thanks for the question. There hasn't been any sort of change to our valuation policy. As I think we've talked about before, our end-of-quarter process includes a pretty granular review of each portfolio company, and that methodology does include, obviously, third-party valuation services and resources from within the BlackRock PFS platform. So I think that's all remained consistent. I do think that when you look at the overall write-downs in the quarter, they were concentrated fairly heavily among those 6 names that we've outlined, which were about 2/3 of the drop in NAV. And I think that those names, generally speaking, had an equity orientation, which obviously, as everybody knows, is more volatile and is fundamentally more sensitive to changes in underlying performance. So we obviously didn't delineate specific performance level detail when we were outlining the businesses that we talked about. But it's safe to say that the inputs and just sort of the factors related to the business performance, industry outlook, et cetera, moved in a way that had on a cumulative basis, a more material impact on NAV for the quarter. Finian O'Shea: So I guess not a change in -- okay. So it sounds like go forward, we're not going to 8-K all the time when the equity market moves. It sounds like maybe less valuation, but more, yes, these 6 names had just straw that broke the camel's back kind of thing, idiosyncratic event that forced your hand to reassess the valuation and that's very one-off. This is like the one 8-K that will ever happen under those circumstances. Jason Mehring: Yes. Listen, it's obviously difficult to predict the future, but I think there were a unique collection of factors that led to a more material markdown in the aggregate for the quarter, which is why we saw fit to release the 8-K when we did in January to make sure that the market was aware. To your point, it's not something that we've seen on a regular basis. There were, again, idiosyncratic factors that happened to occur in unison, which drove a lot of that swing. Again, we've referenced those 6 names. But again, we're -- the process is the same, and we'll continue to consider the need to disclose things on an 8-K basis if and when they arise. Operator: [Operator Instructions] We currently have no further questions, and I would like to hand back to Phil Tseng for any closing remarks. Philip Tseng: Thanks, operator. In closing, I want to thank you all for joining our call today. I'd also like to thank our team for their continued hard work and dedication for TCPC. As always, please reach out with any questions. Thank you. Operator: Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect your lines.
Operator: Ladies and gentlemen, thank you for standing by. I'd like to welcome you to Fibra UNO's Fourth Quarter 2025 Results Conference Call on the 27th of February 2026. [Operator Instructions]. So without further ado, I'd like to pass the line to the CEO, Fibra Mr. Andre El-Mann. Please go ahead, sir. André Arazi: Thank you, Luis. Thank you, everybody, for your interest in our call regarding the fourth quarter of 2025. I would like to begin that we are very excited again to release these numbers for you of the fourth quarter of 2025, which has been a very busy year for us at FUNO. This is the first report after the drop-down of our industrial portfolio. I would like you to bear in mind that we need to consider -- we are considering only a few days of the complete revenues in this new structure, in this particular quarter. Nevertheless, we make sure that everything goes as planned, as we will be able to report a complete quarter this very first quarter of 2026 in the next few weeks. That would allow us to reveal that all the efforts made last year will pay back, and our shareholders will be able to see the positive impact that the carve-out of our industrial portfolio will have on the future of the company. I would like to express our excitement on the numbers released yesterday that show a consolidated company with assets close to $25 billion. These are the big numbers, but we are also taking care of the little numbers. 95.5%, our historic high of occupancy level across the board. NOI margin growing by more or less 300 bps and looking good for this year. A healthy growth above inflation on all the significant lines of the balance. I would like to remember you about last year's achievements. We made the liability management of the company, having renewed close to $800 million at the beginning of the year of the U.S. bonds -- U.S. dollar bonds. We renewed also MXN 12 billion of the Mexican peso bonds. We made the repayment of close to MXN 10 billion of short-term bilateral revolving lines of credit, with the issuance of an unsecured line long term. We made the exchange of our bonds across the curve to complete the transfers of debt to Fibra Next. We finalized the internalization process and we expect savings in the order of $400 million to $500 million this year. We did the carve-out of our industrial portfolio. First, with the IPO of Fibra Next in which we raised close to $430 million. Then we made a follow-on equity offering of Fibra Next close to $400 million. We did the exchange of the bonds. And then finally, at the very end of last year, we finally made the drop-down of the industrial portfolio of UNO into Next. All of this done last year, during which we managed to maintain and excel in our metrics, mainly total income, total NOI, total FFO, total dividend yield, all of them improving in a healthy way. And also, we improved at the end of the year in an overall NOI margin. I would like to thank all the team here at Fibra UNO because none of this would have been possible. We made last year very difficult choices and very strong efforts in order to get where we are today. I was sure -- I will make sure to be reporting the first quarter this year, which will be much clearer of all the efforts that we did last year and will reflect on the balance and the performance of the company and of course, of our subsidiary company, Fibra Next. Thank you for your attention. I would like to pass the mic to Jorge to go in depth with the numbers. Jorge, please. Jorge Pigeon Solórzano: Thank you very much, Andrea, and thanks, everybody, for joining our call. As usual, I'll start with the MD&A for the quarter. Fibra UNO's total revenue increased by MXN 348 million or 4.6% compared to the previous quarter, primarily driven by a 50 basis point increase in the total portfolio occupancy, inflation-driven increases on active contracts, rent increases and on lease renewals and this was offset by the peso-dollar exchange rate appreciation and the effect that this has on our U.S. dollar-denominated rents. In terms of occupancy, our operating portfolio stood, as Andre mentioned, 95.5%, which is a 50 basis points increase compared to the previous quarter. If we look at the retail portfolio, we recorded an occupancy of 93.7%, 10 basis points above the previous quarter. The office portfolio recorded 82.9% occupancy, 10 basis points below the previous quarter. The other portfolio recorded 99.3% occupancy remaining stable versus the previous quarter. The industrial portfolio, 97.7%, which is 30 basis points above the previous quarter. And the in-service portfolio recorded 87.7%, which is 330 basis points above the previous quarter. In terms of operating expenses, property taxes and insurance, total operating expenses increased by MXN 97.1 million or 9.8% versus the third quarter of 2025. This is mainly due to increases in the cost of some of our supplies and services that are above inflation. As you know, we've mentioned this before, a lot of our expenses are linked to service providers that have high degree of correlation with the minimum wage. And this has kept some of those expenses higher. In terms of property taxes, fees increased by 6.1% or 3% above the previous quarter, mainly due to consolidation of Fibra Next. Insurance expenses increased by MXN 10 million or 7.6% versus the previous quarter, again, due to the consolidation of Fibra Next. In terms of net operating income, our NOI increased by MXN 498.3 million or 8.9% versus the third quarter of '25 to reach the amount of MXN 6.079 billion. NOI margin calculated over rental revenue was 85.1% and 77.2% compared to total revenues. In terms of interest expense and interest income, the net interest expense line increased by $51.9 million or 1.8% compared to the third quarter of 2025. This was mainly due to Fibra Next debt consolidation and the interest related to this consolidation. And as Andre mentioned, this was not a complete quarter. So we'll see the complete effect on our financials in the first quarter of 2026. This increase was offset by interest rate reduction in pesos and the effect that this had on our variable rate debt. The appreciation of the exchange rate, which went from MXN 18.38 to MXN 17.97 quarter-over-quarter and obviously, the effect that this has on our interest expense line during the quarter, a decrease in the interest capitalization and the impact of the pricing of our derivative financial instruments. The bottom line on our funds from operation as a result of the above, FFO controlled by FUNO increased by MXN 157.4 million or 6.6% compared to the third quarter of '25, reaching MXN 2.55 billion. Adjusted FFO recorded an increase of MXN 121.1 million or 5% compared to the third quarter of 2025, reaching MXN 2.55 billion. A slight difference against FFO is due to the update in the cost of a property that was sold in the third quarter of 2025. FFO and AFFO per CBFI calculation during the fourth quarter of '25, we put circulation, 5.3 million CBFIs corresponding to the ECP (sic) [ EPC]. And with that, we closed the quarter with MXN 3.810 billion CBFIs outstanding. The FFO and AFFO per average CBFI were MXN 0.6690 and MXN 0.6712, respectively, variations of 6.5% and 4.9% compared to the third quarter of 2025. In terms of the quarterly distribution, we reached MXN 2.55 billion or MXN 0.67 per CBFI with a quarterly AFFO payout of 99.8% and a payout of 94% compared to the annual AFFO. Moving on to the balance sheet. In terms of accounts receivable, we totaled MXN 2.131 billion, a decrease of MXN 260 million or 10.9% from the previous quarter. Reflecting the organic growth related to the consolidation of Fibra Next as well as an improvement in collections that we had in the quarter. Investment properties, the value of our investment properties, including financial assets and investments in associates increased by MXN 32 billion or 9.3% compared to the third quarter of '25. This obviously, as you can see, reflects the consolidation of Fibra Next on the balance sheet as of December 31, 2025, CapEx invested in our portfolio and fair value adjustment of our investment properties. In terms of total debt, we finished the fourth quarter of '25 with MXN 152 billion compared to the MXN 147 billion we had the previous quarter. The variation is primarily due to the consolidation of Fibra Next, which included additional debt, the valuation of the maturity effect of financial instruments and the exchange rate effect appreciation that I mentioned before. In terms of total equity, equity increased by MXN 55 billion, almost MXN 56 billion or almost 30%, 29%, including controlling and noncontrolling interest. As you know, this is obviously the effect of the consolidation of Fibra Next, which is one of the things that we wanted to achieve, and we finally have completed that in the previous quarter. This capital includes the consolidation of the Jupiter portfolio, the second part of Jupiter portfolio. Net income generated from quarterly results, the derivatives valuation, shareholders' distribution related to the third quarter results and the employee compensation plan. Moving to the operating results in terms of leasing spreads. Leasing spreads, we had increases of 16.4% or 1,240 basis points in the industrial segment, 8.2% or 820 basis points in the retail segment and 500 basis points in the office segment. If we look at dollar-denominated leasing spreads, we saw 13.9% or 1,390 basis points for the industrial segment, 460 basis points or 4.6% in the retail segment, and we saw negative 320 basis points in the office segment. As you know, this is something that we are very pleased with and something that we have come to expect in terms of what's happened in the office portfolio. In terms of constant property performance, the rental price per square meter for constant properties increased by 5.3% compared to the weighted annual inflation of 3.6%. So we had 170 basis points growth despite a depreciation of the peso about 13%. If we had not seen that this appreciation, we probably would have been closer to about 8.4% constant property performance. So again, very pleased with the performance that we saw in this area. In terms of the NOI at the property level, we saw for the fourth quarter, an increase of 2.9%. It can be divided in Fashion Mall segment NOI decreased by 2.5% Regional segment decreased by 3.5%, stand-alone segment decreased by 3.6%. The decrease is mainly due to extraordinary income recorded in the third quarter of '25, which is obviously a one-off in [ comparison ] to the fourth quarter of '25. The office segment NOI increased 5.2%. And the others segment decreased by 1.2%. The industrial segment NOI increased by 11.2%. And with this, we finalize the MD&A. Now Luis, if we can open the floor for Q&A. Operator: [Operator Instructions]. Our first question is from Igor Machado from Goldman Sachs. Igor Machado: My question here is on leverage as we have seen a relevant leverage process for FUNO in the last quarters. So I just want to better understand here how does management view the leverage target for the end of 2026? And what is the long-term strategy for maintaining this improved ratios? That's it. Jorge Pigeon Solórzano: Well, as you know, part of the -- there were many drivers for the carve-out of the industrial portfolio and the capitalization and the consolidation, let's say, of that industrial portfolio Fibra UNO. One of them is the deleveraging effect that we have by adding roughly $2.3 billion of new equity, which is a combination of the value of the Jupiter portfolios as well as the equity we raised from the market. Ideally, we feel comfortable, obviously, below 40%, and we feel comfortable having an investment-grade credit rating, which is where we are today, both stable outlooks from Moody's and Fitch. And the trajectory that we have for the company will delever it even further based on a couple of events. One is, as you know, this business is inflation indexed. So that will have a deleveraging effect over time. And then the other one is that Next will continue to grow, and we expect that to come with additional equity issuances further down the road, and that equity is going to be consolidated into Fibra UNO. So that's going to delever the company even further. So at this point, we don't have additional deleveraging strategy, so to speak. And we would like to maintain our investment-grade credit rating going forward. So the metrics that we need to be in that world is what we're going to aim to maintain. So let's say, LTV below 40% is where we feel comfortable around 35% to 40%, say, the sweet spot. Operator: Our next question is from Mario Simplicio from Morgan Stanley. Mario Sergio Simplicio: I have my question is, well, in 2025, you achieved a lot of milestones of your long-term strategy and you have the internalization, we have Fibra Next. And I wonder what are the next targets that you're aiming for, let's say now '26 and for the future years? Like how is the long-term strategy for Fibra UNO now that it has already achieved so many milestones? André Arazi: Thank you for the question. We have many, many plans for the future. And I hope that we, first of all, will reduce the gap between the NAV and the price of the share. Once we do that, all of our opportunities will open wise, and we will act on it. Operator: Our next question is from Diego from Citi. Unknown Analyst: I have one on my side regarding CapEx. In the fourth quarter, the CapEx reached MXN 2 billion. And how this level of investment support FUNO's growth pipeline, including expansions and asset stabilization? And additionally, what you guys expect for CapEx in 2026? Jorge Pigeon Solórzano: I think that the MXN 2 billion is a good number for CapEx for the company, let's say, on a normal operating year on the normal status of what we have been doing, which is keeping up or trying to keep up with the demand for new space that we have from our tenants is a reasonable number to expect again for 2026. And obviously, as you know, this does not include any new developments or anything of that nature. Some minor expansions at some of our properties, but not large scale development. For that, I think that's what we need to open the doors for additional capital for the company. Operator: Our next question is from Pablo Mulas from GBM. Pablo Mulas: You already answered my question. Operator: Our next question is from Gordon Lee from BTG. Gordon Lee: Just a quick question. I was wondering whether you have an estimate or even just a ballpark figure of what the total operating expenses that we saw this quarter that were associated with either the next transactions or the internalization transactions that should be nonrecurring on an ongoing basis, just to get a sense of a more sort of stabilized EBITDA margin for, let's say, the new FUNO. Jorge Pigeon Solórzano: Not yet. I don't think we we run that number. I'll get back to you on that we'll work on it and get back to you. Gordon Lee: Okay. Perfect. Just a ballpark is fine. Operator: Our next question is from Anton from GBM. Unknown Analyst: Just a quick one. I mean, as everyone mentioned, you reached a lot of milestones for FUNO, mostly focused on the industrial side. So I was wondering what are your plans for the retail and office and the other segments? Do you expect to do any acquisitions there? Or what's the overall strategy? Jorge Pigeon Solórzano: Well, more than the strategy, let me tell you what we think about what's going on in the retail sector. If you see our logistics portfolio, it's at 98% occupancy and the rents in the Mexico City market have continued to grow. There is very strong demand for logistics assets. Why? Because the companies that demand that logistics, which is basically consumer-driven in Mexico, are -- have been doing well and expect to continue to do well, and there's growth -- a lot of growth coming in that sector. So that means that there's going to be demand for new shopping malls, new stores, new Walmart and so on and so forth down the road. And obviously, we want to be able to capture those opportunities. Opportunities we have been seeing them the last years, and we've had to let those opportunities pass at Fibra UNO because with the deep gap that we have to our NAV, it's -- this is a capital-intensive business. We want to close that gap in order to be able to issue equity. And then as Andre mentioned earlier, that will open up a lot of opportunities for us for acquisitions and for developments, et cetera. So we see a very strong and attractive retail market in Mexico. Operator: [Operator Instructions]. Okay. We have a question from Felipe Barragan from JPMorgan. Felipe Barragan Sanchez: I have a question on an update on the office segment. Just want to hear your thoughts on the trends and what's going on in that segment. Unknown Executive: Actually, as you have seen on the -- our report, we have been increasing the occupancy that we have there. And I think that it's not just us, it's just a tendency already on the market. Obviously, we are above the average of the market in terms of occupancy. But I think the trend is that the offices are getting occupied. And probably we are at 83% occupancy. Once we hit the 85%, we will be seeing increasing the rent levels that we have as of today that has been almost flat in the last 2 or 3 years. Operator: Our next question is from David Soto from Scotiabank. David Soto Soto: Just a quick one and a follow-up on the retail side. Should we expect variable rents to start contributing to your portfolio anytime soon? André Arazi: They are already contributing. We have a very interesting mass of contracts that we changed. If you remember, I've been saying that in the past that we changed our contracts, some of the contracts for a dual rent, one fixed rent, which was lower than the previous rent that the tenant was paying and/or our percentage of their sales, which has been paying off in the last couple of years. But right now, given that we finished the -- for example, the luxury Avenue in La Isla Cancun, we have been receiving the fruits of that, and we have been receiving already percentage of rent. If you add to that, that we exchange many of the regular contracts of regular shopping malls from fixed rent -- pure fixed rent to fixed rent plus a percentage of the sales, whichever becomes higher. So we have been already receiving that in our portfolio. And given that we exchange many of the contracts, we think that we will continue to be receiving those percentages in the near future. Operator: We'll give it a few more moments for any further questions. Okay. It looks like we have no further questions. I will now hand it to the Fibra UNO team for the concluding remarks. André Arazi: Thank you very much. Thank you, everybody, for your interest in our call, and I hope to hear from you in the next call about the first quarter of 2026 in the future. Thank you very much. Operator: That concludes the call for today. We'll now be closing all the lines. Thank you, and have a nice day.
Operator: Good morning, and welcome to the disclosures. Before starting, I would like to remind you that once the presentation is over, and as usual, we will move on to the Q&A session. [Operator Instructions] So we're going to start with the presentation. We have Mikel Barandiaran, the CEO of Dominion; and Roberto Tobillas, the Director General; and Patricia Berjon, who's the Director for Corporate Development. Unknown Executive: Well, good morning, everybody, and many thanks for attending this call for 2025, and many thanks for being so patient, too, because we are starting somewhat later because of a technical issue. So many, many thanks, many thanks for waiting. But before talking about the figures of the year and to understand how this evolution has been in the different business areas, I think that what we should do is mention how the year 2025 has evolved and also refer to the many events that have happened at the global level that have had a direct impact on the company's evolution. And I think that compared to previous years, geopolitics has now become an ingredient that we have to take into account because we are facing a context where what is improbable has become something possible. And this global paradigmatic shift also includes other things like elections in those countries in which we have a significant presence like in Chile and the paradox that still exists in France where it's difficult to carry out structural reforms. But as regards to macroeconomic events, the most relevant ones have focused on the tariff war that was kicked off in April by the North American government and the effect that this has had for global trade. But although this has not affected the company directly, it has done so indirectly because it has affected the decision-making of some of our customers or different economic agents. And another consequence, another relevant consequence is the strong depreciation of the North American dollar, which has produced significant exchange rate differences and conversion differences in the figures of this year. And what this proves what we already observed since we presented our current strategic plan or our most recent plan, and it shows that there's more uncertainty, which is not disappearing. It's only increasing. But as regards to the strategic plan, this fiscal year of 2025 has been a year in which we have consolidated the transformation that we initiated in the previous fiscal years, and we materialized many of the objectives that we had set ourselves within the pillars of recurrence, simplification and sustainability, which are the 3 fundamental pillars of the plan. So in the year 2025, we initiated the new reporting where the businesses and environmental activities for the industry have their own strategic area structure on the Global Dominion environment. And the creation of these 2 major areas, Global Dominion Environment and the rest of the businesses under Global Dominion Tech Energy want to simplify and regroup the activities in such a way that it's easier to understand the company and also be able to value its elements. And this also means that we can work on different options to develop the strategic area of GDE, where the company has put its focus on organic and inorganic growth, which is the end result of the potential that we can see nowadays where the buildup opportunities are numerous and where the optimization of markets by geographies and activities is a fact. This process has already been addressed in the second part of 2025 with several acquisitions of companies and infrastructures, and we hope that we will add more in the short and medium term. And at the same time that we are developing greenfields in different strategic locations like the case of Tarragona and the United Arab Emirates. And finally, and as regards to the simplification process, we already made the most relevant divestitures of activities in previous fiscal years. And in the month of July, we carried out the divestment of the PV facilities we had in the Dominican Republic that has improved the balance sheet. And we also divested our activities in France where the possibilities of growth were below our objectives. And this divestment doesn't have any impact on the year's figures because this was as of December 31, but in any case, it's going to change things in 2026. But apart from the qualitative improvements, if we were to have to underscore the figures of the year, well, we are growing organically by 4% and we are doing so because both GDE as well as GDP services, in other words, the recurrent areas of the company are growing above the guidance. They're growing at levels of 6%. And this means that this year, the projects have not contributed as much as in other previous years. And we also have to underscore that the simplification of nonstrategic activities is improving our profitability. It's growing and our EBITDA over sales margin is 13.7%, which is a maximum figure for the company, a historic maximum figure. Thirdly, the depreciation of the dollar affects the balance sheet as well as our net profits and this has a one-off effect because of the correction of the divested assets in the Dominican Republic. And this one-off is EUR 18.5 million. And without that correction, our net profits would have been 10% higher compared to the figure reported in 2024. But an important thing is a strong reduction in the net financial debt, which at the end of the fiscal year is EUR 137 million, and this is 25% lower than the figure reported in '24 and 35% -- sorry, and 34% lower than the figure we saw in the first half of the year. So that means that the leverage ratio is 0.9x EBITDA. But before talking about the figures in detail, I would like to remind you that the figures for 2024 have been pro forma to be able to compare identical parameters because the divestitures are significant. And we have applied a pro forma formula. So in other words, these divestments, it's EUR 134 million and EUR 7.5 million in and EUR 5.2 million in net profits. So we are going to compare this with this figure with this pro forma figure that gives us a real snapshot of what this looks like. We've closed the year with a business figure of EUR 1,045 million, which means that an organic growth of sales of 4% with lots of inorganic growth and also growth of ForEx because ForEx has taken off 2% and inorganic growth, 11%. And although there's been a slowdown of projects whose causes that I will be describing later on in the information divided by segments. And as I said, we are growing at a very good speed over in -- especially in activities, the recurrence of GDE and GDT services and the margins are growing and EBITDA has reached a maximum figure of 13.7% of the sales, which shows that this simplification has been very handy with the divestitures of those activities that had lower margins, and we focused much more on activities and businesses that have much more profitability than are related to the environmental world. And the results of 2025, some of them stand below EBITDA, and it's important to detail this and the most important things would be a progressive reduction of financial expenses that finishes with a reduction of 8%, another EUR 2.5 million less in absolute terms. And this reduction came from the reduction of interest rates, which we expect will continue in the next quarters, motivated by 2 factors because there's been a reduction of the financial debt in our balance sheet and the normalization of the interest rates, especially in the United States, where the company also has debt denominated in dollars, interrupted operations. And well, we have the relative figures for the Cerritos wind farm and losses have been reduced by EUR 3 million compared to 2024. And this reduction is mainly due to a reduction of financial expenses associated with the funding of the wind farm and with the commissioning of it, which would generate income. And this commissioning of the wind farm was one of the necessary conditions to carry out the divestment in the infrastructure, which started in the second half of 2025. And right now, we are working on the negotiation of a PPA with different companies so that we can maximize the value of this infrastructure. And finally, this correction that has been brought about by the depreciation of the North American dollar in the assets of the Dominican Republic represent an extraordinary effect of EUR 18.5 million. So the attributable net profit is EUR 10.2 million without taking into account that one-off of EUR 18.5 million. So the figure would be EUR 28.7 million, which compared to 2024, it's a recurrent profit that is 10% higher. But let's now review -- let's review each one of the segments, each one of the business segments, starting off with Global Dominion Environment. And this segment has a turnover of EUR 472 million in the fiscal year, which is equivalent to an organic growth of 5.9%, which is nearly 6% that we mentioned before, a percentage that stands above the guidance of the strategic plan. And so this, we have to add positive in organic growth totaling 1.1% as a consequence of these acquisitions that we announced in Q3. In other words, we're talking about Ecogestion de Residuos and UREC, which is a recovery unit for water in Cartagena, which is in the area of circular economy and the German company, ZCR that operates in the area of decarbonization. But sales have had a negative impact on ForEx of about minus 3% and this area has reached a contribution margin of 10.3% of sales, which is somewhat higher compared to the figure reported in the previous fiscal year. And as mentioned on other occasions, within this area, there are different activities with very different margins. And we have those margins of circular economy that are higher than the rest. And right now, the circular economy represents 25% in the area of GDE. So as the weight of circular economy grows, the objective would be that this should reach something like 50-50, and then the margins will carry on growing. Regarding the total figures of the company, this segment, GDE accounts for 45% of our turnover and 28% of the total margin of the company. So -- and in relation to what we've already said about the strategy of the company in this area, we are working on a relevant pipeline with lots of acquisition possibilities, and we're looking for new capacities, new capabilities and a new position so that GDE can become a European reference in terms of environmental services and infrastructures. And not only that, we also have the organic development of this area, which is very significant. And I have to underscore that as regards to the circular economy, we're signing new contracts for the recovery of hydrocarbons and both in Spain and Latin America, but especially in Chile and Peru, where this activity -- where this automatic cleaning activity is a new development, and it's something that only we do and where we are consolidating our presence, and this is becoming a recurrent activity. As regards to decarbonization, we're still signing new contracts with existing and new customers. And we've signed the first thermal optimization contract in the United States. So we're opening up this market to this activity, and this has an enormous potential. Let's move on now to Global Dominion Tech Energy. And here, we explain the 2 segments, GDT Services and GDT projects. On the one hand, GDT Services closes the fiscal year with a business figure of EUR 460 million, which is organic growth of 5.8%. And this segment is what actually has the divestitures -- the divestments are focused on this segment, and they subtract 23% of the turnover, and we have to add that ForEx is subtracting 2%. So this year, anything that is related to this area is affecting us in other areas, too. And the GDT Services segment accounts for 44% of the total sales. But if we were to add this segment to GDE, we'd be talking about 90% of the company's turnover. And these segments are recurrent, as I said before. So therefore, we have achieved this objective, this recurrency objective in the plan that is exceeding 60% of our total and also 60% of the contribution margin related to recurrent activities. And these recurrent activities are the ones that have grown organically above the guidance. So this gives us lots of visibility in terms of turnover and in terms of future cash flow generation. So we have the margin -- the contribution margin in the segment that reached 19.7% over sales. And as regards to the total figure of the company, GDT Services accounts for 53% of the company's contribution margin. Finally, GDT Projects closes the fiscal year with a figure of EUR 113 million, which is 14% lower than what we reported a year ago. And as mentioned, not only in this period of time, but this behavior has to do with the temporary slowdown in the execution of projects. And this is a consequence of the situation of geopolitical uncertainty that we're facing and also because there's been a change. There's been a change of strategies in renewable projects where we do not execute anything until we incorporate a financial partner. So we want to have a greater financial discipline. So this slower rhythm of execution does not represent the loss of any projects or the collapse of any projects. So our pipeline is still strong and will eventually become income for us. And on the closing date of the fiscal year, the pipeline is EUR 413 million, which I think is well more than 2 years of project execution. The contribution margin now reaches 28.5% of sales in the year. And in Q4, the percentage has been higher, much higher than the average, and this can be explained by the reversal of some provisions because of costs that we have not incurred in a project that has already finished. So we made an adjustment and the adjustment was positive, and it's the transmission line or transport lines in Angola. As regards to the total figures of the company, GDT projects accounts for 11% over sales and 30% of the contribution margin. So once -- now that we've taken a look at the P&L, both globally and by segments, let's move on now to the main movements of the balance sheet. With regard to fixed assets, we have -- they have remained in line because this has coincided with the amortization of the CapEx of the year and also with the changes of perimeter. And there have been changes in the infrastructural assets where this reduction of nearly EUR 62 million comes from divesting in the photovoltaic assets in the Dominican Republic. The variation of the operational net circulating capital -- working capital is -- represents a net investment of EUR 250 million and there's also variation in the rate of exchange and elimination of the debt positions associated to renewable assets in the Dominican Republic. With regards to financial debt, well, it now stands at EUR 136.6 million, which means that it's a reduction of 25% compared to December of 2024 and 34% compared to the last debt figure reported in June 2025. And this reduction has been brought about by the generation of operating cash flow in the year and also because we've collected EUR 70.3 million because this operation was signed in dollars and in euros, it means that we'll be collecting EUR 70.3 million for the divestment of the wind farms in the Dominican Republic. So that means that the leverage of the company is equivalent to 0.9x EBITDA. So in other words, it's 0.9x for this fiscal year. So this generation of operating cash flow was EUR 71.7 million. So that means 5.4% higher compared to the operating cash flow that we generated in 2024. And of course, in 2024, we generated EUR 76 million in cash flow, but we have to discount a number of activities. So the figure for comparative purposes is EUR 78 million. Cash generation has been used to pay an earn-out totaling EUR 1.2 million that corresponds to the acquisition of the Gesthidro company in 2023 and also for the payment of dividends to the shareholders were EUR 50 million in July as well as the minority shareholders, EUR 1.9 million and the investment of C&O related to the divestment in the Dominican Republic and EUR 6.3 million that correspond to interrupted operations. In terms of CapEx, it has to be underscored that in addition to the EUR 20.1 million of maintenance CapEx, which is a figure that remains stable year-on-year, and we've even managed to optimize our levels, we have destined EUR 37 million to the expansion of different activities, among which we have the renting business for mobile devices, the development of renewable infrastructures and greenfields in the area of circular economy in Fujairah and in Tarragona. So as a conclusion of these results in this year, we have achieved the targets established for the fiscal year. So this is thanks to the transformation we've carried out with a very positive evolution, and we have materialized many actions that were geared towards the simplification exercise established in the plan. And we've done so within the context that is pretty turbulent too, with lots of complications. So therefore, we have reached this final year of the strategic plan with most of the changes made and decisions taken in order to carry on progressing in our focus on the environmental world through Global Dominion environment. And we also confirm that in 2026, we will be presenting a new strategic plan where we will lay down the foundations of Dominion of the future and where each strategic area will play a very important role. And before finishing, I would like to remind you that the dividend policy establishes a payment of 1/3 of the attributable net profit. But even so, the Board is going to suggest or propose to the AGM that we pay a much higher figure, much more than the EUR 3 million that would result from applying that policy. And this is so that we can preserve the remuneration to the shareholders. So we will suggest a dividend of EUR 8 million in 2026, which is equivalent to about 50% of the net profit of the continued activities, in other words, without taking into account those activities that were interrupted. And I would also like to remind you about another operation in the area of our shareholder composition, which was done about 1 month ago with the departure of Mahindra. Mahindra owned 4.16% of our shares. And the relevant thing in this case is that this figure, 4.16% has been acquired by the main company shareholders that is by the biggest shareholder we have as well as by the Chairman and the CEO by the company, therefore, increasing their possibilities. So I would like to thank you for your attention, and we can now move on to your questions. So you can either write them in or you can raise your hand on the screen -- zoom screen. Thank you very much for your attention. Unknown Executive: Okay. Well, let's start off with the questions then. [Operator Instructions] So let's start off with the Q&A session and give the floor to the people that have raised their hand. And please make sure that microphone is muted. Firstly, we have Carlos Javier Trevino from Group of Santander. Carlos Javier Treviño Peinador: I've got a couple of questions. Could you please give us an indication of the levels of growth that you expect for 2026? And could you perhaps give us some reference divided by businesses? That would be very grateful. And the second question is when do you think that growth in project can be reactivated because the 2 quarters have been pretty weak. And I would like to ask you specifically about the situation of the construction of the wind farms in Italy. When you signed an agreement in January last year, you spoke about 2 wind farms that would be built towards the middle of the year. And I want to ask you about that. And then could you please explain the reclassification that you've done with GDT services? And what kind of contracts have you got there? Could you please explain the nature of what's happened there? Unknown Executive: Yes, as regards to the growth guidance for 2026, we are continuing with the current strategic plan. And therefore, we have to be over and above that figure of 5%. And that's what we have in our forecast, too. So we have to grow above that figure of 5%. And then you were asking about the issue of wind farms in Italy. Well, the first 4 projects that we had, we had an agreement with the partner. Well, these are already underway. And we're now seeing what kind of new project we could do. We think that it could be another 4 or 5 projects that could be incorporated once again with this partner with IPT. We'd carry out another search. But in any case, so that we can build these projects based on the fact that we have already identified the majority buyer from 70% to 80% up to 100% even, and this is what we have in Italy. And then -- as regards to the reclassification issue, well, that's a very minor issue. Well, yes, it's -- let's say, that this has to do with the quarterly aspect because this is something that I think that you do perfectly well because we have an activity in which we provide logistics services and these logistics services have to be recognized as an income based on added value. And this doesn't have to do with the logistics business, but it has to do with the added value associated with our logistics services. And in this regard, we've had some accounting entries that came from previous quarters that we've had to reclassify and adjust. But in any case, this is an accounting system. Well, as you can see, the figure for the year is the same one, but it's basically a focus between the third and the fourth quarters. Carlos Javier Treviño Peinador: And when do you think that project growth can be reactivated? And when do you think you'll be going back to normal rates again, normal rates of growth? Unknown Executive: Well, Carlos, the truth is it's very difficult to forecast anything because they are currently involved in public tenders. And you know that these projects are binary. But this year, we have good expectations. And I think that we'll be carrying out a project in Chile. And I think that green after divesting in the Dominican Republic will produce the development of new projects in Latin America. Yes, I would say, in the Dominican Republic, where we've identified the partner, and it's basically the 2 main pension plans of the company -- of the country, and we have the right partner. We have the projects. So well, the -- there was -- 7 or 10 days ago, there was a PV tendering process with storage and we expected this for August or September last year, but this has been postponed 5 or 6 months. And the process -- well, towards the end of April, that's when we'll know what's going on. I think that the prospects are very good, and we will have a very significant reactivation as from the second or third quarter in relation to Dominican projects. We -- in Italy, as I say, business as usual. And in Spain, we have some differences that to the extent that they can become self-consumption things, we could have a minor pipeline too to construct and to execute. Unknown Executive: Let's give the floor to David Lopez from [ JB ] Capital. David Sanchez: I have a question on the growth CapEx because this year, you've invested EUR 37 million in expansion CapEx. But could you please give me some more details on what activities are involved? And especially the level of recurrence, what level of investment or expansion should we consider for 2026 because the levels for this year, the levels were very similar compared to what we saw in 2024. Unknown Executive: Well, yes, in that growth figure or CapEx figure, we have the CapEx that is related to the renting of mobile devices, and that would be well just over 1/3 of that total CapEx of EUR 37 million. And then we have the developments that are taking place in the area of renewables. We have developments in Italy, in the Dominican Republic and which, as you know, we've invested part in that development so that we can then allow our partners to join and then carry out the conversion of the EPC where you allocate much more capital. And we do this in the minority manner by -- well, by the arrival of the partner, we've recovered most of what we spent on developments. And then we have what we have invested in the greenfields in the GDE greenfield in the area of circular economy. And we'd be talking right now about something like, well, in Tarragona, where we've invested in the purchase of land in Fujairah, where we are also going to create a MARPOL plant. In other words, a circular economy facility, whatever is for MARPOL. It has to do with sea pollution. So this is going to focus on the circular economy applicable to polluted water, seawater. And these are the 3 chapters that is devices, renewables and GDE. David Sanchez: And what about 2026? What level of CapEx and expansion should we consider? Unknown Executive: Well, I think that lower as regards to the development of renewables because they are much more mature. And then what we are starting to see now are greenfields that have been better identified in the case of GDE. So I don't know. I think that perhaps and perhaps with a different kind of distribution, we'd be able to reach those levels, although it's very difficult to forecast anything like that straight of the cup. So yes, but as Robert said, it will be a different kind of distribution where GDE would be more present. Unknown Executive: Okay. We're now going to review the questions that have to be answered from the chat. And if you want to send in any more questions, it would be the time to do so before finishing. Let's start off with Luis Padron. He's already asked several things. But anyway, when do we expect to present the new strategic plan? That would be the first one. Why are we reducing the dividend when there's a significant improvement of our debt? And the final one is that would you be considering a buyback of shares. And that's why the dividend has been reduced. Unknown Executive: Well, as regards to the presentation of the strategic plan in the second half of the year, well, after the summer, we'll give you the specific date, we would like to present that on the Capital Markets Day, which is when we'll be able to analyze the different issues in greater depth. And then as regards to the dividend, as you point out quite rightly, I think that there's an issue here, like Patricia pointed out, that has to do with net profits without bearing in mind the interrupted operations, we've increased this up to 50%. And compared to previous year, previous years, cash generation has been significant and the levels of net debt have been reduced, and we're comfortable underneath 1x EBITDA. But I think that on our road map, we have attractive investment ideas. And as Patricia pointed out, we've tried to compensate things. And we've tried to be adequately reasonable in our remuneration to the shareholder, although we know that there are internal projects that will generate value -- more value for the shareholder. Yes. Well, this is linked to an aggressive investment plan. And then we have the issue of the buyback, the buyback of shares. Well, this is also something that is being dropped into. It's an issue that we would analyze under the new strategic plan as from this year. Unknown Executive: Let's move on to the questions from David [indiscernible] from Scotiabank. And both of them are asking us about GDE. So there are questions on Q4 in 2025 with a business figure of EUR 140 million and contribution margin of EUR 8.9 million, which represents 6.4%, which is much lower than previously reported figures. And why has there been this slump in the margin over sales? Unknown Executive: Well, this always happens to us in the most individualized part of GDE and Q2, Q3, well, these are much more powerful in the Central Europe or East Europe. But this is part of the company that we are individualizing and which -- what happens is that in December, when they achieve 100% of what they've committed to, we become a little bit more relaxed, but this doesn't really mean anything else. There's no really no significant element here to be considered. Unknown Executive: There are several questions here on Cerritos. So we're going to group them up. Okay. [ David ] from [ Destino Fortunato ] is asking if the situation in Mexico is affecting the negotiations for the sale of Cerritos. And then Diego Martinez and [ Ignacio Joaquin Andreu ] are asking us about our forecast for the net debt once Cerritos has been sold. Unknown Executive: Well, I'd say this is something that we mentioned with Cerritos. And Cerritos 2, 3 years ago became a problem because of the policies that were in place. It's no longer an issue. Now I don't know if this is going to be done on April 1 or May 1. But as you know, this is a project that is rated as an operation available for sale. So the value is about $100 million with a debt of about $85 million or $90 million because this is in euros. And we believe that the net asset value is properly reflected, and we're also actively working to round off the value of the project and defend its worth with an interesting PPA, something bankable, something that can be much more attractive for sale purposes and the sale for it to be operational. We -- well, we are going to -- we're now talking about 3 or 4 main leaders with whom we are negotiating things. and 3 or 4 bidders. And I think that this is a project that will become liquid. It's going to become liquidity, and we're now focusing a little bit on the details of if we can or cannot recover the accounting value or the book value, and that's what we're really focusing on. And I can't really say much more about Cerritos. Unknown Executive: Let's move on to the last questions from Ruben Alonso. But I would like to remind you if you have any further questions, this will be the time to send them in before we finish. Unknown Executive: Okay. Ruben, we've got 3 or 4 extensive questions. And the net asset value, well, we reaffirm what we have in our books because I think that there's an amount there for infrastructure that we will recover in the next 2 or 3 years. In other words, 20% of the Dominican Republic, we expect to recover this in 3 years. And we are also looking into if we have to perform any operations, as you point out, with the rest of renewable assets, because the idea is to focus completely on this rotation strategy that we initiated in the year '23. So this is what we can see. Although, obviously, together with the operating cash flow and according to the amount we would obtain in these recent divestments, I think that what we would really focus on is a company with 0 debt or 0 cash. And of course, it's very difficult because we're working on a new strategic plan, which I think is what Patricia mentioned and what the CEO said too. And we are focusing a lot on the greenfields and organic growth in the area of the environment where we have a number of interesting ideas that have to be carried out in the next few months, and it's very difficult right now to give you a debt and generation guidance. But we feel comfortable with 1x EBITDA. And I think we said that in the call of the third quarter, we said that we had an EBITDA of 1x. And I think what I'm missing is the debt that we had committed. But in any case, the important thing is that we have the basic elements to relaunch in this simplification strategy, the Dominion that we want to see in the future. Yes. And I think that I've answered practically everything with that comment. Unknown Executive: We have one final question from Luis Padron from GVC. What profitability do you expect from the aggressive investment plan of GDE? Is it possible to have a buyback of shares? Unknown Executive: Well, yes, of course, because we have an ambitious plan, and we have the right people, the right team for that. And we are now -- well, it's like when we were listed in 2017 and the segment -- the sector was highly segmented. And we wanted to achieve a lot of growth inorganic and organic growth. But as regards to this part of the plan, we are going to be aggressive. So in other words, the GDE figures of the last 3 years have multiplied EBITDA by 2, and the EBIT is 2.7x. We think that there are lots of very interesting opportunities on the table. And this is where we believe that it's worthwhile getting something done. So we will obviously remunerate the shareholder, but we think that here that there is -- I don't know, there is the possibility of generating a significant amount of value. Well, yes. And considering that we are in the year 10 since we were listed, we were first listed in 2016, and we reached the market -- we reached the market with a promise of EUR 43 million in EBITDA. It was EUR 150 million plus the green through. And all of that capital expansion via dividend and buyback has gone back to the shareholder. In others, we've given back to the shareholder much more than we initially predicted in 2016. But now we have another plan, which is a very aggressive plan, as Robert has just put it out in GDT, we will have lots of organic growth and very good performance. It's a very good business that we dominate and we are doing things even better, and it's very diversified, too. And the truth is that we're very happy with it. And GDE is a very ambitious project, and we expect to receive some very important news in the next few years. And that's what we're currently working on, and this is what our strategic plan is also focusing on, too. Unknown Executive: There are no more questions. So we will close the presentation here. Thank you all for listening. Thank you. Unknown Executive: Thank you very much. Goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good morning. My name is Gabriel, and I will be your conference operator. [Operator Instructions] This is FHipo's Fourth Quarter 2025 Conference Call. [Operator Instructions] FHipo released its earnings report on Thursday, February 26, after market closed. If you did not receive the report, please contact FHipo's IR department directly, and they will e-mail to you. Please note that this call is for investors and analysts only. Questions from the media will not be taken nor should the call be reported on. Any forward-looking statements made during this conference call are based on information that is currently available. Please refer to the disclaimer in the earnings release for guidance on this matter. We are joined by Daniel Braatz, Chief Executive Officer; Ignacio Gutierrez, Chief Financial Officer; and Jesus Gomez, Chief Operating Officer. I would now like to hand the call over to Daniel Braatz. Daniel, please go ahead. Daniel Michael Zamudio: Thank you, and good morning. Thank you for joining us today. Let me walk you through our fourth quarter and full year of 2025. Throughout the year, we maintained a disciplined management of the company, focused on strengthening our balance sheet and optimizing our capital structure, aiming at generating long-term sustainable value for our investors. In the 4Q, we maintained our commitment to delivering profitability. Throughout its history, FHipo has shown solid financial performance, consistently delivering distributions. As of the fourth quarter of 2025, we have distributed more than MXN 7,300 million to our investors on a cumulative basis since 2014, reflecting our long-standing focus on value creation and capital discipline. FHipo maintained a strong capitalization profile. As of the 4Q of 2025, FHipo reported a capitalization ratio of 60% and a debt-to-equity ratio of 0.7x on our balance sheet. In recent years, we have successfully executed a disciplined deleveraging strategy, focused on strengthening our balance sheet and better position the company to pursue attractive market opportunities when conditions get favorable. Our financial margin stood at 54% in the quarter. And on a cumulative basis for 2025, FHipo obtained a financial margin of 54.5%, highlighting the company's operating efficiency. On January 20, 2026, we completed the full early amortization of the RMBS CDVITOT 14U collateralized by INFONAVIT denominated in VSM or Veces Salario Minimo. The execution of the cleanup call was based on portfolio balances as of December 2025. And finally, as of the date of this report, the CDVITOT 13U, 14U and 15U issuances that have been fully amortized throughout the execution of the cleanup calls, significantly reducing the balance of the INFONAVIT mortgages denominated in VSM in our total portfolio. Moving on to Slide 5. We highlight FHipo's consistent track record of generating value to our investors through stable distributions. As I mentioned before, up to the 4Q of 2025, our annualized yield per CBFI stands at 10.9% based on an estimated quarterly distribution of MXN 0.35 per share or per CBFI, subject to the current distribution policy. We have also distributed over MXN 7,300 million to our investors since FHipo was created back in 2014. That is equivalent to MXN 19.68 per CBFI, demonstrating our investor-focused approach and our ability to translate disciplined financial performance into consistent returns for our shareholders. As we move into Slide 6, we take a closer look at FHipo's solid capitalization profile, supported by a disciplined financial strategy management. As of the fourth Q of last year, our debt-to-equity ratio considering both on and off-balance financings was 0.3x and considering on balance financing stood at 0.7x. This result was supported by a balance sheet optimization strategy, which reduced our leverage significantly since 2019 and enhanced our ability to capitalize on market opportunities under favorable conditions. On Slide 7, we continue focusing our strategy on assets with an attractive risk-adjusted profile. Our portfolio collateralization profile remains very strong with an average loan-to-value of 77% at origination and today, an estimated loan-to-value of 28.6% based on current market value. Moving on to Slide 8. As of the 4Q, our nonperforming loan ratio based on the accumulated balances of the total portfolio at origination stood at only 3%, reflecting the historical credit performance of the company. Finally, on Slide 9, FHipo affirms its commitment to sustainability and ESG best practices. Our objective is to generate long-term positive impact beyond financial returns. We have provided more than 100,000 loans, of which women borrowers account for 31% of our overall portfolio, while 46% of our workforce are women, underscoring our commitment to inclusion and gender equality. On governance, our Nomination, Audit and Practices committees are fully independent, and more than half of our technical committee members are independent as well, reinforcing strong oversight and transparency. On the environmental front, approximately 70% of INFONAVIT borrowers have utilized the green mortgage program benefit, supporting energy efficiency home improvements. And internally, we have introduced initiatives to reduce paper, plastic and water consumption. Together, these actions demonstrate FHipo's commitment to responsible and sustainable value creation. Now I will turn the call over to our CFO, Ignacio Gutierrez, who will walk you through our leverage strategy. Ignacio Gutiérrez Sainz: Thank you, Daniel, and good morning, everyone. I will walk you through our funding structure and leverage strategy. FHipo has further reinforced its balance sheet by executing a disciplined deleverage strategy over the past years. As of the fourth quarter of 2025, our total debt-to-equity ratio, including both on and off-balance financing stood at 1.3x. And on a stand-alone basis, our on-balance leverage ratio was 0.7x. This financial discipline strengthens our position and provides us with greater resilience in evolving market conditions. Our diversified funding structure allows us to maintain solid liquidity levels while preserving the flexibility to allocate capital efficiently and focus on long-term value creation. On Slide 12, we will go through the detailed breakdown of our consolidated funding structure as of the fourth quarter of 2025. Our funding sources are well diversified across securitizations, bank facilities and capital market instruments with competitive rates and spreads. As shown on the breakdown, over 90% of our outstanding financings have a legal maturity exceeding 20 years, providing long-term funding stability and mitigating refinancing risks. Given our current capital structure, FHipo maintains additional leverage capacity of approximately MXN 16.8 billion or 1.8x debt to equity in comparison with the target leverage limit of 2.5x. This position gives us flexibility to act prudently and selectively as opportunities arise. Now with this, I'll turn the call over to our COO, Jesus Gomez, who will walk you through the portfolio breakdown before we discuss the financials. José de Jesús Gómez Dorantes: Thank you, Ignacio. Good morning, everyone. Thank you for joining us today. Let's move on to Slide 14 to take a closer look at the breakdown of our mortgage portfolio as of the end of fourth quarter 2025. FHipo's consolidated portfolio comprised 43,849 loans as of December 31, 2025, with an outstanding balance of MXN 16.8 billion, an average loan-to-value at origination of 77% and an average payment-to-income ratio of 24.4%. At the end of the quarter, 92% of the portfolio is performing. Our portfolio remains diversified across several origination programs, including INFONAVIT Total, INFONAVIT Mas Credito, Fovissste and the digital mortgage platforms portfolio, which as of the end of the fourth quarter 2025 represents 20% of the total consolidated portfolio. In over 10 years, we have continuously adjusted our origination and asset acquisition strategy to improve the credit quality of the assets we acquire. Moving on to Slide 15. FHipo's portfolio remains geographically diversified across all 32 Mexican states. Nuevo Leon, Estado de Mexico and Jalisco continue to represent the largest concentrations together accounting for approximately 28.8% of the total portfolio balance. In terms of our partnerships and origination programs, here is the breakdown of our portfolio. INFONAVIT Mas Credito program accounts for 51.7% of the total portfolio equivalent to MXN 8.7 billion. The digital mortgage platforms portfolio accounts for 19.2%, equivalent to MXN 3.2 billion. The INFONAVIT Total pesos program represents 14.3% of the total portfolio, equivalent to MXN 2.4 billion. Fovissste's portfolio accounted for 12.1% of the portfolio equivalent to MXN 2.0 billion. And finally, the INFONAVIT Total VSM denominated loans reached only 2.7% of the portfolio for MXN 0.4 billion, significantly it reduces the balances of INFONAVIT mortgage denominators in VSMs after the cleanup call of the CDVITOT transactions that Daniel mentioned before. This distribution reflects our strategy to prioritize origination programs that offer strong risk-adjusted returns while maintaining a diversified portfolio aligned with market demand. FHipo is well positioned to participate in future growth opportunities while maintaining a strong focus on profitability. I will now return the call back to Ignacio Gutierrez, our CFO, to discuss FHipo's financial results for the fourth quarter of 2025. Ignacio Gutiérrez Sainz: Thank you, Jesus. On Slide 17, our consolidated nonperforming loan ratio stood at 8% at the end of the quarter. As of the end of the fourth quarter of 2025, we continue to maintain a solid reserve and allowance for loan losses with an expected loss coverage of 1.3x and an NPL coverage of 0.53x. If we move to Slide 19 for our financials for the quarter. The total net interest income for the fourth quarter of 2025 was MXN 321.6 million, reflecting an increase compared to the fourth quarter of 2024. The interest expense totaled MXN 148 million, representing a slight decrease compared to the MXN 153.9 million reported in the fourth quarter of 2024, primarily as a result of the decline in interest rates over the past 12 months. Our financial margin stood at MXN 173.5 million, representing 54% of the total interest income, an increase of 3 percentage points compared to the 50.9% in the fourth quarter of 2024. The allowance for loan losses recorded in the fourth quarter of 2025 was MXN 44.9 million, reflecting the underlying credit performance of the portfolio during the quarter and its expected loss. The valuation of receivable benefits from securitization transactions showed a net loss of MXN 8.2 million in fair value during this quarter. This result is mainly explained by the performance of the portfolio and collateral of such trust certificates during the quarter and a net effect derived from the total early amortization of the CDVITOT 14U trust certificates. The total expenses incurred during the fourth quarter of 2025, which include the portfolio servicing and operational services as well as other expenses amounted to MXN 108 million. As a result, the net profit for the quarter amounted to MXN 19.5 million. With this, the estimated distribution for the fourth quarter of 2025, subject to the current distribution policy, as Daniel mentioned, is of MXN 0.356 per CBFI, which considering the average price for CBFI as of the fourth quarter of 2025 and the days of lapse in the fourth quarter results in an annualized yield of 10.9%. With this, I'll now hand the call back to our CEO, Daniel Braatz, for some closing remarks before we move to the Q&A session. Daniel Michael Zamudio: Thank you, Ignacio. As we close 2025, FHipo's business model continues to demonstrate resilience and adaptability. During the year, we sustained a strong financial position and maintain a healthy capitalization profile. Our focus remains on driving profitability and strengthening our capital structure and managing risk responsibly. Through 2026, we will continue evaluating new opportunities aligned with our strategic objectives while enhancing the overall quality of our portfolio. We believe the initiatives undertaken so far have strengthened our position for the future, enabling us to capitalize on future market conditions. Our objective remains clear to deliver stable and sustainable returns to our holders while maintaining the disciplined approach that has defined FHipo since inception. At the same time, we will continue advancing our ESG initiatives and creating long-term value for all stakeholders, including the communities we serve. Thank you for your continued trust. I'll now hand the call back to the operator to open the Q&A. Operator: [Operator Instructions] Our first question comes from the line of Martin Lara. [Operator Instructions]. Martín Lara: This is Martin Lara from Miranda Global Research. I have 2 questions. Could you please share your expectations for this year in terms of loan portfolio, including potential acquisitions of other portfolios or other financial companies? That's the first one. And the second one is that your capitalization ratio is very high at 60%. How do you see this indicator going forward? Daniel Michael Zamudio: Thank you for your questions. In regards of the capitalization, as you know, we've been trying to stronghold our balance sheet in order to take advantage of future leverage opportunities that obviously will reduce the cap ratio that we are holding at the moment. We're working in a couple of financing facilities that will help us lever a little bit more our equity. And the use of proceeds for those financings goes towards your first question, which is we're going to be using part of those proceeds and liquidity that we are holding at the moment to tackle some opportunities in terms of acquisition of new originators and also portfolio on mortgages and real estate-backed loans. Martín Lara: Okay. And your -- I have a follow-up. Your financial margin was very strong. It expanded nearly 4 percentage points year-on-year. What can we expect in the future? Daniel Michael Zamudio: I would say that we need to expect the financial margin to keep at that level. It will depend a lot, as you know, on the interest rate curve that Mexico will be running. As of today, we have a small portion exposed to floating rates. But as we keep performing throughout the year and depending on what Banxico does, I think that could increase a little bit more. But to be in the safe side, I would say that you should target that between the 50% and 54% of financial margin is a target for the company in 2026. Martín Lara: Okay. But more towards 54% instead of 50%? Daniel Michael Zamudio: I would say that, yes, more towards the 53.3%. Operator: We would like to take this moment to thank you for joining FHipo's Fourth Quarter 2025 Results Conference Call. We have not received any further questions at this point. So that concludes our question-and-answer session. Thank you. I would now like to hand the call back over to Daniel Braatz for some closing remarks. Daniel Michael Zamudio: Thank you all for joining us today. Please don't hesitate to reach out to us if you have any more questions or concerns. We appreciate your interest in FHipo and look forward to speaking with you soon. Operator: That concludes today's call. You may now disconnect.
Operator: Good afternoon, and welcome to Alignment Healthcare's Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] And please note that this event is being recorded. Leading today's call is John Kao, Founder and CEO; and Jim Head, Chief Financial Officer. Before we begin, we would like to remind you that certain statements made during this call will be forward-looking statements as defined by the Private Securities Litigation Reform Act. These forward-looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us. Descriptions of some of the factors that could cause actual results to differ materially from these forward-looking statements are discussed in more detail in our filings with the SEC, including the Risk Factors sections of our annual report on Form 10-K for the fiscal year ended December 31, 2025. Although we believe our expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that occur after this call. In addition, please note that the company will be discussing certain non-GAAP financial measures that we believe are important in evaluating performance. Details on the relationship between these non-GAAP measures to the most comparable GAAP measures and reconciliations of historical non-GAAP financial measures can be found in the press release that is posted on our company's website and in our Form 10-K for the fiscal year ended December 31, 2025. I would now like to hand the conference over to John Kao, Founder and CEO. You may begin. John Kao: Hello, and thank you for joining us on our fourth quarter earnings conference call. For the fourth quarter 2025, health plan membership of 236,300 represented year-over-year membership growth of approximately 25% -- this supported total revenue of $1 billion, which grew 44% year-over-year. During the fourth quarter, we also exceeded the high end of guidance across each of our profitability metrics. Adjusted gross profit of $125 million represented an adjusted MBR of 87.7%. Meanwhile, adjusted EBITDA of $11 million solidly surpassed our guidance range of negative $9 million to negative $1 million. For the full year, total revenue of $3.9 billion grew 46% year-over-year. Adjusted gross profit of $495 million resulted in an MBR of 87.5%, representing an improvement of 130 basis points year-over-year. Taken together, this year marks a tremendous milestone in the maturation of our company's profitability. We transformed from roughly breakeven just $1 million in adjusted EBITDA in 2024 to delivering adjusted EBITDA of $110 million in 2025. This reflects an adjusted EBITDA margin of 2.8% and represents 270 basis points of margin expansion year-over-year. Throughout the course of 2025, we have demonstrated both the strategic and operational advantages of our clinically centric model, which is purpose-built to deliver the highest quality care at the lowest cost. The data insights provided by our AIVA technology platform, combined with our Care Anywhere clinical model provided us with the visibility and control necessary to navigate a year of significant disruption, where we overcame the second phase of the V28 risk model, a redesign of the Part D program and broad utilization pressures across the Medicare Advantage industry. And importantly, this allowed us to pursue growth while expanding margins even as competitors took a step back in 2025. I'd like to congratulate our team for their success and recognition by Fortune Magazine for their unwavering commitment to seniors, which named us to its World's -- most Admired Companies list for the first time. We believe our model of lowering costs by delivering more care to seniors, not less, is the MA model of the future, and we are eager to serve more seniors as we continue along our path towards 1 million members. 2025 also marked an important step in demonstrating the replicability of our model beyond California. We more than doubled our ex-California membership, while consistently exceeding our financial expectations throughout the course of the year. As of December 2025, we had approximately 38,000 members across our markets outside of California, representing approximately 16% of our total membership. We have grown confidently outside of California by first leading with quality, which starts with success in star ratings. We now have a 5-star plan in North Carolina for the third consecutive year, 2 5-star plans in Nevada, a 4.5-star plan in Texas and a 4-star plan in Arizona. These achievements are further supported by the portability of our Care Anywhere clinical model, which focuses on delivering care to our high-risk polychronic members. By leveraging the strength of our care model, quality of clinical outcomes and scalability of our health plan operations, we are unlocking the growth potential within these markets. We are now focused on sustaining the momentum of our ex-California markets. In 2026, we plan to invest in our sales and distribution engine, build deeper relationships with our broker partners and continue growing with aligned provider partners where we have durable relationships. With less than 4% market share across our 23 counties outside of California, we see significant opportunity to take share over the coming years. Turning to our 2026 AEP results. We grew to 275,300 health plan members in January of 2026, representing 31% growth year-over-year. We saw broad growth across each of our markets with 23% growth in California and more than 80% growth in our ex-California counties. Importantly, we focused on growing responsibly through our bid design and sales strategy. We drove nearly 20% improvement to our AEP voluntary disenrollment metric and sourced approximately 80% of our gross sales from plan switchers. By taking a balanced approach to growth and profitability this year, we remain mindful of the impact of the final phase-in of V28, while still capitalizing on the growth opportunity in a year of significant disruption. Taken together, we are pleased with the solid growth in California, while continuing our rapid expansion outside of California. Our growth this year is adding to our future embedded earnings potential, while supporting our near-term operating leverage objectives. Meanwhile, improved operating efficiency across the enterprise is creating additional capacity to reinvest in long-term projects and scalability initiatives. Each of these factors is giving us confidence in our initial full year adjusted EBITDA guidance range of $133 million to $163 million. This is consistent with our previous expectations for consensus adjusted EBITDA of approximately $145 million to be in the range of our initial 2026 outlook. Jim will expand further on our financial outlook in his remarks. Looking beyond 2026, I'd like to spend a few minutes on the 2027 advanced rate notice. On a net basis, the announcement appeared to indicate a relatively flat rate environment for the industry. This reflected a combination of underlying cost trends and policy changes. While we have heard disappointment across the industry, we believe the update is largely consistent with the CMS focus on program integrity and aligning payments with underlying costs. Specifically, we are encouraged that benchmark trends reflect continuing growth in costs within the fee-for-service population. This was partially offset by certain policy adjustments, including those related to skin substitutes. As it relates to unlinked chart reviews, we have long supported excluding these records from risk score calculations as part of improving program integrity. Of note, our exposure is limited. Approximately 1% of our total HCC value is derived from chart reviews of any kind. Within that category, an even smaller subset is related to unlinked chart reviews. For those, we believe we have a clear path to ensuring the diagnoses are supported by a linked claim or encounter over time. Most importantly, the current environment reinforces the importance of our strong clinically led model and core medical cost management competency. We believe this enables us to win in any rate environment, just as we have demonstrated in 2024 and 2025, where the industry experienced tighter reimbursement. And furthermore, we will continue to have STARS payment advantages in 2027 with 100% of our members and plans rated 4 stars or above. In closing, we believe we are entering a reimbursement environment that creates a more level playing field with our competitors, which allows our distinct care management model to shine. We are proving the effectiveness of our distinct medical cost advantages with the results we have shared with you over the past 2 years. While we're pleased with our performance, we are not done yet. 2026 will be a year of continuous improvement where we plan to make targeted investments across our clinical model, new market playbook and scalability initiatives, including investment in AI workflows to improve administrative efficiency. In doing so, we are balancing our near-term financial objectives with unlocking the embedded potential of our model. With that, I'll turn the call over to Jim to further discuss our financial results and outlook. Jim? James Head: Thanks, John. I will jump right in with our 2025 results. For the year ending December 2025, health plan membership of 236,300 increased 25% year-over-year. Growth in membership drove total revenue to $3.9 billion for full year 2025, representing 46% growth year-over-year. Full year adjusted gross profit of $495 million represented an MBR of 87.5%, an improvement of 130 basis points year-over-year. We ended the year with strong outcomes across all major cost categories. Of note, Part D profitability and supplemental expenses trended in line with our guidance expectations. Meanwhile, our proactive care approach again delivered strong outcomes, leading to inpatient admissions per 1,000 in the low 140s during the fourth quarter. Taken together, the strength of our performance across each of these medical cost categories and the durability of our clinical model are giving us confidence in our underlying bid assumptions as we step into 2026. Moving to operating expenses. Our operating cost ratios continue to demonstrate significant year-over-year improvement as our operational infrastructure scaled to support our new members. Full year 2025 GAAP SG&A was $443 million. Our adjusted SG&A was $385 million, an increase of 28% year-over-year. Adjusted SG&A as a percentage of revenue declined from 11.1% in 2024 to 9.7% in 2025, representing an improvement of approximately 140 basis points. Taken together, we delivered full year adjusted EBITDA of $110 million and an adjusted EBITDA margin of 2.8%. This represents 270 basis points of margin expansion year-over-year. Turning to cash flow and our balance sheet. We generated positive free cash flow in 2025 and ended the year with $604 million in cash and investments. Subsequent to the quarter, today, we announced the close of a $200 million revolving credit facility. This facility is simply good housekeeping and further evidence of the maturation of our capital structure. We do not expect to draw on the credit facility in the near term, and our increasing positive free cash flow position allows us to support our organic growth objectives. Moving to our guidance. For the full year 2026, we expect health plan membership to be between 292,000 and 298,000 members, revenue to be in the range of $5.14 billion to $5.19 billion, adjusted gross profit to be between $615 million and $650 million; and adjusted EBITDA to be in the range of $133 million to $163 million. For the first quarter, we expect health plan membership to be between 281,000 and 285,000 members, revenue to be in the range of $1.21 billion to $1.23 billion, adjusted gross profit to be between $138 million and $148 million and adjusted EBITDA to be between $26 million and $36 million. As it pertains to our full year expectations, given the strength of our OEP results and continued stability with our retention, we are raising our year-end membership guidance by 2,000 members at the midpoint relative to the commentary we provided in our January 8-K. Moving to revenue. The midpoint of our initial revenue guidance range of $5.16 billion represents 31% growth year-over-year. The expected year-over-year increase to our revenue is primarily driven by our membership outlook. Meanwhile, our underlying revenue PMPM assumptions are balanced by increases to benchmark rates and the Part D direct subsidy. This is partially offset by the impact of the final phase-in of B-28 risk model changes and mix of growth outside of California, which carries modestly lower per member revenue. Turning to adjusted gross profit. Our $633 million guidance midpoint implies an MBR of 87.7%. The outlook contemplates improvement from the retention of existing members and modifications to our product designs within markets to reflect the current reimbursement environment. These tailwinds are balanced by the third phase in of V28 and our new member mix, which is disproportionately represented by LIS, dual eligible and C-SNP eligible members. Caring for these complex members is core to our clinical model, but they typically join with higher MBRs in year 1 as we transition them from an unmanaged setting to our care model. Additionally, as a reminder, we do not incorporate any assumption for sweep pickup from new members in our initial 2026 guidance. In 2025, this pickup was a benefit of approximately $14 million to our full year adjusted gross profit and EBITDA or roughly 30 basis points to our consolidated MBR. Moving to SG&A. We forecast further improvement in our SG&A expense ratio. We expect to achieve operating expense scale economies resulting from both membership growth and enhancements to administrative workflows. As John mentioned earlier, we also plan to reinvest a portion of the savings derived from improved operating efficiency towards further advancements in our clinical model, new market activities and technology infrastructure to prepare for scaling our business and the deployment of AI workflows in the future. Taken together, we expect to deliver adjusted EBITDA of $133 million to $163 million, consistent with our preliminary profitability comments provided earlier this year. Turning to our seasonality expectations. We expect a modestly lower MBR in the first half of the year compared to the full year average. Conversely, we expect the second half of the year to be slightly higher versus the full year average. Our initial view generally reflects the regular seasonality of our Part C MBR experience, combined with a flatter slope to our Part D MBR in 2026. In conclusion, the 2025 execution of our clinical model, the replicability of our results across markets and the consistency of our operating performance all give us tremendous confidence as we enter 2026. We are excited for the significant growth opportunity in the years ahead and are determined to make the right investments in people, processes and technology to ensure that we are scaling responsibly. With that, let's open the call to questions. Operator? Operator: [Operator Instructions] Our first question comes from the line of Michael Ha with Baird. Hua Ha: So I want to frame this question by calling out a few numbers first. So over the past 2 years, Alignment has seen nearly 50% revenue growth CAGR, I think almost 500 basis points of margin improvement, right, sub-10% G&A, all while improving to 100% of members in 4-plus star rated plans, and all this happened in a flat rate environment, while trends nationally rose to high single digits. So on the heels of all of this and with the potential again for another flat rate year in '27, my question is, I guess, simply put, what would prevent Alignment in '27 from having a rerun of what you just accomplished in '24 or '25 because it looks very similar to setup into '27. John Kao: Well, Michael, this is John. You should probably expect my response to be, we feel very comfortable with the 20% growth rate. No, we feel good. I mean the model is working, and it will work irrespective of what happens in the rate universe. And I think that if rates do go back up a little bit in terms of the events switching to the final notice, I think it will be fine. I think what I'm hearing in terms of the amount of potential increase is still going to be pretty short of what we think trend is, at least what the sector thinks trend is. So I think that will be something favorable to us. And if rates don't go up, I think it could be more favorable to us. And I think we're going to do exactly what we've done year after year, which is be very, very disciplined and find the right balance between growth and margin expansion. I would say that we don't want to get ahead of our skis on terms of growth. We don't want to talk about bids. I do expect -- I said this to people beforehand, I think it's still going to be 1 or 2 years of kind of people finding the right model to dig out of this kind of post V-28 world. And I think that there are some folks that grew a lot this past year for AEP. And we chose not to grow at the level some of these other folks grew. We didn't just grow to get growth. We wanted durable provider relationships. We wanted to make sure our infrastructure would be able to sustain the level of stars that we've been able to produce. And the other thing that we're doing is we know how good we're doing in '25, and I feel very strongly about '26 as well. We're taking the opportunity and we're not complacent. We're getting even tougher on ourselves internally from an operational perspective, from a clinical perspective, from an AI deployment perspective. We're just getting stronger to really get to the level of growth we think we can get to over the next 3 or 4 years, getting into a number of growth that will be really meaningful for everybody. That's kind of how we're thinking about it. So Michael, I mean, you called it 2 years ago. I'm not going to give you the benefit of calling it again quite yet. Hua Ha: Got it. Helpful. Okay. My next question, the implied MLR for '26, Jim, I think you mentioned midpoint 87.7%. If I were to strip out that sweep payment from '25, I'm seeing maybe 10 bps of MLR improvement year-to-year. So at first glance, it feels a bit conservative since clearly, prior years have grown a lot more and done a lot more MLR improvement. So I'm just trying to understand the assumptions embedded in MLR a little bit better. I know you mentioned LIS,-SNP,-SNP member mix. How much does that year 1 member mix impact your year-to-year MLR? What are you assuming on trend in '26 versus '25? Just a general sense on the various components. James Head: Yes. And thanks, Michael. I guess a couple of things. Just in terms of the inputs to the 2026 guide, I mean, we're -- it's kind of 3 core inputs that we feel pretty good about. So I want to start with that. And our 2025 experience, how we manage costs and delivered throughout the year, new members delivering, et cetera, that gives us a lot of confidence as we go into the year. We also bid in mid-'25 -- 2026. And you say, okay, how do we feel about that now that we're in January, February and building our model for the year. And it played out very, very nicely in terms of how we thought what was going to happen and happen. And then finally, John's point, this is very disciplined growth, and we chose to play in spots, where we could win with the products we like, with the cohort of members that we like and the geographies and the networks that we like. So that's the setup. Now as it pertains to the MBR, you're right, it's about a 10% kind of apples-to-apples improvement because -- or 10 basis points, I should say, apples-to-apples improvement because we're stripping out the impact of the suites last year. I would say 3 drivers, Michael, that kind of are inputs to why it wouldn't be better. #1, we're still going through the third phase in the B-28, okay? And so we've navigated that very, very nicely, as you mentioned. But that does -- it's not a tailwind. It's a headwind. The new member mix was disproportionately represented by Dual-Eligible, C-SNP eligible and LIS members, which is our sweet spot, but they come with a little higher MBR in the beginning. So it is -- that is a little bit of a headwind. But the trade-off is we know how to manage these members really well, and there's a lot of long-term opportunity there. So we consciously made that choice, and it was a big portion of our AEP -- and then as I mentioned before, we didn't have a suite. So I think the B-28 and the new members coming in at that, I'll call it, heavier mix in terms of special needs, et cetera, is driving that. But we feel very good about where we're at with respect to the visibility we have. And I'll also throw in Part D. A second year, we did a great job delivering on Part D in 2025 and on our promises, and we have a fair degree of visibility as we go into 2026. So I'd say that was another input that was part of the overall mix. Operator: Our next question comes from the line of John Stansel with JPMorgan. John Stansel: I know you called out potentially changing some approaches around your distribution network and broker community. Can you just talk about how you're thinking about that change? And then maybe looking at the '27 commentary a little bit, I think there's been an expectation about potentially expanding into new states in '27. Is that index at all to needing a better rate in '27? Or is that something that you think you can do in an all-weather environment? John Kao: John, it's John. Yes, with respect to distribution, we're going to -- and I think that comment was specifically related to some of the ex-California markets, including some of the potential new market entry strategies that we're going to be taking into the existing states, new markets in existing states and what we're doing with potentially getting into another state. And so we're at a size now in pretty much each of our markets that we're really kind of a player and relevant. And so I think we've got deeper relationships with brokers and providers. And a lot of the success that we've been able to achieve in California is starting to take root in these new markets. And that really does start with the providers. And what we've learned also is really is the brokers are really pretty important in that discussion. And you put that against the backdrop where the receptivity of the brokers is just much greater given the fact that a lot of the incumbents are taking a step back for the last year or 2 and maybe for the next year or 2. I think that creates an opportunity for us. And so we're just very intentional about that. With respect to new markets, we are seriously thinking about that. We're not quite where I want to be quite yet with some of the provider engagement conversations, but I'm pretty comfortable we're going to be able to get into a new state. And the rates, I just don't think that matters to us. I think it's going to be whatever it is, it is, and I think we're going to do well in any environment. I really mean that. And again, a lot of this is choosing the right provider partners, which I think we have in these 2 distinct new markets. John Stansel: Great. And then on the RFI from CMS that is still out and about but has received comments at this point, a couple of different topics embedded in there. As you've had further discussions with the administration and with your counterparties, how are you thinking about potential incremental changes that could potentially come out of that RFI? John Kao: TBD. I mean we submitted our comments like everybody else yesterday. I think from a policy point of view, I think we'll see what they have to say around the reward factors and the HEI. Again, we'll see what happens. I think we're going to be okay either way. And I think from a kind of just more information gathering purposes, we feel pretty strongly about kind of the C-SNPs remaining as C-SNPs and not really getting linked to any kind of aligned network. And the logic there really is we want there to be choice for the beneficiaries. We don't think that's right that the beneficiaries should be forced into a suboptimal star rating plan is more of a key plan. I think they should really be -- have choice, get the right benefits, get the right network and just to get the right quality they deserve. But other than that, there's other moving parts. I've been asked what we think about risk adjustment going forward. We do support documentation of the HRAs. We've always supported that. So I think that's a good thing. I think the administration focusing on program integrity and minimizing gaming, all that is kind of the right direction. But as I mentioned earlier, I do think there's going to be some exposure on rates. And as the previous Mike said before, I mean, I think we stand to be a beneficiary of that. But I think they're going to do the right thing on rates. That's what I actually think when the final comes out. Operator: Our next question comes from the line of Matthew Gillmor with KeyBanc. Matthew Gillmor: I wanted to start off with the 80k metric in your outlook. Can you provide some more details and unpack what drove the favorability in the fourth quarter? And then also, as we're looking ahead, I would think the 80k metric will probably tick up given the duals mix, but just wanted to get a sense for what's the right kind of apples-to-apples comp for 80k that's embedded within the guide? James Head: Well, I'll start with how we finished the year, we had an expectation, if you remember in the third quarter, Matt, that 80k might tick up. We weren't ready to bet on flu season being favorable, and it did come in pretty well. So we ended the year, as we said, in the low 140s. As we go into the new year, the answer is yes. Because of mix, our 80k could tick up a little bit, and that is not because the trend is wrong on an apples-for-apples basis, it's because of that. And so I view that as another component of the, I'll call it, the cost trend that we're pretty maniacally focused on and managing actively. But it might tick up a little bit in the -- over the course of the year. As you're aware, first quarter is usually a little bit higher. So that's just a seasonal issue. Matthew Gillmor: Great. Very helpful. And then maybe asking about AI investments. You mentioned some investments in the prepared remarks. I think last call, you also talked about AI within Care Anywhere and AVA. Just wanted to get a flavor for where some of the technology enhancements you have in flight, where they maybe be directed and how that may benefit the business over time? John Kao: Yes. Matt, it's John. Yes, it's a great question. We've got 30-some-odd different potential use cases where we could deploy Agentic AI. Having the use cases is not our issue. What we're actually doing is to require 2 foundational actions be at a level where we're satisfied. And the first one is really as part of this kind of revalidation of everything. It starts with a unified data architecture. It starts with AVA. And we're just looking at everything. We're making sure all the data ingestion is as tight as we think it is. We're validating everything. We're not assuming anything, all of which is designed to ensure that we can scale and replicate without any abrasion. We're going to be just that much more efficient scaling. And what that really translates into is we're going to get to cash flow breakeven faster than we would have thought before. We're going to grow and be more aggressive on Stars and benefits even more so than we did before. The second issue is what we're talking about internally, is just making sure the end-to-end workflows within each functional area is well documented and frankly, well understood. And what I mean by that is when you basically double in size every 2 years, you bring in a lot of people, a lot of new people that have to get trained. And so the training opportunity is to make sure that all of these different workflows are understood by everybody. And then within the end-to-end workflows, you've got micro workflows. You really know what's happening. And then ultimately is the cross-functional workflow processes. And when you -- again, those are very sophisticated workflows that factor in our clinical work processes, our provider contracting work processes, which one of these providers are we delegating, -- are we not delegating? We have our directly contracted networks. All of that is being evaluated right now. And once I get those done, which we expect to have done midyear this year, you're going to see us start deploying these use cases for Agentic AI. The other thing we're doing is we're kind of revisiting the initial stratification model within AVA. And I think there's going to be tools that we have -- sorry about that. I went on mute for a second. I was going to say, we talk about AVA and we're looking at using the new tools to make the stratification model even better for our Care Anywhere members of the 10% of the population we think that account for 78% of the spend. You're also going to see us have use cases around administrative improvements. I think member services is going to be one of the first ones, and I think there's going to be immediate savings there. I think in our financial reporting, I think you're going to -- we're going to be able to use AI and look at the raw data and be able to come up with actionable conclusions market by market. I think those are things you're going to see. What we're probably not going to do is kind of lead the market in deploying Agentic AI in care delivery. We're going to still rely on our doctors and nurses to do that. I hope that helps. Operator: Our next question comes from the line of Scott Fidel with Goldman Sachs. Unknown Analyst: This is Sam on for Scott Fidel. I was just wondering if you could talk about just are you concerned about the DMA industry that has -- may have lost too much bipartisan support in Washington? And what can the industry do to improve its standing and position itself better to alleviate the ongoing regulatory pressures on the sector? John Kao: I think it's to get back to what CMS originally intended MA to be. And I think it's -- all the actions that I see going on are exactly consistent with that, meaning -- and I've spoken about this. They want a program that creates value to the end beneficiary. And to define that, you got to have higher quality, better experience. And I think to do that in a way that is the most affordable. And so this is what I always say, you got to have high quality and low cost. And in that environment, the folks that can create the highest degree of value ought to be positioned to win. I think there's been some financial engineering away from that over the past several years. There's an emphasis on coding, global capitation, prior auth, all of which I don't think are going to be sustainable going forward. So I think if people just do what CMS intended them to do, they're going to be in a good place. And I think the benefit differential in MA relative to traditional Medicare, I think, is going to cause MA to continue to grow, not go down. That's what I think. And I think for the last 40 years, we go through these different phases of whether it's the BBA in the '90s and the ACA in the early 2000s. I mean, you go through those peaks and valleys, MA has always thrived. It has always come through. And I just think it's -- I would be very surprised if that trend changed put that way. Operator: Our next question comes from the line of Craig Jones with Bank of America. Craig Jones: So I want to follow-up on what you said on the final rate notice for '27. You said you think CMS will do the right thing on rates in the final notice. We saw United in its letter to CMS around the advanced rate notice thinks that growth rate for '27 should be closer to 9% to 10% versus the 5% in the advanced notice. So where do you think that growth rate should be? And then what do you think CMS will actually end up doing when you say do the right thing? John Kao: I think the thing that I've been reading about really is related to the impact of these skin substitutes and how that's been an effective offset to the utilization trends for traditional Medicare. And I think it remains to be seen how they actually manage that specific issue. I'm not sure it will get up to the 9%, 10% rate net. But I think it's possible you get to the 5%. And I'm not sure that's still enough, frankly, to kind of fully meet the trend. But I got to tell you, I was surprised by the rate notice in the advanced notice. And very practically, it was related to the midterms. That's really how I was thinking about it. And I think there's an opportunity with additional data that's going to be coming in to capture the second half trends. I think they're going to come up with something hopefully to do with skin substitutes that was a material takeaway. And I think it will be something that will be reasonable. And maybe I should say I'm hoping it will be something reasonable because if it's not, I think you're going to get a lot of people that are going to degrade benefits even more. And it is a real issue. And we saw this during BBA 30 years ago. Operator: Our next question comes from the line of Ryan Langston with TD Cowen. Ryan Langston: John, I want to make sure I caught what you said on the chart reviews. Did you say the exposure to total chart reviews is 1% and then even smaller from the unlinked piece? John Kao: Yes. For us, we don't rely on that much at all is really the message. And we don't feel exposed by that change at all. Ryan Langston: Okay. And then, I mean, is it fair to maybe assume the split is more just 50-50 within that sort of 1%? John Kao: I'm not sure I understood that. James Head: Yes. Ryan, I just don't think we're going to get precise about that because it's so immaterial. It's a small number. It's a small number. Ryan Langston: Okay. And then I guess just building maybe on John's question and John, your remarks about sort of deepening broker relationships. A direct noncompetitor you guys in your markets announced some plan to use MA brokers more like health navigators and get them involved in patient experience. I guess is this -- is that sort of a strategy you think could work for the industry? And maybe just more broadly, how do you believe the payer broker relationship will or could evolve sort of over time? John Kao: Yes. We -- I mean, we have been consistent about this. We value our broker partners. We think they do a good job. We think they're generally looking out after the best interest of the beneficiary and are fair. What I do think is going to be interesting is how CMS tries to position itself as a bit of a, call it -- if not the actual agent, a little bit more of the FMO. I think that will be interesting. And we're kind of looking at some of that -- some of the developments, some of the -- just it's very nuanced, but I think that's going to be interesting, one to watch. Not sure it's going to be implemented anytime soon, but I think that's on their radar. With respect to your kind of commentary on some of our competitors, I don't know. I think they were, I think, very specifically saying that whatever it is, 4% to 6% of premiums going to distribution is a big line item, I think, is what was quoted. Yes, I'm not sure. I mean there are certain parts that they can maybe be additive to a little bit, but I'm just -- I'm not sure about that one. Operator: Our next question comes from the line of Whit Mayo with Leerink Partners. Benjamin Mayo: John, can we go back and talk about the D-SNP growth in some of the non-California markets? Are there any numbers that you can put behind that? And then also maybe just elaborate on the potential opportunity in the coordination-only duals contract in Nevada. James Head: And I'll take the growth issue. We -- about 50% of our AEP growth was in the LIS duals and C-SNP. And that was both in California, but also outside of California. As you know, we have strong outside California growth. So that's a real healthy portfolio for us. And we think we can manage that pretty well over time and with a lot of embedded value. But John, I think there's a second half of the question, maybe I'll give it over to you. John Kao: Yes. I actually would need to follow up with you on that one. I don't have a good answer for you. Benjamin Mayo: Okay. And my follow-up would just be with some of the Stars changes that if CMS deletes the 12 measures in Stars, is this a good or bad thing for you? I know you had some 2s and 3s in some of those measures. John Kao: Yes, we've looked at it. I think it's net neutral is kind of the bottom line. I think it does get implemented, it's probably not going to actually take root until '27 anyways, which means it will impact '29, maybe 2029, 2030. But net, I think as of now, we think it's effectively a net neutral. I do think CMS is going to try to simplify that whole Stars program. And so we actually think that's actually a pretty good thing. Operator: Our next question comes from the line of Jessica Tassan with Piper Sandler. Jessica Tassan: Can you maybe give us a little more detail on the slope of MBR over the year? I think you mentioned typical Part C seasonality and then flat MBR flattish slope in Part D. So just trying to understand, excluding the sweep in '25, will calendar '26 follow kind of a similar seasonal cadence? James Head: Yes, ex the sweep. And as you're aware, history has shown itself pretty consistently that Q1 and Q4 are kind of the higher MBRs. And then not even with the sweep, but just in Q2 is usually our seasonal low and then it picks up in Q3. So I think it's going to follow a similar pattern, Jess. And I think you're kind of seeing that in our first quarter guidance. Jessica Tassan: Okay. Great. And then just my next one is, can you all discuss retention during AEP? And then on the lower projected intra-year growth in '26 from 1Q to 4Q, is that a matter of lower gross adds or increased intra-year churn or switching? Just trying to get a sense of basically year 1 versus tenured membership and the mix of year 1 versus tenured in 2026. James Head: Yes. Why don't I try the first -- the second question first, which is the intra-year and then we can talk about retention. But as we come into this year, there was just a lot more movement. Disruption is probably too strong a word because we weren't picking up that stuff, but there was just a lot of movement. And so we are trying to assess whether we picked up most of that movement in AEP or whether it will sustain itself throughout the year. So it's a little bit like we're not ready to bank on a greater AEP opportunity turning into sustained growth throughout the year. OEP is feeling fine, but the -- we just aren't ready to kind of bank it all the way through December. And then as it pertains to retention, I think we talked about it in January at the conference. We felt very good about the retention this year. That was one of the reasons why we had kind of very nice -- we had both sales growth, but we also had retention, and that's wonderful for us, because of our ability to mature our cohorts and get better MDRs. So we're not churning them, we're holding on to the loyal numbers. So that was -- that's turned out to be a nice little boost for us. Operator: Our next question comes from the line of Andrew Mok with Barclays. Unknown Analyst: This is [ Tiffany Yan ] on for Andrew. I just wanted to follow-up on the advanced notice. You mentioned your exposure to the unlinked chart review is fairly limited. Can you share what you think your exposure is to the risk model rebasing component relative to the industry? John Kao: That's actually an interesting question. I actually don't think we are as exposed as others for the simple reason that our kind of blended RAF scores are -- what are we, Jim, 1.08 or something like that. I mean it's just 1.1, yes. James Head: Below 1.1, yes. John Kao: Yes, it's below 1.1. And even with the final phase of V28, you still got people coming down from 1.5, 1.6, 2.0 in certain markets, down kind of 20-some-odd percent. And so I just -- I think we're -- we've never relied on it other than to make sure that we're just very accurate and compliant on the coding part and have focused on the cost management side and the Star side. And I think we're going to be advantaged actually, if there's any more tweaks to that. Unknown Analyst: Okay. Got it. And then I just wanted to follow-up on the MLR seasonality. I appreciate the comments around sort of the blended seasonality. But could you remind us how your Part D MLR specifically progressed through the quarters in '25? And is your expected '26 slope consistent with that '25 experience? James Head: Yes. It's the -- it will be slightly different in '26 than '25, but -- which is to say that the profitability of Part D is going to be a little bit more weighted to the first half. But this is all in the margins. So I would kind of say at a high level, consistent but slightly more weighted to the first half. And that's just really kind of the construct of risk quarters and how we accrue for contra revenue when we're outside the risk quarter, et cetera. So I would say pretty similar to 2025, a little bit flatter. Operator: Our next question comes from the line of Jonathan Yong with UBS. Jonathan Yong: John, I think you mentioned that you're still in some provider engagement or negotiations in the new state. I guess what in your mind is currently the hang up there? And typically, where are you in terms of when you're thinking about entering new states? Would you normally be completed at this time? Or would it be a little bit further down the road you have that completed? John Kao: It depends. It's a good question, John. It depends. Really, we're looking for full provider durability, full provider engagement. And I think we're going to get there. It's just -- again, our lessons learned over the past several years in terms of entering new markets is just causing us to be extra vigilant and to make sure people understand our model, why we're different than everybody else. And it really -- even if you work with different health systems and integrated delivery networks and whatnot, a lot of it really relates to the physicians and to create economic, clinical and operational alignment with that doctor and/or their MSO. And that's really what I was focusing on. I think we've got great hospital partners, and we've got a lot of good doctors that understand and like what we're saying in terms of the clinical model. We just need -- we just -- I would like to have a few more. That's all. Jonathan Yong: Got you. Okay. And then just going back to the rate update for '27. It wasn't clear to me because I think at the beginning in your prepared remarks, you said that the industry is complaining about what the effective growth rate is. But then it sounded like it was fine for you, but then I believe later on, you said that it is running below trend in terms of what it is I just want clarity on that. John Kao: Yes. The 0.9% net kind of advanced rate notice, I think, is clearly disappointing to the industry. I think there's a little bit of debate over what's causing that low trend. And I think that CMS has certainly shared with us that it was really just an actuarial reality when they use different data for more recent dates relative to what was used in the past. So their intention was not kind of programmatic policy issue, but it's just like the data was different. And that's what led to a little bit lower-than-expected raw traditional fee-for-service trend. Then in addition, you deducted these skin substitutes as an offset to that and ergo, you kind of get this 0.9%, which is a big problem. If that maintains for the rest of the industry, people are going to be rationalizing benefits again. And so my point was I heard somebody say 9% to 10% from one of our competitors. I'm just not sure I've seen that number -- and so if you then -- if you think about the fee-for-service trend data and let's say you get a portion of the skin substitutes, if not all, but let's say a portion is actually used as an offset and then it's phased in over time. I think you could see kind of closer to what the other analysts was talking about 5%. I have heard a lot of people talk about 200 to 300 basis points increase, kind of getting 0.9 to increase to 200, 300 basis points, which gets you to whatever, 3% to 4%, 5% increase potentially. But my point was I think that's still lower than the kind of the utilization trends that would cause people to be aggressive on benefit designs. That's what I really meant. My point as it relates to alignment is I really think we can win either way because we're the high-quality, low-cost producer. We're not dependent on kind of an external entity to do our medical management. That's something that we're actually very good at. And what we've also said is the margin that would otherwise go to a third-party value-based provider, we actually reinvest to the individual practitioner and/or to richer benefits. So I just think either way, we're going to be in a really good place. From an industry perspective, I hope they're right, actually, that you're going to get a rate increase of 9% to 10%. Not sure that's going to happen. Operator: Our next question comes from the line of John Ransom with Raymond James. John Ransom: Just thinking about bending the trend with AVA, 1.0 was, I think, pop health 1.0 was CHF, COPD, type 2 diabetes. What's the -- if it's going to become more about bending the trend, what's kind of 2.0 in terms of deploying your assets to do that? John Kao: Really good question. John Ransom: I thought it really was, John, so I appreciate that. John Kao: No, it's -- your questions are always still like advanced. No, they really. No, no. So I think I think 2 things. It's actually a serious, serious answer. I think that as good as we are, we can do a lot better operationally. And so what I mean by that is I think our stratification models can be more precise. I think our workforce management of our clinicians can be more efficient. I think we're focusing on clinical outcome measures as what you talked about, which is kind of traditional chronic disease management. I think the outcomes measures are going to be more and more important where we demonstrate not only the efficacy of better utilization, but better clinical outcomes. I think that's going to be something we focus on. But in terms of programs, I think transitions of care programs we can do better on, case management [indiscernible] we can do better on, tighter integration with our provider partners from a medical management perspective and potentially on palliative programs, I think we can do better on. And like when you kind of combine all these together, I think they all represent small opportunities for we to continue bending the cost curve. The other thing I would say is, and I've alluded to this in the past, is and this is less of a clinical MLR piece, but an overall MLR piece, the supplemental benefits right now that we have, whether it be kind of dental coverage or vision coverage or transportation or Flex card, I mean those kinds of benefits represent about 5% of overall premium, right? And I think that we're getting big enough now that we are going to be investing in starting, buying kind of some of these captives, these specialty company captives. And I think from that, we ought to be able to save on margin because we would be paying ourselves basically. And if we did -- I'm just picking on whatever, whatever specialty we do, we'll be able to seed it with 300,000-ish seniors, if you know what I mean. And so I think that's going to be a way where we bend the cost curve. The other thing that we've also talked about is one of the benefits of our performance in '25 was we really working closer with these IPAs that we have and taking the technology tools and really helping them do the utilization management for the acute authorizations. And I think we've done a very good job. And we're operationally good with them. We have some work to do, I still think in terms of some data. But I think by delegating that has been something that's going to help us and help the member and help the IPA. And I think that -- before this past year, we hadn't done that. And so the full benefits of AVA and Care Anywhere weren't fully realized yet. So I'm very optimistic about that part. John Ransom: That was quite the answer. My second question is a very simple one. There are studies as long as your arm about is MA a good deal for the taxpayers. If you do apples-to-apples, risk adjust apples-to-apples, where do you -- I mean you've got MedPAC on one hand saying it's terrible. There's the Evolent study on the other hand saying it's a great deal. And there's all over the -- when you talk to people in D.C., what study do you point to? And do you think it's apples-to-apples a good deal yet for the taxpayers? John Kao: I think it's a very good deal for the seniors. I think from a tax point of view, the last study I saw is post B-28. It's pretty much apples-to-apples is what I saw. And to the extent that plans that are able to remain competitive and still have a reasonable rebate back to that beneficiary are going to be the winners. And I think that CMS has been consistent with they want to grow MA. They just want to grow it the right way. They want to minimize the gaming, their words not mine, and ensure program integrity. On the other hand, they want to have an alternative with what they're referring to as traditional fee-for-service Medicare. Now I just -- I think just looking at the value proposition to the beneficiaries, I personally think you're going to get continued growth and market share growth in MA. -- because the rebate dollars, even though they go down, they're still material enough in terms of being better than fee-for-service that people are going to still choose it. Operator: Our next question comes from the line of Raj Kumar with Stephens. Raj Kumar: Maybe just one quick one around kind of AEP and just thinking about new member engagement kind of pertaining to the Care Anywhere platform. Any kind of insight on that and how that's trending relative to kind of this time last year? John Kao: Raj, it's John. Can you just repeat that again? I kind of faded out or you faded out. I didn't quite... Raj Kumar: Yes. Sorry about that. Yes. Just maybe kind of any details around kind of new member engagement and kind of pertaining to the Care Anywhere platform and how that's trending relative to kind of this time last year with the new membership. John Kao: Yes. I got it. Yes, I would say it's about the same. I think there's opportunity for us to get better. We're spending a lot of time, again, taking advantage of, again, the -- I think the strategic decisions and operational decisions we made 2 years ago that are really paying off in '24 and '25, and I think will also pay off in '26. That same kind of operational focus of continuous improvement Again, just not being satisfied with any of it is going to cause us to get better and better and better. And one of those areas is Care Anywhere engagement. I think we were still at about 65%, which really isn't bad. But I think we've set a target internally. We're trying to get to 75%. And I think some of the new people that we brought in on the member service and member experience side, shout out to that team is really going to be good for the company and for our beneficiaries. So I'm optimistic about that. But year-to-year, to answer your question, it's about the same. Raj Kumar: Got it. And then just maybe as a follow-up, just kind of thinking about your ex-California markets and kind of been in them for a while now and as they've matured, have you kind of seen any divergence in just overall trend or even consumer behavior and how maybe that has kind of led to operational kind of nuances in those distinct markets and maybe even kind of any catering or tweaking around AVA to kind of service those operations in the kind of most optimal manner. John Kao: That's a very good question. I think the work that we're doing now in terms of, call it, I call it, operational scaling is really designed to make sure that the providers and the members outside of California get the same level of service they get inside of California. And that's part of our maturation. It's part of our scalability -- and we're working really hard on that right now. Again, having very clear member satisfaction, but we're really starting provider satisfaction metrics. And I think the bigger we get, the more critical this area is, particularly outside California. I think we've done a very good job on Stars. I think we've done a very good job on clinical replicability in terms of the ADK metrics outside of California. I think our provider engagement is something we got to just get better at. And I say that to all the providers out there. We're working on it. We're going to get really, really good. And we want 5 Stars from all of you, just like we got 5 Stars from the members. Operator: Ladies and gentlemen, that's all the time we have for questions. This concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Good morning. My name is Gabriel, and I will be your conference operator. [Operator Instructions] This is FHipo's Fourth Quarter 2025 Conference Call. [Operator Instructions] FHipo released its earnings report on Thursday, February 26, after market closed. If you did not receive the report, please contact FHipo's IR department directly, and they will e-mail to you. Please note that this call is for investors and analysts only. Questions from the media will not be taken nor should the call be reported on. Any forward-looking statements made during this conference call are based on information that is currently available. Please refer to the disclaimer in the earnings release for guidance on this matter. We are joined by Daniel Braatz, Chief Executive Officer; Ignacio Gutierrez, Chief Financial Officer; and Jesus Gomez, Chief Operating Officer. I would now like to hand the call over to Daniel Braatz. Daniel, please go ahead. Daniel Michael Zamudio: Thank you, and good morning. Thank you for joining us today. Let me walk you through our fourth quarter and full year of 2025. Throughout the year, we maintained a disciplined management of the company, focused on strengthening our balance sheet and optimizing our capital structure, aiming at generating long-term sustainable value for our investors. In the 4Q, we maintained our commitment to delivering profitability. Throughout its history, FHipo has shown solid financial performance, consistently delivering distributions. As of the fourth quarter of 2025, we have distributed more than MXN 7,300 million to our investors on a cumulative basis since 2014, reflecting our long-standing focus on value creation and capital discipline. FHipo maintained a strong capitalization profile. As of the 4Q of 2025, FHipo reported a capitalization ratio of 60% and a debt-to-equity ratio of 0.7x on our balance sheet. In recent years, we have successfully executed a disciplined deleveraging strategy, focused on strengthening our balance sheet and better position the company to pursue attractive market opportunities when conditions get favorable. Our financial margin stood at 54% in the quarter. And on a cumulative basis for 2025, FHipo obtained a financial margin of 54.5%, highlighting the company's operating efficiency. On January 20, 2026, we completed the full early amortization of the RMBS CDVITOT 14U collateralized by INFONAVIT denominated in VSM or Veces Salario Minimo. The execution of the cleanup call was based on portfolio balances as of December 2025. And finally, as of the date of this report, the CDVITOT 13U, 14U and 15U issuances that have been fully amortized throughout the execution of the cleanup calls, significantly reducing the balance of the INFONAVIT mortgages denominated in VSM in our total portfolio. Moving on to Slide 5. We highlight FHipo's consistent track record of generating value to our investors through stable distributions. As I mentioned before, up to the 4Q of 2025, our annualized yield per CBFI stands at 10.9% based on an estimated quarterly distribution of MXN 0.35 per share or per CBFI, subject to the current distribution policy. We have also distributed over MXN 7,300 million to our investors since FHipo was created back in 2014. That is equivalent to MXN 19.68 per CBFI, demonstrating our investor-focused approach and our ability to translate disciplined financial performance into consistent returns for our shareholders. As we move into Slide 6, we take a closer look at FHipo's solid capitalization profile, supported by a disciplined financial strategy management. As of the fourth Q of last year, our debt-to-equity ratio considering both on and off-balance financings was 0.3x and considering on balance financing stood at 0.7x. This result was supported by a balance sheet optimization strategy, which reduced our leverage significantly since 2019 and enhanced our ability to capitalize on market opportunities under favorable conditions. On Slide 7, we continue focusing our strategy on assets with an attractive risk-adjusted profile. Our portfolio collateralization profile remains very strong with an average loan-to-value of 77% at origination and today, an estimated loan-to-value of 28.6% based on current market value. Moving on to Slide 8. As of the 4Q, our nonperforming loan ratio based on the accumulated balances of the total portfolio at origination stood at only 3%, reflecting the historical credit performance of the company. Finally, on Slide 9, FHipo affirms its commitment to sustainability and ESG best practices. Our objective is to generate long-term positive impact beyond financial returns. We have provided more than 100,000 loans, of which women borrowers account for 31% of our overall portfolio, while 46% of our workforce are women, underscoring our commitment to inclusion and gender equality. On governance, our Nomination, Audit and Practices committees are fully independent, and more than half of our technical committee members are independent as well, reinforcing strong oversight and transparency. On the environmental front, approximately 70% of INFONAVIT borrowers have utilized the green mortgage program benefit, supporting energy efficiency home improvements. And internally, we have introduced initiatives to reduce paper, plastic and water consumption. Together, these actions demonstrate FHipo's commitment to responsible and sustainable value creation. Now I will turn the call over to our CFO, Ignacio Gutierrez, who will walk you through our leverage strategy. Ignacio Gutiérrez Sainz: Thank you, Daniel, and good morning, everyone. I will walk you through our funding structure and leverage strategy. FHipo has further reinforced its balance sheet by executing a disciplined deleverage strategy over the past years. As of the fourth quarter of 2025, our total debt-to-equity ratio, including both on and off-balance financing stood at 1.3x. And on a stand-alone basis, our on-balance leverage ratio was 0.7x. This financial discipline strengthens our position and provides us with greater resilience in evolving market conditions. Our diversified funding structure allows us to maintain solid liquidity levels while preserving the flexibility to allocate capital efficiently and focus on long-term value creation. On Slide 12, we will go through the detailed breakdown of our consolidated funding structure as of the fourth quarter of 2025. Our funding sources are well diversified across securitizations, bank facilities and capital market instruments with competitive rates and spreads. As shown on the breakdown, over 90% of our outstanding financings have a legal maturity exceeding 20 years, providing long-term funding stability and mitigating refinancing risks. Given our current capital structure, FHipo maintains additional leverage capacity of approximately MXN 16.8 billion or 1.8x debt to equity in comparison with the target leverage limit of 2.5x. This position gives us flexibility to act prudently and selectively as opportunities arise. Now with this, I'll turn the call over to our COO, Jesus Gomez, who will walk you through the portfolio breakdown before we discuss the financials. José de Jesús Gómez Dorantes: Thank you, Ignacio. Good morning, everyone. Thank you for joining us today. Let's move on to Slide 14 to take a closer look at the breakdown of our mortgage portfolio as of the end of fourth quarter 2025. FHipo's consolidated portfolio comprised 43,849 loans as of December 31, 2025, with an outstanding balance of MXN 16.8 billion, an average loan-to-value at origination of 77% and an average payment-to-income ratio of 24.4%. At the end of the quarter, 92% of the portfolio is performing. Our portfolio remains diversified across several origination programs, including INFONAVIT Total, INFONAVIT Mas Credito, Fovissste and the digital mortgage platforms portfolio, which as of the end of the fourth quarter 2025 represents 20% of the total consolidated portfolio. In over 10 years, we have continuously adjusted our origination and asset acquisition strategy to improve the credit quality of the assets we acquire. Moving on to Slide 15. FHipo's portfolio remains geographically diversified across all 32 Mexican states. Nuevo Leon, Estado de Mexico and Jalisco continue to represent the largest concentrations together accounting for approximately 28.8% of the total portfolio balance. In terms of our partnerships and origination programs, here is the breakdown of our portfolio. INFONAVIT Mas Credito program accounts for 51.7% of the total portfolio equivalent to MXN 8.7 billion. The digital mortgage platforms portfolio accounts for 19.2%, equivalent to MXN 3.2 billion. The INFONAVIT Total pesos program represents 14.3% of the total portfolio, equivalent to MXN 2.4 billion. Fovissste's portfolio accounted for 12.1% of the portfolio equivalent to MXN 2.0 billion. And finally, the INFONAVIT Total VSM denominated loans reached only 2.7% of the portfolio for MXN 0.4 billion, significantly it reduces the balances of INFONAVIT mortgage denominators in VSMs after the cleanup call of the CDVITOT transactions that Daniel mentioned before. This distribution reflects our strategy to prioritize origination programs that offer strong risk-adjusted returns while maintaining a diversified portfolio aligned with market demand. FHipo is well positioned to participate in future growth opportunities while maintaining a strong focus on profitability. I will now return the call back to Ignacio Gutierrez, our CFO, to discuss FHipo's financial results for the fourth quarter of 2025. Ignacio Gutiérrez Sainz: Thank you, Jesus. On Slide 17, our consolidated nonperforming loan ratio stood at 8% at the end of the quarter. As of the end of the fourth quarter of 2025, we continue to maintain a solid reserve and allowance for loan losses with an expected loss coverage of 1.3x and an NPL coverage of 0.53x. If we move to Slide 19 for our financials for the quarter. The total net interest income for the fourth quarter of 2025 was MXN 321.6 million, reflecting an increase compared to the fourth quarter of 2024. The interest expense totaled MXN 148 million, representing a slight decrease compared to the MXN 153.9 million reported in the fourth quarter of 2024, primarily as a result of the decline in interest rates over the past 12 months. Our financial margin stood at MXN 173.5 million, representing 54% of the total interest income, an increase of 3 percentage points compared to the 50.9% in the fourth quarter of 2024. The allowance for loan losses recorded in the fourth quarter of 2025 was MXN 44.9 million, reflecting the underlying credit performance of the portfolio during the quarter and its expected loss. The valuation of receivable benefits from securitization transactions showed a net loss of MXN 8.2 million in fair value during this quarter. This result is mainly explained by the performance of the portfolio and collateral of such trust certificates during the quarter and a net effect derived from the total early amortization of the CDVITOT 14U trust certificates. The total expenses incurred during the fourth quarter of 2025, which include the portfolio servicing and operational services as well as other expenses amounted to MXN 108 million. As a result, the net profit for the quarter amounted to MXN 19.5 million. With this, the estimated distribution for the fourth quarter of 2025, subject to the current distribution policy, as Daniel mentioned, is of MXN 0.356 per CBFI, which considering the average price for CBFI as of the fourth quarter of 2025 and the days of lapse in the fourth quarter results in an annualized yield of 10.9%. With this, I'll now hand the call back to our CEO, Daniel Braatz, for some closing remarks before we move to the Q&A session. Daniel Michael Zamudio: Thank you, Ignacio. As we close 2025, FHipo's business model continues to demonstrate resilience and adaptability. During the year, we sustained a strong financial position and maintain a healthy capitalization profile. Our focus remains on driving profitability and strengthening our capital structure and managing risk responsibly. Through 2026, we will continue evaluating new opportunities aligned with our strategic objectives while enhancing the overall quality of our portfolio. We believe the initiatives undertaken so far have strengthened our position for the future, enabling us to capitalize on future market conditions. Our objective remains clear to deliver stable and sustainable returns to our holders while maintaining the disciplined approach that has defined FHipo since inception. At the same time, we will continue advancing our ESG initiatives and creating long-term value for all stakeholders, including the communities we serve. Thank you for your continued trust. I'll now hand the call back to the operator to open the Q&A. Operator: [Operator Instructions] Our first question comes from the line of Martin Lara. [Operator Instructions]. Martín Lara: This is Martin Lara from Miranda Global Research. I have 2 questions. Could you please share your expectations for this year in terms of loan portfolio, including potential acquisitions of other portfolios or other financial companies? That's the first one. And the second one is that your capitalization ratio is very high at 60%. How do you see this indicator going forward? Daniel Michael Zamudio: Thank you for your questions. In regards of the capitalization, as you know, we've been trying to stronghold our balance sheet in order to take advantage of future leverage opportunities that obviously will reduce the cap ratio that we are holding at the moment. We're working in a couple of financing facilities that will help us lever a little bit more our equity. And the use of proceeds for those financings goes towards your first question, which is we're going to be using part of those proceeds and liquidity that we are holding at the moment to tackle some opportunities in terms of acquisition of new originators and also portfolio on mortgages and real estate-backed loans. Martín Lara: Okay. And your -- I have a follow-up. Your financial margin was very strong. It expanded nearly 4 percentage points year-on-year. What can we expect in the future? Daniel Michael Zamudio: I would say that we need to expect the financial margin to keep at that level. It will depend a lot, as you know, on the interest rate curve that Mexico will be running. As of today, we have a small portion exposed to floating rates. But as we keep performing throughout the year and depending on what Banxico does, I think that could increase a little bit more. But to be in the safe side, I would say that you should target that between the 50% and 54% of financial margin is a target for the company in 2026. Martín Lara: Okay. But more towards 54% instead of 50%? Daniel Michael Zamudio: I would say that, yes, more towards the 53.3%. Operator: We would like to take this moment to thank you for joining FHipo's Fourth Quarter 2025 Results Conference Call. We have not received any further questions at this point. So that concludes our question-and-answer session. Thank you. I would now like to hand the call back over to Daniel Braatz for some closing remarks. Daniel Michael Zamudio: Thank you all for joining us today. Please don't hesitate to reach out to us if you have any more questions or concerns. We appreciate your interest in FHipo and look forward to speaking with you soon. Operator: That concludes today's call. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. I'd like to welcome you to Fibra UNO's Fourth Quarter 2025 Results Conference Call on the 27th of February 2026. [Operator Instructions]. So without further ado, I'd like to pass the line to the CEO, Fibra Mr. Andre El-Mann. Please go ahead, sir. André Arazi: Thank you, Luis. Thank you, everybody, for your interest in our call regarding the fourth quarter of 2025. I would like to begin that we are very excited again to release these numbers for you of the fourth quarter of 2025, which has been a very busy year for us at FUNO. This is the first report after the drop-down of our industrial portfolio. I would like you to bear in mind that we need to consider -- we are considering only a few days of the complete revenues in this new structure, in this particular quarter. Nevertheless, we make sure that everything goes as planned, as we will be able to report a complete quarter this very first quarter of 2026 in the next few weeks. That would allow us to reveal that all the efforts made last year will pay back, and our shareholders will be able to see the positive impact that the carve-out of our industrial portfolio will have on the future of the company. I would like to express our excitement on the numbers released yesterday that show a consolidated company with assets close to $25 billion. These are the big numbers, but we are also taking care of the little numbers. 95.5%, our historic high of occupancy level across the board. NOI margin growing by more or less 300 bps and looking good for this year. A healthy growth above inflation on all the significant lines of the balance. I would like to remember you about last year's achievements. We made the liability management of the company, having renewed close to $800 million at the beginning of the year of the U.S. bonds -- U.S. dollar bonds. We renewed also MXN 12 billion of the Mexican peso bonds. We made the repayment of close to MXN 10 billion of short-term bilateral revolving lines of credit, with the issuance of an unsecured line long term. We made the exchange of our bonds across the curve to complete the transfers of debt to Fibra Next. We finalized the internalization process and we expect savings in the order of $400 million to $500 million this year. We did the carve-out of our industrial portfolio. First, with the IPO of Fibra Next in which we raised close to $430 million. Then we made a follow-on equity offering of Fibra Next close to $400 million. We did the exchange of the bonds. And then finally, at the very end of last year, we finally made the drop-down of the industrial portfolio of UNO into Next. All of this done last year, during which we managed to maintain and excel in our metrics, mainly total income, total NOI, total FFO, total dividend yield, all of them improving in a healthy way. And also, we improved at the end of the year in an overall NOI margin. I would like to thank all the team here at Fibra UNO because none of this would have been possible. We made last year very difficult choices and very strong efforts in order to get where we are today. I was sure -- I will make sure to be reporting the first quarter this year, which will be much clearer of all the efforts that we did last year and will reflect on the balance and the performance of the company and of course, of our subsidiary company, Fibra Next. Thank you for your attention. I would like to pass the mic to Jorge to go in depth with the numbers. Jorge, please. Jorge Pigeon Solórzano: Thank you very much, Andrea, and thanks, everybody, for joining our call. As usual, I'll start with the MD&A for the quarter. Fibra UNO's total revenue increased by MXN 348 million or 4.6% compared to the previous quarter, primarily driven by a 50 basis point increase in the total portfolio occupancy, inflation-driven increases on active contracts, rent increases and on lease renewals and this was offset by the peso-dollar exchange rate appreciation and the effect that this has on our U.S. dollar-denominated rents. In terms of occupancy, our operating portfolio stood, as Andre mentioned, 95.5%, which is a 50 basis points increase compared to the previous quarter. If we look at the retail portfolio, we recorded an occupancy of 93.7%, 10 basis points above the previous quarter. The office portfolio recorded 82.9% occupancy, 10 basis points below the previous quarter. The other portfolio recorded 99.3% occupancy remaining stable versus the previous quarter. The industrial portfolio, 97.7%, which is 30 basis points above the previous quarter. And the in-service portfolio recorded 87.7%, which is 330 basis points above the previous quarter. In terms of operating expenses, property taxes and insurance, total operating expenses increased by MXN 97.1 million or 9.8% versus the third quarter of 2025. This is mainly due to increases in the cost of some of our supplies and services that are above inflation. As you know, we've mentioned this before, a lot of our expenses are linked to service providers that have high degree of correlation with the minimum wage. And this has kept some of those expenses higher. In terms of property taxes, fees increased by 6.1% or 3% above the previous quarter, mainly due to consolidation of Fibra Next. Insurance expenses increased by MXN 10 million or 7.6% versus the previous quarter, again, due to the consolidation of Fibra Next. In terms of net operating income, our NOI increased by MXN 498.3 million or 8.9% versus the third quarter of '25 to reach the amount of MXN 6.079 billion. NOI margin calculated over rental revenue was 85.1% and 77.2% compared to total revenues. In terms of interest expense and interest income, the net interest expense line increased by $51.9 million or 1.8% compared to the third quarter of 2025. This was mainly due to Fibra Next debt consolidation and the interest related to this consolidation. And as Andre mentioned, this was not a complete quarter. So we'll see the complete effect on our financials in the first quarter of 2026. This increase was offset by interest rate reduction in pesos and the effect that this had on our variable rate debt. The appreciation of the exchange rate, which went from MXN 18.38 to MXN 17.97 quarter-over-quarter and obviously, the effect that this has on our interest expense line during the quarter, a decrease in the interest capitalization and the impact of the pricing of our derivative financial instruments. The bottom line on our funds from operation as a result of the above, FFO controlled by FUNO increased by MXN 157.4 million or 6.6% compared to the third quarter of '25, reaching MXN 2.55 billion. Adjusted FFO recorded an increase of MXN 121.1 million or 5% compared to the third quarter of 2025, reaching MXN 2.55 billion. A slight difference against FFO is due to the update in the cost of a property that was sold in the third quarter of 2025. FFO and AFFO per CBFI calculation during the fourth quarter of '25, we put circulation, 5.3 million CBFIs corresponding to the ECP (sic) [ EPC]. And with that, we closed the quarter with MXN 3.810 billion CBFIs outstanding. The FFO and AFFO per average CBFI were MXN 0.6690 and MXN 0.6712, respectively, variations of 6.5% and 4.9% compared to the third quarter of 2025. In terms of the quarterly distribution, we reached MXN 2.55 billion or MXN 0.67 per CBFI with a quarterly AFFO payout of 99.8% and a payout of 94% compared to the annual AFFO. Moving on to the balance sheet. In terms of accounts receivable, we totaled MXN 2.131 billion, a decrease of MXN 260 million or 10.9% from the previous quarter. Reflecting the organic growth related to the consolidation of Fibra Next as well as an improvement in collections that we had in the quarter. Investment properties, the value of our investment properties, including financial assets and investments in associates increased by MXN 32 billion or 9.3% compared to the third quarter of '25. This obviously, as you can see, reflects the consolidation of Fibra Next on the balance sheet as of December 31, 2025, CapEx invested in our portfolio and fair value adjustment of our investment properties. In terms of total debt, we finished the fourth quarter of '25 with MXN 152 billion compared to the MXN 147 billion we had the previous quarter. The variation is primarily due to the consolidation of Fibra Next, which included additional debt, the valuation of the maturity effect of financial instruments and the exchange rate effect appreciation that I mentioned before. In terms of total equity, equity increased by MXN 55 billion, almost MXN 56 billion or almost 30%, 29%, including controlling and noncontrolling interest. As you know, this is obviously the effect of the consolidation of Fibra Next, which is one of the things that we wanted to achieve, and we finally have completed that in the previous quarter. This capital includes the consolidation of the Jupiter portfolio, the second part of Jupiter portfolio. Net income generated from quarterly results, the derivatives valuation, shareholders' distribution related to the third quarter results and the employee compensation plan. Moving to the operating results in terms of leasing spreads. Leasing spreads, we had increases of 16.4% or 1,240 basis points in the industrial segment, 8.2% or 820 basis points in the retail segment and 500 basis points in the office segment. If we look at dollar-denominated leasing spreads, we saw 13.9% or 1,390 basis points for the industrial segment, 460 basis points or 4.6% in the retail segment, and we saw negative 320 basis points in the office segment. As you know, this is something that we are very pleased with and something that we have come to expect in terms of what's happened in the office portfolio. In terms of constant property performance, the rental price per square meter for constant properties increased by 5.3% compared to the weighted annual inflation of 3.6%. So we had 170 basis points growth despite a depreciation of the peso about 13%. If we had not seen that this appreciation, we probably would have been closer to about 8.4% constant property performance. So again, very pleased with the performance that we saw in this area. In terms of the NOI at the property level, we saw for the fourth quarter, an increase of 2.9%. It can be divided in Fashion Mall segment NOI decreased by 2.5% Regional segment decreased by 3.5%, stand-alone segment decreased by 3.6%. The decrease is mainly due to extraordinary income recorded in the third quarter of '25, which is obviously a one-off in [ comparison ] to the fourth quarter of '25. The office segment NOI increased 5.2%. And the others segment decreased by 1.2%. The industrial segment NOI increased by 11.2%. And with this, we finalize the MD&A. Now Luis, if we can open the floor for Q&A. Operator: [Operator Instructions]. Our first question is from Igor Machado from Goldman Sachs. Igor Machado: My question here is on leverage as we have seen a relevant leverage process for FUNO in the last quarters. So I just want to better understand here how does management view the leverage target for the end of 2026? And what is the long-term strategy for maintaining this improved ratios? That's it. Jorge Pigeon Solórzano: Well, as you know, part of the -- there were many drivers for the carve-out of the industrial portfolio and the capitalization and the consolidation, let's say, of that industrial portfolio Fibra UNO. One of them is the deleveraging effect that we have by adding roughly $2.3 billion of new equity, which is a combination of the value of the Jupiter portfolios as well as the equity we raised from the market. Ideally, we feel comfortable, obviously, below 40%, and we feel comfortable having an investment-grade credit rating, which is where we are today, both stable outlooks from Moody's and Fitch. And the trajectory that we have for the company will delever it even further based on a couple of events. One is, as you know, this business is inflation indexed. So that will have a deleveraging effect over time. And then the other one is that Next will continue to grow, and we expect that to come with additional equity issuances further down the road, and that equity is going to be consolidated into Fibra UNO. So that's going to delever the company even further. So at this point, we don't have additional deleveraging strategy, so to speak. And we would like to maintain our investment-grade credit rating going forward. So the metrics that we need to be in that world is what we're going to aim to maintain. So let's say, LTV below 40% is where we feel comfortable around 35% to 40%, say, the sweet spot. Operator: Our next question is from Mario Simplicio from Morgan Stanley. Mario Sergio Simplicio: I have my question is, well, in 2025, you achieved a lot of milestones of your long-term strategy and you have the internalization, we have Fibra Next. And I wonder what are the next targets that you're aiming for, let's say now '26 and for the future years? Like how is the long-term strategy for Fibra UNO now that it has already achieved so many milestones? André Arazi: Thank you for the question. We have many, many plans for the future. And I hope that we, first of all, will reduce the gap between the NAV and the price of the share. Once we do that, all of our opportunities will open wise, and we will act on it. Operator: Our next question is from Diego from Citi. Unknown Analyst: I have one on my side regarding CapEx. In the fourth quarter, the CapEx reached MXN 2 billion. And how this level of investment support FUNO's growth pipeline, including expansions and asset stabilization? And additionally, what you guys expect for CapEx in 2026? Jorge Pigeon Solórzano: I think that the MXN 2 billion is a good number for CapEx for the company, let's say, on a normal operating year on the normal status of what we have been doing, which is keeping up or trying to keep up with the demand for new space that we have from our tenants is a reasonable number to expect again for 2026. And obviously, as you know, this does not include any new developments or anything of that nature. Some minor expansions at some of our properties, but not large scale development. For that, I think that's what we need to open the doors for additional capital for the company. Operator: Our next question is from Pablo Mulas from GBM. Pablo Mulas: You already answered my question. Operator: Our next question is from Gordon Lee from BTG. Gordon Lee: Just a quick question. I was wondering whether you have an estimate or even just a ballpark figure of what the total operating expenses that we saw this quarter that were associated with either the next transactions or the internalization transactions that should be nonrecurring on an ongoing basis, just to get a sense of a more sort of stabilized EBITDA margin for, let's say, the new FUNO. Jorge Pigeon Solórzano: Not yet. I don't think we we run that number. I'll get back to you on that we'll work on it and get back to you. Gordon Lee: Okay. Perfect. Just a ballpark is fine. Operator: Our next question is from Anton from GBM. Unknown Analyst: Just a quick one. I mean, as everyone mentioned, you reached a lot of milestones for FUNO, mostly focused on the industrial side. So I was wondering what are your plans for the retail and office and the other segments? Do you expect to do any acquisitions there? Or what's the overall strategy? Jorge Pigeon Solórzano: Well, more than the strategy, let me tell you what we think about what's going on in the retail sector. If you see our logistics portfolio, it's at 98% occupancy and the rents in the Mexico City market have continued to grow. There is very strong demand for logistics assets. Why? Because the companies that demand that logistics, which is basically consumer-driven in Mexico, are -- have been doing well and expect to continue to do well, and there's growth -- a lot of growth coming in that sector. So that means that there's going to be demand for new shopping malls, new stores, new Walmart and so on and so forth down the road. And obviously, we want to be able to capture those opportunities. Opportunities we have been seeing them the last years, and we've had to let those opportunities pass at Fibra UNO because with the deep gap that we have to our NAV, it's -- this is a capital-intensive business. We want to close that gap in order to be able to issue equity. And then as Andre mentioned earlier, that will open up a lot of opportunities for us for acquisitions and for developments, et cetera. So we see a very strong and attractive retail market in Mexico. Operator: [Operator Instructions]. Okay. We have a question from Felipe Barragan from JPMorgan. Felipe Barragan Sanchez: I have a question on an update on the office segment. Just want to hear your thoughts on the trends and what's going on in that segment. Unknown Executive: Actually, as you have seen on the -- our report, we have been increasing the occupancy that we have there. And I think that it's not just us, it's just a tendency already on the market. Obviously, we are above the average of the market in terms of occupancy. But I think the trend is that the offices are getting occupied. And probably we are at 83% occupancy. Once we hit the 85%, we will be seeing increasing the rent levels that we have as of today that has been almost flat in the last 2 or 3 years. Operator: Our next question is from David Soto from Scotiabank. David Soto Soto: Just a quick one and a follow-up on the retail side. Should we expect variable rents to start contributing to your portfolio anytime soon? André Arazi: They are already contributing. We have a very interesting mass of contracts that we changed. If you remember, I've been saying that in the past that we changed our contracts, some of the contracts for a dual rent, one fixed rent, which was lower than the previous rent that the tenant was paying and/or our percentage of their sales, which has been paying off in the last couple of years. But right now, given that we finished the -- for example, the luxury Avenue in La Isla Cancun, we have been receiving the fruits of that, and we have been receiving already percentage of rent. If you add to that, that we exchange many of the regular contracts of regular shopping malls from fixed rent -- pure fixed rent to fixed rent plus a percentage of the sales, whichever becomes higher. So we have been already receiving that in our portfolio. And given that we exchange many of the contracts, we think that we will continue to be receiving those percentages in the near future. Operator: We'll give it a few more moments for any further questions. Okay. It looks like we have no further questions. I will now hand it to the Fibra UNO team for the concluding remarks. André Arazi: Thank you very much. Thank you, everybody, for your interest in our call, and I hope to hear from you in the next call about the first quarter of 2026 in the future. Thank you very much. Operator: That concludes the call for today. We'll now be closing all the lines. Thank you, and have a nice day.
Operator: My name is Kate, and I will be your conference operator today. At this time, I would like to welcome you to the Grindr Fourth Quarter 2025 Earnings Call. [Operator Instructions] At this time, I would like to turn the call over to Tolu Adeofe, Director of Investor Relations. Tolu Adeofe: Thank you, moderator. Hello, and welcome to the Grindr Earnings Call for the Fourth Quarter and Full Year 2025. Today's call will be led by Grindr's CEO, George Arison; and CFO, John North. They'll make a few brief remarks, and then we'll open it up for questions. Please note, Grindr released its shareholder letter this afternoon, and this is available on the SEC's website and Grindr's Investor page at investors.grindr.com. Before we begin, I will remind everyone that during this call, we may discuss our outlook and future performance. These forward-looking statements may be preceded by words such as we expect, we believe, we anticipate or similar such statements. These statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our earnings release and our periodic reports filed with the SEC. During today's call, we will also present both GAAP and non-GAAP financial measures. Additional disclosures regarding non-GAAP measures, including a reconciliation of GAAP to non-GAAP measures, are included in the earnings release we issued today, which has been posted on the Investor Relations page of Grindr's website and in Grindr's filings with the SEC. With that, I'll turn it over to George. George Arison: Good afternoon, everyone, and thank you for joining us today. 2025 was an exceptional year for Grindr. Revenue grew 28% year-over-year to $440 million, and we delivered roughly $196 million of adjusted EBITDA, meaning we achieved more EBITDA than our revenue just 3 years ago. We accomplished that while materially improving the product and platform and while rapidly terraforming Grindr into an AI-native organization. With such a fantastic year, I'd point to 3 highlights. First, the core business stayed strong. We expanded the product in ways that deepen engagement and clarified intent, including the global expansion of Right Now and launches like For You, Chat Summaries and A-List. We strengthened XTRA and Unlimited and expanded monetization through ad formats like Rewarded Video. Second, we made real progress on AI, not as a feature, but as an operating advantage. In Q4, AI agents drove between 60% and 70% of our new code and our engineers are reporting roughly a 1.5x productivity improvement per person. We're now able to ship faster with higher quality without the company getting heavier and slower. Third, we took steps to drive revenue growth in a way that matches what we've built. Over the last several years, we've added a lot of new value to XTRA and Unlimited, significantly expanding what users get from both tiers. To make sure we're capturing the right economics and return, in August, we began rolling out new pricing for XTRA and unlimited. Results have been encouraging, and we are continuing to roll out these changes globally through the first half of 2026. Looking ahead, our framing for 2026 is to raise the baseline. Our best execution periods during 2025 with high output, high urgency, high quality will become our default operating mode. And from that baseline, we intend to push even higher. Therefore, this year, we are concentrating on 4 priorities: first, premium AI experiences [indiscernible] and Edge. This AI native premium tier is built for power users who want the most capable version of Grindr that today's technology enables us to build. We'll continue refining the experience and testing price points through the year. Second, durable core growth, that means improving onboarding, translation and localization, [indiscernible] personalization and intent clarity through AI and beginning to strengthen the user experience in lower density and international markets. Third, operational rigor through Grindr [indiscernible], clearer ownership, higher productivity, faster decision-making, greater leverage for our management layer and AI embedded into everyday workflows across functions. Fourth, deliberate investment for durability and upside. We are leaning into reinvestment in our team, our platform foundations and ecosystem health. That same posture applies beyond subscriptions, we will continue building [ Grindr Health ] anchored by Woodwork and we will keep strengthening our ads platform with increased focus on direct advertising and brand partnerships. Up to this point, these remarks were read by AI using a proprietary voice model trained on my voice by one of our [ Gayborhood ] expansion teams. We did that deliberately as a small demonstration of how deeply AI is becoming embedded in both our product and our operations. Our continued focus as a management team is to execute against the strategy that creates significant long-term shareholder value by building exceptional experiences for our users while driving sustained growth in revenue and profitability. At both the management and the Board level, we are committed to demonstrating this through our actions and to continue doing all we can to earn our investors long-term trust and support. Thank you to the Grindr team for delivering through another ambitious year and to our users for their continued willingness to come to Grindr for their Gayborhood. With that, I'll turn it over to John to review the financials and guidance. John North: Thank you, George, and hello, everyone. I'll start by summing up the year and then dive into the fourth quarter. Grindr delivered outstanding results in 2025. Revenue grew 28% year-over-year to $440 million, and adjusted EBITDA was $196 million, representing a 44% margin. For the full year, we reported net income of $103 million compared with a loss in 2024 that reflected a noncash warrant liability revaluation. In the fourth quarter, revenue was $126 million, up 29% year-over-year. Direct revenue was $103 million and indirect revenue was $23 million for the quarter. Revenue exceeded our increased full year guidance provided in November due to continued strength from our subscription and add-on offerings as well as strong performance in our TPA business, which benefited from strong demand from both our partners and growing international markets. Adjusted EBITDA for the quarter was $56 million, a 44% margin, and net income was $29 million. We demonstrated operating leverage in the fourth quarter. Operating expenses, excluding cost of revenue, were $63 million. As a percent of revenue, those expenses declined to 50% from 54% in the prior year, which supported operating income for the quarter of $31 million or 25% of revenue. For the full year, operating expenses, excluding cost of revenue, were $201 million, declining 2% to 46% of revenue versus 48% in 2024. Operating income for 2025 was $126 million or 29% of revenue. We finished the year in a strong liquidity position. Cash and cash equivalents were approximately $87 million at year-end and total gross debt was roughly $396 million. We generated $133 million in free cash flow in 2025, which we utilized for both investment and growth initiatives and our share buyback program. Today, we announced a 3-year $400 million expansion of our share repurchase authorization and extended the program by 3 years to March 2029. This step reinforces our conviction in the strategy and our optimism of what's ahead for Grindr. In 2025, we repurchased 25.1 million shares against the original $500 million authorization for approximately $450 million. The balance of approximately $50 million will roll into the increased and extended program announced today, giving us total repurchase availability of up to $450 million. When we launched the initial 2-year $500 million authorization a year ago, a key objective was to offset the dilution we expected from the cash exercise of Grindr post the de-SPAC warrants. We moved through most of that authorization quickly, clearing the warrant overhang, eliminating nearly all of the associated dilution and doing so without increasing our aggregate debt. This expanded authorization gives us flexibility to buy shares when appropriate and in doing so, return capital to shareholders. Going forward, we expect our pace to be materially more measured. And because the business continues to execute at a high level with strong cash generation and real durability, we can return substantial capital to shareholders and keep investing aggressively in the long-term road map that will compound growth and profitability over time. Before I discuss our outlook, I'll briefly expand on user metrics and our updated MAU disclosure. Average MAU for 2025 was $15 million. Average paying users were approximately 1.26 million and ARPU was $24.25. As we discussed in November, we will be providing average MAU on an annual basis rather than quarterly going forward. This change better reflects the way we manage our business, focusing on delivering value and a great experience to our reliable funnel of free users and enhancing the features we provide to our paying users and aligns our disclosures with many of our public consumer Internet peers. We'll continue to provide quarterly visibility on leading engagement indicators. Finally, we have introduced our outlook for 2026. We expect to continue growing the business while scaling investments in longer-term initiatives, including premiumization, AI and the Gayborhood. For full year 2026, we expect revenue of greater than $528 million and adjusted EBITDA of greater than $217 million. As we have consistently discussed, we guide to what we have clear line of sight to. George noted some of our early initiatives like Edge and Woodwork are not yet included in our outlook as the pace of revenue growth is not yet predictable, though the investments and expense are factored into our adjusted EBITDA for the year. We will continue to invest carefully with discipline and to protect our ability to generate strong cash flow. Additionally, while we do not provide guidance on a quarterly basis, we currently expect our revenue growth rate and adjusted EBITDA margin in Q1 to pace well ahead of our annual results, reflecting early year revenue momentum and the timing of our planned 2026 investments, respectively. As noted in the past, we do not manage our business for quarter-to-quarter performance, but for long-term durable and sustainable growth and profitability. In closing, 2025 was another great year of strong growth, outstanding margins and durable free cash flow generation. In addition to our highly cash-generative business model, we have a healthy balance sheet that gives us the flexibility to invest and return capital. And with that, operator, please open the line to questions. Operator: [Operator Instructions] Your first question comes from Andrew Marok with Raymond James. Andrew Marok: Thanks to AI, George, for the remarks. If we could start with 2026, I guess, what you've seen so far in terms of things like retention and churn impacts from your pricing actions that you've done to your base plans at this point and kind of some of the assumptions underpinning Edge into the '26 outlook? And then I have a follow-up. George Arison: Sure. I can start with that, and then John can chime in if he wants to add anything. So with regards to 2026 and pricing changes, we were very happy with the results of the test that we ran in 2025, starting in about August on pricing. The user base accepted the price changes very well. I think that speaks to the fact that we have added an incredible amount of value to both XTRA and Unlimited over the last 3 to 4 years. A lot of new features and products were added to those tiers, but we never charged for those, right? So I think users like the features and the offering that is there. And so now having to pay a little bit more for all that extra value that had been generated over the last 3 years was not a significant challenge, and I think has been really well received. So we don't expect to have any significant impact on conversion from the price changes that we made. And we will be rolling out the price changes throughout the first half of the year across the globe. It's live with a lot of users already, but not live at 100%, and that's something we expect to happen in H1. With regard to Edge, we started Edge in -- the products that are in Edge have been in testing for a while, but as a tier, it went live in Q4 of last year in Australia. The feedback on that was extremely positive. Frankly, demand was higher than we had anticipated in a pretty significant way, which told us that there's a lot of value in what we're creating and potentially, we were not pricing it appropriately for the amount of value that we were generating. To get a better sense of the price points, given that we've never done anything of that nature before. We've never offered a product of that much value in the past. We felt that it was important to do tests outside of Australia as well. And so we launched tests in certain U.S. and other global markets where we have a significant number of users who are paying customers. Those tests are ongoing today, and that's some of the information that got out into the public which was inevitable when you start doing price tests like this, it will attract attention. We would expect testing to continue through H1 and probably in Q3 as well. Edge is being really built as the core foundation of growth in 2027. If we go global with Edge outside of testing in 2026, it will be upside. It's not assumed at all in our guidance for the year. Andrew Marok: Great. Really clear there. And then maybe in a different direction, following the break of the proposed takeout offer a couple of months ago, you were left with 2 major shareholders, one of whom has been selling down a stake pretty significantly. I guess can you give us any color as to your expectations for how the situation plays out and how you're approaching the governance situation in the meantime? George Arison: Thanks for the question. I appreciate where the question is coming from, and I understand that -- this is an important issue for a lot of shareholders. We ourselves get this question from folks pretty regularly and also appreciate that in light of last fall, there is more interest in that. As I believe everybody knows, James has stepped down from the Board, and the Board does continue to view this issue as quite important, and that's something that they've always thought about. I think one of the things that came out from last fall is that everybody is in alignment that Grindr remaining a public company is the best thing to do. That's true for Ray as our largest shareholder. That's true for the remainder of the Board, and that's true for management as well. I think the other thing that came out last fall that was very positive is that Michael Gearon, our Lead Independent Director, was willing to step into that role when James stepped down. Michael is among the most successful entrepreneurs in the world, period. And so to have him be in that role is extremely valuable to me. He's been a great mentor, and I've learned a ton from him in the 3.5 years we've been working together and very much looking forward to continuing to work with him in that role. Since going public, Grindr has had an independent Board, and our Board is very committed to remaining independent and to continue to be stronger. That's not something new that got started just in the fall. It's been going on for a long time. We have been adding new directors. We added Chad Cohen as a Director in May. I think it was a very positive addition to us given his financial expertise and roles twice as the CFO of a public company. And we are in the process of interviewing candidates for Board membership now. We've interviewed over a dozen very serious and credible candidates so far with support from 2 different search firms, and we will continue that process for the next several weeks as we get ready for the shareholder meeting this summer, and I think there will be an update on that at the shareholder meeting. And then lastly, what I'd say is that I have a very positive relationship with Ray. Ray has been a very good shareholder to Grindr. What Ray, James and Michael did when they rescue this company from China ownership was massive, and it really saved the product and saved it for the community, and I think that's really valuable. And in the 4 years that I've known Ray, we've had a very positive and strong working relationship. He is a very entrepreneurial investor in that he very much likes to think about the long term and is very optimistic about the future and what the company can do, whether it's in -- as a business overall or within products that we're launching and is pretty deep in knowing what we're doing and what the road map is, which I think is really positive. So we've had a very good working relationship. I've learned a lot from him as well. Obviously, he has expertise in areas that I don't know as much about like capital markets. And so I've very much enjoyed working with him. I think he's a very strong shareholder, and I believe he'll continue to be a very committed shareholder for the long term, who is very dedicated to this business. And there was -- you could speak to that from the fact that last year, even though he owns so much of the company, he bought even more ownership in the business by putting in nearly $200 million into the company at the time. So I think we are in a very strong position from the governance standpoint, and the Board will continue to be very focused on ensuring that we are run as an independent company, which is something that's very important to me and to the Board. Operator: Your next question comes from Nathan Feather with Morgan Stanley. Nathaniel Feather: Congrats on the results here. I guess first, I'm thinking about the at least 20% revenue growth guidance you gave, can you help us think through the primary contributors that are included within that, whether it's the price increase or other kind of factors? And then second, really interesting to hear the positive receptivity to the Edge tier. Can you provide some more information on within that, what are the early subscribers saying is the primary value they're getting. There's a lot of different features. So trying to help kind of contextualize what are the things that people are really circling as these are things that are really improving my experience. John North: Nathan, good to hear from you and really appreciate you picking up coverage earlier this week. So thank you for that. I'll take the guidance question, and then maybe I can turn it over to George for the second question. When we think about guidance, our philosophy has been pretty consistent from the beginning, which is what do we have line of sight to and how do we think about the business over the long term. We're not going to take a quarterly approach to managing the business. We're going to be long term and thoughtful in how we talk about what our outlook is. And that's reflected in the guidance for '26. It's what we have line of sight to. And I think the 20% revenue growth, to your point, is still a great growth rate. It's primarily focused off of the product enhancements that we've been making over the last 18 to 24 months and then the fact that we hadn't really taken a price increase since 2018, if you can believe it. And so as George mentioned earlier, we implemented those pricing changes just right at the end of last year. And those are going to continue to work their way through the first 2 quarters of this year. And that's our expectation in terms of where the majority of the revenue growth is going to come, along with continued growth in our advertising business, which was up 37% last year and making sure that we also enhance the quality of that business, both through better advertising, things like rewarded ads and then also through direct advertising. So those are the primary drivers as we think about it. To the extent there are expansion opportunities, Edge gets pulled forward, things of that nature, we don't have line of sight to that now. It's not included in the guidance. And if and when that happens, it would hopefully lead to upside. George Arison: And with regards to Edge, thanks for the question. B, looking forward to seeing you on Monday at the conference. And Edge is something that I'm super excited about because, honestly, I came up with it thinking through like what the opportunity is, and the team has done a really awesome job at making it happen. And also is awesome because it's built on technology that wasn't in existence 4 years ago. One of my thesis about taking this role and coming to Grindr was AI would become a game changer in how technology is being built. And Grindr was very uniquely positioned to be able to be an AI-first company, and AI-first product because we have so much data. Like AI is good theoretically, but if you don't have the data, it can't really do very much. And we do have a ton of data that we can utilize. So the things that we're trying to solve with Edge are twofold. One is that people end up having many, many conversations inside Grindr, which don't go very far, partly because new conversations take over, right? So because we're an open architecture platform, people can talk to anybody and people have many, many conversations at once. Power users, in particular, have even more conversations, but an average user sends 50 messages a day. So you have many people that you're talking to all the time. That's really magical, and that's where a lot of the excitement of Grindr comes from. But one of the negatives of that is that some of the great conversation you might be having get kind of pushed down and lost in the inbox. And the thing we've been kind of thinking about over the years is how do we avoid that from happening? How do we help the user have a better sense of, hey, these are the conversations that I'm having, and I want to maintain them and maybe they go somewhere beyond just the conversation over the long term. That's especially true for users who travel a lot because you might be having conversations in many different places. And then you're in New York, you have a bunch of conversations in New York, then those get lost when you go back to, say, Chicago and are having conversations in Chicago. What we've built within Edge is a product called A-List, which takes your entire chat history and builds on top of it a set of summaries of the richest and the best conversation that you've had with people that the AI believes are your best matches. And then you can go to your A-List and see those conversations and brings together those conversations. It brings together the summary, it tells you what you told them, what that person told you and why that's interesting. What are the important information that you shared about each other, whether it's your name or other relevant information, et cetera. It brings together the other person's photos as well. So you can see all the photos that he has shared with you or anything that you've shared with him. And that feature is a killer feature. The users really, frankly, love it. And I might remember in my head, the day when we, as a team described it for the first time about 2 years ago and to go have it go from like just a concept in a conversation to hear it's live and is as awesome as it is, I think, is fantastic. So that's the first piece of what we're trying to solve. The second piece that we're trying to solve is discovery. Grindr does not have a lot of information about its users on its profile. That's, again, part of the magic of Grindr. Privacy is very important to users. And so we don't require you to say a lot about you. But there is a limitation to that in that you don't actually oftentimes know, is this the right person for me to be reaching out to or not. And what we are doing with Edge is for people who want to be a part of this, obviously, it's all by person's choice. We don't force people into our AI functionality. Only people choose to be part of the AI functionality. Is this true? The user who is subscribing to Edge will be able to see Grindr derived information about the other user. So if I'm looking at somebody's profile and I'm an Edge subscriber, I will know things about that user's behavior patterns that are useful for me to know in deciding whether I should reach out to him or not. And I think that's extremely valuable and people are really loving that experience. And tied to that is the second piece, which is discovery. In almost every location in the world, the number of gay people in a given geography is actually quite limited because we're about, what, 5% of population, maybe 6%, and that's not that many people. When you take half the population is male and then 5% of that is gay. Maybe in New York, that's an exception where you do have a critical density, but everywhere else, density is lacking. And so through a feature we call Discover, we're able to identify and surface people to you that are the right matches for you, meaning we believe you will like them based on everything we know about you and everything we know about them, but you otherwise might not find. And that's less contained by geography where Grindr is very geography focused. It's like I'm here and here's my greater Army by geography, it's broader in nature. And that allows people to find new people that they otherwise might not connect with. But because it is based on all this information that we possess, it's actually a very positive recommendation and because it's transparent because of insights, there's actually a desire on the person's part to engage in a conversation and take a risk on a longer distance because there's so much alignment of interest. So that's what Edge is doing. I think it's a really incredible set of products because it's truly AI [indiscernible] Grindr for people. I've been using it since about September when it got put on my phone. And it's really an incredible user experience. It also is very magical because as a product guy, knowing we can do this, you now know that every other company is going to build products like this over time, meaning legacy products. And the legacy products are going to become even better with AI as a result. And so kind of thinking through that is really cool. One last thing I'd say is we are starting this out at the premium tier, obviously. But over time, elements of what we are building with Edge will be available to everybody because we want the entirety of Grindr experience to be AI [indiscernible] and to be really amazing. The free user experience and 91.5% of our users or 92% of our users don't pay for Grindr at all. And we do want to keep a really robust experience for them. And that's something that we will continue to do in the future as well. Operator: Your next question comes from Eric Sheridan with Goldman Sachs. Eric Sheridan: And maybe building on that last answer, George, the first part would be just how your philosophy might change over time with respect to striking the right balance in terms of tiering the products and the platform. So you're continuing to grow the user base and also continuing to sort of evolve the user funnel more broadly described on the platform? And then the second part of the question would be, what have you learned about marketing as a potential stimulant for either accelerating the path towards higher tiers or more monetization for the platform more broadly or just user acquisition or traffic more broadly? George Arison: Thanks, Eric. Let me start with the first one. So historically, Grindr has had a very, very strong tier, very robust free tier. There are 2 things that make, I think, it particularly robust compared to most other products of our kind. One is unlimited messaging, the fact that you can message anybody and continue having those conversations in an unlimited way. It's not like we tell you can only see 10 messages at a time or 20 messages at a time. It's completely free. The result is people send 50 messages a day on average, and that's more messages than you see on WhatsApp a day, right? And messaging is just one portion of Grindr. And the second part is discovery, the fact that you see this group of people and you can start a conversation with anybody. And as you move around the city, the grid changes because different people come close to you and you can see them. That robustness, we obviously want to maintain and we want to keep. What we've done since probably 2020, so both during my time here and before, is start to slowly introduce some paywalls across the experience whether it's in filtering or in visibility or in other areas that drive more people to convert to become paying users. And that has served us well. It has allowed us to put a lot more value into the extreme unlimited tiers, and we are seeing the benefits of that now because people very much value those tiers and are willing to pay slightly more for them in light of all the extra value that we put into them over the last few years. We could continue doing that, and that's a path that a lot of other companies have taken as well in continuing to monetize by putting in more and more paywalls along the way, which would end up pushing more and more people to become paying customers. But as we discussed at Investor Day back in June of 2024, the alternative way of monetizing is to actually start offering more premium features which a smaller subset of people will really value and want to pay for. And that would then eliminate the need for you to put in paywalls that are new and force more people to become converts to paying customers. And we believe that for Grindr, given the magical nature of the free user experience and keeping it very robust, that latter way of doing things might be a better approach. And so what we're going to be focusing on in 2026 and 2027 is that AI-driven premiumization, where we will be offering new features and new products to a smaller subset of users, initially power users and then slightly broader that we believe will really serve them very well and they will be willing to pay for. That will be the driver of our revenue growth this year, next year and so forth. And then we'll be able to take some of that growth and be able to push it back to the free user to ensure that the free experience ends up being really awesome and actually starts to improve. And so one of the things that we're doing this year is actually unwinding some of the paywalls that have been put in place over the years and reducing some of the ad triggers that have been put in place as well as a giveback to the free user experience to make that experience even better than it is right now. And that's something that we believe we can continue to do as we premiumize the product. I think if you look back at last year's data from November, you'll see that younger users, 18 to 29 had a much lower payer rate. But that's okay because they can use the free product very successfully. And then as they age, they become more likely to pay because they want those added features at the more older age level. With regards to marketing, I oftentimes say that Grindr became successful in spite of its marketing rather than because of it. We, frankly, we're not really focused on marketing at all and not really paying attention to it. When I got here, I felt that marketing was a huge opportunity, and we need to really lean into it. Even though we have amazing brand awareness, 95% brand awareness in the United States, but that doesn't mean that everyone loves us and marketing's goal should be partly to have the product be loved. And what we are really doing with our marketing efforts is creating an experience that -- or creating experiences in real world and digitally that will get people to appreciate us as a business and as a product and love us more. And so what you saw last year a lot with things like the Gay Sheep campaign or the Christina Aguilera campaign are these really cultural shaping magical moments that speak to the power that Grindr has on society in terms of cultural impact. We have an audience that is very much a trendsetter. And when they start doing something, a lot of our people follow, and we very much like to lean into that with our marketing efforts. And I think the marketing change that we've seen through our new brand approach has been really fantastic and the users really love it. And we just got a little bit of data from a survey we did where like love for brand actually has increased in a significant way over the last 2 years, and we're very happy about that among [ gay men ], the kind of the core audience. We do believe there's a lot of opportunity with brand building internationally because our brand is not as known in many countries as it is in the United States. And so that is an area that we have not historically leaned into, but we will be spending more of an effort on. You saw this a little bit last year with us launching our social media channels in Spanish. We now have an agency supporting our communications work in Latin America, where we are doing a lot more comms work than we had done in the past, and we'll be leaning into that. And so we are starting to take a little bit more of a global footprint on marketing. And I do believe that over time, though that's not going to be immediate, we will see positive results in terms of user growth from more and more people knowing that we exist and then using us, right? Because what we do know is that when people know us about us in certain countries like Brazil or Philippines or India, they use us and they really like us. But a lot of people still don't know us, and they can't use us if they don't know us, right? Operator: Your next question comes from Andrew Boone with Citizens. Andrew Boone: I wanted to ask about Woodwork. Can you guys just help us understand how that fits into the monetization playbook for 2026 and then out years? And then understood you're moving away from the MAU metric, but we've seen 2 quarters of slowing growth. Is there anything that we should be thinking about or you want to highlight as we think about MAU growth on a go-forward basis as you do move to the annual disclosure? George Arison: Totally. So let me start with Woodwork. Thanks for asking the question. Woodwork is not at all in our guidance for 2026 from the revenue perspective. It is in there from a cost perspective, but costs on it are fairly modest. There's a small team that is working on that. But because we mostly partner with third parties for how it operates, there is not a lot to kind of cover in terms of costs other than the team. What I've said about Woodwork is everyone should think of it as a start-up inside Grindr. And it's a 10-month old start-up. We launched it in the spring of last year. In that time period, it has served thousands of users and thousands of patients, has launched more than one product. So it started out with ED. Now it offers more than ED medications, and we believe there's opportunity to offer several other treatments over time as well, such as hair care, which we don't yet offer and to really go through a test-and-learn process of like how do you go from 0 to 1. Well, now it's gone to 1 because it's able to go after more scaling, but it still is a start-up. And I joked, I think, at the Board meeting was if it were a stand-alone company and was in Silicon Valley, it'd be one of the hottest companies in Silicon Valley, given how much scale it's achieved in a very short amount of time with minimal spend. But it is still a start-up. And so we don't want to put the pressure of a public company on that team. We want them to operate like a start-up with deep start-up rigor as well as hard corners that start-up companies are run with. And so that's kind of how we are envisioning Woodwork. But we do believe that over time, Woodwork can be a very valuable growth lever for us as well as an anchor for the broader health offering that we are working on and developing. And concurrently with that, it also makes the overall offering from Grindr better, right? Because there's a lot of synergy between I subscribe to Grindr and I subscribe to, say, ED medications from Woodwork. And we are seeing a lot of positive synergy when we are offering those 2 things together. So that's kind of, I think, what I'll say about Woodwork. We're going to continue to maintain the view that giving information about that beyond that probably is not in the best interest of that product being successful. With regards to MAU, to start with, the quarterly MAU is not how we think about our business. That is just not generally what we use in day-to-day management and how we operate. MAU has grown very nicely for a long time at Grindr purely throughout of MAU. Last year, unadjusted MAU growth was 5.2%. I think I've said this before, and I'll explain again for those who haven't heard me, but we did start to much more aggressively remove unwanted accounts from Grindr than we had done in the past in 2025. And the result was that we removed about 350,000 more accounts out of MAU in 2025 than we would have done in 2024 had we not put in place all the new tools that we developed and implemented in 2025 for unwanted account removal. And so at the request from analysts and investors, we also did share an adjusted MAU growth number, meaning what would MAU growth have been like had we not removed these unwanted accounts, and that was 6.1%. So quite similar to what MAU growth would have been in the past years. The only difference really is the fact that we did have this pretty significant adjustment from the more aggressive MAU removal. I do believe that we're going to continue to remove unwanted accounts quite aggressively. And so I think the amount of raw MAU growth that we saw in 2025 is how we should think about MAU growth for 2026 as well. Now we do believe that there's a ton of opportunity for MAU growth beyond what we already do, especially internationally with all the users or all the potential users who don't know about Grindr, but could as well as the fact that there are very positive things happening in certain countries as far as acceptance in India, for example. And so over time, you will have more and more people being willing to use Grindr. And so we are thinking about what types of things we want to be doing internationally. That has been an area that we see as a big opportunity, but it's not one that we've gone after so far, purely out of focus. You can only focus on so many things, and that's not been one that we've been focused on yet, but it will become a bigger part of our focus in '26 and '27. And then the other piece that I think there's an opportunity with [ MAU ] is older cohort retention and reengagement. As you saw from the data we released in November, we have a very strong younger user base, 18 to 29, but we become a little bit weaker at the kind of 45-plus cohort. And we believe that getting those users to reengage with us is an opportunity, especially in countries like the U.S. and the U.K., and that is also something that we are working on as well. But both of those things are going to take a long time to have an impact. And so I wouldn't kind of look to, hey, in one quarter, that's going to have an impact. Operator: Your next question comes from Logan Whalley with TD Cohen. Logan Whalley: Yes, Logan on for John Blackledge here. Two questions. I guess, first, as you improve app functionality and then undertake big projects like you mentioned rewriting the code base, -- how do you weigh investment behind engineer headcount versus, say, investment behind AI tooling to make your current engineers more productive? And then secondly, as part of your '26 guidance, you called out in the letter you called out unwinding paywall dynamics and ad triggers. Could you just talk about that in a little more detail, like what exactly that looks like for app users? George Arison: Sure. Yes. Thank you for that question. The first one is one of my favorite questions. And I think every Grindr employee would certify that George has been pushing them on this point for a lot longer than almost every other executive in tech. I said at a conference in the fall of 2024 that there will be a time that when there are synthetic employees working alongside humans inside companies. And I got a lot of flat for that. But I think no one denies that, that's going to happen anymore. Synthetic AI agents or employees are going to be a fundamental part of our work on a go-forward basis. and we are seeing the impact of that now. At Grindr, we have been at the very, very forefront of adoption of AI in our day-to-day work, especially in engineering. And I'm pretty confident in saying that we're probably in the top 5 percentile of companies in tech in terms of how quickly we're adopting to that and how quickly we're terraforming to being an AI-native organization inside the company. The result of that is that in Q4, somewhere between 60% and 70% of the code that Grindr engineers produced was written by AI rather than by human beings. That number is higher in January and it's going to continue to be higher for the long time. And I believe that there's going to be a time when almost all the code that we produce will be written by AI agents. That does not mean that engineers don't matter. Engineers actually matter even more now and awesome engineers matter even more because the really great engineers are able to take advantage of these tools even more than anybody else's, making themselves even more valuable because they can do so much more, right? The concept of a 10x engineer is now becoming 100x engineer because one 10x engineer can do 4, 5, 6, 7, 10x engineers' worth of work as a result of what the coding agents and AI-based synthetics are able to do for him or her when they are writing code. And the way code is being written completely changes, right? I have some engineers who write me and know things like before I would come in and I would have a new project and I would think about I'm going to assign work for it. I want to give this much to this person and this to this person and would take each of these 2 individuals 6 weeks to write the code that they were going to be working on for that particular project, and I would spend a lot of time helping them be more successful plus writing my own code and then bringing it all together. Now I sit down with an agent, I started talking to it about what it is that I'm working on. I send it off to have them do the work. And within 2 days, that whole thing is done, right? So the speed by which we're going to be producing code is increasing rapidly. Internally, we've seen about a 1.5x increase in productivity per engineer. That's self-reported data. So kind of it is pretty awesome. And we're going to continue to lean into that at Grindr, not just inside engineering, but everywhere else. That does not mean we don't need more people. We are very -- our operational leverage is extremely high, $2.75 million in revenue per head, which I think is awesome. We only have 160 U.S.-based employees. Our EBITDA per employee is also very high. And we're going to continue to be best-in-class in that, but we do need more people, and we do want to continue scaling our [indiscernible] team while maintaining an extremely high talent bar. And so that's very much one of the big focus areas for us for this year, as I spoke about in our shareholder letter, kind of pushing that grinder mode that we'll be talking a lot about both internally and publicly as the year progresses. As far as the unwinding is concerned, one of the things that historically has been true for us is that when we do launch a paywall or we do add, they are global, right? We do them everywhere, all the same. And one of the things that we are learning is that maybe that's not ideal. Certain ad triggers might not matter in some parts of the country or some parts of the world, but really do matter to users in other places. Certain paywalls might not matter to people in certain parts of the world, but really do matter to them in other places based on geography, based on density, based on the type of users we have in those locations. And so some of the unwinding that we're going to be doing on ad triggers and on paywalls will actually be geographic in nature as well as user-focused in nature, meaning understanding the user, what type of category of a user does that person fall into and whether those triggers should be in place for them or not. And we believe that will end up having a better user experience as well as better long-term retention of users based on that segmentation. Operator: There are no more questions at this time. I'd now like to turn the call over to George for closing remarks. George Arison: Well, thank you, everybody, for joining. Hopefully, this video version of the call was worth it and helpful for folks, and we'll aim to do that again in May. Looking forward to seeing you then.
Operator: Thank you, for standing by. This is the conference operator. Welcome to the Endeavour Silver Fourth Quarter and Year-end 2025 Financial Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Allison Pettit, Vice President, Investor Relations. Please go ahead. Allison Pettit: Thank you, operator, and good morning, everyone. Before we get started, I ask that you view our MD&A for cautionary language regarding forward-looking statements and the risk factors pertaining to these statements. Our MD&A and financial statements are available on our website at edrsilver.com. On today's call, we have Dan Dickson, Endeavour Silver's CEO; Elizabeth Senez, our CFO, and Don Gray, Endeavour's COO. Following Dan's formal remarks, we will open the call for questions. And now over to Dan. Dan Dickson: Thank you, Allison, and welcome, everyone. Before reviewing our 2025 results, I'd like to provide a brief update on Terronera. Operations were temporarily impacted by recent security events in Mexico and Jalisco's Code Red mandate, which requires civilians to shelter in place. To comply with the mandate, the uncertainty surrounding the event and to ensure the safety of our people, we paused Terronera's operations Sunday evening. Operations resumed Wednesday, February 25, once supply routes were confirmed to be secure. We will continue to monitor developments closely and the safety of our employees and contractors remain our top priority. With that, I'd like to briefly touch on the current silver and gold market. Over the past year, we've seen exceptional gains in renewed investor interest in precious metals, driven by inflationary pressures, global economic uncertainty and ongoing political tensions. Silver and gold continue to be viewed as a safe haven assets with silver also benefiting from rising industrial demand especially in the green energy and technology spaces. This momentum has continued into 2026 as gold trades well above $5,000 and silver is elevated above $90, reflecting ongoing confidence and reinforcing the importance of our strategic initiatives and our commitment to delivering value for our shareholders. We are extremely well positioned to benefit from the current silver prices and believe there is substantial runway remaining in this cycle. Moving over to the specifics of the company. 2025 was a transformational year for Endeavour Silver. We took a major step forward with the acquisition of Kolpa in May, Terronera achieving commercial production in October and agreed to the sale of the Bolanitos Mine, which closed in January. In December, we raised $350 million through convertible debt offering, strengthen our balance sheet and positioning ourselves to advance the Pitarrilla development asset. These milestones lay a solid foundation for performance and sustained growth as we look ahead to the future and position ourselves as a stronger company within the industry. In 2025, Endeavour produced 11 million ounces of silver equivalent metal, including base metal production from Kolpa making a 48% increase compared to 2024. In Q4, Endeavour produced 2 million ounces of silver and 14,000 ounces of gold, totaling just shy of 4 million silver equivalent ounces. This represents a 146% increase compared to Q4 of 2025 due to the addition of Kolpa, Terronera and the higher grades at Bolanitos. Excluding Kolpa and Terronera, this was a 27% increase compared to the same period last year. In 2025, the company reported record revenue of $468 million up 115% compared to 2024 with cost of sales of $385 million, mine operating earnings of $83 million and mine operating cash flow before taxes of $156 million. Mine operating cash flow before working capital changes rose by 116%, while cash costs increased to $19 per ounce of payable silver primarily driven by the substantial changes in our production profile. In Q4, Endeavour recognized adjusted net earnings of $4.8 million or an adjusted earnings of $0.02 per share. Due to realized losses from derivative contracts and higher financing costs in relation to the early repayment of the debt facility. Direct operating costs per ton increased by 8% this year, primarily driven by elevated costs at Terronera during its initial quarter of production. Looking ahead, we anticipate a substantial reduction in these costs as we transition from diesel to liquefied natural gas in Q2 of 2026, complete the demobilization of our construction team, benefit from workforce and logistics optimization plans implemented in January and maintain a throughput at 2,000 tonnes per day through 2026. Kolpa will also see an improved cost efficiency as its plant expands 2,500 tonnes per day here in Q1. For clarity, our direct operating cost per ton include direct input costs associated with mining, milling and site level G&A. Our definition of direct cost per ton includes royalties, mining duties and the purchase of third-party material. Changes in the metal prices have a meaningful impact on our direct cost per ton. For example, for every dollar increase in silver, our cost per ton rise by about $0.90 of Terronera, $0.50 at Kolpa and $3.80 per ton at Guanacevi, mainly due to the higher royalties, duties and third-party purchase costs. All-in sustaining costs net of byproduct credits were elevated this quarter with higher royalties duties, third-party ore purchases, elevated corporate G&A and the addition of Terronera. Terronera incurred higher costs due to higher sustaining capital expenses during the first quarter of operations. Terronera's all-in sustaining costs includes capital expenditures of $16.3 million for the quarter which worked out to approximately $48 all-in sustaining cost per ounce. And this includes onetime investments related to new mining operations. These costs are expected to decrease as we move through 2026. The elevated corporate G&A was impacted by the divestiture of Bolanitos, the appreciation of deferred share units and the integration of all our new operations. As of December 31, 2025, the company's cash position stood at $215 million, providing us with the financial strength and flexibility to advance our strategic initiatives. This robust foundation allows us to remain nimble and responsive to new opportunities while staying focused on driving progress at Pitarrilla, where we continue to invest in exploration, technical studies and the economic evaluation. As we move through 2026, our attention remains focused on several operational investment priorities across our main operations and projects, each serving as a catalyst for our continued success and growth in 2026. At Terronera, our primary focus is disciplined execution as we transition into higher grade zones in the second half of the year. We are seeing gradual improvements towards designed operating parameters, including nameplate throughput, recoveries and mine output. Grades are aligning with plan and operations are beginning to establish a consistent rhythm rather than the volatility of a typical ramp-up. As we eliminate ramp-up or start-up costs, we expect direct cost per ton to improve through the year. Secondly, at Kolpa, we are actively advancing our expansion initiative, increasing capacity from 2,000 tonnes per day to 2,500. We anticipate achieving this milestone in the coming weeks, which will enhance our throughput and support our growth objective. Additionally, we remain focused on delivering a resource estimate later this year. At Pitarrilla, the company's next major development project and one of the world's largest undeveloped silver deposits, our commitment remains very strong with a planned $68 million investment in 2026. This includes the completion of an NI 43-101 feasibility study targeted for completion in Q3 2026, along with early works such as commencement of the construction camp, continued ramp advancement through the manto and procurement of long lead equipment to support the basic and detailed engineering. We are positioning the project to have a well-informed construction decision in early 2027, supporting our strategic strategy of significant organic growth. 2025 marked a defining chapter in our story. As we continue on this exciting path, I want to extend our gratitude to our valued shareholders and stakeholders for your confidence and partnership. We remain committed to creating lasting value, driving operational excellence and building a premier senior silver company. Thank you for your continued support and engagement. And with that, I'm happy to open this to questions. Operator, please proceed to our Q&A session. Operator: [Operator Instructions] The first question comes from Wayne Lam with TD Securities. Wayne Lam: I'm just wondering, just on the updates operations like Terronera. Can you discuss the mill availability and what happened with the electrical interruptions? If I recall, you guys also had an electrical issue in late September, which kind of resulted in the delay to commercial production. So just wondering exactly what's going on there? And have you seen an improvement on those issues? Have those been resolved in the first 2 months of this year? Dan Dickson: Yes. Thanks for the question, Wayne. I mean the quick answer is yes, we have seen a lot of improvement in January and February. We've done very well from a throughput standpoint. As you recall, back in September, we had resistors that we had to replace early October, and it took 6, 7 days for those to come in as they are onetime items. And we had a lot of electrical disruptions just because we're on diesel gen sets. We were at max power and we had to make some adjustments in Q4 to that, and we're getting lots of starts and stops. So losing maybe 1 hour or 2 hours on various days that really impacted. Starting and stopping impacts recoveries, obviously impacts throughput. We've seen that kind of stabilize late December and obviously through January and February. The most important part to those temporary diesel gen sets is we have received our permits to operate our LNG plant. So we are allowed to vaporize our liquefied natural gas into natural gas and ultimately electricity. We are completing that connection point here in Q1. The provider of the liquefied natural gas has obtained their permit to transport, and they're waiting on a storage permit on site that we're going to look at here over the next or we expect to receive over the next couple of weeks. So our expectation is that we'll be on our LNG plant in Q2. Obviously, it does a significant thing for our stability of electrical continuity, but also from a cost standpoint. Going from diesel gen sets into the LNG plant takes us from $0.33 per megawatt hour to $0.17, almost $8 a ton at this point. So we're excited to get on that for a number of reasons. Obviously, reliability and cost being the first -- the main two. Wayne Lam: Okay. Great. And then maybe just on the grade profile at Terronera. You guys had previously guided the 122 grams per tonne silver and 2.5 grams per tonne gold through the first 6 months of operation. But the guidance for this year implies that you'll average 120 grams per tonne through the entirety of 2026. I know you guys had talked about some mining of the lower-grade stock works driving that. But -- just wondering if you might have any guidance on grades in terms of a split in H1 versus the prior 122 grams per tonne and where we should think about that with the higher grades you're projecting into H2? And then just are the lower grades entirely being driven by that lowering of the cutoff? Or is there some attribution as well to greater dilution or lower reconciliation versus the block model? Dan Dickson: Yes. I think the first couple of questions. block model reconciliation has been relatively strong, better as we move forward, and we've got deeper into the mine plan. We do have lower silver grades and ultimately gold grades because of some of that stock work. But right now, that software isn't a significant amount. And as we're -- as you know, in the back half of the year, we get into the main shoot of Terronera, and that's the goal. That's where our highest grade points are, and that's where our biggest splits are. As far as the breakdown between H1 and H2, I don't have that rate in front of me, but it is a gradual increase of Q1, Q2, Q3 to Q4. Each quarter gets better as we bring more and more of that shoot in -- for those that are listening, we made the decision about almost a year ago now, maybe 9 months ago, that we would go into a lower grade part of the ore body as we start with initial production. Obviously, because we didn't want to end up having ounces of silver and gold into our tailings dam, ultimately as we go through kind of your regular start-up issues and building up our recovery. So this was by design, Wayne. Again, it's lining up relatively well to plan. We're slightly lower because we are taking that stockwork. It's very difficult to speak to that stockwork. and the impact overall. But as we go through the year, we'll bring more and more into the plan and more of the high-grade stuff and hopefully go back to that stockwork later on. Wayne Lam: Okay. And maybe just as a follow-up to that, the mine plan in the early years of operation is in the realm of 230 to, let's call it, 280 grams per tonne silver, like when would we expect that type of material to be mined and processed through the mill. Is that more of a '27 thing? Dan Dickson: Exactly, 2027. Wayne Lam: Okay. Okay, good. Maybe just last one for me. Just on the guided capital spend this year. There's been quite a bit of spend budgeted at Terronera, particularly towards additional mine development, which is driving your higher ASIC. Just wondering if that reflects a catch-up on development that was anticipated to have been completed through the initial construction period. And if that drops off substantially as we progress through the year. Or would you see your development meter still as relatively behind where you'd like to be through the early stages of the operation? Dan Dickson: Yes. We're a little bit behind, but not relatively behind. You'll see that in our guidance that we put out in January, we had a $56 million capital budget for Terronera. And then similarly, I think we spent almost $17 million in Q4 at Terronera, which we define as sustaining capital. Obviously, moving from commercial production into -- from construction into commercial production, we have had some capital programs slosh into Q4 and ultimately Q1, Q2. As we move forward through Terronera, we expect that to come down. There are onetime activities that are included in this CapEx. For example, as we already talked about, the LNG plant and the completion of that. We're waiting on a CONAGUA permit for waste dump 2 that's going to reduce our trucking capacity, and we would have some development around waste dump 2. We expect that. We have a backfill plant that we're currently leasing we're going to buy that. So there's a number of onetime items in our sustaining CapEx that you could argue is related to the actual build of Terronera. Obviously, we're taking that through sustaining CapEx. We don't want to play with numbers and start calling certain things growth or sustaining. So at this point, it is what it is, but do you expect that to come down as we move through 2026 and ultimately 2027, we expect to be at a regular sustaining CapEx break. Operator: The next question comes from Heiko Ihle with HC Wainwright. Heiko Ihle: So Terronera commercial production, obviously, was October 1. So we'll be in March 1st here in the very near future. So it's 5 months later, you want to just maybe provide the audience here with a little bit of color on how things went since then, maybe things that went better if things that went worse? Any sort of bottlenecks in supply chains or at site or just things that came a little bit different from your expectations, again, not necessarily just worse. But also, I assume some things went substantially better than you thought. Dan Dickson: Do you mean over the course of the construction period or just over operations in the last 5 months, Heiko? Heiko Ihle: Operations over the last 5 months. Dan Dickson: Yes. I mean, to be honest, I mean, it's our first time doing an initial build. Our first mine that we brought into commercial production. Obviously, there's things have gone extremely well, things that we wish could be better. I mean I think that's normal through a ramp-up phase that is 2 steps forward, 1 step back. It's through all of our past experiences and Don's experiences. There's things that we felt like we can improve on maybe from an initial start-up and ramp-up, better knowledge almost of going to the initial plan. Everybody has different ideas and it's sticking to the original plan. And then from that, starting with the variables are trying different reagents at different times, putting various options through it. Because of the terrain around Terronera, the topography at all, it's very mountainous, we don't have a lot of flexibility with laydown yards. So we only have about 80,000 tons, even less than that right now, a stockpile that sits near the plant. So what comes out of the mine kind of gets fed right into the plant. So we're continually learning about the ore body trying to find what's best from a recovery standpoint. But again, January, February, we've seen very good throughput up until Sunday night. We obviously shut down for a couple of days. But again, going forward, we expect that to be very good and it's the gradual ramp-up of recoveries. We've been running lower silver grades, as Wayne kind of pointed out, and those will improve through we go the year, and we expect recoveries to improve with that. I think our team has been phenomenal at finding flexible ideas using plans B and C to get to where we need to get to. But now we want to get into the rhythm and kind of be steady state and get into normal course operations. We look forward to that. Heiko Ihle: Fair enough. And then just like, I guess, a little bit more touchy-feely, as silver is at $94 right now. I mean assuming silver prices stay here or maybe even go up a little bit more, is there an impact a quantifiable impact of where you mine across your asset base? And what you internally are envisioning a mining costs like direct costs for labor and [indiscernible] activity across your asset base? Dan Dickson: It's a very broad question of with $94 first off, it's a phenomenal environment, and we expect cash flow to be very significant. There's a big impact to us at Guanacevi because we pay a significant royalty at Guanacevi 16% to Minera Frisco that owns the main concessions of that. Further with there, we toll ore, I think in Q4, we did close to 20% of our throughput was toll ore. That's going to continue. Obviously, there's a lot of family run operations. The government built in 1981, that Guanacevi plant, and we're required to take up to 10%. And quite frankly, it extends the life of our mine. We get good margins on some of that tolled ore. It's just expensive to buy. And then flip side of that, Special Mining Duty, which is an EBITDA tax, and that's included in our cost per ton in our direct cost per ton. So with higher prices, and we kind of put this in our guidance news release, it's going to drive our direct cost per ton. Again, for our audience, we have a direct operating cost per ton, which is mining, milling and our indirect costs and then our direct costs include royalties, duties and purchased ore. Those last 3 items go up with higher prices. It's great. We still have great margins, but it means rising cost per ton. We get a lot of questions of wire costs rising. For the cost that we can control, we've been through our negotiations with our unions out of Mexico, and our general increase is about 6%, which is a bit higher than our budgeted number of 5%. It was all included in guidance. Of course, we're going to start seeing pressure on our inputs. I think that's just natural at these prices. It's our job as management to work through that. That's all included in our guidance numbers. I think it's imperative at Kolpa and Terronera, we have a lot smaller royalties there, so it's easier to contain those costs. But of course, as we evaluate projects going forward, we're looking at these higher prices and what's the impact long term on costs. I don't know if that fully answers your question, Heiko. But again, in our guidance news release, we kind of touch on that in depth a it. Heiko Ihle: Yes. Yes. No, you did. You got exactly where I wanted to go with this. Operator: Next question comes from Soundarya Iyer with B.Riley. Soundarya Iyer: Congratulations on the quarter. My question is more on this derivative hedge. I mean, there is a good amount of detail in the MD&A. But could you help me understand the remaining notional exposure and the cash settlement cadence over the next 12 months? And how -- what about the risk management strategy in order to manage this strength in precious metals? Dan Dickson: I'm happy to talk about that. I mean, it's an important part right now on our balance sheet that we -- under the project loan facility that we borrowed to build the Terronera mine. We borrowed $135 million from 2 lenders. When we went into that facility agreement back in 2022, we were required to hedge 68,000 ounces of gold, and we locked that gold price and in March of 2024 at $2,325. Today or at December 31, we had about 50,000 ounces of that gold hedge remaining. That gold hedge is going to unwind through 2026 and into 2027. I think we're through it in Q2 of 2027. Ultimately, on our balance sheet, you can see that we do a mark-to-market adjustment that holds that difference, that liability sits on our balance sheet. We recognize that loss on that derivative liability through the income statement in the year. So a very significant amount, and we try to adjust it for adjusted earnings purposes. Again, we, as a company, have a policy that we would not like to hedge our silver, we have a small hedge in place from a collar again from that project loan facility. But we have a policy to try to remain unhedged. And of course, from a silver standpoint, if you're make an investment in the silver company, you believe silver price likely going higher. We want to give that upside, and we feel like there's a lot of upside there in silver. So we hedged the gold, which was a byproduct. And again, we're through that mid-2027. Soundarya Iyer: Just one more on this Mexican peso appreciation, which was again a headwind on the cost this year, right? Any hedging or risk management strategy to cover that for 2026? And is there any sensitivity at what exchange rate does this currency that impact meaningfully margins or costs? Elizabeth Senez: Soundarya, this is Elizabeth. I'll take that question on the foreign exchange. So as you see, we do have some Mexican peso hedges in place. And I believe at the end of 2025, they were around 19 pesos to the dollar remaining. We don't have very many left. And with lower prices, we haven't put many on recently. It's hard to hedge at 17 pesos to the U.S. dollar. But we are taking opportunities to hedge where it is appropriate for the Mexican peso. One of the advantages with adding Kolpa to our portfolio is that we have reduced our percentage exposure to the peso as well. And the sol -- the Peruvian sol is more steady for us. So we do have that diversification as well. Operator: The next question comes from Cosmos Chiu with CIBC. Cosmos Chiu: Maybe my first question is -- sorry, also on Terronera. But just I'm trying to kind of quantify it. Terronera costs were fairly high in Q4, $50, $65, $70 an ounce. And Dan, you talked about onetime costs, LNG plants and stuff. But in 2026, you're guiding to 28% to 29%. And so I'm just trying to understand how it can drop in 2026. Is it going to be more back-end weighted? You're going to have some quarters that might be over $29, some quarters below $29 an ounce or -- because if you have another [ quarter of $65 ], it'd be hard to average out to $28 to $29 for the full year. Dan Dickson: Well, the good news is $65 was in Q4 of 2025. Our guidance is only for 2026. We don't expect Q1 to be as elevated as it was in Q4. We've got some severance costs of moving off from various construction people in January, but we do expect that cost to decrease over the year. So Q1 will be higher than Q2. Q2 will be higher than Q3. Q3 and Q4, we have higher grades coming in. So on a per ounce basis, that cost per ton or that cost per ounce can improve, the cost per ton won't become as drastic. I would point out that Q4 has the onetime expenditures of $16 million, not necessarily onetime CapEx expense of $16 million, $17 million in Q4. That includes onetime initial CapEx that flowed into Q4. We have that in Q1. We'll have less of that in Q2. Q3, Q4, we should get pretty flattened out sustaining CapEx. That is going to be the biggest driver of our cost per ounce increase at all-in sustaining costs. Similarly, our cost per ton as we get more rhythm at site, we expect that to come in a move from LNG plant to the -- temporary diesel gen sets to the LNG plant that's cost improvement. So there's a number of things that are going to come through cost that are going to come through the year. So we've been saying out to the market and to analysts, look, Q1 is our first quarter of production. It's not indicative of what the future is going to hold at Terronera. And again, we expect Q1 to be better. We expect Q2 to be better than Q1, and I think that's going to come through. Cosmos Chiu: Great. And maybe broader scale, can we talk a bit about Mexico, Jalisco, certainly some volatility in the area. Has it resulted or necessitated any change in security protocols on site of Terronera? Has it necessitate any kind of changes to systems in place to make sure that it's kind of in response to the situation. And then on top of that, can you talk about supplies on site, consumables on site? Have you stocked up in light of what's happening in terms of fuel, in terms of consumables, in terms of spare parts, how should we look at it? Dan Dickson: No, it was a very fair question [indiscernible] what we saw this past week. Obviously, unexpected, I think that was something we've never experienced in Mexico. Our biggest concern, obviously, first and foremost, is for our people and with Jalisco going to Code Red, shutting down Sunday night. The major thing about coming back from an operations is the supply lines out of Puerto Vallarta up to site. So we're about an hour and [ 15 ] 1.5 hours drive from Puerto Vallarata to site. Because of the topography of Terronera, we don't have a lot of storage space. We have about 1 week supply of food for the camp, 2 to 3 days supply of water. We had delivery of water on Monday that helped. Obviously, we're very concerned about diesel and transporting that. Going forward, I don't suspect we'll change our security around the Terronera mine. It will continue as in. We have to look at our protocols on shipments. So shipments coming up, shipments coming out, our concentrate shipments. We already have security protocols around all the shipments going out. Some of the shipments coming up. I think we'll just have to look at that, maybe beef it up a little bit. We don't expect a dramatic increase in security costs at this time. Of course, we have to monitor what this impact will have across the region if there becomes instability with all these groups in Mexico. As of right now, we don't have a huge change, just an increase of presence around our transportation lines. Cosmos Chiu: Great. And then maybe one last question, more of an accounting question. With Bolanitos, the sale closing in Q1, is there any kind of accounting nuances or impact that we should be aware of for Q1? Is there going to be some type of onetime gain or loss? And then can you talk about Mexican taxes as well? My understanding is that Mexico cash taxes are higher in the second -- in the first half or even in Q1. Is that what's happening here? And with the Terronera construction costs, the CapEx, does that help you offset some of those Mexican taxes? Dan Dickson: Yes. Hold on, can we just clarify your second question about Bolanitos taxes? You said something around timing at end of the year. Cosmos Chiu: Yes, overall, just more Guanacevi, sorry. So I guess, number one, Bolanitos, the deal is closing or closed in Q1. Is there any accounting sort of nuances or entries or impact that we should be aware of? Just, you know, overall Mexico taxes, how we should look at it in terms of quarterly. Sorry, Elizabeth. Elizabeth Senez: Yes, this is Elizabeth -- I'll take that question. Yes, the Bolanitos sale closed January 15. And we will be recognizing that during our Q1 financials, obviously. And we are anticipating, as you saw, we sold it for approximately $50 million. For accounting, there's different adjustments to that, depending on the value of the shares that we acquired as a result. And then we were carrying it for around $25 million at the end of the year. So we are anticipating an accounting gain on that in Q1. And that math can be done using our year-end financial statements. Your question about Mexico taxes. Guanacevi is paying Mexico taxes and pays installments regularly on those Mexico income profit taxes there. Terronera, as you commented, does have construction costs, which are recognized as tax losses. And as it starts to make taxable profits, those losses will offset those taxable profits during 2026. And then depending on how the silver price goes, drives how quickly those losses will be utilized, and then when we will start paying income taxes in cash in Mexico for Terronera. Cosmos Chiu: Great. So there's no big true up in Mexico, Mexican cash taxes in the first half of 2026, where I see that somewhere else in other companies, but I guess not here. Dan Dickson: No. On our sale of Bolanitos, we have historical losses that are designed or we can use that we won't have to pay a tax on our Bolanitos debt. Elizabeth Senez: AT this point, that's our anticipation, yes. Operator: The next question comes from Alex Terentiew with National Bank. Alexander Terentiew: I guess I was a bit slow with my fingers, a lot of questions already asked. But nonetheless, one question still for me here on Kolpa. So can you just clarify for me then. As it comes to that mine with permitting and getting 2,500 tons per day, are you waiting for additional permits? Because I thought 2,500 tons per day is kind of the ultimate expansion rate that you want to get at. But based on your commentary guidance, it sounds like you're going to get there a lot sooner. So I just want to make sure I'm clear on the expectations there. Dan Dickson: Yes. We are getting there a lot sooner. I think it's a testament to the team that we acquired when we bought Kolpa. They're very confident people. In December, they received the construction permit to build out the Kolpa plant, which is really a expansion, the crushing facility, new crusher, ball mill to go to 2,500 tons per day, then there's some additional flot cells that need to be done. It, of course, expanding the mine underground. They received that construction permit. They're almost through that. We expect to be testing the ball mill relatively shortly, so let's say March. In our guidance, we did have 2,400 tons per day throughput for the average for the year. We've been running just over 2,300 tons per day over the last couple weeks. There has been a lot of rain in that area, and we've battling how much rain there's been here in Q1, so it slowed us down a little bit from a production standpoint. The construction standpoint, like I say, we've been very impressed with how it's gone. From the construction standpoint, we can operate it, but we do have to get an operating permit, which generally comes a month to two months, maybe three months after the construction phase is done. But we are allowed to test that circuit and go through that. Again, hopefully in Q2, we're approaching 2,500 tons per day. The underground mine will be running around 2,300 tons per day. As we've talked about before, with the underground mine, it's opening up more faces, more employees, staff. You're not going to get a lot of economies of scale from the underground portion of it. The additional tons for the first half of the year will come from a lower grade pit that's within the area, and we'll try to fill that with some contractor ore as well. So we are ahead upon the above ground surface. There's still some work to be done underground, but we are in very good shape right now. Alexander Terentiew: Okay. Great to hear. And then just one last question on Pitarrilla. A lot is happening there this year. Can you remind any of permitting time lines or kind of what you're doing to advance that this year? And what news we maybe could expect whether later this year or early next year on the permitting for that project? Dan Dickson: Yes. I'll give a quick overview, and I might pass it over to Donald Gray, our COO. I mean, obviously, we're spending $68 million at Pitarrilla. We really believe in the project. We like everything we've seen, thus far. What makes Pitarrilla kind of special is the volumes that you can get out in such a tight space. There's a manto that's got 7 million to 8 million tonnes of what would be ore once that feasibility study is complete and then 3 feeder structures that come up and through it. And we've been working on a mine plan, and that mine plan is going to dictate the scale of the plant. Now the plant has already been permitted. Underground mining has already been permitted. We're waiting on a tailings storage facility permit. It's going to be a dry stack tailings. We've been working on the site. We've been working on the engineering. We've been going back and forth with the state level SEMARNAT on how to submit this and how to submit it most efficiently. I think right now, our projection is that we're aiming for Q1 2027 permit to receive that tailings storage facility permit. But beyond that, there's additional permitting that's required, such as CFP for power but that's something that we can work through during our construction timeline, as we did with Terronera. Of course, we will need temporary power source during the construction. It's a question of when we can bring on power sources at the end of that. Don, I don't know if we want to get in too much more detail of it, but there's a lot of permits that we've gone after. We've spent the past 12 months working on that permit to make sure we're getting ahead of where we effectively were when we started building Terronera. Don, do you have any color you want to add? Donald Gray: Just that I think the permitting schedule really lines up well with the, with the project work that we need to do to finish the feasibility, get into the basic engineering, get the, like we mentioned in the press release, the long lead items or the major pieces of equipment on order so we can do the detail engineering and then head into construction. I think what you'll see is really -- the engineering will be quite advanced by the time we go into construction, and we'll have a good idea on where the costs are and that kind of thing. Dan Dickson: I think the main gating item is [indiscernible] from a construction standpoint is that last permit. So we'll be in very good shape. We feel when we can get that permit. Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Dan Dickson for any closing remarks. Please go ahead. Dan Dickson: Well, thank you, operator, and thanks, everyone, for attending our Q4 financial earnings call. Again, 2026 will be a big year for Endeavour. We're excited with what we can do with Terronera and getting that operation into a steady-state full rhythm by midyear. What Kolpa is going to do for us and ultimately advancing Pitarrilla to take us to where we need to go, and that's, again, our goal is to become a premier senior silver producer. Thanks a lot, and have a good day. Operator: This brings to an end today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Good morning, everyone, and welcome to Grupo Televisa's Fourth Quarter and Full Year 2025 Conference Call. Before we begin, I would like to draw your attention to the press release, which explains the use of forward-looking statements and applies to everything we discuss in today's call and in the earnings release. I will now turn the call over to Mr. Alfonso de Angoitia, Co-Chief Executive Officer of Grupo Televisa. Please go ahead, sir. Alfonso de Angoitia Noriega: Thank you, operator. Good morning, everyone, and thank you for joining us. With me today are Francisco Valim, CEO of Cable and Sky and Carlos Phillips, CFO of Grupo Televisa. Last year was marked by several milestones, both at Grupo Televisa and TelevisaUnivision, which Bernardo and I are confident will allow us to keep creating value for our shareholders. At Grupo Televisa, let me touch on four major achievements. First, our strategy to focus on attracting and retaining value customers in cable allowed us to grow our Internet subscriber base by around 47,000 in 2025. This marks a full year turning point after losing Internet subscribers, both in 2023 and 2024, mainly driven by a strategy decision not to retain low-value subscribers. Second, we keep executing on the implementation of OpEx efficiencies and the integration between Izzi and Sky to extract further synergies. This contributed to expanding our 2025 consolidated operating segment income margin of 39.1%, by 200 basis points, driven by a year-on-year OpEx reduction of 8.3%. Third, we kept a disciplined CapEx deployment approach to focus on free cash flow generation. In 2025, we invested MXN 12.2 billion in CapEx, which is equivalent to 20.7% of sales. This CapEx is intended to deliver higher returns over the investment and has allowed us not only to have close to 1.4 million gross adds during the year, but also to upgrade 4.5 million homes to FTTH technology. This basically means that we ended 2025 with around 9 million homes or approximately 45% of our total footprint passed with FTTH technology. Valim will elaborate on our plan to keep upgrading our network later during the call. And fourth, in 2025, we generated around MXN 5.9 billion in free cash flow, allowing us to prepay bank loan due in 2026, with a principal amount of around MXN 2.7 billion. This debt repayment comes on top of the $220 million principal amount of our senior notes already paid on March 18. Additionally, at the end of 2025, Grupo Televisa's leverage ratio of 2x EBITDA compared to 2.5x at the end of last year, mainly driven by our free cash flow generation. And at TelevisaUnivision, I will mention three key milestones. First, 2025 was a breakthrough year for our direct-to-consumer business, as ViX delivered record revenue since it was launched, achieving profitability in every quarter and expanded operating margins throughout the year. For the full year, our DTC business represented nearly 1/4 of the total company revenue, driven by robust advertising growth from our free tier and the continued expansion of our premium subscription offerings. Moreover, our DTC business is now a significant contributor to our adjusted EBITDA, accounting for approximately 20%, driven by its industry-leading margins. Second, the efficiency plan to reduce gross operating expenses at the TelevisaUnivision by around $400 million in 2025, delivered outstanding results. During the year, our total operating expenses declined by around 8% year-on-year for total operating expenses of around $3.2 billion. This shows a disciplined execution of our cost savings initiative. This OpEx reductions have been fully realized in our 2025 results. And third, looking at TelevisaUnivision's leverage and debt profile the company ended the year at 5.6x EBITDA, an improvement from 5.9x at the end of 2024, driven by growth. Moreover, in 2025, TelevisaUnivision successfully refinanced $2.3 billion of debt, which extended its credit facilities and eliminated all near-term maturities. Deleveraging remains a core strategic priority for TelevisaUnivision. Having said that, let me turn the call over to Valim, as he will discuss the operating and financial performance of our consolidated assets. Francisco Valim Filho: Thank you, Alfonso. Good morning, everyone. In 2025, consolidated revenue reached MXN 58.9 billion, representing a year-on-year decline of 5.5%, mainly driven by lower revenue at Sky. Operating segment income reached MXN 23 billion, equivalent to a slight decrease of only 0.6% year-on-year. Turning to our fourth quarter results. Consolidated revenue reached MXN 14.5 billion, representing a year-on-year decrease of 4.5%, while operating segment income reached MXN 5.9 billion, equivalent to a year-on-year expansion of 6.1%, driven by the efficiency measures that we have been implementing since the integration of Sky. Now let me walk you through the operating financial performance of our cable operations. We ended December with a network of 20 million homes after passing around 59,000 new homes during the quarter or over 118,000 new homes during the year. During the quarter, we continued to execute our strategy to focus on value customers rather than volume, while working on customer retention and satisfaction. This contributed to achieving a monthly churn rate below our historical averages of 2% for the third consecutive quarter. Our broadband gross adds remained solid, allowing us to deliver 25,000 net adds during the fourth quarter compared to net adds of around 22,000 in the third quarter and 6,000 in the second quarter and the disconnection of about 6,000 in the first quarter of 2025. In video, we also experienced stronger gross adds than in the first three quarters of the year and managed to reduce churn. Therefore, we lost about 31,000 video subscribers during the fourth quarter compared to 43,000 disconnections in the third quarter and 53,000 cancellations in the second quarter and a loss of 73,000 video subscribers in the first quarter of 2025. Moreover, we expect these improving trends to continue going forward, influenced by our multiyear partnership with Formula 1 to provide line coverage of all Grand Prix via Sky Sports channels available through Izzi and Sky, beginning in the fourth quarter of last year and through the 2028 season. Moving to mobile. Our net adds of 95,000 subscribers during the quarter showed sustained momentum as they were mostly in line with the 94,000 net adds in the third quarter. Our innovative MVNO services are already making our bundles more competitive, allowing us to increase the share of wallet of our existing customers and helping us to reduce significantly the churn of our existing customers. During the quarter, net revenue from our residential operations of MXN 10.6 billion, which accounted for around 90% of total cable revenue decreased by only 0.6% year-on-year. This marked the best quarter of the last 2 years at our residential operations from a revenue growth performance standpoint and compares well to a decline of 1.8% in 2025. On a sequential basis, net revenue from our residential operations remained stable, potentially signaling a gradual recovery. During the quarter, net revenue from our enterprise operations of MXN 1.2 billion, which accounted for around 10% of our cable revenue fell by 4.2% year-on-year. Due to the timing of revenue recognition of an important contract signing in the fourth quarter of 2025 and because of tough comps. Moving on to Sky's operating and financial performance. During the fourth quarter, we lost 304,000 revenue-generating units, mostly coming from prepaid subscribers that had not been recharging their services. In addition, beginning in the second quarter, we started to charge an installation fee of MXN 1,250 to all new satellite pay-TV subscribers to increase the return on investments on this service. This translated into a slowdown of video gross additions for Sky that has been steady over the last three quarters. Sky's fourth quarter revenue of MXN 2.8 billion declined by 16.8% year-on-year, mainly driven by a lower subscriber base. To sum up, segment revenue of MXN 14.5 billion fell by 4.5% year-on-year, while operating segment income of MXN 5.9 billion increased by 6.1%, making it the best quarter of the year driven by efficiency measures that we have been implementing and synergies from the ongoing integration between Izzi and Sky. Our operating segment income margin of 40.9% expanded by 410 basis points year-on-year. Regarding CapEx deployment, our total investment of MXN 4.6 billion accounted for 31.8% of sales in the fourth quarter. During the year, our CapEx deployment of MXN 12 billion, equivalent to $645 million, or 20.7% of sales. The main reason behind having a higher total investment relative to our 2025 CapEx budget of around $600 million was the strong-than-expected Mexican pesos, particularly during the second half of the year and the fact that around 50% of our CapEx budget is in local currency. Finally, operating cash flow for Cable and Sky, which is equivalent to EBITDA minus CapEx was MXN 1.3 billion in the fourth quarter, representing 9.1% of sales. For 2026, our CapEx to sales ratio should be close to 25% as we plan to upgrade 6 million homes to fiber-to-the-home technology, increase our subscriber base and support growth. This basically means that we expect to end 2026 with 75% of our total footprint passed with FTTH technology. Alfonso de Angoitia Noriega: Thank you, Valim. You're doing a great job. Now let me walk you through TelevisaUnivision's 2025 results released on Tuesday morning. As expected, the company's full year revenue fell by 5% year-on-year to $4.8 billion, while adjusted EBITDA of $1.6 billion, increased by 2%. Excluding political advertising and FX volatility, adjusted EBITDA increased by a healthy 7% year-on-year, underscoring the scalability of a profitable DTC business and the sustained impact of the cost reduction initiatives launched at the end of 2024. Turning to the fourth quarter. Revenues of $1.3 billion declined by 2% year-on-year, while adjusted EBITDA of $396 million fell by 12%. Excluding political advertising, total revenue grew by 1% year-on-year, while adjusted EBITDA decreased by 5%, despite continued DTC profitability and continued cost management. Moving on to the details of our revenue performance. During the quarter, consolidated advertising revenue was flat year-on-year. In the U.S., advertising revenue was 11% lower as continued growth in ViX and higher pricing were more than offset by declines in linear advertising due to secular softness and political spending relative to the prior year due to the absence of U.S. presidential election cycle. Excluding political advertising, advertising revenue in the U.S. fell by 3%. In Mexico, advertising revenue increased by 15% year-on-year, driven by the strong ViX growth and a resilient linear business, including private sector advertising. In local currency, advertising revenue in Mexico grew by 6%. During the quarter, consolidated subscription and licensing revenue decreased by 4% year-on-year. Continued growth in ViX across both the United States and Mexico along with higher U.S. linear subscription and licensing revenue, including benefits from our new Hulu agreement and higher content licensing, more than offset the loss of Fubo, the temporary YouTube TV carriage dispute and ongoing net subscriber declines. However, these increases were more than offset by lower linear subscription revenue in Mexico due to the renewal cycle with Izzi Sky and the cancellation of another distribution company, which we have already lapped. Moving on to the balance sheet. TelevisaUnivision ended 2025 with $440 million in cash, an increase of 33% compared to the previous year. Total CapEx investments were $119 million for the full year or a year-on-year increase of 4%. We expect CapEx deployment to remain at similar levels in 2026. Speaking about the 2026 World Cup, it represents a great opportunity both for Grupo Televisa and TelevisaUnivision, and we are approaching it with a fully integrated strategy across broadcast, streaming, digital and social. Our goal is to deliver comprehensive coverage with flawless execution, while maximizing the commercial impact across platforms. In Mexico, ViX will become the official home of the World Cup, making ViX the exclusive streaming destination for all 104 matches available at a preferential price for customers of Izzi and Sky. ViX premium annual subscribers will get access included while ViX's monthly subscribers and the customers of Izzi and Sky will have the option to add on World Cup coverage. Finally, considering several opportunities in the telecom sector in Mexico that we're currently exploring, our Board of Directors approved suspending the payment of our regular dividend in 2026. This will be presented for approval at our Annual Shareholders' Meeting. To wrap up, Bernardo and I are confident that our focus on value customers, efficiencies and ongoing integration between Izzi and Sky at Grupo Televisa and further integration and operational optimization at TelevisaUnivision now that our DTC business represents over 20% of consolidated revenue and adjusted EBITDA, will allow us to create greater value for our shareholders in 2026. Now we're ready to take your questions. Elsa, could you please provide instructions for the Q&A? Operator: [Operator Instructions] The first question today comes from Marcelo Santos with JPMorgan. Marcelo Santos: I have two. The first is for Valim. Could you please walk us through the fiber plan, how many homes with fiber-to-the-home do you have today? I mean, is this goal -- what is the goal exactly, if you could repeat? And is it for the end of 2026? So just wanted to get a bit more color on this plan. And the second question is about the competitive environment. How has been like the room to increase prices? Could you make some comments on how the market is going? Alfonso de Angoitia Noriega: Thank you, Marcelo. Valim, please. Francisco Valim Filho: Thank you, Marcelo. So I think that the fiber deployment is we're already at 9 million homes with fiber today, and planning to get to 15 million, 16 million by the end of 2026. So that would mean 75% of our existing network would be fiber-based. So that is on plan and on target. Regarding the competitive environment in Mexico, I think it's important to emphasize that we have been increasing ARPU consistently over the last several quarters. So it's due to price increases, mostly is due to more products to more -- to our existing customers and better and better services. So that's what we decide. We see that our alternative players, their flat or declining ARPU as opposed to ours, which is increasing constantly. And that's the route we are taking, not so much on price increases, but enable to sell more to the existing clients. And so the competitive environment in Mexico has been very stable over the last 2, 3 years, basically. And what we have been doing also consistently is focusing on high-value clients that will churn less and value our services and be able to acquire more services from us. That's the strategy moving forward. Alfonso de Angoitia Noriega: Pretty much a rational competitive environment. Marcelo Santos: Great. Just a follow-up on the first answer. When you mentioned the 9 million today and to 15 million to 16 million, this is really like fiber-to-the-home where there's no cable involved anymore, like it's fiber box in the home? Or is it like more fiber to the curb, but there is still a cable. Alfonso de Angoitia Noriega: No. Marcelo, fiber is still a cable. It's just a different cable. Marcelo Santos: HFC, sorry. Alfonso de Angoitia Noriega: Yes, I understand what you're saying. And just couldn't a point the joke. So it's just, yes, we will have fiber to the home on 15 million, 16 million homes by the end of the year. So if acquired, actually, nowadays, when the network is deployed, there are no deployments in HRC. So we still have a percentage of our deployments are in HRC because we are not with the full coverage. But as we grow our subscriber -- our fiber network, every new subscriber goes into fiber, and we migrate them as conditions are needed into fiber. So in a few years, all of our clients will not only be under a fiber network infrastructure, but also be connected to our fiber network. Operator: The next question comes from Matthew Harrigan with Benchmark. Matthew Harrigan: You're kind of almost uniquely exposed to AI positively on the telecom side, given all the repetitive processes and consumer-facing kind of customer journey experiences. And then on the media side with your JV, I think you're -- I know you're obviously the largest volume producer of Spanish programming in the world, and you may even be #1 overall. You had a lot of dislocation in the U.S. media names a few weeks ago on account of 20. And I was just curious, what's your broad perspective on how AI affects you both on the blocking and tackling side on telecom and then on the creative side on TelevisaUnivision, both with respect to your in-house content creation being even faster and more short form and then more competition you might face on people and companies aren't nearly as well funded as you. Alfonso de Angoitia Noriega: Thank you, Matthew. A very interesting question. I'll answer the media side and then Valim can take the telecom side. On the media side, we're experimenting with AI and production through AI. It's a very important tool. So in terms of script driving in terms of production itself, it is very useful. So we're experimenting especially. We launched last year our micronovelas on the short form. We produced -- we started producing last year this type of content. This year, we will produce more than 300 micronovela. And some of them are produced 100% with AI. So we're moving in that direction, moving I mean, using AI more and more, which will become a very efficient way of producing content. Francisco Valim Filho: In telecom, AI is mostly useful in how we handle our customer and how we operate our network. And as we speak, we are in very challenging and deep changes into the organization, making sure we have AI all over, meaning from the network usage to the client interface. So in the next few months, we're seeing significant impacts on how we interact with customers focusing on basically 100% AI. So 2026 will be the year we'll flip from a typical call center kind of a thing to full AI, everything AI in terms of customer relationship. So this is the year that will go from a typical telephone to an AI-based telecom operator. Matthew Harrigan: Great. It feels like even with some pretty straightforward kind of enterprise AI applications, you're in a great place without being too fans on the value LM models. Francisco Valim Filho: And sorry, just to complement on that, we are operating with the large guys, which is the typical Oracle, Salesforce, AWS kind of guys. So we have a clear path and we're working with the right guys to be able to achieve it. Operator: The next question comes from Ernesto Gonzalez with Morgan Stanley. Ernesto Gonzalez: It's on the opportunities you're exploring in Mexico Telecom. Just wanted to see if you can comment a little bit on whether these opportunities are in the fixed market or on the mobile market or any additional color you can give? And on the residential or your operations in Mexico, operating segment income was really strong in the fourth quarter. How sustainable is this margin level? Alfonso de Angoitia Noriega: Well, yes, we are actively exploring opportunities in the telecommunications sector. But unfortunately, we cannot comment on specifics or at this point, share more information. Hopefully, we can get those to materialize. There's no guarantee, of course, that they will we'll be in touch as those -- as we make progress as to those. And as to your second question, Valim? Francisco Valim Filho: We keep on optimizing our operations like we were just discussing a few moments ago, try to make sure our systems are more AI-oriented in order to make our processes more efficient, not only from a customer facing perspective, in other words, the clients see and understand that we are closer to them and providing better service, but also the flip side to that discussion is that it would allow us to have a lower cost base. All in all in the service of our clients. So yes, we keep on pursuing increasing operating cash flow. Operator: The next question comes from Alejandro Azar with GBM. Alejandro Azar Wabi: Third one is on your comment, Valim, of the 25% CapEx to sales for 2026. Is that on the telecom service or it's telecom enterprise or it's the full telecom enterprise satellite? Should we think 25% of consolidated Televisa? And my second question is also on -- relative to Sky. With the rate of the connections that we have had in the last couple of years. And if this continue, it becomes really tough for Televisa at the consolidated level, at least on the EBITDA side to show growth. I'm just wondering if you guys can give us more color of how you see Sky going forward, if there is a level where you see these connections or your total clients might normalize? Francisco Valim Filho: Okay. That's a great question. I think that the CapEx discussion is up to 25%. It comprises everything. Izzi Sky and Bestel, our B2B, our DTH and our cable fiber business. So that comprises it all. With regards to Sky, I think there is just misperception of what Sky really is. used to be a great business, all over the world, DTH represented a great business. But in all markets, what has happened is with the advancement of the networks, the FIC networks, Obviously, the connections are better and a lot of the streaming are also competing with that. So you see Internet plus the first streaming that doesn't allow much room for a DTH platform to keep on growing. So our plan is basically to make sure that we have the lowest possible cost at the Sky, meaning it's revenues minus variable cost, programming costs, minus the satellite and conditional access. Other than that, it's a cash flow generating business. So we don't expect it to stop or to normalize or level at any point. And I don't think that's something that people have seen anywhere else given the conditions that I have just described. So as you segregate that segment, Sky and its direct costs, which is -- which are the only costs that they basically have. And so everything else is our B2B and our B2C business. So I think that's the way you should approach this market as opposed to this is an overall thing and our revenue was declining. Yes, our DTH revenue is declining as expected. And what we did is streamline the DTH business. So keeps on generating cash and will be generating cash for the foreseeable future. And we have a business that is long lasting, which is our direct-to-consumer and B2B businesses. Alejandro Azar Wabi: One more, if I may, and this is just to remind us all, when do you have to pay the transaction of Sky? Alfonso de Angoitia Noriega: It's 2027 or 2028. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Angoitia for any closing remarks. Alfonso de Angoitia Noriega: Well, thank you very much for participating. Give us a call if you have any additional questions. Have a great weekend. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Bernd Pomrehn: Good morning, everyone, and welcome to Holcim's Full Year 2025 Results Presentation. My name is Bernd Pomrehn, Head of Investor Relations, and I'm pleased to be joined by our CEO, Miljan Gutovic; and our CFO, Steffen Kindler. After their presentations, as usually, you will have the opportunity to ask questions. If you join us on this sunny day, Friday in Zurich, then just raise your hand, and we will hand you a microphone when it's your turn. And our colleague from Chorus Call will now instruct you how to ask your questions via the webcast. Sandra, please. Operator: [Operator Instructions] The conference is being recorded. [Operator Instructions]. Bernd Pomrehn: And with this short intro, I directly hand it over to Miljan. Miljan, please. Miljan Gutovic: Thank you, Bernd. Good morning to all of you, and a warm welcome to Holcim's 2025 Full Year Results Analyst and Investors Conference. Steffen and I are pleased to be presenting our earnings to you today. And of course, there will be a time afterwards for your questions. We delivered strong profitable growth in 2025 with an acceleration in the fourth quarter as we achieved all our targets. As you can see, we accelerated the growth of our recurring EBIT in Q4. It was up 12.2%, taking us to a 10.3% for the year, exceeding our guidance. Our industry-leading margin increased by further 80 basis points to 18.3%. Margin expansion was driven by our high-value strategy, which includes scaling up our sustainable offering as well as continuously exercising strong cost discipline while enhancing operational efficiency. We generated CHF 2.2 billion in free cash flow with a cash conversion of 54%. Due to our excellent results and the confidence in the outlook, our Board of Directors has proposed a dividend of CHF 1.7. That represents a payout ratio of 53%. With these excellent results, we are setting guidance for '26 that is fully aligned with our midterm targets, and I'll take you through the guidance in details at the end of this presentation. Now let's turn to the region highlights. Very proud to report excellent results in Europe. Europe for Holcim continues to deliver strong margin expansion, which is driven by our high-value strategy as we are scaling our sustainable offering and accelerating initiatives in decarbonization and circular construction. In terms of the outlook, very positive on Europe. We expect strong activity in infrastructure. For instance, take, for example, Switzerland, we already communicated that we are supplying our products and solutions to Gotthard Tunnel. Now we have landed another big tunnel Axenstrasse, and we will start delivering soon. Also in residential building permits have increased across the whole Europe in recent months, even in the big markets like Germany and France. Let's look now in more detail on how we have made sustainability a driver of profitable growth in Europe. By scaling our sustainable offering, accelerating, decarbonization and circular construction as well as investments in value-accretive M&A, we have achieved a consistent multiyear margin expansion of 430 basis points between 2020 and 2025. That is a period that includes COVID crisis, high energy crisis, challenging economical cycles, market condition and also significant volatility in carbon price. Leading in decarbonization, we are using innovative formulations and alternative fuels to continue to expand our margins, so too with recycling of construction and demolition materials into the new building solutions. During this period, we have also created excellent value through our disciplined M&A approach, closing 66 acquisitions at very good prices, which were on average just around 5.3x EV EBITDA at signing, including synergies. These acquisitions are increasingly focused on expanding less carbon-intensive high-value building solutions from foundation and flooring to walling and roofing. All of this demonstrates our agility, our resilience based on our proven business model. I'm sure that we will get on to discussions on the EU ETS in our Q&A. So let me say a few words on this topic. The European Commission already announced its work program in 2025. So this is not new. This included a review of ETS to provide clarity for the post-2030 period with a proposal expected in Q3 this year. I would like to emphasize that we do not expect any major changes in short term before 2030. Holcim, of course, welcomes the work that EU Commission is doing to provide clarity for the post 2030 period, including for topics important -- that are important to decarbonization of our industry. If there are any changes to EU ETS allowances in the mid- to long term, this will simply provide more time to build effective business cases and partnerships to evolve the carbon management value chain, including transportation and storage as well as decreasing our costs. Once again, this slide shows that Holcim has made sustainability a driver of profitable growth regardless of the CO2 price. And more importantly, we have the strategic agility to adapt to different scenarios in our decarbonization road map with levers that expand our margins independent of the carbon price. Strong cost discipline and operational excellence are part of Holcim's DNA. Next, in LatAm, we delivered double-digit net sales growth for the full year with recurring EBIT margin above 30%, even after absorbing the integration costs of our newly acquired businesses. Disensa, the largest construction materials retail franchise in the region continues to grow strongly. We opened 460 new stores to take us to total 2,360. We expect the strong performance in LatAm to continue with 1.8 million new homes and the start of the next wave of infrastructure projects to accelerate growth in Mexico as well as significant demand in residential, but also in infrastructure to boost Argentina and Central America. Asia, Middle East and Africa delivered outstanding double-digit increase in recurring EBIT in '25 and really outstanding margin expansion of 220 basis points. We saw strong growth in North Africa, driven by public spending and also very, very good momentum in residential market. For this year, as a whole, we expect the strong demand in North Africa to continue with public and infrastructure projects in Egypt, Morocco and Algeria. We also see Australia as another bright spot where our team has secured important precast contracts for roads and tunnels. With that, I would like to hand it over to Steffen to talk through the financials in more detail. Steffen? Steffen Kindler: Thank you, Miljan, and a warm welcome to you all also from my side. It's a pleasure to be with you today for the full year results. Turning first to the net sales bridge. You can see that organic growth was the main contributor to a 3% rise in local currency as we achieved our 2025 guidance. While there was a contribution from acquisitions, we also divested Nigeria in the fourth quarter, which is categorized as a large transaction. The foreign exchange effect on sales was negative CHF 810 million or 5%. Just a note on our guidance that you may have picked up from the presentation and press release as a technical simplification and a move to the more common terminology of organic growth, we will be guiding on organic growth for 2026. OG for 2026 is expected to be very similar to the LC definition used so far. For the full year, on the next chart, EBIT, on the full year, we delivered 10.3% growth in recurring EBIT in local currency, excluding large M&A. Now you know why we go back to OG, and even 12.2% organic growth, significantly exceeding our 6% to 10% targeted range for the year. Despite foreign exchange headwinds of CHF 200 million or 7%, we managed to grow our absolute EBIT in Swiss francs by 1.4%. Next, let's look at the progression of our recurring EBIT and recurring EBIT margin over the last 4 years. This graph here shows that we have been consistently expanded both our recurring EBIT margin and our recurring EBIT, now well above CHF 2.8 billion. As Michael said earlier, our margin expansion is driven by our high-value strategy as we scale up our sustainable offering while keeping a strong focus on cost discipline and operational excellence. We saw strong recurring EBIT contributions from all the regions, around CHF 1.5 billion in Europe and more than CHF 900 million in each of LatAm and EMEA. Europe delivered strong EBIT growth with margin expansion of 140 basis points. Net sales growth was double digit in Latin America, and we maintained a recurring EBIT margin of above 30%. In Asia, Middle East and Africa, there was double-digit growth in recurring EBIT at 14.1%. The strong performance overall shows the benefits of our regional diversification playing out well. Our deeply embedded performance culture and disciplined financial management ultimately drives the growth of our earnings per share or EPS, which is up 5% in Swiss francs from 2024. This shows that we pay equal attention to operational performance and financial discipline. And as you see here also on the lines below EBIT, obviously. You can see that by all measures of the bottom line, we are producing superior profitable growth. Next, you can see the development of our free cash flow in 2025, which exceeded our target of around CHF 2 billion -- in the last 5 to 6 years, Holcim reliably delivered superior free cash flow with cash conversion rates consistently above 50%. This is driven by strong EBITDA, our focus on working capital, financing costs, other cash relevant items and last but not least, a very disciplined approach to CapEx, prioritizing those projects with the highest returns. On this chart, you see our net debt leverage ratio, which closed 2025 at a comfortable 0.9x. This will provide Holcim with sufficient financial flexibility and the ability to navigate all economic cycles while continuing to invest in profitable growth through CapEx and M&A and to offer attractive shareholder returns. We remain committed to a healthy balance sheet and net leverage below 1.5x over the long term, a reiteration to what we said at the Capital Markets Day. Holcim is investing for growth while delivering steadily increasing ROIC. Our return on invested capital continues to tick up year-on-year, reaching 11.2% in 2025. And following our strong value creation for shareholders in 2025, the Board of Directors has proposed a dividend per share of CHF 1.7 to be proposed to our AGM. This will be paid out of foreign capital contribution reserves of more than CHF 7 billion, which amount to 17% of our market capitalization, and these are not subject to Swiss withholding tax. This represents a payout ratio of 53% and very important, a post-tax dividend yield of 2.4% after tax. This next slide is a bit of a reminder of our growth-focused capital allocation out to the year 2030, which we frequently discuss in smaller group meetings with our investors. The execution of our NextGen Growth 2030 strategy will provide Holcim with a total capital deployment capacity of up to CHF 22 billion until 2030. In order to ignite further growth, we will deploy this capital strategically, focusing on growth as well as shareholder returns. We remain committed to a progressive dividend and returning substantial value to our shareholders. We will return a total of CHF 7 billion until 2030, corresponding to a payout ratio of approximately 50% or higher per year. An additional CHF 4 billion to CHF 6 billion from proceeds of larger divestments or available debt capacity can be used for large strategic M&A or to opportunistically execute share buybacks. We believe that our growth-focused capital allocation will further accelerate profitable growth while delivering attractive returns to shareholders. And with that, I'll close, and I'd like to hand it back over to Miljan. Miljan Gutovic: Thank you, Steffen. So for NextGen Growth 2030, as you have seen, we are delivering superior performance and margin expansion focused on 5 pillars. We are scaling up our sustainable offering powered by our premium brands. We are accelerating initiatives for decarbonization and circular construction, driving profitable growth. A key part of NextGen Growth 2030 is expanding our high-value building solutions. With our impeccable track record of value-accretive M&A, we are focusing on the most attractive markets. And all of this, this is all driven by our deeply embedded performance culture, which we are proud to have at Holcim. Let's look more closely at some of these priorities. Customer demand for our premium brands, ECOPact and ECOPlanet continues to grow. These are being used at scale in large projects like the CityWave in Italy, which was built with ECOPact made from ECOPlanet that is even more sustainable because we use calcine clay and Mohammed Tower in Morocco, which was built with our ECOPlanet low-carbon cement and our insulation form Airium. We're also seeing a strong growth in ECOCycle, our circular technology that is being used to recycle construction and demolition materials and put it back into our products. A recent project completed using ECOPact and ECOCycle was this housing project on the outskirts of Paris in France, which consists of 220 social housing units. This is the first and first in the world, 100% recycled concrete building in which all the components used, cement, concrete, even water are 100% recycled. Overall, this concrete with ECOCycle saved more than 6,000 tons of primary materials. It is a demonstration of what we can achieve by partnering with forward-looking cities to evolve building standards and building norms. We are advancing circular construction to build cities from cities and also to drive profitable growth. In 2025, we made 3 acquisitions, and we also invested organically to grow our circular construction hubs. We are establishing them in all the major metropolitan areas in which we operate to a total of 109. Over the same period, we grew our net sales from circular construction to close to CHF 500 million. And as you can see, we are well on the way to hit CHF 800 million by 2030. Organic investments make up an important part of our growth-focused capital allocation, and Steffen also mentioned this. And in 2025, our capital expenditure amounted to around CHF 400 million. You can see some recent examples on this slide across different geographies. They give you some idea of our priorities, grinding investment, calcined-clay production or expanding our building solutions in Australia. You will see in our press release that we have signed an agreement with Air Liquide to deepen our collaboration on one of our flagship projects, GO4ZERO for carbon capture and storage in Obourg, Belgium. We are in full execution of the first phase of this upgrade, which will make Obourg a really state-of-the-art plant, not only in Holcim World, but globally. And all these growth investments have a very attractive returns and a very attractive paybacks. Next, M&A. We closed 21 value-accretive transactions in 2025, of which 18 were acquisitions and 3 were divestments. We made 9 acquisitions in Building Materials and also 9 acquisitions in Building Solutions. We also have closed divestments of Jordan, Nigeria, and we sold our Karbala plant in Iraq. Just a reminder that we signed in October an agreement to buy Xella, a growth platform in a highly attractive European walling market. It brings us sustainable and energy-efficient solutions powered by the premium brands that are really great fit to Holcim's existing product portfolio. It will also help us to accelerate the expansion of Holcim's high-value building solutions, which is in line with our next-gen growth strategy. This transaction is subject to customary conditions and approvals and is expected to close in H2 this year. In December, we also signed the agreement to acquire a majority stake in Pacasmayo. The company is a leading producer of building materials in Peru, and this transaction will probably close, of course, subject to all the regulatory approvals in H1 this year. Finally, a note on our deeply embedded performance culture. You can see on this slide, statistics, but our results are not down to statistics. Our results are thanks to our people that work at Holcim. We want Holcim to be the best workplace where talent is nurtured, where performance is awarded and where innovation is encouraged. Our commitment to this vision has been reflected in Holcim being recognized as a global top employer by the Top Employers Institute. And through Holcim University, which is our in-house business school, we are providing our people with really best-in-class trainings. With our focus on accountability and also empowerment through Holcim spirit, our more than 45,000 of employees are delivering value across all economical cycles and across all market conditions. And now to the outlook. Well, net sales and recurring EBIT growth fully in line with our NextGen Growth 2030 targets. Net sales, 3% to 5%. And as mentioned by Steffen, we are moving to organic growth. Also EBIT, 8% to 10% organic EBIT growth. We are committing to further increase of recurring EBIT margin. We estimate cash flow to be around CHF 2 billion. And of course, we will continue to invest in circular construction with 20-plus percent volume growth in 2026. Bernd, you can now open it for questions. Bernd Pomrehn: Thank you so much, Miljan. Thank you so much, Steffen. With this, we're starting our Q&A session. The first question is coming in from Martin Husler, who is joining us here in Zurich. Please wait until you get the microphone, please. Martin Huesler: I have 2 questions. Maybe first, coming back to the ETS rumor scheme, and thanks for your elaboration so far. But maybe how much have you already invested, let's say, for example, in CCUS projects, which might stand at risk if CO2 prices came down below EUR 50 over the next couple of years. So just an indication on what's here at stake? And what would it mean if you start to delay CCUS projects for your CapEx for the next couple of years? That's the first question. Miljan Gutovic: Okay. Thank you, Martin, and thank you for your question. So on ETS, the answer is negligible investment so far. I mean, we are -- for instance, in Obourg, we are building a brand-new plant, but we would do that without CCS. This will be the state-of-the-art plant best-in-class when it comes to cost efficiency and also when it comes to the sustainability KPIs. We talk here about a few million across the projects. So investments so far, negligible. If the projects are delayed, and I did discuss on what happens after 2030, I think if there is a delay, we will have more time to find more cost competitive solutions for these projects. I'll give you a perfect example. 3 years ago, most of these carbon capture projects were based on offshore storage, means we take -- capture CO2, we take it somewhere in the sea. Now the momentum, especially in the last year, 1.5 years, has accelerated to move from offshore to onshore. So the cost advantage is enormous. So even if nothing happens on EU ETS, CO2 prices continue to go up, I might delay a project 6 to 12 months in order to move from offshore to onshore storage because cost advantage, as I said, is enormous. So when it comes to the CCUS projects, what we do at Holcim, and this is DNA, it's the discipline regardless, cost discipline on pricing, on cost and cost discipline on M&A and also CapEx projects. Martin Huesler: And then a second question because you faced some integration costs you mentioned for Latin America, for example. Now thinking about the acquisitions that you announced, Pacasmayo, Xella, et cetera, which roughly add 10% to group sales on an annual base. How much as a ballpark number, how much EBIT contribution could that be? I mean, could EBIT also be impacted by integration costs, just 10% on sales? How much is this roughly on EBIT? Miljan Gutovic: I'll start and then maybe Steffen can continue. So these 2 acquisitions in LatAm, they were different than Pacasmayo, let's say. Pacasmayo will run as a stand-alone company. So integration costs, they will -- there are always integration costs. Are we synchronizing ERP system? We will definitely invest in safety -- health and safety because this is the core of what we do, but I would expect negligible impact. And the same applies for Xella. On Xella, I think I would even like to spend more to accelerate this cross-selling between us to invest, for instance, in additional sales force so we can move faster on specification selling. So I would not expect significant impact on these 2 deals and the integration costs. Steffen Kindler: You're completely right, Miljan. Just to give you a feeling the scope in for these large acquisitions, Xella, Pacasmayo and Alkern for this year is going to be in the range of CHF 120 million to CHF 150 million on EBIT level. But the difference to a smaller acquisition -- in a small acquisition, you often need to go in and change a lot of things to bring it up to Holcim standard from safety to IT to accounting. Here, we're acquiring very mature companies. And so the initial cost to bring them to our standards is much, much lower. We can basically use almost everything they have. And then we change the accounting standards to completely communicate with ours. But the cost and the effort we have to do is much lower. Bernd Pomrehn: Next question comes from Lothar Lubinetzki from Octavian. Lothar Lubinetzki: Let me follow up on the CO2 issue. What is more important for your margin progression, price or mix? And with regard to price, what is the current premium you're getting for ECOPact ECOPlanet in Europe and LatAm? Miljan Gutovic: So everything is important. Don't get me wrong. But on the -- what is the -- what's driving our margin expansion is our whole high-value strategy, where pricing is important to offset the cost inflation, but margin expansion is coming from sustainable offering. I'll come to that later. It's coming from our incentives -- initiatives in decarbonization and circular construction. And you saw the slide on Europe, 66 acquisitions in the last 5 years at multiples of 5.3 after synergies. And so all of this is driving margin expansion. Now on sustainable offering. This is something that I'm really proud of the way we handle the whole launch of these products and where we are today. We do have a modest price premium on ECOPact, ECOPlanet, and this could be between low to mid-single digits. Probably in some countries, we are closer to 5%. In some countries, we are between 1% and 2%. But as I said this before, these products, we have a cost upside. Thanks to Holcim's innovation, our production know-how, our formulation know-how on these products, we are reducing cost. We are replacing expensive raw materials with less expensive. For instance, you saw that we are now scaling up calcined clay production even in LatAm. This is exactly the point. By doing this, we will be replacing clinker with calcined clay. Calcined clay has lower CO2, but also has a lower cost. So the story was about Europe. But a few weeks ago, I had a privilege to visit Egypt. I mean, country -- emerging market where the team took me to a project, National Grand Museum of Cairo, quite impressive, the whole development. And what was specified -- architects specified ECOPlanet. They demanded low-carbon cement and concrete solutions on these products. And this is a project in Egypt, not in Zurich or Hamburg or London. So potential for these products is increasing. And we are seeing more and more demand even in the developing markets. Another great example that you find might -- we published this actually 2 quarters, Ecuador. By far, I think it's the biggest residential development complex in the whole Latin America, houses for 180,000 people, all done with ECOPlanet and ECOPact. Lothar Lubinetzki: And in terms of recycling CDM, I think you reached 8 million tons this year. Is there anybody else in the industry who is even getting close to that number? Miljan Gutovic: So just to clarify, this market is big. What we're currently seeing that this market is fragmented. So there are many players. For us, where our advantage is, we are focusing on metropolitan cities, big cities from Zurich to London to Paris, Lyon, where we have a strong Holcim footprint. Buying these companies or building recycling hubs from scratch, we have excellent synergies. That's why we are faster than the others. I'm being modest. Bernd Pomrehn: Thank you, Lothar. One more question from the room. It's Remo Rosenau from Helvetische Bank. Remo Rosenau: What kind of price increases did you already announce in Europe ahead of all these certificate discussions? And when should they take effect? Steffen Kindler: It varies by region, so probably the most important regions. Miljan Gutovic: So we talk about Europe -- Remo, thank you for the question. I know the pricing question always comes at some stage. First of all, very pleased with the pricing dynamic in Europe this year. We had an excellent exit price in December. And I think from what I have seen, and I have spent a lot of time with my dear colleagues at the back on pricing topic, we do have a very healthy momentum. I maybe too early to say, but it depends from market to market. Maybe we are talking about mid-single digits. Remo Rosenau: In percentage points. Miljan Gutovic: Yes. We will stick before or after all of this. Remo Rosenau: Well, that's the question, how much of that will stick because the announcement is one thing and then the reality is the other one. And this is the slow season. So it only comes really -- I mean, the proof of the pudding will be in March, April, right? Miljan Gutovic: Once again, depending from market to market, we are already seeing something -- some contracts have been secured. I am optimistic and positive that we will get there. Remo Rosenau: We stay tuned. Bernd Pomrehn: Thank you, Remo. We are now switching to questions from the webcast. The first one is Julian Radlinger from UBS. Julian Radlinger: So a couple for me. So first of all, the -- so you're guiding to 8% to 10% organic EBIT growth, which is higher than what you guided to last year. And last year, you delivered, I think, 12%. So I'm not going to ask whether or not you think you could do even better than 10%. But if that were to happen, what would the drivers for that be? What's likely to be different in 2026 versus 2025 in your mind in terms of demand, volumes, price or costs? And then secondly, and I'm really sorry to ask this, but I think a lot of investors right now are really nervous about this topic, obviously. In a scenario in which something really draconian were to happen to this whole ETS mechanism. Let's just hypothetically say it actually -- they actually push the whole thing to the [right] or they cap CO2 prices on a very low level. What do you think happens to cement pricing dynamics in Europe or the level of competition? How would you -- what would you -- how would you think about that? Miljan Gutovic: Julian, thank you for your question. I'll go to the second, and maybe you can answer the first one. We already addressed it on the guidance. So first of all, Europe slide is there, Julian, you can see what we have done in the last 5 years. And this is across some really challenging market conditions. We had COVID. We had -- remember in 2022, we had high energy prices going 300%, 500% overnight and so on. Pricing was disciplined in Europe, and that helped us offset all these costs. So I do not perceive any significant impact, on the pricing dynamic will remain positive and healthy. There is more discipline. And Holcim, this is where we differentiate. We will continue with our pillars of our high-value strategy, sustainable offering, decarbonization, circular construction, M&A and so on to continue with margin expansion. So regarding just one on these big projects that I would like -- there are derisking mechanisms already in place in some countries that can help us mitigate the CO2 price volatility. So these projects on carbon capture can go ahead. Steffen Kindler: Look, we simply narrowed the guidance, right, from 6% to 10% to 8% to 10%, which is a sign of our confidence that we're really going to sit again at the upper end of that frame that we gave at the Capital Markets Day. So you should interpret that as a sign of confidence. Last year, we had above 12%. And again, we're aiming for the upper end of this guidance. Now what drives it? Leverage through a bit volume, as Miljan described before, operating leverage. And we're still on the journey to reduce our corporate costs, as you know, and to readapt to the regional footprint also after the spin-off. We have positive price over cost. We have good contribution from our JVs, a bit offset through the Nigeria divestment. So -- and I would also say the margin progress and the EBIT growth progress is probably a bit back-end loaded given the volume recovery pattern. But it's a sign of confidence, I would say, that we narrowed this guidance to the upper end. Miljan Gutovic: Maybe one I mentioned in the presentation, Switzerland. So we are a Swiss company, proud to be a Swiss company. The amount of infrastructure projects we have in Switzerland today is significantly higher than versus 3 years ago. I mentioned Gotthard, okay, but this new one, Axenstrasse connecting Schwyz and Uri. This is a new project that will go on for years and where Holcim has secured the contract to supply. Also, once again, I would like to reiterate, residential sector was hardest hit in the last few years. For the first time, we are seeing bottoming down. Maybe it will not go skyrocketing, but we are seeing positive signs in this market segment where we took the hardest hit. Bernd Pomrehn: The next one on the line is Ben Rada Martin from Goldman Sachs. Benjamin Rada Martin: My first is on the 2026 free cash flow guidance. Your comments around, I guess, expecting CHF 2 billion in '26 versus the CHF 2.15 billion you did in 2025 despite some really strong earnings growth in terms of EBIT. Can you talk through, I guess, what would bring you down towards the CHF 2 billion mark? Is it CapEx, tax, any working capital impacts, just so we can understand some of the key buckets? And then the second would just be on carbon capture. It's worth noting some headlines around potentially a Belgium project moving beyond 2030. Would you be able to touch on how you see the other project time lines within the next few years? And how much you expect to be online before the end of the decade? Miljan Gutovic: Thank you for your question, and thank you for joining us. I'll go with the second question, and then Steffen can address the first on cash flow. So this morning, Air Liquide has made the announcement that we entered into partnership for the second phase of this project, Obourg, carbon capture. So as you can imagine, we have been dealing with the media recently a lot. Nothing to do with us. Phase 1 is progressing well. I had the opportunity to bring our Board members to see how the state-of-the-art project will look like when it's commissioned in H1 next year. Very happy with the development on that front. Once we complete commissioning in H1 next year, we will start working on Phase 2, which is with carbon capture with Air Liquide. Steffen Kindler: Ben, good to talk to you. On the cash flow guidance, look, over the last couple of years, also before the spin-off, Holcim has always delivered an above 50% cash conversion. And we've always had a very conservative cash flow guidance. Now why is that? Because cash flow is a time frame number, but it's also a snapshot number at the end of the year, depending on the fall of certain payments at the end of December or the beginning of January. This is why we give ourselves some flexibility here with this number. But you shouldn't read a message that we're reducing cash flow or that the strength of our cash conversion is weakening at any degree. It's just we give ourselves some flexibility in order not to be pushed into unsustainable measures at the year-end. That's it. Bernd Pomrehn: And the next one on the line is Luis Prieto from Kepler Cheuvreux. Luis Prieto: A couple of them for me. The first one is I would like to come back again for a moment to the European Commission's overhaul of the EU ETS. The significant amount of noise around the subject has taken the CO2 price down, if I'm not mistaken, by almost 25% over the last 6 weeks. Could you provide us with a rough idea of what is the minimum price for the average project in your CCUS pipeline to be economically viable just to understand a bit better. And second one is from a conceptual perspective only, what could be a reasonable assumption for medium-term volume growth in Europe if the German infrastructure, defense investments, residential recovery and data center themes pan out as expected? In other words, if all these things fire on all cylinders? Miljan Gutovic: Thank you for your question. On the volume -- I'll start with the volumes just to shake it up a little bit. On the volumes, we do not comment on the volumes, but I would say that construction activity can increase mid-single digit if all of this happens. On the ETS, well, the price can be even EUR 50, EUR 60 if you have derisking mechanisms in place. For instance, Germany has CFD, which is a carbon contract for difference, where they are helping the companies to offset the CO2 price volatility. So if we have that in place, then these projects can go ahead regardless of the CO2 cost. However, for us to be comfortable has to be EUR 100-plus per tonne. Bernd Pomrehn: The next one on the line is Elodie Rall from JPMorgan. Elodie Rall: So first of all, on LatAm to change a bit from Europe. We've seen margin down 320 bps. I think you mentioned impact from integration of recent acquisitions. What kind of margin direction should we expect there for '26? Do you think we can get that back as soon as this year? Second question is on FX. Sorry, but could you give us your expectations for FX on top line and EBIT? And last question is on your view on capacity consolidation in Europe, if there is any update on this? I mean you were talking previously about further consolidation likely to happen by 2030. So has anything changed in particular with the potential for ETS reform? Miljan Gutovic: Thank you for the question. On the capacity consolidation, we are not seeing any significant changes. I still believe that we might -- even this year, we might see some opportunities. As I said last time, we are interested. However, there are markets where we will not be able to participate. But overall, if there is a possibility, definitely, we would be interested in capacity consolidation. For us, I said this also in the past, there could be a possibility that in the next few years, some of our existing clinker producing plants will be converted to produce something else, for instance, calcined clay. And the teams are working on this, and we already have a few of these projects underway. On LatAm, I think I am expecting margin expansion this year. I will not put the number, but all the signs -- positive signs are in place all the way from Mexico to Argentina. We are seeing a positive strong momentum in some of the countries in Central America. So I am expecting margin expansion in LatAm. Steffen Kindler: FX? Elodie, first of all, we expect headwinds to normalize from FX at around -- number one, first, I have to say, I don't have the crystal ball, okay? This is a disclaimer. And then after that, we expect headwinds to normalize as of the second quarter. The first quarter will still be a bit challenging. But if you have to put my best guess for this year, you have an FX headwind on sales of around 3% and an FX headwind on profit of around 4% to 5% with big disclaimer marks all around this information, okay? Bernd Pomrehn: The next one in the line is Arnaud Lehmann from Bank of America. Arnaud Lehmann: I have 3 questions, if I may. Just a follow-up on Latin America and Mexico, in particular, there's been a bit of unrest. Can you confirm that there wasn't any major disruption to your operations so far? And if you don't mind commenting a bit more on the volume outlook and pricing outlook for Mexico for 2026? That's my first question. My second is on North Africa. I believe the momentum was pretty good in Morocco, Egypt, et cetera. Can you -- do you see a continuation of the positive volumes momentum in '26? And lastly, you end 2025 with a very strong balance sheet. The share price has been a bit more volatile and obviously has come back down a little bit recently. Do you see opportunities for buyback? Miljan Gutovic: I'll go on LatAm, Mexico and North Africa, and you address share buyback. Mexico, we are monitoring situation. There have been unrest in 20 out of 32 states in Mexico. Today, we still have some tension in 4 states, but Holcim operations have not been affected. And in -- other than these 4 states, most of the states are back to normal. On the whole Mexico volumes and trends, so as I said, last year, probably we were expecting these big infrastructure projects to start earlier, they started late in Q3 and they continued in Q4. So I expect good momentum on infrastructure projects this year. And I already mentioned, it's on the slide that the first wave of social housing projects, 180,000 homes out of 1.8 million has started. So I'm optimistic about Mexico. On the North Africa, really, really strong momentum in '25. I am very happy what I'm seeing this year, what we have in the pipeline. You mentioned Morocco and Egypt. I would like to add Algeria. These countries -- these 3 countries' margins are now even higher than what we have in Latin America. Momentum is strong. Probably, we are expecting even better year than '25 in these markets. Steffen Kindler: Share buyback. Maybe I'll take a little step back to answer your question. So we announced the deals of Xella and Pacasmayo, which we will close in 2026. So the cash out will be in this year. We announced the dividend. And then there are some smaller portions that we do. We do bolt-ons again and so on and so on. So we will end up with a debt leverage of below 1.5 again, as we announced at our Capital Markets Day, we're going to move a bit closer to that number in 2026. Now also, as we've shown on our chart before, capital allocation until the year 2030, we have a clear priority of the dividend, the M&A, the CapEx, and we always said that share buyback is something we do with -- in exceptional opportunistic cases with excess cash. But if you look at what I said before, we still have so many opportunities to do M&A on top also of Xella and Pacasmayo. There are still a lot of interesting opportunities out there for us in 2026 that you might hear as we go through the year. So that we -- for this year, we don't announce a share buyback. But as we also said in our capital allocation in a year where we don't have so many opportunities to drive very good returns with M&A, then we might also revert to a share buyback as a means to deploy our cash. Bernd Pomrehn: The next one on the line is Ephrem Ravi from Citi. Ephrem Ravi: Again, only 2 questions left. Firstly, the Asia, Middle East and Africa, obviously seeing some of the strongest EBIT growth in local currency of all your regions. But it feels to me from the commentary that's almost entirely North Africa and maybe a little bit of Australia. So is it possible to unpack that region a little bit more in terms of what proportion of the growth in EBIT is coming from Morocco, Algeria and Egypt and maybe even Australia compared to Bangladesh, Philippines, et cetera, which is probably breakeven and obviously, Huaxin, we can look from public figures. Second question on the -- back to carbon, I'm sorry for that. Is there any opportunity for you with lower carbon prices, i.e., can you sort of sell some credits before prices come down in the future if the rate of allowances given is going to be higher than expected in the future? And secondly, are you looking at hedging mechanisms on carbon? Because obviously, you could hedge currency and energy, but I haven't heard much about hedging carbon cost in the future because I suppose it was all seen as a one-way trade-off. But now that it's more volatile and range bound, is that something that you would be considering? Miljan Gutovic: I'll tackle EMEA and you tackle the second one. Ephrem, thank you for your question. Yes, EMEA outstanding margin expansion, very good growth and most of it is coming from North Africa, Australia and GCC. We didn't mention it's a small position, but UAE is booming. Our position in Philippines, Bangladesh, it's relatively small. Philippines, if I can say one market where there are really challenging market conditions, that's Philippines and -- but relatively small position in the grand scheme, so it's not impacting. As I said, most of the margin, most of the contribution comes from North Africa, GCC and Australia. Having said that, Australia in H1 last year was a little bit softer, but we have seen a very good momentum in starting Q3 and continuing in Q4. Steffen Kindler: Carbon, Ephrem, we do not usually comment on that of what positions we take or don't take. It's highly sensitive. But we can be opportunistic in certain cases. We can look out into the future. We can make estimations that in certain years, the allowances we have will not cover our needs and then we might take positions at low markets. But be aware, what is very important to understand, we always view this as an industrial company. We never view this from a point of view of a trader who is trying to make a benefit on the carbon trades. We deal with the CO2 market like a raw material, okay, and not as a tool to make an additional gain with hedge positions. I think this is very important to understand. Miljan Gutovic: So my view is even simpler. If I have CHF 1 million to invest, would I go and buy CO2 credits or would I invest in the circular hub or decarbonization initiative? Definitely. I would invest in a project where I can reduce the CO2. So we are -- as you said, we are not in the trading business. Bernd Pomrehn: Doing something good for shareholders and the planet. We've got a couple of written questions. The first one is from Pujarini Ghosh from Bernstein. She's asking, have you seen any change to the demand or willingness to pay a slight premium for your decarbonized products because of the ETS noise? Miljan Gutovic: The answer is no and not only in Europe, but outside Europe as well. Bernd Pomrehn: Very simple. And the second question from Puja is, could you split the LatAm margin decline between what is driven by acquisition integration costs and how much could be operating leverage and underlying business impact? Steffen Kindler: Look, a couple of drivers here. Number one, we said that there were some onboarding costs for acquisitions. There was a big mix effect also, some countries that are very high profitability were a bit softer. Then we went through a bit of a slump in volumes also in 2025 in the second quarter, especially. And naturally, it takes a few months until you adapt your fixed cost structures. And then lastly, we did a lot of maintenance, as I said, in the third quarter. So all of these things, as Miljan said before, we were quite positive that this is behind us. And for the full year 2026, we plan a very nice margin progression back to the levels of where we've been before. We're not guiding margin on one region specifically, but you can expect that the margin will come back up because there's nothing fundamentally -- there's nothing fundamentally that drove this where we are today. It was a couple of instances. Bernd Pomrehn: Then we've got 3 questions from Paul Rogers from Exane BNP Paribas. The first one, are you now happy with your portfolio in Latin America? Or are there still either new countries to enter or bigger gaps to fill? Miljan Gutovic: I would simply -- last one was Peru. Peru now with Pacasmayo, we are gaining market leadership, and that would be it. LatAm story will be on bolt-ons, especially on Building Solutions side and the full, full acceleration in increasing number of sales points, number of Disensa stores. Bernd Pomrehn: Second question from Paul is how much debt capacity is left for larger M&A this year after Xella and Pacasmayo? Steffen Kindler: Yes. Paul, same question I gave to Arnaud before. We're going to close the deals on Xella. We're going to close the deal on Pacasmayo. We're going to pay a dividend. That leaves us at the end of the year roughly below 1.5. This is a long-term commitment. Now what we can do in order to maintain our credit rating, we can go up to -- up to 2 for a certain period of time. So there is a lot of debt capacity still left for us if we find it opportunistic to do other M&A. So financing will not hold us back. Bernd Pomrehn: And let me ask a third question. I think more or less we tackled this one. It's again update on Obourg modernization and CCS. Are there other big capital projects proceeding to plan? Miljan Gutovic: All in all, I mentioned already Phase 1 commissioned in H1, really state-of-the-art plant. And I hope that once we are up and running, I will be able to send invitation for you to come and see the plant with the latest technology advances in cement industry. Bernd Pomrehn: Perfect. The next set of questions came also in by e-mail from Ebrahim Homani from CIC. Latin America, we already also tackled that one, I think, more or less. Is it possible again to reach the 2024 level in Latin America in the future? Yes. Very simple. Then the second question, weather conditions are currently bad in Europe since the beginning of the year. Not today in Zurich, but what's the impact on the expected organic growth for this year? Miljan Gutovic: Look, Q1 is the smallest quarter in the year. January and February are the smallest months in the year. I say I cannot control the weather. But for me, what's important in January and February, Remo, this is what we discuss pricing momentum. So in the meetings these days, when it comes to activity, we only talk about pricing momentum. So even January was cold, February was wet, but this is only start of the year. Bernd Pomrehn: Perfect. The next question came in from Harry Goad from Berenberg. Do you expect to see positive organic volume growth in France and Germany this year? Miljan Gutovic: To be highly conservative, I would say flattish. I would not commit to growth. Bernd Pomrehn: I think we demonstrated last year that we can achieve growing EBIT even in weak volume environments. Miljan Gutovic: Well, the slide on Europe is suggesting activity was going down and the margin expansion was going up. Bernd Pomrehn: Somewhat related question from Stefano Donati from BlackRock. In your guidance, what volume assumptions are you using for Europe? And how much of the German infrastructure stimulus is in them? Steffen Kindler: [indiscernible] flat probably on 2 very large countries. And then up in Eastern Europe, I would say we have a low to mid-single-digit volume guidance in Europe positively. Miljan Gutovic: I would -- on infrastructure in Germany, I would not expect anything in H1. We might see some positive signs in Q3, but I would not bet on anything big from German infrastructure spend. Bernd Pomrehn: Perfect. Then we are switching again to live questions from the webcast. The next one in the line is Harry Dow from Rothschild. Harry? Harry Dow: Just I think 2 questions left for me. I think, firstly, on the cost picture for 2026. I maybe you could take us through some of the assumptions around the raw materials, energy, employee sort of wage inflation sort of thinking about maybe in Europe? And then also just back on Northern Africa, I just wondering how much sort of spare capacity there is left in some of those markets for further volume growth? Or is it more sort of around pricing gains beyond sort of this year? Miljan Gutovic: What was the second question? Can you please repeat the second question? I didn't hear it well. Harry Dow: Yes. It was just on North Africa, again, coming back on that. I just wondered how much spare capacity there was in that market for more sort of volume growth from here in terms of... Miljan Gutovic: I'll go to North Africa, you tackled the cost topic. So North Africa, there is an excess capacity in all of these countries, especially in Algeria, but these countries are also export hubs. I mean, Algeria, currently, we are producing products to export to Europe, West Africa and also North America. Similar situation is with Egypt. There is a capacity if local demand is increasing, then exports will start reducing. Steffen Kindler: On cost, look, I would say energy, low single-digit impact, but we're always guiding carefully on energy. And then what nonvolume-related costs we're definitely going to go down this year. I said this before. We are still working on the fine-tuning of organization, which we do all the time. It's an ongoing topic at Holcim. We never have a big restructuring program or give it any name, but we're always working down on our structure. So this will continue here. We see positive impacts. Distribution, hard to say, maybe a bit up by also low to mid-single digit. And then most importantly, I think what we said before and for you to take into account, there will be positive price over cost. So this is for us, it's the main topic. There will be positive price over cost, and there will be margin progress. Bernd Pomrehn: Perfect. The next one on the line is Isaac Ocio from On Field Investment Research. Isaac Ocio: So first one, I have 2. The first one would be, so in Asia, what additional EBITDA could you expect from Huaxin in China after they acquired Nigeria? And second question, so in Europe and Mexico, we're seeing mid- to high single-digit price increases successfully sticking. CEMEX announced 10% hoping to get mid-single digit in Mexico, and it looks like we could see some better volumes on top of that. So given the relatively limited cost inflation on the energy side, how much potential do you see for organic EBIT growth to really exceed the high end of your guide as the price costs expand? Miljan Gutovic: Thank you for the question. Look, we probably go a little granular if we want to now break the Nigeria impact into Huaxin. I don't know, maybe 10% more conservatively -- 10% more contribution from Huaxin. And then Mexico, how much potential for organic growth? Well, double digit. Bernd Pomrehn: And the last question today in the line is an add-on question from Julian Radlinger from UBS. Julian Radlinger: I just wanted to ask, so judging from the slides, it looks like the ECOPlant mix has kept growing about 1% per half year through '25, but ECOPact has stayed at 31% of ready-mix sales since last summer. And obviously, as you explained, the increasing mix of these products has been a consistent price and margin driver for you guys. So how -- I know you have targets for that for 2030, but how should we think about that going forward? Is that -- are both of those products going to keep increasing? Miljan Gutovic: Julian, very simply, it's not a linear relationship. For instance, I believe ECOPlanet will accelerate now because we are seeing a huge momentum in countries like Egypt, Morocco, all the way to Mexico and Argentina. So probably the ECOPlanet will start increasing over proportionally versus ECOPact. And ECOPact, this is more in mature market. We are seeing a growing demand across all markets, but at a slower rate. Anyhow, we do have a commitment by 2030. We are sticking to this commitment. I would say that probably ECOPlanet will be above that. Bernd Pomrehn: Perfect. Thank you, Julian. So with this, we are finished. Thank you so much for joining us today. If there are any further questions, obviously, the Investor Relations team is more than happy to support you. Everyone who is joining us in Zurich today, we are happy to invite you for a small lunch and the analysts which were not able to join us today and investors, we hope to see you soon in the coming weeks when we are going on roadshow. And with this, I hand it back to Miljan for some closing remarks. Miljan Gutovic: Thank you. Thank you all for joining us. Really a pleasure this morning to present these outstanding results. I can assure you that we are at the full speed. Our performance culture delivered and will continue to deliver outstanding results. This performance culture, if I can use one word, that word is discipline. We will continue to exercise strong cost discipline, pricing discipline, discipline when it comes to M&A, discipline when it comes to CapEx projects. And I'm looking for another successful year in 2026. One big thank you to all Holcim employees, 45,000 of them for your outstanding efforts.
Chek Tan: Good afternoon, ladies and gentlemen, and welcome to CIMB Group's financial results briefing for the fourth quarter of 2025. Our host is CIMB Group CEO, Novan Amirudin; and Group CFO, Khairul Rifaie. My name is Steven from the CIMB IR team. You should have received the analyst presentation and financial statements by now from the Investor Relations e-mail. Otherwise, you may find the documents in the IR section of our website at www.cimb.com. Before we begin, please be informed that this briefing is being recorded. [Operator Instructions] At this juncture, I would like to hand over the briefing to Novan and Khairul. Novan, over to you. Muhammad Amirudin: Thank you very much, Steven. Thank you very much all for joining our presentation this afternoon. So it's been a very resilient year despite all the challenges that we saw on the FX side, given the ringgit appreciated vis-a-vis other ASEAN currencies, the persistent rate cuts that we saw in all markets that we operate as well as the various macroeconomic headwinds. We completed 2025, which is the first year of our Forward 30 execution by delivering record net profit of MYR 7.9 billion and which translated to an 11.3% ROE. I will now go into the drivers behind this record performance. First and foremost, our noninterest income, NII, if you focus on the table on the left-hand side, the NII has 2 components. One is our NIMs and secondly is our asset growth. The first point, NII was flat despite all the persistent rate cuts, and we attribute this to our successful cash strategy, which focused on reducing our cost of funds, which then cushioned our NIM compression to 8 basis points year-on-year. Now alongside that, assets then grew for us on a constant currency basis by 6.1%. So these 2 factors basically assisted in our flat NIM despite the persistent rate cuts. NOII saw a year of growth. Year-on-year, it grew 3.1%. But the main call out here is our client franchise business derived from NOII, which grew 4.8% faster than the growth in NOII. This is a testament to our successful cross-sell strategy, which focus on client franchise business as opposed to just trading income. Moving on to our operating expenses. Thanks to our capability strategy, this led to disciplined cost control and our cost-to-income ratio at 47.3%. As you can see, OpEx grew 2% year-on-year with a flat personnel costs, but we continued investments in technology. We invested MYR 1.7 billion in 2025, which is about 7.8% of our income, which is within the guidance of 8% to 9% that I provided earlier in the year. With regards to asset quality, this is the best ever GIL that CIMB Group has achieved. So our GIL improved from 2.1% last year to 1.7%. Our credit cost remained stable at about 30 basis points, and our coverage ratio remained above 100%, closing at 103.2%. All these contributed to our net profit growth on a constant currency basis of about 5.3%. So we grew from MYR 7.7 billion to MYR 7.9 billion. With regards to capital, we've optimized CET1 to 14.3%. And as a result of the record financial performance, we then decided to share our record performance with our shareholders also via a record dividend payout. We paid out MYR 0.471. And if you recall the last quarter, we were the first Malaysian company to announce a MYR 2 billion capital return program. This MYR 0.471 include the first tranche of that. So with all those drivers coming together, that gave us a ROE of 11.3%, which is 10 basis points higher than the 11.2% we achieved last year. So if we look at 2025 in review, based on all the guidance that we provided to you at the start of the year, we have largely met all our guidance. Cost-to-income ratio was very close. We guided less than 47%. We achieved 47.3% from the 2% increase in OpEx. A recap of our Forward30 strategy, which is our 6-year plan until 2030. This anchors on our purpose of advancing customers and society. And how are we executing Forward30 is what I'd like to call the 4 Cs. The first C is capital, and this is important for us to always look at how to reallocate capital to grow. The second C is cash, about building a very strong deposit franchise business to optimize our cost of funds. Our third C is cross-sell, and this is to increase returns and increase ROE. And our fourth C is capabilities and capabilities is all about becoming simpler, better, faster to the group. Now how do we perform on each of the 4 Cs throughout the year, which led to our strong financial performance. The first C on capital, if you look at the table on the top left-hand side, given the challenges that we saw in Indonesia and Thailand last year, we then reallocated more capital towards Malaysia, which was a lot more stable and saw a lot more tailwinds relative to the other ASEAN markets. So RWA allocation to Malaysia increased to 56% and therefore, profit before tax also increased to 61% with a stronger ROE of 12.1% for Malaysia. Correspondingly, you would see that the RWA allocation in Indonesia and Thailand reduced, which then also led to a reduction in the PBT contribution to the overall group. Singapore remained a very strong market for us, 18% ROE in 2025, and we maintained our RWA allocation there with a slightly higher contribution in profit before tax. I've always mentioned Thailand is a market that we are restructuring. That work is ongoing. It's seeing a lot of progress, and we will be updating you about our Thailand progress in the not-too-distant future. Now sharing our strong performance with our key stakeholders. As I mentioned earlier, this is the year where we've paid the highest dividend amount of MYR 0.471. And you can see on the table on the bottom left-hand side how that has grown over time. We announced our MYR 2 billion capital return program until the end of 2027. All permanent workforce in Malaysia are earning above the Malaysian living wage. And we committed earlier this year a MYR 200 million investment in the communities that we serve until 2030. This is 13% higher than our commitment in the previous cycle. The second C on cash. As a result of the focus on deposits and the focus on building a strong deposit franchise, we saw a reduction in our cost of funds by 21 basis points year-on-year, coming from a 5.4% increase in deposits on a constant currency basis, which improved our loan-to-deposit ratio. This helped cushion the persistent rate cuts that we saw in all markets. So NIM compressed by about 8 basis points year-on-year. But what is encouraging is what we saw in the fourth quarter last year, which we are continuing to see in January this year, where the NIM compression is starting to bottom out, as you can see on the chart on the right-hand side. We always believe that to build a strong cash franchise, it is a byproduct of having very good cash management services and offerings to our customers. In the third quarter of 2025, we launched the OCTO Biz app for non-retail businesses. This is the OCTO equivalent, but for businesses. With the launch of OCTO Biz, all our front-end customer-facing applications, whether it is Touch n' Go, OCTO or Octo Biz are now all next-generation ready. We also work with the government and we've invested in the BUDI 95 program towards the third quarter of last year. We were involved from the front-end side via Touch n' Go all the way to the back-end side, where we invested in a system that tracks the fuel subsidies that's given to each Malaysian, and we also manage the cash management side from the government to the petrol companies. In December last year, we also announced our blockchain [indiscernible]. We have committed that our next CIMB bond offering will be in tokenized format. We've been admitted into the Bank Negara Digital Asset Innovation Hub with regards to blockchain -- just a few days ago, we announced our partnership with one of our key partners [indiscernible] Financial with regards to participating in their digital platform for cash management and treasury solutions. Our third C, cross-sell. This is something that you saw the growth in the client franchise outgrowing our growth in NOII last year. We remain as the #1 investment banking house, whether on the bond side as well as investment banking as a whole across Malaysia, Indonesia, Singapore and Thailand with respect to deal volume advice to our clients. Our fees and commission grew 3.2% year-on-year. Our treasury client sales, which is the business that we generate from our customers on the treasury side grew 7.2% year-on-year. Wealth grew 9.2% on the back of a 3% increase in our wealth customers. Our fourth C, which is capabilities, there is a relentless focus in CIMB Group to become simpler, better and faster. This is contributing to what you are seeing in the table at the bottom, where operating expenses have remained relatively flat with a 2% growth coming from a flat personnel costs over income, but still continued investments in technology, which was within our guidance. There is -- and then we are focusing on our -- getting simpler, better, faster by setting up the SBF Lab within CIMB Group. This is where we encourage all businesses and enablers to come up with processes to improve your processes further. If something used to take 12 steps, why not 6 is something that used to have 6 [indiscernible], why not 2. Last year, we saw 30 over projects coming up from a bottom-up basis from the relevant businesses to our SBF Lab to make things simpler, better and faster. We also invested MYR 100 million in upskilling our people when it comes to AI last year, and there's an increasing usage of AI throughout our organization, whether is it coming from transaction monitoring, whether it's coming from client onboarding and more recently into our front-end customers, providing them with the tools and data to serve our customers better. So with that, I'll now hand it over to Khairul to go through his observations. Khairul, over to you. Khairulanwar Bin Rifaie: Thank you, Novan, and good afternoon, everyone. So I'll go straight into the numbers with first Slide. Now you have gone through this, but I'll provide a bit more color on these numbers on Slide 10. Firstly, if you look at our underlying performance, that has been robust. We had a seasonally weaker 4Q 2025, typically in the fourth quarter. As you can see on a constant currency basis, if you compare this quarter to last year fourth quarter, on a constant currency basis, our total income grew by 3.8% with our net profit growing at 8.3%. Similarly, the underlying robust performance was recorded on a year-on-year basis. If you look at total income, that grew by 4.2% with net profit growing at 5.2%. As Novan mentioned, our NIMs are bottoming out and is providing a lot of stability. The year-on-year contraction of 8 basis points is well within our guidance of contraction. But you look at the Q-on-Q performance that's underpinned by Malaysia NIMs expanding by 4 basis points Q-on-Q after the contraction that we had during the third quarter of 5 basis points given during that period of third quarter of the policy rate cut. On our expenses, you can see what -- not mentioned in terms of it being well contained, growing only at 2% year-on-year. But if you look at it from a historical perspective as well, that has only grown by 3.1% on a 4-year CAGR basis. So that cost control has been ongoing and will continue going forward. On the next slide, if I break it down further to some of the business segments on PBT. So just very briefly before we go into the business segment P&L later on, on consumer banking, the year-on-year performance was slightly down flattish, but underlying that, if you look at NOI, that grew well at 14%, but this was offset by the prior year where we had a slightly higher overlay write-back in 2024. On a Q-on-Q basis, that's down because in the third quarter, we had some lumpy NPL sale in Malaysia. On wholesale banking, we had a very strong year, especially on T&M, driving that year-on-year growth. In addition to that, we had some higher write-back coming through in Malaysia. Q-on-Q, there was a very exceptional third quarter performance on trading. So normalization of that impacted the PBT on a Q-on-Q basis. In addition to that, if you recall, we had quite a sizable recovery coming through in Malaysia on the oil and gas sector in the third quarter. We did have a similar write-back in the fourth quarter in Indonesia, but that was smaller compared to the Malaysia write-back in the third quarter. On Commercial Banking, we did some preemptive macro overlays. So that impacted the year-on-year performance in addition to some NIM compression coming through. Q-on-Q, that was relatively flat with strong NOI being offset by higher costs. CDA and group funding are slightly lower on a year-on-year basis. This is coming from higher OpEx and also slightly higher provisioning from Philippines. But within that, Touch n' Go Digital has recorded a strong profitable trajectory coming from a small base. Q-on-Q OpEx accruals that we recorded in the third quarter and the absence of that or the normalization of that in the fourth quarter has driven the PBT growth. Moving on to the country performance. If you look at on Slide 12, a very good strong year-on-year profit growth in Malaysia. That's driven by NII growth with stable NIMs year-on-year with asset growth coming through. Q-on-Q, it is slightly down, a normalization of the trading and FX. And also we had the lumpy NPL sales coming through in Malaysia in the third quarter, which was not repeated in the fourth quarter. Singapore, top line was driving that good growth on PBT with the top line growing at 6.9%, both on NOI and also NII. In the fourth quarter, however, we did have a low -- so in the fourth quarter, we had lower provisions driving the strong growth in terms of PBT. Indonesia, overall, it was challenging from a macro perspective. So that impacted our NIMs in the first half, which then, of course, impacted our year-on-year growth on PBT. On the fourth quarter, we had lower NOI coming from the normalization of the trading and FX from a very exceptional third quarter in addition to the absence of an NPL sale, which we recorded during the third quarter. Thailand, somewhat similar to Indonesia, where the backdrop was challenging. So growth was weak and also we had some NIM pressure from the persistent rate cut in Thailand. So that impacted our PBT performance on a year-on-year basis. Q-on-Q, we also recorded a lower NOI compared to the third quarter. On Slide 13, a breakdown of our P&L firstly, NII. So overall, we had a very good quarterly NII momentum sequentially. You can see on a constant currency basis, we grew well, close to 4% Q-on-Q, and that's driven by that NIM expansion, in particular, coming through from Malaysia. So 2 drivers coming through from Malaysia on that NIM expansion. Number one, despite us -- the first point, despite us having that typical seasonal pressure on which both on retail and also wholesale. This is more than offset by our deposit rates coming off -- coming from the policy rate cut from the third quarter. So the full impact of that positive impact in the fourth quarter helped us drive that NIM expansion Q-on-Q. Similarly, in Thailand and Singapore as well, that NIM expansion is really about how we managed to optimize our lower cost of funds. Indonesia, on the other hand, recorded a NIM contraction. We had some lumpy income coming through during the third quarter. But in addition to that, we had a 75 basis points policy rate cut in the third quarter. So the full impact of that -- the full negative impact of that coming through in the fourth quarter. On a year-on-year basis, on constant currency, NII grew by 3.2%. If you look at the NIM contraction, it's really driven mainly by 2 countries, which is Indonesia and also Thailand. Indonesia contracted NIMs by 12 basis points. And this is given the very tight liquidity and competitive environment in the first half of the year. That slowly improved during the second half. The liquidity environment in the fourth quarter was good. So we did see that liquidity improvement coming through. But however, because of the tough first half, that drove the NIM contraction and also all the policy rate cuts that we had in Indonesia. And that is similar as well to Thailand. Also in Singapore, where we had a NIM contraction of 18 basis points, where SORA moved by about 160, 170 basis points down throughout the year. Malaysia is positive. flat NIM is positive given where the rate cut came through in July. This is through the active balance sheet and liability management on both rate and also balances. We managed to reduce our expensive wholesale funding by about MYR 5 billion compared to the start of the year. Moving on to NII on Slide 14. 4Q is really a normalization of what was a really exceptional third quarter. You can see the top left graph where there is a normalization on -- firstly, on fee income and others. We had a couple of NPL sales coming through in Malaysia and also in the third quarter, which wasn't repeated. That amounted to about MYR 170 million in the third quarter, which was not repeated in the fourth quarter. Trading was also very strong in the third quarter. But you can see compared to -- on the right-hand side, the client franchise drop is not as significant as the drop in trading, which dropped by 48% Q-on-Q. On a year-on-year basis, both trading and FX and also fee and other income grew more or less at the same level at the fees side, Singapore bank assurance really driving the fees [indiscernible] on a year-on-year basis was relatively flat at about MYR 170 million, so that was relatively flattish. Trading and FX that what -- not mentioned is really driven by the client franchise business growing client franchise sales are growing at 7.2% year-on-year. On Slide 15, operating expenses, I think I said earlier, this remains well under control. The quarterly movement is mainly due to the seasonal impact, firstly, on personnel costs. If you recall, we accrued a larger bonus during the third quarter because of the strong top line performance during the third quarter. So the movement is really a normalization of that. Marketing and admin in general, this is a typical fourth quarter seasonal catch-up that we do as the activities ramp up during the fourth quarter. Similarly, in terms of technology, we did some accelerated depreciation of charges given the investments that we are making in technology. On the overall year-on-year numbers, like what Novan highlighted on P-cost and technology costs on establishment, we did some tactical cost savings during the start of the year given the view that we were having some headwinds on the macro backdrop, we did some tactical cost savings. Marketing did increase year-on-year given our focus on improving our group spending and also some of the partnership costs in Philippines are picking up. Admin in general, if you exclude some of the one-off that happened in 2024 is really on an underlying basis, that was a relatively low growth compared to the reported number that you see at 15.2%. Asset quality on Slide 16, this remains strong. So on the total provisions on a Q-on-Q basis, that is slightly lower. Recoveries is lower given the bigger recovery that we had in the third quarter on the Malaysia [indiscernible]. In the fourth quarter, there was quite a significant one coming through in Indonesia, but it was lower than third quarter. On the non-retail side, that came down slightly. And that is really driven by the underlying improving on the non-retail side, but we also had some Singapore overlay write-back on a portfolio basis on the non-retail segment. On the retail segment, there is some underlying improvement in Indonesia and Malaysia on the ECL number itself. We also had some MEF refresh coming through in Malaysia, which then resulted in the number coming down lower. On a year-on-year basis, the higher recoveries year-on-year is mainly driven by Malaysia and Indonesia. On the nonretail side, it's really driven -- the slight increase is really driven. If you recall, we did some overlays related to macro uncertainties in the second quarter and also in the third quarter. So that drove the number a bit higher on a year-on-year basis. If you exclude that additional overlay that we did on the non-retail side, on an underlying basis, that is actually relatively stable. On the retail side, that has gone up slightly. Overlays again impacting some of the variances. Last year, we had a bigger -- last year meaning 2024, we had a bigger write-back in terms of overlay on the retail side that has come off lower and that drove the number higher. So if you exclude those noises on overlay, on an underlying basis, Malaysia and Indonesia year-on-year is slightly lower, also partly driving that slightly lower number is the model deployment. If you recall, I mentioned in Indonesia and Malaysia, we deployed some models and that resulted in some of the ECL coming in a bit lower on a year-on-year basis. So overall, you can see the numbers in terms of the ratios are all trajecting well throughout the year. We are maintaining our loan loss coverage well above that 100% level. Slide 17 is a new slide. This is to show our breakdown on our total asset growth as a total -- our business franchise. And this is where we want to also break down the drivers of growth on the debt and securities level. So there has been -- this is a better reflection of our overall business and not just showing our loan segment. So here, you can see on a constant currency basis that what Novan mentioned, our asset is growing at 6.1% and our debt securities growing at 9.2%, driven by Singapore and also Malaysia. On loans, if you look at it on a constant currency basis, growing at 3.1%. What we mentioned during the third quarter where we see momentum picking up, you can really see that coming through in the fourth quarter in wholesale banking. The momentum picked up as well and strongly. Within that number of 2.9%, Malaysia wholesale on a Q-on-Q basis grew by 5.8% Q-on-Q. Consumer Banking on a Q-on-Q basis continued its growth trajectory overall recording at 2.2% year-on-year growth, Malaysia being slightly higher than that 2.2%. Commercial Banking on a year-on-year basis, relatively flattish. But within that, Singapore is growing at 14% year-on-year on a local currency basis. So if you look at it from a perspective of country, Malaysia growing at 3.6% with consumer growing higher at 3.7%. Indonesia, the main driver of that growth is corporate banking and also the auto segment. In Singapore, consumer and commercial are both growing at 14% year-on-year. Thailand is actually negative across all segments. On deposit, on Slide 19, the CASA ratio is relatively stable. If you look at it from a year-on-year perspective, we did do some optimization on the campaign rates in Thailand and Singapore during the quarter, and that drove the CASA number down lower on a Q-on-Q basis. But on the other hand, you saw earlier the NIMs in Thailand and also Singapore expanded. But the second point here, you can see in terms of the CASA ratio, despite that coming off for Singapore and Thailand, the CASA ratio has remained relatively stable on a Q-on-Q basis. Another driver of the CASA coming down is on the wholesale banking due to some year-end seasonality and some of the [indiscernible] CASA on the wholesale side. Dividend payouts on Slide 20, Novan has gone through this. Just to highlight one more point in terms of the dividend yield, that's at 5.7%. Slide 21, our capital ratios on CET1 has remained fairly stable at above the 40% mid level, 40% of CET ratio level. Our liquidity ratios on the right-hand side remains very refresh. On the segment PBT on Slide 22, Consumer Banking. So you can see here on a line-by-line basis that contraction is really coming through on the operating income because of that lumpy sale on NPLs that we recorded during the third quarter. We did, however, have some offset to that with lower provisions given the MEF refresh that we did for Malaysia. On a year-on-year basis, on the operating income on the NOII side, this is actually driving a good growth of 14%, where there's the offset is actually on the NII side, which was weaker on a year-on-year basis. Provisions was higher that I mentioned because we had a bigger overlay write-back in 2024. If you exclude that, on an underlying basis, provisions actually fell in Indonesia and also Malaysia. Slide 23. Q-on-Q, Commercial banking is relatively flattish. We did record a good NOII growth during the quarter of about 9% for the business on a year-on-year basis, it is impacted by our conservative proactive provisioning in terms of the macro overlays. So it is higher on a year-on-year basis, but the business also recorded some NIM contraction. If you look at the loan side, Malaysia driving that growth higher, but Malaysia is growing by 3.4%. So the reported number is impacted by the currency translation. If you look at CASA, it's also growing very well for Malaysia and Singapore, driving that total deposit growth of 2% with Malaysia CASA growing close to 7% and Singapore CASA growing close to 15%. On Slide 24, wholesale banking normalization of an exceptional third quarter in terms of our trading and FX treasury end markets. You can see that being reflected with the lower operating income. In addition to that, there was a higher write-back coming through from Malaysia in the third quarter. So a smaller write-back coming through in Indonesia in the fourth quarter impacted the provisions being higher as well. Year-on-year, very good strong performance on PBT, and this is driven by some of the provisions being lower in Indonesia and also Malaysia. Slide 25, digital assets and group funding. On a Q-on-Q basis, the growth is really coming through from a normalization of OpEx where we accrued some of those bonuses -- higher bonuses in the third quarter. On a year-on-year basis, slightly lower because of the higher OpEx and also higher provision from Philippines. If you look at Touch n' Go, that is growing very well and on a very good profitable trajectory. If you look at some of the indicators, the growth of number of registered users is very strong at 11% now ending the year at 32.3 million. If you compare that to the third quarter, the growth is also strong, and that has remained the trajectory for many years. So in the third quarter, that number of users was 31.4 million. In Philippines, in terms of customers that grew strongly, close to 20%. However, on the loan side, we are bringing it down slightly with a slight negative growth of 1.3% year-on-year as we recalibrate the strategy [indiscernible] Forward30. Lastly, on Islamic on Slide 26, it is impacted during the quarter performance on the normalization of the NOI. So that is slightly lower. On a year-on-year basis, a very good growth driven by the asset growth and stable NIMs. Provisions as well was lower. So you can see in terms of the financing growth, it continues to outpace the conventional growth and growing at 6.4% and the Islamic deposits also tracking similarly on the financing side. So that's the end of the financials. Thank you, and I pass the presentation back to Novan for the closing. Muhammad Amirudin: Okay. Thank you, Khairul. So how do we see 2026? I think FX will continue to be a headwind. Malaysia ringgit vis-a-vis all the other asset currencies, we feel that will be a headwind for us. However, we are not allowing that noise to distract us, so the team continues to be extremely focused on doing what we do best and to execute the 4 Cs. And therefore, our target ROE for 2026 will be in the 11% to 11.5% range, and we are on track to achieve our 12% to 13% ROE in 2027 which we guided earlier to be our midterm checkpoint for Forward30. So what is driving the 11% to 11.5% ROE guidance? We are looking at an asset growth on a constant currency basis of 5% to 7%, our cost-to-income ratio to be below 47%, credit costs to be 25 to 35 basis points and our CET1 ratio to be at least equal to or above 14%. So with that, I will now end our presentation and take any questions that you have. Chek Tan: Thank you, Novan and Khairul. We will now begin the Q&A session. [Operator Instructions]. We have the first question, it's Yong Hong. Yong Hong Tan: Just 3 questions from me. Thanks for the 2026 guidance. But if you are targeting ROE to be broadly the same level as 2025, what are the levers to get to 12% for 2027? And if earnings-wise, if that is lower than your expectations, any other levers that we can pull to get to that 12% level in 2027? That is my first question. Muhammad Amirudin: Okay. Thank you, Yong Hong. So the journey to 2027, we have a number of levers. First, with regards to our capital allocation itself, which you will see a lot more focus on the Malaysia business. You saw earlier on Page 6, the Malaysia ROE has increased from 11% to 12.1%. We're going to be focusing to grow a lot more in Malaysia vis-a-vis the other markets, which is namely Indonesia and Thailand. So you're going to see a lot more capital reallocation from Thailand, to some extent, Indonesia, a lot more into Malaysia, which is generating above 12% ROE. Our focus in Singapore will remain the same, if not slightly higher, where ROE is now at 18%. So think of capital reallocation from Thailand, Indonesia, into Malaysia and Singapore. So that's the first lever. And then within each of these countries, there's going to be a lot more relentless focus on noninterest income. The focus on the wealth business, focus on our wholesale business with Singapore as a wealth and treasury hub, focus on transaction banking, which will facilitate our cash business, all that will grow NOII, treasury client sales that you saw a very strong growth this year versus previous years. So a lot more client franchise NOII, which will also boost our ROE. We're going to continue that discipline on cost that you have seen. You have seen over the last many years, OpEx growth is roughly about 3% CAGR. Last year was 2%. We're going to continue with that discipline on cost. We're going to continue with the discipline on asset quality. You saw GIL at the lowest ever for CIMB, credit costs to remain contained. And then on the capital side, we announced the capital return program up to end of '27. We're going to execute that. So I think when we put all these levers together, we are confident of achieving the 2027 ROE guidance. Yong Hong Tan: Just following up on your capital to get to that ROE, can we maybe have the thinking that the capital return will be earlier, if not so [indiscernible] that will give us a better base to get to the ROE target in 2027. Is that the right way to think about that? Muhammad Amirudin: Yes. I mean we always proactively think of capital. Capital, we see -- we value the capital from our shareholders a lot. And therefore, we're always proactively thinking about how to return it faster. I mean this is excess capital that we have committed anyway. You saw what we did in the last quarter where market was not expecting us to do a special dividend, but we chose to do a special dividend earlier ahead of time. You saw how we executed this over the last 2 years where we had excess capital and we've done that as special dividend. So we are going to continue executing this like how we've executed in the past. But at the end of the day, it's a balance of many factors that we need to take into account, and we will continue to be vigilant about it. Yong Hong Tan: Maybe on margins, I mean I missed that earlier. Is there any guidance on margins for this year? Khairulanwar Bin Rifaie: Yes. So, Yong Hong, yes, so in terms of the margin guidance, right, for the group, we are looking at plus/minus 5 basis points. So relatively stable, plus/minus. Within that, I think more importantly, if you look at Malaysia, we are looking at Malaysia to be stable to slightly spending, right? Niaga has given their guidance is a plus/minus 10 basis points to 3.9% to 4.1%. Where we see potentially some further weakening is Singapore, right? Singapore, but I think it will be less than what we recorded in 2025 as what you saw in SORA even though weakening has stabilized compared to what we recorded in '25. So there should be some weakening of that. But I think where the offset to this is really Malaysia, where we are looking at stable to slightly spending because in terms of our rate outlook in Malaysia, right, we are expecting rates to be stable versus the negative impact that we had in 2025. So that's number one. But number two, to the point on our cash strategy, that will continue to gain traction going into 2026, and that will help our margin trajectory. And lastly, we continuously optimize the higher cost of funding, wholesale funding that we did. So we managed to do that already for the last couple of years. We'll continue doing that again in 2026. So just as a number, last year in 2025, we reduced our wholesale funding by about MYR 5 billion on an endpoint to endpoint. So we'll continue to try and optimize the expensive funding in 2026 as well. So that will help that margins in Malaysia to be stable to slightly expanding. So overall, just to recap, at the group level, we are looking at plus/minus 5% -- 5 basis points. Yong Hong Tan: Yes. Sorry, just one small follow-up. What are the scenario where you see margin expanding by 5 basis points, and what are the scenario that you see margins coming down by 5 basis points? Khairulanwar Bin Rifaie: Yes. So I think the main lever is because I think 2 parts, which is our biggest -- 2 biggest markets. So one is Malaysia. The other is Indonesia. So if you look at Indonesia, the range is plus/minus 10 basis points. We have seen liquidity environment improving in Indonesia over the second half, and that has been sustained in the fourth quarter. Similarly, in the first -- so far, that liquidity environment has been stable. But I think we still have a long way to go to the end of the year. So that liquidity has to be there. Competition has to be fairly rational for us to get to the upper end of that range where Niaga has guided. So that's number one. Number two, our biggest market will be the biggest driver, which is Malaysia. And so far, liquidity has improved slightly if you look at it from this year, starting of the year. So the continuation of that maybe could give us some slight upside to margins in Malaysia. So that will drive that upper end of our guidance. Muhammad Amirudin: The next question comes from Harsh. Harsh Modi: Can you hear me? Muhammad Amirudin: Yes. Harsh Modi: Just one question. I understand your payout was in line with guidance. But how do we think about your guidance on regular moving over the next couple of years? Special, I understand as you have guided for a number, you've already started paying and you'll do it as you can release. So that's on -- as it comes through, you'll do. But special is 55% the number we should plan for over the next 2, 3 years or even that number can increase meaningfully over next few years? Khairulanwar Bin Rifaie: Yes. So I think, yes, so in terms of our dividend payout of 55%, we've been sustaining that for the last 3 to 4 years. And looking at the growth trajectory and giving that stability to the market, I think we need that number to be a sustainable number -- a really sustainable number. And that sustainable number is really driven by all the entities within our group and how we extract that capital to the holding level. And we believe based on our trajectory, right, this is the sustainable number of 55%. We will -- we do continue reviewing this number. And if you look at our guidance, it is stable at the 55% level, given how we have optimized all the capital levels in all the entities. Harsh Modi: Right. So basically, unless and until there is any release of capital, be it Thailand, be it Basel norms or what have you or maybe higher payout from Niaga, it is not likely that we will end up getting -- so above and beyond your MYR 2 billion commitment and 55%, we should not pencil in anything else. Khairulanwar Bin Rifaie: Yes. I mean, yes, so. So based on today's view and outlook on growth and what excess capital we can expect from all the various levers that we have, both Malaysia and outside Malaysia, this is the level that we are comfortable with in terms of 55% and also the capital return that we have committed up until the end of 2027. Harsh Modi: Khairul, if I just want to double-click on that. If -- let's say, assuming that the about MYR 1.3 billion, MYR 1.4 billion remaining on special out of MYR 2 billion, that comes out from, let's say, optimizing capital elsewhere and narrowing the gap between group and bank to an extent. Is 55% enough to optimize your ROAs -- to optimize your returns, ROEs in particular? Or you can push up to 60%, 65% over a couple of years? Khairulanwar Bin Rifaie: So the basis of this 55% is more or less with the current sort of projection of CET1 and outlook, right? So we are maintaining a stable capital ratio broadly across all our entities, including GH with this 55% payout. And on top of that, that capital return that we have committed. If we want to optimize further, right, it depends on many, many other levers. And if we can optimize our CET1 further, that's where there could be a potential higher dividend payout firstly for all our entities that hopefully, that can translate to a higher payout at GH as well -- group holdings as well. Chek Tan: We do not have any further questions at this time. [Operator Instructions] We have one coming from Tushar from Nomura. Tushar Mohata: The first question is on Indonesia and Niaga. Given the developments in Indonesia and the increased scrutiny on free float and the discussion that Indonesian stocks might need to increase free float to 15%. What would be your considerations in deciding whether to sell in the market or do a dividend in [indiscernible] like how it had happened in 2016, I believe, when the previous round of free float increase was required? Muhammad Amirudin: Thank you, Tushar, for your question. So at this point in time, yes, there's a top of the 15%. There is no policy in terms of how we will get there at the moment. I think the indication is over a period of time. From our perspective, all options are on the table. If there's a requirement to then increase our stake, then we will consider all options, whether is it a re-IPO in the market or whether is it a DIS, I mean, it all goes back to which one gives us the best value. I mean the reason I mentioned the word pre-IPO is because today, Niaga 7% free float, the liquidity is thin. The trading doesn't reflect the true value of the business, which is achieving a 13-odd percent ROE. So therefore, if we were to ever want to consider increasing stake by selling some stock, then it needs to be via a full marketing process. But at the end of the day, all options are on the table for us, and we will execute the one that extracts the best value. Tushar Mohata: Okay. And just want to understand the minimum CET1 required by end of 2026, which you are targeting at greater than 14%. I understand that the structure of CIMB is a bit different where dividends are paid out of group holdings level. So group holdings CET1 is more important. But is it fair to say that group holdings, this kind of structure versus all of your peers where bank level CET1 is more important, you need to maintain a higher group holdings level CET1 versus others where bank level CET1 can be lower? Khairulanwar Bin Rifaie: The answer is no. So it's similar. It's the same, right? So whatever capital levels because we are covered by Malaysia Central Bank. So whatever capital level that's required at CIMB Bank, CIMB Islamic, CIMB Investment Bank, similar to CIMB Group Holdings. So it's not more that is required at the holding level. Chek Tan: [Operator Instructions] Next question comes from Benjamin from UBS. Benjamin Tan: I just have one quick question. Just you mentioned that the stronger ringgit has been a headwind to the performance at CIMB. Just wanted to get some rough sensitivity, like, let's say, if the ringgit were to strengthen another 5% or whatever number you have in mind, what is the downside to the ROE guidance that you have, that would be very helpful or like if Malaysian ringgit were to depreciate versus a basket of currencies regionally, what would be the impact on your earnings and your ROE. Khairulanwar Bin Rifaie: Yes. I think the sensitivity is relatively mechanical, right, given the contribution of Niaga and our overseas operations. Niaga is actually is the one that is impacting us the most with the PBT contribution of that 22%, right? To a lesser extent, a very small component in terms of U.S. dollar, but it's not material driver, but that's not material. But the main one is actually Indonesia and to a certain extent, Singapore as well, right? But if you look at how we have managed that, which was very challenging in 2025 still within that 11% to 11.5% ROE, right? And that is a reflection of our diversified business with Malaysia performing very well in terms of the ROE, as mentioned on a year-on-year basis. Of course, we are susceptible to that sensitivity that you mentioned, but we are going to be very agile to still focus on meeting our guidance of 11% to 11.5%. Muhammad Amirudin: Yes. So I think my answer is actually there's no impact. We're not speculating on FX. We'll focus on executing and doing what we do best. So yes, as FX move, it then impacts our numbers, and we will see how that impacts our numbers. And therefore, we will be agile and we will pivot our strategies accordingly. So whatever it is to make sure that we achieve what we have guided the market. Chek Tan: I think there are no further questions at this point in time. Andrew San from Macquarie, are you there? Andrew San: Happy Friday. Just a question on your guidance. I noticed that in terms of when you put down asset growth guidance instead of loan guidance or is there something more to be read into that? Muhammad Amirudin: Sorry, can you repeat that? I think you broke up. Andrew San: So in terms of the guidance that you mentioned, the asset -- sorry, asset growth guidance that you put down, yes, in terms of what you put down, it's 5% to 7%. Is there any difference with loan growth guidance? Can I just translate that loan growth guidance? Yes. Okay. Muhammad Amirudin: Sure. So the reason why we put asset growth is that's how we operate our business. From our capital and deposits that we have, we then mobilize it into either loans or either through securities. And we are a large universal bank and also a strong investment bank. When we advise our customers to raise financing, it's the financing that makes most sense for them. If a loan makes more sense, we extend a loan. If a bond makes more sense, then we advise them on a bond, but we can also use our balance sheet to underwrite part of the bond. If an equity makes more sense, then we advise them to raise equity. So that's why we are focused on an asset growth guidance rather than just too narrowly focusing on loan growth per se. But with regards to our own internal numbers, as part of this 5% to 7% asset growth, loan growth is a subset of that. If I were to look at Malaysia, which is our largest market, we are looking at growing loans at about 4% to 5%, which is in line with the GDP, and it would differ across all markets. But at the end of the day, our business plan is around an asset growth strategy. Andrew San: Sorry, can you remind me what the loan growth guidance is for Indonesia and Thailand as well? Khairulanwar Bin Rifaie: Yes. Indonesia is 3% to 5%, right? Singapore will be in the higher single digit, and that's driven mostly by SME and also consumer. In Thailand, we're expecting the market environment to still remain fairly challenging. So in Thailand, it will likely be a negative growth. This is on loans specifically. But again, I just want to reiterate, we are looking at it more from an asset growth in totality for all the countries as well. Muhammad Amirudin: [indiscernible] so therefore, when we make NII, the cash that get deployed either through loans or through securities, we still make NII from that, just that the bonds that allow us to trade in as well. So that's why we're going on an asset growth basis. I just want to understand that. Andrew San: Okay. I understand. And just a follow-up on the Malaysian loan growth of 4% to 5%. Can you help me understand? I mean, the GDP growth has been strong, and we should be seeing GDP growth in the high 4%, if not 5% in terms of forecast for this year. And at the same time, you're focusing growth more on Malaysia going forward. Why is loan growth only at 4% to 5% for Malaysia? Muhammad Amirudin: So yes, we're a big universal bank, which includes a large investment bank. Our clients in Malaysia, they raise financing either through loans or through the capital markets, which is the bond market. I mean the Malaysian bond market grew a lot more compared to the loan market last year, and we are the #1 player in the bond market. So from our perspective, it's all about what makes sense most for our customers. If it's a lot more efficient for them to raise bonds, and we did a lot of bonds for our top clients last year, then we will advise them to raise bonds, but we will then underwrite part of the bonds and that goes on our balance sheet. So that's why we focus on asset growth. So I would like to take your focus away from just loan growth alone because that's not how we operate our business, unlike maybe some of our peers. But look, at the end of the day, if it makes more sense for our customers to do loans, then you will see the loan growth number grow a lot more. But I don't want to be too fixated on the loan growth number. Andrew San: Okay. And just a follow-up on that again. Then how should we think about NOI as a percentage of total income or NOI growth for this year then? Khairulanwar Bin Rifaie: Yes. So I think for this year, right, if you look at from a numbers perspective, where we ended the year in terms of proportion at 31.7%, right, given our focus on 2 things. One is our cross-sell, so on the client franchise component. But secondly, also on the bond side, that also create a lot of opportunity on NOI, we do expect NOI to grow stronger than NII. And that is somewhere slightly higher than the mid-single digits of level for NOI. So that proportion, we do -- we are targeting that to expand further in 2026. Andrew San: Okay. So expecting NOI to grow stronger than NII. And that's also including the fact that you might have a higher base in terms of bond sales from 2025. Muhammad Amirudin: Yes. But that's not the main reason, yes. I mean our NOI growth, as I presented earlier, the client franchise grew faster than NII itself. In fact, if you look at the earlier Page 14, last year, our client franchise of trading and FX is actually higher than our trading income. So yes, there won't be trading gains. We will take trading gains as they come, but the focus is on client franchise business, where we make treasury client sales, where we make fees and commissions from either our banking products or investment banking advisory -- so the contribution of NOI will come from both, but I would say a lot more on the client franchise side. Chek Tan: Just one more, I think, from Jin Han. Jin Han Chin: I have just a couple of questions on Singapore. I may have missed it, but could we get the in-house view on where SORA rates are going and what's underpinning expectations for 2026 as well as a little bit more color on credit costs for Singapore. If you could share any numbers would be great. Khairulanwar Bin Rifaie: Yes. So I'll take the credit cost numbers first for Singapore. I will share a specific number, but in terms of directionally, right? So in 2025, we recorded quite a significant net write-back in Singapore. Going into 2026, we still expect the credit cost for Singapore to be relatively flattish, meaning not write-back position, but a very, very small credit cost as there are some pipelines of further recoveries coming through in 2026. So a very small credit cost number. Yes. On the point on SORA, right, we have some views on where it will go. We're looking at around 50 basis points further lower or so. Chek Tan: I think we are -- there are no further questions at this point in time. Okay. Since there are no further questions, I'd like to pass the line back to Novan for his closing remarks. Muhammad Amirudin: Thank you very much for your time on the Friday afternoon to join our presentation. For those that are fasting, I just want to wish you [Foreign Language] and see you all again soon. Thank you very much. Chek Tan: Ladies and gentlemen, that concludes our briefing for today. Thank you for joining us, and wish you a good evening ahead.
Operator: Welcome to the Hertz Global Holdings Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] I would like to remind you that this morning's call is being recorded by the company. I would now like to turn the call over to our host, Johann Rawlinson, Vice President of Investor Relations. Please go ahead. Johann Rawlinson: Good morning, everyone, and thank you for joining us. By now, you should have our earnings press release and associated financial information and these can be accessed through the Investor Relations section of our website. I want to remind you that certain statements made on this call contain forward-looking information. Forward-looking statements are not a guarantee of performance, and by their nature, are subject to inherent risks and uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call speaks only as of today's date, and the company undertakes no obligation to update that information to reflect changed circumstances. Additional information concerning these statements including factors that could cause our actual results to differ is contained in our earnings press release and in the Risk Factors and Forward-Looking Statement section in the filings we make with the Securities and Exchange Commission. Our filings are available on the SEC's website and the Investor Relations section of the Hertz website. Today, we'll use certain non-GAAP financial measures which are reconciled with GAAP numbers in our earnings press release available on our website. We believe that these non-GAAP measures provide additional useful information about our operations, allowing better evaluation of our profitability and performance. Unless otherwise noted, our discussion today focuses on our global business. On the call this morning, we have Gil West, our Chief Executive Officer, who will discuss strategy, operational highlights and our fleet. Our Chief Commercial Officer, Sandeep Dube, will share insights into our commercial strategy followed by Scott Haralson, our Chief Financial Officer, who will discuss our financial performance. I'll now turn the call over to Gil. Wayne West: Thanks, Johann. Good morning, everyone, and thank you for joining us. I want to start by thanking the Hertz team, their focus, discipline and resilience, especially those serving our customers in the field was evident throughout the year but particularly during the fourth quarter holiday travel season, which is historically one of our most operationally intensive periods. Together, they executed consistently against our goals and made real progress, building momentum for the year ahead. 2025 marked the first full year operating under the back-to-basic strategy, guided by our North Star metrics, we brought greater discipline to fleet management, revenue optimization, rigorous cost control and improving the customer experience. The work is far from finished, but the progress we made this year materially strengthened the foundation of our business for the long term. In 2025, we achieved a full year adjusted EBITDA improvement of more than $1 billion year-over-year. We drove sequential improvements in revenue, RPU and RPD and improved utilization by sweating our assets and drove DPU down in line with our North Star target. We brought DOE per transaction day down despite lower volumes. We also completed our fleet rotation and successfully secured our model year '26 buys at our target prices and volumes. That allowed us to begin selling model year '25 through our enhanced retail channels, continue our short hold strategy, introduce a more optimized mix of car classes and achieve our lowest average fleet age in almost a decade. And we delivered a nearly 50% improvement in customer satisfaction. As we turn to the fourth quarter, typically challenging seasonal environment was amplified by a number of external headwinds that were primarily isolated to the quarter from government shutdown, coupled with FAA cancellations, multiple technology vendor outages and unfavorable residual value environment to elevated recall volumes. Taken together, these created outsized pressure of well over $100 million on our business and kept us from hitting some of our targets. But even within that environment, we made progress. In the fourth quarter, adjusted EBITDA improved $150 million year-over-year, but our strongest result this quarter was revenue. In fact, it was our strongest revenue result in nearly 2 years. If you remember, we entered 2025 with revenue down double digits year-over-year. And by the end of the fourth quarter, we were nearly flat revenue with a 3% smaller fleet, significant accomplishment, driven by our ability to sequentially improve RPU and RPD and sustained utilization and transaction days, all with a smaller fleet. We also saw a more stable industry pricing backdrop throughout the quarter, which is especially noteworthy given the very polarizing peak and off-peak dynamic that plays out during this period every year. This is evidence that both our commercial investments in pricing and demand generation are paying off and that the industry setup is more positive than in prior periods. While DPU, as I mentioned, was in line with our North Star target for the year, in the fourth quarter, it moved above our North Star target due to a revised Black Book residual value forecast and lower-than-expected whole sale prices from heavy OEM and rental car company deflating during the car market seasonal low period. While we monitor multiple market trend sources, we have historically indexed heavily on Black Book forecast, which tends to be more seasonally volatile. As of the end of the year, it was down nearly 5% year-over-year, resulting in a $60 million noncash charge to depreciation. By contrast, Manheim average rental vehicle prices in December were up 2.85% year-over-year. And as we look ahead, updated projections from our partners at Cox Automotive show that their Manheim used vehicle value index is expected to end the year roughly 2% higher than in December 2025. While our forecast is not predicated on such a positive outlook, our internal analysis is encouraging and we've seen early signs of recovery in Q1 in line with these Manheim values, which in January were up 2.4% year-over-year. On the cost side, we brought adjusted DOE per transaction day down 6% year-on-year. This moved us closer to our North Star target in the low 30s. Recall volumes peaked in mid-November and December, taking over 20,000 cars out of service, which is almost 3x higher than the normal rate. This resulted in us having to carry more fleet than we had planned and limited our performance, which had ripple effects across the business, impacting our fleet utilization, particularly for our rideshare business. We have strategically managed through this by redeploying available fleet where it would have the most impact. And as a vast majority of these recalls lack available fixes and restrict us from renting and selling vehicles. We are actively working with our OEM partners to find solutions to minimize fleet downtime. Recall volumes have moderated slightly throughout the first quarter but remain elevated. With this in mind, we're staying disciplined in our capacity planning to ensure our rentable fleet stays well utilized and inside of demand. It's clear Q4 presented real challenges, but the decisions we made throughout 2025 held up under pressure and reinforced that our strategy is the right one. Today, Hertz stands on a meaningfully stronger foundation than it did a year ago. A healthier fleet, improved unit economics, a more disciplined operating model, a better customer experience. And what I want to be clear about is this, the improvements we're seeing in the business are structural, they're permanent. The headwinds we faced and continue to navigate are transitory. That difference matters, and it's what gives me confidence in the trajectory ahead. That confidence is already being validated as 2026 is off to a good start. Q1 trends in both revenue and RPD are positive year-over-year, a particularly encouraging sign given that this is typically a seasonal trough period for the industry. This means we're entering the upcoming peak period from a position of strength. Looking ahead to the rest of the year, we remain focused on accelerating revenue, RPD and RPU growth while staying disciplined on cost, putting core rental business firmly on the path to profitability. While rent-a-car remains our core business today, this transformation is about becoming more than a single line of business. We're executing with discipline in the business that powers us now, but we're intentionally building the capabilities that will power what's next. We're laying the groundwork for a diversified value-creating platform that will unlock value beyond the core. The Hertz platform spans rent-a-car, service, fleet and mobility. It's still early days. And while the areas of our platform sit at different maturity levels, each presents meaningful upside, both near and long term. In rent-a-car, we'll maintain steady momentum in our mature airport locations by driving pricing, utilization, demand generation and asset management. We still -- we see real near-term upside from growth in our off-airport locations in areas like insurance replacement local commercial agreements and small business. We're also sharpening our focus to unlock additional value in our franchise footprint while piloting new offerings in service. We see a particularly strong runway in fleet through Hertz car sales and in mobility, where the long-term opportunity has the potential to become as, if not more meaningful than our core rent-a-car business. We're transforming Hertz car sales into a truly omnichannel experience, meeting customers where they are online, in person through rent to buy and delivery right to their door. The opportunity here is significant. We are a used car factory with a building customer base, and we're building the shopping experience to match, one that can ultimately rival the largest used car dealers in the country. We have a constant supply of preowned vehicles and sales volume that already puts us in the top 5 used car dealerships in the country. Our improved website has a wide variety of vehicles for sale and intuitive interface, enhanced imagery and more detailed descriptions to help customers shop more confidently. We already have scale in shifting our primary sales channel to retail as a major unlock. We also have established key partnerships with Cox Automotive, Amazon and Palantir that gives us the capability to scale this business profitably, Hertz car sales value proposition has never been more compelling as new cars are increasingly out of reach for many buyers with prices topping $50,000 on average. With our shorthold strategy, we deliver best bang for the buck as consumers can get a nearly new car for around half the cost. This is an important differentiator as we head into spring, typically a peak buying season, which will be bolstered this year by record high tax returns. Now to mobility. Hertz owns and manages fleets at scale with core strengths and fleet ownership, large-scale operations, world-class maintenance and vehicle fleet financing. Along our physical infrastructure, operating capacity and leadership experience, this business is evolving to meet the mobility needs of tomorrow, whether driver led or autonomous. Our journey in mobility began in ride share by renting cars to Uber and Lyft drivers. Today, we operate the largest rideshare rental fleet in the world. And it has become one of our highest growth potential businesses with double-digit revenue opportunities. And in the background, we're developing and testing new approaches in this space with strategic partners. While it's difficult to quantify the full growth potential of our Mobility business at this stage, the opportunity undoubtedly is significant. For context, Uber's CEO has described autonomous vehicles as potentially a multitrillion dollar market. We're building the capabilities now to ensure Hertz is positioned to play a significant role in that ecosystem. Today, our rental car business remains the largest consumer of our time and operational focus. But as we scale the broader platform across rent-a-car, service, fleet and mobility, the mix will evolve. Rental will become one part of a more diversified value-creating enterprise. With that, I'll turn it over to Sandeep. Sandeep Dube: Thanks, Gil, and good morning, everyone. I want to jump right into the headlines on revenue this morning. The fourth quarter, the industry's typical trough period with volatile seasonal demand, represented Hertz's strongest year-over-year revenue result since Q1 2024. After adjusting for Q4 2024's onetime loyalty gains, in Q4 2025, we drove year-over-year revenue growth with the primary driver being RPD which was nearly flat on a year-over-year basis. Most importantly, RPD for the airports in the Americas, our largest segment, was positive year-over-year for the quarter. We achieved this meaningful sequential improvement despite several headwinds, including a lower car class mix, the extended government shutdown and elevated recalls. In Q4, we achieved a difficult feat by improving both year-over-year pricing and days sequentially, primarily driven by Hertz's commercial strategies. Our revenue metrics showed good sequential progression. Q4 2025 adjusted revenue was sequentially 4 points better, going from down 4% to about flat. RPD mirrored the same sequential improvement on a loyalty adjusted basis as well. The driving factors of these improvements were the same as detailed in our Q3 earnings call. Let's dive deeper into the details a bit. First, driving a better customer experience. Our Net Promoter grew by nearly 50% year-over-year and it is driving better organic demand for our brands. Second, generating greater durable demand from higher-margin channels. Direct website demand is showing strong growth. Our corporate business is gaining ground. We are now driving consistent growth in our off-airport business, and our mobility business is growing revenue double digits. Third, improving our pricing tactics and strategies. We are on a multiphase approach to bring more sophistication in the way we drive demand with a focus on driving positive RPD for comparable asset class. Mid-quarter in Q4, we executed a totally new pricing metrics and we saw immediate results from that change in driving positive RPD. Our next situation is going into test mode in a few weeks. I expect phase improvements in the sophistication of our pricing approach. Fourth, better monetization of our higher RPU assets. This was achieved by improved asset deployment, having the right vehicle at the right location, ensuring that higher RPU assets are effectively monetized. Fifth, better value-added product sales. We drove better sales of our value-added products through improved operational performance and pricing sophistication. Lastly, local level profitability and optimization. We continue to manage our business at a more granular level of profitability. These commercial strategies and tactics primarily drove the positive momentum in Q4 2025. Most importantly, these foundational changes raised the baseline productivity of our revenue and RPD production, and we expect these gains to largely persist irrespective of the macroeconomic environment. And just a reminder, we are still in the early innings of a transformation of our commercial strategies, and we expect more foundational improvements in the coming quarters. If you step back even further, the takeaway here is the sequential improvement through 2025 as a result of our back to basic strategy. We started 2025 down double digits year-over-year on revenue and down mid-single digits year-over-year on RPD. This narrowed to near parity on both metrics by the end of the year, and they have both turned positive in the early part of 2026. We also delivered improvements in utilization across our total fleet in each of the quarters in 2025, including Q4, where we were able to offset the impact of higher rate of recalls and delivered an improvement of 200 basis points year-over-year. Total fleet includes all vehicles irrespective of operating status, whether in service, out of service or in our car sales inventory. Looking [indiscernible] we are delivering clear results and building momentum for the year ahead. 2026 is off to a strong start as the strength we saw at the end of December for the holidays carried forward into the new year. In January, we are seeing year-on-year positive revenue and unit revenue growth, mostly driven by a couple of percentage points increase in global RPD, reflecting pricing growth in both our Americas and our International segments. February is trending even more positively and March looks to continue on that trajectory. As a result, we expect Q1 2026 revenue to be up mid-single digits year-over-year with fleet growth of only low single digits. Q1 2026 is also supported by a more constructive industry environment compared to Q4 2025, with the industry demand environment looking better. For the rest of 2026, we will manage our growth in a disciplined manner. This means holding airport growth at or below TSA levels, while pursuing off-airport and mobility opportunities. At the same time, we are focused on doing more for our customers. The improvements we have seen in our Net Promoter Score is a clear indicator that our work to create a more consistent, convenient and caring customer experience are resonating. We are deeply grateful to the millions of customers who choose Hertz, and we have recently lowered the threshold for achieving 5-star status to reward them even more for their loyalty. At a time and status across the travel industry feels harder to earn than ever, we are offering a faster, more transparent part, providing more value with every booking and one more reason to continue choosing Hertz. So in summary, our commercial playbook is working, and the results are starting to prove it. With that, I'll hand it over to Scott to walk through our financial performance. Jon Kirchner: Thanks, Sandeep, and good morning, everyone, and thanks for joining us. As you heard from Gil and Sandeep, the fourth quarter had a number of items that cloud the results. But once you get past the transitory impacts in the quarter, you can see some interesting foundational elements. The revenue trends are improving. Our fleet is rotated and model year 2026 buys have been secured at prices and volumes we expected. In spite of a richer fleet mix in 2026, which will provide a tailwind to RPD, we still expect to keep DPU for the year below $300 per unit. NPS took a big leap forward in 2025 and that's prime to continue in 2026. Our digital customer experience, operational consistency and customer-focused initiatives are being recognized by our customers. We have found a good balance between utilization and NPS scores, but have our eyes set on improving both at the same time. The moves we made last year to create a rental car fleet with an average age of less than 10 months, which is the youngest it's been in almost a decade and to drive record-setting utilization are now strategic tailwinds. The cost and efficiency actions paid dividends and will get even better in 2026. Throughout 2025, we pulled off a difficult task. We lowered unit cost while also reducing units. That's difficult to do in a heavy fixed cost and operationally complex business like ours. We have real opportunities for growth in 2026. The focus of that growth will be at our off-airport locations and in our mobility business. Our expansion of the platform outside of traditional rental car is progressing nicely. Our digital car sales business has made some important technological advancements on both the back-end website and the merchandising capabilities as well as the digital transformation of the car sales process. While early, we think 2026 digital expansion could produce a meaningful progression in the percentage of our car sales that will be transacted through retail channels. On mobility, while we are the industry leader in rental ride share, we are growing and developing the business to meet evolving needs. We also have been actively building in the background a substantial set of capabilities that we will be leveraging to position Hertz to be a significant player in the aggregation of the supply of mobility in the future, whether that is driver led or autonomous. This will ultimately be the future of Hertz, but we are balancing the current optimization of the mature part of our business while building the platform for the future. Even though the absolute financial results are not where we want them to be yet, the actions we have taken over the past year or so are showing real sustainable results and the opportunity in front of us is exciting. So with that preamble, I do want to quickly walk through some details in the quarter, where we are with liquidity and cover a bit of our 2026 outlook. Starting with the quarter. For Q4, we reported revenue of $2.0 billion, which came in ahead of consensus expectations with RPD broadly in line and down approximately 1% year-over-year. Importantly, excluding the prior year loyalty adjustment, revenue growth was up year-on-year with RPD nearly flat. Adjusted EBITDA for the quarter was a negative approximately $200 million. While this is a $150 million year-over-year improvement, it was still about $100 million off of our target. This was entirely in our vehicle carrying cost. We incurred about $20 million of additional costs resulting from the additional fleet to compensate for the elevated recalls. We also had a $20 million loss on the sale of assets due to the large number of cars available in the marketplace that weighed on residuals in the quarter. We also took a noncash depreciation expense of approximately $60 million due to the late in the quarter residual value adjustment by Black Book. While we do believe the adjustment on the forward view of residuals to be a bit conservative, we did take the entire impact to the P&L. We view these items as mostly isolated to the fourth quarter, albeit recalls will likely remain elevated throughout the first quarter. We expect the residual value market to improve as we head into the peak car sale cycle starting in Q1 into Q2. The government shutdown duration and timing also weighed on results. We were able to recoup most of the days lost in the period, but it did come in more off-peak days production since the shutdown came in what was becoming an improving October with positive demand and pricing momentum. While difficult to quantify and while the revenue for the quarter was still positive, we estimate the government shutdown cost us an additional $10 million to $20 million of adjusted EBITDA in the quarter. In total, the underlying business performed better than the reported adjusted EBITDA would suggest as we performed well on the items within our control. Transaction days were almost flat year-over-year as we kept the higher fleet to mitigate the recall issues and recoup some of the days lost due to the transitory events. Utilization remains solid. And even with the additional fleet, the global fleet was 3% lower than prior year. Adjusted DOE per day was another positive story. It improved 6% year-over-year, coming in at $36.39 as our cost initiatives are taking hold. It did, however, reflect higher collision severity and repair cost and ongoing elevated insurance costs. We still have more to do, but have done good work on addressing operating expenses in our big 3 categories: labor facilities and vehicle maintenance and repair. With further work to be done in growth in transaction days in 2026, we do expect lower unit costs this year. Core SG&A remained flat with total year-over-year variances primarily stemming from the timing of expenses in 2024, with 2025 being a more normalized expense level. Turning to depreciation and DPU. For 2025, we produced a full year net DPU of $300 per month. While this is right at our North Star metric, we were certainly not happy that we had to take a late charge to depreciation due to the move from Black Book. We were expecting to be below $300 per unit. However, if residual values end up where we think they will in 2026, this will prove to be timing of the expense and will benefit us with less depreciation this year. The fourth quarter ended at $330 per unit, down 21% year-over-year, but nonetheless, higher than we expected. Now let's talk liquidity. We ended the quarter with approximately $1.5 billion of total liquidity, including revolver capacity. This reflects the impact of the partial redemption of $300 million of the 2026 notes in Q4, leaving $200 million outstanding. The Wells Fargo make-whole liability, which had been reserved for some time, was primarily concluded with the $346 million payment made in late January. This reduced our available liquidity to just under $1.2 billion. This number was about $100 million lower than expected due to the timing of vehicle dispositions that were delayed and the early acceptance of vehicles in Q4 due to the larger number of recalls and the impact of the government shutdown. Other than the cost to carry the additional vehicles in the quarter, the timing of the vehicles in and out of the fleet is not expected to have any meaningful positive or negative impact on our expected liquidity at the end of the second quarter. Also, our ABS programs remain healthy with ABS vehicle fair values comfortably above net book values and market access is solid. We recently entered into financing transactions that we expect will result in an increase in our liquidity by approximately $200 million at an attractive cost of capital. We also have several other liquidity enhancement opportunities that we'll be evaluating in the coming months, that could total more than $500 million. In addition, we also have approximately $400 million of first lien capacity to refinance the expiring revolving credit facility commitments in June of this year. With the disciplined growth that we have planned for 2026, we have access to the liquidity capacity to make that happen. We expect to reach the low point of liquidity at the end of Q2 at something likely below $1 billion, as we invest in the fleet in the first half of the year and then expect to end the year well north of $1 billion as free cash flow generation improves after Q1 and from the return of capital that happens in the fleet rotation cycle in the back half of the year. To be clear, this assumes we action some of the liquidity enhancements we have available to us. Finally, let's turn to guidance for the year. For Q1, we expect transaction days and fleet to increase low single digits year-over-year. Total fleet utilization will likely be flat in Q1 year-over-year due to the impact from the heavy winter storms and continued elevated fleet recalls, which should decline throughout the quarter. On the revenue front, as Gil and Sandeep noted, January saw positive year-over-year RPD and revenue growth, with February trending even better and March bookings to date showing a similar trend. However, Q1 is still an off-peak quarter for us and the recall levels are still going to impact our results. Given this, our Q1 expected margin range is in the negative high single-digit to low double-digit range, which is a year-over-year improvement of approximately 600 to 800 basis points, assuming DPU at around $300 per unit. For the full year, we previously communicated an outlook of a 3% to 6% adjusted EBITDA margin range. While the revenue trends were positive and the internal expectations for DPU are in line with prior expectations, it is early in the year, and we would like to see more game film before we revise the guidance upward. That's why we are maintaining the guidance for the year in the 3% to 6% margin range. We continue to target $1 billion of adjusted EBITDA in 2027. With that, I'll turn it back to Gil for closing remarks. Wayne West: Thank you, Scott. 2025 was a year of back to basics, focused on rebuilding the core and transforming Hertz for the long term. We first tackled our fleet, the biggest problem to solve, along with cost and revenue, all while elevating our customer experience. Through our fleet strategy and rotation, we operated as an asset management company, and the team turned our fleet, which was once a massive headwind, into a competitive advantage positioning us well for 2026 and beyond. We delivered year-over-year improvements in unit cost even with a smaller fleet and we see a long runway of cost and productivity initiatives that cut across all aspects of our business. This, along with operating leverage from growth should help propel us forward. Unit revenue growth has been a key area of focus. The team's work around customer service, demand generation in the right segments, revenue management strategies and initiatives are paying off and we have the talent, tools and technology to continue this momentum and return Hertz to solid profitability this year and achieve over $1 billion in adjusted EBITDA in 2027. But our transformation does not stop there. We're both pragmatic and ambitious, focused on what's in front of us while also planning for the future. We're making progress in developing our platform to unlock value beyond our core business, leveraging the same operational discipline, rigorous cost control and revenue optimization that would define this turnaround. With that, let's open it up for questions. Back to you, operator. Operator: [Operator Instructions] Our first question comes from the line of Chris Woronka with Deutsche Bank. Chris Woronka: I guess, Gil, to start off, one of your competitors recently took about a $500 million write-down related to EVs. And obviously, Hertz went through a process a couple of years back that I think is complete or largely complete. Can you maybe give us a refresh on where you guys are in EVs and your strategy has changed or evolved at all recently? Wayne West: Yes. Chris, thanks for the question. Yes, I think a lot of headlines across all the automotive industry on EVs, of course, of late. And I think we're probably a little further down the road than most, and we do have a bit of a different strategy now in that I'd just start with some context. We're the largest fleet supplier to rideshare in the world, as I mentioned. It's really important to get that fleet right because the rideshare just has different fleet needs in our traditional rack business and EVs remain central to rideshare and remain a long-lived asset in that fleet. So we're just probably more experienced than anyone as an EV fleet operator at scale. We've been building a lot of operational muscle around EVs over the years, and that includes the technical expertise as well as operating infrastructure. So kind of as part of our transformation, as you well know, we've gone through and rightsized our EV fleet based on what the natural demand is for EVs. So essentially, we've redeployed that fleet in the right channels with the majority of that fleet moving towards rideshare business. And that puts EVs into real high-intensive operating environments. And that helps us accelerate our learning curve. So specifically with our Tesla fleet, just to give you an example, we're in the process of doing an interior refresh on that fleet. So it's really given the where we've encountered on the interiors over the last several years. So this is a low-cost investment per vehicle for us. And then the vehicle condition comes out looking nearly new and then extends the life of the useful life of that asset. And then, of course, has considerable economic benefits for us on that fleet. So we got a world-class maintenance and tech ops team. And they've done this all their life really on older generation aircraft, applying a similar approach where we refurbish the interiors and do it at a low cost. So it's what's happening with our Tesla fleet. And ultimately then, I think with that fleet, the limiting life factor will be battery life at this point, kind of given the current battery replacement cost. But even that could change in the future. But we got to remain agile with our EV fleet. It's really set us up well, though in our rideshare position. And then it's probably worth noting that, that experience we've been building with EVs really sets us up well in the future for AVs because I think every future autonomous vehicle will likely be an EV. So all that will bode well for us in the future. Operator: Our next question comes from the line of Chris Stathoulopoulos with Susquehanna International Group. Christopher Stathoulopoulos: So Gil, if a lot of commentary here on the mobility business, your prepared remarks I think you said mobility has the potential to more than surpass rent a car. So could you dig into a little bit more here on the future potential of the mobility business for Hertz? What does that look like? What is the plan for the next year, 1, 3, 5 years, if you could? Just want a little bit more detail on how you're thinking about that. Wayne West: Thanks, Chris. I mean, obviously, as we mentioned in the call, the potential is significant here, and we continue to position Hertz for the future of mobility. And I think we'll be a big part of that because we've got -- we've already got great partnerships in the rideshare space. So as you think about kind of the next step of mobility, it's really the evolution of rideshare into autonomous. So we've been piloting some innovative new models with a strategic partner, and we're starting to scale some of those. We'll talk about those in the future. But I think we're a natural player in mobility and ultimately, the AV space as it continues to evolve. So we've got really an incredible team leading our mobility business. I'm extremely bullish about what that future looks like. So maybe just to recap, as I see it, at least, how the space plays out. First of all, it will be a huge TAM, if you will. We had some comments in the script about that. And it's not a winner-take-all game. It's very big. And I think we're -- Hertz is really one of just a limited number of companies that have all the necessary ingredients to be a major player in AVs, right? Our core business is owning and operating large fleets of vehicles. And that's a foundational requirement in AVs and the model for mobility going forward. So we've got an iconic brand. We've got a global footprint. We got operational excellence. We got really advanced maintenance capabilities. And then, of course, large fleet management skills and as I mentioned -- just mentioned, experience managing EVs. And again, I'll just reiterate, I think in the future, almost all AVs will be EVs. So that experience will be a big stepping stone for us. But we've got rideshare experience, the infrastructure. We're an asset-heavy business, but we've got the vehicle financing capability. And then we've got a team literally with years of direct AV operating experience. So I mean, in sum, I think we've got the right ingredients to do it. We're focused on it. But I'd be remiss if I also didn't say we're also focused on making sure the core business is turning, head in the right direction, and we're not going to be distracted by anything around that. But we can do more than one thing, and we are and mobility is a big part of our future. Operator: Our next question comes from the line of Dan Levy with Barclays. Dan Levy: I wanted to go back to the question of DPU. And I know your North Star metric is the $300. But perhaps you could just walk us through again the path to how you can sustainably be at that $300 given some of the vehicle inflation that we've seen, what offsets do you have? Because just mathematically, if you're holding a car for 18 months and the price is going up, that DPU is going to just increase above $300. So what offsets do you have to get it to that $300? And what's the confidence on that? Wayne West: Yes. Thanks, Dan. I appreciate the question. I'll start, and Scott, feel free to add. But yes, we've got confidence that kind of our end-to-end fleet strategy that we've talked about in the past will work in any environment, first of all, and we can maintain the sub-300 DPU this year and beyond. So although as we noted, there's some seasonality in the trends and some volatility. But we've rotated the fleet. We've got model year '25, '26 vehicles to sustain our depreciation North Star and the used car market set up well this year as we move forward. We've also pivoting into heavier retail car sales, along with shorter hold periods. And I think both of those will be tailwinds for us as we go forward. But ultimately, it's about managing the right buy, hold and sell at a make-model trim level in order to maximize the retention value over that whole period. It's not necessarily the cap cost. It's the retention value from what we buy it for the net purchase price and what we sell it for. And that retention value then over that whole period is the key. So -- and managing that really gives us the ability to hit our DPU targets. Scott Haralson: Yes. Dan, it's Scott too. I'll just add an important sort of mathematical component here. Obviously, we buy a ton of vehicles at sort of large volumes that are significantly below MSRP. And at that sort of discount level, I mean, ideally, you turn around and sell the vehicle the next day, obviously, to monetize that discount. But obviously, we can't do that, and we rent the car for a period of time. But to Gil's point, the idea of a short hold has significant mathematical components, albeit operationally complex because you do need a large inflow of vehicles, you need the piping to be able to exit vehicles at that volume. So the combination of all those things create the ability to optimize DPU that we think will be below $300. And we have the capabilities to drive it a good bit further once all of the components sort of start humming. So I think mathematically, you could easily get to that point. And historically, the rental car business has been well below $300. So I don't think we're charting new territory here, respectively. But I think there's a lot of components that we've definitely gotten good at, and we'll continue to do that. But I think mathematically, it's important to sort of think of it around those factors. Dan Levy: Great. And if I could just ask a follow-up on the liquidity standpoint. So I appreciate the commentary on Q2 being the trough and some other liquidity actions. But just given you're still going to be a ways away from being free cash flow positive, maybe you could just comment on the free cash flow dynamics. But in the absence of that, what other capital raise options you have to keep the liquidity in line until you hit free cash flow positive? Scott Haralson: Yes. Let me touch on a couple of points there, Dan. I think we'll make pretty sizable strides in free cash flow generation in '26. Obviously, post Q1, if you sort of look at the margin profile, we'll be somewhat cash flow neutral in the year post Q1. And so the -- obviously, we got to drive the business in '27 to the point where we become cash flow positive, covering all of the components within our working capital needs. But we talked about a few things that we have in the pipeline, the $200 million initiative that we created, which was an alternative letter credit facility that reduces the need for those funds to be taken out of the RCF. We have a large number of initiatives that are not your typical sort of first lien offering, which we have as well that talk about things like more capacity within our ABS structure. We have real estate assets that are both locations we no longer need. I mean we're a 100-year-old company. So we have some excess assets that we need to monetize as we optimize our facility footprint. But we also have other locations where we do operate and want to continue that we may do sale-leaseback transactions on at a very good cost of capital. That's a better capital allocation than owning real estate across the entire network. We also have a number of strategic initiatives to grow our franchise base, including new geographies where we don't operate today, plus some locations that are corporate-owned and operated, which are desirable franchise opportunities that are both strategically interesting, but also create an upfront capital infusion opportunity. So there's a whole host of items here that give us a good bit of flexibility, including the first lien capacity that we have, which is roughly $400 million. A lot of that comes from the rolling off of some of the RCF capacity that we can refinance in the year. Operator: Your next question comes from the line of John Healy with Northcoast Research. John Healy: Gil, I wanted to go to a comment that you kind of weaved into the prepared remarks a few times, you used the word off-airport. And you seem to use it in separation with the word mobility. So would just love to get your view on the word off-airport, what you guys are doing there. If it is separate than the mobility business, and is it related to maybe a desire to get back into the insurance business that the company was in a while ago. Wayne West: Yes. Thanks, John. Yes, just to clarify, I appreciate that question. The way we were using it, the term off-airport was in respect to our rental car business, not for mobility. So it's a separate and included part of our rental car business. And we consider, of course, on-airport and our what we call Hertz local addition, off-airport volume in that mix. And maybe just for context, that growth in that, we do see the growth and it's profitable growth for us, and we're disciplined about that. But if you recall, as we rotated the fleet, we had to shrink our fleet in order to accelerate the rotation of the fleet. We're managing capital. We're managing vehicle availability. We're managing -- working our way through depreciation, all those things. So we had to shrink to accelerate the fleet rotation. Essentially, we kept our airport capacity more or less flat during that period. And we shrink in our off-airport HLE location and to some degree, our mobility business. So as we think about off-airport and growing that business in '26, it's really just kind of going back to where we were in prior years is certainly the first step of that. The demand is there, again, in various segments. And so that's really the context of off-airport. Mobility is separate, right? We're growing that business. It's even at a much faster rate than off-airport. And it's through the partnerships. And again, that's got, we think, a long runway. Scott Haralson: John, this is Scott. Just a quick comment. I think we view those businesses differently, too, by the way. The airport has different demand profiles, obviously driven by airlines and TSA demand, our off-airport business has a different cycle to it, obviously, related to insurance replacement and even some of the leisure demand and commercial components operate on a different cyclical component. So as we think about growth profiles, profitability profiles. We do view those a bit differently, which is why when we talk about growth, we segment it out into the sort of airport off-airport, rideshare components just because they behave differently. John Healy: Great. And then just one question on cap structure and balance sheet. You guys have said that, I believe, 300 to 600 basis points of EBITDA margin this year. If you're at the high end of that range, does that get you towards kind of cash flow breakeven for the year? And just longer term, any thoughts about the approach to deleveraging here? I mean, even on the '27 goal of $1 billion in EBITDA, even if we earmark a lot of that improvement to debt repayment, we're still an awfully levered company. So just wanted to get your thoughts about how we bring down leverage. And I know you talked about sale leaseback and some of those things. But I would just love to get your view on ideal cap structure and hypothetically, like maybe when we could be below certain leverage levels? Scott Haralson: Yes. John, it's a good question. Obviously, the business has to get to the point where it can cover its sort of debt servicing and working capital needs. I mean you could probably do the math within our balance sheet, but the sort of free cash flow breakeven number sits in that sort of 6% to 7%. So yes, at the high end of that, we're going to be pretty close to sort of free cash flow breakeven for the year. And I've said this before, obviously, the business has to get to the point where it's producing free cash flow to start thinking about using those funds to delever. There are other components that will take place in the future as well as we refinance. We may have the capability within our stock price to use equity at some point in the future that we've talked about that we're definitely price sensitive to that because we are so optimistic about where the business goes. And the other components of that, that we think through are how the platform and the initiatives will play out in forming the ability to delever. We think the components of mobility and fleet car sales will both drive operating profits to the business as well as an infusion of equity capital that may also participate in all the holistic views of capitalizing those components necessary to grow those businesses, but also helping the cap structure at the same time. So there's a lot of moving pieces, and this is going to happen over time. But the first step is getting the business on solid profitable footing. Operator: Our next question comes from the line of Ryan Brinkman with JP Morgan. Ryan Brinkman: With regard to the Hertz car sales strategy, what are you expecting in terms of the percentage of vehicles disposed of via various channels in 2026 relative to 2025? And maybe looking beyond this year also, what is assumed already in your North Star target for per unit depreciation of under $300 per month or $1 billion of EBITDA in '27 versus what level of disposition performance would be incremental to those targets? Wayne West: Yes. I'll start with the latter point, Ryan. Nothing, right? We're not assuming that Hertz car sales factors into the $1 billion of EBITDA in '27 or really anything material this year. The real key from a growth standpoint, there's 2 points I would make here on Hertz car sales because we do want to grow the percent of car sales that we have into retail. Keep in mind, historically, what we've done is to move volume through the rental car seasonal periods and do it through wholesale channels in order to match the timing of kind of the ins and outs of that. So we're shifting our strategy to move the bulk of that volume through retail channels and shorten our sales time to do that. Today, we're roughly at, call it, about 1/3 of our cars move through retail channels. Today, that's both Hertz car sales, our direct sales along with retail partners that we have established to move volume through. Aspirationally, we want to grow that to about 80%. So there's a path there, and we're pushing hard to do that. And then if you peel that back, I think we tried to cover a little bit of this in the script, but we see kind of a couple of pieces to that, right? We've got a physical footprint today. We've been investing in our digital channels and e-commerce as well. And the combination of those creates a really good model for us, right? So we can meet our customers where ultimately they want to be, right, rather than just relying either/or on a physical channel or a digital channel. So that combination is really important for us. We've got a lot of great ingredients to drive this. Of course, we've got a building customer base. People are test driving our cars every day. We've done rent to buy. We partnered with Cox to revamp our website. Again, I would encourage you guys to go see it. It's really impressive. I would also just mention, on a customer basis, the cars we sell to customers. The Net Promoter Scores of those buyers are as high as anything I've ever seen anywhere. They're over 90% Net Promoter Scores. That's almost impossible achievement, candidly. So the experience is already good. We've got a great trusted brand. And then it's a matter of top-of-funnel demand. We've got big partnerships that drive that. And then the real problems for us to solve are distilling that into qualified leads and conversion rates. And the team is really focused on that. We've got some great people helping us. And that -- those are the real keys. Along with driving up our net margin per sale. It's not just about volume. Ultimately, it's about adding a few thousand dollars to the net here, selling hundreds of thousands of cars where we have the material impact. So the net margin is key in the equation. We've been focusing really hard on reconditioning cost, along with capturing F&I that on the back end of the transaction that we've never had. So combination of those 2 plus selling more digitally reduces the overall selling expenses. So -- and we're seeing the margin side heading the right way on a per car basis, and then it's about increasing volume. We're -- look, it's -- this isn't easy, obviously, but we got the ability to -- again, we've already got the scale. It's just a matter of channel shift in the way we're selling. So a big opportunity for us. Ryan Brinkman: Okay. And then lastly, with regards to the more sophisticated approach to pricing that you referenced in your prepared remarks is leading to higher revenue per unit, and you expect to contribute more, are you utilizing a refining a new or existing software system? Or what would you say are the drivers of the progress so far and the catalyst for further improvement? Scott Haralson: And just to clarify, are you talking about the car sales or our rental business, rental car business? Ryan Brinkman: Now the rental, the pricing that's baked into the RPD. Scott Haralson: So we're doing the same, by the way, on the cars. But go ahead, Sandeep. Sandeep Dube: Yes, this is Sandeep here. Yes. Thanks for the question there on pricing sophistication. So see, we are relooking broad scale how we price demand overall, right? And it's a combination of improved systems. And we've talked about this in prior earnings calls around our work around there. And that's a longer term, and we are well on that journey. On top of that, you have to always relook how you structure your pricing and the approach that you use within the systems, right? And that's the piece that I referred to when I talked about Q4, where we've infused the revenue management team with some new talent. There's some really good thinking that's going on there. And we've applied different queries into how we actually price for demand, and that's leading to a different outcome there. So I think it's a combination of systems and different thinking. And by the way, this is still in the early innings of how we kind of go about this. This is a journey, and I expect continuous improvement on this front. Operator: Our next question comes from the line of Chris Woronka with Deutsche Bank. Chris Woronka: So the second question is going to be kind of as we think about the $1 billion target for next year on EBITDA, we know that the North Star targets are kind of numerically. But if I think about how much fleet maybe that requires? And then also more importantly, on the revenue side, maybe you can, at a high level, directionally bucket for us where you think -- is this market share on corporate? Is it market share on leisure? Is it more rideshare where you don't maybe have quite as much direct competition? If you could maybe, at some high level, bucket those out for us, what you think drives that would be super helpful. Wayne West: Okay. Well, I'll start, and I would encourage Scott and Sandeep to dive in. Thanks, Chris. Yes, first of all, I think in terms of the $1 billion EBITDA in '27, I mean, a little bit of context, at least from my view, I mean these aren't uncharted waters, right? We've been there in the past. Others in the industry are there now and achieve that level of performance. So it's clearly achievable. I think the North Star financial targets that we've given on DPU, RPU and DOE, along with some just modest growth, get us there conceptually, and we can talk about any of those assumptions. And then, of course, the approach we've taken on back to basics laid a foundation to get there. The trajectory of all those metrics are heading that way, right? They turn, they're heading that direction. I think the biggest economic lever, as you know, is the fleet, which we've addressed, and that's the economic engine. And we're tracking really with all the North Star metrics directionally where we want to go. We'll never be satisfied with the timing and we'll keep pushing hard. That is the one variable that's always a little difficult to gauge given the kind of nature of the significant transformation we've been doing. But there's a strong sense of urgency at the team. Everybody is full throttle. The needles are moving. So we've talked about depth some, maybe the revenue piece, you want to touch on. Sandeep Dube: Yes. On the revenue piece, I think, again, it's going to be very, very disciplined growth, right? And going back to our business lines, right? On the airport side, we're going to be very clear that our growth is going to be at or below TSA levels. And the beauty in there is we're going to keep refining the segments that we -- the segment mix there so that we generate a higher and higher margin out of our airports. And for the off-airport business, again, there's more growth there, and we'll keep working on that. I think Gil alluded to that earlier on. By the way, there's a segment mix play within the off-airport segment business line as well, which would help us enhance the margins there. And then lastly, mobility, again, we have talked about that. There's more growth there. We're growing that business at a pretty good clip and we'll continue on that journey. But I would say discipline in where we grow and discipline on how we fleet is the answer there. Scott Haralson: Yes. I think just real quick before we wrap up the call here, Chris, is that I think mathematically, all 3 levels of the North Star get you well above $1 billion. I think the point here is that there's a number of ways to get there. They all don't have to hit to hit $1 billion, plus you've got the fourth dimension of scale, which plays into here. And then we really haven't even talked about the platform component that adds on to it. So Gil talked about timing, but I think the takeaway is there's multiple ways to get there. Operator: There are no further questions at this time. This concludes the Hertz Global Holdings Fourth Quarter and Full Year 2025 Earnings Conference Call. Thank you for your participation.