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Thomas Russell: All right. Tony, we're ready. Tony Sheehan: Thanks, Tom. Good morning, and welcome to the H1 FY '26 update for Change Financial. My name is Tony Sheehan, CEO of Change, and I'm joined by Tom Russell, Executive Director. Similar to our usual webinar format, Tom and I will run through a presentation and then take Q&A at the end. If you do have any questions, please submit them through the chat function on this webinar. Okay. Just a little bit briefly about Change Financial. So, Change Financial provides innovative and scalable payment solutions for over 150 clients across more than 40 countries. We are a B2B business with 2 core products. The first being Vertexon, which is our Payments as a Service offering, which provides card issuing, card management and transaction processing. Vertexon supports prepaid, debit and credit card issuing, and there are 2 main models under Vertexon, the first one being processing only. Under this model, we provide the technology, which is a card management system to clients to run their card programs. The clients hold the necessary scheme and regulatory licenses to issue cards. So processing only is available globally and supports all major schemes. And we have clients using Vertexon in Southeast Asia and Latin America, including 2 of the largest banks in the Philippines running over 45 million cards on the platform. The second model is processing and issuing. This is only available in Australia and New Zealand. And under this model, clients utilize Vertexon for processing capabilities and leverage our regulatory and scheme licenses and issuing capabilities. So under this model changes the card issuer record and provides treasury, fraud and compliance services. Vertexon generated 85% of the group's revenue in H1. Our other core product is PaySim, so that's software, which enables end-to-end testing of payments platforms, processes and scheme rule compliance. The PaySim software is based on global messaging standards and can be sold globally. PaySim is the default testing standard for EFTPOS in Australia and has a blue-chip client base, including 5 of the top 10 digital payments companies. PaySim contributed 15% of the group's revenue in H1. So importantly, for both the Vertexon and PaySim, they are proprietary payments technology platforms, which are owned and developed in-house by Change. So this is an important -- this is important from a value and control perspective for the company. So, if we look at some highlights, so really strong financial performance in H1 with a record half year revenue result of USD 9.3 million. So that's up 29% on prior year. 70% of revenue is derived from recurring sources. So this provides a very solid base of revenue to grow from. The proportion of revenue from nonrecurring sources increased during the half due to the strong performance from licenses and professional services revenue. So one-off revenue is an important driver of overall financial performance and was a key contributor to the strong financial performance during the half. Our rolling 3-year revenue CAGR to 31 December is now 25%. Underlying EBITDA for the half was USD 1.8 million. So, this is a material improvement on the underlying EBITDA loss of USD 0.5 million in H1 FY '25. The key drivers of this significant improvement in the underlying EBITDA were revenue growth, stable fixed cost base and the U.S. cost outs from the exit of the U.S. operations. Now if we isolate the impact of the U.S. cost-outs, H1 FY '26 underlying EBITDA was USD 1.9 million versus an underlying EBITDA of USD 400,000 in H1 FY '25. So, we also delivered a maiden profit of USD 600,000 for the half. So that's a real key milestone for the company and something we're very, very proud of as well. We are seeing the operating leverage pull-through we've been talking about. We've been talking about this for the last few quarters. We want to continue to drive operating leverage moving forward to generate margin expansion as we continue to scale. So, PaaS is a key driver of our growth, and we have seen strong growth in PaaS metrics across the board. We now have more than 110,000 cards active in Australia and New Zealand. That increase in cards was driven by the Sharesies debit card program in New Zealand, which launched in October and also significant growth in one of our existing fintech clients in the prepaid card space. So, we will continue to drive revenue growth on the PaaS platform through organic growth from our existing clients. Our new clients already signed. So, we're currently onboarding 2 clients and also further client wins. One of our key priorities across the business is growing our PaaS client base in Australia. So, increasing our footprint in Australia will drive scale benefits. So, we have the product and the team in place to add significantly more clients and volume without having to increase our cost base. There's a significant opportunity in market size in Australia as well. So, we want to really replicate that success that we've had in New Zealand and bring it here into Australia as well. Over to you, Tom. Thomas Russell: Okay. Thanks, Tony. So, we cover a lot of this information in our quarterly webinars. So, the slides are here for new investors, but I won't spend too much time going over the same ground. If you do have specific questions, please ask them using the Q&A function, and we are more than happy to answer them at the end. As Tony said, we've had a great growth in our active card numbers with a significant number of new cards added late in the half. Active cards were up 66% versus H1 last year. We obviously finished onboarding and launched a significant fintech client in New Zealand in October last year, and we're also currently launching another significant fintech client who will soon be migrating existing cards across the Change. We report active cards, which is a leading indicator for expected activity, that is transactions and transaction volume. We want clients growing because the PaaS model is designed to support our clients through launch and then their growth is also our growth. The types of fees we earn from our clients are listed there in the bottom left table. Generally, the largest driver of PaaS revenue is a number of transactions, but we also charge for active cards volume fees depending on the type of transaction and other valued fees you see there. Okay. The 2 clients I just mentioned that have recently launched and are in the middle of launching already have a significant cardholder base and the volumes are starting to show in the coming periods. Change is a B2B business and sales cycles can take a while. But importantly, once clients are onboarded, they can be very meaningful from a revenue perspective and as clients go through their own rollout plans and their multiyear deals. One question we get a lot is, are you actually going to be able to compete in market? Why would someone use Change over a competitor? Well, if you look at this chart, 6 of these clients were one of competitors. So the answer is yes, we can and are competing in market. We are winning on features, service and reliability as one of the only options in market now that owns our own technology. So in short, we've already proved we can win clients. The graph here shows that both competitors -- from competitors, banks and other issuer processes, and we can win net new programs. The key focus for us is building up the number of clients on the right that are contracted and going through the onboarding process. We won a new client in Q2, which is just about to start onboarding. And with the momentum building and more of the deals maturing through the pipeline, you should expect to see the box on the right starting to grow again very soon. All that will drive recurring PaaS revenues in the short-term, but also over the medium to long-term. I've presented this slide before as well, including in our full year results. So I'll just quickly touch on the key points for anyone new. Firstly, the scalability of Vertexon. Our clients process and manage over 45 million debit and prepaid cards on the platform, including one client in the Philippines who issued more than 40 million cards. For our Vertexon on-prem clients, we historically sold a one-off license to them. From that point, clients pay an ongoing support and maintenance fee of around 20% for as long as they continue to use the platform. That includes us pushing quarterly updates to them to ensure their system remains compliant with the card scheme mandated changes. Importantly, many of these clients have been with us for more than 10 years. Vertexon is a core system for them when they roll out new features, for example, the Southeast Asian client recently launched a credit card offering. They pay new license fees plus ongoing support and maintenance. Some clients also expand card tiers, which drives additional license revenue. Revenue here is generally not linked to transaction volumes. PaySim operates in a very similar way. Clients pay an upfront license fee for the modules they require and then ongoing support and maintenance to receive quarterly scheme updates. It's highly modular. Clients typically start with 4 or 5 core modules and then they add additional testing functions over time, which drives further license and recurring revenue. Across both products, particularly Vertexon on-prem, we also undertake customization work where required, generating professional services revenue. Talking explicitly to the financials now. It was a great half financially for Change, a record revenue half with USD 9.3 million of revenue or AUD 13.3 million of revenue, which is up 29% on H1 FY '25. PaaS is now the biggest contributor to revenue and Oceania has overtaken Southeast Asia as well as our biggest region in the last 12 to 24 months. I like sneaking this into every presentation, too, but we've had consistent quarter-on-quarter growth now for the better part of 3 years, and we are on track to have doubled the revenue in the business in the last 3 years by the end of FY '26. Pleasingly, revenue was up across the board and recurring revenue continues to build. The revenue waterfall chart here clearly shows where the revenue comes from across the business. The growth in revenue is being driven by our PaaS clients, but also our Vertexon clients who use Vertexon's core system and have had it deployed into their banks for a long time. The team is doing a great job at managing project pipelines, and we are seeing that work and resulting revenue dropping through at higher rates than in previous years. As a reminder, approximately 70% of our global client base pays us in USD, 20% in New Zealand dollars and 10% in AUD. Turning to the profit and loss. So again, USD 9.3 million of revenue in the half. You can also see the benefits of the cost reduction and exiting the U.S. operations, which is now materially completed, and we're in the final stages of the process to wind down the U.S. subsidiary. As we always say, we have the team in place to support significant increase in revenue, and that's the power of the platform. We are now starting to also see the benefits of AI multiplying the scalability of the platform, and Tony will talk through this shortly. Significantly, we recorded a significant step change in underlying EBITDA with a positive result of USD 1.8 million for the half. For context, we made a USD 0.5 million EBITDA loss last year in H1, and we only recorded USD 200,000 for the full year of FY '25, a 9th of the half year result. This clearly shows the inflection point the company is going through. Looking at PaaS margins, these have started to expand as we have advised they would. Margins in FY '25 set around 26%, but in H1 FY '26 have moved to around 30%. We still have heavy onboarding activities, which we continue to expect to have as more clients are onboarded, but the impact of these lower-margin revenues and even costs during onboarding are diluted by higher recurring base of transactional revenue. As we scale, fixed costs like connectivity and digital pay certifications are spread across a larger revenue base and will support ongoing margin expansion. Turning to the balance sheet. At the end of December, we had USD 2.6 million of cash at bank, an additional USD 1.4 million of cash-backed security deposits. As flagged at the full year, we have started splitting out client settlement funds that sit on our balance sheet as well. These relate to our PaaS business. They were USD 2.5 million at 31 December and fluctuate depending on the day of the week. There also is an offsetting liability for USD 2.3 million, which is labeled scheme settlements payable, which we've now split out from other trade and other payables. We also maintain a healthy balance of contracted liabilities. These are already contracted paid for support and maintenance as well as professional services work that will be unlocked over the next 12 months. In the first couple of months of H2, we've also contracted some large projects with Vertexon on-premise clients that are not reflected in that 31 balance. Overall, the balance sheet is in very good shape, and we continue to drive profitable growth. We'll continue to strengthen the balance sheet. In terms of cash flow, the significant improvement has been driven by a significant increase in cash receipts, but also the stable fixed cost base. The increase in operating payments is primarily driven from PaaS COGS as volumes and revenues increased. CapEx has stayed relatively stable with capitalized software development only up slightly on the back of additional revenue-generating features rolled out to clients in the half. As we always point out, given the billing cycle and cash usage cycle in the business, H2 is expected to be much more improved again on a net cash flow perspective and remain on track to hit our target of cash flow positive guidance for the full year. Back over to you, Tony. Tony Sheehan: Thank you, Tom. So just briefly touching on the large market opportunity that we have in front of us. Many of you on the webinar today would have already heard us talk around this, but there are some new people on the call. So, I will go through this, but I'll go through it pretty quickly. There is more details in the appendix. So, we have a very large market opportunity for Vertexon and PaySim. So, what is our focus really to capitalize on these opportunities? We have identified target markets. So, for Vertexon, that is Australia, New Zealand and Southeast Asia. They are the regions that we are gaining traction and winning. For PaySim, it's global as the product can be sold globally without modification. Secondly, we have pivoted towards outbound sales hunting. So, we have reshaped the sales team and pivoted towards outbound sales. So, the BDMs that we have hired over the last 12 months continue to aggressively target outbound sales opportunities. Thirdly, it's growing and leveraging the partner ecosystem, so expand our partner ecosystem and work more closely with existing partners to drive mutual value. That partner ecosystem provides a one-to-many sales approach, which can be very effective for both Vertexon and PaySim. Fourth is cross-sell and upsell. So, work with our existing Vertexon and PaySim clients to drive project work, and for Vertexon clients, continue that journey towards migrating to PaaS or the latest on-premises version. We upsell the modern functionality and features to clients, which also drives incremental revenue across both products. So, if we look at some key operational achievements. So, to deliver on our financial results that Tom has just gone through, we have a clear and focused operational plan. So, some of the notable operational highlights for H1 include from a commercial perspective, we integrated a marketing campaign automation tool and commenced marketing nurtures for Vertexon and PaySim. So, this is to increase brand awareness and lead generation. We expanded our partner ecosystem. So, we signed 3 new PaySim partners and a new BIN sponsored partnership with a global processor. We also launched our first BIN sponsorship client in New Zealand. We've talked about them before, the Sharesies debit card program launched in early October. From a product perspective, we significantly enhanced the Vertexon PaaS digital capabilities. So, we upgraded our digitization offering, and we broadened our SDKs or our software development kit to enable faster and deeper client integration. So that's really key from a sales perspective as well is having a rich SDK, which does make it easier to integrate and offer more functionality. We continue progressing the PaySim modernization project. So, we completed a 64-bit upgrade to increase testing capacity for our clients. We also enhanced the PaySim ISO 222, which is account-to-account payments product offering. So that complements our ISO 8583 offering. And we completed dual domestic EFTPOS network connectivity in New Zealand. So that's important for our debit card programs and in particular, our financial institution clients as well. From an operations perspective, we strengthened the Vertexon PaaS platform monitoring to maintain high availability as volumes continue to scale. We also undertook ongoing high availability infrastructure improvements, again, for continued scaling. Some of the clients that we're in discussions with and one that we've won recently really is around the resilience and stability of our platform. So that is key for us from a business perspective. We also deepened AI integration across the business, and I'm going to talk more in more details around that now in terms of AI. So, if we look at -- looking a little more deeply at AI and what it means for our business. So AI is rapidly evolving on a daily basis. The enhancements in capability, particularly in the last few months is quite extraordinary. So, the evolution of AI has now reached the point where it can create significant opportunity and value for Change. AI is not new to us. So we already utilize AI in products, for example, fraud monitoring and over the last 24 months, have deployed AI to assist development and other business units. Now with the recent transformational improvements in AI, we are changing the way we adopt AI moving forward. We are embedding Agentic AI across development, operations and client delivery. This will enhance structural advantages and drive operating leverage across the business. So, what is the impact we see from embedding Agentic AI across our business? Firstly, it's around defending and deepening the moat. So, we have proprietary platform control. As we mentioned earlier, we own the technology for Vertexon and PaySim. So this enables faster execution versus competitors reliant on third parties. We have over 20 years of institutional trust in our products. So AI improves our resilience and scalability. Embedded proprietary business logic, so compounding advantage as AI trains on our internal data. There are also some things which AI can't shortcut. So for example, scheme certifications and regulatory licenses and compliance. From our perspective, AI strengthens our competitive moat rather than eroding. Secondly is to accelerate revenue, so faster product releases. So development cycles compressed from months to weeks. So, this will accelerate our product road map delivery, which is super exciting. Will enable faster client onboarding through reduced implementation time frames. It will enable more customization capacity. So that's improved -- that will improve our ability to win large and complex deals. And it will also improve client responsiveness, so stronger retention and cross-sell expansion. The third pillar that we see there is really to drive margin expansion and operating leverage. So increased developer productivity, so far greater output per employee. There will be automation assistance with support and reporting, reduced rework and testing cycles. The operational task, automation, so workflow enhancements to reduce manual engagement and also expanded operational capacity. So, AI will augment teams and drive financial efficiency. So, we are in a super exciting period of evolution for our business. In terms of the outlook, so on the back of a strong H1, we upgraded our guidance for FY '26 in late January. Many of you will be aware of that. Revenue is now expected to come in between USD 17.5 million and USD 18.5 million. So, the increased quantum of recurring revenue provides a very solid base for the business. Underlying EBITDA is now expected to come in between USD 3.1 million to USD 3.8 million. So that's a 15% increase at the midpoint compared to previous guidance, which we released in July. We've also maintained our guidance of being cash flow positive for the year. So as Tom mentioned, historically, our cash flow has significantly improved in the second half of the year. We expect that to be the case in FY '26 as well. So overall, it's been a great start to FY '26. Our focus is on growing the business and executing on our operating plan to deliver on our targets for the year. Tom, we might turn over to Q&A. I think we've had some come in. Thomas Russell: Yes. Thanks, Tony. Okay. So. the first one here is from Miles at Veritas Securities, who has recently picked up coverage of the stock. Thanks, Miles. To what extent are AI and automation enhancing your sales and marketing capacity? Tony Sheehan: Yes. So good question there. I think let's start with the marketing. What the -- what AI is enabling us to do is establish content faster, whether that's white papers, whether that's lead generation materials as well. So that's sort of the first pillar is around that content. It will also likely enable us to do AI-powered lead scoring as well. So, we will use signals, web visits, content downloads, engagement frequency to enable targeting to potential clients there. So, it will continuously learn from our CRM data that we have and refine that and refine the nurtures and the campaigns that are going out. And then what we would be hoping that will come out of that as well is the identification of more sales-ready leads earlier. So that directly leads into the sales side of the business as well. I did talk around the enhancements that Agentic AI, we see coming across the business in terms of product delivery, the road map, customizations as well and onboarding -- the speed of onboarding of clients. So, we think that when you combine that with marketing and the product from a sales perspective, we will reduce implementation friction, increase confidence, particularly during those large and complex enterprise procurement processes there and accelerate our sort of revenue recognition for new contracts. Thomas Russell: Thanks, Tony. Next one from Joe at MST. Congrats on the great result and maiden profit. Just wondering if you can give any color on the current sales pipeline. Tony Sheehan: Yes, I'll take that. So, the sales pipeline at the moment is in very good shape. We've got some very good opportunities that are down the bottom of the funnel, so well advanced in Australia, which is great on the PaaS side. Tom mentioned around when we talked around that onboarding slide where you can see the number of clients and building out that box down the bottom right in terms of clients that are signed. We will be looking to really build that out over the coming quarter or 2 as well. So, from a sales perspective, looking very strong there, which is great. We just need to get those conversions and close those deals hopefully in the coming months as well. And then Southeast Asia, we are still seeing good traction up there. We've got some really marquee clients up there, which is driving a lot of our professional services and license sales on the Vertexon on-premises side as well. So, some great opportunities coming through. Joe, needless to say, we just need those to drop through in the coming months as well. Thomas Russell: Thank you. All right. Laf from MST, who also covers the stock. I appreciate the extra color on AI. Can we talk to specifics on the costs and how they may change and investment versus possible savings? I'll let you take that one, Tony. Tony Sheehan: Yes. And Tom, jump in on this as well. So Laf, in terms of where we're at with that AI, that is rolling out in a very accelerated manner across our business. I think in terms of the costs and what that will change, we will be working on that in more detail in the coming sort of couple of months as well as we -- as that rolls out across the business. So, probably a little bit early for us to sort of talk around that investment and possible savings. Tom, I don't know if you've got anything you want to add to that? Thomas Russell: Yes. The only thing I'll say is that the actual AI tools don't cost a huge amount of money. So, it might surprise you, but we're not talking about huge amounts of money to make that investment in AI. We've already started doing that, as Tony said, over the last 12 months in particular, but the additional cost of AI is not great. And I think we can provide a bit more color on that in the coming sort of months to 6 months. Okay. Another question from Laf. Are the 3 wins in PaySim net wins, new wins? Tony Sheehan: Yes. So, they're partner wins, so they are net new partner wins, Laf, on the PaySim side. And so, they're in most of those -- one partner was in Latin America, 2 were in the Middle East as well. So, regions where we can sort of leverage that partner network to sell PaySim licenses in region. Thomas Russell: So, we sell a lot of licenses through partners currently in different parts of the world as well. So, we use them as a distribution channel. And what worked in the pitch for PaySim, how do you seriously move above a less than 0.5% market share? Tony Sheehan: Yes. So, with PaySim, it is extremely functionally rich. So, the software itself, functionally rich. We have resellers that have their own testing tools as well, but they sell PaySim because it is more functionally rich. In terms of how do we move past that 0.5%, we are undertaking a modernization of that product, so to improve the look and feel of that. That's where we would expect our Agentic AI to really accelerate that modernization of PaySim. It's also about direct sales. So, we've moved towards outbound sales hunting with the appointment of new BDMs last year, and that partner network, we talk around that one-to-many partner network for distribution as well. So, it really, Laf, comes from product. So that modernization is very functionally rich. Let's modernize it to improve the look and feel and then direct sales and partner sales, I think the partner sales network, which has been very good for us historically. We need to accelerate that, and that's one of our key focus areas. Thomas Russell: Back to AI. Do you think you can use it for any horizontal opportunities as a new revenue potential? Tony Sheehan: Look, in terms of horizontal opportunities, I mentioned it earlier around accelerating our road map. We have road maps for Vertexon and PaySim. Where I see the AI coming in is the acceleration of that, which is new products and features. So that is revenue potential. So absolutely see AI as accelerating our revenue potential and growth there. Thomas Russell: I've got another question here. What is the cost of remaining listed? Would the company not be better off being privately held? Look, that's something that people ask us from time to time. The cost is probably about USD 400,000 a year in terms of being listed. It's not cheap to be a listed company, which is why you see in the market now companies need to be bigger before they list. Look, it's something the company could consider, but we've got about 2,000 shareholders who I'm not sure would all appreciate being a private company. So, for now, we'll be staying listed. Michael from MST. Can you touch on some of the future products or enhancements you guys may be exploring over the next 12 to 24 months? Tony Sheehan: Yes. So, Michael, from a product perspective, if we have a look at PaySim, the modernization, which I mentioned in the presentation and also some of the last questions there, the modernization look and feel, also building out our ISO 222, which is our account-to-account solution as well. So, what we -- a core function that we have runs on 8583, ISO 8583. What we want to do is build out that functionality around account-to-account payments because that's a growing segment as well. So, that will be the real focus for PaySim. If we have a look at Vertexon, again, we have a long list on our product road map, which we go through with prioritization. Things that we are looking at, I've mentioned that we've significantly enhanced our digital capabilities on the PaaS platform. We will also be looking at loyalty and also account-to-account, so real-time payments to complement our card issuing. We're not going to be someone that competes for account-to-account payments, but it is a complementary offering for our clients around that card issuing. So that's probably some of the key things that we'll be looking at over the next sort of 12 to 24 months. And again, that's where we do expect that acceleration to happen through our sort of rollout of Agent AI. Thomas Russell: Thanks. Last question for now. Sean from Snowble. Does the use of AI affect your hiring decisions? Example, would you look at hiring less due to efficiency gains? So, I might take that one, Tony. So yes, I think that is our expectation. The platform, as everyone knows, is very scalable, and we've always needed to hire a few people to double the revenue, like we said for the future and like we've shown in the last sort of 12 to 24 months. We've had those people there the whole time. The revenue has doubled. We don't need to -- when we sign a new client, go and add more staff necessarily. There will become a point where we do. As we said before, we're sort of going through our AI rollout plan at the moment. It's happening very quickly, something we've been sort of been keeping a very close eye on and how it's going to affect us as a business. So we're well ahead of it. But over the next few months, I think we'll be in a position to talk more about that as we come into towards the end of the financial year. Okay. That's it for questions for now, I think, Tony. Tony Sheehan: Okay. Thank you for the questions, Tom and I always enjoy the engagement from investors and our analysts that cover our stock as well. Thank you for joining. Thanks for taking the time to join us on our H1 update. I look forward to keeping you updated throughout the remainder of FY '26. Lots of exciting things happening in the business. So, we'll keep that coming with our news flow as well and our quarterly updates that we provide.
Operator: Thank you for standing by. This is the conference operator. Welcome to the LFL Group Fourth Quarter and Full Year 2025 Financial Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Jonathan Rose, Investor Relations for LFL Group. Please go ahead. Jonathan Rose: Thank you. Good day, everyone, and welcome to LFL Group's Fourth Quarter and Full Year 2025 Conference Call and Webcast. LFL's fourth quarter and full year 2025 financial results were released yesterday. The press release, financial statements and management's discussion and analysis are available on SEDAR+ and on our website at lflgroup.ca. Joining me on the call today are Mike Walsh, President and Chief Executive Officer; and Victor Diab, Chief Financial Officer. Today's discussion includes forward-looking statements. These statements are based on management's current assumptions and beliefs and are subject to risks, uncertainties and other factors that could cause actual results to differ materially from these assumptions and beliefs. We encourage listeners to refer to the risk factors outlined in our management's discussion and analysis and annual information form, which provide additional detail on the risks and uncertainties that could affect future results. This call also includes non-IFRS financial measures. Definitions, reconciliations and related disclosures for these measures can be found in the management's discussion and analysis and press release issued yesterday. Forward-looking statements made during this call are current as of today, and LFL Group disclaims any intention or obligation to update or revise them, except as required by applicable law. All financial figures discussed today are in Canadian dollars unless otherwise noted. With that, I will turn the call over to Mike Walsh. Mike? Michael Walsh: Good morning, everyone, and thank you for joining us. In 2025, LFL Group delivered strong operational and financial performance. We grew system-wide sales by 2.8%, expanded gross margins, delivered 16.5% growth in normalized adjusted diluted EPS and increased our quarterly dividend by 20%. As you would have seen, I'm also excited that yesterday, the Board approved a $0.50 special dividend. These results reflect the efforts of our associates across the country to deliver solid performance day in and day out for our customers and our shareholders. Consumers were cautious and value-focused during 2025, leading to a challenging backdrop for retailers. At the same time, trust, service and confidence in the retailer became increasingly important in purchase decisions, a dynamic that plays directly to our strengths. It's worth emphasizing what execution like this requires. Strong performance in 2025 wasn't just about being more promotional. It was about discipline and judgment. Knowing where to flex in response to the consumer, how to flex and when not to is something that's built over time. That hard-earned knowledge is what enables us to maintain customer loyalty while delivering solid financial results and maintaining long-term pricing power in our core categories. I'm very pleased with how our teams delivered, driving consistent market share gains that translated into strong financial performance. Furniture was definitely the standout category in 2025 and an important contributor to our results, growing 6.3% for the year. We continue to execute on a focused assortment strategy, narrowing where appropriate, going deeper in our best-performing SKUs and selectively broadening into areas of opportunity. Strong performance we generated in the category during the year was a direct result of these decisions. Our appliance category, led by the commercial channel, also contributed meaningfully to results in 2025, supported by the delivery of previously booked multiunit residential projects. We continue to make solid progress across the replacement and property management segment and we're expanding our geographic reach. Appliance Canada has historically focused its builder and developer partnerships in Ontario. When anticipating a moderation in that market and recognizing that many of these partners operate nationally, we proactively made the decision to pilot a store within a store concept inside our Leon's location in Richmond, BC. This format gives developers a dedicated destination for customer upgrades while making efficient use of infrastructure we already have in place. In-store execution remains solid in 2025. As we discussed last quarter, our e-commerce platform continues to play an important role in driving more purposeful store visits. We're seeing higher intent customers walking through our doors and our associates are well-positioned to serve them. They know the product, they understand the customer and are focused on helping them find the right solution. Turning briefly to the fourth quarter. While we anticipated the impact of Canada Post disruptions on flyers, distribution during key promotional windows, the quarter brought some additional headwinds, increased promotional intensity in certain categories, selective consumer spending, particularly on larger discretionary items and tougher winter weather comparisons. That said, in the context of the broader market, we're satisfied with how we performed. We managed the business with discipline and delivered profitability for shareholders. Looking ahead to 2026, we're confident in our strategic position. We do anticipate some carryover of the fourth quarter headwinds into early 2026, but our model is built for an environment like this. Same focus that has driven our performance will continue to guide us, serving customers with the value they need, growing sales and market share, protecting gross margins, maintaining cost discipline and translating it all into earnings growth. From a category standpoint, we're building on what worked in 2025. Furniture remains our core strength and we'll continue to go deeper where we have scale, sourcing advantages and a clear value proposition. At the same time, we're taking a disciplined test-and-learn approach to selectively expanding our offering where we have relevance and where it makes sense for the customer across all of our focus segments. We also see meaningful growth potential for our warranty, insurance and service businesses over the coming years. These businesses complement the core retail platform, but we also see them becoming more meaningful contributors to results in their own right. We're also taking a selective approach to growing our store network in 2026. We expect to add a small number of new locations, 2 corporate stores and up to 5 franchise stores weighted towards the back half of the year. In parallel, we plan to move forward on some capital-light renovations and refreshes where targeted investment can enhance customer experience and drive returns. As we've talked about before, our strategy has never been about maximizing store count. These are destination format locations with larger catchment areas built around a full-service experience and every decision we make, whether it's a new opening, a renovation or a refresh gets evaluated through the lens of 4-wall profitability and long-term value creation. The historical results of that discipline give us the confidence to continue to grow at a measured pace rather than pursuing unit expansion for its own sake. Beyond the store footprint, we continue to make disciplined investments in the organization to better leverage our platform and support LFL's future growth. We have added senior talent across digital and technology, diversified businesses, commercial operations and real estate. These investments are about building capability, enabling us to move faster, integrate opportunities more effectively and execute with greater consistency across the business. We've been steadily strengthening our technology stack to improve how we operate, how we serve our customers and how we make decisions. This includes piloting artificial intelligence tools as well as deploying automation across the business in marketing, supply chain, forecasting and document management, among other areas, to drive productivity and organizational efficiency. We are in the early stages of this work, but we are encouraged by what we are seeing. Our focus remains on building a stronger, more capable organization for the long term. We have a proven track record of navigating cycles like this. Our scale, sourcing capabilities, distribution network and financial strength position us well to manage near-term variability and continue gaining market share over time. With that, I'll turn it over to Victor to walk through the financial details and provide more context on the quarter and the year. Victor Diab: Thanks, Mike, and good morning, everyone. I'll start with the full year walk-through, move to a discussion of the fourth quarter and then touch on capital allocation and a few considerations as we enter 2026. Overall, we're very pleased with our performance in 2025. For the year, revenue was $2.57 billion, up 3% year-over-year. Growth was led by furniture, along with a solid contribution from the appliance categories led by the commercial channel, as Mike highlighted. In commercial, performance reflected the completion of previously secured multiunit residential projects that moved through deliveries during the year. As we've outlined, we expect developer-related revenue to moderate and we're beginning to see that trend emerge in the early part of 2026. Gross margin expanded 65 basis points to 45.04%. This improvement reflects both the impact of higher-margin furniture sales and our continued focus on strengthening sourcing and vendor engagement. We've deepened relationships with our top vendors and increased purchasing penetration through our First Ocean subsidiary, driving improved cost efficiencies and supply consistency. At the same time, disciplined promotional activity and optimized pricing strategies have supported margin improvements across categories. SG&A rate improved to 36.48% compared to 36.72% in 2024. This improvement was primarily driven by lower retail financing fees due to declining interest rates. We also maintained strict cost discipline and realized leverage as we grew the top line, even in an environment where there was an upward cost pressure across many areas of the P&L. Net income for the year was $157 million or $2.29 per diluted share. Normalizing for the one-time gain from the CURO settlement, adjusted net income increased by $22.2 million or 16.6% and adjusted diluted earnings per share increased 16.5%. We're also pleased with where inventory levels sit today. Our written-to-delivered relationship is in good shape. We've continued to go deeper on certain SKUs, which has enabled us to tighten the written-to-deliver time line. We headed into 2026 with a healthy in-stock position, good availability across key categories and no material constraints on flow. Turning to the fourth quarter. Revenue was $671.4 million, up 0.7% with same-store sales up 0.6%. The story is consistent with what we've seen through the year. Growth was led by furniture, where a stronger inventory position and an improved assortment enabled us to capture demand and by appliances, where we continue to see solid growth in the commercial channel. Gross margin in the quarter was 46.08%. The year-over-year improvement reflects a favorable mix shift into higher-margin furniture as well as a better furniture and appliance margin rate from the assortment and sourcing work we've done over the past year. This was partly offset by a higher mix of sales in the lower-margin commercial channel. SG&A as a percentage of revenue was 35.51%, an increase of 13 basis points versus last year. The change was primarily driven by higher occupancy and amortization with the lease commencement of our Edmonton distribution center and other renewals, higher sales commissions and a slight deleveraging of fixed costs. These were partially offset by lower POS retail financing fees as Bank of Canada interest rates moved lower. On a reported basis, adjusted diluted EPS for the quarter was $0.74, down from $0.98 last year, reflecting the onetime $23.4 million legal settlement we recorded in Q4 of 2024. If you normalize for that item, adjusted diluted EPS increased modestly year-over-year to $0.74 from $0.73, an increase of 1.3%. It's important to view our fourth quarter results in the context of the market-related headwinds that Mike described earlier. Even considering those factors, we continue to execute and delivered growth in normalized earnings. From a balance sheet perspective, we generated strong cash flow through 2025 and ended the year with $603 million in unrestricted liquidity, including cash, marketable securities and our fully available revolver. We also increased the quarterly dividend by 20%, underscoring our confidence in the strength of the business and our ability to continue generating solid cash flow. In addition, we stay attuned to returning capital to shareholders where it makes sense to do so. And as Mike said, yesterday, our Board approved a $0.50 special dividend. Maintaining this level of liquidity is a deliberate strategic choice and one we're comfortable with. Our approach to capital allocation has been guided by a consistent focus on returns and that means being strategic about liquidity, holding more in certain environments, less in others. Our track record reflects that discipline. And with a liquidity position that very few others in this market have, we're well-positioned to act when and where it makes sense for the long-term growth of the business. Our approach to capital deployment remains disciplined and consistent with our long-term focus. We prioritize reinvestment in the business where we see attractive returns, maintain a strong balance sheet and return capital to shareholders over time with a primary focus on our regular dividend. We also remain attuned to acquisition opportunities that fit strategically and create long-term value. Looking at 2026. On reinvestment, we expect maintenance capital expenditures to be modestly higher than our typical range. Historically, we've talked about maintenance CapEx in the $35 million to $40 million range. This year, we expect that to be approximately $45 million to $50 million, reflecting an increase in planned renovations and category level refreshes across a portion of our network in addition to our typical maintenance program. On the growth side, we expect to open 2 new corporate stores along with up to 5 franchise locations towards the back half of the year. Importantly, this level of maintenance and growth investments remains very manageable and enables us to continue generating strong free cash flow. In addition to store investments, we continue to look for opportunities to improve operating efficiency across the network. Centralized distribution is a core part of our long-term strategy as we transition from the legacy-attached warehouse model toward a more efficient hub-and-spoke network over time. The closure of our Mississauga warehouse in February of 2025 delivered expected operational results, including SG&A savings and working capital benefits and we continue to track key service level metrics as part of that evaluation, including customer experience and written-to-deliver time line. Based on what we learned from Mississauga, we're evaluating a further centralized distribution initiative in another region. This would be a phased measured test designed to build confidence on a larger scale. These initiatives take time to implement, but the objectives are clear: reduce inefficiencies and inventory flows, improve working capital management and drive meaningful SG&A efficiencies over the longer term while maintaining service levels. The most significant opportunity is in Ontario, which is our largest market. We are approaching this deliberately and we'll continue to provide updates as we make progress. We will continue to be opportunistic in our approach to buybacks, taking advantage of volatility where it aligns with our long-term strategy. We did not repurchase any shares under our existing NCIB during the fourth quarter of the year. On M&A, we continue to evaluate opportunities that align with our core categories and retail focus, involve recognizable brands, offer a clear runway for growth and are synergistic with our broader ecosystem. In an environment like this, opportunities can emerge and our balance sheet puts us in a position to act if the right fit presents itself. I also want to briefly address tariffs as this is an important topic for the sector. Steel derivative tariffs were implemented by the government of Canada on December 26, 2025. Inventory already in transit was not impacted. For new orders placed after December 26, we're evaluating the impact and we'll adjust pricing where appropriate. Any pricing increases would be surgical, carefully balancing customer value with financial returns as we have done many times before across a range of market conditions. This is an industry-wide factor and we are well-positioned to manage it given our scale, sourcing relationships and supply chain capabilities. One item to flag on comparisons. As we move through 2026, we are lapping strong performance in 2025, which creates more demanding year-over-year comparisons, particularly in the first half. This is most evident in Q1, where results last year benefited from a timing dynamic that pulled some sales forward from Q4 2024 into Q1 2025. Before handing it back, I'd like to briefly address the previously announced initiative to create a real estate investment trust. This remains an important strategic priority for us. The timing will be driven by market conditions and regulatory approvals and we'll share additional updates when appropriate. That's the only update we can provide on today's call. As Mike mentioned, we've also strengthened our real estate capabilities by adding a dedicated senior resource to provide in-house expertise across our property portfolio. This role is focused on helping us drive greater value from our assets, supporting our development agenda and ensuring we are making informed strategic decisions across the portfolio that both strengthen our core business and create value for shareholders. Entering 2026, we remain confident in our positioning. Our approach to managing the business will be consistent as we move forward regardless of the environment. We remain focused on outperforming the market and gaining share while protecting gross margins, staying disciplined on SG&A and driving profitability. Overall, our scale, disciplined sourcing, promotional strategies and solid balance sheet provides the foundation to continue driving profitable growth and shareholder value over the long term. With that, I'll turn it back to Mike for closing remarks before we open the line for questions. Michael Walsh: Thanks, Victor. To wrap up, 2025 was a strong year for LFL and one that demonstrates the consistency of our execution. In a challenging environment for many retailers, we grew revenue, expanded margins, delivered solid earnings growth and increased our dividend. More importantly, we did that by staying focused on the fundamentals, disciplined merchandising, targeted promotions, strong execution in our stores and a clear focus on value for the customer. These results weren't driven by short-term actions. They are a direct product of how we built this business, the scale to negotiate directly with suppliers and secure advantaged pricing. Banners that Canadians trust coast to coast, backed by a large and growing omnichannel presence and integrated logistics infrastructure, including one of the largest final mile delivery networks in the country. That sets us apart in how we serve customers from the store to their door. Together, these are durable advantages that matter most when consumers are being more deliberate with their spending and they are the foundation we continue to build on. As we move into 2026, our focus on execution and on continuing to gain market share in our core categories. We're investing thoughtfully where we see opportunity and we're doing so from a position of strength with a solid balance sheet and durable competitive advantages that will enable us to continue to win across cycles. Before we open the line, I want to truly thank our associates across the country in our stores, distribution centers and support teams for their continued commitment. Their work drives the results every day. And to our shareholders, thank you for your continued support. With that, we'll be happy to take your questions. Operator: We will now begin the analysts question-and-answer session. [Operator Instructions] Our first question comes from Ty Collin from CIBC. Ty Collin: So yes, maybe just to start off on the same-store sales growth. How can we kind of understand the deceleration in Q4 compared to your fairly brisk year-to-date pace up to then? And maybe specifically, you can just touch on how you've seen consumer behavior evolve into Q4 and to start off 2026 so far. Michael Walsh: Great question, Ty. I think how I'd characterize the Q4 was it was a little choppy. We started out the first quarter or the fourth quarter with the Canada Post strike. And as you know, that's one of our highest ROI channels with the consumer. So definitely, that impacted. So 50% of our network didn't have flyers going out to them, which really impacted Ontario and Quebec. The weather disruptions, so our 2 biggest days of the year, Black Friday and Boxing Day, which had both had weather events. And it's really tough because in 2024, in the fourth quarter, we had Canada Post strike, but it started later in November. And this year -- or in 2025, it started in September. And so as you look at Boxing Day, Boxing Day is kind of a month or 2-month event now given what happened in the pandemic. And so it's spread out over a period of time. And so leading up to Black Friday, we had literally 50% of our flyers not going out. And for sure, we lean more heavily into TV, digital, SEO, SEM and e-mail. But those channels don't fully replace the lost flyer impressions. Victor Diab: And then just to add there, Ty, just to build on Mike's point. So I think, obviously, a slower start to the quarter, just given the 50% of our network was either fully or partially impacted with no flyers. And then I would say we did see -- on top of weather, we did see a consumer slowdown, a broader slowdown in December just across our brands, which tells us it's a bit of a macro thing to Mike's point, the shopping period is getting -- holiday shopping period is getting longer and longer. By the time you get to December and between Black Friday and Boxing Day, we just noticed a bit more of a lull period there. That tells us and we did see this throughout the year, shoppers are waiting for more value. They're waiting for the bigger days. Our bigger promotional days outperformed our average days. And we continue to see evidence of a strained consumer and that we're seeing trade-down happening. So all of that just tells us the consumer is being cautious. They're constrained. They've got to prioritize where their share of wallet is going. So that's just a bit more color there. Ty Collin: Okay. Great. So is it fair to say that you've seen that more cautious consumer behavior in December kind of carrying over into the first couple of months of 2026 so far? Victor Diab: Yes. I think what we saw in December, which is a little tricky, right? It was a combination of weather and the consumer pulling back. What we've seen in January is similar in that really cold January, lots of snowfall. So we think that impacted traffic in addition to a more cautious consumer. So we did see that to start the year as well. Ty Collin: Okay. Great. And then maybe for my follow-up, I'm just wondering if you could comment a little more on the promotional environment, which you called out in your comments. I mean, is there any particular set of competitors where that increased promotional activity is coming from? And is there any sign of that abating so far in 2026? Michael Walsh: No, I think Q4 carried into Q1 from a competitive set, I think consumers are value-driven right now and they have been as we've stated in previous quarters. And I think all retailers are trying to play in the value prop game on different channels. And so that's going to continue, and I don't see that abating throughout 2026. Operator: The next question comes from Ahmed Abdullah from National Bank of Canada. Ahmed Abdullah: On the commercial appliance growth that's been helping some of the top line, you've mentioned that it's a lower margin mix. As you see some weakness perhaps in other higher-margin categories, what levers do you have to kind of protect your margins if commercial keeps outperforming? Michael Walsh: Well, we -- as we stated in previous quarters, we continue to focus on the category of furniture because that's got one of the highest gross margins that we have. And so we continue to focus on that through a reduced assortment and going deeper on our inventory. So we have the product available and we can spin up the delivery time between -- and the lag time between written and delivered. We also, as we said, Appliance Canada is primarily in Ontario, but they have lots of their customers that are in other parts of Canada. And so leveraging a store within a store in Richmond, BC really helps us to enable Appliance Canada to play outside of Ontario, which has been severely impacted from a development perspective. Victor Diab: Yes. And then just to answer the mix question there, to build on Mike's point there, Ahmed. Like we said, we know and we've signaled that the commercial business is slowing down. So from a sales mix perspective, we're not necessarily expecting the same level of growth going forward. We're expecting moderation. And it is a lower margin category. So the way we've been offsetting despite tremendous growth in that channel over the last couple of years, our margin rate has been improving and that's because we've been improving rate on the retail side through stronger furniture sales mix and some of the rate initiatives that we've had. So net-net, we don't expect that to be a margin headwind going forward from a mix standpoint. Ahmed Abdullah: Okay. So on the flip side of that comment, are you thinking about your promotional cadence into 2026 to drive margin tailwind as such that would push your adjusted EBITDA margin for 2026, assuming there's revenue growth higher? Victor Diab: Yes. I think the way you got to look at rate, right, we're pretty -- we operate pretty proud of sort of the improvement that the team has been able to make over the last couple of years. We're happy with kind of where we are at this level. We've got to balance a few things. Obviously, sales mix. The way we've done it is primarily through sales mix and rate -- core product rate improvements, not through price. And so we've got to keep the consumer in mind there, right? So our primary focus is to provide value to the consumer, grow market share and grow it profitably. And we tend to operate margin within a range, right? So if you look at our history, we're pretty disciplined. We're consistent and we gradually improve over time. But we pick and choose when we're going to do that. And we've got to be very cautious in this environment in a value-oriented environment in terms of when we flex up or down on categories and overall. So again, I would kind of point you to, we've made good improvements. We're kind of satisfied at this level today. There is upside in the medium and longer term, but it will depend on overall sales mix. It's kind of the way we look at it. Ahmed Abdullah: Okay. And just if I can squeeze one more follow-up. On Ty's comment around the Canada Post disruption, clearly, you see value in the medium and continuing the use of flyers going forward. Were you able to estimate or quantify the impact that Canada Post cost you this quarter? Victor Diab: Look, the way I would answer, we're not going to throw out numbers. Obviously, there's lots of variables in terms of sales and we're not going to specifically break those things out. But I would point to, again, the key drivers in terms of -- one, we thought the quarter in the grand scheme of things, we thought the top line growing sales, growing profitability, that's a good result, right? I think the momentum heading into the quarter and your comment about the step back, I think those are 3 factors that we talked about. The flyer impact to start the quarter, the broader December slowdown and weather on some of our -- weather just in general, but on some of the bigger days like Boxing Day and leading up to Black Friday was adverse weather conditions, especially relative to last year. So I would just kind of look at it like that, but we're not going to throw specific numbers out there. There's just too many variables. Operator: Our next question comes from Martin Landry from Stifel. Unknown Analyst: It's [ Jesse ] filling in for Martin. I was wondering how promotions performed over the last year and how you expect them to perform going to go over into the new year? And particularly maybe get some color on which campaigns worked and which didn't. Victor Diab: Yes. Listen, thanks for the question. Like as I said maybe earlier, what we saw throughout the year is our bigger promotional days just outperform on our average days. So it does tell us that our promotions are working. The one sort of element for LFL, just in general is we're -- our objective is to provide value to the consumer throughout the year, right? So we're always focused on value. We leverage our scale and we leverage it well to provide value throughout the year. But we did see, in general, our bigger promotional days outperform our average days and that just tells you where the consumer mindset is, but it does tell us that our promotions are working really well for us. Unknown Analyst: Okay. Great. And maybe -- I know you touched on it a little bit this call, but I was wondering about the replacement business. Can you maybe provide a little bit more color on that? I know the builder pipeline was moderating a little bit. So if you could touch on that, that would be helpful. Michael Walsh: Yes. I think we signaled it 12 to 18 months ago that the pipeline for the builder segment was going to be a challenge in '26 and '27. So we pivoted to increase our replacement business, which we have been doing and continue to do. It won't necessarily make up the shortfall from the development segment, but it definitely helps. But it's a continued focus that we have on the replacement business. Operator: [Operator Instructions] And our next question comes from Nevan Yochim from BMO Capital Markets. Nevan Yochim: I appreciate the color so far on the January trends. Hoping you could just give an update here on what you're seeing across product lines and region to start the quarter. Victor Diab: Yes, it's a good question. So we continue to see strength out West. We're seeing a bounce back in BC and more softness in East Ontario in general, just a bit slower to start the quarter. But in general, I think January just has been colder, more snow and I would characterize it as a bit tepid across the board. But it's our smallest month of the quarter. So we'll continue to see how the quarter progresses. And we're optimistic as we think about the back half of the year. We're optimistic in terms of, hopefully, some of the macro headwinds ease and we're optimistic about some of our initiatives going forward in terms of, again, being positioned for value and continuing to outperform the market and gain share across our categories. Nevan Yochim: Okay. Great. And is it fair to say that the trends you saw in Q4 in terms of product lines that those have continued into the year as well? Victor Diab: Well, listen, as we think about Q1, I think a couple of things we need to flag, right? So last year, we would have highlighted to you that we had a shift in written to delivered from Q4 into Q1. That's primarily a furniture category dynamic, right? So we're going to see a bit more -- as we think about category performance in Q1, we're going to see a bit more pressure on the furniture category because of that shift. Otherwise, I would characterize the performance sort of across the categories as pretty consistent with our historical trend. We're still pretty bullish on our ability to drive share growth in furniture, we believe we're really well-positioned in that category, but that comparable year-over-year, especially in Q1, is going to be hard to comp, especially as it relates to the furniture category. And then again, we're off to a slower start in January as we characterized. So Q1 will be a tougher comp and then we feel pretty good about our positioning for the balance of the year. Nevan Yochim: Great. And then just on the commercial appliances, I know some details so far. Just hoping you could expand a little bit. Is there a certain quarter in 2026 where you begin to lap these tougher comps? And can you frame the headwind on same-store sales growth? Victor Diab: Yes. So I think with respect to commercial, look, it is moderating. It's going to be tough to comp. That category, that channel, we've seen tremendous growth over the last since -- frankly, since 2019, that category has grown at a CAGR of 6-plus percent just to kind of put it out there. So we're expecting a bit of a moderation, but we've gained a lot of share in that category. So our goal is to obviously mitigate that through the replacement business, mitigate that through geographical expansion, as Mike highlighted in his comments. And -- but nonetheless, it's probably going to moderate this year. And it will -- our objective is to mitigate that as much as possible. We still feel like we're outside of Q1. We think we're going to drive good growth across our retail business. We plan to open a few -- like we said, we're going to grow our network. We have a couple of corporate stores planned to open this year in the back half of the year. We've got up to 5 franchisee locations that we're going to open. So all of that is going to help with top line growth. Nevan Yochim: Okay. And then maybe just one more for me. You talked about renovating the stores. Are you able to provide a bit more detail on the cost per store, maybe the payback period and how you're thinking about returns on those investments? Victor Diab: Yes. No, for sure. I mean, when we think about our renovations, we look at it as major, minor and sort of refreshes. And we've obviously got a couple of new stores like we said. So it all has to fit within our return framework. We have pretty high hurdle rates, well above our cost of capital. So these are pretty high-returning projects. We're basing it on some of the comps that we've seen in our network, some of the recent renovations that we've seen where we've seen really good results and we're quite pleased. We're very selective. As Mike said in his comments, we're pretty capital-light in our approach. The major renovations obviously cost more than the minor renovations and the refreshes. But -- and then I'm going to add in their category level refreshes. So in some cases, we'll go into a store and refresh the furniture category or the mattress category and not do an entire refresh. So it really depends on the store itself, the market, what we're seeing as an opportunity and it needs to fit within our return framework. And again, our hurdle rates are pretty high. I'll leave it at that. Michael Walsh: Yes. I think the only thing I would add is that retailers have to consistently look at their stores, the refresh, concept renewal, payback. And I think one of the things coming out of the pandemic, we had 2 or 3 years where you weren't touching stores. And so it's really difficult to try and catch that up in 1 year. And so over time, we want to be able to continue to refresh our stores and look at a go-forward and a go-back strategy, what's working in any new developments or any concept renewal and take that back to the broader groupings of stores. So it's just something retailers have to consistently look at and do. Operator: There are no further questions at this time. This concludes today's conference call. Thank you for participating and have a pleasant day.
Operator: Good day, and thank you for standing by. Welcome to Certara Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, David Deuchler, Investor Relations. Please go ahead. David Deuchler: Good morning, everyone. Thank you all for participating in today's conference call. On the call from Certara, we have Jon Resnick, Chief Executive Officer; and John Gallagher, Chief Financial Officer. Earlier today, Certara released financial results for the full year ended December 31, 2025. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements, and actual results may differ materially from those expressed or implied in the forward-looking statements. Please refer to Slide 2 in the accompanying materials for additional information, which you can find on the company's Investor Relations website. In the remarks or responses to questions, management may mention some non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are available in the recent earnings press release available on the company's website. Please refer to the reconciliation tables in the accompanying materials for additional information. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 26, 2026. Certara disclaims any obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. And with that, I'll turn the call over to Jon Resnick for opening remarks. Jon Resnick: Good morning, and thank you all for joining today's call. I want to begin by thanking the Certara team for the warm welcome to the organization. I am also grateful to the Board of Directors for their trust and support. I've spent the last 30 years working at the intersection of health care policy, science and technology, where I've built and transformed data, technology and services businesses within the life science industry. Joining Certara on January 1, I am genuinely excited by the opportunity ahead. As the new CEO coming in with fresh eyes, I have approached the first 50 days plus with one priority, listening intently and learning from our stakeholders. I have spent most of my time speaking with customers and engaging directly with employees at all levels. These discussions have been invaluable. The conversations have reinforced the inherent strength of this organization and also highlighted where we must operate differently to unlock our full potential. Everything I have seen and heard affirms 3 things. First, there is a compelling market opportunity to transform how the life science industry drives innovation across research and development. Second, regulators worldwide are actively embracing technological solutions to accelerate drug development, reduce costs and shorten time lines. And third, Certara is uniquely positioned to lead in this evolving market with our AI-enabled technology, data and our model-informed drug development platforms, which are deeply embedded in industry workflows and utilized by regulatory bodies. This presents an extraordinary opportunity. To capture it, we must sharpen how we operate, focus our investments and execute with greater discipline and urgency. Our historic performance does not reflect the full potential of our market. Later in this call, I will outline our plans to improve. My conversations with our customers have made one thing clear to me. Our customers want us to drive innovation and play a larger, more strategic role. The pharmaceutical industry is spending more than $200 billion per year developing drugs with overall time lines now hitting 10 to 15 years. Now more than ever, our customers are looking for partners who can reduce total development costs, accelerate time lines, improve decision-making and respond to new regulatory requirements. AI, biosimulation and other in silico methodologies are expanding the relevance of Certara's offerings, validating our value proposition and opening new opportunities for us. Regulators are more favorably disposed to the use of new methodologies today than at any point in our history. Agencies are providing clear guidance that advances model informed and computational approaches and are actively encouraging the use of new approach methodologies to modernize drug development. Just recently, Dr. Martin Makary, the United States FDA Commissioner, noted that computational modeling can provide more insightful perspectives on experimental design in animal testing alone. In his words, now a computer can look at a drug and actually make better predictions. Additionally, in a recent New England Journal of Medicine article, the commissioner outlined a framework where only one pivotal trial would be required for approval. This creates an opportunity for developers to rethink and improve clinical trial designs and reduce overall time lines. This is what Certara is built for. It underscores the relevance of our platforms and services. Certara's credibility has been built over decades. Our 430 PhDs and MDs have directly contributed to hundreds of drug approvals. Worldwide, we have more than 2,600 customers and 23 agencies using our technologies. I see this foundation of one of Certara's greatest strengths and a powerful platform from which to lead in this expanding market. At the same time, we have not sufficiently converted that credibility into the level of growth the opportunity warrants and that I believe we should and can deliver. In fact, over time, Certara's business should be able to drive double-digit growth. There are 3 potential explanations for this disconnect. First, the true potential and market acceptance of AI-enabled technology, data, model-informed drug development has yet to be achieved. Second, external market conditions created market headwinds and/or third, internal execution gaps have impacted results. There are probably elements of all 3 of these at play. Let me address the market acceptance point, and then I'll return to discuss planned operational improvements. Through our work, we are seeing accelerated adoption of MIDD use cases earlier in research, expanded use cases across preclinical development and strategic applications in clinical and regulatory settings. Allow me to highlight a few recent examples that have delivered measurable impact for our clients. First, a top 10 pharma company used millions of quantitative systems pharmacology simulations or QSP, to prioritize 28 drug candidates against 26 unique targets. This predicted the drug target combinations with the highest likelihood of clinical success, demonstrating how our QSP technology has the ability to drive dramatic productivity gains in the R&D workflow. Second, an innovative biotech company used model-informed approaches to justify a first-in-human dose, 50 to 100x higher than what would be supported by standard methodologies. This change enabled the earlier selection of a more clinically relevant dose, which was the basis for a successful Phase I trial. Ultimately, this molecule was acquired. And in rare disease, MIDD opens up new avenues for developers to reach underserved populations. For example, in Pompe disease, we created virtual populations to evaluate the efficacy of a novel compound versus the standard of care and predictive clinical outcomes in these virtual patients. These examples illustrate the broader point that aligns with our mission and the opportunity ahead of us. MIDD is growing. Now let me turn to our broader technology and services offerings and share a few perspectives. While Certara continues to benefit from a strong legacy as a market-leading software provider, it is clear that we must sharpen our execution to fully capture the opportunity ahead of us. Our 4 core franchises remain highly differentiated, deeply embedded in customer workflow and integral to decision-making across the development life cycle. Importantly, clients affirm to me that there's a limited risk of AI-driven disintermediation. Instead, they are looking to Certara for leadership to advance AI model informed development, creating new avenues for us to add value and strengthen our strategic position. At the same time, despite stepping up our R&D investment in product enhancements and new products, we have not yet converted that investment into sustained organic growth. To address this, we are taking targeted actions to accelerate our sales and strengthen our go-to-market approach and to focus our portfolio with greater discipline. Now moving to our services business. I've been impressed by the caliber and depth of our scientific expertise and the longevity of our relationships. Our specialized services address our customers' needs and advance their goals delivering value both independently and in combination with our software. Certara's tech-enabled services continue to be a core part of our growth strategy and a critical enabler of MIDD adoption. When our consultants deploy our software and customer engagement, it surfaces new use cases and build stickier customer relationships. This expert in the loop helps to create an innovation flywheel. Certara grows faster when our software products are integrated with our scientific expertise. As with our software business, our services execution has room for improvement. Ultimately, we need to enhance our engagement with customers and more proactively match the right solution to our customers' needs. Lastly, we are in the final stages of the strategic review of our regulatory writing and operations business and expect to conclude that process in the near term. Coming in, it was important that I take the time to thoroughly evaluate all the options and ensure we are pursuing the course that best maximizes long-term shareholder value. Moving on to operations. Over the last several weeks, I conducted structured reviews with business leaders, reviewed P&Ls and go-to-market plans and met with nearly 100 employees. I went deep into our product portfolio. The talent and scientific capability inside Certara is exceptional. But as I've alluded to above, I am equally clear-eyed about the opportunity to grow and to improve. We must operate with greater focus. We must build with clear priorities and reliable execution. We must engage customers more proactively, and we must create a culture of accountability and financial discipline. Simply put, to grow faster, Certara must run differently. And as CEO, I intend to lead that change with urgency and clarity. We are moving forward with 3 strategic priorities. First, we are developing a more focused corporate strategy and product portfolio, anchored in customer needs, scientific rigor, innovation and disciplined investment. We will accelerate AI integration and double down on core R&D technologies in MIDD. Second, we will continue to put customers at the center with deeper engagement and greater senior level involvement. We will leverage our feedback from our customers to inform product road maps, AI initiatives and service priorities. This will lead to improved commercial performance and improved revenue growth. Third, we are raising the bar operationally, sharpening pricing, improving delivery and driving higher returns from our investments in sales and marketing and R&D. We will leverage AI to increase efficiency and scale our operations more effectively. Already, we have identified a path to approximately $10 million in cost avoidance relative to the initial 2026 plan. Our team will hold one another accountable for delivering on these improvements. We believe that these changes will reposition Certara for sustainable, faster growth, and I look forward to updating you on our progress. 2026 will be a transition year as we bring change to the organization and strengthen our focus. In this context, we are guiding to flat to low single-digit revenue growth, which reflects both market conditions and the operational improvements we plan to implement. Our balance sheet and cash flow generation remains strong. We intend to be strategic with capital deployment, including executing against our existing share repurchase authorization, which we view as a compelling long-term investment at current levels. Our focus will be to reinvigorate growth at Certara and drive shareholder value. With a sharper strategy, a customer-centric operating model and unflinching execution discipline, we would expect a faster growing, more predictable, mission-oriented and more valuable company. With that, I'll turn the call over to John Gallagher to walk you through the 2025 results and our 2026 guidance. John Gallagher: Thank you, John. Hello, everyone. Total revenue for the 3 months ended December 31, 2025 was $103.6 million, representing year-over-year growth of 3% on a reported basis and 2% on a constant currency basis. For the full year of 2025, total revenue was $418.8 million, representing year-over-year growth of 9% on a reported basis and 8% on a constant currency basis. Total bookings in the fourth quarter were $155.2 million, which increased 7% from the prior year period on a reported basis. Trailing 12-month bookings were $482.1 million, increasing 8% on a reported basis. Software revenue was $46.4 million in the fourth quarter, which increased 10% over the prior year period on a reported basis and on a constant currency basis. Growth in the quarter was driven by MIDD software and Pinnacle 21. Ratable and subscription revenue accounted for 61% of fourth quarter software revenues, down from 63% in the prior year period. For the full year, software revenue was $183.3 million, which grew 18% on a reported basis and on a constant currency basis. Chemaxon contributed $22.9 million to reported software revenue in 2025, making full year organic software growth 7%, which was in line with our plan. Ratable and subscription revenue accounted for 61% of 2025 software revenues, down from 65% in 2024 due to the impact from Chemaxon, which is mostly term license software. Software bookings were $56.1 million in the fourth quarter, down 6% from the prior year period. Fourth quarter software bookings were lower than our expectations, compounded by both external factors and execution challenges. Customer reorganization and reprioritization, slower clinical trial completions and weaker pipeline conversion of new and renewal software contributed to the bookings result. Trailing 12-month software bookings were $184.3 million, up 9% year-over-year. The software net retention rate was 107% in the quarter and 105% on the year, consistent with our plan. Looking at our software bookings performance by tier, we saw strong performance among Tier 3 customers in the fourth quarter and throughout the full year. Tiers 1 and 2 were slower in the fourth quarter, offsetting strength in Tier 3. Now turning to services revenue, which was $57.3 million in the fourth quarter, down 1% versus the prior year period on a reported basis and on a constant currency basis. For the full year, services revenue was $235.6 million, which grew 3% on a reported basis and on a constant currency basis. Services revenue in 2025 includes regulatory writing revenue of $50.4 million, which compares to $54.7 million in 2024. Technology-driven services bookings in the fourth quarter were $99.1 million, which increased 17% from the prior year period. TTM services bookings were $297.8 million, up 8% as compared to the prior year. In the quarter, we saw double-digit growth in MIDD services bookings with growth led by Tiers 2 and 3. For the full year, MIDD services bookings grew 8%. Regulatory writing bookings grew in the high teens versus the fourth quarter of 2024, driven by solid bookings across all customer tiers. For the full year, regulatory bookings grew in the mid-single digits. I would like to point out that we did experience better-than-expected spending commitments from our customers during the month of December, which helped drive higher-than-expected overall services bookings for the quarter. Total cost of revenue for the fourth quarter of 2025 was $39.2 million, an increase from $38.3 million in the fourth quarter of 2024, primarily due to higher employee-related costs and an increase in capitalized software amortization. Total operating expenses for the fourth quarter of 2025 were $63.6 million, an increase from $56.1 million in the fourth quarter of 2024, primarily due to higher employee-related expenses due to our investments in research and development. In 2026, our operating plan contemplates discretionary investments in research and development related to product development initiatives as well as minor investments in G&A and cost of sales. As Jon mentioned in his remarks, we have identified upwards of $10 million in cost avoidance in 2026 versus the prior planning. Adjusted EBITDA in the fourth quarter of 2025 was $32.5 million, a decrease from $33.5 million in the fourth quarter of 2024. Adjusted EBITDA margin in the quarter was 31%, in line with our expectations. For the full year of 2025, adjusted EBITDA was $134.5 million, an increase from $122 million in the prior year. Adjusted EBITDA margin was 32%, consistent with 2024. Wrapping up the income statement. Net loss for the fourth quarter of 2025 was $5.9 million compared to net income of $6.6 million in the fourth quarter of 2024. Reported adjusted net income in the fourth quarter of 2025 was $14.9 million compared to $24.7 million in the fourth quarter of 2024. Diluted loss per share for the fourth quarter of 2025 was $0.04 compared to earnings of $0.04 per share in the fourth quarter of 2024. Adjusted diluted earnings per share for the fourth quarter of 2025 was $0.09 compared to $0.15 for the fourth quarter of last year. During 2025, Certara repurchased approximately 3.3 million shares for $43 million. Moving to the balance sheet. We finished the quarter with $189.4 million in cash and cash equivalents. As of December 31, 2025, we had $295.5 million of outstanding borrowings on our term loan and full availability under our revolving credit facility. Now I would like to walk you through our guidance for 2026. We expect total revenue to be in the range of flat to 4% compared with 2025. We anticipate our end markets will remain stable and better execution will drive improving revenue growth throughout the year. We expect Q1 to be closer to the low end of the revenue range related to a tough comparison to the prior year and subsequent quarter acceleration related to new initiatives during 2026 as well as easing compares to year-over-year. We expect to achieve adjusted EBITDA margin in the range of 30% to 32%. As I mentioned earlier, our 2026 operating plan contemplates discretionary investments, which will be managed according to our commercial performance throughout the year. Adjusted EBITDA margin is expected to be lower in the first half of the year and will increase during the second half. We expect adjusted EPS in the range of $0.44 to $0.48 per share for the full year. Fully diluted shares are expected to be in the range of 160 million to 162 million, and we are modeling an effective tax rate of about 30%. With that, we will open up the call for Q&A. Operator, can you please open the line for questions? Operator: [Operator Instructions] Our first question comes from the line of Jeff Garro from Stephens. Jeffrey Garro: Maybe start with one for Jon R with your first call here. And I appreciate all the remarks in the prepared comments about your approach going forward and strategy for the company. I was hoping you could share a little more of your external perspective on what attracted you to Certara and maybe more, in particular, how you view the differentiation of Certara's software products and talent on the services side as something that can really be leveraged going forward. Jon Resnick: Great. Thanks, Jeff, very much for the question. Yes, as I said before, it is great to be here. I -- as you commented, it's been a pretty intensive 56 now 57 days. I've gone as deep as I possibly could go with capacity in the last couple of months really trying to understand pretty much exactly what you're asking about here. Gone deep into kind of each of our products, done probably 100 skip over conversations, talked to dozens of customers really trying to get a good feel for exactly how we do stand here as a business. I was attracted to come here pretty simply. I look at it and I look at the external marketplace, the amount of opportunity that sits here. This company sits on the right side of kind of every trend. Pharma $250 billion per year and what I'll call inefficient allocation of R&D spend and they're driving demand for efficiency, regulator acceptance and you have this company that sits there with so many assets and so many tools and such a phenomenal track record, it just struck me as an undervalued gem in this space with tons of potential upsides and tons of potential opportunity to grow and to build as this market continues to evolve. As I go through some of the different products, you said services, but services and software, I'd say that, first of all, on the software side, the software, I found those products to be incredibly differentiated. As you talk to customers, it's amazing how deeply embedded each of our major assets are in their workflow. These are -- there's decades of teams who've grown up using Simcyp and using Phoenix and using the capabilities that exist to do their job every day. There's a high degree of dependence on the asset. So they're not only market-leading, but just incredibly well entrenched. Equally, I think our relationships exist with 20 regulators around the world who are also using the assets. So you have this highly entrenched set of workflow used by regulators and used by the life science industry and in this kind of highly scrutinized space where documentation and validation and transparency are essential areas where they have incredibly high track record of. So a very strong proposition. And the services side, I see it's incredibly reinforcing. As I noted in my opening remarks, we're strongest when the technology, software products and the services work hand-in-hand. This ability not only to have market-leading computational capability and workflow capability, but to be able to wrap the world's leading scientists in QSP and PBPK and [ QSF ] around those capabilities makes it an enduring proposition. Jeffrey Garro: Excellent. Really appreciate that. And to follow up, I want to ask how a platform approach, cross-selling, integrating and automating workflows between software products factor into this more customer-centric go-forward strategy. I thought those were kind of prior focus items and maybe didn't hear as much of those in the script, but you're also speaking at a high level. So I want to hear more on whether or not those are kind of encompassed or to what extent those are encompassed in the go-forward strategy or whether there's some kind of deeper shift. Jon Resnick: No, I don't think you heard a radical shift in strategy. You have to kind of operate at the rate and pace at which your customers operate here as well. There's kind of -- as you look at the industry, there's kind of twofold here. There's kind of the power users who are sitting at levels in organizations who we serve with distinction and pride every day. And that at the senior levels of the organization, they're looking to drive kind of more innovation and more cross-section, but that's a slow process. So our focus is going to be twofold: continue to serve the users who use this every day, who sit here and rely on this to do their function and to build out a range of functionality and engagement at that more senior levels to start to work through some of those more longitudinal approaches to accelerate first in human, to accelerate regulatory time lines. We feel like we can tap into both of these with distinction. And no, our strategy won't change. It's both going to be to develop those product enhancements that the core expert teams are looking for and to look to stitch together a lot of the assets in differentiated ways to play to ensure that the same capabilities that are happening late in clinical development can move into preclinical and into development itself. Operator: Our next call is coming from Michael Cherny from Leerink Partners. Michael Cherny: Jon Resnick, welcome to the company. Maybe if I can just get into the guidance a little bit. Obviously, we all saw the bookings dynamics in 4Q and then the revenue guidance in particular, coming in below where your trend rate has been. As you think about the 0% to 4%, can you kind of give us a little breakdown of how much of it is what you're seeing in the market? How much of it is flow through to bookings? And is there any, at least in terms of the prioritization of revenue, strategic pullback on anything that's embedded in the specific '26 revenue guidance? John Gallagher: Mike, yes, as it relates to the guidance, I think about it in 2 components. One is services. Last several years, services revenue has been in low single-digit growth, although we had a very strong fourth quarter on services, which came with a surge in the pipeline in the month of December, which wasn't necessarily expected, but it's certainly a good indication of health in the end markets, and we do expect stable end markets as we approach the guide. But nonetheless, services performance has been low single digit. And then when you combine that with the software business that had some deceleration in bookings in the fourth quarter. Now mind you, software revenue in the fourth quarter grew 10%. Full year organic revenue was 7% right in the middle of the plan for the year. So we were pleased with that performance. But we did see some deceleration in the software bookings in the fourth quarter. And so when you take that combined and the tight correlation between bookings and the revenue going forward, combined with the services in the low single digits, puts total company expectations for 2026 in the low single digits, hence, the flat to 4% growth. Michael Cherny: And along those lines relative to the software bookings, it seems like data points around all things tied to clinical trials have been at least from a qualitative perspective, more positively than negatively skewed. You talked about some dynamics on decision-making, but also some dynamics on execution. Can you dive a little bit more into what encompassed the composition of the software Tier 1 bookings and the red arrow that it got in the deck, specifically tied to what was, call it, on your side versus what was market oriented? John Gallagher: Yes. Yes. So I mean, on the market side, you saw big pharma reprioritizing headcount reductions, slowness, as you said. Those customer dynamics have an impact on, for example, Phoenix seat licenses. We also saw study counts down a bit, which when you look at a product like Pinnacle 21, which has certainly penetrated the market very fully to the extent that studies are down, we're going to see a little bit of softness there. So those are a couple of the points around market. But execution also is, like you said, is a key component here, too, where we have pipeline visibility, and we didn't convert as much as we should have in the fourth quarter. And so that's why we did call out the element of execution. Jon Resnick: Michael, thanks for the welcome. It's Jon Resnick. I -- again, it's wonderful to kind of look at things as very kind of kind of fresh eyes and clean eyes. First of all, in general, I think our view on the market is that it is strengthening, I think, consistent with what others are reporting. I was pretty encouraged by the December services bookings. From my standpoint, services tend to be a more discretionary item, which ebbs and flows over time. And independent of some of the slowdown that we saw last year or 2 years ago, that seems to be a really good leading indicator for us of some opening and perhaps a leading indicator of more spend into '26. The other thing I'd say on seat licensing, in particular, things like with Pinnacle, there tends to be a little bit of a lag. You're still going to pay for the reduction in studies from a couple of years ago. I think we're all looking at the same data that seat licensing is starting to come back up. And as that starts to rise, you'll start to see some improvement in Pinnacle as well tied to studies -- sorry, tied to study. So as the number of studies starts to elevate -- starts to lift, you'll start to see stronger performance, but there's a little bit of a lag time between the 2. So yes, look, I think as we enter '26, I think we're cautiously optimistic similar to what I've heard other peer companies and observers talk about things a lot of the trends seem to be moving in the right direction and that December discretionary spend number is one certainly I'm anchoring on and asking the team to work hard on the execution side. Operator: Our next question comes from the line of Luke Sergott from Barclays. Anna Kruszenski: This is Anna Kruszenski on for Luke. It would be great to hear more about which areas you see the most opportunity on AI enablement. And specifically, how are you thinking about the balance of investing in AI capabilities to support a more innovative portfolio versus leveraging the productivity gains to drive more near-term margin expansion? Jon Resnick: Sorry -- this is Jon. I missed the name upfront. Anna Kruszenski: This is Anna Kruszenski on for Luke. Jon Resnick: Anna, how are you. Nice to meet you. So look, I think that's a great question. So AI, in general, is a huge change agent here internally. And I think we think about it on a couple of different dimensions. We think about our software side of the business, AI is being actively embedded into all of our core assets. A good example would be Phoenix, where a bunch of modules and increased functionality are all AI-driven, consistent with the way we're approaching a bunch of the other businesses. We have a handful of products that have been launched in the last -- end of last year and will be launched early this year, which also are highly kind of AI-driven products, which we're excited about one, which was launched last year, was CertaraIQ, which is in the QSP space, which is a very fast driving area for us, heavy kind of AI backbone to it. We're really optimistic about not only the product side there over time, but also the intersection between that and our QSP services. We also have a number of things. There was an earlier question about stitching together. We have a number of stuff that aren't exactly horizon 1 offerings, but things that help stitch together stuff in more of a true kind of AI native way, which are groundbreaking and innovative. So there's a lot of things happening on the core kind of product side, which we'll be taking a close look at and accelerating. As you'd imagine, there's equally as much going on and opportunities on the core execution side. So on the software development side, huge push over the last 6 weeks, 8 weeks really to make sure we're using best-in-class process, rolling out tools, accelerating our internal time lines. That will be an ongoing effort and initiative this year to accelerate our internal builds and to ensure that we're moving at rate and speed and with a high degree of efficiency. More broadly, on the AI side, there's a range of opportunities we see to enable our services business to help fix some of our operations infrastructure. So it will be a major push internally that we believe will drive both short-term and midterm productivity and efficiency enhancements. Anna Kruszenski: That was super helpful color. And then one follow-up. You talked about the efforts underway to revamp the commercial organization. Just curious, what do you see as the lowest hanging fruit here? And then any initiatives that will require a heavier lift? Jon Resnick: Yes. Great. Thanks. So look, both on the portfolio side and the go-to-market side are areas in which I'm going to take a close look. I think I'm looking at the same data that you guys are looking at, which is our investments over the last couple of years have gone up pretty steadily and the translation into organic revenue growth hasn't materialized. So as a new leader in this business, you start to ask a bunch of questions about the shape of those investments and how you can start to optimize them, and we'll be focused both on the portfolio and go-to-market. On go-to-market, I think there's a couple of different dimensions of it. We talked about customer centricity is one key piece. How do we optimize the relationships that we have and really bring the best of the issues that they're facing into our organization so we can respond to them most effectively. There's elements of pricing and contracting and kind of just core kind of operational elements that we have. There's an organizational focus around getting a number of our executives out in front of clients and having kind of that second order, second level nature of conversation. I'm a big believer in targeting and AI-driven productivity around kind of sales initiatives and sales efforts. And so how are we doing in terms of kind of automating our initiatives and making sure we're having the right conversations with the right people at the right times. Obviously, then there's a range of other questions in terms of do we have the right people in the right places. We've got a diverse portfolio with a combination of services and kind of tech services and pure SaaS offerings, which all have slightly different service offerings. So how do you kind of rationalize across those 3 to make sure that you're optimizing it directly with customer. Low-hanging fruit will be things like pricing and customer centricity initiatives and targeting and incentives, things that you'd expect and then more medium term, really looking to transform some of the types of relationships we can have with the client. Operator: Our next question comes from the line of Scott Schoenhaus from KeyBanc. Scott Schoenhaus: Welcome, Jon Resnick. I guess a follow-up to that question in fourth quarter software bookings. As you look to sort of automate the process and put these price incentives in, how much of that pipeline that didn't get converted, do you think can be converted over the next 90 days? And then when can we see a bookings reacceleration on the software side? John Gallagher: Yes, Scott. So -- the pipeline conversion piece on the execution side here, we don't -- you heard in the prepared remarks, we don't necessarily see that coming back in Q1. We indicated that Q1, we expect to be at the lower end of the overall flat to 4% revenue growth guidance range. Some of that's due to a tough compare to the prior year. And then we're expecting to see some acceleration in the subsequent quarters. Some of it due to increased conversion and visibility and then some of it because the comps get a bit easier as we move through the year, too. Scott Schoenhaus: And as a follow-up on the regulatory writing business grew nicely in the quarter. Just your thoughts there on the divestiture, the timing of it and maybe what's embedded in your services growth guidance on the regulatory writing side? Jon Resnick: Yes. Let me tackle Scott, the first question. So I appreciate a number of you have been asking about this for a long period of time. I have the luxury of 50 days or so to take a look at it. It's a bit of a riddle here, right? So you have a business that's clearly been compressing year-over-year. What you'd expect, I guess, along with market trends, right, you kind of -- you saw some of the dislocation in pipelines around IRA and some of the rebalancing over the last couple of years, you'd expect that business to decline. You saw that sharp increase in book-to-bill, 1.5 book-to-bill in Q4. And you have to remember, at its core, it's a pretty profitable offering. So the first thing I did when I joined and we were active in strategic review was really look at the options on the table to ensure that we were, a, fully evaluating, for example, the contributions to the profit margin, those paid dividends in terms of our ability to invest in MIDD and invest in some of the other areas of high growth. So I wanted to make sure we had a good hard look at that and that any potential options that we have take into consideration not only the strengthening of that underlying business, but the contributions that it makes on a bottom line basis. That said, I think we're in the final stretches here. We should have a resolution answer for you in the near term. It's something that I think everyone on this side wants to move forward with, and we're well on our way to have a clear answer for you very quickly. Operator: Our next question comes from the line of David Windley from Jefferies. David Windley: John Resnick, good to talk to you live and John Gallagher to you again. On the software sales, the software bookings, is the pipeline conversion there a reflection at all of customers perhaps hitting the pause button as they evaluate how AI might influence how they use tools like this? Jon Resnick: David, good to talk to you. And I have an answer to the question you asked me on my first day here, talked directly. The -- look, I don't hear that. As I said, I spend a lot of time talking to customers. And I asked this question very directly to every single one. And I tried to get to all of our major accounts in multiple levels in terms of the way that they were -- they're thinking about their technology stacks and the role that we see us sitting. Yes, is there an industry-wide set of questions about where are they going to make investments, how are they going to make investments, it does cause some paralysis on the client side. Yes, clearly, we see that across segments and across different components. I don't think that's the issue here. Nobody who I spoke to is thinking within that context. I think what you ended up having here is just a little bit of issues around that lag on the Pinnacle side with studies, the newness of some of the new products that we have and the time it's going to take to get those to market, some dynamics around the conversion as we start to convert clients to cloud, by the way, which we're very excited about the newness of the CertaraIQ offering, which had a soft launch, which we expect to continue to accelerate in the year. So I think you've got a little bit more of a function of timing, a little bit of market events. I don't hear and I didn't hear AI as being the driver. There was -- every sales rep, every client I spoke to, there was -- there's no indication that that's the driver of that slowdown in Q4. David Windley: Got it. And John -- or Jon R, is maybe a little unfair given what did you say, 56 or 57 days still. But as you come into the business and kind of evaluate where do you aim sales efforts and where do you aim innovation investments, it seems like there's -- there has been a trade-off between like later-stage clinical development and opportunities to streamline there have perhaps bigger bang for the client and bigger TAM for Certara versus some of the recent maybe acquisitions or discussion and strategy at the company has aimed at early development, say, maybe not discovery, but kind of late discovery preclinical stage in more of a capture the molecule mindset. How do you weigh those 2 options and which one do you lean into? Jon Resnick: So that's not the question I thought you're going to ask me. I thought you're going to ask me the TAM versus execution question. There is definitely -- the market exists to the question you've asked me directly before... David Windley: That too, if you like... Jon Resnick: I mean, I think we addressed that in the prepared remarks pretty clear. There is a -- this market is ripe for growth. And as I said in my opening remarks, I think there's a lot more opportunity for us to drive execution. I am -- whether it's on the debt side, later on in the debt side or earlier discovery, there's trade-offs of those different markets, price point size, fragmentation. There's a lot of different things that are going to play. So I think we'll be a little bit selective around how we're choosing what to do. I think -- and John Gallagher alluded to this in his remarks, if you kind of look at the core MIDD portfolio that we have, it grew in those double-digit numbers that I think, David, you'd be expecting from this franchise. So the core kind of where we're doing the biosimulation and the computational work, that is 10%. Now there's a range of places you can deploy that. You can deploy that at the point of regulatory submission. You can deploy that in trial optimization and trial design. Some of the case studies and examples that we're highlighting, we were intentionally pointing you to earlier things, use of QSP to pick targets and as we kind of integrate Chemaxon and D360 and some of the different offerings that we have that are closer to the discovery stage, we think there's going to be a lot more value by integrating PBPK and QSP earlier into that cycle. So I don't know if the trade-off is much around do you play in discovery to play in that as much as how can we focus around those kind of core growth areas with our strong legacy and strong differentiation. I think those are the types of things that you'll be seeing from us over the next couple of weeks and months. Operator: Our next question comes from the line of Brendan Smith from TD Cowen. Brendan Smith: Welcome, Jon. I wanted to follow up actually on your commentary in the prepared remarks, I know you just expanded a little bit on this, but where you said Certara should be able to drive double-digit growth over time. Can you maybe just expand a bit more on what you kind of mean there and over what time frame you think this is feasible? Are there maybe certain benchmarks over the next couple of years you think the company needs to hit to derisk that ramp to 10% plus growth? And maybe just related to that, curious how you're thinking about software growth specifically over the next couple of years, just given that I think some of your peers are in the space are benchmarking about 10% to 15% there. So wondering how we should interpret that within your kind of blended flat to 4% guidance. Jon Resnick: Let me -- John, I'm going to take a quick stab, and then I'll turn to you for some of the thinking. Yes. So first of all, I think you definitely kind of picked up on the points that we were there. Look, I don't know why our expectations would be any different than anyone else in this peer group. There are no shortage of opportunities out there. We're not going to provide a multiyear path today. We will certainly get that to you over the course of this year. We're in the process of kind of updating those LRPs and those processes, and I will give you a very clear answer to timing and expectation at that point. The commentary that we had today is very clearly if you look at the opportunity, you look at the potential for this, you look at the range of use cases this can be deployed into and you look at what I alluded to around some of the opportunities around just execution, there's huge windows for improvement in what we do. But we will get you those answers over the course of the year, if not at the next set of calls early into Q3, we'll be providing that multiyear guidance and a clear direction and path for you. Do you want to add anything? John Gallagher: Yes. Yes. I think maybe just to add on to that, then the view to double digits, of course, is predicated on all the things that Jon just said, some help from the end markets, which we seem to be getting like when you look at the performance of the services business, as Jon was saying earlier, perhaps a good leading indicator on discretionary spend that we could be entering a time of at least some stability, maybe even some tailwind from the end market, combined with some of the execution points that we've discussed here would set us on that path. And we look forward to giving an update in the coming quarters on just what that time line looks like. But when you look at adoption of MIDD versus where we are today and the growth rates that we have today versus the market-leading position that Certara has in this space, then we feel very optimistic about the future. Operator: Our next question comes from the line of Sean Dodge from BMO Capital Markets. Thomas Kelliher: This is Thomas Kelliher, on for Sean. Welcome, Jon. Maybe going back to pricing. How would you characterize the pricing environment across the different solutions and customer tiers? Are there more specific areas you'd call out we're seeing a bit more pressure? Or on the flip side of that, do you see some areas where you have an opportunity to maybe better align price with value? Jon Resnick: Yes. Thanks, Thomas. It's a good question. I want to answer your question directly without necessarily communicating to the entire world what our pricing strategy is going to be on some of these dimensions. Look, I think there's a handful of ways to think about it. There's some core products in the portfolio that probably should be thinking in a little bit more disciplined way around how to -- for pricing, for opportunity. So there's a segment of products that fit right into that category where I think that there is more pricing potential. And I think it's fair and commensurate with the value of the product and the level of investments that we're putting into the product and the value that adding to the organization. I mean I think one of the questions -- behind the questions, I presume, is also how is the pricing environment changing as you start to extend the SaaS model and start to extend some of what you're doing internally, the offerings that we bring, we believe add a tremendous amount of value. When -- if you look at some of the case studies that we provided today or even other things in the public domain around impacts that we're having, whether it's trial avoidance or optimized trial or the ability to do meta-analysis on things and save considerable money, I think we think we're bringing considerable value to our clients. And we certainly are looking at how do we better align things that we do to ensure that we're participants in some of that value creation. I think the world of flat -- thinking the world about user fees and seat licenses and other things, I think it's going to evolve considerably over the next few years. And I think we sit in a nice spot where we can partner with clients in a more longitudinal way and kind of demonstrate areas in which we're helping them avoid cost, accelerate time line, derisk trials in a way that we can tap into a little bit more value. So that's the focus that will be going on. I'm trying not to give you the 100% detail on it, but I think we have a good forward approach here, which we think will align nicely to where our clients want to go as well. Thomas Kelliher: I totally appreciate some of the sensitivity there. Maybe going back to the Tier 1 bookings, there's kind of a disconnect between software and services. How should we think about that? Is demand for maybe some of the regulatory services, for example, could those be potential leading indicator on the software side of the business as well? Any color there would be helpful. John Gallagher: Yes, yes. The strength in the services bookings in Q4 is a good indicator of the overall market, we think, as John was saying before, it's probably a good indication of the appetite for discretionary spend. And we saw it not only in the reg business. We did see -- we had a strong Q4 bookings number in reg, but also in biosim services. So on both sides of that, we -- and as we approached the year looking at 2026, we entered the year with a bit more optimism and a view toward a more stable end market environment as a result of that. Operator: Our next question comes from the line of Max Smock from William Blair. Christine Rains: It's Christine Rains on for Max. Hoping you can walk through the relative magnitude of the factors driving your expected step down in adjusted EBITDA margin in 2026, just if it's predominantly revenue driven, maybe any headcount growth expected, innovation investments you discussed or other strategic or commercial change programs you're putting in place? John Gallagher: Christine, yes. So the margin guide of 30% to 32% is in line with the guide we provided last year. And we had noted that it was a year of investment, which you certainly saw that show up in our R&D expense during the course of 2025. 2026 is similar in the sense that we've guided a similar margin range. It is a step down, as you pointed out, from where we exited the year, and we did a full year of 32% last year. And that's because we do have further investments in R&D related to MIDD and unifying our platforms and these are investments that we're going to continue to make. We launched 4 new software -- or sorry, 3 new software products in Q4 of last year. We intend to continue that path of launching new software and enhancements to our existing software during 2026. And so that's where we're at. Now I balance that with the fact that, yes, we put 30% to 32% out. Last year, I think we did -- I'd like to say we did a good job of managing the investments that clearly we were making, you see them show up in R&D. We're finding operational efficiencies and still coming at the high end of that guide. As we look at this year, we're already starting to look at how we can make the investments this year while also looking at the cost structure. And you heard Jon mention cost avoidance that we've looked at already in the '26 plan of $10 million. So hopefully, that gives you a sense of how we're thinking about it. We are investing this year. You're going to see that in R&D and hence, the guide of 30% to 32%. Christine Rains: Great. That's super helpful. Given this innovation ramp, I'm hoping you can discuss your CapEx and free cash flow assumptions for this year. John Gallagher: Yes. We don't guide those particular metrics. But I think that what you've seen is like if you're looking at capitalized expense, then that's largely due to the R&D investment. So if you think about what it is we're doing, we're investing in R&D, we're developing new software products or enhancements to our platforms. We're unifying our tech architecture, all of which are capitalizable. And as a result of that, you've seen us capitalize a bit more. So the trend that you saw in 2025 or the levels of capitalization that you saw in 2025 would be similar based on the earlier comments that I made would be similar in 2026. Operator: Our next question comes from the line of John Park from Morgan Stanley. John Park: I'm on for Craig. Earlier in the prepared remarks, you talked about matching the right solution for clients. Do you think you have all the pieces together when it comes to personnel or IP? Jon Resnick: Personnel or IP, is that the question? John Park: Yes. Or like what -- do you think you have all the pieces together to really find the right solution for clients? Jon Resnick: Look, I think anyone would say they never have all the right answers. I mean that's the honest answer. This is a dynamic space with a range of different things. I think we feel pretty darn good about our ability to respond to a range of questions. I think strategically, we always kind of have our eye on what else is out there with complementary capabilities to what we do. But there's no shortage of ability for us to match kind of client demand. You take the toughest questions that our clients have about trial, trial design, execution, chemical entity business design, we can answer a range -- a massive range of things. So I have no concern about the fitness of the current portfolio to execute. Obviously, we'll always continue to look for things to complement us and things to continue to help us create scale and grow as a business and round out our offering. But on the whole, we have more than enough in the current portfolio to very actively work with our clients on any number of challenges that they're facing. John Park: I know you mentioned a lot of the FDA remarks up top in the prepared remarks. Have your clients seen any changes in the FDA other than statements? I know it's probably way too early for drug approval rates change, but are they optimistic when it comes to maybe going one phase to another? Jon Resnick: So I think -- look, I think I would answer the question slightly different, if you don't mind. The way I tend to think about it is, are we seeing a shift towards more of our services as the FDA starts to push people to more computational and modeling-based approaches. And I think the answer is certainly, yes, the FDA and the life sciences industry does not move quickly. These cycles are long. So you get changes in regulatory guidance, you have in-flight trials, you have a whole range of other things that take time to move. But if you look at underneath the growth in our QSP business and the core growth in our PBPK business, those are reflective of these alternative approaches being used and growing acceptance. So look, as we kind of look -- we look at the direction of travel, the FDA, we certainly think that's a huge tailwind for our offerings. We're starting certainly to see the leading indicators in some of our core service offerings and the technology that underpins them. So we're optimistic about the way those guidelines and the direction of travel for the regulatory bodies and how that plays into our ability to support clients in a broader and more helpful. Operator: Thank you for your participation in today's conference. This does conclude the question-and-answer session and concludes the program. You may now disconnect.
Operator: Thank you for standing by. Welcome to Indivior Pharmaceuticals Inc's fourth quarter and full year 2025 results conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, please press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please note that today's conference is being recorded. I would now like to hand the conference over to Jason Thompson, your host for today's call. Please go ahead. Jason Thompson: Thank you, and good morning, everyone. I am joined today by Joseph J. Ciaffoni, Chief Executive Officer, Patrick A. Barry, Chief Commercial Officer, and Ryan Preblick, Chief Financial Officer. We are also joined by Christian Heidbreder, our Chief Scientific Officer. Before we begin, I need to remind everyone that on today's call, we may make forward-looking statements that are subject to risks and uncertainties, and that actual results may differ materially. We list the factors that may cause our results to be materially different here on slide 2 of this presentation. We also may refer to non-GAAP measures, the reconciliations for which may also be found in the appendix to this presentation that is now posted on our website at indivior.com. I will now turn the call over to Joseph J. Ciaffoni, our CEO. Joseph J. Ciaffoni: Thanks, Jason, good morning and thank you for joining us on today's call to review our fourth quarter and full year 2025 results. I will begin with an overview of our business performance in 2025 and summarize our progress against the Indivior Action Agenda. Pat will then provide a commercial update and discuss our priorities for SUBLOCADE. Finally, Ryan will review our financial performance, 2026 guidance, and then detail our capital deployment strategy. 2025 was a transition year for the company. Last July, we rolled out the Indivior Action Agenda to maximize the potential of our business, make a positive difference in the lives of people living with opioid use disorder, and to create value for our shareholders. We have made significant progress, including successfully completing phase 1, Generate Momentum, and delivering against our financial commitments for 2025. Specifically, we improved our commercial execution and generated momentum for SUBLOCADE, delivering record net revenue in 2025 of $856 million, a 13% increase versus 2024, and total net revenue of $1.24 billion, representing a 4% increase compared to the prior year. We took several actions to simplify our organization and establish Indivior Pharmaceuticals Inc's go-forward operating model. Operating expenses will not exceed $450 million in 2026. We grew adjusted EBITDA 20% year-over-year to $428 million in 2025, along with notable margin improvement. We launched a new direct-to-consumer campaign, Move Forward in Recovery, on October 1, 2025, to drive awareness of SUBLOCADE among people living with opioid use disorder. Although early, we are encouraged by the engagement we are seeing and all key leading indicators are trending ahead of expectations. Finally, we strengthened our financial profile, including paying the outstanding $295 million obligation related to the legacy DOJ matter, thereby eliminating a significant future liability for our company. I want to thank the Indivior Pharmaceuticals Inc team for their contributions to our progress against the Indivior Action Agenda and their unwavering dedication to people living with opioid use disorder in the communities we serve. Our strong financial performance and the momentum we generated in 2025 position us to accelerate in 2026. Our confidence in the business is reinforced by our new $400 million share repurchase program authorized by our board that we announced this morning. With phase one of the Indivior Action Agenda completed and our go-forward operating model firmly established, we are now executing on phase two of the Indivior Action Agenda, Accelerate. During this phase, we expect to accelerate SUBLOCADE dispense unit growth and net revenue throughout 2026 and immediately grow adjusted EBITDA and cash flow at a faster rate. SUBLOCADE is the first and number one prescribed long-acting injectable for the treatment of moderate to severe opioid use disorder. It is the only monthly long-acting injectable with an indication for rapid initiation and has been prescribed to over 475,000 people. We believe that SUBLOCADE is a durable growth driver with 12 Orange Book-listed patents that range from 2031 to 2038. We are committed to investing at sustained levels to maximize the potential of SUBLOCADE and grow the long-acting injectable market. Although we are making progress, we believe long-acting injectables remain underutilized. We expect our laser focus on improving commercial execution, our sustained investments in patient education and activation, and efforts to advance state and federal policies that support greater treatment access will drive the acceleration of SUBLOCADE. I am encouraged by the trends we are seeing across all key metrics thus far in the first quarter. In 2026, we expect to deliver SUBLOCADE dispense unit growth in the mid-teens, an acceleration compared to the 7% dispense unit growth we achieved in 2025. This will result in SUBLOCADE net revenue growth of 8% at the midpoint of our guidance range. The leverage generated by our go-forward operating model will immediately accelerate adjusted EBITDA and cash flow at a faster rate. We expect to generate 30% adjusted EBITDA growth in 2026, representing a 13 percentage point improvement in our adjusted EBITDA margin compared to 2025, and we expect to generate approximately $300 million in cash flow from operations. Our increased cash flow and strong financial position will enable us to strategically deploy capital to create value for our shareholders. Our capital deployment priorities are threefold: manage our debt, opportunistically deploy our newly authorized $400 million share repurchase program, and evaluate potential business development opportunities to acquire the next commercial stage growth drivers as we earn our way to phase 3 of the Indivior Action Agenda Breakout. We are encouraged by, but not satisfied with, the progress we made in 2025. The actions we took and the foundation we established strongly position us to achieve our financial and operational objectives in phase two, Accelerate, in 2026. I will now turn the call over to Patrick A. Barry. Patrick A. Barry: Thanks, Joe, and good morning, everyone. As part of phase one of the Indivior Action Agenda, Generate Momentum, we have been focused on improving commercial execution for SUBLOCADE. Our commercial team is dedicated to helping people living with OUD, and they have a strong belief in SUBLOCADE as the first and number one prescribed long-acting injectable in the category. We have made progress on our commercial execution initiatives, which are reflected in our fourth quarter and full year results. In the fourth quarter, we delivered strong dispense unit growth of 12% versus the prior year and 6% versus the third quarter. New patient starts in the fourth quarter were up 25% year-over-year, and over the course of the last 10 weeks of the year, weekly new patient starts achieved all-time highs on three separate occasions. Total category share of LAIs and new patient share in the U.S. for SUBLOCADE continued to stabilize in the mid-70s. We exited 2025 with a record number of active SUBLOCADE prescribers, including those treating 5 or more patients. In the 4th quarter, both total active SUBLOCADE prescribers and prescribers treating 5 or more patients grew 14% year-over-year and approximately 6% sequentially. We believe this progress represents a combination of the fundamental strengths of SUBLOCADE, along with our improving commercial execution. We are encouraged by the momentum we generated exiting 2025 and are well positioned to accelerate in 2026. We remain focused on continuous improvement in commercial execution to accelerate SUBLOCADE prescribing volume for the benefit of people living with OUD. Our efforts are centered on driving excellence in field force messaging, improving commercial channel productivity, growing patient activation and new starts, and unlocking treatment access through proactive engagement with policy leaders. We have seen improvements across each of these areas. Our field force messaging acumen that is focused on SUBLOCADE's differentiated label is driving growth in the number of physicians utilizing the accelerated second dose. Approximately 7% of new patients received the accelerated second dose, and 17% of active HCPs prescribed a second dose in line with the expanded SUBLOCADE label. On commercial dispense yield productivity, we remain in the early stages of improving yields towards our non-commercial channel average of approximately 80%. We are seeing steady progress with our targeted commercial specialty pharmacies and expect steady yield improvement as we move through 2026. In addition to these commercial improvement initiatives, we are investing to expand patient awareness and engagement. Last October, we launched our direct-to-consumer campaign, Move Forward in Recovery, which is designed to emotionally and authentically connect with people living with OUD and drive awareness of SUBLOCADE as a treatment option for those struggling with moderate to severe opioid addiction. Recall this campaign has an omni-channel approach, including national television, digital and social media, and in-office point-of-care materials, along with a newly designed SUBLOCADE patient website. We are seeing early indicators of success following the launch of the campaign. For example, prompted awareness among patients has increased versus the first quarter of 2025. Branded online search volume increased 60% in the fourth quarter compared to the months immediately prior to the launch of the campaign, driving high-quality engagement on the SUBLOCADE website, including a 70% increase in usage of the Find a SUBLOCADE Treatment Provider tool. We also saw an average of around 1,400 new CRM enrollments per month in the fourth quarter, versus around 60 per month immediately prior to the new campaign, reflecting meaningful and tenure-driven patient action. We are also actively pursuing opportunities to expand patient access through our proactive public policy initiatives. For example, in several states, long-acting injectables are only available under a medical benefit. This creates logistical complexity, upfront cost, and administrative burden for providers. Expanding coverage under a pharmacy benefit would reduce these barriers, lower financial risk, and improve provider adoption. In parallel, we are engaging on bundled payment structures to help ensure that long-acting injectables are appropriately recognized, whether through potential carve-outs or a more accurate reflection in overall payment levels. This would strengthen the financial viability of treating people with OUD. Taken together, our improving commercial execution, patient activation efforts, and policy initiatives are laying the foundation for SUBLOCADE acceleration and give us confidence in our ability to deliver mid-teens dispense unit growth in 2026. I will now turn the call over to Ryan. Ryan Preblick: Thanks, Pat. Good morning. First, I will highlight our fourth quarter and full year financial performance, followed by a review of our 2026 guidance, and close on our capital deployment strategy. We delivered on our financial commitments in 2025. We grew total SUBLOCADE net revenue by 13% and adjusted EBITDA by 20% year-over-year. We simplified the organization while strengthening our financial profile. We are well positioned to execute on phase two of the Indivior Action Agenda, Accelerate. Looking at our results in more detail, starting with the top line. Total net revenue of $358 million for the fourth quarter and approximately $1.24 billion for the full year increased 20% and 4%, respectively, versus the prior year periods. The increase for both periods was driven by strong SUBLOCADE net revenue growth. Total SUBLOCADE net revenue of $252 million for the quarter and $856 million for the year increased 30% and 13%, respectively, versus the prior year periods. For the fourth quarter, SUBLOCADE dispense volume grew 12% year-over-year and 6% versus the prior quarter. For the full year, SUBLOCADE dispense volume grew 7%. Gross-to-net benefits also contributed to the increase in SUBLOCADE net revenue for both periods. The fourth quarter included a gross and net benefit of approximately $19 million and $10 million due to an increase in trade inventory of approximately 2 days. The full year included a gross and net benefit of approximately $49 million. Turning to SUBOXONE Film net revenue, in the fourth quarter and full year, we benefited from continued generic price stability in the U.S. Fourth quarter SUBOXONE Film net revenue included a gross and net benefit of $23 million, and the full year included a gross and net benefit of $55 million. Total non-GAAP operating expenses were $164 million for the fourth quarter and $622 million for the full year, down 8% and 5%, respectively, versus the same year-ago periods. Non-GAAP SG&A expenses were $148 million for the fourth quarter and $545 million for the full year, down 2% and 1%, respectively, versus the prior-year periods. The decreases in both periods were driven by reductions in headcount and footprint consolidations across the organization, partially offset by increased selling and marketing investments behind U.S. SUBLOCADE. Non-GAAP R&D expenses were $17 million for the fourth quarter and $80 million for the full year, down 36% and 22% year-over-year, respectively. The decreases in both periods were driven by the reprioritization of pipeline activities and the restructuring of the R&D and medical affairs organizations. Charges related to the simplification actions we took as part of phase one of the Indivior Action Agenda were $55 million in the fourth quarter and $120 million in 2025. These charges include severance costs, write-offs for leases, inventory, equipment, and intangibles, as well as other termination payments and consulting costs. The related cash costs were approximately $28 million in 2025. Looking at the bottom line, we generated record adjusted EBITDA for the fourth quarter and full year. Adjusted EBITDA for the fourth quarter increased 91% year-over-year to $142 million. For the full year, adjusted EBITDA grew 20% to $428 million, with margin improvement of 500 basis points. We are reaffirming our 2026 financial guidance, which reflects the go-forward operating model we established by completing phase one of the Indivior Action Agenda. We expect total net revenue in the range of $1.125 billion-$1.195 billion. The modest decline in net revenue at the midpoint versus 2025 is mainly due to the expected U.S. SUBOXONE Film pressure, lower net revenue from the rest of the world due to the optimization we conducted last year, and the continued runoff of PERSERIS. We expect total SUBLOCADE net revenue in the range of $905 million-$945 million, representing growth of 8% at the midpoint versus 2025. We expect to accelerate U.S. SUBLOCADE dispense unit growth to the mid-teens in 2026 from 7% in 2025. By leveraging our new operating model that we have established as part of phase one of the Indivior Action Agenda, Generate Momentum, we expect non-GAAP operating expenses in the range of $430 million-$450 million. We expect adjusted EBITDA in the range of $535 million-$575 million, which at the midpoint, is an increase of 30% versus 2025 and would represent 13 percentage points of margin expansion to 48%. With the successful completion of phase one of the Indivior Action Agenda, Generate Momentum, we have strengthened our financial profile and will continue to improve upon this foundation as we execute on phase two, Accelerate. We ended the year with gross cash and investments of $222 million, even after concluding the legacy DOJ matter by paying the outstanding obligation of $295 million. Excluding the impacts from settlement and restructuring payments, underlying cash flow from operations was over $200 million in 2025. We ended the year with net leverage below 1 time. In 2026, we expect to generate over $300 million in cash flow from operations, enabling us to strategically deploy capital to create long-term value for our shareholders. Our capital deployment priorities include managing our debt, returning value to shareholders through opportunistic share repurchases, and evaluating business development opportunities as we earn our way to phase 3 of the Indivior Action Agenda Breakout. Today, we announced that our board authorized a new share repurchase program of up to $400 million, with a term up to 18 months. We plan to utilize this program opportunistically to return value to our shareholders. As we earn our way to phase 3 Breakout, we will evaluate business development opportunities specifically focused on commercial stage assets that have the potential to enhance and diversify our growth profile. Our financial strength provides us with capital deployment optionality. We are committed to taking a disciplined approach. I will now turn the call back over to Joe for concluding remarks. Joseph J. Ciaffoni: Thanks, Ryan. 2025 was a year of significant progress against the Indivior Action Agenda. We sharpened our focus on our highest growth opportunity, U.S. SUBLOCADE, established our go-forward operating model, and strengthened our financial profile. We are now executing phase 2 of the Indivior Action Agenda, Accelerate, in which we expect to accelerate SUBLOCADE throughout 2026 and immediately accelerate adjusted EBITDA and cash flow at a faster rate. With the establishment of our capital deployment strategy, we are focused on creating long-term value for our shareholders as we work towards becoming a leading, diversified specialty pharmaceutical company, committed to making a positive difference in the lives of people through the commercialization of differentiated medicines. We will now open the call for questions. Operator? Operator: Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Once again, please press star 11 and wait for your name to be announced. To withdraw your question, please press star 11 again. We are now going to proceed with our first question. The questions come from the line of David Amsellem from Piper Sandler. Please ask your question. David Amsellem: Hey, thanks. Just a couple here. Joe, I wanted to get your thoughts, just taking a step back on where you think penetration of LAI buprenorphine modalities ultimately could go to, or what you think would be a reasonable way to think about peak penetration of the category in the OUD space. Then secondly, how should we think about share versus your competitor? Obviously, the goal is growing volumes here, and that has been the focus, but there is a lot of, I think, investor focus on your share, even though the pie, so to speak, continues to grow. I am wondering if you can give us some thoughts on share. That would be helpful. Then lastly, you mentioned capital deployment in your prepared remarks. Wanted to get some more detailed thoughts on business development. What kind of therapeutic adjacencies or other therapeutic areas are you looking at? My assumption is that you are looking at commercial stage assets, but wanted to get more details on your thought process regarding biz devs. Thank you. Joseph J. Ciaffoni: Great. Thanks, David. Look, I appreciate your questions. First off, with regards to LAI penetration, we are now embarking upon 9%, so we have to confront the reality of where we are, and we believe there is significant opportunity to continue to grow LAI penetration. We believe that long-acting injectables are underutilized. I am not going to get into peak penetration projections. However, I will share with you some analogs and data we look at that will give a sense of what is possible. If you look at categories like schizophrenia, as an example, from a long-acting injectable perspective, you would see penetration at 30%. I can assure you, we have a lot of market research here at Indivior Pharmaceuticals Inc that would support LAI penetration in the range of 20%-30%. My final comment on LAI penetration is we are committed, as the longstanding leader in the space, to doing everything that we can to educate and activate consumers with regards to the important role that long-acting injectables can play. As it pertains to your question on share, what I would emphasize on share, and you are correct, our focus is really first and foremost about driving the market. From a share perspective, we have seen over many quarters our market share stabilizing in the mid-70%. I would emphasize that we are the only entity in the world that has perfect data on the vast majority of the market, and we have been applying a consistent methodology. Importantly, what we are most focused on is new patient share, which has been very strong, as has the absolute number of new patients. We are pretty routinely now achieving all-time highs in new patient starts. To your final question on capital deployment, look, our start point is there are no commercial assets in the space of opioid use disorder that we believe are there that would enhance our portfolio. Once we made that determination, we will be establishing a new strategic beachhead in a new therapeutic area. I will not say we are agnostic. There are certainly some areas we would not go into, like cancer gene therapy, but what we are focused on are business fundamentals. We are looking at commercial stage only. We are looking for assets that have peak sales potential of greater than $200 million. It is important to us that the products have a long runway. One of the strengths of the Indivior Pharmaceuticals Inc story is we have a great growth driver with a durable runway in SUBLOCADE, we want to acquire assets that have runway that goes towards the mid to end of 2030 at a minimum. Of course, we want differentiated assets. We are not interested in being an aggregator of commoditized brands. We feel that is important from a patient value perspective, but also, when you look at it from a reimbursement perspective, we believe to get the coverage necessary to be successful commercially, that you have to have meaningfully differentiated products. David Amsellem: Okay. Helpful. Thanks. Joseph J. Ciaffoni: Thanks, David. Operator: We are now going to proceed with our next question. The question comes from the line of Chase Knickerbocker from Craig-Hallum. Please ask your question. Chase Knickerbocker: Good morning, guys. Congrats on the results here, thanks for taking the questions. Maybe just first digging in a little bit more to guide. Can you just kind of delineate what your guidance assumes from an LAI market growth perspective in 2026? Then, you know, to ask, I think, this question just a little bit differently on the share, what does it assume for share in 2026? Just kind of zooming in on the guide specifically, Joe. Thanks. Joseph J. Ciaffoni: Yeah. Chase, thanks for the question. On the SUBLOCADE guide, I am not going to get into an LAI penetration assumption. We are assuming mid-teen SUBLOCADE growth, which is a significant step up from where it is that SUBLOCADE was in 2025. I will comment on a market share perspective. We do expect to see continued stabilization of SUBLOCADE market share. Chase Knickerbocker: Just as we wrap up 2025, you know, like you had mentioned, you guys kind of have perfect data. Can you just kind of update us on what LAI market growth was in 2025? My last question, Joe, is just a little bit more, you know, I would appreciate some more thoughts on kind of buyback versus M&A. It is just kind of where they are on the priority list. Is this something where you will kind of be opportunistic on M&A, and then in the meantime, you know, you guys will be, you know, fairly aggressive on the buyback as far as that being kind of the primary capital allocation after you service your debt, of course? Joseph J. Ciaffoni: Okay, thanks, Chase. I will let Pat take the first question and let Ryan comment on the second. Patrick A. Barry: Yeah, in LAI category growth, for Q4, we were approaching 18%. Again, really strong category growth. Ryan Preblick: Hey, Chase, good morning. When it comes to capital allocation, you know, due to our financial strength and the strong cash flow from the business, we have options here. It is not about or, it is about and. If you start with the debt, you know, right now we do have expensive debt, but as part of our normal cadence, it is something that we are looking at, and it is something that, you know, we will take care of in the near future. If you look at the share repurchase, this is another option we have to deliver value to our shareholders. We authorized the $400 million program to be ready to be prepared to buy back shares and be opportunistic. That decision will be made in the context of what else is going on in the business at that point in regards to the debt conversation, BD, making sure we have the right capacity for investments behind SUBLOCADE. And then also, you know, we need to evaluate if there is still a gap between the share price and what we believe the value of the company is. And then finally, when it gets to the business development, you know, we are still earning our way to phase 3, the Breakout, where, as Joseph J. Ciaffoni just said, you know, we are going to look at BD, including buying commercial assets. Overall, we are definitely focused on driving shareholder value. Chase Knickerbocker: Great. Thank you. Joseph J. Ciaffoni: Thanks, Chase. Operator: We are now going to proceed with our next question. The question comes from the line of Dennis Ding from Jefferies. Please ask your question. Dennis Ding: Hi, good morning. Thanks for taking our questions. I have two. Number one, what are your thoughts on the overall Medicaid funding landscape and the potential impact on SUBLOCADE from less funding in 2027? How confident are you around maintaining that mid-teen unit growth in the U.S. in 2027 and after? Number two, on SG&A, I am just curious about the shape of SG&A in 2026, given it was $148 million in Q4. If you can comment on how much you are spending on DTC in 2026, and, you know, at what point would you reevaluate that DTC spend in terms of growing or shrinking that? Thank you. Joseph J. Ciaffoni: Yeah. Dennis, thanks for the question. With regards to DTC, we are not going to get into how much we are spending for competitive reasons. What I will assure you is we are making every investment in support of it, and we are actually over-investing beyond what our models would suggest that we should. We are also committed to investing behind DTC at those levels for a multi-year period, because at the end of the day, the most important thing that we can do is educate and drive long-acting injectable penetration. As it pertains to Medicaid, I am not going to get into, we are just starting 2026, what we think growth would look like in 2027. What I can tell you is, one, we advocate for and are hopeful from a humanistic perspective, that everybody who should be supported by Medicaid is supported. We believe that overall, if you look at the various legislation, it is generally supportive, we view that as a bipartisan support to helping people with substance use and opioid use disorder. The final point I would make, at 8%-9% long-acting injectable penetration, there is so much opportunity for growth with SUBLOCADE across the board, inclusive of Medicaid. It will not be impacted whether Medicaid population is ± a certain %. I will give Ryan the opportunity to comment on SG&A. Ryan Preblick: Yeah, good morning. In regards to the step-up in Q4, that was simply us taking advantage of our DTC campaign, tested really well, and we had the opportunity to start it early. That is the expense you are seeing in Q4. Around phasing for 2026, our quarters are relatively flat. You may see some skew to the first three quarters just due to the campaign we have in place. Dennis Ding: Helpful. Thank you. Joseph J. Ciaffoni: Thanks, Dennis. Operator: We are now going to proceed with our next question. The question comes from the line of Christian Glennie from Stifel. Please ask your question. Christian Glennie: Hi, thanks, guys. Thanks for taking the questions. First one would be on SUBLOCADE and the guide. Just so I guess to understand it properly, obviously, you had meaningful gross-to-net benefits. Is the idea that we, you know, adjust for that, take that off in terms of the base, the underlying, I guess, base for SUBLOCADE, that gets you, if you are doing mid-teens, that gets you to the sort of the range that you have guided to? As in, trying to, you know, compare the 8% net revenue guide versus your mid-teens guidance in dispense growth. Joseph J. Ciaffoni: Thanks for the question, Christian. Look, in 2025, gross-to-net served as a tailwind. In 2026, gross-to-net will serve as a headwind to the business. The key component of the guide is the following: we are going to grow and accelerate dispense unit growth to the mid-teens, and we are assuming that we are going to continue to see a stabilization of market share. Christian Glennie: Okay, thank you. Then on the, I guess, just obviously, you know, funny enough, if we are going back to the capital markets day 2022, you talked about an exit rate to, you know, billion-dollar exit rate by the end of 2025. You have actually gone and actually done that. I guess, any observations about, you know, the potential to breach that billion-dollar number? Joseph J. Ciaffoni: I appreciate the question. We are not going to get into any peak sales projections, any forward-looking, when we are going to hit certain thresholds. What we are focused on is delivering on the financial commitments that we made to everyone for 2026, or for 2026. The final comment I would make there is we are very confident with SUBLOCADE that we have a durable growth driver, and I think we are just scratching the surface on the potential of this asset, both from a business perspective, but candidly, more importantly, in the potential it has to make a difference in a positive way in the lives of people living with opioid use disorder and the communities that we serve. Christian Glennie: Thanks. My final one, if I can, maybe just to clarify a previous comment around new assets. You talked about being well-served, obviously, in OUD, in terms of it seemed to apply other therapeutic areas. Would that include other addiction therapeutic areas, or is it outside addiction? Joseph J. Ciaffoni: I appreciate the question. First thing I want to emphasize, we are head down in phase 2 Accelerate, and we have been clear we need to earn our way to phase 3 Breakout. I would not have an expectation that anything we do from an acquisition perspective would be focused on opioid use disorder or substance use disorder. I would think of different therapeutic areas than that, but I would bring you back to the business fundamentals that will really drive what it is that we are looking to achieve. Commercial stage, peak sales potential greater than $200 million, a long and durable runway in front of it, and a differentiated asset that would deliver both patient value and enable us to get the reimbursement we feel is necessary to be successful commercially. Christian Glennie: Great. Thank you. Joseph J. Ciaffoni: Welcome. Thank you. Operator: We are now going to proceed with our next question. The questions come from the line of Brandon Folkes from H.C. Wainwright. Please ask your question. Brandon Folkes: Hi. Thanks so much for taking my call. Congrats. Maybe just a quick one for me. Can you just talk about how you think contribution from the criminal justice system opportunity in your 2026 SUBLOCADE guidance? Thank you. Joseph J. Ciaffoni: Yeah. Thanks, Brandon. I am going to give that one to Pat. Patrick A. Barry: Yeah, no, I appreciate the question, Brandon. We see the criminal justice segment as a strong opportunity for us. We see it as a rebase business. From there, we believe we can grow. Also, SUBLOCADE is a differentiated asset. It is the only monthly with a long-acting injectable monthly with the rapid induction. You have prescribers that are familiar and comfortable with it. In that context, we do believe it can contribute to the growth that we are guiding to on mid-teens. Obviously, we are looking at the broader opportunity. While CJS is a part of it, we are looking at the opportunity as the category leader to continue to fuel and grow the overall LAI category. Operator: We are now going to proceed with our next question. The question's come from the line of Thibault Boutherin from Morgan Stanley. Please ask your question. Thibault Boutherin: Yes, thank you. Thank you for the clarification on SUBLOCADE guidance between 15% and 8%. There is also another element, it is small, but SUBLOCADE ex U.S., how should we think about that line of revenues given the organization changes they have made, you have made, sorry. Should we expect this to stabilize? Could it decline next year? Just if you could help us on that. Just on R&D, obviously you are going to have 2 phase III go-no-go decisions in the next few weeks. How should we think about the impact of the different scenarios on your OpEx guidance if you take 0, 1, or 2 assets to phase III? Thank you. Joseph J. Ciaffoni: Sure. I will let Ryan take the first question, and then Christian and I will split the second. Ryan Preblick: Certainly. Good morning. On SUBLOCADE and the rest of the world, it is going to be relatively flat year-over-year. We will see growth in Australia and Canada, but we will lose some of the volume coming out of the Nordics. Joseph J. Ciaffoni: Okay. With regards to R&D, I will let Christian comment on the programs and timing of the phase II readouts. What I would tell you is our budget for 2026 contemplates if we have the opportunity to advance those programs, that is built into the operating budget that we are working towards. Christian? Christian Heidbreder: Yes. Based on what Joe just said, the 2 phase II trials were completed at the end of the fourth quarter last year. We are now going through the traditional process of data cleaning, data closeout, and statistical programming. This will be followed by a database lock by the end of the first quarter this year, with the final tables, figures, and listings available in the second quarter of this year for preparation of top-line results on both assets. I must add that in addition of INDV-6001, in addition to the phase II data, the decision to proceed to late-stage clinical development, that is the phase III, hinges on 3 additional factors. First, the manufacturing feasibility and the availability of the drug product for the actual phase III. Second, we are currently running a payer-validated differentiation and evidence that is going to be required for coverage based on the target product profile research. Third, the impact of that research on the clinical phase III trial design, if indeed, this is what the business decides to do. Thibault Boutherin: Thank you. Joseph J. Ciaffoni: You are welcome. Operator: Thank you. This concludes the question and answer session and today's conference call. Thank you all for participating. You may now disconnect.
Operator: Good morning, and welcome to the Viatris Inc. Q4 2025 earnings call. Today, all participants are in a listen-only mode. Should you need assistance during today's call, please signal for a conference specialist by pressing the star key, followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touchtone phone. To withdraw your question, please press star, then 2. Please note that today's event is being recorded. I would now like to turn the conference over to Mr. Bill Szablewski, Head of Capital Markets. Please go ahead. Bill Szablewski: Good morning, everyone. Welcome to our Q4 2025 earnings call. With us today is our CEO, Scott Smith, CFO, Doretta Mistras, Chief R&D Officer, Philippe Martin, and Chief Commercial Officer, Corinne Le Goff. During today's call, we will be making forward-looking statements on a number of matters, including our financial guidance for 2026 and various strategic initiatives. Those statements are subject to risks and uncertainties. We will also be referring to certain actual and projected non-GAAP financial measures. Please refer to today's slide presentation and our SEC filings for more information, including reconciliations for those non-GAAP measures to the most directly comparable GAAP measures. When discussing 2025 actual or reported results, we will be making certain comparisons to 2024 actual or reported results on a divestiture-adjusted operational basis, which excludes the impact of foreign currency rates and also excludes the proportionate results from the divestitures that closed in 2024 from the 2024 period. We may refer to those as changes on an operational basis. When comparing our 2025 actual or reported results to our expectations, we are making comparisons to our 2025 financial guidance. When discussing our expectations for 2026, we will be making certain comparisons to 2025 actual or reported results on an operational basis, which excludes the impact of foreign currency rates. With that, I will hand the call over to our CEO, Scott Smith. Scott Smith: Good morning, everyone. 2025 was a strong year for Viatris Inc., and I am very proud of what we are able to accomplish across all our strategic priorities. The result of all that great work is that we have positioned the company to enter a period of long-term sustainable growth beginning in 2026. Specifically, for 2025, we drove strong commercial performance across our global portfolio, continued to stabilize and strengthen our base business, and delivered solid results, including $14.3 billion in total revenues, representing approximately 2% growth versus 2024, excluding the India pack, and adjusted EBITDA of $4.2 billion. We advanced our pipeline, including five positive phase 3 readouts, and made significant regulatory progress on multiple assets. Importantly, we also advanced both cenerimod and Soladragrom, their phase 3 trials, with full enrollment for both programs expected in 2026. We prioritized capital return with more than $1 billion in capital return to shareholders through dividends and share repurchases. We targeted accretive regional business development, completing 60 regional transactions, including our acquisition of Aculys Pharma in Japan. For our India facility, we met with the FDA in November to review our progress and discuss potential timing for reinspection. That timing remains at the agency's discretion, we will be ready for reinspection this year. In the meantime, we have built operational redundancies and alternative supply sources. We have just completed our enterprise-wide strategic review. As a result, we have identified opportunities from across our company to optimize our cost structure, improve our resource allocation, and strengthen our operational efficiency. We are expecting to deliver approximately $650 million in gross cost savings over a 3-year period. We plan to reinvest up to $250 million during that same period. We are creating this reinvestment capacity to invest in areas that enhance the growth profile and long-term competitiveness of the company, such as sharpening our commercial execution and go-to-market effectiveness, advancing our R&D and innovative assets, and continuing to build the capabilities we need to enable sustained success. In addition, we have identified three strategic imperatives that will shape our future. We will drive our base business by executing successful launches, focusing on supply chain continuity, evolving our generics portfolio over time towards more profitable, higher-margin products, and strengthening our established brand portfolio. We will fuel our innovative portfolio by advancing a pipeline of late-stage and in-market growth assets sourced both internally and externally. We will modernize for sustainable growth by strengthening our technology, data, and talent capabilities to enable sustained success in a rapidly evolving healthcare environment. Together, we expect these actions will accelerate the transformation of Viatris Inc. into a more focused, efficient, and future-ready organization and position the company to enter a period of sustained revenue and earnings growth beginning in 2026. There has been a lot of work over the last year, really over the last few years to get us to this point. A sincere thank you to the more than 30,000 employees of Viatris Inc. for your thoughtful and focused execution. Your contributions make a real difference for our company and for the approximately 1 billion patients we serve around the world every year. As we look to 2026, we expect another year of strong execution. Specifically, we will be very focused on delivering strong financial performance and driving commercial execution across our businesses, including the anticipated launches of our low-dose estrogen weekly patch in the U.S. and EFFEXOR for generalized anxiety disorder in Japan, while preparing for launch of fast-acting meloxicam. From a pipeline perspective, we are hoping for regulatory decisions for six product candidates, including EFFEXOR and pitolisant in Japan, fast-acting meloxicam, low-dose estrogen weekly patch, and Ryzumvi for presbyopia in the U.S. We are expecting regulatory decisions for Empexa in Australia and Canada. We are also expecting a number of meaningful phase 3 data readouts this year and to reach full enrollment in several priority phase 3 programs. From a capital perspective, we expect to generate robust cash flow in 2026, which will give us significant financial flexibility to continue with our balanced capital allocation approach. We have also reiterated our commitment to our dividend in 2026. At the same time, we are focused on building a portfolio of growth assets through business development and continued execution of our internal pipeline. From a business development perspective, we are targeting accretive high growth in market assets. Finally, with the completion of our enterprise-wide strategic review, we will focus on evolving and modernizing our organization to strengthen our operating model and ensure sustained growth. We look forward to sharing more details at our investor event on March 19th, including our long-term outlook for revenue and earnings growth and our portfolio strategy across generics, established and innovative brands. We will also provide a deep look at our R&D capabilities and key pipeline programs, as well as our commercial strategy and how we are building the capabilities needed to execute upcoming launches. To summarize, we believe 2026 is shaping up to be a pivotal year for Viatris Inc., one where strong execution, disciplined capital allocation, and the benefits of our strategic review will begin translating into sustained, profitable growth and long-term value creation. I will now turn it over to Philippe. Philippe Martin: Thank you, Scott. 2025 was an outstanding year from a research and development perspective. We achieved five positive phase 3 readouts, advanced trial enrollment, and delivered numerous regulatory milestones across multiple therapeutic areas, technologies, and regions. The strong momentum sets the foundation for what we aim to achieve this year. Our 2026 R&D priorities are to secure eight regulatory approvals for six product candidates to progress our innovative portfolio, advance six phase 3 development programs, and continue to drive our generic pipeline and established brands portfolio, which together accounts for more than 100 new product approvals expected globally in 2026. At our upcoming investor event, we will share a comprehensive update on our pipeline. Today, I will focus on high-level updates, beginning with regulatory submissions. In Japan, we expect a regulatory decision for EFFEXOR for the treatment of generalized anxiety disorder in March this year. If approved, this will be the first and only treatment for generalized anxiety disorder in Japan, which would represent an important medical milestone for approximately 8 million Japanese patients estimated to be affected by this condition. The Japanese health authority, the NDA, is also reviewing the 2 JNDAs for pitolisant that we submitted last year, one for excessive daytime sleepiness associated with obstructive sleep apnea and the other associated with narcolepsy type 1 and 2. We anticipate regulatory decisions for both indications in the second half of 2026. Pitolisant has the potential to be a first-line, non-controlled treatment option for these indications in Japan. In the U.S., FDA recently accepted our SNDA for phenylephrine ophthalmic solution for the treatment of presbyopia and assigned a PDUFA goal date of October 17th, 2026. Phenylephrine offers a physiological approach to treating presbyopia that relaxes the iris dilator muscle to improve near vision without engaging the ciliary muscle, which helps preserve distance vision. Data from our VEGA-3 pivotal trial will be presented at the American Society of Cataract and Refractive Surgery Conference in April and at the Association for Research in Vision and Ophthalmology conference in May. Regarding our low-dose estrogen weekly patch for contraception, the FDA accepted our NDA for review late last year, assigning a PDUFA goal date of July 30, 2026. This patch addresses an important need for women seeking a reversible transdermal birth control option with lower estrogen exposure and potential best-in-class adhesion. Results from our phase 3 study will be presented at the American College of Obstetricians and Gynecologists conference in May. We remain excited about our fast-acting meloxicam for the treatment of moderate to severe acute pain, including postoperative pain, which has demonstrated in clinical trial a reduced need for opioid analgesics. We recently had a positive pre-NDA meeting with the FDA. Based on the outcome of this meeting, we anticipate submitting our NDA by the end of this month. With regards to sotagliflozin, we successfully submitted multiple filings last year and anticipate regulatory decision from Australia and Canada later this year. Sotagliflozin is emerging as the best-in-class SGLT inhibitor, which we believe uniquely provides early benefit in reducing heart failure-related outcomes.... Consistent with this dual SGLT1 and SGLT2 inhibition, sotagliflozin is the first SGLT inhibitor to demonstrate a significant reduction in MI and stroke. Turning to brief updates on our phase 3 development programs, beginning with cenerimod in SLE. The OPUS-2 study was fully enrolled last year, and I am pleased to share that we recently closed the enrollment for the OPUS-1 study. This marks a significant milestone, reflecting the Viatris Inc. team's ability to execute on an ambitious recruitment strategy. Importantly, we enrolled a high proportion of patients with high Type I interferon signature. Recall that in our Phase 2 CARE study, this population demonstrated the greatest treatment effect. If successful, cenerimod has the potential to offer a differentiated oral treatment option for patients with SLE by targeting the S1P1 pathway, with the goal of improving disease control while maintaining a favorable safety profile when given in combination with standard of care treatment. We are also advancing our cenerimod phase 3 study in lupus nephritis, and are actively randomizing patients into the study. For selatogrel, a potential life-saving, self-administered medicine for patients with a history of acute myocardial infarction or heart attack, our enrollment rate in our phase 3 trial has accelerated to approximately 1,200 patients per month, and we expect full enrollment by the end of this year. Phase 3 enrollment for our norelgestromin-only weekly patch is ongoing and is expected to be completed in the first half of this year. This product candidate complements our U.S. portfolio and pipeline. It is a progestin-only contraceptive transdermal system designed for women with medical comorbidities, including those with a BMI of 30 or higher, and for those who prefer to avoid estrogen exposure with known safety risks. Moving to our phase 3 study of Nefecon for the treatment of IgA nephropathy in Japan. We expect a top-line readout in the first half of this year. If successful, Nefecon has the potential to become a first-line disease-modifying therapy in Japan for IgA nephropathy. It is the first targeted release formulation designed to reduce the production of galactose-deficient IgA1 at its source in the gut. IgA nephropathy remains a significant unmet medical need, particularly in Japan, where disease prevalence is high. Finally, we are advancing our Influvac High Dose phase 3 program, which will present a strategic life cycle extension of our current Influvac vaccine in Europe. Influvac High Dose has the potential to offer patients, particularly those aged 60 and older, an enhanced immune response compared to the standard dose. The consistent execution of our pipeline over the past year demonstrate the rigor we are bringing to our development programs. I look forward to sharing more on March 19th about our R&D strategy and how we plan to accelerate innovation and increase the value we deliver to the business and to patients worldwide. Now I will turn it over to Doretta. Doretta Mistras: Thank you, Philippe. Good morning, everyone. My remarks today will focus on the key highlights from our fourth quarter and full year 2025 results, and our growth outlook for 2026, which we believe will be powered by continued commercial momentum and the anticipated benefits from our strategic review. Building on Scott's comments, we are proud of our team's strong performance in 2025. Our fourth quarter and full year results reflect disciplined execution across our diversified global business and, importantly, strong momentum as we exited the year. We reported total revenues for the fourth quarter of $3.7 billion, up 1% versus the prior year, excluding the indoor impact. This result was driven by strong commercial performance across key regions. In Greater China, growth was supported by demand in our cardiovascular portfolio. In Europe and emerging markets, growth was driven by the breadth and competitive strength of our portfolio. Moving to full year 2025 results, we delivered total revenues of $14.3 billion, in line with our expectations, and up 2% versus the prior year, excluding the indoor impact. Adjusted EBITDA of $4.2 billion, reflecting solid operating performance, adjusted EPS of $2.35 per share, and free cash flow, excluding transaction-related costs of $2.2 billion. Importantly, we prioritized capital return with over $1 billion returned to shareholders, including share buybacks and dividends. Turning now to our outlook for 2026. We expect to build on our positive momentum exiting 2025 and establish a clear baseline for sustainable growth. We are guiding to approximately 2% total revenue and adjusted EBITDA growth versus 2025. A key enabler of this growth is the company's strategic review, which is expected to deliver approximately $650 million of gross cost savings or $400 million of net savings after reinvestment. These cost savings are expected to be evenly balanced between SG&A efficiencies and COGS optimization, and phased over a three-year period, with full run rate benefits realized in 2029. Importantly, we plan to reinvest up to $250 million of these cost savings into areas we anticipate will drive our future growth. This includes strengthening our commercial execution for near-term launches, advancing our innovative assets, and building the capabilities required for success. We believe these efforts will not only strengthen our competitiveness, but also support sustainable growth over the long term. Now, here is what we expect to accomplish in 2026. We are very excited about the anticipated launches of EFFEXOR, low-dose estrogen weekly patch, and sotagliflozin. These are important strategic launches for us. While they are not expected to be material top-line drivers in 2026, we do anticipate them to be significant financial contributors over the longer term. Let me now walk you through the building blocks for our 2026 total revenues outlook. We are anticipating new product revenues of $450 million–$550 million, which are expected to contribute to strong segment performance. We expect net sales in developed markets to grow 2% versus 2025. In Europe, we expect growth of 4% year-over-year, benefiting from several tailwinds. First, we expect increased contributions from new product revenues, led by apixaban and paliperidone. We anticipate continued growth in key markets such as France and Italy, including some supply recovery from India. Finally, we expect strong continued performance in some of our key brands, like Creon and Rufin. North America is expected to be flat year-over-year, as new product revenues, primarily from complex products and ongoing strength from existing products such as Brina, Estradiol TDS, and Xulane, are expected to offset certain competitive impacts, including the Isosulfan Blue LOE. Turning to emerging markets, we expect to grow 6% year-over-year. This is primarily driven by expansion in key growth markets, including Turkey, Mexico, India, and Brazil, new product revenue contributions, and some supply recovery in our ARV business. These benefits are expected to more than offset pricing headwinds in certain Asian markets. As it relates to JANZ, we remain focused on returning the segment to growth. Our outlook for this year reflects the expected impacts from government-driven price regulations in Japan and Australia, as well as the anticipated impact from the mid-year Amitiza LOE in Japan. At the same time, we expect to launch important strategic products in 2026, including EFFEXOR and pitolisant, to begin supporting future performance for this region. Lastly, in Greater China, we expect to deliver 3% year-over-year growth, driven primarily by our cardiovascular products that are sensitive to proactive patient choice. Our confidence in Greater China is the result of our ability to continue to maximize our well-established commercial presence across multiple channels. These include retail, private hospitals, and e-commerce, where we have invested strategically over the past few years and are seeing continued growth, in particular for certain retail-oriented products. As mentioned in our press release, in mid-February, a fire occurred in a service area at our oral solid dose manufacturing facility in Nashik, India. Manufacturing at the facility has been temporarily suspended. We expect to resume operations beginning in April. We have considered the potential impact of this incident and the facility shutdown in formulating our 2026 financial guidance. Moving to the drivers of adjusted gross margins, adjusted EBITDA, and adjusted EPS. We expect gross margins to be modestly lower year-over-year, primarily due to anticipated losses of exclusivity and mix shift as supply recovers in our lower-margin ARV business. These headwinds are partially offset by favorable segment mix and higher-margin new product launches. Over time, however, we expect gross margins to benefit from the realization of cost savings and the scaling of our higher-margin products. Adjusted SG&A is expected to decline year-over-year as a percentage of sales, reflecting the net benefits from our strategic review. Adjusted R&D is expected to be flat versus the prior year as we continue to advance our innovative programs while maintaining disciplined cost management. Finally, in 2025, we benefited from approximately $40 million in TSA income related to divestitures, which will not recur in 2026. Moving to free cash flow, we continue to expect significant and durable cash generation in 2026. Our cash flow this year will be impacted by transaction-related and restructuring costs from our strategic review, but the underlying cash-generating profile of the business remains robust. We expect to be in a strong financial position in 2026, with over $2.5 billion of cash available for deployment. That includes our excess cash on hand and the net proceeds received to date from the Biocon monetization. This position provides flexibility to deliver on our balanced capital allocation framework. Our priorities for 2026 include targeting end-market accretive business development while remaining committed to shareholder return. Our plans this year also include paying down a portion of our debt maturities to further strengthen our balance sheet and investment-grade financial profile, while reducing leverage back to our 2.8x–3.2x gross leverage range. A few comments regarding the pushes and pulls of our 2026 guidance. Total revenues are expected to be higher in the second half of the year, driven by normal product seasonality and the timing of anticipated new product launches. Operating expenses are expected to be more evenly phased between the first and second half of the year, reflecting the implementation of our strategic review and timing of investments. As a result, we expect adjusted EBITDA and adjusted EPS to be more heavily weighted towards the second half of the year. Free cash flow is expected to be lower in the first half of the year. The first quarter is expected to be the lowest quarter for total revenues and adjusted gross margin, driven by product seasonality and mix. Free cash flow is also anticipated to be the lowest in the first quarter, primarily due to the timing of working capital and one-time operating cash costs, as well as transaction-related and restructuring costs and taxes. In summary, our 2026 outlook reflects continued momentum in the business, disciplined financial execution, and a strengthened cost structure that supports both reinvestment and shareholder return. We are entering the year with a growing base, clear priorities, and the financial flexibility to execute. We look forward to hosting our investor event in New York City next month, where we plan to provide an update on the company's future outlook for growth. With that, I will hand it back to the operator to begin the Q&A. Operator: Thank you. We will now begin the question-and-answer session. As a reminder, to ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If your question has been addressed and you would like to withdraw it, please press star then 2. At this time, we will pause momentarily to assemble our roster. Today's first question will come from Glen Santangelo with Barclays. Please proceed. Glen Santangelo: Oh, yes, thanks and good morning, and thanks for taking my question. Yes, just two quick ones for me. You know, Scott, at a conference last month, you seemed to mention a path to mid-single-digit revenue growth, and I fully understand that is not where we are today, but maybe I was just hoping you could give us a little bit more color on those six potential approvals this year, your confidence level in those, which may be most meaningful, and then maybe how that was layered into the guidance, if at all? I will just ask my follow-up upfront. You know, Doretta, I did want to talk about the strategic review. You did mention release $650 million of savings with $250 million of reinvestment. If we call it net $400 million of savings over the next three years, maybe for modeling purposes, if you could just sort of help us, you know, think about the timing of those savings across the three years. Thanks. Scott Smith: Thank you, Glenn. Good morning. Thank you for the question. Doretta is going to address the enterprise-wide strategic review, cadence and timing, things like that. I just want to say that we are very pleased with the work that is done and very confident in our ability to deliver the results from the enterprise-wide strategic review. Relative to the mid-single digits path, which is a longer-term path that we have over the next few years. You know, the way that I think we get there when I think about it, this is the way that I look at it in my mind. We have got a base business, and Doretta pointed it out in her comments, is growing at 3% this year, grew last year. We have got a growing base business. On top of that, you layer in the launches that are coming in 2026, and those will be Effexor, Tolosens and Spydia in Japan, although we launched Spydia at the very end of last year. I consider it a launch product for Japan. Japan is a very important market for us, three very important launches in the CNS space there for us that can really help build on what we have there. In the U.S., we are hoping to launch Quinlo, our low-dose estrogen, weekly patch, Ryzumvi in presbyopia, and potentially even Milocam, which as Scott alluded to, we should be filing tomorrow. Depending on the cadence of that review, we may be launching that. On top of that, we have got a number of data readouts in 2026 that are going to be launching in 2027 and beyond. We have got selatogrel and cenerimod readouts, which, you know, we think are near-term launches, which can provide a lot of growth, you know, as we get into the 2028, 2029, 2030 timeframe. On top of all that, we have got capital to deploy to bring in accretive growth assets into the portfolio and pipeline. All those things together give me a lot of confidence that we can get to that mid-single digits in the coming years. Doretta Mistras: Glen, with respect to your question around the $400 million of savings, we do expect them to be phased over three years. The way to think about it is we anticipate roughly 30% in 2026, an additional 30% in 2027, and then the remaining approximately 40% in 2028. The sequencing really reflects the timing of how we think about workforce actions and other efficiencies as we fill them into the organization. Importantly, as those savings are phased in, they are expected to support our EBITDA growth and margin expansion over time. Operator: The next question is from Umer Raffat with Evercore. Please go ahead. Umer Raffat: Hi, guys. Thanks for taking my question. Maybe two here, if I may. First, on the cost cut announcement, the strategic review, could you break down for us the $650 million as it is broken down between COGS versus SG&A versus R&D, and if there is any CapEx associated to get to these, which is not sort of reflected in the $400 versus $650? Secondly, could you also remind us, what are you assuming for India bounce back in 2026? Is there any model in at all in the current EBITDA guidance or not? Because I know there was a $325 million headwind over the course of 2025. Scott Smith: Thank you. Good morning, Umer. Let me just make a couple comments, then I will pass it over to Doretta to give you some of the specifics. In terms of where the $650 comes from, about 50% of that is coming from headcount reductions at this point in time. The other 50% is coming from COGS, efficiencies, inventory management, support structures, not a lot from R&D. There were some medical affairs and some streamlining things, but that is not a major area of focus for us in terms of cost cutting, because we are moving forward to execute on a number of pipeline programs. That is an area I think that we are focused on, you know, bringing in more assets and growing. you know, there are some efficiencies there in the way we do it, but it is not an area of major cost savings. Again, 50% in headcount reductions and the rest in COGS efficiency, inventory, and support structures. I will pass it over to Doretta to give some more detail. Doretta Mistras: Right. I think you handled from a cost savings perspective. You mentioned roughly evenly split between operating efficiencies and SG&A. I would state the operating efficiencies and the COGS efficiencies are a little bit more back-end weighted as you think about the phasing, just given the timing of implementation, but that should give you a rough sense. Secondly, with respect to your India question, we assume a little less than 1% of India recovery baked into our top line. Just as a reminder, we had done a lot of work over the course of the year to remediate India, and there was a portion of India that was lenalidomide that was not expected to recur in 2026. When you take out lenalidomide and also all the work that we have done over the course of the year, kind of we have remediated and managed through the impact, so it would not have a material impact on our 2026 guidance. Scott Smith: Yeah. I think it is all baked in as we stand today. Again, we have requalified other plants, found alternate sources, so, you know, I do not expect any bounce up of, you know, when the plant comes back online or bounce down if there is a delay in reinspection. We have tried to remediate the full effects of anything that happened at India and affected us last year. Operator: The next question comes from Ashwani Verma with UBS. Please proceed. Ashwani Verma: Hi, thanks for taking our question. Congrats on all the progress. Just wanted to understand the level of the restructuring charges versus the net savings you are realizing. You are effectively spending $700–$850 pre-tax charges for a $400 million net savings. Is this within typical benchmark range for such cost-saving initiatives in the industry? Then secondly, on the fast-acting meloxicam. Yes, this can have pretty broad set of physician universe that you can go after, from primary care all the way to surgery settings, pain specialists, et cetera. What do you consider to be your initial focus and where can it go from there? Thanks. Scott Smith: Yes, thank you, Ash, for the question, and we will have Doretta answer the first part and Corinne will talk about fast-acting meloxicam segments. Doretta Mistras: Yes. Ash, let me break this up into two parts. The first piece are the one-time costs that are necessary to achieve the one-time savings. Our current estimate, you can think about a general ballpark of about over the lifetime of the program, about 1 times our gross savings in order to achieve them. We estimate that it will be about $250 million this year, and that is what is baked into that $700 million number you quoted. There are two other components to that number that it would be helpful to break out. Number one, we have talked about the fact that even though we realize that cash proceeds from both the divestitures as well as the Biocon proceeds as cash, when it comes to the taxes and other costs associated with those monetizations, they are recorded as operational outflows. Those are the two numbers. From the Biocon perspective, we received the $400 million of cash. We have included the $110 million of taxes associated with that in that $700 million, we still have about $320 million of divestiture-related cash and costs and taxes that are included in that number. It is really the three components you have to think about. Ashwani Verma: Gotcha. Thanks. Corinne Le Goff: Ash, regarding your question on fast-acting meloxicam, yes, you are right. There is a broad opportunity for acute pain, moderate to severe acute pain, and we are very excited about the potential of meloxicam, and the place that meloxicam will play in this market. Just to remind everyone about the size of the opportunity, we see every year in the U.S., 80 million cases of acute pain. Unfortunately, opioids, you know, are still prescribed broadly. About 50% of prescriptions are opioids. The way we look at how we are going to enter this market is for us to make sure that we can guarantee faster uptake for the asset. Therefore, we will focus on post-operative and operative acute pain management versus non-operative pain. We will build a specialty sales force that will target those physicians in their offices, and, you know, like surgeons, orthopedic surgeons, dental surgeries, podiatrists. I am giving you a range of the targets that we will focus on. Beyond those targets, because you are right, pain medication can be prescribed very broadly, including from PCP. Beyond those specialty targets, we will plan on looking for potential partnerships to extend our reach and as we progress with the launch of the product. Operator: Your next question will come from Leszek Sulewski with Truist. Please proceed. Leszek Sulewski: Thank you for taking my questions, congrats on the progress. A couple from me. First, on Japan, can you quantify the regulatory pricing challenges you are seeing across the region? You noted the Japanese was coming to an inflection point. Do the Oculis assets and Effexor provide net growth for the region, or more of an offset from erosion due to the LOE facing there? On the cost savings side, can you quantify if the remaining costs are tied to discontinued operations, or what percentage of the strategic review savings is essentially cleaning up the divestiture's tail versus actual efficiency gain in the core business? Then essentially, as you realize the net savings, ultimately, you know, do you have a kind of a long-term gross margin or EBITDA margin target for the business? Thank you. Scott Smith: Thanks for the question. Just a little bit on Japan. Japan is a very important market for us. Structurally, Japan is a difficult market traditionally for where we have been over the last few years as a company. There are mandatory price decreases every year on the LOE products. That is a good part of our portfolio. We have seen downward pressure. There is a lack of ability to modify your structure from a personnel perspective in Japan. Labor laws and things make it very expensive to make changes. You know, our decision was, we have got a well-functioning company. We have got good people there. We have just seen downward pressure on both revenue and EBITDA in Japan because of the structure of the Japanese market, the mandatory price decreases, et cetera. We decided to add assets in there, and I think those assets will turn us from revenue and EBITDA decline to growth as we get into 2028 and beyond. The long-term picture for Japan is much better with the internal development of Effexor GAD, the acquisition of Toluzent and Spidea and others, which are coming into the... There is also some other pipeline developments which should come in the next couple of years. We are very, very pleased about where we are with Japan now. Very good group of people. We are putting assets into their hands, and we should turn that to growth as we get into 2028 and beyond. In terms of the enterprise-wide review? Doretta Mistras: I was just going to add one more impact that is impacting our Japan business this year. We do anticipate the loss of Amitiza mid-year. In addition to the normal price decreases that we get in that region, that is another factor that is impacting, and you can see that in the trends. As Scott mentioned, longer term, we feel good about the trajectory of that business. With respect to the cost savings, we are not currently contemplating any significant divestitures or recuts of our business. As Scott mentioned, this is really about taking a look at our infrastructure, how we are organized, reevaluating the business makeup post the divestitures, and making sure that we are set up for success going forward. It is not a material change to how we do business today. Scott Smith: You asked also about a little bit of cleanup that we are doing maybe around the divestitures. I think people ask me, you know, “Why now? Why did you do this exercise now?” I think it was really important to do this exercise now. A merger of two companies five years ago, very different companies, different business dynamics, and then four major divestitures, biosimilars, women’s healthcare, OTC, API. You know, a lot of the people associated with those businesses went with the business, right, directly. Then there is a back-end support structure in place to support those business, and we want to make sure that those people are oriented as best as possible as we move the business dynamic forward. It was really important for us to take a holistic look at the company. Do we have the right people in the right places to move forward? As Doretta alluded to, this is not about divesting pieces of the company. This is about us getting more modern, leaner, and better able to execute on the base business today and the innovative portfolio as we move forward. Operator: The next question comes from Matthew Dellatorre with Goldman Sachs. Please proceed. Matthew Dellatorre: Hey, guys. Good morning. Thanks for the question. Maybe first on fast-acting meloxicam, could you share your latest expectations in terms of the label, in particular, how you expect opioid sparing to be reflected there? You know, for instance, will it be, you know, in section 14, kind of like clinical data? ... inclusion, or will it be, can we expect that to be up top in that kind of initial section? Also any feedback you have received from the FDA thus far ahead of the kind of pending submission? Maybe on BD, what are your latest thoughts in terms of bringing in, or in licensing, maybe a more substantial branded asset versus doing smaller deals? What would be your comfort level in doing earlier stage, for example, maybe phase two, where less of the value is baked in? Which verticals would that make the most sense in? Thank you. Scott Smith: Yes, let me maybe answer the second question first, and then I will throw it over to Philippe to talk about fast-acting naloxone. you know, we are not, you know, our, we are looking for in-market accretive growth assets. That is what we are really focusing on. We are not looking to acquire early pipeline. We want to support the business today. We have built an internal pipeline that is going to be producing over the next few years. Our focus is finding assets that can help us drive growth, you know, in the short term, and now in the next three, four years. We are not focused on pipeline assets. Happy to do bigger things as long as they fit, as long as we are, you know, good owners of them, and that we can swallow them. We had 60 regional deals last year, including the Aculys, to support the base business. Certainly, I would like to bring in some assets that can have an effect and have some real, add some real growth and more high margin revenue, particularly to the U.S., but also globally. We are not focused on pipeline, we are focused on things which can move the needle for us today. Philippe, relative to fast-acting naloxone? Philippe Martin: Yes, just to reiterate that, we have had a pre-PMDA meeting with the agency in January. We just received the minutes. We were waiting for those in order to be able to file. We will be filing tomorrow. The meeting was extremely positive. We were able to align on all points of discussion we had with the agency. That is why we are filing tomorrow. In terms of the label implications, I think this will remain a discussion with the agency. However, if you recall, we have very strong data when it comes to opioid sparing, and we anticipate that we will have that language included in the label. Whether it is in the indication section or as part of the clinical section of the label, I think it is premature for me to tell you that. I do not think it really matters at the end of the day, as long as it is captured in the label. Operator: Your next question comes from Chris Schott with J.P. Morgan. Please go ahead. Chris Schott: Great. Thanks so much for the questions. I just wanted to come back maybe first to the longer term growth algorithm. I guess when I look at the 3% top line growth this year, or I guess maybe 2% adjusting for India recovery, is that a good proxy to think about for underlying growth before we consider some of these bigger pipeline readouts in BD? I am just trying to get a sense of like, when you think about building up to that mid-singles, is that just kind of like a business that can do two or three kind of as stands, and then we can kind of enhance that as these readouts come through? My second question, which is maybe elaborating a bit on the BD side, sounds like from the comments you just made, a U.S.-branded asset could be a focus here. Can you just talk a little bit about the landscape for those? Like, how big of an opportunity set is there? Are you seeing assets that are interesting in the market, or is that more just kind of conceptual? I just want to get a sense of like how broad of an opportunity set do you see for those. Thanks. Scott Smith: Thanks, Chris, and good morning. First question, again, let me maybe do it a little bit backwards. The landscape of business development, I think there are lots of assets out there. Very lot of interesting things. We are looking at lots of things. It is a matter of making sure that it is the right price, the right asset that fits us. You know, but there are lots out there. It seems like 12 months ago, there was not much happening from a BD M&A perspective, and the pharma world seems to be heating up a little bit. There seems to be more activity and more action. Feels like a good time to start to really build the pipeline. You know, BD is not something that you can ever predict to get done at a certain time. It depends on the flow of things, depends on price, depends on availability of assets. This seems to be a time, from my perspective, where there is a significant number of assets out there that are interesting, that I believe we could be good owners of. In terms of the growth algorithm, you know, the way that I look at the base business right now is it is low single digits growth that we see right now. We have had, excluding the impact, one-time impact of India, you know, we have seen seven, eight, nine consecutive quarters of growth. Sometimes it is 1%, 2%. This is a little bit higher this year at 3%. You know, I see them at 1%, 2% growth. What we are trying to do is continue to invest in the space, sustain the space, do the things we need to keep the base healthy, and then add onto it things which can be higher growth, higher margin. That is our path to getting sustainable, higher margin, higher level, mid-single digit growth in the longer term. We will get into all of this at the Investor Day as we get into March and give more specifics around it. I do not want to get ahead of ourselves because we are going to be talking to everybody in a couple of weeks. That is sort of the algorithm on how we can potentially get there. Operator: The next question is from David Amsellem with Piper Sandler. Please go ahead. David Amsellem: Hey, thanks. I know you are going to be talking about R&D in a couple of weeks. I did want to get some more detailed thoughts on how you feel about your internal R&D capabilities. You say you do not want to acquire pipeline assets, you are looking more at commercial stage assets. Just talk generally about your innovative capabilities internally, and where you feel you are at, particularly as it relates to novel assets. That is number one. Number two is, can you just remind us where you are in your exclusivity runway or potential exclusivity runway for the meloxicam product? Then, third question is just on contribution from new revenues this year. Is there any one product in particular that has an outsized impact of the $450 million–$550 million, or is it spread around pretty evenly? Thanks. Scott Smith: Internal research and development capabilities, I feel very good at. From an innovative perspective, we have added some late development. Again, even though we are looking from a BD perspective, not necessarily to acquire pipeline right now, but in-market assets, we are developing a number of things on our own, internally. I think we have a very strong research and development. It is not really, it is not really R&D. There is not much research development. We have got a very strong late-stage development group led by Philippe, and maybe you want to talk a little bit about those capabilities. Philippe Martin: You know, I think we believe we have a strong group that can develop drugs from Phase 1 and IND filing type drugs, like the MR-146 we have for our gene therapy in eye care. All the way down to life cycle strategy for assets like EFFEXOR. We have the whole gamut of expertise from a development standpoint. We have shown that we know how to do it, and we will show you as part of the Investor Day, more details about all this and who we are. We also have a very strong medical affairs structure that we are reorganizing as part of the enterprise-wide strategic review to focus more on the innovative portfolio than on the legacy portfolio. I think all the required expertise is there for us from a development standpoint. Scott Smith: Relative to meloxicam exclusivity, we will get more into this as we get into the 19th and talk more specifically about meloxicam. It is being filed under 505(b)(2) route. There is exclusivity, which comes with that. In addition, there is some uniqueness in the data, which we think we can add significant other, more, intellectual property protection around that asset. The way that I look at it is I consider it to be a contributor into the 2030s from an exclusivity perspective in the market. We will get more into that as we go and get more. It becomes more granular, right, as we start to file some of this intellectual property and other things. We have a very strong strategy to extend that exclusivity as long as we can. Again, I think of it as a contributor into the early 2030s. Doretta Mistras: Just to answer your question around new product revenue, the $450 million–$550 million is really diversified, both in terms of products and geographies. I would call out some of the contributors that we are excited about include octreotide, iron ferric, iron sucrose. In Europe, we have talked about apixaban and polythiazide. I would also call out, it is also relatively balanced between products that we have already approved, like octreotide and iron sucrose, and products that we expect approval for this year. Corinne Le Goff: Maybe to add, that we are very excited also about the launch of our branded new products. We mentioned them already in Japan, Effexor SR, Spydia at the very end of the year for Japan. In the U.S., low-dose estrogen weekly contraceptive patch. Even though those products will be in their launch year and will not contribute greatly in 2026, they are important growth contributors in the following years. Operator: Your next question is from Jason Gerberry with Bank of America. Please go ahead. Jason Gerberry: Hey, guys. Thanks for taking my question. One for Doretta. I am struggling a little bit with the 2026 guidance relative to 2025, right? Your EBITDA goes up about $150 million or so. It looks like that is largely on the cost restructuring dynamics, but you have +$400 million in revenue versus prior year. It seems like none of that is dropping to the bottom line, but your gross margin degradation is only, like, 30 bps. I was just wondering what I am missing there. On the enterprise review, it looks like about half is on the cost of goods side, if I understand that. And maybe if you can unpack that a little bit, is that mainly like better procurement, reduced facility footprint type of cost? Just wondering what you guys are going to be doing differently versus, say, prior years to drive that cost of goods improvement. Thanks. Doretta Mistras: With respect to your question, Jason, on EBITDA, we have always talked about EBITDA stability. We feel good about the momentum and the inflection point that our business has gone, this year we are really proud of where we are. Just to give you a flavor of some of the components. We did see a marginal decline in our gross margins. We have talked about the drivers of that, just given the mix, some of these LOEs, and some of the recovery coming from our lower margin ARB product. Also call out the $40 million of TSA income that we do not expect to recover this year on the back of that. I would characterize 2026 really as a stabilization year, supported by the savings realization, with structural expansion really becoming more visible as the savings pop in and some of our new products come into account. Scott Smith: Good. Jason, on the enterprise-wide strategic review, 50% is coming from head cost reduction, not from COGS efficiency. A much more minor piece is coming from COGS efficiency. I think you asked the question the other way around, but it is 50% from headcount reduction across the board and only a much smaller piece in terms of COGS efficiency. Operator: The next question comes from Dennis Ding with Jefferies. Please proceed. Dennis Ding: Hi, good morning. Thanks for taking my questions. I had one on the enterprise review, the $400 million net savings. I am just wondering if there could be additional savings upside as you execute on this over the next 1–3 years. Basically, how realistic and or conservative is the $400 million net savings? Number two, specifically on meloxicam, what is your base case in terms of launching activity in the U.S. on net revenue? What does a good launch look like to you? If you internally view the Jordanavix launch as a good proxy for meloxicam? Thank you. Scott Smith: Just a couple comments, and then I will ask Corinne to talk a little bit about the comparative launches in the acute pain space. Yes, $400 million is a number we feel good about. We took our time in doing this and wanted to make sure that we could cement that within the organization. Could there be additional opportunities as time goes over the next few years? Sure. That is not something we are saying is going to happen. The other thing is, when we talk about the $250 million in reinvestments, up to $250 million, you know, depending on the progress of how things go, we could spend less than that. There could be more net savings than 400, but 400, I think, is the right number for you to think about and that we are very, very confident that we can deliver. In terms of meloxicam, very important product for us. We want to be able to show very strong launch. I believe in the team we are putting together to be able to launch it. We are looking at partner strategies. We are making sure that it is resourced properly to do well. It is important for us. In terms of launch metrics and what does a good launch look like in the U.S., it is a little hard these days with access concerns and other things. We will roll that out and talk more about that on the 19th for sure, but if, Corinne, you would like to make any general comments. Corinne Le Goff: Yes, thank you very much. Yes, and you mentioned one of the competitors in the field. What I would like to say is that we are going to launch meloxicam where we think we can have the greatest impact and fastest effect. Part of this is linked to our pricing strategy, the other part is linked to how we are going to focus on target physicians that have the most patients in terms of acute pain management. While Vertex has been launching, I think, have a different timeframe in mind, we have a different strategy. Again, our focus is on quick access, and we will put resources behind this product, as again, we will be successful with the launch. Operator: At this time, this concludes today’s question and answer session. I would now like to turn the conference back over to Mr. Scott Smith, CEO, for any closing remarks. Scott Smith: Thank you very much. Just let me close with this. I think 2025 is a very important or 2026, excuse me. 2025 is a great year. 2026 is a very important, pivotal year for us. Our base business is not only stable, but it is growing. We continue to generate strong cash flow, which gives us financial flexibility, and we are expecting multiple launches and pipeline milestones this year. With our strategic review complete, we are building a more focused, efficient, future re-ready company, and we are confident that we are at the beginning of a period of sustained revenue and earnings growth for the company. Thank you very much for your attention. Operator: This does conclude today’s conference. Thank you for attending today’s presentation, and you may now disconnect.
Cindy Rose Quackenbush: Good morning, everyone. Good morning, and warm welcome to our 2025 preliminary results and strategy update. By the way, that's our new brand refresh. I hope you like it, created by Landor AMP and Man versus Machine, WPP agencies, all powered by WPP Open. So look, I'm delighted to welcome you all here to One South Work Bridge to our campus here in London, which in many ways is symbolic of the future of WPP. It's modern, it's adaptive, it's collaborative workspace for our talent, our clients and our partners. So the plan this morning is I'm going to start with some opening remarks, and then I'm going to hand over to Joanne Wilson, our Chief Financial Officer, to share our 2025 preliminary results. Then I'll share our strategy update, and then we'll open up to Q&A. Before we start, I'd like to recommend that you take a moment to read this cautionary statement while I get out of your way. So Joanne and I will be joined on stage later by Brian Lesser, who's CEO of WPP Media. When we get to the media section of the presentation, and most of my senior management team are here in the audience as well. Let me start by saying that WPP is an extraordinary company. We are built on agency brands with remarkable histories going all the way back to the 1800s. Some are still well known today. Others have evolved into new parts of WPP. But together, they have roots in creating iconic work that moves people and shapes culture. We serve some of the biggest, most demanding clients in the world, and we steward and grow some of the most well-known brands on the planet, several of whom you'll hear from and see referenced throughout today's presentation. And our business model is actually very simple. We exist to make our clients successful. We help our clients build brands that matter, drive meaningful engagement with their consumers and drive outcomes for their business. It drives growth for them and growth for us. However, it's really clear that what has made us successful in the past will not make us successful in the future. And as you can see from the numbers that we released this morning, our performance is not where it needs to be. Yes, of course, there are externalities we can point to market volatility, economic headwinds. But really, the results point to the need for us to embrace a single unified growth strategy to execute with increased rigor and evolve as the needs of our clients evolve. After several years on the WPP Board of Directors, I took this role with a clear thesis in mind as to what we need to do differently. We've spent the past 6 months as a team validating this thesis through rigorous analysis and by speaking directly to our clients and actively listening to their feedback. And the good news is we haven't been waiting for today's presentation to take action. We've already made several decisive changes, and you can see the positive results in our recent new business success. In the fourth quarter of 2025, WPP was #1 in JPMorgan's net new business rankings for the first time since 2020 with a series of excellent client wins across media, creative and our integrated offer. These include being appointed the U.K. government's lead media agency, Reckitt and Henkel Media in Europe, Kenvue and Haleon Creative globally, TruGreen Media in the U.S., Norwegian Cruise Line Global Media, Suncor Media, just to name a few. And I'm delighted to say we've maintained this strong momentum into 2026, winning Jaguar Land Rover, Global Media and Integrated Services. In fact, the impact from new business wins in 2026 already exceeds the impact of new business wins for all of 2025 combined, and it's only February. So while the turnaround of our business will take time, our momentum is undeniable, and these wins give me huge confidence that we are firmly on the right path. My team is united, committed and hungry to win. Today's session is the culmination of months of detailed work by our team. We have a bold plan to make WPP a simpler, more integrated company, one that's fit for the future, relentlessly focused on growth and brilliant execution. Personally, I'm very excited to be here at a time of such revolutionary change, and I feel quite privileged to lead WPP as we play a defining role in shaping the future. So I'll come back shortly and talk about our view on the evolving landscape and our growth plan for the new WPMP, which we're calling Elevate28. But first, I'm going to hand over to Joanne to take you through our 2025 results. Joanne? Joanne Wilson: So thank you, Cindy, and good morning, everybody. And can I add my warm welcome to you here today. So let me start by taking you through the main financial headlines for 2025. Our like-for-like revenue less pass-through costs fell 5.4% for the full year due to client assignment losses and spending cuts. Now this is slightly better than our most recent guidance for a decline of 5.5% to 6%, and it reflects a Q4 like-for-like decline of 6.9%, and that's a deterioration from the third quarter decline of 5.9% -- in the context of the weaker top line, we delivered a headline operating margin of 13%, in line with our expectations and down 180 basis points year-on-year on a like-for-like basis. Our fully diluted EPS was 63.2p, a decrease of 28.4% year-on-year, with the impact of reduced headline operating margin and a higher headline effective tax rate, partially offset by lower net finance costs and noncontrolling interests. Turning to cash flow. Our adjusted operating cash flow before working capital was GBP 1.2 billion, down from GBP 1.3 billion in 2024 and at the top of our most recent guidance range and includes GBP 82 million of cash restructuring charges. On my next slide, I provided some color on our net sales performance, both for the fourth quarter and across the full year. And please note that we have included more detail in the appendix to this deck. Now you have some of the detail here on trends by business, by region and by client sector, but I thought it would be more useful to unpack some of those trends by theme to help give a sense of what is WPP specific and what is more market driven. And when we consider what is WPP specific, the major negative impact to call out both for the full year and for the fourth quarter is the impact of gross client losses, which deteriorated through the year. Now this was driven by the impact of incremental losses in year in 2025. And by segment, this particularly weighed on media, by geography on the U.S. and the U.K. and by client sector on CPG and TME. Now against this, we had the positive impact of new business wins in 2024 and '25, which indeed contributed progressively through the year. The aggregate level of in-year wins, however, was lower than we initially expected and significantly below what we have experienced over the past number of years. This was in part because of a lower win rate, but in EMEA, it was because of a lower level of aggregate new business activity. Industry estimates are that global pitch activity was down double digit in the year. While we saw an encouraging new business performance in the fourth quarter with the wins of Reckitt, Henkel, the U.K. government, Pizza Hut, NCL and JLR, the impact on our like-for-like performance is expected to take time to ramp up, and we expect the overall net new business headwind to sustain into the first half of 2026. The final theme to call out is spend by existing clients. We characterize the year as one of more cautious spending from clients with a higher degree of volatility than we would typically expect to see. Now the impact was seen most strongly across the CPG, auto and the tech and digital services sectors. And while many of our businesses were impacted, it weighed most heavily on Ogilvy. The waterfall chart on this next slide bridges our headline operating margin from 15% in 2024 to 13% in 2025, a 1.8 percentage point deterioration on a like-for-like basis. There are a number of moving parts and starting with staff costs, including our severance and incentives on the left. Now these reduced by GBP 576 million on the back of lower permanent headcount, which ended the year down 8.7% and reduced use of freelancers, which was down 14% year-on-year. However, due to that lower revenue, this resulted in 180 basis points drag on our margin. This was amplified by the impact of increased severance and other associated costs, which was up GBP 89 million in the year, taking a further 100 basis points of margin. And we did increase investment levels in WPP Open in AI and data, and this was more than funded by a reduction in back-office costs, leading to a net reduction in tech spend and other costs of GBP 128 million. Again, with the impact from those lower revenues, this translated into a 60 basis point drag on margin. These drags on margin were offset by a 50% reduction in staff incentive payments to GBP 182 million, providing a margin cushion of 140 basis points, which is equivalent to 120 basis points like-for-like if we exclude FGS. And taken together, this resulted on that net margin move of 200 basis points on a reported basis and 180 basis points on a like-for-like basis, which includes 20% of the impact from the disposal of FGS and from FX. Now moving to my next slide, we show our headline income statement. Overall reported revenue less pass-through costs was GBP 10.2 billion, a decrease of 10.4% year-on-year on a reported basis. Our headline operating profit was GBP 1.3 billion, which was down 22.6% year-on-year on a reported basis and is consistent with that 13% operating profit margin. Our net finance costs of GBP 274 million were slightly down year-on-year on lower average net debt and lower interest rates. And our effective tax rate increased to 32% given that lower profit base and the impact of nondeductible fixed elements. By contrast, noncontrolling interest of GBP 43 million was down year-on-year, partially driven by disposals. Our headline diluted EPS, as I said, was 63.2p and down 28.4% on a reported basis. The Board has recommended a final dividend of 7.5p, giving a total dividend of 15p for 2025. Now while this is a reduction year-on-year, it represents a stable dividend from the first half, and it underlines our commitment to maintaining shareholder returns. We include a full reconciliation between our headline and our reported financials in the appendix. And the main items I would call out are the impact of restructuring programs as well as further goodwill impairments of GBP 641 million, which primarily relate to our integrated creative agencies and property impairments of GBP 114 million, both of which are noncash in nature. Now this next slide bridges the year-on-year movement in net debt, which ended 2025 at GBP 2.2 billion versus GBP 1.7 billion in 2024. Our adjusted operating cash flow before working capital was GBP 1.2 billion and reflects a lower level of cash profit, partially offset by a lower level of CapEx and a year-on-year decrease in cash restructuring costs, which came in at GBP 82 million. Our working capital saw an outflow of GBP 334 million, primarily driven by the temporary impact of reduced staff incentives, adverse FX movements and business mix. Within this, our trade working capital, excluding the impact from FX was broadly flat year-on-year. We remain disciplined on our working capital management and saw an improvement in underlying operating metrics year-on-year, including reduced overdues. We saw an outflow of GBP 17 million from earnouts of GBP 65 million and the net impact of dividends to minorities and from associates and earn-outs have decreased year-on-year and are expected to continue to progressively fall in 2026. Our net interest and tax contributed to a total adjusted free cash flow of GBP 202 million and note that the tax payment includes GBP 43 million of one-off taxes related to the disposal of FGS Global. And turning to the uses of cash, M&A spend was GBP 147 million and largely related to the acquisition of Infrum, while cash dividends amounted to GBP 343 million. Adding in the impact of buybacks at GBP 97 million to offset the dilution from incentives and other factors, including FX, our spot net debt was GBP 2.2 billion, up GBP 500 million year-on-year. Now my next slide provides more detail on our overall net debt and our leverage profile. As we've already said, we think it's more prudent to look at average adjusted net debt through the year rather than the year-end level, which typically benefits from a favorable working capital position. Now our average adjusted net debt was slightly down year-on-year at GBP 3.4 billion compared to GBP 3.5 billion in 2024. However, given that lower headline EBITDA, the average adjusted net debt to headline EBITDA ratio for 2025 was 2.2x, which was up from 1.8x in 2024. While our average leverage ratio has increased, our maturity profile stands at 5.8 years and the average coupon on our net debt is 3.5%. We, of course, also completed a successful GBP 1 billion bond issue in December 2025, which more than covers our GBP 650 million bond maturity in September 2026. We have no covenants. And as of December 2025, we had GBP 4.4 billion of liquidity, including an undrawn committed RCF of $2.5 billion, which does not mature until 2031. And furthermore, I'm very pleased to share that today, Fitch Ratings has assigned WPP a BBB rating with a stable outlook, reinforcing our investment-grade balance sheet. And on my final slide for now, I have shared guidance for 2026 across key financial metrics. Now we will talk about the impact of our strategy update later this morning. But for 2026, we're setting the following parameters in terms of our headline guidance. Our like-for-like net revenue growth is the most important metric for judging our business, but it is a lagging indicator with account losses continuing to drag for around 12 months after they first start to impact. And meanwhile, new account wins take time to bed in and move toward a steady state. For the year as a whole, we estimate that gross client losses will represent a 500 to 600 basis point drag, an increase from the 300 to 400 basis points in 2025. At the same time, the positive impact on like-for-like from gross client wins in 2026 already exceeds that for the full year 2025. Now while it is still early in the year to indicate the impact of new business in the full year, we do expect it to be a more significant drag in the first half in 2025. We are encouraged by the new business performance in the fourth quarter and the performance year-to-date and the nature of the pipeline. And as a result, we anticipate a progressively improving impact from net new business through the course of the year. Now reflecting all of this, we are guiding to like-for-like revenue less pass-through costs down mid- to high single digits in the first half of 2026 with an improving trajectory in the second half. And we also anticipate that the first quarter will see the weakest like-for-like for the year. On profit, there are a number of moving parts that will impact our headline operating margin. On the positive side, we will benefit from the annualized impact of cost actions, which were taken in 2025, alongside a part year benefit from the cost initiatives we are implementing as part of our new strategy. We also expect a lower impact from headline severance costs. Against this, we will continue to invest in WPP Open in AI and in data as well as our growth drivers and also expect to rebuild our incentive pools. Cindy and I will share greater detail on both the growth drivers and the cost initiatives as part of our strategy update. Taking all of that into account, we anticipate headline operating profit margin in the range of 12% to 13%. And turning to cash flow, we continue to focus on adjusted operating cash flow before working capital as the most important metric, reflecting the potential for volatility in the year-end working capital position, including both the anticipated costs associated with historical plans as well as the restructuring costs linked to the Elevate28 8 plan, we anticipate adjusted operating cash flow before working capital of GBP 800 million to GBP 900 million. This includes total anticipated cash restructuring charges of around GBP 250 million, of which around GBP 190 million are associated with the Elevate28 plan. Excluding these charges, we would anticipate adjusted operating cash flow before working capital of GBP 1 billion to GBP 1.1 billion. And finally, in terms of leverage, given the expectation of a further moderation in headline EBITDA, we would anticipate our average leverage metrics to move up further in 2026. We do, however, expect average net debt to remain broadly stable, and we note that any proceeds from asset disposals during the year will be used to strengthen our balance sheet, providing a greater degree of financial flexibility. Now you will find more detail on other modeling assumptions for 2026 in our preliminary results press release. And that is it for me for now, and I will hand back to Cindy, who I know is very keen to share our strategic update. Cindy Rose Quackenbush: Thank you, Joanne. Thank you. Look, the first thing I want to say to you is that I fully recognize that recent years have been disappointing from a shareholder perspective. I acknowledge our performance on core metrics like net sales margin, free cash flow. It's disappointing. No one is more determined to turn that around than I am. And as I said in my opening remarks, I took this role with a clear thesis as to what we needed to do differently. We've spent the past 6 months as a team really validating that thesis with rigorous analysis and by actively listening to feedback from our clients. There are plenty of reasons for optimism, and I'm going to get to those in a moment. But first, I thought it's just appropriate to share with you some of the feedback that we have received from clients. It's clear and consistent and not only supports my thesis, but provides us with an excellent blueprint for what we need to do differently going forward. Clients pointed to the fact that our complexity got in the way of true client obsession. We were siloed. We were hard to navigate. We haven't been intentional enough about evolving our integrated proposition to adapt to the changing needs of our clients. It's taken us too long to land our data proposition and our media business has suffered as a result. Now the good news from my perspective is that all of these issues are fixable. And as I said, we've already started to do so. So while it's true that our performance hasn't been where we want it to be, it's also true that WPP is full of potential and has all the ingredients that we need to win. We have incredibly talented, hard-working people with deep domain expertise who do amazing things for our clients, for some of the most demanding clients in the world, I might add, every single day. We have world-class capabilities that span the entire marketing workflow from media to commerce, creative, PR, production, digital experiences, software engineering, data, AI and more. We've made really smart investments over the years in technology that have now enabled us to build WPP Open into a powerful future-facing agentic marketing platform, giving us a real competitive advantage. We have a presence in over 100 countries around the world, which means we can serve the most complex multinational, multi-client brands in the world. We have a scaled media offer and partnerships with every relevant player in the ecosystem. But maybe most importantly of all, we have an ambitious, competitive, high-energy team that is ready to embrace change and hungry to win. So notwithstanding the challenges, which are clear, I stand here with immense optimism because we're at a really pivotal moment in WPP's journey. We're not just adapting to change. We're actively shaping the future. We are building a WPP that is more agile, more connected, more powerful than ever before, a WPP that is simpler to work with, fit for the future and built to win. A WPP that is obsessed with the client -- the success of our clients and as a result, that drives better returns for our shareholders. So our strategy starts with a new mission, to be the trusted partner for the world's leading brands in the era of AI, valued for combining cutting-edge media intelligence, trusted data solutions, world-class creativity, next-generation production and transformative enterprise solutions to help our clients navigate change, capture growth and capture opportunity. Now there's 4 key objectives of our strategy, and we're going to unpack these in some detail. But just to summarize, our objectives are to drive superior growth for our clients, to become a simpler, more integrated company, to leverage our agentic marketing platform, WPP Open for competitive advantage and to create firm financial foundations for the future. As I said earlier, this is going to take time, but we've already made a promising start. And to support our growth strategy, we've built a very detailed execution plan that broadly spans these 3 distinct phases. Our immediate priority is to stabilize the business, make the structural changes needed, strengthen our execution, win and retain clients to sustain our current market momentum. The next phase is about building on these foundations and returning the company to growth sometime during 2027. And the third phase will be about accelerating our growth so we can capture our fair share of the market from 2028 and beyond. And just to summarize what you can expect from this plan in terms of outcomes, you can expect the stabilization of our performance in the near term, a return to growth sometime in 2027, gross cost savings of GBP 500 million over 3 years, a reallocation of investment against our key growth priorities and a more focused portfolio, an investment-grade balance sheet, as Joanne said, and greater financial flexibility. So that's the basic framework, the time line of our growth strategy and what you can expect in terms of outcomes. We're going to unpack all of this in more detail. But before we do, I would like to step back, if I may, and just do a bit of scene setting to offer some perspective on how we see the world changing, the needs of our clients evolving and the opportunity of AI. So for some time now, we've known that our industry is experiencing dramatic transformation. With the rapid diffusion of AI, we're not just seeing incremental shifts in consumer behavior, like this is a complete metamorphosis of the commercial ecosystem. Brands are now discovered in AI-driven conversational search. All the old barriers that protected established brands are gone. creators and influencers have reshaped consumer preference and can launch brands in an instant. Media is everywhere. It's in everything. It's no longer episodic and campaign-driven. It's continuous, always on, a stream where social, search and physical spaces all blend together. Commerce is the new organizing principle. Every action, every interaction is shoppable, and we're rapidly shifting to agented commerce where AI agents do the shopping on our behalf. Trust is scarce, right? It must be earned every day in this world of synthetic content and deep fakes. Brands need to balance hyperpersonalization with personal privacy. And as the world is flooded with AI-generated content, the demand for verifiable human creativity, craft, empathy, taste is increasing as key brand differentiators. These changing dynamics are not fleeting trends. The acceleration of AI is unstoppable. And as I said, it's driving a complete metamorphosis of the commercial ecosystem. And this is the reality our clients are navigating every day. The fragmentation, the complexity, the pace of change is dizzying for our clients and the paths to growth are much harder to find. He's never been more urgent to build compelling trusted brands that endure for generations and provide competitive advantage and long-term enterprise value. To cut through this noise and find new growth audiences in this environment, brands need to embrace new strategies grounded in deep data insights, real-time signals and AI that acts on these signals at the speed of light. In this perpetually changing environment, clients don't need more traditional marketing agencies. What they need is a new playbook for growth and a trusted partner who can help them build it and operationalize it. A partner that operates as an intelligent orchestration layer across creativity, media, commerce, data and tech who fuses technical expertise with breakthrough creative thinking into one cohesive approach to modern brand building. At WPP, we work with some of the most consequential brands and clients on the planet, Coca-Cola, Unilever, Nestle, Kenvue, Ford, so many more. We know how to navigate disruption. We know how to find signal in noise and help clients build new paths to growth. Now for many clients, this new playbook for growth means real transformation at every level. So I spent the last decade delivering large-scale technology transformation to enterprise clients around the world. And I can tell you, it's not easy. Clients need to have AI-ready data foundations and agentic tool and governance in place. They need to be trained and skilled. Processes need to be reimagined. There's really no shortcut when it comes to AI transformation. Every client I meet is going through it, and they all need our help. So for WPP to seize this opportunity, we need to evolve from being a collection of traditional marketing agencies to being a trusted partner for growth and transformation, helping our clients build modern marketing capabilities and move boldly and confidently into the future. A wonderful example of this kind of partnership in action is the Coca-Cola Company. Let's hear from Manolo. [Presentation] Cindy Rose Quackenbush: Commerce and Retail media at 23% and high-velocity content production at 38%. These changes that we're making at WPP to integrate our client proposition will enable us to cross-sell more effectively and grow our share in these fast-growing markets. So that's my perspective on how the world is changing, what it means for our clients and the opportunity of AI. Thanks for indulging me in that. But I'd like to now unpack our growth strategy in a bit more detail. So as I mentioned earlier, we have 4 strategic objectives: to deliver superior growth for our clients by reorienting around an integrated proposition to become a simpler company moving to 4 operating units across 4 regions with common incentives across the company, to leverage the power of our agentic marketing platform, WPP Open for competitive advantage and to create firm financial foundations for the future. We've built a detailed plan that sets out the actions we're taking to deliver on these objectives, and the entire management team worked together to build this plan. This was the ultimate team collaboration. We're all behind it. We're all aligned and committed to its execution. There are 8 core pillars to the plan, which you can see on this slide, but I'm going to double click and I'm going to double-click briefly on each of them, but I do want to start with WPP Open, our pioneering agentic marketing platform because it sits at the center of everything we do. It's where all of our capabilities come together into one integrated end-to-end platform. It's the cornerstone of WPP's own transformation, and it's how we deliver services, transformation and growth to our clients. WPP Open is a platform that we've been investing and building for a few years now. We recognized that we needed an end-to-end orchestration layer to connect workflow inside of WPP. And the platform enables us to scale intelligence and best practice across our group and reimagine business process and client solutions with the agentic capabilities that now live inside Agent Hub, an important recent addition to the platform. But let me show you an example of the power of the platform with a recent example from Google Pixel. Using WPP Open and AI personas, we analyzed millennial conversations from across social media, uncovering a shift towards romantasizing everyday life and reframing mundane moments as cinematic moments. Guided by this insight, our brand agent recommended focusing on Pixel's camera coach feature to help users take control of their story. Thanks to specialized agents, our workflow moved from social listening to creative concepts in just 1 hour. With Google's advanced AI models within WPP Open, campaign assets were approved and live within 24 hours. And this delivered a 3% increase in brand uplift, demonstrating a new marketing flywheel where insight, creativity and production really move at the speed of culture. So recognizing the pace of technology change, we knew that the future of marketing would look very different than in the past. And to anticipate these changes, we've significantly enhanced the platform over the past 12 months. Open Intelligence is our foundational intelligence layer that securely connects trillions of live data points from clients, partners and WPP in a privacy-first way. And it's now integrated and powers the entire WPP platform end-to-end. We consolidated our technology and data solutions into one organization. We have one WPP development team, one integrated product road map and one set of design and portfolio management principles, which dramatically simplifies how we think about evolving this platform in the future. Our people work on WPP Open every day, and it features in every client pitch as the single unified agentic platform that clients need to deliver integrated marketing workflows and a collaborative workspace where humans and agents can work together to deliver a system of growth that clients can trust. There are many, many point solutions available in the market today that address pieces, fragments of the marketing workflow, and they're often tied to specific platforms, leaving clients to manage costly complex tech stacks with fragmented workflows. WPP Open solves this problem in a single end-to-end platform. It's an agnostic system built on a common data model. It gives clients one source of truth to integrate operations, optimize investment and drive growth at scale. It's really hard to explain technology, though. So let me show you how this works. [Presentation] Cindy Rose Quackenbush: Great. So I talked about the importance of partnerships because in today's changing world, like no single company can go it alone. WPP Open, as the name indicates, is open by design. We will continue to enhance our own technology with the very best and latest AI models and agentic tool sets through our groundbreaking strategic technology and data partnerships with Google, Microsoft, TikTok, Meta, Amazon, Stability AI and more. These partnerships don't just give us access to new AI models and tools. They enable us to bring cutting-edge innovation resources to our clients and unlock important new routes to market, particularly important for our Enterprise Solutions business. You might have seen earlier this week, we announced a significantly expanded partnership with Adobe, embedding their industry-leading AI marketing suite directly into WPP Open. This is a powerful integration that delivers effective streamlined marketing operations for our clients, enabling them to scale personalization, optimize media and create on-brand content efficiently with agentic AI workflows. This build, buy and partner approach that ensures that WPP Open remains at the forefront of cutting-edge technology innovation so that our clients always have state-of-the-art capability at their fingertips. WPP Open is a significant source of competitive advantage for WPP. This platform puts AI to work to transform our clients' marketing function and enable new outcome-based commercial models, tying our success directly to client growth. So that's WPP Open. Now let's go back to the strategic plan and briefly step through the actions we're taking to deliver on our growth objectives. Our first key action focuses on media and data and positioning these capabilities at the core of our integrated client proposition. Brian Lesser joined WPP 18 months ago and has done a fantastic job spearheading the transformation of WPP Media. He's implemented structural change and led the acquisition and integration of InfoSum, which now underpins our differentiated data approach. We know there's more work to do, but recent wins in WPP Media that Brian and his team have secured give us full confidence that we're on the right path. So I'd like to invite Brian to the stage now to dive a bit deeper on WPP Media's transformation. Brian? Brian Lesser: Hi, everybody. Good morning. And thank you, Cindy, for the introduction and for leading the way at WPP. 12 months ago, I promised a transformation, and we delivered. We have united WPP Media, placing our clients at the heart of everything we do, ready to unlock limitless growth in a media everywhere future. Our foundation is built on our proprietary open intelligence, driving real-time predictive decision-making. Today, I'll detail how we're now perfectly set up for success with the client always at the core of a truly integrated WPP, powered by a differentiated platform that sets us apart. This is our winning recipe, and I'll share tangible case studies proving this model is designed to win. From the outside, it might seem as if all marketers have the same basic needs. The truth is that every client is unique with vastly different context, growth strategies and audiences. This is why we have restructured the way we work to ensure each client's unique needs sit at the heart of our business. This radical client centrality is allowing us to unlock true integrated marketing across WPP. We have built a single financial and data ecosystem that eliminates siloed operations to bring the full power of WPP's people and tech to life. This empowers us to deliver seamless connected solutions that cut across the traditional ways of doing business like customer experience, commerce and social and influencer that accelerate client growth. Whether it's a media pitch, a creative pitch or a production pitch, more than ever, clients are looking for a single integrated solution. This is what we're now set up to deliver and why clients are choosing us. You can see the power of this integrated approach with Mazda. When creative is as intelligent as you're targeting, you don't just reach people, you move them. Mazda's first to the finish was a groundbreaking branded content series. It spotlighted trailblazing female racecar drivers connecting on a human level beyond motorsport. This innovative program became the first branded content designated a prime video original. It showed how media intelligence fuels powerful storytelling. The series achieved 16 million minutes watched, drove 93% new website visits, increased purchase consideration by 23% and contributed to Mazda's highest sales year ever. This is the type of results the new WPP media generates. Our data approach isn't merely an evolution. It's a fundamental revolution. Traditional marketing with its static definition of identity and commoditized view of audiences is increasingly obsolete and constrained by privacy risks. We ask a different question, what signals truly matter to our audiences. We unlock intelligence from diverse live signals, context, interests and behaviors to find new patterns in the consumer journey. This identifies new growth audiences and predicts their future actions to accelerate business growth. Central to this is our market-leading solution, enhanced by InfoSum, which establishes private data networks directly within our clients' environments. This enables secure multiparty data collaboration without any data ever moving. This decentralized approach breaks down silos, creating comprehensive AI-ready consumer insights from previously inaccessible sources, far surpassing traditional ID matching alone to deliver truly predictive intelligence. For the first time, clients can harness the full potential of their first-party data from any cloud or warehouse environment. including Adobe, AWS, Microsoft Azure, Google Cloud, Salesforce, Databricks and Snowflake. This proprietary intelligence can then be connected and enriched with our comprehensive identity data and robust network of over 350 integrated partners, giving us access to quadrillions of real-time signals. This allows us to produce faster, smarter and more effective marketing across all leading global platforms like Amazon, Google, Meta, LinkedIn, Snapchat and TikTok. By synthesizing this vast data, we build predictive media strategies that deliver deeper engagement and superior client growth, moving beyond just reach and frequency and validating actual outcomes with historical performance data. To bring this to life, consider our work with Heineken. They needed a way to connect their first-party consumer data with ITV's on-demand viewing audience and Tesco shoppers. Powered by InfoSum, Heineken was able to identify relevant audience segments based on age and real-time drinking preferences. Crucially, Tesco provided closed-loop measurement of sales impact, all without moving or sharing any customer data out of Heineken's environment. In a world where measurable outcomes truly matter, the campaign success wasn't measured in brand uplift or impressions, but in real sales data from Tesco stores, which increased by an impressive 189%. Another real-life example of driving business results through our market-leading data and technology solution. Powered by Open Intelligence and enhanced by InfoSum's federated learning infrastructure, WPP Open offers a unique agentic marketing platform. This gives our clients speed, simplicity, scale and AI innovation to modernize marketing, optimize media and accelerate their growth. Our differentiated approach to data is helping move marketing beyond legacy static databases by enabling more connected and intelligent ways of working. For Coca-Cola, this means bringing together creativity, technology and real-time insights to create more integrated marketing experiences. There's no one better than Manolo to share how WPP Open and Open Intelligence are transforming marketing at the Coca-Cola Company. [Presentation] Brian Lesser: Our strong Q4 2025 momentum continued into 2026. with WPP Media achieving its best January in 4 years for net new business wins, leading all media holding companies. We have an inspired, dynamic market-leading team of winners leading this charge. The change in our culture has been palpable. Major integrated wins like JLR and Estee Lauder confirm our strategy works. Our winning client-centric proposition built on this future-proof integrated foundation rapidly meets evolving client demands and delivers truly predictive intelligence. With media at its core, WPP is now exceptionally positioned to drive continued growth, sustain client relationships and deliver significant value for our investors. Thank you, and now I'll hand it back to Cindy. Cindy Rose Quackenbush: Thank you, Brian. Thanks so much. So the next key action we're taking is to establish next-generation production and creative capabilities. And I'm going to start briefly with production. Just last month, we announced the creation of WPP Production, our new production unit led by Richard Glasson. And of course, we marked the occasion with a video. [Presentation] Cindy Rose Quackenbush: So as I think you can see, production is being pretty radically transformed, and we're facing into this head on by fundamentally reimagining how it all works. WPP production, it's a mouthful. It's designed to solve for both volume and performance. We operate an end-to-end content orchestration through WPP Open as one unified content production engine. We're establishing high -velocity studios deeply integrated into WPP Media for real-time measurement and content optimization. And we're centralizing commissioning and supplier management to in-source more work where appropriate and create a more curated roster of external production partners. We're investing. We're investing in cutting-edge capabilities, high-velocity studios, as I mentioned, Gen AI studios, virtual production, video effect of virtual effects and digital twin pipelines. With WPP production, we are well positioned to support our clients as they look to transform and often consolidate their content production activities. And we're confident over time, we will take a greater share of this market. So next, I want to talk about creative. Like we know how critically important creativity is to our clients. I talked a bit earlier about the increasing demand for verifiable human creativity and craft in the era of AI. This is an important source of brand differentiation and value creation for our clients. And while the market for creative service is projecting limited growth over the medium term, creative capabilities are still a vital element of an integrated proposition, and there is significant opportunity for us to unlock white space across our client portfolio through joint propositions and cross-sell. So recognizing these factors, today, we are formally announcing the launch of WPP Creative, led by John Cook, and this organization will be home to our most iconic agency brands, VML, Ogilvy, AKQA, Berson, Landor, Design Bridge and Partners. I want to be very, very clear on this one. We are not merging agency brands. We are not consolidating agency brands. We are not sunsetting agency brands, okay? On the contrary, John and our agency leaders will unite them in new ways and empower them like never before. I've spoken to many clients. They all share with me how much they value choice and the unique perspectives and cultures that our agency brands provide. However, they also want to make it easier for those agencies to collaborate and efficiently access the whole breadth of WPP's capabilities. A simplified structure also removes barriers for our global client leaders, creating a frictionless path to our top talent so we can put the right resource in front of the right client at the right time without the constraints of the past. With WPP Creative, all of our agency brands will have access to the full modern stack of commerce, customer experience, digital platforms, enhancing their client proposition and expanding the go-to-market channel for these services. Much greater alignment with WPP Media and WPP Production will ensure that creative ideas are instantly adaptable and executable across the whole customer funnel. While agency brands remain, WPP Creative will have a more competitive cost base from a simpler, more unified operating model and greater shared infrastructure. I'm excited that WPP Creative will double down on our agency brands and arm them with the capability they need to make them more modern and more united than ever before. And we're already seeing the power of bringing together our portfolio in recent successes securing, for example, the creative mandate for Kenvue, the parent company to well-known brands like Listerine LSTERIN, Sudafed, BAN-AD and more, a strength also recognized by our client there. Next, I'd like to spend a few minutes talking about enterprise solutions. Because today, every global business needs a partner that can help them build, run and evolve their core platforms and systems in a world where AI is part of everyday operations. Businesses are being forced to rethink how they establish competitive advantage and the potential to reinvent workflows has never been greater. For some of our clients, the need is clear and well articulated. For others, the need is completely unarticulated. They know there's a better way, but they don't know what it looks like. To partner most effectively with our clients on their AI transformation, we are elevating our existing enterprise solutions capability into a new externally facing operated unit called WPP Enterprise Solutions, led by Jeff Geheb. Enterprise Solutions provides a complete enterprise transformation offer for clients that spans consulting, content, customer experience, commerce, CRM and platforms. We have a unique ability to fuse these capabilities with media intelligence and world-class creativity to build an AI-powered marketing operation end-to-end for our clients. WPP Enterprise Solutions benefits from multiple routes to market, including via our agency brands and both direct and partner-led go-to-markets as well. These multiple routes to market maximize our coverage and enhance our ability to cross-sell, capture white space, TAM growth opportunity within our installed client base and will drive more direct and partner-influenced revenue. The enterprise transformation market is huge. It's worth $230 billion and projected to grow cumulatively 7% over the next 3 years. Although our share of that market today is small, the opportunity is really significant. And actually, we already have really solid foundations to build on. Today, our Enterprise Solutions business employs around 10,000 people and generates around $1.8 billion of revenue. It's about 13% of our overall group net revenue. This business has quietly built a book of exceptional clients and has already earned notable industry recognition from Gartner, Forrester and IDC. In many ways, as I like to say, Enterprise Solutions is the hidden gem within WPP that we will now elevate to become the crown jewel. And if you ask our clients at Ford, it's already the crown jewel. We have a partnership with Ford that started with J. Walter Thompson 80 years ago, and we've continued supporting them with cross-functional teams as their needs have evolved. Let's hear directly from Ford. [Presentation] Cindy Rose Quackenbush: Great. Okay. So we have talked about how we're going to deliver superior growth for our clients by reorienting around an integrated proposition that brings together media creative, production enterprise solutions, all powered by WPP Open. Now I want to talk about the organizational changes that we're going to make to become a simpler, more integrated company because these are key enablers for our strategy. And as I mentioned earlier, we haven't been waiting for today's update to change how we engage with clients. We know that when we show up as the new WPP, as the best of WPP, we win. But to build on our current momentum and make it sustainable, we need to radically simplify our organization really to unlock true client centricity. So to do that, WPP will no longer be a holding company. We will no longer be a shopping basket full of stand-alone businesses, hundreds of stand-alone businesses. We're going to move to a single company model. with 4 operating units across 4 regions with incentives that closely align to the overall performance of WPP. Being a single company with a simpler structure and common incentives are critical enablers of our strategy. As part of these structural changes, we'll also further simplify corporate functions, particularly in finance and people to reduce duplication, increase our use of shared services and redesign our processes, leveraging AI and Agenta capabilities. Alongside these structural changes, we're also focused on significantly strengthening our execution, both in terms of client service delivery and new business growth. At the heart of WPP's relationship with our largest clients are our global client leaders, our GCLs -- and our GCLs are already masters of creating value. But our existing operating model and our incentives and our internal processes have not always afforded them the agility needed to deliver seamless client-centric services that unlock new avenues for growth. I'm sure my GCLs in the room would agree. But we're transforming our approach. We're going to empower our GCLs with the authority and the resources to function as true leaders for their client portfolios, exercising strategic leadership rather than merely orchestrating a bunch of activities. This is going to include greater control over client P&Ls and the authority to make the best strategic decisions supported by streamlined internal processes designed to eliminate organizational friction and provide access to the right resource at the right time. We're also establishing a new team of client solution architects. This team will apply deep industry expertise to develop winning growth strategies for clients and then architect tailored solutions to deliver on those strategies, unifying technology, media data, all of our marketing capabilities to really drive successful execution. And finally, we're establishing more integrated growth operations, creating a stronger network of growth talent across WPP with a shared hunger to win. These changes will enable us to build on our current momentum, all of our recent wins as we strengthen our new business engine and champion a stronger winning mindset. And speaking of winning mindset, the next core priority for us, perhaps the most important of all, is to embed a high-performance culture to attract and retain the world's best talent, grounded in collaboration, client obsession, humility, accountability and a hunger to win. I know from experience that culture can be the biggest differentiator and competitive advantage of them all. Talented people choose to join companies and stay at companies that have strong cultures where they can thrive in their careers and be their authentic selves. I also know that changing culture takes time and persistence, and it's about both winning hearts and minds. I think winning hearts is about inspiring people with a new mission that feels fresh and relevant and clear. It's also about creating an environment that feels safe and inclusive, where creativity, where intelligent risk-taking are valued, where failure is treated as a path to learning and continuous improvement is celebrated. Now winning minds is about getting the basics right. So that's about clear communication and active listening to people, investments in learning and development. We've got to ensure that our people are building new capabilities with a focus on AI so they can deliver what our clients need from us. It's about common incentives across the company that just unlock collaboration and frictionless resource sharing. It's about performance management and feedback to allow us to build that culture of accountability and greater talent mobility and career progression opportunities. But what I really want is for people to have a world-class employee experience and feel proud to be on a winning team and proud to be part of WPP. Now the final pillar of our Elevate28 execution plan is about creating firm financial foundations for the future. And that's about creating capacity to invest in growth and building a WPP that's fully optimized to deliver for our clients. I'm going to hand over to Joanne now to step through the financial aspects of our plan. Joanne? Joanne Wilson: So thank you, Cindy. And okay, let me share the financial framework, which underpins our Elevate28 8 plan, including our approach to capital allocation. Elevate28 8 is first and foremost about getting WPP back to growth, and our financial priorities underpin that. In the near term, our focus will be on stabilizing the business, and that means improving our net new business performance and our client retention. As I mentioned earlier, net sales like-for-like is a lagging indicator, and that will take time to recover as we cycle through historic client losses. Now as we progress through the 3 years of our plan and we deliver strongly against the core growth building blocks, which I will talk to in a later slide, we anticipate a return to taking our fair share of the market. And in some areas and over time, we will seek to outperform the market. And to support this, we will unlock GBP 500 million of gross annual cost savings between now and 2028, enabling a reallocation of investment towards our growth drivers. And this will, in turn, support a rebuild of margins. And finally, we are setting out to make WPP a simpler and more focused business reducing the perimeter of the group and then still doing strengthening the balance sheet and providing a greater degree of financial flexibility. As you've heard today, we are already implementing many parts of our plan. However, it will take time to deliver and to realize the full benefits in our operational and in our financial outcomes. As Cindy indicated, we see delivery across 3 phases. In 2026, we will stabilize the operational performance of the business, leveraging the improved competitiveness of our media and our data proposition and our production consolidation. We will action our cost saving plans, and we will prioritize investment into the parts of our business, which represent the largest growth opportunities. In parallel, we will take a more proactive approach to our portfolio, unlocking embedded value and operating with a tighter and a more focused perimeter. This will require focused execution and a rigorous reallocation of resources to support our growth plans. Now as a lagging indicator, we expect organic growth to remain subdued in 2026, and we also anticipate margins to remain below historic levels as we reinvest savings to support growth. Alongside this, we expect an elevated average leverage ratio. From 2027, we expect to start to see a progressive ramp-up of the benefits from both our operating model changes and the investments we are making to enhance our new go-to-market, our integrated proposition and from scaling capabilities, including our full service enterprise solutions and production. It is our ambition for the group to return to growth during 2027 for margins to start to rebuild and for our leverage to start to come down. And from 2028, our plan assumes a significantly improved operational performance characterized by accelerating growth and improving margin and strong cash conversion. While we are not providing specific medium-term guidance today, rest assured, we are relentlessly focused on immediate stabilization and disciplined execution of the building blocks to return WPP to growth. And let me spend some time on those building blocks of growth, which we are, of course, aligning our investment priorities against. And I'll start with media. Now the market for Media Services is around $40 billion and is forecast to grow at a 4% CAGR from '24 to '28. And within this, commerce and retail media is a high-growth market, expected to deliver a CAGR of 23%. As you heard from Brian, we have been busy transforming our media and our data proposition and improving our execution. And this not only supports our ambition to improve new business and retention across our media business, but it will also enable us to deliver that improved integrated proposition for our clients with media at the heart. And our recent win with JLR is a great example of that. Now taking back our fair share of the media market is the most significant growth opportunity for WPP at a group level, and it's a core tenet of Elevate28. Now the second area is our next-generation production offer. Now while the overall production market is seeing muted growth, we are seizing the opportunity to take share, internalizing third-party production spend by our agencies, which is estimated at hundreds of millions over the course of Elevate28. We have also identified significant incremental opportunities from new ways of originating creative work, leveraging GenAI and BFX pipelines, which enable us to build next-generation studio capability and make much more of our client work directly. High-velocity content production is a great example of this, which despite being a relatively small proportion of the overall production market today is forecast to grow at a CAGR of 38% over the next 3 years. As the largest production agency globally and with our investment in dedicated capabilities, including content studios, we are well placed to take more than our fair share of this opportunity. We are working with a number of our large clients already in these areas, and we've leveraged innovative content opportunities in some of our recent new business wins. And finally, scaling our enterprise solutions proposition. The enterprise solutions market, as we define it, is forecast to deliver a CAGR of 7%. We play in this space already, but as part of a fragmented offering, existing within agency silos and as such, our current share of the market is low single digit. Now scaling our enterprise solutions across all of our creative brands as well as establishing it as a distinct pillar and investing in direct go-to-market capability, we believe will enable us to significantly grow our market share over the course of Elevate28. The strength of our capability in this area has been recognized by Forrester, amongst others. And with many recent client wins, we are confident we will see an improving growth trajectory. For 2026, the focus will be on consolidating these capabilities under one leader, establishing a strong direct go-to-market team and leveraging partnership opportunities such as the one announced this week with Adobe. Now cumulatively, these opportunities represent a significant white space gross revenue opportunity estimated at up to $900 million over the term of Elevate28 8. And delivering against our growth priorities will, of course, require investment, which will be self-funded from our cost initiatives. Our shift to a new operating model will yield significant efficiencies, building on what we have already done. Since 2024, we have removed GBP 300 million of gross cost savings and our Elevate28 operational plan unlocks a further GBP 500 million of gross annualized cost savings by 2028. Now we expect the associated cash restructuring costs to be around GBP 400 million and for those to be incurred across '26 and '27. It's important to emphasize that our cost actions are targeted at improving our execution and supporting our growth priorities as much as they are about simply removing costs from our business, and they will come from 3 key areas. The first area is that shift to a new operating model. It will drive a more simplified, more integrated way of working. It will enable us to scale our capabilities across the organization and support a stronger and a more effective client proposition. We will consolidate leadership at a global, at regional and at market levels, providing clear roles and responsibilities for our people. We will optimize spans and layers. We will remove duplication across our creative assets, driving a more aligned model, enabling a more effective cross-selling and providing a more holistic view of client success and outcomes. The second bucket focuses on structural cost savings. And as a result of our new operating model, we will deduplicate corporate functions, particularly across our finance and our people teams. We'll further leverage our shared service centers and create centers of excellence. This will set us up to unlock more scaled productivity savings from greater automation and the use of AI across our corporate functions. And the third bucket will come from rationalization opportunities. We will deliver savings from our real estate footprint and from across our long tail of markets and agency operations. In 2026, we expect to realize at least GBP 100 million of in-year P&L savings and GBP 250 million of annualized savings. The estimated restructuring costs associated with these savings in 2026 is around GBP 190 million. Now these targeted actions will improve our execution as well as enable a reallocation of investment into the highest growth opportunities across our business, supporting a rebuild of our margins over time. We will prioritize investment across 3 key areas. Firstly, we are bolstering the main engines of the Elevate28 plan, which you've heard about today. We are directing investments specifically into media and commerce into high-velocity production and enterprise solutions to ensure we capture demand in those high-growth areas. This will include investment in commerce and influencer and analytics talent and in content studios. Second, we are investing to upgrade our go-to-market approach with a focus on our client needs and our new business capabilities. Alongside this, we will rebuild our incentive pool, and we have redesigned our incentive model to align it to our new operating model and with the aim of disincentivizing the past siloed way of working. Third, we are sustaining our commitment to WPP open to data and to AI. To give you a sense of scale, in 2025, we invested more than GBP 300 million in this area, and we will protect this investment to ensure continued enhancements to our technology platform and our AI capability. In 2026, we are expecting to reinvest all of the in-year savings from the cost initiatives into the first 2 priorities, and this is reflected in our margin guidance for the year. Now these investments will be made in a disciplined manner, and we will fully leverage our more integrated approach to benefit from scaled capabilities and a rigorous prioritization in the areas that will drive the highest growth opportunities and returns for WPP. And let me move on to talk about our portfolio review. In recent months, we have conducted this review aimed at assessing opportunities to unlock embedded value and refocus our perimeter. Now this review has covered all assets that we own, whether an operating unit or a minority investment. We've evaluated how each strengthen our proposition and fit our future integrated offer. While we have many great assets within our portfolio, it may not be optimal for us to remain owners either in whole or in part of some of those in the future, and we've applied that best owner assessment to identify the assets where value is potentially maximized outside the group alongside a plan for continuing to rationalize noncore passive investments. Now this has also been an exercise in determining the areas we want to prioritize investment in and being rigorously disciplined in our allocation of capital. And of course, underpinning this is a disciplined approach to M&A with a focus on organic execution in the near term. With the review now complete, we are moving directly to action. And while we don't have specific transactions to announce today, the work is underway, and we will update you in due course. And that leads me to our approach to capital allocation, which is framed across 3 clear priorities. First, we are committed to our investment-grade balance sheet. This is our foundation. Our primary focus here is retaining strong liquidity, reducing our gross debt and improving our leverage ratios over time. As shared earlier, Fitch Ratings has assigned WPP, a BBB rating with a stable outlook, further solidifying our investment-grade balance sheet. Our second priority is funding organic growth. As you heard, we are prioritizing investment in the highest growth and the highest returning areas of the business. And crucially, we are funding this through our cost initiatives I shared today with a strict focus on scaling capabilities that support growth across the entire group rather than in silos. And third, we will share the proceeds of growth. We aim to balance consistent, sustainable shareholder returns over the medium term with inorganic investment. Reflecting this, the Board have proposed a full year dividend of 15p for 2025. We will apply a focused approach to M&A, deploying capital only when an acquisition is clearly more efficient than building that capability internally. And beyond that and as appropriate, any excess capital will be returned to shareholders. And finally, for me, a brief note on how we -- how our reporting is going to evolve to reflect this new structure. Now the current structure is shown here, and our ultimate objective is for our financial reporting to map directly onto our new organizational model. For segmental reporting purposes, the 4 operating units, which are the engines of our business will be included in an enlarged global integrated agencies reportable segment, which will now include public relations and our design agencies. For regional reporting, results will be broken down by North America, EMEA, Latin America and APAC. And over time, we want to give you better visibility into the engines of our business. And therefore, within global integrated agencies, we will provide specific disclosures on net revenue and organic growth for our key capabilities, media, production, creative and enterprise solutions. So that's all for me, and I will hand you back to Cindy to wrap up. Cindy Rose Quackenbush: Amazing. Thank you, Joanne. Home stretch folks. So before we conclude and open up to questions, I just want to spend a minute on how my team and I will hold ourselves accountable and measure success. As Joanne mentioned, our primary focus is to return our business to growth. Organic growth is our most important success metric and getting back to consistent organic growth is our North Star as a management team. But as you know, organic growth is a lag indicator and will take us some time to deliver. So beyond the lag indicators, you can see on the right-hand side of the slide behind me, we've also included on the left a few leading indicators and success metrics that my team and I have as part of our own scorecard. -- that will provide tangible evidence along the way that the actions we're taking are working. I won't read them to you, but you can see there are things like new business wins, client retention, cost savings, asset disposals. These are the types of lead indicators we'll be rigorously managing, and we're confident that these will drive the outcomes that matter the most over time, consistent organic growth, supported by a solid financial foundation. I also want to reassure you that we're not going to just simply disappear and report back on KPIs in a year's time. We really want you to see the execution of the strategy in real time. We want to invite more frequent engagement with our investor community. So over the coming months, we'll be hosting a series of deep dive webinars to take you further under the hood of our key growth engines, specifically in the areas of media, next-gen production and enterprise solutions. So I know we've shared a lot of information with you today, and thank you for listening. But I have to say our mission has never been clearer to be the trusted growth partner to the world's leading brands in the era of AI. Elevate28 is a bold plan for a simpler, more integrated WPP. We will stabilize the business, return to organic growth, create capacity to invest and deliver attractive returns for our shareholders. And we'll do that by delivering growth for our clients by being a simpler, more integrated company by leveraging our agentic marketing platform, WPP Open for competitive advantage and creating firm financial foundations for the future. I am very confident that WPP has a bright future ahead. This is a WPP that is fit for the future and built to win. Now we're going to draw this strategy update to a close. We're going to invite questions from the audience for me, Joanne, Brian or any members of the senior leadership team. And I want to thank you. Thank you very much. Thomas Singlehurst: Thank you very much, Cindy. My name is Tom Singlehurst. I head up Investor Relations for WPP. We're going to go to questions. We'll -- before we dive in, a couple of quick parish notices. For those in the room, we're going to bring a mic to you. So if you can just be patient. If you could state your name and which firm you represent, that would be fantastic. And to make sure we've got enough time for everyone, it would be hugely appreciated if you could ration yourself to maybe 2 questions and a follow-up. [Operator Instructions] But let's start with questions in the room. Laura, maybe start with you. Laura Metayer: Laura Metayer from Morgan Stanley. Three questions today, please. First question on differentiation and competitive advantage. I'm curious, what do you think is the single differentiation of WPP. Obviously, we've heard from peers need to like have an integrated offering, a focus on data, driving leading with AI. So I'm just wondering what do you think is the single differentiating factor of WPP. Second question is when you talked about the JLR win, you said you pitched it as an outcome-based revenue model. Do you mind providing a little bit more details here, like any KPIs that -- and if you can also say maybe like telling us a little bit more generally, like how you think the revenue model will evolve and what sort of KPIs will be used to measure performance? And then lastly, on the Enterprise Solutions business, could you give us an example of a typical project of WPP here and how it differs from leading IT services consultants because obviously, it's part of an agency. Cindy Rose Quackenbush: Sure. Thank you for your questions, Laura. They're great. I'll have a go at the first one and then maybe invite Johnny Horny to talk about JLR. He led the pitch and maybe Jeff Geheb to give an example of an enterprise solution engagement, if that's okay. So I think Brian was incredibly articulate on this. I tried to paint a picture of WPP Open as a very different proposition, right? And it's -- because it's integrated, it's not a point solution. It transforms the entire end-to-end marketing workflow. It's powered by Open Intelligence, which is our foundational data layer. And we've integrated InfoSum's distributed data collaboration capabilities, which means it's built for the future of marketing, not the past. And that is an incredible competitive advantage. Like we have all the ingredients we need to win. And what we really needed to do is pull it all together into an integrated proposition and then power it with this incredible platform that we have. And frankly, when clients see that, they see the power of it and its ability to drive growth without compromising on data ownership. We win in head-to-head competition. That's what you're seeing happen. But I don't know, Brian, do you -- is there anything you want to add? Brian Lesser: I think one of the things I said was that every client is different. And there is no one approach to driving business results for clients. We've built a platform in WPP Open that is flexible that includes our own proprietary technology, but also partners effectively with other companies. So we're always ready for what's next. And we built a data model that similarly doesn't rely on a static data asset that is a legacy CRM solution. Instead, it relies on the ability to connect any and all data sources so that we can be more intelligent and more dynamic in understanding consumer behavior and driving those business results for our clients. So it's different for every client. But as Cindy said, it's really an integrated approach across all parts of our business grounded in that data and technology strategy. Cindy Rose Quackenbush: Thank you. I would just add, we are still contracting with JLR. So there's a limit to what we can share. But Johnny, why don't you say a few words? Johnny Horny: Yes, sure. Yes. Thanks for mentioning that. We haven't officially been appointed by JLR. We pitched throughout last year, went into a period of exclusivity with them through January, and we're now contracting and hoping that by March will be live. But at the core of our pitch to your question, I guess, what's our secret sauce? I think our secret sauce is where you put everything you've seen this morning together. So starting with Open Intelligence to be able to build cohorts and understand audiences in a way that doesn't require us to do simply old-fashioned ID matching, but to keep the data where it is, keep it safe and secure and then put that into a team that we're going to build with JLR, where we and they are all together on the open platform end-to-end. And it's the end-to-end integrated nature of this offer that I think then allows us to make what I think are becoming genuinely competitive offers when it comes to outcomes. So those outcomes aren't do you like the agency you work with, those outcomes are, are we selling more product? And will we get paid on being able to sell more product by being able to build their brands and measurably show that there's greater levels of desire for their products and the crown jewels of brands that they've got. So we haven't finished contracting, but those are the defining and that pitch was against all the major holding companies. I think those are going to be the integrated propositions that will see us win JLR and hopefully many more JLRs pulling these ingredients together. Cindy Rose Quackenbush: Thanks, Johnny. Joanne Wilson: Can I just build on that because Laura, I think stepping back a little bit, your question is around what happens with a time and materials model with AI. And the story is really moving on. Hopefully, you picked it up today. Our clients are using us and it's for the industry really. They need brand safety. They need to know that they have got cultural nuances. They have the best creative and strategy talent, working with them on their brands to really differentiate. And also that they've got the access to the best talent. And navigating through what is an incredibly and ever more complex ecosystem is incredibly challenging for CMOs. It's getting tougher and tougher. And that's what they're paying us for. It's no longer they're paying for us to create 5 ads. In fact, we can create 1,000 ads, but it's how do you get those ads into the right audiences. And that's really what they're paying for, which is really enabling this output-based pricing, it's outcome-based pricing, and it's also shifting more to tech fees and licensing fees as well. So this will be an evolution, but we're making lots of progress in this area. Unknown Executive: To answer your question about enterprise solution scaling. So let's just stay with automotive. This could be JLR. It's certainly true with Ford. So when you begin to solve a marketing problem around content transformation or a customer experience challenge for marketing and you start with the CMO, you quickly evolve that conversation and realize that's an enterprise problem you're solving. Content doesn't live in marketing. It lives as an asset of the entire company. Customer experience lives as an asset of service, brand of product development. And so the nature of our work usually begins with the marketer and then it expands further and further and further. And soon, we're in rooms with IT leaders, procurement leaders, service leaders. And instead of using their silos to define how we work, we're pulling them together. And with AI, that's collapsing at an even more increased rate of change. So AI platforms right now are -- they're collapsing the buying patterns with IT buyers used to buy a platform, implement it for years and then draw the business in. Nowadays, there's a really fast iteration cycle. So we're finding ourselves in rooms now starting with marketing, but really extends to all the stakeholder groups. Thomas Singlehurst: Can we go to Nico. Nicolas Langlet: Nicolas Langlet from BNP Paribas. I've got 3 questions. The first one on the existing business with clients. which was definitely a weak part in the 2025 performance. Can you tell us a bit more about what happened? Is it related to scope reduction, pricing pressure? Or can you give us more detail about that? And what are the concrete actions you have already implemented to stabilize the business with the existing clients? The second question on WPP Open Pro. Can you give us an update regarding the rollout, the first feedback and what sort of opportunity you see in the mid- to long term? And finally, of the GBP 500 million gross cost reduction, have you included any benefit from generative AI tools in that GBP 500 million? And if you can share that? And of the GBP 500 million, how much do you plan to reinvest in the business? Cindy Rose Quackenbush: Yes, why don't you take the first? Joanne Wilson: Okay. So look, Nico, it's absolutely the right question. If you look at our performance in 2025, we talked about a drag from net new business of about 150 basis points. So that points to just under 400 basis points from the underlying business. And the majority of the cuts that we saw really came from the creative part of our business. And as I said in my prepared remarks, it was really an overview, and we did see significant spending cuts, particularly from the start of Q2. Look, we can point to different reasons for it, but there was an awful lot of uncertainty, and we saw heightened volatility across clients. We've talked about the polarization. Many clients, we saw very strong growth during the year, but others cut significantly and at very short notice as well. And effective, we tend to have more project-based spend in our business. And of course, that's often the first places that get cut when we see that volatility. And I would also just add that as you heard from Brian today, Brian and the team have been incredibly busy in the last 18 months really setting up our competitive proposition for the future, redesigning how we deliver for clients. And that undoubtedly has had some disruption in the business and the underlying business. And we've been very deliberate in Elevate28 that Brian and the team have done a lot of the heavy lift and their focus is now on execution. So it sort of brings you on to the second part, what are we doing about it. So if you think about that for media. And then with the creative part of the business, we are building an incredible powerhouse within WPP Creative. We did get in our own way a lot of the time in the past with our silos. WPP Creative will enable scaled capabilities across all of our agencies. WPP Open as well will enable our creative teams to work in a standardized way, and that's everything from big large clients to smaller clients. So it will improve what we're delivering, and that will help both with our larger clients and that tail of clients where we've seen more reductions in spend. And I think that's really important with creative. Sometimes we get very focused on the headline cost saving, but it really is about creating a more agile organization with fewer silos. And just on the GBP 500 million of growth savings and how much we're going to reinvest. I talked about the in-year savings in '26 being GBP 100 million annualized savings will be GBP 250 million. All of that we're going to reinvest in 2026. I talked about this priority to stabilize and invest in the growth drivers, we will do that. Look, it's too early to say how much of the remainder we will invest, but I would assume that we will invest as much as we need of that to support our growth ambitions. Cindy Rose Quackenbush: I'm happy to say a few words about WPP Open Pro. It's early days, right? We only launched a few months ago. But what we did was basically productize or SaaS-ified certain capabilities from within the WPP Open platform. And we did it to target the mid-market SMB kind of end of the client segment. The clients that would largely look to self-service that kind of capability. I'm very encouraged actually. We've got a number of deals with clients. We've got a very healthy pipeline against this, albeit it's small in absolute terms. I think the interesting learning from my perspective is our top 100 clients, say, are looking at WPP Open Pro as a way to software enable the long tail of markets that they service. So rather than having full teams on the ground, you can start to see a world where they can software enable their long tail. And that's kind of interesting. Thomas Singlehurst: Perfect. Maybe we can go to Adrien. Adrien de Saint Hilaire: Cindy, this is Adrien from Bank of America. So I've got maybe 2 questions maybe for Brian and maybe one for you, Cindy. John, I know we're talking this afternoon. So I'll leave the financial questions maybe for later. But maybe, Brian, on -- you talked about all the business wins in Q4 and Q1 and well done on that. Can you tell us like what was the factor or what were the factors behind those wins? And how much of a factor price was behind those wins? And then secondly, I know we've talked about this before, but you put data at the core of your strategy. But how do you solve for the fact that you don't really have, as far as I know, at least a proprietary identity graph compared to competitors? And maybe more for Cindy. So today, we heard a lot about the opportunities. Sorry to come back on the risk. How much like revenue attrition would you expect in maybe in creative because of AI deflation around the revenue per head, for example, how much would you anticipate for the next couple of years? Brian Lesser: Adrien, in terms of the new business wins, everything that I showed in terms of our proposition contributed to those wins. And without going client by client, what I said about every client being different applies to how we pitch business and then how we ultimately service business. So whether that was winning JLR or NCL or the various other wins, each one of those solutions was different. And the great thing about our platform is it allows that and it enables us to go in and do things differently for clients. So selling cars is different than selling cruises is different than various other clients that we have. So I think that contributed to it. The way that we're structured also helps quite a bit. So we're not going into these pitches as Mindshare or Wavemaker or one of our other agencies, we're going to these pitches as WPP media. And increasingly, we're going into these pitches as WPP. So we get a lot of help from our colleagues at VML and Ogilvy and AKQA and from WPP production. And the clients see that, and they know that while we're pitching one thing, we're going to offer a full breadth of services over time. All these pitches are competitive, so price is always a factor, but that wasn't a defining factor in any of these pitches. We have a proprietary identity asset. One of the things that you have to understand is that identity is pretty ubiquitous in the market. So there are lots of companies that provide identity solutions. And it's really an old-fashioned notion of what we need to do to join up disparate data points. So we also have an identity asset called MerLink. We see every adult in the United States and we use that. We also use other partners like Experian when we want to augment that. And because we have a solution that allows us to access any identity asset, it's really not a problem for us. Having identity is such a small part of what you have to do to understand consumer behavior. What we do have is InfoSum, which allows us to connect to hundreds of other data sources. And instead of those being household addresses or e-mail addresses, these are what are people consuming on TikTok? How are they interacting with creators on YouTube. Those signals are much more important than having a traditional identity asset, which again, is a legacy system and fairly ubiquitous and accessible in the market. Cindy Rose Quackenbush: Yes. I would just build -- thanks for your question, Adrien. I would just build on what Brian said. I mean, I've never met a client that doesn't want more for less. That's not a new dynamic. We operate in a very highly competitive market and price pressure is a constant feature, right? But I would say that we probably accept on some level some downward pricing pressure from AI productivity, if you will. But what we're doing here is creating an organization that can cross-sell more effectively to address the white space within our installed client base and be more effective at converting new business. If you take our top 25 clients, for example, we probably capture at best 1/3 of addressable spend. When we unlock this collaboration and cross-sell opportunity for WPP, we have massive opportunity to offset and grow in those areas. Thomas Singlehurst: Why don't you pass it on to Steve, given he's right next to you. Steven Craig Liechti: Steve Liechti from Deutsche Numis. Just on the -- some numbers, sorry. You said 5% to 6% gross hit from losses. Can you quantify the '25 and '26 to date wins to kind of give us some idea of a net number to work off as we stand today? So that's the first question. Second, Brian, in the new setup and the new kind of pitch that you're doing to clients, where you haven't won, why was that? I know things is different, but it would just be useful to hear some insights there. And you also said you had some more work to do as well in your comments. I just wonder from my perspective, how much is the pitch that you're going with the clients now absolutely the right pitch? And what more is there that you do have to do? Brian Lesser: It's a very dynamic business. So it's very rare that the right pitch today is the right pitch a week from now or a month from now. So when I say we have more work to do, it's that we're on a constant quest to meet the needs of our clients in a rapidly evolving world, and that's never going to change. Structurally, we're set up to win, and we have been winning. From a data and technology standpoint, I feel great about where we are. We have the building blocks in place to evolve, not just win today, but evolve as the market evolves. So I feel great about that. In terms of why we didn't win, I say all the time to the team, you can be the best in a pitch, you can be the best on the day and you can still lose a pitch. And there are lots of factors that go into it. Sometimes it's price. Sometimes we don't feel comfortable with where a prospect is taking us in terms of commercial negotiations. Sometimes it's an affinity for one of our competitors between a CMO that knows a certain team. So there are lots of different factors that go into it. And we're not going to win every pitch, but we need to go into every pitch with the right solution for clients. And then I feel great about getting our fair share and actually exceeding our fair share and starting to win back the market share that we've lost. Joanne Wilson: Thanks for the question, Steve. I'm always hesitant at this time of the year to give a net new business because there's a whole year to play for, there's a pipeline, et cetera. But let me share some of the data that we've already shared and you'll be able to kind of broadly figure it out. And then I'll just give you some context around the pipeline. So last year, we said that our gross wins were 300 to 400 basis points of drag, and then we ended up at the top end of that. And we said that the net new business impact was about 150 basis points for 2025. Really encouraging, the gross win impact for 2026 exceeds and that gross win impact in 2025, and that really reflects in recent months, the new business, the better business performance that we've seen, and that's really encouraging. 2025 was a much lower activity year for new business. What we have seen in recent months is the pipeline activity building up again, which is also encouraging. And I would also often get asked, what's defensive and what's offensive? And it's very interesting when you look at the pipeline and the opportunities, it's less black and white than that. It's oftentimes you're defending some scope, but you also have an opportunity to win more. And so it's getting much more nuanced. But as I said, encouraged by the activity, the pickup in the pipeline and of course, the momentum that we've seen in recent months. Thomas Singlehurst: Perfect. I'm just going to do a couple of questions from the webcast, and then I will get back to the room. First one is on the broader strategic shift at WPP to become a more holistic partner to solve challenges for clients. Does this increasingly take WPP into competition with different competitors? And how well do you think you are positioned to win against them? Cindy Rose Quackenbush: Yes, that's for me, right? Look, I think we have all the ingredients we need to win. Like we have, as I said, amazing talent, incredible capabilities, fantastic technology and technology partnerships. We have scale. We have the trust of our clients, which is super important. What we need to do now is pull it all together into an integrated proposition and lead with our agentic marketing platform. And when we do that, I think what you're seeing is we're pretty hard to beat for clients that are ready for that. Like all of our clients are on a journey. Some are really at the very beginning, some are way down the line and most are somewhere in between. But when you see the power of that, turn up in your office and the growth that we can deliver, again, without compromising on data ownership, it's a very strong proposition. So I feel very confident that we're going to be in a great position to deliver this on a repeatable sustained basis. Thomas Singlehurst: Perfect. And one more from the webcast before coming back to the room. It's on a very important topic, which is leverage. So I presume for Joanne. A question here about clarifying the leverage framework. You previously guided to a net leverage target of 1.5 to 1.75x. Has this target been withdrawn? And how do you manage the process with the rating agencies regarding an investment-grade rating? Joanne Wilson: Okay. What we've clearly shared today in our capital allocation framework is our commitment to an investment grade balance sheet and that feels more relevant as we progress through Elevate28 plan feels more relevant than the historic range that we had and we are very committed to that investment-grade balance sheet. And I think, as I said in my remarks, and that's reinforced with the Fitch rating. I want to spend a bit of time on leverage as well. Leverage is really driven by, obviously, EBITDA and net debt. And our net debt -- our average net debt through '25 has actually come down slightly. And so our elevated leverage as a result of that lower EBITDA. And hopefully, as you've heard today, and we presented a plan that is going to get us back to growth. And obviously, with that, we'll follow improved margin, profitability, improved cash generation and we'll help that out. We also talked about the importance of reducing our gross debt. We talked about the role that the portfolio review will play on that. And over the course of Elevate28 we expect our leverage to come down. We do have liquidity at the end of the year of GBP 4.4 billion. Our maturity profile is 5.8 years. We recently refinanced our bond, et cetera. So we're in a very strong position. In terms of the rating agencies, I mean, many of them are here today. And we have a very strong relationship with the rating agencies. We engage with the rating agencies, we listen to what's important from their perspective. And like all stakeholders, we take that into consideration as we ensure that we're making the right decisions and taking the right actions to ultimately deliver long-term returns for all of those stakeholders. Thomas Singlehurst: Let's come back to the room. Can we go to Julien at the back. Sorry, yes, when you get the microphone back. Sorry. Julien Roch: Julien Roch with Barclays. Looking at Page 41, you have a production CAGR over '24, '28 of minus 1% for the industry. I thought it was a growing part of agency services. So why the decline for the industry? And what can WP production can grow at? That's my first question. Then on organic, accelerate organic growth in 2028, previous CEO had a 3% plus organic guidance. So if everything goes according to plan, what's your cruising altitude? What is your ambition? And then lastly, moving from holding company to a single company, does that mean one P&L per country? Or will you still have separate P&L for the new 4 entities? Or will you still have separate P&L per agencies? Cindy Rose Quackenbush: Sorry, Joanne, I think you're on. Joanne Wilson: I might need to repeat your second question, but let me answer the first and the third first, and we can come back to that. Yes, look, on production, and I shared this in my remarks -- prepared remarks that there's subdued growth in production overall. That's not the way to look at what production can mean for our business and how that can contribute to our growth. Hundreds and hundreds of millions of dollars that our clients spend and their production today goes outside of WPP. It goes to a variety of third-party providers. And hopefully, as you saw today as well, production is being completely revolutionized and transformed by AI. We talked about particular parts of production, high-velocity production, which is growing at 38%. That's a very small part of the production market today, but it is a huge opportunity. And as the largest agency globally and with the investment that we're making in content studios and with our team, we're incredibly well placed to take advantage of that. And also with the WPP production consolidation, we are much fit for purpose to really internalize a lot of that client spend, which we can, in an integrated proposition, make it more efficient for our clients. So it's really, really a win-win and our clients are getting the very best of production capability in the market and that AI investment as well. In terms of the P&Ls, so how we will operate and maybe I'll start with WPP Creative and then look at it overall. So the WPP Creative will run on P&Ls. The regional and market models will mirror media. And in certain markets as well, actually, those media and creative and production operations and teams will be even more integrated. But we will have one P&L for WPP Creative for the markets. For the agencies, we will still measure them on their revenues and their contributions, but that will not be the lead P&L. And then across the other 4 areas, of course, they will each have their P&Ls that will roll up to WPP overall. I think the most important thing is as we talk today about the incentives, we have redesigned our incentive model so that it's much more aligned -- everybody is much more aligned on a WPP outcome, and we struck that balance right where it's still incentives that people can really influence as well. So a much simpler P&L structure even if I did. Cindy Rose Quackenbush: Just to build on that because I'm trying to see what's behind your question. Please don't underestimate the enormity of the change that we're making. We're moving from hundreds of stand-alone operating companies to 4 operating units across 4 regions. And this common incentive that is linked to WPP's overall performance is going to change behavior in very dramatic ways. It's going to take all the friction out of the organization. It's going to make us much more client obsessed. It's going to enable us to put the right resource in front of the right client at the right time. So I just wanted to say -- please don't underestimate what's involved in making these changes that we're proposing. Joanne Wilson: And then, Julien, I think your second question was around our ambition on organic growth, if that's right. Julien Roch: That's right. Joanne Wilson: And I said we weren't going to give specific medium-term targets, and that was quite intentional. We talked about the 3 phases. The job that we have to do as a management team in '26 is to stabilize the business, continue to build on that new business momentum and improve our client retention. And that will get us back to growth at some point during 2027, and then we will accelerate from there. So I'm intentionally not putting a number on it, but you can -- that will give you a sense of what we're expecting in terms of the trajectory. Julien Roch: No, I understand that you don't want to give us like a '28 numbers, but it's more -- actually, it's probably more a question for Cindy, right, is what's your ambition in terms of growth rate in 5 years, in 10 years? What would you consider a success for WPP is achieving the previous target of 3% or you actually have more ambition than that? -- without giving us a year or whatever, but what's the... Cindy Rose Quackenbush: I'd like to get to the end of Elevate28 capturing our fair share of the market and then go beyond. But look, we're -- in the short term, I'm absolutely focused on delivering growth for clients, building on our market momentum and stabilizing our performance. And that will remain our short-term focus. Thomas Singlehurst: Can we go with Annick? Annick Maas: Annick Maas from Bernstein. And first question is, as a company which is employing 100,000 people in a world where change is becoming more and more -- it's accelerating basically, how can you stay nimble and keep up with this pace? Or what are the challenges here? The second one is on AI, and this is probably for and it's more conceptually. I guess AI is leading to staff efficiencies in terms of absolute numbers of stuff, but you also have an unprecedented industry structure with one less players. So how do you think conceptually about number of staff and absolute and staff cost inflation in the next years? And then you spoke about the rationalization of the portfolio. I suspect you speak with a few players. Who are these potential buyers? Cindy Rose Quackenbush: Good. Well, look, I'll say in terms of staying nimble, like that's a continuous process, right? We invest in skilling and building new capabilities in our employees on a continuous basis. We have creative technology apprenticeships. We have all kinds of formal AI coaching and training that we put our people through. But I think it also -- it's about also staying close to our partners. We have what we call forward deployed engineers. So we take resources from our technology partners. We put them into our organization. We train them on our platform. And then we send them into clients to co-innovate on new solutions. So I think just being in and around this environment creates a very, as I said, very AI native mindset where we can just continuously build these capabilities. These aren't capabilities you build through formal online training. You have to get your hands on it and actually put it to work for clients. And that's -- that's really how we're staying nimble and in front of things. But do you want to take the question on... Joanne Wilson: Yes. And exactly through the questions, I think. Nico, I think it was you asked me about AI efficiencies and I didn't answer. Look, as we look at the business going forward, undoubtedly, if nothing else changed, we can do more with less. So we can do a lot more with a lot fewer people, but it's never just as simple as that. What we're able to do now for our clients is before we might have created 5 ads and we were managing that. Now it might be 1,000 ads and they're very different how those ads need to be used to target audiences and drive returns. That's requiring different skills and different talent in the organization. Now some of that, we are upskilling our people, some of that we're bringing new talent into the organization. And if you think about the plan that we shared today, we will be reallocating talent around the business. So yes, we will be delivering cost savings. And in people -- in a business where most of our cost savings are people, that will mean a reduction of certain heads, but we will be reinvesting back into talent, different types of talent, commerce talent, influencer talent, much more analytics talent. We already have that at scale today, but really, those are the areas that we will be investing in and with that will come a different profile. In terms of how we measure it, the most important metric will be revenue per head, and that will reflect also our ambition to grow and do more with people, decouple our revenue model from our FTEs. And that's really all around our client delivery. In the back office, there's an opportunity, and we're already doing it in pockets. How do we leverage open, how do we leverage AI to drive productivity savings in our back office. And with the plans over Elevate28, we will do much more of that, much more at scale and on a standardized level. Just in terms of the question, is there AI productivity you asked built into the GBP 500 million. There is on the back office side. But on the front office, the way we think about it is we are creating productivity efficiencies in how we do things, but we're reinvesting that back into delivering even more value, even more outcomes for our clients. And then that feeds into the evolution of our commercial model as well. So that's all built into our plans. But we don't pull out and say we're going to deliver productivity savings from that delivery. We think about it much more holistic. There was a third... Thomas Singlehurst: Portfolio. Joanne Wilson: The buyers. Well, look, as I -- as we shared and particularly in the people business, incredibly sensitive, and we don't -- we're not at a point where we're ready to share externally. What is important is that we've seen an opportunity where we have embedded value of great assets that we have, and that will give us greater degree of financial flexibility and enable us to target our capital allocation more. And for some of these assets, there are many buyers, some of them are attractive assets. Thomas Singlehurst: We go with Ciaran. Ciaran Donnelly: A couple left for me. Joanne, maybe just on your comments on 2027. Can you clarify how we should understand the comments of growth during 2027? Should we think about that as implying a positive exit rate on like-for-likes rather than necessarily positive like-for-like growth for FY '27 in total? And then maybe, Cindy, could you just give us a bit more color on the new incentives? I guess, how do you kind of balance it between individual remit and kind of growth targets? And I guess, just in terms of what they look like versus the legacy incentive structures, how different are they? And then just finally, I mean, on the legacy structures, do they roll off over a period of time? Or what is that phasing period between the new structures and the old structures going at? Joanne Wilson: Very quick answer to your first, it's the latter. So it's during 2027. So you should think about it as a positive exit rate rather than for 2027 as a whole. Cindy Rose Quackenbush: So on the incentives, basically, if you're sitting in an operating unit, your incentives are 50% tied to your operating unit and 50% tied to WPP. If you're in WPP as part of a corporate function, you're 100% WPP. If you're a GCL, you're paid on your client growth. It's that simple. And it's dramatically different from where we are today, where if you're in an agency, you're paid on your agency results primarily. So that is very, very different. And that's why I think it's going to unlock very different behavior, much different collaboration. In the past, our agencies competed with each other. That was the model. Today, when we go into a pitch, we cast the right resource for the right client at the right time and -- it enables that. It enables a much more client-centric approach to the business. Just to add, we're implementing that in 2026. Thomas Singlehurst: I got a couple of people in the wings. I'm going to start with Anna, I think, at the back, and then we'll come to you, sir. Anna Patrice: Anna Patrice from Berenberg. A couple of questions from my side. So you were talking about the evolving remuneration part from time and material to project-based. So maybe how it has evolved in the past over the last couple of years? Like what's the share of time and material overall? And where do you see that going into the future? And what could be the impact on your profitability? That's the first question. The second question on the capital allocation, you were also referring to M&A. So just quickly, maybe what are you looking for? What are the things that are still kind of white spots for you that you would like to enforce within the overall WPP? Joanne Wilson: Shall I take the first one? Cindy Rose Quackenbush: Yes. Joanne Wilson: So just in terms of that evolution, and it's -- that's the way you should think about it. This will be an evolution in our commercial model. And this is an evolution for the industry and for our clients as well. So there's 3 key areas that we look at. One is output-based pricing and where we see more and more of that is in our production business today. We then have performance or outcome based pricing. We've talked a little bit about that. I mean we've always had an element of that in our fee structures with clients, but that's becoming increasingly important, particularly as Brian had shared today how we can measure that outcome more. And the third element is just tech and labor fees as well. That can be through licensing fees, through bundles, through subscriptions, et cetera. And all 3 of those we have in our business today. So with many of our clients for parts of work that we do for them, we're working with our clients to understand what works best, what aligns structures. clients we have going much more major outcome and others, it's more of an evolution of it. So really that's the way to think about it. So -- but very, very much encouraged by the shift that we're seeing. And as we are more and more confident in what we can deliver for our clients, of course, that creates more stickiness with clients. We see a big opportunity to enlarge the scope of what we do for clients. And you asked specific on margin on a per unit basis, we often say, of course, if you just look at it and everything else is the same, it would be deflationary in revenue because we can produce units at a lower cost. But actually what's more important, what clients are paying a premium for is all of that brand safety, the culture strategic input that we're bringing and how we can drive more growth. We're able to do that in a much more efficient way. And so we're looking at this to be ultimately over time, margin enhancing for us. Cindy Rose Quackenbush: Yes. On your question on M&A, again, I would just repeat that Phase 1 of our plan, we are really deeply focused on stabilizing our performance, delivering growth for our clients and building on the current market momentum that we have. As we get into later stage and free up capacity to invest in growth, we certainly will. And I would -- I stand by the statement we have everything we need to win. But as we create capacity to invest, I'll be looking to enhance in those growth areas that we mentioned, media, data, commerce, social influencer and the growth areas. But that's not the short-term focus. Short-term focus is on stabilizing our performance. Thomas Singlehurst: Gentlemen over here has been by patient. Jérôme Bodin: Jerome Bodin from ODDO BHF. Two questions. The first one on the WPP creative. So just to make sure I have properly understood. Will the idea be to pitch from WPP creative or from at the network level? That's my first question. And then also still on WPP Creative. So I have understood that the idea is to improve the mobility in terms of talent between all the networks. So how do you plan to make the improvements from a pure HR perspective in terms of systems and HR architecture? I think it's not so easy. Second question on disposal. So I fully understood that you can't give any names, but could you maybe explain what could be the idea in terms of disposal? Will it be an asset disposal at 100%? Or could you partner with someone with a minority stake? And then linked to that, could we have an update on Kantar on the stake in Kantar, where you are? And what do you plan? Brian Lesser: What was the last question? Joanne Wilson: Kantar. Cindy Rose Quackenbush: John? You want to say a word on WPP Creative, our CEO of WPP Creative. John Seifert: You can see where it came from. Thank you. Yes, first of all, on WPP Trade, it's -- after being at some of these investor meetings in the past, it's nice not to come and talk about a big merger that we're going through in the creative agencies. I've done that before. We all know that game. We've got -- in the analysis we've done in the last 6 months, we've got really powerful agencies. We've done that work in these last 5 years. And I saw that just this week, the drum creative rankings, #1, Ogilvy, #2 VML. It's not a super power we want to walk away from. So that's thing number one. And so I'm really excited about the strategy of not merging things, but getting behind our agencies. So that's a precursor to your first question, which is -- we're not using WPP Creative as a brand or an agency. It's not an agency. It's an operating system lets those great agencies, those very creative agencies operate together because we have a couple of beliefs, and we heard this from our clients. Our clients love our agencies. They love the choice. They love the creativity, they love the diversity, but they found it hard to work with them and found that either the clients or our GCLs, our global client leaders had to do the navigation, and that was difficult. So we're doing what we think is the best of both worlds, build around these great agencies, highly recognized, very creative agencies that make it easier to navigate. So WPP Creative is simply a way to navigate. It's an operating system. It's not an agency with a very light layer of infrastructure between them to make that happen. And if we do that, we will grow better than we ever have before as WPP and as creative agency. So if we unite them in the right way, which we are, -- we have the second part of your question, which is the ability for talent to move around between those agencies or to team up for client assignments. That's something we haven't had as well as we should have in the past. So that mobility, the second part of your question is key, and that's one of the reasons for the group. If we do this, we can also put better capability across all our creative agencies. Cindy talked about enterprise solutions. Jeff talked about it. This will be different than other holding companies creative agency groups, if you will, because of the embedment of everything Jeff and Cindy talked about with Enterprise Solutions. So to your point, WP Creative is not an agency. It's an operating system lets the great agencies. The creative agencies of WPP be great individually and be great together; and two, it allows for talent mobility. Cindy Rose Quackenbush: Jerome, thanks for your question, and I hope you'll forgive me for not answering it. We're not going to name any assets or give any further guidance today. We've carried out a complete strategic review of our group. We've identified assets that we feel we're probably not the best owners for in the long term. We've started a formal process. And as soon as we have anything to report, we will. But thanks for the question. Joanne Wilson: And I'll just follow up with Kantar, which you asked specifically about. I mean, Kantar, obviously, they sold the media part of the business last year. And they now have 2 divisions, Numerator Worldpanel and Kantar Brands. And those 2 divisions, they've done a big lift in terms of those 2 setting them up to operate independently, and that will be completed in the next few months. Obviously, that gives more flexibility in terms of realizing value from that business for both ourselves and BN, and we're very aligned with BN on the time lines for that, but nothing really more to add. I mean I think just specifically to your question on could this look like minority sales? Yes, it could. So there may be some assets that we bring majority owners into as well. Thomas Singlehurst: And Richard. Richard Kramer: I will keep it to 2 questions. Richard Kramer from Arete Research. Cindy, you mentioned productizing WPP Open and Pro and for the mid-market in particular, do you see offerings like Meta, Andromeda and Google Pomelli as fundamentally competing with WPP? Or do you see them as somehow complementary? And my question for Brian, there's been a lot of recent discussion and disclosure around principal trading and rebates. How are you going to address this question of transparency going forward? And is this an opportunity in the market for you to take some more share? Cindy Rose Quackenbush: Thanks for your question, Richard. As I said, there's a lot of point solutions out there. Some are tied to specific platforms. I think when companies start to stack all these up, -- it becomes expensive, complex and you break the workflow. So I don't -- I think what we have is fundamentally different. It's an end-to-end platform. We are agnostic and independent in terms of how we invest our clients' media budgets. And we have relationships with all the major platforms anyway. So I think what's behind your question is, are we going to be disintermediated by the big tech players? I don't think it's that easy to just turn on a solution in a client environment and watch the magic happen. And this involves real transformation and our clients need help. As I suggested, their data is not always ready. Their people aren't always ready. Their systems aren't always ready. So I see a real opportunity in being that intelligent orchestration layer. I don't see -- we're not seeing a disintermediation dynamic play out in any way. Brian Lesser: In terms of principal Trading, building compelling performance-oriented products has always been a part of our business, Richard, as you know. In fact, WPP was really a pioneer in building products that drive value for clients. In many cases, those are part and parcel of the services that we provide our clients. And in other cases, it requires us to invest, invest in technology, invest in our trading partners, invest in sources of data and then pull all of that together on behalf of our clients to drive performance. In a lot of markets for a lot of different channels that we service, we do sell principal media products to our clients. And those products are actually built with our clients. And they are asking us for more, frankly. Both Cindy and Joanne touched on the fact that our clients, in many cases, are CMOs, CMOs are under tremendous pressure to prove the value of marketing and grow their business. And so in many cases, they come to us and they say, how can you help us navigate addressable television? How can you help us navigate social media or commerce or retail media. And with our clients, we design products where, in many cases, we have to invest in those products. So it's a part of our business, and it's a growing part of our business, and I continue -- I expect it to continue to grow over time. In terms of us taking share, I do think that we can take share through our investment in those products. Again, if you come back to our strategy with respect to technology, we're not trying to sell assets that we acquired for billions of dollars. We're trying to work with technology companies, data companies, media companies to connect these things to build products that drive better performance. So in many ways, we are more impartial, more objective in how we construct our principal-based media products, and therefore, they're more compelling to our clients, and I expect they'll buy more of them over time. Thomas Singlehurst: Now we promised to get you out by midday. I've got a couple of questions, 3 from the webcast, and then we'll draw a line under it. But first one for Joanne, once again on leverage and the balance sheet. Could you please let us know if you intend to refinance the September '26 bond out of cash or by issuing another bond? That was the first question. Joanne Wilson: That's easy. We've done that. We refinanced in December, our GBP 1 billion bond, which covers that September maturity and our next maturity after that isn't until May '27. Thomas Singlehurst: Perfect. Second question, we've had a couple of these, and so I'm synthesizing them, but it's -- for you, Cindy, it's about the transition from moving from the Board to being a CEO. Can you talk about the challenges and surprises during that process? Cindy Rose Quackenbush: Gosh, how long do we have? Well, look, I think on balance, it was a strategic advantage because I knew the team, I knew the business, I knew many of the clients. So I think I avoided the 6-month onboarding experience that perhaps an outsider would. And actually, I had -- as I said, I had a thesis even before I arrived in the role. And so I just think it was a strategic advantage and helped me get to where I wanted to get to faster and actually started making changes relatively quickly. So -- but there's always surprises along the way, right? We'll save that for another day. Thomas Singlehurst: Final question. A couple of people have mentioned the Enterprise Solutions capability, the fact that it's 13% of revenue, and that feels high. Where does it come from? Is it -- where are the assets based? And what's their genesis? It might be one for John and Jeff. Cindy Rose Quackenbush: Jeff, do you want to take it? Jeff Geheb: Sure. Cindy Rose Quackenbush: Okay. Go forward. Jeff Geheb: Yes. So the nature of where it came from is 10 years of acquiring companies, 10 years of building capability inside of our creative agencies inside of really every company inside of WPP to be relevant was expanding into new asks. So they were expanding into CRM. They were expanding into technology because their value proposition required them to do it. And so what it happened over the years is that we had distributed capability all over the company. And through the acquisitions, integrations, as John mentioned, specifically when VML and Wunderman Thompson came together, we began to pool all of these assets together, and we could bring them to clients in new ways that didn't require them to, I think Cindy said, shop. They could come together in a holistic offering. So where would you have found it? You would have found it in all the different P&Ls, all the different regions, all the different markets. And so really, what we're doing now is just we're bringing them together, and we're putting under a framework where not every company or a capability is competing on to itself. And so for the first time, you're going to find it seen outside of the context. This isn't a start-up. I mean we've been doing this for a while. We've been competing on this for a while, but you'll just find it under VML. You would find it in Ogilvy, you would find it distributed throughout the network. So that's where it came from. Cindy Rose Quackenbush: So we're strapping rocket boosters to... Jeff Geheb: Yes. That's right. Cindy Rose Quackenbush: WPP Enterprise Solutions. Good. Shall I wrap? Okay. Super. Look, I want to thank you all for joining us today. I mean I've met many of our shareholders individually over the past few months, and I'm genuinely always grateful for your insights and for your support. And thank you. I want to thank you from the bottom of my heart for your trust in us. And we really look forward to sharing our journey as we move forward. So thank you all for coming and for listening. Thank you.
Operator: Good day, and thank you for standing by. Welcome to the Idorsia Full Year 2025 Financial Results Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Srishti Gupta, CEO. Please go ahead. Srishti Gupta: Thank you, Nadia. Good afternoon and good morning, everyone, and welcome to our webcast to discuss the financial results of 2025. My name is Srishti Gupta, I'm the CEO of Idorsia, and I'll start the call today with an overview of the operational progress we made in 2025 and the exciting plans we have for 2026. I'll then hand it over to Arno Groenewoud, our CFO, to walk you through the company's financial position. We'll then take your questions. Next slide, please. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties and other factors. These may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Next slide, please. We entered 2025 facing significant financial pressure, but we leave the year stronger and more focused. 2025 was a year of stabilization and preparation. We reinforced our balance sheet, delivered disciplined commercial execution and positioned our pipeline for decisive milestones ahead. Most importantly, we continued advancing medicines that address meaningful unmet needs for patients. Our Idorsia-led QUVIVIQ sales for 2025 have more than doubled compared to 2024, rising from CHF 60 million to CHF 134 million, just above our target, which we upgraded in May last year. This performance was a result of strong commercial traction and growing demand for QUVIVIQ in Europe and Canada, the stabilization and optimized model in the U.S. I will share more on this later. Our non-GAAP operating results have improved from a loss of CHF 308 million to a loss of CHF 100 million. Key to this operational recovery has been our commercial strength paired with cost control. Arno will share more on our financial performance later. Next slide, please. Idorsia represents a rare combination of valuable assets. We are a commercial stage pharma company with 2 products that have blockbuster potential. We also have a rich pipeline of first or best-in-class medicines. We have a clear path to making QUVIVIQ the standard of care in insomnia. In parallel, we are actively engaging in partnership discussions to maximize the value of TRYVIO/JERAYGO and change the treatment landscape of uncontrolled hypertension. We also have plans to advance our innovative pipeline, leading where we can and partnering where we should. Next slide, please. Let's start with QUVIVIQ. As you know, QUVIVIQ is a best-in-class dual orexin receptor antagonist. It works by suppressing an overactive wake signal rather than sedation as some older drugs tend to do. As a result of this mechanism and the best-in-class pharmacokinetic properties, we can confidently say that only QUVIVIQ offers restorative sleep and revitalized days. Before we talk about the commercial performance of QUVIVIQ, it's important to ground ourselves in the patient experience of insomnia. Insomnia is not just the loss of a night's rest and it does not end when the night is over. It infects the entire next day. Patients describe difficulty focusing, feeling emotionally depleted and struggling to keep up with work and family responsibilities. What they value most is a treatment that helps restore their ability to function during the day. That next-day benefit is what matters to patients and it's central to how we think about addressing this condition. Next slide, please. We continue to expect sales growth of QUVIVIQ in 2026 as we guide to sales of around CHF 200 million, but this is just a step on our path to changing the treatment landscape and becoming a global blockbuster. We have a clear plan to achieve this. First, market expansion in Europe and Canada; second, unlock the true value of QUVIVIQ in the U.S.; and third, continue to build a global brand. Let's look at the progress we are making on this and what's ahead. Next slide, please. In Europe, QUVIVIQ is the only pharmacological treatment for long-term management of insomnia disorder. Our 3-pronged approach to market expansion in Europe and Canada is proving very successful. First, we secure public reimbursement. Second, we invest in focused promotional efforts targeting psychiatrists, neurologists and sleep specialists. Finally, we expand into primary care with co-promotion partnerships. Starting 2025, we had secured reimbursements in France, Germany, the U.K. and the private insurance markets in Switzerland and Canada. We continue to focus on reimbursement. And during the year, we obtained public reimbursement in Austria, successfully negotiated premium reimbursed price in Germany, entered price negotiations in Quebec, while submitting in Finland, and continuing our discussions in Spain. This continues to be our top priority for additional markets. And in 2026, we expect to secure public reimbursements in Spain, Finland and Quebec while preserving our price corridor, submit in the Republic of Ireland and continuing discussions in Sweden, Italy and the rest of Canada. Our promotional efforts targeting psychiatrists, neurologists and sleep specialists are leading to strong positioning in retail and hospital settings. We've expanded into primary care with co-promotion partnerships with Menarini in France in October 2024 and Germany in April 2025. And in February 2026, we added the U.K. This is having an incredible effect on our reach, and we continue to look for partners who have established presence and relationships with GPs in other countries. The result of these efforts has been an outstanding trajectory, particularly in France, but closely followed by Germany, the U.K. and Switzerland when considering the relative market sizes. And that trajectory can continue. Just to highlight a few markets, demand in the final quarter of 2025 increased by 25% in Germany, 38% in Canada and 45% in the U.K. Next slide, please. In the U.S., in 2025, we executed a targeted digital marketing strategy with Syneos Health to establish stabilize sales and maintain our core patient base. Going forward, ensuring more patients have access to QUVIVIQ remains a priority. To achieve this, we are advancing 3 key initiatives. First, descheduling the DORA class, recognizing the safety in the same way as it is recognized in all other countries. This would simplify prescribing, facilitate access, expand the prescriber base and improve the patient experience, especially with regards to refills. Second, we will conduct a streamlined label-enhancing clinical study agreed with the FDA to have QUVIVIQ's benefits on daytime functioning recognized in the U.S. label, again, in the same way as it is recognized in all other countries. This would reinforce our differentiated profile with physicians, patients and payers. Third, we will be launching a direct-to-patient digital distribution model aligned with the evolving U.S. market and to increase access. Next slide, please. In 2025, we continue to expand QUVIVIQ's global reach and change the standard of care for insomnia with new approvals, launches and strategic commercial partnerships. Several license agreements help cover markets shown here in green. QUVIVIQ is available in Japan through our partner, Nxera, and they recently saw positive Phase 3 results in South Korea. Our partner, Simcere, has had a very strong uptake in China within the private setting with 300,000 to 400,000 patients treated within the first 6 months. In June, we signed a licensing and supply agreement with CTS in Israel and more recently in 2026 with EMS in Latin America. In Brazil, the regulatory dossier has been submitted to ANVISA, marking an important step forward towards market entry in that region. In red, you can see the next wave of planned distribution agreements focused on Central and Eastern Europe as well as the Middle East and North Africa. These partnerships are part of our strategy to broaden geographic reach efficiently. We expect to make further progress through mid-2026, and we'll keep you updated as these agreements are finalized. Next slide, please. In 2025, we completed the recruitment into our pediatric study of daridorexant, enrolling children aged 10 to 18 with data expected in early Q2 2026. This will be an exciting readout that can pave the way for the first therapeutic option for children suffering from insomnia. Pediatric insomnia is a major unmet need with an estimated 12 million children in the U.S. affected and no FDA-approved therapies available. Insomnia is more prevalent in children with neurodevelopmental disorders like autism spectrum disorders and attention deficit hyperactivity disorder, and our study includes these patients. Daridorexant is the only DORA in pediatric development and, as the new standard of care, could revolutionize the treatment paradigm. We are particularly excited to share the results in the coming weeks and discuss the path forward with regulators. Next slide, please. Our second approved product is aprocitentan, commercially available under the trade name TRYVIO in the U.S. and JERAYGO in EU. We secured regulatory approvals in the U.K., Switzerland and Canada during 2025. It is the only -- the first and only endothelin receptor antagonist approved for the systemic hypertension market. We are actively engaged in partnership discussions, evaluating global and regional deals. Our objective is to expand access for patients while creating value for all stakeholders. Next slide, please. TRYVIO/JERAYGO is uniquely placed in the treatment landscape for difficult to control or resistant hypertension. Its efficacy and safety profile differentiates it to existing therapies and any of those in development. Our registration trial, PRECISION, remains the only hypertension study to enroll true resistant hypertensive patients, all on 3, 4 or more drugs when entering the study. Notably, there was no exclusion based on any antihypertensive drug class. It also had the broadest inclusion criteria, including patients with eGFRs as low as 15. Aprocitentan delivered a double-digit blood pressure reduction of 15.4 millimeters of mercury in just 4 weeks, on top of a standardized triple therapy administered as a fixed-dose combination pill. Aprocitentan has an excellent safety profile with low discontinuation rates observed over 40 weeks, no drug-drug interactions and no increased risk of hyperkalemia, hypotension or a decline in eGFR. The FDA approval provided a broad U.S. label that indicates TRYVIO is suitable for use in all patients who are not adequately controlled on other therapies with the cardiovascular outcome benefit cited within the indication statement. TRYVIO benefited from several important derisking milestones in 2025. In March, the FDA removed the REMS requirement, simplifying prescribing and distribution. Then in August, aprocitentan was incorporated into the updated comprehensive hypertension guidelines issued jointly by the American College of Cardiology and the American Heart Association, which was an important step in reinforcing its role in clinical practice. Our recently published CKD subgroup data shows strong blood pressure lowering plus significant reductions in proteinuria, supporting TRYVIO as a compelling and differentiated option for these patients. Market access work for JERAYGO is also underway in Europe to support our partnering efforts. Next slide, please. TRYVIO is currently being prescribed at more than 25 of the top hypertension centers as part of our focused prelaunch activities to generate on-market experience. In the clinical setting, we see consistent double-digit blood pressure lowering across subgroups, including CKD stages 3 to 4 with excellent safety and tolerability. We see prescriptions coming from key specialties, including nephrology and cardiology. Early on-market experience is translating into increasing new patient starts and improving refill rates, reflecting growing physician confidence in the therapy. Prescribers report meaningful and reliable blood pressure control and comfort using TRYVIO across diverse comorbid patient types. TRYVIO's early real-world experience confirms and reinforces the pivotal trial data from PRECISION. Next slide, please. Our U.S. label allows us to target patients with uncontrolled hypertension despite treatment on 2 or more therapies. Within this broad patient population, there are clear and identifiable patient subgroups that would be the natural initial choice for prescribers. These include patients who remain uncontrolled despite treatment with 3 or more therapies, truly resistant hypertension by definition. This is a group with significant unmet need and high clinical urgency. Second, patients with uncontrolled hypertension and comorbidities where endothelin is known to play a role, such as diabetes and obesity. Third, there is a clear need among patients with uncontrolled hypertension and chronic kidney disease, including those with eGFR down to 15. In this setting, TRYVIO offers a differentiated option without the hyperkalemia risk or eGFR decline that often limits other therapies. Importantly, our on-market experience shows strong uptake across these same patient segments. Notably, given the significant unmet need and clear medical value in these patient populations, the prior authorization process has been very smooth. Next slide, please. Let's turn now to our pipeline. 2025 was a year of meaningful progress, laying the foundations for long-term growth. We are making deliberate focused investments to accelerate our most value-creating assets, supported by a leaner and more streamlined R&D organization. We have advanced our first-in-class immunology portfolio of 3 chemokine receptor antagonists. The study for our CCR6 receptor antagonist is already enrolling in psoriasis with broad potential in T helper 17 driven autoimmune disorders. A study to show anti-inflammatory and remyelinating properties of our CXCR7 receptor antagonist is in progress and progressive multiple sclerosis will start shortly. And a study for our CXCR3 receptor antagonist as an oral precision treatment for vitiligo will begin later in the year. Each will be a proof of concept in a specific indication under investigation as well as a proof of mechanism for a range of related disorders. Next slide, please. We recently announced the exciting news that we have established a clear route to registration for lucerastat in Fabry disease. Fabry disease is a serious and progressive condition affecting around 16,000 people today, a number expected to rise to 21,000 by 2034. There is a high need for treatments capable of addressing disease biology across the full Fabry population as existing therapies are partially effective, have cumbersome intravenous administration or are limited to specific mutation types. Lucerastat's mutation-independent mechanism, oral delivery and long-term data make it uniquely differentiated option in a market expected to reach USD 4 billion. The body of evidence we have generated to-date shows that long-term treatment with lucerastat consistently reduces the glycosphingolipids substrates that accumulate in Fabry disease. We also observed a slower decline in kidney function compared with patients' prior historical trajectories. Importantly, kidney biopsy data from patients receiving long-term treatment demonstrate low to no levels of characteristic lysosomal deposits per our related data recently published at WORLD Symposium 2026. Next slide, please. Following constructive interactions with regulatory authorities, we now have a clearly defined clinical program for lucerastat. This program builds on the substantial body of data already generated and outlines the agreed path towards future NDA in the U.S. and in line with feedback from the European Medicines Agency. The agreed development plan includes a pivotal baseline controlled biopsy study supported by a second study designed to demonstrate that an oral therapy has the potential to deliver clinical benefits comparable to enzyme replacement therapy, which is complex and burdensome for patients. This developmental program is structured to reinforce lucerastat's potential as the first oral monotherapy suitable for all Fabry patients regardless of mutation type. If successful, the data are expected to support regulatory submissions as early as 2029. With that, I will hand it over to Arno to take you through the financial results and our guidance for 2026. Next slide, please. Arno Groenewoud: Thank you, Srishti. Good afternoon and good morning to everyone on the call. In my first slide, you can really see the impact of our increased QUVIVIQ sales and contract revenue, together with our cost-saving measures, resulting in a significantly improved operating result. Net revenue of CHF 214 million includes CHF 134 million from QUVIVIQ product sales, excluding partner sales, a significant increase compared to the CHF 61 million of sales in 2024. The main driver of the sales increase is the EUCAN region, where sales increased from CHF 32 million to CHF 108 million. The sales in the U.S. remained flat despite a significant reduction in sales and marketing costs. As mentioned by Srishti, the aim is to maintain our U.S. prescriber and patient base in a cost-efficient manner to bridge to a potential descheduling. Non-GAAP contract revenue of CHF 72 million includes the USD 35 million exclusivity fee from the undisclosed partner for aprocitentan that was received in Q4 '24, but recognized in Q1 '25 after the exclusivity period ended without resulting in a deal. As a reminder, the undisclosed partner was not able to close the deal for reasons absolutely unrelated to aprocitentan. In addition, we received a CHF 40 million signing and approval milestone from Simcere related to the out-licensing of QUVIVIQ in China. The cost rationalization efforts initiated in '24 and '25 further improved our operational cost base with savings of more than CHF 80 million compared to 2024. As a result, the non-GAAP operating results improved from a loss of CHF 308 million in 2024 to a loss of CHF 100 million in 2025. Based on successful negotiations with Viatris in Q1 '25, Idorsia's cost-sharing commitments were reduced by USD 100 million against a reduction of potential future regulatory milestones. This resulted in a gain of CHF 90 million. Other non-GAAP to GAAP differences mainly include depreciation and amortization and stock-based compensation. This resulted in a U.S. GAAP EBIT loss of CHF 33 million. The U.S. GAAP net loss of CHF 112 million also includes the financial expenses of CHF 72 million, which also includes a CHF 61 million noncash expense related to the convertible bond restructuring and the new money facility. And we had an income tax expense of CHF 6 million. Next slide, please. In addition to outstanding -- to an outstanding operational performance in 2025, we were also able to successfully strengthen our financial position and access to liquidity. As you know, we started the year with CHF 106 million in cash. Operational cash inflows included CHF 142 million from QUVIVIQ product sales, including sales to partners, and operational cash outflows included CHF 215 million of SG&A and CHF 93 million of R&D costs. The CHF 11 million other cash outflows mainly included working capital movements. Further, as announced in May '25, we secured a CHF 150 million funding facility from our bondholders. And in June '25, we drew the first tranche of CHF 70 million. We also raised CHF 68 million net of cost through an equity raise in October '25 by way of an accelerated book building process as well as the sale of some of our treasury shares to bondholders. We were very happy with the oversubscribed demand from the top-tier institutional investors that participated in the book building process. This resulted in a liquidity of CHF 89 million at the end of the year. And in addition to that, we still have access to a further CHF 80 million from the new money facility, which totals CHF 169 million liquidity available to Idorsia. All in all, I think we can conclude that we finished the year with a strong liquidity that puts us in a good position to fund our activities going forward and leading to next inflection points. Next slide, please. Here, we come to the comparison against the guidance. We are proud of our strong performance against an ambitious guidance target, which was significantly upgraded in May 2025. Our QUVIVIQ sales of CHF 134 million exceeded the guided sales of CHF 130 million due to an excellent execution of our commercial strategy, as Srishti already alluded to. The company also delivered on the announced reset of the cost base. And as a result, the operating expenses, net of other income, were in line with the guidance that we provided in May '25. The U.S. GAAP operating loss of -- or U.S. GAAP loss of CHF 33 million is lower than the guidance, mainly due to one-off lower stock-based compensation costs. Equally important compared to achieving the financial guidance for 2025 is that we've built the structures to transition this momentum into the future. Next slide, please. We continue to guide on Idorsia net sales, excluding sales to partners because this is the performance that we can actively steer and have control over. We expect a continuous QUVIVIQ sales growth and with sales of CHF 200 million, we will have a positive commercial contribution for the first time. Our 2026 OpEx, including cost of goods sold, will be flat compared to 2025, a little bit higher than might be anticipated in the market, but purposefully so, focused on creating shareholder value and within strategic guardrails. Our 2026 OpEx is fully consistent with a disciplined plan that supports the next wave of growth drivers. These expenditures are targeted, program-specific and clearly tied to our medium-term value creation plans, such as lucerastat program and the proof-of-concept studies with our immunology portfolio. In a nutshell, sales are going up, OpEx remains flat and overall losses are going down, reflecting the improved underlying business performance and the embedded operational leverage within our business model. And with that, I hand over to Srishti. Srishti Gupta: Next slide, please. Thank you, Arno. 2026 is shaping up to be a catalyst-rich year across commercial execution, strategic partnering and important scientific readouts. We are particularly looking forward to sharing the pediatric insomnia data in early Q2, along with several additional milestones throughout the year that we believe have the potential to meaningfully advance our portfolio and create value for shareholders. Next slide. With 2 approved products with significant commercial potential and a pipeline of first and best-in-class compounds, Idorsia is positioned to create meaningful value. I am proud of the team's performance in 2025. We delivered on upgraded ambitious guidance, accelerated QUVIVIQ's commercial trajectory and continued building the foundation for long-term growth. TRYVIO/JERAYGO represents the fourth endothelin receptor antagonist brought to approval from our pipeline, underscoring our deep expertise in this pathway and its potential in an area of high unmet need. We continue to advance other assets with discipline and focus. And as we look to 2026, we are committed to executing against even more ambitious objectives with a clear focus on delivering sustainable growth and long-term value. With that, Nadia, please open the line for questions. Operator: [Operator Instructions] And now we're going to take our first question. And it comes from the line of Raghuram Selvaraju from H.C. Wainwright & Co. Raghuram Selvaraju: Firstly, I was wondering if you could elaborate a little bit further on the digital distribution model for QUVIVIQ. And specifically, a, how you anticipate this to have an impact on the forward sales trajectory; b, how it might improve your operating efficiency going forward; and c, how it could conceivably be leveraged for the use of launching additional products in the future or if it's going to be very specific to the needs of QUVIVIQ as a product franchise and wouldn't be applicable necessarily to other potential products that you bring to market in the future? And then secondly, I was wondering if you could provide us with kind of what you see as the ideal time frame within which you would want to have a TRYVIO/JERAYGO partnership in the United States as well as regarding guidance, just some clarificatory points. Are you still confident in the previous 2027 top line guidance? Or how has that changed? And are you including in that forward assessment any potential contribution from TRYVIO/JERAYGO? Or is that going to be entirely driven by organic growth in the internal products over which you maintain commercial control? Srishti Gupta: Thank you, Ram. So the first question, area, we can tackle first on the distribution model that we're thinking about for the U.S. for QUVIVIQ. Is that the first question, area? Raghuram Selvaraju: Yes. Srishti Gupta: And so we have -- yes, we're thinking a little bit about -- I mean, what we've learned from the weight loss space is that when there's a high degree of self-diagnosis, the ability to then find a provider and find -- be able to go into online to broaden access and broaden the availability to patients that that can have a huge unlock for certain therapeutic areas. And we very much believe that sleep could be the next therapeutic area that could benefit from this type of model. So we've been exploring right now in the U.S. how we could do a direct-to-patient distribution model for QUVIVIQ. We've heard this is a friction right now in terms of both on the prescriber side as well as on the distribution side with pharmacies that they're not always stocking because of the DEA oversight. And so what we've understood is that some of these models for distribution can consolidate the regulations and the oversight, both on the telehealth providers as well as for the distribution. And so that's what we're exploring right now to start as a pilot in 2026. So we definitely anticipate that this could -- in addition to our current model, be on top of that, we would anticipate that as we can get this up and running, it would have some forward momentum on our sales for QUVIVIQ. And then we would also expect that given its efficiency, we could, at some point, it would have impact as having a lower OpEx. DTP models are common now, are getting more and more common in the United States. And so we would anticipate that if we were to make other products like TRYVIO available through that model, it might actually have an impact. But right now, the current focus really is QUVIVIQ, especially because we have more experience with QUVIVIQ and understand the points of friction that were there for patients and prescribers. So then moving on to your second question area of TRYVIO and the ideal time frame for a partnership in the U.S. I mean with the approval and the availability of TRYVIO in the U.S., obviously our focus is to make sure that this is available to patients as soon as possible. We would actually love to scale. We know that patients are benefiting already from our focused efforts to introduce this in the top hypertension centers. Prescribers are very eager to make sure it's available to patients. So we would absolutely love to be able to build on our very, very focused prelaunch work and scale that through partnership. And so that is top priority for the company right now is to be able to find a partner and move that forward as soon as possible. And our efforts to do all the work that we've done on distribution with Walgreens Specialty, our work with the hypertension centers, our work on the guidelines and making sure that we're continuously present at conferences and hosting ad boards and working with KOLs is really to make this as turnkey as possible for a potential partner. So we would love to make sure that as they -- as we find that partner in the U.S. that they are able to make TRYVIO available to more and more patients. In terms of your questions on guidance, I'll start with that, and then I'll hand it over to Arno. I think right now, the company is really focused on guiding on a one-year timeline. I think with the catalytic events and sort of the unknowns with things like descheduling, the partnership timeline, we -- it's not meaningful to guide beyond a year. And so our 2027 with outlook that we provided in May 2025, at the time it was the best available information we had. But of course, as we move forward, we are seeing more data. We see potentially we could see the descheduling, we could get more information on partnership. And so our forward-looking guidance could change in the next year. I think 2026 is actually quite a shaping year for us. But with that, I'll hand it over to Arno to see if he has anything to add. Arno Groenewoud: Yes. Maybe also to take it a bit broader because, I mean, the outlook that we gave in May 2025 was in the context of the whole financial restructuring. And I think after that, I think with the 2025 performance and the guidance for '26 and in particular, the growth of QUVIVIQ sales, we are really making clear steps to profitability and cash flow breakeven. The 2025 sales were in line with our guidance. And our guidance for '26 is also in line with what we said in May 2025. But like Srishti said, I mean, going forward, we will limit our guidance to the current year as there are many variables and inflection points in '26 and onwards in commercial, in partnerships and also with our pipeline. And considering these moving parts, I think giving guidance beyond 2026 would not be meaningful for the market. And we would like to stay credible and transparent with guiding on numbers where we have a solid visibility. Operator: Yes, of course. Now we are going to take the next question. And the question comes from the line of Joris Zimmermann from Octavian. Joris Zimmermann: This is Joris Zimmermann from Octavian speaking. Two, if I may. First, on the QUVIVIQ pediatric data that you expect later this year in I think Q2, what is the immediate impact that you expect and kind of the next steps that would follow those data? And then also a bit from a longer term perspective, what's your strategy here? Will you pursue an updated label? Does it have -- does it come with a pediatric extension as well? So that would be on QUVIVIQ. And then the second question on your cash and cash reach. With the current cash of around CHF 89 million and the CHF 80 million remaining from the new money facility, how would you assess your funding situation? Kind of what is the estimated cash reach? And does that include all the costs to cover the -- kind of to drive your pipeline assets and to reach all the key inflection points that you outlined in the presentation? Srishti Gupta: Joris, thank you for joining, and thank you for the questions. I'll take the first one and hand the second one over to Arno. On the pediatric QUVIVIQ daridorexant study that is -- we're expecting in Q2 2026, it's a dose-finding study. So we tested in 3 doses and we'll do a dose response curve. And so what we're expecting hopefully to see is both positive results with daridorexant in insomnia in the pediatric population as well as to get some data on the dose. The next step would then be to take that information to the regulators and agree on a pathway forward, both with the U.S. as the FDA as well as the EMA. So we would have to run a Phase 3 program. We're expecting to be running a Phase 3 program, but we would like to shape that program based on the findings of the Phase 2. So that's where we are on the data. I mean we're very excited, though, because there is no FDA-approved therapy for insomnia in this pediatric population. And there are no other doors with the safety profile that does non-sedative to work on the wake signal in this population. And as we know from the data that we have in the adult populations that we use all around the world, the daytime functioning could have a huge impact for pediatric patients as well. So we're very curious to see how the Phase 2 results pan out, and we're very curious to be able to shape a Phase 3 program that is able to do that later. The other part of it for me that's very exciting is that there's the huge safety halo that comes from having a product that's effective in the pediatric population. And especially in the United States where we've had the burden of being a Schedule IV product, we would love to be able to have the safety halo that comes from showing use in the children with insomnia. With that, I'll hand it over to Arno. Arno Groenewoud: Yes. Thanks, Joris, for your question about the cash and the cash reach. I think we're very fortunate that we have a very strong liquidity at the end of the year with CHF 169 million. We clearly have sufficient cash to bring us to the next inflection points. And as already mentioned by Srishti with the previous question, I mean there are many variables and inflection points to come. So that will also clearly have an impact on our cash need going forward. But for now, I'm pretty happy with the cash runway that we have and that we're able to reach the inflection points based on which we can take additional decisions on whether to further invest or not. Operator: Now we are going to take our next question. And the next question comes from the line of Niall Alexander from Deutsche Bank. Niall Alexander: Hi, it's Niall Alexander from Deutsche Bank. So I guess maybe just moving to the pipeline, just on your CXCR7 antagonist in MS, I understand it's just a proof of concept right now. But it would be helpful to understand how you feel this mechanism could potentially be differentiating, and especially so to the likes of the CD20s right now or even the BTKs in the space. Just trying to understand what your hypothesis or views are on the mechanism. And then the same applies to the CCR6 and CCL20 in psoriasis. Just wondering how the mechanism there can potentially be different from the likes of IL-17s and 23s in this space. Srishti Gupta: Thank you, Niall, for the questions. Maybe I'll start with CCR6 first because that's the one that's enrolling right now. So it's a first-in-class oral small molecule, and it's selective for the CCL20-driven recruitment of the pathogenic CCR6 expressing immune cells. So we -- first thing, I think, is the potential for an oral therapy that delivers a biologic-like efficacy, and that's very compelling. We've designed the trial that evaluates the speed and the magnitude of the response as well as the dose performance and safety in the T helper 17 driven psoriasis in the PASI. And the reason we went with that test as well as with this -- with psoriasis is because that mechanism is the most clean. I think we don't see sort of off-target in that area. So we were really hoping that we could get a clean response on the PASI. So a positive outcome in this proof of concept would confirm that in the mechanistic validation and the expansion to other associated indications. And so that's kind of what we're thinking about for CCR6. In terms of CXCR7 and the kind of the unique or the differentiating is that we have this oral, again, that is both potentially anti-inflammatory as well as remyelinating. And the brain penetrating potential is quite strong, which would have an impact in the -- to be able to transform the treatment paradigm in MS. And so the proof of concept is primarily the progression and so of the multiple sclerosis. And so what we're trying to see is if we can -- through the -- its imaging -- yes, with via imaging, we could see a slowing of the demyelination. And so that's kind of our -- the proof of concept that we've designed for the CXCR7. Operator: Now we're going to take our next question. And the question comes from the line of Sushila Hernandez from Van Lanschot Kempen. Unknown Analyst: This is [ Sandrine ] on for Sushila. We have 2. First, could you provide more of an update on the QUVIVIQ descheduling process? Like how likely is it that it will happen this year? And second, on the Fabry disease, now that you've reached alignment with the FDA, what are the next steps? Like when will you start the kidney and the renal studies? Srishti Gupta: Thank you, Sandrine, thank you for joining. So on the first question on descheduling, we expect the next major update to be the initiation of the public comment period from the DEA. And so that's the next time we think we'll have public information available on the descheduling process. In terms of where we are, I mean, we've now seen that -- we have probably around 13 million patients ex U.S. that have been on ADAURA across the globe between Japan, China and Europe and a couple of million patients in the U.S. And we consistently know that QUVIVIQ is valued for its safety. We don't see any meaningful signals of abuse dependence or withdrawal. And so part of our update to the FDA has been to share this kind of comprehensive ex-U.S. data. This is on top of the Citizens Petition from '23 and a recent update that we did to the FAERS analysis. So the FAERS is the FDA's own adverse event reporting system database and where we -- again, we went back to the database and we did an updated analysis and we demonstrate that the DORA class has significantly reporting odds for adverse events related to drug abuse compared to the Z drugs and other nonscheduled drugs such as trazodone, which are used in the U.S. off-label. So we're kind of combining those things in our mind and hoping that the FDA's recommendation that moves forward is to be descheduled, but we'll only know when the DEA opens it for public comment. That being said, I think it's important to know that we're not waiting for the descheduling to unlock the value of QUVIVIQ in the U.S. The daytime functioning in the label, the label-enhancing study as well as the work with the direct-to-patient, we're setting up those -- we're setting up the model on direct-to-patient to be able to accommodate for the current schedule as well as then expand based on any descheduling that happens. So we are really focused on making sure that even in its current form that we can increase access for patients and they can have the benefit. And then, of course, all of those things in total, as we get more and more patients on QUVIVIQ, we can update the FDA with the safety profile and the lack of abuse signals. So that's the question, I think, probably on descheduling, but we'll only know when it goes from the DEA into public comment. On Fabry, we're expecting to initiate the pivotal study for the biopsy in this year. And so that's the pivotal. That's the 16 patients I showed it earlier. It's baseline controlled. We're expecting to take patients that are treatment naive or pseudo-naive, and it's 18 months of treatment, and we're expecting that it's in our budget to be starting that study this year. Soon thereafter, we'll do the second study, which is to show the switch from ERT. So we'll take patients that have been on ERT therapy for a year or more, and we'll do the switch study. And so with the idea that we'd like to submit in 2029. Did I answer? Operator: [Operator Instructions] And the question comes from the line of Myles Minter from... Unknown Analyst: Congrats on the progress. A couple on lucerastat. Just wondering if you can comment on kind of the powering assumptions for that 74-patient renal function study that you're doing against ERT in Fabry. And then I noticed at the WORLD Symposium, you seem to see a greater efficacy signal in patients with pretty severe declines in eGFR but at baseline and also antidrug antibody positive patients on the ERT side. So I'm just wondering whether you're going to stratify the readout of that trial in any way based on those factors? And the final one is just in terms of the number of patients that remain in the open-label extension there. I think it was 47% of the original amount that crossed over. Can you just provide any sort of major reasons as to why there was discontinuations there? That would be very helpful. Srishti Gupta: Myles, thanks for joining, and thanks for the questions. I think your first question was on the power of the second study. So we were not requested by the FDA to power the eGFR study. And so that's -- so we were working under the assumption that we don't have to have statistical significance. So we designed that study with that idea. In terms of the WORLD Symposium, the decline in the eGFR and the antibody and the stratification, I think we'll have to see where we are in terms of the eGFR study and the enrollment on how we might want to stratify that study. But right now, as we're looking for a broad monotherapy label for all adult patients with Fabry, we're not looking to kind of have a specific use in those patients with ADA. We are trying to get the label to be as broad as possible. We would like to make sure that our study design is consistent with that. And then finally, on the open-label extension for MODIFY, that was 43 months, which was, I mean, I think, 6 years, right? Like we're in total with the 6-month MODIFY trial, that's 6 years. I mean 50% is actually a really good retention rate after 6 years. I don't know if there's anything I'm doing right now that's the same as I was doing 6 years ago. So I think that retention rate actually seems pretty good for this type of study for chronic -- for a daily oral and with for chronic condition. Operator: And the question comes from the line of Joris Zimmermann from Octavian. Joris Zimmermann: One more question from my end on the aprocitentan partnering, if I may. I was just wondering, looking at like the data is there, the data is good. The first market feedback, to my understanding, is also very positive. And now you have the whole REMS requirements omitted and you're even in the guidelines. So I was wondering what is it that is kind of -- why do the aprocitentan partnering discussions still go on? Can you maybe comment on that? So is it more on the finding the right partner in the U.S. and Europe probably? Or is it more on the deal terms? What's kind of the main discussion topic you're currently having here? Srishti Gupta: Thank you, Joris for the question. The second -- the third question, actually. So I mean, there's a lot of the positives, right? We have the data, we have the market feedback, the REMS, we have the differentiation, especially for those patients that have an eGFR down to 15 where there are no other options. And we've been in the process of looking for a partner for a while, I mean, especially even to the time when J&J decided to not pursue work in cardiovascular anymore, and we took the rights back for apro so that we could bring it forward because we have such conviction in the endothelin receptor antagonist space and its ability to be used in systemic hypertension. Now after the approval process, I think we have gotten into a point, we're having a commercial asset that has not had the ability to be resourced for a launch. That's a new mechanism of action that is -- needs to be introduced in a pretty complex health care system right now with incredible cost pressure. And with the commercial payer system that's highly under evolution with PBMs and it's like every other week, a pharma company is being hauled into the White House. I think it's really important for partners to be able to understand the commercial fit. And so with a commercial stage asset, the commercial fit, I think, from the partner perspective is one of the things that needs to be worked out on both sides. Like, we need to see that they're able to resource that apro or TRYVIO gets to the patients and are willing to put the effort to make sure that TRYVIO can reach the most patients, but they also need to make sure that it fits with their programs given that it's commercial stage. A lot of the -- sort of the sweet spot for most deals is kind of a little bit before Phase 3 or at this derisking stage where they can prepare the market. And so I think right now, we're just in a peculiar stage with TRYVIO, but we are actively engaged in a range of conversations. I think one last point to make is that the sort of complicated U.S. drug pricing system and its implications for internationally are also impacting. And so that's why I think we are exploring both global as well as regional partnership. We have 2 different labels, 2 different brands, 2 doses for TRYVIO/JERAYGO, and I think that gives us the flexibility to really pursue regional opportunities. And so that's also kind of evolved our focus on the partnership discussion. Operator: Dear speakers, please be advised there are no further questions for today. And I would now like to hand the conference over to the management team for any closing remarks. Srishti Gupta: Well, thank you, everyone, for the time today. We will have our first quarter results on April 28. And together with some of the participation that we have in investor conferences on this side of the Atlantic as well as in the U.S., we hope to get the opportunity to speak to more of you in the near future. Thank you again for joining. And with that, we can close the lines. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
Operator: Greetings! Welcome to the Collegium Pharmaceutical, Inc. fourth quarter and full year 2025 earnings conference call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during this conference call, please press star zero on your telephone keypad. Please note, this conference call is being recorded. I will now turn the call over to Ian Karp, Head of Investor Relations at Collegium Pharmaceutical, Inc. Thank you. You may now begin. Ian Karp: Great, thanks. Welcome to Collegium Pharmaceutical, Inc.'s fourth quarter and full year 2025 earnings conference call. I am joined today by Vikram Karnani, our President and Chief Executive Officer, Colleen Tupper, our Chief Financial Officer, and Scott Dreyer, our Chief Commercial Officer. Before we begin today's call, we want to remind participants that none of the information presented today is intended to be promotional, and any forward-looking statements made today are made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995. You are cautioned that such forward-looking statements involve risks and uncertainties as detailed in the company's periodic reports filed with the Securities and Exchange Commission. Our future results may differ materially from our current expectations discussed today. Our earnings press release and this call will include discussion of certain non-GAAP information. You can find our earnings press release, including relevant non-GAAP reconciliations, on our corporate website. With that, I will now turn the call over to our President and CEO, Vikram Karnani. Vikram Karnani: Thank you, Ian. Good morning, everyone, thank you for joining our 4th quarter and full year 2025 earnings call. 2025 was a year of transformative growth for Collegium Pharmaceutical, Inc. We delivered robust financial results due to strong commercial execution and deployed capital strategically to support long-term value creation. Importantly, we made meaningful progress on our three strategic priorities, which include driving significant growth for Jornay PM, maximizing the durability of our pain portfolio, and strategically deploying capital to further enhance shareholder value. In the 4th quarter, we saw continued momentum for Jornay among prescribers and across our key patient populations, including pediatrics, adolescents, and adults. We were encouraged to see that once again, total Jornay prescribers reached an all-time high in the quarter, which is particularly impressive given that Jornay first launched more than 6 years ago. This growth was supported by a strong back-to-school season, which began in Q3, as well as the positive impact from recent sales and marketing investments made throughout the year. In parallel, our pain portfolio continued to drive significant revenues with meaningful year-over-year growth in the fourth quarter. The continued performance of our pain portfolio enabled us to achieve record levels of both full-year total revenues and adjusted EBITDA, while generating significant cash flows to fuel our capital deployment strategy. Our dedication to patients and the communities we serve drives us every day, and it is the foundation of our success. With our achievements comes a significant opportunity and responsibility to further support patients and give back to our communities. Yesterday, we published our 2025 ESG report, which highlights the various ways we demonstrate our ongoing commitment to doing good as we do well. I encourage you to view this report now available on our corporate website. I want to thank the entire Collegium Pharmaceutical, Inc. team for their enduring commitment to operating with integrity and empathy as we deliver on our strategic priorities and serve patients who are at the forefront of everything we do. In 2025, we achieved record top and bottom line results, growing full-year net revenues by 24% and adjusted EBITDA by 15%. Strong execution across the enterprise enabled us to achieve our annual financial guidance. In our first full year of Jornay PM ownership, we drove significant growth in both prescriptions and revenue. Jornay PM prescriptions grew by 20% year-over-year and generated $148.9 million in net revenue, up 48% compared to pro forma 2024 revenue. Our pain portfolio generated $631.7 million in 2025, up 6% year-over-year, with all three of our core pain medicines delivering full-year growth. The continued solid performance of our pain portfolio further reinforces our belief that these revenues will prove to be durable in the years ahead. In addition, we generated more than $329 million in cash from operations in 2025 and ended the year with over $386 million in cash, up approximately $224 million from the end of 2024. Our net leverage ratio is now less than 1 time, which was an ambitious target we set for ourselves earlier in 2025. Finally, we made great progress executing our capital deployment strategy. In December, we announced the closing of a $980 million syndicated credit facility, which significantly improves our interest rate and debt terms and provides additional flexibility as we continue to seek opportunities to expand and diversify our portfolio through BD. The successful closing of our first syndicated credit facility reflects the strength of our financial outlook and demonstrates our commitment to maintaining a strong balance sheet. Earlier in the year, we repurchased $25 million in shares through our share repurchase program, reinforcing the importance of repurchases as an important component of our capital deployment strategy. Turning now to recent corporate updates. In keeping with our strategy of maximizing the life cycle of our pain portfolio and ensuring our medicines remain accessible to patients, in January, we announced supply and quality agreements with Hikma Pharmaceuticals in connection with our authorized generic agreement for Nucynta and Nucynta ER that was previously announced in 2024. This allows Hikma to launch authorized generics of the Nucynta products. Hikma recently launched an authorized generic of Nucynta and is expected to launch Nucynta ER in Q1 2026. Our AG agreement provides us with significant profit share, positioning us to maximize the value of the Nucynta franchise and compete effectively with third-party generics. We also continued to strengthen the clinical evidence supporting our portfolio, completing four real-world evidence studies for Jornay PM and three across our pain portfolio, generating meaningful new insights for healthcare professionals. We also supported investigator-initiated studies evaluating Jornay PM in adults and in patients with comorbid psychiatric conditions, helping to expand understanding in patient populations of growing clinical interest. As we enter 2026, we remain focused on our top three priorities mentioned before, with the ultimate goal of improving the lives of patients and driving near and long-term value creation for our shareholders. First, we will build upon the progress we made in driving growth for Jornay. In 2025, we accelerated Jornay's growth trajectory, delivering 20% growth in prescriptions and 48% growth in net revenue compared to pro forma 2024. As expected, we are starting to see the tangible benefits from the sales and marketing investments we made in 2025 to raise awareness of Jornay. These efforts included expanding our ADHD sales force and launching new commercial initiatives, which we expect will continue to drive momentum throughout 2026. As reflected in our 2026 guidance, we expect Jornay revenue of $190 million-$200 million, representing more than 30% annual growth. Second, we will continue to maximize the durability of our pain portfolio. In 2025, our pain medicines delivered 6% growth in revenues and generated robust cash flows that enable us to further invest in our business and support our capital deployment strategy. Third, we remain committed to disciplined capital deployment. Our approach balances portfolio expansion and diversification through business development, debt repayment, and opportunistic share re-repurchases. Our new syndicated credit facility provides additional flexibility to further drive long-term value creation as we work to expand and diversify our portfolio of differentiated medicines. With our proven history of delivering results, we are well positioned for near and long-term growth in 2026 and beyond. Our pain portfolio provides a strong financial foundation from which we continue to invest in our business. That foundation is bolstered by Jornay, a differentiated medicine with headroom for further meaningful growth, and that provides an anchor in neuropsychiatry and pediatrics from which we can continue to expand our portfolio. Our track record of successful business development, including our proven ability to rapidly integrate and invest behind newly acquired assets, provides a pathway for long-term value creation. With that, I will now turn it over to Scott to discuss commercial highlights. Scott Dreyer: Thanks, Vikram. Good morning, everyone. Jornay PM continued to perform well in the fourth quarter as we leveraged the momentum created in the third quarter and maximized the opportunity during back-to-school season. During the fourth quarter, we grew prescriptions, prescribers, and market share. Backed by strong brand differentiation and HCP perceptions, coupled with the growth trajectories just mentioned and our ongoing commercial investments, we are well positioned to drive additional growth for Jornay again this year. Jornay is a highly differentiated medicine and the only ADHD stimulant with once-daily evening dosing that provides symptom control upon awakening, through the afternoon, and into the evening. Many patients, including pediatrics, adolescents, and adults, report challenges starting their day, which is an area of key differentiation for Jornay as it begins working when patients wake up in the morning. In addition to efficacy upon awakening, symptom control throughout the day is important for most patients because it can eliminate the need for an additional booster at school or work. Jornay delivers efficacy that lasts throughout the day. HCP perceptions of Jornay continue to be highly positive. In market research, healthcare professionals rated Jornay as the number one ADHD brand in terms of product differentiation, with a score that was more than double that of all other medicines in the same category. In addition, over 60% of HCPs indicated a strong intent to increase prescribing, which was the highest among all other branded ADHD medicines. We also know that if a patient or caregiver specifically asks to try Jornay, physicians typically honor that request. Our commercial team remains focused on increasing awareness of Jornay's unique and differentiated profile to further drive utilization. We see opportunities to drive additional growth moving forward. In addition to raising awareness among HCPs, caregivers, and patients, other opportunities include initiatives to extend persistency and actions to further penetrate the adult market. Jornay was the fastest-growing stimulant for the treatment of ADHD in the fourth quarter and full year 2025, delivering record prescriptions in both the quarter and the year. In the fourth quarter, over 200,000 prescriptions were written, up 16% year-over-year, and over 760,000 prescriptions were written in 2025, up 20% year-over-year. This performance reflects strong commercial execution throughout the year, including the critical back-to-school season, as well as early impact from the new sales and marketing investments we made in 2025. Our expanded ADHD sales force and new marketing campaigns were strategically in place ahead of the back-to-school season to maximize the opportunity during this time. We continue to see their impact on prescriptions extending into the fourth quarter. In December, average weekly prescriptions were up to approximately 16,600, compared to 13,800 in July, an increase of 20%. We are excited to see that this momentum continued into January, with average weekly prescriptions of approximately 16,800, which was particularly encouraging given the typical Q1 dynamics, where there is seasonal pressure on volume due to annual deductible resets and higher out-of-pocket costs for patients. We expect strong prescription growth in 2026 as we continue to realize the full year benefit of our expanded sales force and marketing campaigns. Jornay's broad prescriber base also continued to grow, reaching an all-time high of over 29,000 in the fourth quarter, up 21% year-over-year. Not only are we seeing growth in new prescribers, but the depth of prescribing also increased throughout 2025, particularly with our targeted physicians. Jornay's market share of the long-acting branded methylphenidate market grew to nearly 26% in the fourth quarter, up 6.5 percentage points year-over-year. Importantly, we saw growth across both patient segments of our business, pediatrics and adults. In the fourth quarter, the pediatric and adolescent segment, which represents about 80% of total prescriptions, grew 14% year-over-year. The adult segment, which represents about 20% of prescriptions, grew 24% year-over-year. We see additional opportunity in the adult market, including raising awareness among HCPs that their adult patients' unmet need for efficacy upon awakening is greater than they think. We remain focused on driving significant growth in Jornay by raising awareness and maintaining broad patient access. In 2025, we made targeted investments to increase awareness and adoption with an expanded set of prescribers and to raise caregiver and patient awareness, so they ask their healthcare provider about Jornay. Our expanded sales team is targeting approximately 21,000 prescribers, up from 17,000 prior to the expansion. Importantly, they are also increasing frequency of interactions with key healthcare providers. As we end 2025, the majority of targets we added as part of the expansion have written a prescription for Jornay, and their depth of prescribing increased by the end of the year. Building on our efforts from last year, we continue to launch new marketing campaigns aimed at raising awareness of Jornay among healthcare providers, patients, and caregivers. Our non-personal marketing efforts include a comprehensive and broad campaign that surrounds healthcare providers via web and social media content, supporting the efforts of our sales force to drive awareness of Jornay's differentiated profile. During the back-to-school season, spanning Q3 and Q4, we increased our investment in these critical non-personal promotional programs, reaching an additional 50,000 ADHD prescribers who fall outside of the sales force targeting efforts. In total, our digital marketing actions target approximately 70,000 healthcare providers. We made significant and increased investment in digital marketing to activate adult patients and caregivers during the back-to-school season, as we know that their requests are one of the largest driving forces behind new prescriptions. We also focused on maintaining broad payer access for Jornay. We are pleased to share that we have secured new formulary access under a major commercial healthcare plan, which will be effective May first, increasing Jornay's coverage by an estimated 4.5 million covered lives. Turning now to our pain portfolio. Collegium Pharmaceutical, Inc. is the leader in responsible pain management, with a unique and differentiated portfolio of medicines, Belbuca, Xtampza ER, and the Nucynta franchise, which collectively represent approximately half of the branded ER market. Our pain portfolio is highly differentiated with strong brand fundamentals. Belbuca remains the only long-acting opioid medicine that uses buprenorphine buccal film technology. In market research, it was ranked as the number one branded ER opioid in terms of differentiation and favorability. Similarly, Xtampza, the only extended-release oxycodone medicine that uses our proprietary best-in-class abuse-deterrent technology, DETERx, was ranked as the number one ER oxycodone medicine in terms of differentiation and favorability. In the fourth quarter and full year 2025, we delivered strong performance in our pain portfolio, which continues to fuel the financial strength of our business. We grew combined revenues from our pain portfolio on a quarterly and full year basis, both up mid-single digits, and prescription performance was in line with our expectations, reinforcing our belief that the life cycle of these medicines may prove to be longer and more robust than is currently appreciated in the market. Average weekly prescriptions for both Belbuca and Xtampza were particularly strong in October through December, generating positive momentum as we enter this year. Additionally, we continue to see a large, and in the case of Belbuca, growing prescriber base, despite these brands being later in the life cycle, further supporting our expectation of durability for both brands. We have said before, we remain committed to maximizing the revenue from our pain portfolio while maintaining broad payer coverage. A reminder, we expect both our ADHD and pain portfolios to be impacted by the typical first quarter dynamics, when there is seasonal pressure on volume and gross to nets due to annual deductible resets and higher out-of-pocket costs for patients. This is in line with our expectations and reflected on our 2026 financial guidance. We enter 2026 from a position of strength as we remain focused on advancing our priorities for the year. We delivered another year of strong performance in 2025 across the entire portfolio. I am proud of our commercial team's execution, which set us up to enter 2026 in a position of strength as we remain focused on advancing our priorities of growing Jornay and maximizing the pain portfolio. I will now hand the call over to Colleen to discuss financial highlights. Colleen Tupper: Thanks, Scott. Good morning, everyone. I am pleased to share that we have delivered another year of robust financial results and achieved our 2025 financial guidance. This accomplishment is a testament to the operational execution and financial discipline across our organization. Full year 2025 net revenues were a record $780.6 million, up 24% year-over-year, and adjusted EBITDA was a record $460.5 million, up 15% year-over-year. We also generated robust operating cash flows of $329.3 million and ended the year with $386.7 million in cash equivalents and marketable securities. Additional financial highlights for the fourth quarter and full year of 2025 include: total net product revenues were $205.4 million in the quarter, up 13% year-over-year, and a record $780.6 million in 2025, up 24% year-over-year. Jornay PM net revenue was $45.9 million in the quarter, up 57% year-over-year, and $148.9 million in 2025, up 48% year-over-year, compared to pro forma 2024 revenue. Belbuca net revenue was $59.1 million in the quarter, up 7% year-over-year, and $221.7 million in 2025, up 5% year-over-year. Xtampza ER net revenue was $48.6 million in the quarter, down 6% year-over-year, and $199.3 million in 2025, up 4% year-over-year. Nucynta franchise net revenue was $47.9 million in the quarter, up 15% year-over-year, and $196.3 million in 2025, up 11% year-over-year. Revenue from the Nucynta franchise increased year-over-year, primarily due to profitability improvements from managing gross to nets, consistent with our payer strategy. GAAP operating expenses were $67.6 million in the quarter, up 12% year-over-year, and $283.6 million in 2025, up 37% year-over-year. Non-GAAP adjusted operating expenses were $57.5 million in the quarter, up 13% year-over-year, and $237.3 million in 2025, up 58% year-over-year. The increase in operating expenses in 2025 reflects ongoing costs to commercialize Jornay, as well as the targeted investments we made to drive future growth, including the expansion of our sales force and new marketing campaigns. GAAP net income was $17 million in the quarter, up 36% year-over-year, and $62.9 million in 2025, down 9% year-over-year. Note that GAAP net income in the quarter and full year was impacted by a one-time loss on extinguishment of debt of approximately $16 million, related to the extinguishing of our prior debt and refinancing with our new syndicated credit facility. Non-GAAP adjusted EBITDA was $127.3 million in the quarter, up 18% year-over-year, and a record $460.5 million in 2025, up 15% year-over-year. GAAP earnings per share was $0.54 basic and $0.46 diluted in the quarter, compared to $0.39 basic and $0.36 diluted in the prior year quarter. For the full year, GAAP earnings per share was $1.98 basic and $1.73 diluted, compared to $2.14 basic and $1.86 diluted in the prior year. Non-GAAP adjusted earnings per share was $2.04 in the quarter, compared to $1.77 in the prior year quarter. For the full year, non-GAAP adjusted earnings per share was $7.42, compared to $6.45 in the prior year. Please see our press release issued earlier today for a reconciliation of GAAP to non-GAAP results. As of December 31, 2025, we had $386.7 million in cash equivalents and marketable securities, up $223.9 million from the end of 2024. We ended the year with net debt to adjusted EBITDA leverage of less than 1 time. We are reaffirming the 2026 financial guidance that was issued in January. We expect total product revenues in the range of $805 million-$825 million. This represents a 4% increase year-over-year, driven by Jornay growth and durable revenues from our pain portfolio. Our revenue guidance reflects an estimated impact of our authorized generic agreement with Hikma. Our agreement with Hikma provides us with significant profit share, positioning us to maximize the value of the Nucynta franchise and compete effectively with third-party generics. Consistent with prior years and typical first quarter dynamics that impact our industry, we expect a modest quarter-over-quarter decline in revenues in the first quarter of 2026 due to annual deductible resets that increase out-of-pocket costs for patients. We expect Jornay revenue to be in the range of $190 million-$200 million, a 31% increase year-over-year. We ended 2025 with Jornay full-year gross to nets of about 64%. We expect gross to nets in 2026 to remain stable in the mid 60% range. As a reminder, gross to nets tend to fluctuate on a quarterly basis, and we expect gross to nets to be highest in the first quarter and higher in the first half of the year compared to the second half, due to typical seasonal dynamics. We expect adjusted EBITDA in the range of $455 million-$475 million, up 1% year-over-year. We remain committed to creating value for our shareholders through disciplined capital deployment. Our capital deployment strategy balances expansion and diversification through business development, debt repayment, and opportunistic share repurchases. As Vikram mentioned, we remain actively engaged in evaluating opportunities to further expand and diversify our portfolio through business development, which I will elaborate on in a moment. In December, we announced the successful closing of our first syndicated credit facility, underscoring the strength of our financial outlook. The $980 million credit facility will mature in 2030 and consists of a $580 million initial term loan, a $300 million delayed draw term loan, and a $100 million revolving credit facility. The initial term loan was used to repay the $581 million balance of our previous $646 million term loan, with the delayed draw term loan and revolving credit facility both currently undrawn. Our new credit facility significantly improves our interest rate and debt terms, which is expected to result in meaningful annualized interest savings. The credit facility also provides additional capital that can be used to fund future business development opportunities to drive long-term value for shareholders. In 2025, we returned $25 million of value to shareholders through an accelerated share repurchase program. We have $150 million remaining in our current board-authorized repurchase program, which can be leveraged through December 31, 2026. We remain disciplined in our approach to business development and continue to evaluate assets that are commercial or near commercial, with cost-efficient sales and marketing requirements and exclusivity into the 2030s and beyond. We are focused on therapeutic areas where we can leverage our expertise and established infrastructure, including neuropsychiatry, pediatrics, and pain, while also remaining open to other specialty indications or rare diseases that are cost efficient, assuming they offer a compelling path to building a franchise. I am confident in our ability to build upon this track record when the right opportunity arises. I will now turn the call back to Vikram. Vikram Karnani: Thank you, Colleen. 2025 was a year of strong execution for Collegium Pharmaceutical, Inc., in which we achieved our financial commitments and delivered on our strategic priorities. We enter 2026 with great momentum and a clear focus on driving further growth for Jornay PM, maximizing the durability of our pain portfolio, and strategically deploying capital. These priorities position us to create long-term value for our shareholders as we build a leading, diversified biopharmaceutical company committed to improving the lives of patients living with serious medical conditions. I will now open up the call for questions. Operator? Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question at this time, you may press star one from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, for our first question. Thank you. The first question is from the line of Les Sulewski with Truist. Please proceed with your questions. Jeevan Larson: Hey, this is Jeevan on for Les. Thanks for taking our questions. What assumptions underlie 2026 Jornay guidance, and how should we think about factors that could lead to upside? Have there been any competitive developments in the space that could impact Jornay demand? Thank you. Vikram Karnani: Thanks for the question, Jeevan. I think, if I understood your question, you were asking what assumptions drive the 2026 guide for Jornay. As we said before in our prepared remarks, we expect that growth to be driven by demand growth, as we expect relative stability in gross to nets between 2025 and 2026. If you do not mind repeating your second question, that would be helpful. Jeevan Larson: Yeah, sure. Have there been any competitor developments in the ADHD market that could potentially impact Jornay demand? Vikram Karnani: We monitor all the typical competitive dynamics in the market. We assess future launches that might be coming into this space. To date, we do not see much material change, both in the forms of current dynamics or in future launches that could impact Jornay demand. As a reminder, Jornay remains one of the only differentiated medicines in this space, specifically because of our proprietary delivery technology, which makes meaningful impact for patients, particularly those that are dealing with morning challenges. We do not expect that to be impacted anytime in the future. Operator: Thank you. Our next question is from the line of Brandon Folkes with H.C. Wainwright. Please proceed with your question. Brandon Folkes: Hi, thanks for taking my questions, and congrats on all the progress. Maybe just two from me. I know you have not given a peak sales range for Jornay, but can you help us frame how you are thinking about the ramp to peak? Are you thinking about a three- to five-year ramp to peak in your hands? Secondly, within Nucynta AG in the market, how promotionally sensitive is Belbuca and Xtampza at this stage of their life cycle? How do you think about the commercial infrastructure behind those products today versus perhaps if a generic came to market on either one of those? What is your hurdle to pull back on investment there? Thank you. Vikram Karnani: Thanks for the question, Brandon. I will take the Jornay PM peak sales question, and then we will have Scott address the Nucynta question. You are right. We have not previously talked about Jornay PM peak sales, primarily because we have, as I said before, continued to invest in sales and marketing activities for Jornay PM. As a reminder, we expanded the sales team from 125 to 180 sales reps back in April last year, and we also said that it takes about 6 to 9 months before you can truly start to see the impact of the expansion. We are right in that timeframe right now, where we are starting to see the impact of the expanded team, and we expect that to continue throughout 2026. I think once we have a better sense of what the impact of these commercial investments tends to be, we will have a much better sense, both of the peak opportunity as well as what that ramp looks like. We look forward to keeping you updated on what Jornay looks like, both in terms of the peak and how fast we can get there. Now, on the Nucynta question, I will turn it over to Scott and Colleen to weigh in. Scott Dreyer: I will start, Brandon. I think your first thing was, as Nucynta AG is here, how does that help us think about the sales force and is Belbuca and Xtampza promotionally sensitive? They are definitely mutually exclusive. Nucynta, later in life cycle, light promotional sensitivity. Belbuca and Xtampza, high promotional sensitivity. It is a different situation. It is not one where it is competitive, so to speak, versus other sales forces, but it is a highly complex marketplace. Our sales representatives are helping the offices navigate the payer environment and continue to change behavior. Definitely promotionally sensitive. We need our team, and just as a reminder, it is highly efficient. We have 100 in that sales organization that are supporting that $600 million plus revenue. We think we are in a good spot there. Colleen Tupper: Yeah, Brandon, I will just add on, as we have said previously, particularly our field forces, as Scott just mentioned, are focused on Xtampza and Belbuca, and we will invest through any of those potential LOE dates because of the uncertainty. In the event an event were to occur, we can pivot pretty quickly, and we have the ability to moderate investment there, and that is how we would approach that. I might just come back and remind you on Jornay PM that the LOE for is our base case IP is out to 2032, and given its differentiation, as you think about longevity, you should be thinking about that date. Brandon Folkes: Great. Thank you very much. Operator: Thank you. As a reminder, to ask a question today, you may press star one. The next question is from the line of David Amsellem with Piper Sandler. Please just proceed with your questions. David Amsellem: Hey, thanks. Just a couple from me. One, on capital deployment. Vikram, I know you have talked about rare diseases in the past and certainly given your background. I am wondering how you are thinking about it in terms of acquiring a rare disease-focused asset that is on the market and using that as a beachhead off of which you can add more rare disease assets, where you would leverage a patient services and a reimbursement hub. I know that is something that obviously you have a lot of experience with, but is that something you are thinking about, or are you leaning more into your existing therapeutic areas of expertise, like psychiatry? That is number one. Secondly, just talk more generally about the Jornay sales force. There is always room to expand. ADHD is, of course, a big market, but how are you thinking about right-sizing of the sales force, or potential for more expansion down the road, whether it is this year or next year? Thanks. Vikram Karnani: Thanks, David. On capital deployment, I think I will remind everyone that our capital deployment, particularly from a BD standpoint, as we have said before, the types of assets we are looking at are commercial or near commercial, primarily U.S.-based, that have LOEs into the 2030s and beyond. In an ideal world, we can get these assets in the areas where we have already made a significant commercial investment. If you think about psychiatry and pediatrics, where with the Jornay PM sales force, we already call on a significant number of prescribers. That would be ideal so we can get significant operating leverage... We have also said before that we are open to other potential areas, but they do need to be more capital efficient. As you have rightly identified, rare disease tends to be one of those areas where you can be a bit more TA agnostic, but you can build a franchise that creates operating leverage from creating a significant commercialization approach. One of them is the backbone of patient services, reimbursement hub, et cetera. As we have spoken before, both of those areas are attractive to us as we think about how we build our portfolio out for the future. In terms of the Jornay PM sales force expansion, I think what we previously said still holds true. When we expanded to 180 reps back in April, we did that because we believed that, given the number of prescribers, given what the prescribing behavior looks like and what the various deciles look like, we believed that 180 was the right number, and so we believe we are right-sized. Of course, if down the road we feel that we need to expand more, because we are only limiting our growth ourselves, then we will absolutely revisit that. At this point in time, we believe 180 is the right number, and we look forward to seeing the momentum we are going to drive this year. David Amsellem: Okay. That is helpful. Thank you. Vikram Karnani: Thank you. Operator: Thank you. At this time, I will turn the floor back to Vikram for closing comments. Vikram Karnani: Thank you, everyone, for joining our call. Wish you a great rest of the day. Operator: Thank you. This will conclude today's conference. You may disconnect your lines at this time. We thank you for your participation. Have a wonderful day.
Operator: Welcome to GigaCloud Technology Inc.'s fourth quarter and full year 2025 earnings conference call. Joining us today from GigaCloud Technology Inc. are the company's Founder and Chief Executive Officer, Larry Wu, its President, Iman Schrock, and its Chief Financial Officer, Erica Wei. Larry will provide opening remarks, Iman will discuss the company's operational progress, and Erica will review financial results. After that, we will open the call to questions. As a reminder, this conference call contains statements about future events and expectations that are forward-looking in nature. Actual results may differ materially. Additionally, today's call will include a discussion of non-GAAP measures within the meaning of SEC Regulation G. When required, a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures, calculated and presented in accordance with GAAP, can be found in the press release issued today by GigaCloud Technology Inc., which is posted on the company's website. I would now like to turn the call over to Larry Wu. Please go ahead, sir. Larry Wu: Thank you, Operator, and good morning, everyone. 2025 marked a defining chapter for us: record revenue, record EPS, and a level of performance that underscores not only the strength of our model, but also our resilience and adaptability when facing challenges. In a year when the macro backdrop was anything but predictable, our agility and operational discipline powered strong double-digit growth and positioned us to accelerate even further. From the beginning, we understood the importance of building new growth vectors for sustainable long-term value creation; that strategy continues to pay off. We have expanded our geographic reach, scaled our marketplace, and strengthened our platform through targeted acquisitions. In doing so, we have built not just a thriving company, but an ecosystem designed to lead the next phase of growth. Our acquisition of Noble House is a great example of how we are building our growth vectors into businesses and how those vectors are already driving momentum. In under two years, we took a bankrupt company to a profitable and growing portfolio. Our work took discipline and patience. We broadened our product line, expanded our channel reach, and enhanced our operational efficiency. More importantly, we built a repeatable playbook for M&A integration that sets us up for long-term success. Now we are applying the same playbook to our new acquisition, New Classic Home Furnishing. This move positions us to serve every corner of our industry with even greater depth and capability. Iman and Erica will get into the details shortly, but the headline is simple: We are genuinely excited about the value New Classic unlocks for our marketplace, our partners, and our shareholders. Our success in Europe is another clear validation of this approach, and it reflects the value of long-term strategic positioning. With 68% revenue growth from 2024 to 2025, we expanded our presence in a measured, strategic way, extending the reach of our marketplace and giving our buyers and sellers around the world a more efficient way to transact. Our performance has also given us the financial flexibility to be disciplined with our capital. Investing in growth where we see the highest-conviction opportunities while continuing to return capital through ongoing share repurchases is a core part of how we create durable value. We feel confident in what we have built and where we are headed. We believe this is a business that can perform across cycles, supported by strong execution, a portfolio of durable growth vectors, and disciplined capital management. Now, I would like to turn the call over to Iman for a discussion of our continued progress. Iman Schrock: Thank you, Larry. Hello, everybody. Our marketplace continues to deliver impressive momentum, posting another period of substantial growth. Over the trailing 12 months ended December 31, 2025, marketplace GMV increased approximately 18%, reaching a record of nearly $1.6 billion. Sellers continue to join our marketplace at a strong pace, with our 3P seller base expanding 17% year-over-year on a trailing 12-month basis, reaching 1,299 as of December 31. More encouragingly, GMV from this base grew by 23% to $851 million, as our sellers continued to find success on the marketplace. We added nearly 2,800 new buyers in 2025 on a net basis, bringing our total buyer base to 12,089. By increasing efficiencies and lowering transaction risk, our marketplace is an even more compelling solution for participants looking to operate confidently in a volatile global environment. While global macro trends and policy shifts remain outside of our control, we can and do control the flexibility and responsiveness of our model. We operate with the expectation that conditions will change, and we are structured to adapt quickly. Europe is a clear example. Our focus on Europe as a key growth vector continues to deliver. By shifting more resources and focus to Europe, in light of softness in the U.S. market, we drove tangible results. Europe delivered 68% revenue growth on an annual basis, a key contributor to our double-digit global growth for the full year. This is exactly the kind of agility we built into our model: the ability to identify where growth is happening and redeploy resources accordingly. To build on this momentum, we strengthened our marketplace operations and expanded our infrastructure to seven facilities in Europe. We are building a truly global business. Europe proves that our model travels and that the growth vectors we planted years ago are now delivering. For us, that is the value of long-term strategic positioning: placing disciplined bets, giving them time, and letting the results speak. This is not just about geography. We are applying the same lens across the business, broadening our product offerings, and strengthening our distribution channels. With that in mind, I would like to share an update on Noble House and provide additional context on our more recent acquisition of New Classic. It has been two years since our acquisition of Noble House in Q4 of 2023, and I would like to take a moment to look back on how far we have come. We acquired Noble House out of bankruptcy, a business that was losing close to $40 million a year. We began leaning on GigaCloud Technology Inc.'s superior marketplace model and operational expertise to trim fat and streamline the business. From there, we executed a complete overhaul of Noble House's portfolio offerings, rationalizing SKUs to focus on what works. The process took patience and discipline, and the results speak for themselves. The Noble House portfolio turned to profitability during the earlier half of 2025 and returned to growth in the third quarter of this year. I am pleased to share that we have stabilized the portfolio as of Q4 2025, slightly ahead of our original goal of Q2 2026. Moving forward, we expect to continue refreshing the portfolio through a disciplined cadence of regular new SKU introductions and selective rationalizations, consistent with how a healthy portfolio evolves rather than the comprehensive overhaul we executed in 2025. As of today, all elements of operations for the Noble House portfolio have been fully integrated into GigaCloud Technology Inc. On a go-forward basis, legacy Noble House will be managed as part of GigaCloud Technology Inc.'s larger, growing portfolio. Given the completion of our integration efforts, we do not plan on providing portfolio-specific updates in future calls. The acquisition and integration of Noble House brought us new product capabilities, especially in the outdoor space, as well as wider and deeper distribution channels. It also reinforced what is possible when we apply patience, discipline, and the full weight of our operational expertise and the marketplace model, even in challenging conditions. With our acquisition of New Classic, we see a similar opportunity. On January 1 of this year, we completed the acquisition of New Classic, funded with $18 million cash on hand. The acquisition broadens our product offerings and strategically deepens our foothold in brick-and-mortar distribution, an area where we see meaningful growth potential. We are eager to get to work, apply the same disciplined approach, and capture the value we know is there. On the integration front, we are off to a strong start. The New Classic team brings deep expertise and relationships in the brick-and-mortar space, and we have been working closely to ensure a smooth transition. Similar to Noble House, New Classic will be integrated directly into GigaCloud Technology Inc. rather than being run as a distinct subsidiary. Our focus is on preserving New Classic's strong distribution channels and relationships while thoughtfully layering in GigaCloud Technology Inc.'s marketplace model and operational capabilities with a target integration period of six quarters. We are excited about the growth potential that will come from combining New Classic and GigaCloud Technology Inc. On the revenue side, we see two clear and immediate opportunities. First, we will leverage GigaCloud Technology Inc.'s vast nationwide fulfillment network to expand New Classic's geographic reach, moving beyond the constraints of its current two-facility footprint. Second, we plan to leverage GigaCloud Technology Inc.'s deep supply chain routes and new product development capabilities to widen New Classic's assortment, driving increased volume through its brick-and-mortar channels. We are energized by what lies ahead. Our team is focused on executing with patience and precision, and we believe we are well positioned for the future. With that, I will turn things over to Erica for a discussion of our fourth quarter financial results. Erica Wei: Thank you, Iman, and hello, everybody. A quick note before we get into our results: All figures I cover today are rounded, and unless otherwise noted, comparisons are against the same period last year. Now, let us take a look at our results. We delivered strong fourth quarter and full year results, breaking several records. Fourth quarter revenue was $363 million, up 23% against the prior-year quarter, and full year revenue rose 11% to $1.3 billion. Quarterly diluted EPS grew 37% on a quarterly basis to $1.04 per share, and full year diluted EPS increased 18% to $3.59 per share. Now, let us dig in a bit deeper, starting with service revenue. Service revenue increased 21% year-over-year to $129 million for the fourth quarter. Growth was driven by strong demand from our marketplace participants, including higher last-mile activity, along with higher packaging service revenue and commissions, reflecting larger transaction volumes and increased use of our fulfillment services. These gains were partially offset by a decline in ocean service revenue, resulting from ocean spot rates being meaningfully lower in Q4 2025 than they were in Q4 2024 due to softer overall demand for ocean shipping after Liberation Day across the broader economy. Q4 service margin declined by three percentage points sequentially to 6%, primarily due to cost increases related to peak-season ground fulfillment surcharges, as expected during the holiday season and similar to prior years. Service margin also saw modest sequential pressure from the lower ocean spot rates. Turning to product revenue, product revenue increased by 24% year-over-year in the fourth quarter to $234 million, driven by growth across all operational regions. Breaking that down further, U.S. product revenue totaled $121 million, up 3% year-over-year against a challenging backdrop. We continue to remain disciplined in the current volatile environment, prioritizing profitable revenue over empty volume that does not translate into earnings. Consistent with this approach, we had intentionally paced top-line revenue for the Noble House portfolio earlier this year as we rationalized SKUs to protect bottom-line integrity. I am pleased to share that our efforts are paying off. The Noble House portfolio saw over 40% year-over-year growth on a quarterly basis in Q4, driven by new products and SKUs introduced this year. We are encouraged by the results of our turnaround efforts and are optimistic about the portfolio's future. As Iman mentioned earlier, given the portfolio's full integration, this will be our last standalone update on the Noble House portfolio. Europe product revenue continued to be a strong contributor. Product revenue for the region increased by 64% year-over-year to $98 million total. Product margins increased 220 basis points sequentially to 32.1%. The expansion was driven by several factors, including targeted pricing actions aimed at capitalizing on strong fourth quarter demand, growth in off-platform sales, which typically carry higher gross margins to offset higher selling expenses, as well as benefits from lowered ocean shipping costs. While declining ocean spot rates can negatively impact service margins, they also translate to cost reduction on the product front, supporting product margin expansion. Combining the above, total gross margin for the quarter was 22.9%. Diving into our expense categories, sales and marketing costs for the fourth quarter totaled $29 million and represented 8% of total revenue, compared with 6% for last year's fourth quarter. The increase was due to higher channel-related advertising spend and staffing costs associated with our European expansion. G&A was $11 million, or 3% of total revenue, down from 6% last year due to increased warehouse utilization rates and lower stock-based compensation and administrative compensation compared with the prior-year quarter. Combined, net income margin for the fourth quarter was 10.6%, and net income was $38.5 million, a 24% increase from the prior-year quarter. Our net income growth was further amplified by share buybacks, translating to a 37% year-over-year increase in diluted quarterly EPS to $1.04. We generated $64 million in operating cash flows during Q4, ending the quarter and year with total liquidity, which includes cash equivalents, restricted cash, and short-term investments, of $417 million. We remain debt-free. Our capital allocation plans remain consistent as previously communicated: strategic M&A on an opportunistic basis and returning capital to shareholders through ongoing buybacks. On the buyback front, since the announcement of our latest $111 million share repurchase program in August of 2025, we have executed $33 million in share buybacks at a weighted average price of $31.60 per share, representing 30% of the approved plan. Finishing up with our first quarter outlook, revenue is expected to be between $330 million and $355 million. Operator, we are now ready to begin the Q&A session. Operator: We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw, please press star and then two. Our first question comes from Ryan Meyers with Lake Street Capital Markets. Please go ahead. Ryan Meyers: Hey, guys. Thanks for taking my questions, and congratulations on the strong results and the strong quarter. First question for me: thinking about where revenue ended up coming in well ahead of guidance that you previously gave, what were the sources of upside? How should we think about that as a potential lead-in for what you gave for the second quarter guidance and then the range that you gave there? Erica Wei: Hey, Ryan. Thanks for the question. This is Erica. Yes, in Q4, our strongest drivers of year-over-year growth were, A, Europe, which we have seen very strong performance from for the last several quarters, and looking forward, we expect that to continue in the near future. Now, I do want to be clear, we do not expect the region to indefinitely grow at close to 70%. A year from now, we should see some gradual slowing down. The other big grower was Noble House. I think we have talked about this on previous calls several times. There was actually a decline in the first half of 2025 because we were doing a complete overhaul of the SKUs in that portfolio. What that meant exactly was we had, at the time, taken out a lot of the SKUs that were not performing as well, not quite as profitable as we would like them to be, and replaced them with new SKUs. There was a period where revenue was down, and Q3 and Q4 were when the new SKUs that we introduced really started kicking in, or the efforts started paying off, and we saw really quite strong growth of over 40% in Q4 of this year. Looking ahead to Q1, I would also expect strong contribution from that portfolio and, down the line, that will tend to taper off slowly as we become more and more stable. Ryan Meyers: Okay, makes sense. Gross margin, I think you briefly had called it out. It came down a little bit from last quarter but was up year-over-year. What were the main drivers of that? How should we think about the gross margin in the first quarter here? Erica Wei: For overall margin, you really do have to look at product and service separately. If we look at service first, the main driver, if we are looking at year-over-year, the biggest one is for sure ocean, right? We all know what happened there. Ever since April, overall demand for ocean services globally has been down, and I am not talking about GigaCloud Technology Inc. or even the furniture industry. I am talking about the broader economy. Spot rates are a lot lower than what they were in 2024. We actually moved more containers this year than last year, but because of the lowered price per unit, overall revenue and margin from that piece are down. If we look at it sequentially, usually we do see a bit of compression coming out of Q4 because of last-mile surcharges that our vendors charge, and these tend to go away around mid-January. Product-wise, we did see very strong performance. Europe was for sure our strongest region. Then, for all of our geographical regions, we also saw stronger or higher off-platform channel sales. Usually, those have higher gross margins because of the higher sales and advertising expenses that come with them. Does that answer your question, Ryan? Ryan Meyers: Nope, that does. That makes sense. Thank you. Erica Wei: Thank you. Operator: The next question comes from Joseph Gonzalez with Roth Capital Partners. Please go ahead. Joseph Gonzalez: Good morning, guys, and congratulations on another good quarter. This was already asked, but approaching it from a different angle, as we look to your 1Q sales outlook, is there any way you can break out service versus product here in growth? Also, any color on New Classic contributions as we look into 1Q? Erica Wei: Yes, thank you for the question. We do not really have a breakdown specifically for product and service, but overall, we do expect the trend—or kind of that they were growing at similar speeds this quarter—to continue for the coming quarter, and the guidance that was given does indeed include New Classic. For Q1, we expect revenue from that portfolio to be in the probably mid-teens. Joseph Gonzalez: Got it. Okay. Again, just looking as we look into 1Q, thoughts on service gross margin recovery. It looks like services came in at roughly 6%. I know you just answered that it is mainly coming from ocean spot rates. Any color as we are heading into 1Q in 2026 on gross margin expansion on that front? Erica Wei: Sequentially, I do expect a bit of recovery, mainly because of the change in last-mile costs. Usually between November and mid-January, we see increased costs from our vendors because of the holiday season and the very high volume. Once that goes away, in Q1, usually last-mile margins recover a bit, and then on top of that, we have also been conducting a little bit of pricing increases in Q1. Joseph Gonzalez: Okay, got it. Thank you. If I could just squeeze one more in here, any preliminary thoughts on ocean freight? I know we have seen compression in 2025. I just want to see what your preliminary thoughts are on service gross margin this year and how it may be impacted. Erica Wei: Great question. Unfortunately, I am not able to really predict the future when it comes to ocean spot rates. I really wish I could. With that said, what we are seeing at the moment is things seem to be pretty stable, and they are at a point that I would consider fairly low if we look back at the last two years. Joseph Gonzalez: All right. Got it. We will go ahead and take the rest offline. Thank you again. Erica Wei: Thank you. Operator: This concludes our question-and-answer session. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning. Welcome to Lantheus Holdings, Inc.'s fourth quarter and full year 2025 conference call. All lines have been placed on mute. This call is being recorded. A replay will be available in the Investors section of the company's website approximately two hours after the completion of the call, and will be archived for at least 30 days. I will now turn the call over to Mark Guarnieri, Vice President of Investor Relations. Mark? Mark Guarnieri: Thank you. Good morning. With me today are Mary Anne Heino, our CEO and Executive Chairperson, Amanda Morgan, our Chief Commercial Officer, and Bob Marshall, our CFO. We will begin with prepared remarks and then take your questions. This morning, we issued a press release, which was furnished to the SEC under Form 8-K, reporting our fourth quarter and full year 2025 results. The release and today's slide presentation are available on the Investors section of our website. Any comments could include forward-looking statements. Actual results may differ materially from these statements due to a variety of risks and uncertainties, which are detailed in our SEC filings. Discussions will also include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures is included in the Investors section of our website. I will now turn the call over to Mary Anne. Mary Anne Heino: Thank you, Mark, and good morning, everyone. It is a pleasure to be back with you as CEO at an important moment for the company. I want to start by recognizing Brian for his leadership and for ensuring a smooth transition. While my role as CEO will be interim as we complete the search for the next Lantheus Holdings, Inc. CEO, I am thrilled to be back in the operational leadership role with the same passion and commitment that those who work with me will remember. I have taken time to meet with shareholders over the past months and appreciate the ongoing opportunity to listen to your feedback. My intent is to seamlessly transition our strategy and the execution of that strategy to the incoming CEO. I will note, the board and I are successfully progressing our CEO search, and I am pleased with the candidates we have met thus far. Before I offer comments about our business achievements for 2025, I would first like to share that Lantheus Holdings, Inc. products helped impact the lives of approximately 7 million patients in 2025, underscoring the real-world importance of the work our teams do every day. Now, turning to the results, I would like to start by highlighting the important progress we made in 2025 to shape our strategic focus within the radiopharmaceutical industry. The decisive actions we took in 2025 include: We closed 2 complementary transactions that diversified and will accelerate our near-term revenue stream across our commercial radiodiagnostic portfolio. First, the acquisition of Neuraceq, our beta-amyloid-targeted PET radiodiagnostic, which now serves as the commercial cornerstone of our Alzheimer's disease portfolio. We are excited both about the growth potential of Neuraceq and the expanding amyloid PET imaging market. In 2026, we expect Neuraceq's growth will exceed that of the overall market. Second, our acquired product candidate OCTEVY, a neuroendocrine PET radiodiagnostic currently under FDA review. Upon approval, OCTEVY will enter the well-established gastroenteropancreatic, or GEP-NET, PET imaging market. This product fully complements our nuclear medicine customer base and allows us to broaden our offerings to the customers we already engage with for PYLARIFY and Neuraceq. In 2025, we also took meaningful steps to further build out the portfolio of radiodiagnostic products Lantheus Holdings, Inc. offers to the prostate cancer community. Our primary focus in 2025 was defending our leadership position in the PSMA PET imaging space with PYLARIFY, and we believe that position will serve as a key advantage as we prepare the market for our new formulation later this year. This past year, we also advanced Lantheus 2401, our Phase 3-ready gastrin-releasing peptide receptor, or GRPR, targeted radiodiagnostic for prostate cancer. GRPR is a biologically distinct target from PSMA. An estimated 15%-30% of prostate cancer patients do not express PSMA. Lantheus 2401 has the potential to complement PSMA PET imaging by identifying disease in patients who may be PSMA negative or equivocal, extending the addressable population while fitting within our existing prostate cancer franchise. With these acquisitions and the other activities accomplished to build out our pipeline, we believe that Lantheus Holdings, Inc. now has the broadest radiodiagnostic pipeline among our peers in the radiopharmaceutical space. Finally, we completed the divestiture of our legacy SPECT business on January 1, 2026. While the SPECT business was foundational to Lantheus Holdings, Inc.'s renowned reputation in nuclear medicine over many decades, our strategic intent is to prioritize investment in, and the commercialization of, innovative PET radiodiagnostics on a forward basis. Having narrowed our strategic focus to radiodiagnostics, we believe we can deliver sustainable and attractive revenue growth in the mid and long term. Looking ahead to 2026, we are fully focused on commercial execution and revenue generation with our current commercialized assets, as well as successfully advancing a number of approval milestones for our registrational stage products. Our top priority is to maintain and strengthen our leadership in PSMA PET by sustaining PYLARIFY volume growth while preparing the market for the launch of our new PSMA PET formulation. That transition will take place in the fourth quarter of 2026, with the material commercial impact of that launch beginning in 2027. In neurology, we are excited to drive momentum with Neuraceq through expansion of our PMF manufacturing network, as well as the opportunity of introducing Neuraceq to our existing nuclear medicine PYLARIFY customers. Neuraceq, as well as the radiodiagnostic products currently under FDA review, will be offered to our nuclear medicine customer base as part of a comprehensive portfolio of Lantheus Holdings, Inc. products in 2026 and beyond. We have the potential for multiple FDA approvals this year. The first, our new PSMA PET formulation, second, OCTEVY, third, PNT2003, our radioequivalent formulation of Lutathera for the treatment of gastroenteropancreatic neuroendocrine tumors or GEP-NET, and fourth, MK-6240, our tau-targeted PET radiodiagnostic. Assuming approval for each of these products, the commercialization plan will be thoroughly targeted to align with market and access readiness, an approach we believe underpinned our successful PYLARIFY launch. We are able to leverage our PMF network and commercial infrastructure, investing in line with the expected revenue growth opportunity of each product in 2027 and beyond. As I have already mentioned, our strategy and related investments going forward will focus on radiodiagnostics. As a result, we are optimizing our cost structure to match this focus, enabling us to deliver on the EPS targets we announced today, while leaving additional opportunity to further improve that profile in the future. We are selectively prioritizing first and best-in-class later-stage PET radiodiagnostic assets that complement our current commercialized portfolio and our nuclear medicine customer base. As part of this strategy, we have decided to pursue value-maximizing alternatives for the radiotherapeutic assets in our pipeline. Given the broad portfolio we have built to date, we do not anticipate pursuing any significant M&A activity in 2026, though we remain open to opportunistic tuck-in acquisitions of portfolio-aligned diagnostics. Our priority is to complete the integration of our recent transactions early in 2026 to fully capture their value. As I have outlined, 2026 will be a year of commercial execution and regulatory milestones as we focus our efforts and investments to serve our nuclear medicine customers. With strong mid-and long-term revenue drivers, a robust late-stage pipeline, and a clear strategic roadmap, we are confident in our ability to drive meaningful performance gains that support a compelling mid-and long-term outlook for our shareholders. Let me now hand over to Amanda, who will offer highlights on performance and commercial execution across our portfolio in oncology, neurology, and cardiology. She will then provide an update on our late-stage diagnostic pipeline. Amanda? Amanda Morgan: Thank you, Mary Anne. We are positioning the business for its continued growth by driving commercial readiness ahead of multiple upcoming launches, beginning with our new PSMA PET formulation. First, let us discuss our fourth quarter results and priorities for 2026. I will begin with PYLARIFY, our market-leading agent, which posted solid performance in the fourth quarter in a highly competitive market, with volume up approximately 4% year over year. Our continued successful commercial execution and pricing discipline were the drivers of this performance. Notably, the vast majority of our annual volume in 2025 came from long-standing accounts, demonstrating the resilience and commitment of our customer base and the clinical value of PYLARIFY. As a reminder, pricing concessions provided late in the second quarter of 2025 reset 340B pricing in the fourth quarter. Our best price, which determines what is offered as 340B pricing, was unchanged in the second half of 2025. There will be no further change to our 340B pricing in the first half of 2026. We believe we have the broadest end-to-end coverage of PSMA PET imaging value chain, delivering consistent availability, reliability, and dependability to our customers. This level of operational excellence is a clear source of competitive advantage. We will extend this proven capability across each product we launch into the radiodiagnostic market, with the intent to accelerate adoption and drive both mid and long-term growth. I will highlight performance of our commercialized Alzheimer's imaging product. Neuraceq contributed $31 million for the quarter, driven by strong commercial execution. In 2026, we will further support that execution with the onboarding of six additional PMF sites. We are excited about the potential of Neuraceq in Alzheimer's disease PET imaging market. As the already second-most utilized and fastest-growing beta-amyloid PET imaging agent, Neuraceq addresses a large and expanding opportunity. With more than 7 million people currently diagnosed with dementia in the U.S., demand for amyloid PET imaging is increasing, driven both by the adoption of Alzheimer's disease-modifying therapies, or DMTs, as well as by guideline expansion for diagnostic use earlier in the care pathway for patients with mild cognitive impairment and early Alzheimer's disease. Finally, DEFINITY remained a strong contributor to our overall performance and delivered over $85 million in the fourth quarter. 2026 marks DEFINITY's 25th year on the market, and it remains firmly positioned as the market leader with more than 80% share. Now turning to our promising late-stage pipeline. 2026 is a critical and exciting year for commercial launch preparedness for several of our registrational stage assets. Specific to radiodiagnostics, it is important to align investment and launch timing with market access and value chain readiness to optimally realize the commercial opportunity. We have 3 radiodiagnostic assets and one radioequivalent therapeutic with near-term regulatory approval timelines. First, our new PSMA PET formulation, with a PDUFA date of March 6, offers the same diagnostic properties of PYLARIFY with a similar safety and efficacy profile, while delivering manufacturing efficiencies that will immediately improve supply availability. As with any F-18 radiodiagnostic, launch timing and success depends on having broad PMF network in place, as our focus will be on supply continuity. A central tenet of our launch strategy is to ensure we have coding, transitional pass-through status, and broad payer coverage in place before commercial launch, thereby ensuring customers have access to and coverage for the new formulation. By leveraging our already established infrastructure and strong nuclear medicine customer relationships, our goal is to ensure the transition from PYLARIFY to our new formulation will be a seamless experience while providing what will be the only F-18-based product in the PSMA imaging category with transitional pass-through reimbursement. This approach, informed by our deep experience in radiodiagnostics, will be executed on a rolling regional basis in the fourth quarter of 2026, which will minimize risk during the commercial launch. We believe these actions position a new formulation for continuous, sustainable growth beginning in 2027. Second, OCTEVY, our gallium-based PET radiodiagnostic for NETs, with a PDUFA date of March 29, will support clinical decision-making in patients with neuroendocrine tumors. Assuming FDA approval, we will have the opportunity to launch OCTEVY as the only neuroendocrine PET radiodiagnostic with transitional pass-through reimbursement. As a gallium-based agent, OCTEVY will be offered through existing radiopharmacy networks, which Lantheus Holdings, Inc. has long-standing relationships with. Our team is eager to begin the launch process for both agents in the second half of this year, with the expectation that they will begin to have a material impact on our performance in 2027. Turning to PNT2003, our registrational stage radioequivalent therapeutic to Lutathera. We are awaiting FDA approval and anticipate a court ruling mid-year on our Hatch-Waxman litigation. PNT2003, like OCTEVY, will be a natural addition to the Lantheus Holdings, Inc. commercial portfolio of products offered to our nuclear medicine customer base, enabling portfolio leverage across this common customer. MK-6240, our registrational stage tau-targeted PET radiodiagnostic for Alzheimer's disease, currently represents an important asset within our biomarker solutions portfolio and is the leading imaging agent supporting late-stage Alzheimer's DMT development. It is currently the most widely used imaging agent in amyloid and tau-targeted therapeutic candidate clinical programs. MK-6240 currently serves as the imaging agent for treatment eligibility in 17 pharma-sponsored therapeutic programs. The PDUFA date for MK-6240 is August 13 of this year. Collectively, our registrational stage assets will deliver on our strategy to maintain and expand our leadership in innovative PET radiodiagnostics and drive sustainable mid and long-term growth. In 2026, our commercial priority is clear: maximize the value of our current product portfolio by navigating a competitive marketplace with discipline and executing upcoming launches with excellence. I will now turn the call over to Bob to provide more detail on our fourth quarter and full-year results and outlook. Bob? Robert J. Marshall: Thank you, Amanda, good morning, everyone. I will provide details of the fourth quarter and full year 2025 financials, focusing on adjusted results with comparisons to the prior year quarter, unless otherwise noted. Revenue for the fourth quarter was $406.8 million, an increase of 4%. Revenue for the full year was $1,541.6 million, an increase of 0.5%. Turning to the details, radiopharmaceutical oncology, currently comprised solely of PYLARIFY, generated fourth quarter revenue of $240.2 million, flat sequentially and down 9.7%. For the full year, PYLARIFY delivered $989.1 million, down 6.5% from the prior year period. The result was above expectation, with price and volume favorability as compared to our previous estimates. Precision Diagnostics delivered fourth quarter revenue of $143.2 million, representing a 22% increase. The category was driven by net sales of DEFINITY at $85.3 million, or 1% lower, due to the prior year competitor supply challenges, which drove higher than expected revenue during Q4 2024. For full year, results were $330.2 million, up 3.9%. Neuraceq delivered $31 million in the quarter and $51.4 million since the acquisition in late July. TechneLite and other SPECT revenue for the quarter was $26.9 million for the fourth quarter and $111.4 million for the full year. Strategic partnerships and other revenue was $23.3 million, up 203.3%, due to a strong quarter for MK-6240, as well as the recognition of a $6 million milestone receipt relating to an out-licensed asset. Full year revenue was $59.4 million, with MK-6240 contributing slightly less than half of that amount. Gross profit margin for the fourth quarter was 65.1%, down 289 basis points from the fourth quarter 2024, due mainly to year-over-year decreases in PYLARIFY net price and the inclusion during 2025 of the Evergreen manufacturing facility and Neuraceq volumes, which were not in the comparative period, all offset in part by favorable PYLARIFY dose volumes. Operating expenses at 30.9% of net revenue were 179 basis points unfavorable from the prior year, but within previously guided spending levels. Increases in research and development, the majority of the year-over-year change, were a continuation of our planned investments to advance our clinical stage portfolio. The sales and marketing increase was largely due to having a full quarter of the Neuraceq sales team and related activities. G&A was flat in the period, despite ongoing and a litigation expense for our PNT2003 asset and the inclusion of LMI and Evergreen operating expenses. Other income and expense was $2.3 million of expense. Operating profit for the quarter was $138.9 million, a decrease of 8.5%. Total adjustments in the quarter were $66.2 million of expense before taxes. Of this amount, $17.5 million and $16.5 million of expense is associated with non-cash stock and incentive plans and acquired intangible amortization, respectively. The company recorded an unrecognized loss of $9.5 million, attributed to its equity investments in Perspective Therapeutics and Radiopharm Theranostics. Additionally, the company recognized a $5 million payment in the quarter relating to the RELISTOR royalty stream sale, which was reflected in other income. Further, the company incurred $21.7 million in acquisition, integration and divestiture-related costs. The remaining $6 million is related to other non-recurring expenses. Our effective tax rate was 19% in the quarter and 25.3% for the full year. The resulting reported profit for the fourth quarter was $54.1 million, and a profit of $110.7 million on an adjusted basis, a decrease of 4.1% from the prior year period. GAAP fully diluted earnings per share for the fourth quarter were $0.82 and $1.67 on an adjusted basis, an increase of 4.7%. On a full year basis, GAAP fully diluted earnings per share were a profit of $3.41 and a profit of $6.08 on an adjusted basis, a decrease of 10% from the prior year. Turning to cash flow. Fourth quarter operating cash flow totaled $90.2 million, as compared to $157.7 million in Q4 2024. Capital expenditures totaled $8.8 million, $7.6 million less than the prior year. Free cash flow, which we define as operating cash flow less capital expenditures, was $81.4 million in Q4 2025, a decrease of $60 million from the prior year period. The majority of the variance lies within working capital, with a $49.3 million decrease, driven primarily by the acceleration of accounts payable associated with the cutover activities for the SPECT business ahead of the divestiture on January 1. Increase in accounts receivable related to timing of sales and the go-live to a direct billing model transferred from one of our significant PMF partners, as well as an increase in inventory due to the timing of production runs and expansion of the PMF network. Additionally, the company repurchased $100 million, or 1.77 million of its own shares during the quarter, leaving $200 million of authorization for buybacks outstanding. Lastly, cash and cash equivalents, net of restricted cash, now stand at $359.1 million. Before turning to our expectations for the full year 2026, there are a number of line items that we would like to clarify to put the right context on 2025 versus 2026 comparisons. Beginning with revenue, we completed the divestiture of our SPECT business effective January 1, 2026. As such, you should remove $111.4 million from the 2025 baseline year. Further, as mentioned, we recognized a $6 million milestone payment related to an out-licensed asset in the fourth quarter. Taken together, the comparable baseline would be $1,424.2 million. The EPS impact on these adjustments equates to approximately $0.16. Operating expenses also require normalization adjustments for comparison's sake as well. During 2025, the company reduced accrued bonus expense, resulting in approximately $0.14 of benefit to 2025. That should not repeat in 2026. Further, the company recognized approximately $4 million or $0.04 of employee retention credit benefits occurring in Q2 of 2025, also not likely to repeat. Therefore, the appropriate adjusted EPS comparison should be $5.75. Turning to expectations for 2026 fiscal year. While we expect several product approvals this year, given the timing of commercial launches, as Amanda discussed, we do not anticipate meaningful revenue contribution this year. Our focus in 2026 will be the continued commercial execution, assuring a successful transition for our new PSMA PET formulation, setting the stage for revenue and earnings growth acceleration exiting 2026. For the details. The forecast for PYLARIFY considers the annualization of pricing decisions made in 2025 and related impacts, as well as the potential for renewed competitive dynamics as the year progresses. Notably, as the only one other commercially available F-18 agent nears the end of its transitional pass-through period as of September 30. We see PYLARIFY net revenue declining 8%-10% year over year, consisting of increased volume, offset by modest price erosion. To assist with modeling, each quarter should be fairly similar sequentially from a net revenue perspective, with volumes and discounts growing throughout the year. This includes the fourth quarter, during which we will undertake the transition of our PMF channel partners from PYLARIFY to our new formulation on a rolling geographic basis. We see Neuraceq growing triple digits inorganically. DEFINITY is expected to grow low to mid-single digits. Taken together, we forecast worldwide net revenue of $1.4 billion-$1.45 billion for 2026. Moving down the P&L, gross margin continues to model at approximately 65.5%. While we have the opportunity to leverage our established infrastructure and common targeted customer base, we will continue to invest in sales and marketing in support of our new PSMA PET formulation, as well as OCTEVY, to ensure broad availability and access. R&D is expected to move to 10%-11% of revenue, an increase of approximately 200 basis points across a number of phase-gated projects, anchored by our GRPR diagnostic agent. G&A should be essentially flat with 2025 at 10% of net revenue. Our net interest expense and other is expected to change in 2026 to $5 million of expense from approximately $9 million-$4 million of net income in 2025. This $9 million headwind is due largely to lost interest income on funds we used on our 2025 M&A activity, as well as through share repurchases executed throughout 2025. The effective tax rate is expected to increase slightly by about 1 point to 26%. Fully diluted shares outstanding should average 66 million shares for the year. Altogether, we forecast EPS in a range of $5.00-$5.25. As Mary Anne noted, following last year's considerable M&A activity, we are undertaking a full review of our pipeline portfolio and expense base. We are committed to focusing on investment in related commercial efforts, largely on our diagnostic portfolio. For the therapeutic assets in our pipeline, we are contemplating alternative opportunities to advance these assets and optimize their value for the company and our shareholders. This process will take the better part of 2026, during which we are confident that there will be further opportunities to rebase the company's earnings profile and growth trajectory with annualized synergies achieved, in addition to the avoidance of higher costs of late-stage R&D development, often associated with therapeutic product candidates. We believe that the therapeutic pipeline has material value, this plan is intended to unlock that value for shareholders, which is not reflected in our stock price or our guidance. With that, let me turn the call back over to Mary Anne. Mary Anne Heino: Thank you, Bob. While we focused in 2025 on the competitive dynamics experienced in the PSMA PET imaging market and our work to successfully integrate acquisitions, we are now taking purposeful steps to sharpen our focus on our strategic priorities, especially in the diagnostic space, and leverage both our capabilities and portfolio in 2026 and beyond. Allow me to again state our priorities for 2026. Maintain our market leadership in PSMA PET by sustaining PYLARIFY volume growth. Execute a seamless transition to the new PSMA PET formulation beginning in the fourth quarter. Increase momentum for Neuraceq by expanding our manufacturing footprint and driving deeper penetration in existing accounts and accounts where a strong PYLARIFY relationship already exists. Advance our assets currently under FDA review through regulatory approval milestones and effect fit-for-purpose launch activities with those assets that offer the earliest and best revenue return. Selectively develop other pipeline assets towards key stage gates and decision points, and allocate capital with discipline, prioritizing radiodiagnostics, seeking to optimize the value of our radiotherapeutic pipeline, and maintaining financial flexibility while committing to a leveraged P&L that delivers value to our shareholders. We enter 2026 with confidence in our strategy and our ability to deliver, recognizing this represents a year of intentional investment and portfolio prioritization that will position the company for solid financial performance and durable value creation. We do so, we remain focused on the patients we serve, having helped impact the lives of approximately 7 million patients in 2025. I want to thank our shareholders, employees, and our loyal customers for their continued support and dedication. I will now turn it over to Q&A. Operator? Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please limit yourself to one question per person. One moment for questions. Our first question comes from Anthony Petrone with Mizuho Cap Financial Group. You may proceed. Anthony Charles Petrone: Thank you, hi, Mary Anne, welcome back. Hope you are doing well. Hi, Bob, Amanda, Mark, hope everyone is doing well. Maybe I will start off with 2 quick ones. Just know a lot of folks are on the line here, but start with, you know, just the March 6 PDUFA date for next gen PSMA PET imaging agent. Thanks for the updates there on a fourth quarter rollout. When we think about taking a glass half full approach, assuming, you know, the PDUFA date goes as expected, and we get clearance, you know, what will be the timing when we do secure coding, you know, when we get realization on what the TPT sort of reimbursement rate will be, and maybe a little bit of detail on how you will begin that transition, specifically with long-term contracts that are out there, and I will have one quick follow-up. Thanks. Mary Anne Heino: Anthony, I will take that, thank you so much. It is, as I said, great to be back in my operational role here. As you noted, it is absolutely a glass wonderfully half full about our new PSMA PET formulation. Let me review some of the dates we are assuming here, that will also then, I think, explain our strategy as we move forward. As you noted, our PDUFA date is March 6. The two items that Amanda referenced that are important with the launch of any PET-based product, is you need to ensure that you have secured a HCPCS code as well as transitional pass-through status, those are two separate activities. We would anticipate that we would have in place by October 1, our HCPCS code, and that for having submitted our transitional pass-through application by June 1, that will also be in place by October 1. It is very important that those events precede your commercial entry into the market. That is why you hear us referring to late 2026, or specifically the fourth quarter, for the operational rollout of the PMF. As you can remember from our PYLARIFY launch and from the other launches of F-18-based assets into this category, you have to stand up or get approved each PMF separately because they each represent a GMP-approved manufacturing site. Our goal is to make sure that we never have disruption of product Lantheus Holdings, Inc. product availability in that market. We have chosen a regional-based rollout, allowing for duplicity so that we absolutely still have service in place to flip from PYLARIFY to our new formulation, which we will offer a name and start using as soon as it is approved. And we anticipate for making sure that that is the risk, that will take us the fourth quarter to accomplish. Coming out of the fourth quarter, we will have a network as broad as we have in place currently for PYLARIFY in place for our new formulation, and that is why we keep referencing to say that significant revenue related to that product will really occur beginning in 2027 and not as much in 2026. We feel like we have got all bases covered here. We are all, you know, waiting for the March 6 date. It is right in front of us now, and you can certainly imagine that there will be a press release, around that date, to communicate what we have heard from the FDA. Anthony Charles Petrone: Excellent. Just a quick one is just the market dynamics for PYLARIFY, as is today, down 8%-10%. We know that there is a study out there, POSLUMA versus PYLARIFY, a head-to-head study. I believe it reads out at ASCO. Maybe what is baked into the negative 8%-10% per share shift? How does the outcome of the study play into that? Thanks again. Welcome back. Mary Anne Heino: Thanks, Anthony. Kind of interesting to talk about that study, because I will be honest and say we do absolutely have some concerns regarding the study design that was used. First and foremost, there is no randomization in the study. If you read the protocol and you see how it was executed, the PYLARIFY images were always captured first. In a fully randomized trial, you would probably expect to see something different. Also what is concerning, there is no truth standard. If you look at the design of the study, they are really measuring just SUV and detection rate. The kind of the odd thing about that is, when you measure detection rate that way, you actually give yourself credit for false positives. The high detection rate may be due to the false positives that are already noted in that product package insert. Also, if it is just from a math perspective, the study was not powered to show statistical significance. From a clinical perspective, there is really two relevant comments here. First, bladder SUV values do not impact diagnostic performance, and that is what the study is really measuring. Second, and very much not in line with current clinical practice, the men in the study, because of course it was all male patients, were not allowed. They were actually prevented from voiding prior to having their scan done. That is very much the opposite of what happens in clinical practice today. I will say we are glad to see continued scientific investigation into this incredibly important class, but we also would very much hope that it would be rigorous scientific evaluation. I will share with you, because you referenced, how did that bake into our forecast? The results of that study really do not bake into our forecast. Operator: Thank you. Our next question comes from Richard Newitter with Truist. You may proceed. Richard Samuel Newitter: Hi, thanks for taking the questions. I just wanted to put a finer point on what your kind of pricing and unit growth played out, how that played out in Q4 2025. You were at 3% unit growth, I think you said. In the third quarter, you had about a 500 basis point, 340B driven price headwind to contend with in the fourth quarter. I am getting to, like, a high single digit unit growth rate in Q4. Is that right? You know, what was behind that? Did the market improve? Did you just call back some share, if that is in fact right? Maybe, Bob, can you give us a little more on what the market assumptions are for 26 for PYLARIFY and kinda what your unit and price assumptions kinda are within that? Thank you. Robert J. Marshall: Rich, I will take that. In terms of growth, I mean, listen, it was a great quarter from a PYLARIFY perspective. Obviously above our expectations. It was both volume and a little bit of benefit actually coming from the gross to net price change. You know, I think when we talked about it during kind of the fourth quarter, you know, following our call and whatnot, we had sort of pegged it at sort of the mid-teens, and that is effectively what we saw. That was maybe slightly more favorable than the actual teens growth that we were kind of thinking. You know, as I think Amanda pointed out, I think it was like 4% volume growth, and it did turn out to be our single greatest sort of volume performance in the quarter. I mean, excuse me, for the full year. When I think about assumptions going into how we are playing out 2026, we are thinking sort of a similar sort of low single-digit volume growth for the year. Much not too dissimilar from 2025. From a pricing perspective, what we have done is that while we have seen a lot of consistency in the market from a pricing perspective over the last couple of quarters, you know, as we think about one of those competitors losing pass-through, that they may actually look to try to use pricing as a mechanism to drive share. We have been really pretty disciplined, and we have been really explicit that as we think about executing our strategy, that we are going to stay disciplined. We are not going to chase business that is not good for the medium to long-term value of that franchise. The guide assumes that we see sort of a continuation of some, you know, incremental price that would sort of move us from sort of the mid-teens of where we are now to, you know, maybe the high teens as we progress through the year from a gross to net adjustment perspective. That is why you see sort of what I have laid out as sort of a sequentially net revenue, sort of neutral outcome for each of the quarters throughout 2026. Mary Anne Heino: Rich, this is Marianne. Does that answer your question? Richard Samuel Newitter: Yeah, it does. It sounds like you are not seeing any dramatic changes to the pricing environment currently. To be prudent, you are because this is what took you by surprise and all of us by surprise last year, you are embedding that assumption that there will be another kinda regular way price price erosion situation, or you will have to walk away from that business incrementally. That is a placeholder in your guide, and you do not really assume any contribution from two-point-o. There could be upside if those things do not play out that way, and you start to get some benefit from two-point-o, if all goes well next week, and you can execute on the transition faster. Is that a fair way to look at these numbers? Mary Anne Heino: Yep. Rich, absolutely. I have to say, it is such a great pleasure to have analysts like yourself monitoring our business where you know the market so well and also understand our strategy. You are really spot on with how we are thinking about the market. Richard Samuel Newitter: Okay. Thank you, guys. Operator: Thank you. Our next question comes from Roanna Ruiz with Leerink Partners. You may proceed. Roanna Clarissa Ruiz: Hey, morning, everyone. Was curious, could you elaborate a bit more on one of your comments about pursuing value-maximizing alternatives for radiotherapeutic assets to support long-term growth? It made me think about, are you thinking about different features of products that you are looking for? Could this be part of near-term BD? I know you mentioned on the comments, possible tuck-ins this year, I was just curious if you could explain a bit more there. Mary Anne Heino: Absolutely. I am glad that everyone is kind of picking up on the comments that both Bob and I made about this intentional focusing of our strategy. We really see it as the natural outcome of all the activity that we had in 25 and even 24. We have now a very broad portfolio of both diagnostic and therapeutic assets, our intent is to, and we think our obligation to our shareholders, is to make sure that the value of each of those is considered. We certainly could not handle or accomplish the advancement of that entire portfolio. We have chosen to focus in on the diagnostic asset then. As you will see, I had a pipeline slide in the middle of my presentation, it will also show it again at the end. It really is a very broad portfolio there. When we refer to the therapeutic assets, what we are referring to is, and we have undertaken a full review of our whole portfolio, but looking really at what are the stage gates for the therapeutic assets that really define value for them, so that as we consider how they should be then driven further, and it will be through external or alternatives or partnered alternatives, how is it best for us to present the value and the clinical utility of these products? A lot more to come, a lot more to come on that as we talk throughout the year. I will mention, and it really comes back to what you mentioned with tuck-ins, further tuck-ins for diagnostic opportunities. If we find them and they fit, then, yes, absolutely, we will consider them. Even as we talk about the therapeutic assets, I probably should be clear to say that when I talk about that, I am not talking about PNT2003. That product is right before us as far as regulatory approval opportunity. It is a natural fit into our portfolio of products and, again, our customer base. We are already committed to what we believe will be a very successful launch of that product. Operator: Thank you. Our next question comes from Matt Taylor with Jefferies. You may proceed. Matthew Charles Taylor: Hi, good morning. Thanks for taking the question. I guess I will ask one on Neuraceq. It came in nicely in Q4, and your guidance, you said, it was, I think, at least triple-digit growth. You know, I guess, not that that is a bad growth rate, but why could not it actually be higher than that, given the momentum that you have and also the sequential growth that we are seeing in some of these Alzheimer therapeutics? Mary Anne Heino: Matt. We absolutely do see... triple digits, pretty good to hear, Matt. I think what you are also hearing from us, again, we inherited that product as of, we will call it, midyear last year. One of the things, again, this comes back to F-18-based products in this market, you have to have the manufacturing footprint to be able to bring your product broadly to patients. I will say, I think the numbers have been discussed before, but the number of standing PMFs for Neuraceq at the time we acquired it was, call it, mid-20s. We added a few, and someone might correct me if I am wrong there, but we added a few, and then our intent is to add six more this coming year. Therefore, we will start to approach having what we consider a broad geographic footprint for that product. I am sorry, I have been corrected. The starting number of PMFs when we inherited the product was 16, and again, we will continue to add. That really is our the way that we measure how far we can take the product into new areas. The other part of our, what we think is a very promising forecast, is our ability to take the product deeper into the accounts where it already is based on some changes in guidelines and the broadening that we saw in the PIs last year, as well as by also leveraging the relationships that we have in accounts with other Lantheus Holdings, Inc. products. Happy to be wrong here and have it even further exceed what we have, but I think we have been very practical, optimistic, but practical with our forecast. Bob, do you want to add something there? Robert J. Marshall: I do, because well, people can figure this out from a mathematical situation. By triple digits, we are talking certainly in, like, call it the 140%-150% range of inorganic growth off of what was a very good fourth quarter, which was the first full quarter that we actually had the asset in the portfolio commercially. Operator: Thank you. Mary Anne Heino: Does that answer your question? Operator: Our next question comes from Paul Choi with Goldman Sachs. You may proceed. Karishma (for Paul Choi): Hi, thank you for taking our question. This is Karishma on for Paul. If the upcoming Biogen data shows meaningful tau reduction, but no benefit on cognitive measures, how does this affect your go-forward investment in your tau program? Thank you so much. Mary Anne Heino: I am sorry, could you repeat what you are referring to? No, the study. Can you repeat the first part of your question, please? Karishma (for Paul Choi): Yeah, sorry. If the upcoming Biogen data shows meaningful tau reduction, but no benefit— Mary Anne Heino: Oh, yes. Karishma (for Paul Choi): —on cognitive measures, how does this affect your go-forward investment in your tau program? Thank you. Mary Anne Heino: Okay. I am sorry, there was, we just did not hear the first part of your question, but it makes the perfect sense. We will, of course, are very eagerly awaiting those data, but I think there is very, very strong scientific evidence already that the presence of tau and the quantification of tau is aligned with cognitive performance of patients. That really is something that is slightly different than the role that amyloid plays. Amyloid, and, you know, to think about it, I guess, bluntly, amyloid comes early, but it does not always match to cognitive change in patients, where there is a much stronger correlation between rise of tau, especially in certain areas of the brain, and unfortunately, related cognitive defects for patients. I think what we are seeing in this market, and we are kind of all seeing it in real time because that is the wonderful thing that is happening around us. There really is now a market that is willing and acting on taking these products that are disease-modifying and starting to use them in patients. The kind of complementary use increased use of imaging, both amyloid and tau, will come along with that. I will not speculate on data that are not out yet, other than to say we are, from a scientific perspective, we are fairly confident in the role of tau in the market. As you heard, Amanda mention, in our biomarker business, tau is our product, MK-6240, is the number one product that is used in what we see as the 17 underlying, the ongoing studies in the market. Operator: Thank you. Our next question comes from Larry Solow with CJS Securities. You may proceed. Lawrence Scott Solow: Great, thank you, I echo the welcome back, Marianne. It sounds like the CEO search is progressing though. You know, is this gonna be like a, do you feel like it is a 6-month, 12-month type of thing? Any thoughts on just timing? Mary Anne Heino: It, it is progressing, Larry, and it is good to be talking with you again. I am gonna say two things that I think are in our favor. I think this is an incredible opportunity for someone to step into what the future of our company and where we are going to be taking this company. I think as exciting as that is to me, I think it is also something that is exciting to the candidates we are talking to. The other thing I will say is, as everyone knows, we sit fairly adjacent to what is an incredibly active market in the United States, and that is the life sciences market in Cambridge. That is also, I think, been very much a boon for us in our search. I will say, this will not be a surprise to anyone, that the potential slate of candidates for us who are purely radiopharmaceutical or have radiopharmaceutical, is very narrow. This is just not a large industry. There, just from a history perspective, there have not been a lot of CEOs in this industry. As you can imagine, those of us who are here probably have competitive blocks from going to competitors in a role as significant as the CEO. Having said that, I will reiterate what I said, I am very pleased with the candidates that we have met, and to me, it is also a declaration or a demonstration of how far radiopharmaceuticals have come, and what they mean and represent in overall life sciences now. Operator: Thank you. Our next question comes from Yuan Zhi with B. Riley. You may proceed. Yuan Zhi: Good morning. Thank you for taking our questions. Maybe to Mary Anne, when comparing Neuraceq to the number one leader in that space, where do you see improvement opportunities to catch up in market shares? Is it availability, guidance, difference, or pricing? Any additional color will be appreciated. Mary Anne Heino: Sorry, your voice was actually very muffled, while you asked your question, and we are going to have to ask you to repeat it. Yuan Zhi: Yes, I am sorry. When comparing Neuraceq with the number one leader in that space, where do you see improvement opportunities to catch up in market shares? Is it availability or guidance or pricing? Anything you see opportunities in? Mary Anne Heino: Very well understood now. Thanks so much. Let me first start by correcting. Neuraceq is the second most utilized beta-amyloid imaging agent in the space. The product with the highest market share in the space right now is actually Lilly's product, Amyvid. As far as where we see the growth opportunities, growth opportunities for Neuraceq in the market, short, mid, and long term is, first and foremost, there have been some changes to the guidelines regarding the use of beta-amyloid imaging for diagnosis of patients with different levels of Alzheimer's disease. That is the first, and it is very much testament to that. I think the launch and now that what we see is continued uptake of the DMTs, the drug modifying therapies for Alzheimer's disease, come with what will be associated imaging, not only to validate that the patients would be eligible for those therapies, but then there is also the potential to monitor those patients during therapy. All of those, both of those activities would add volume to the amyloid imaging market. Finally, very specific to Neuraceq, this is not a price play. You mentioned, is this gonna come from purely from price or growth? The answer to that is no. It really is driven by two factors. The first is, and most important, broadening the geographic footprint from which Neuraceq is available for distribution to all of the centers that do amyloid based PET imaging. The second is, within those accounts, and especially accounts with this already a PYLARIFY relationship, deepening the penetration of Neuraceq use in those areas. You heard me refer several times throughout my comments to the nuclear medicine customer base. We feel very strongly that we have a key advantage in our relationship there. Long, longstanding history, that has been the central focus of Lantheus Holdings, Inc.'s commercials efforts since we were essentially launched as a company back in the late 50s. It is a long relationship, it is a deep relationship, and it is a very trusting relationship for having brought them all the products before, but certainly PYLARIFY. Where we find ourselves now, very fortunately, which we absolutely intend to take advantage of, is that we have the ability to bring a portfolio of products into this customer space. One of those will certainly be Neuraceq. I would also like to clarify a comment that I made before, regarding the POSLUMA versus PYLARIFY head-to-head study about the final point about patients not being allowed to void. That is not an accurate statement. What I should have said is that while patients were encouraged to drink, they and they were encouraged to drink, they were not instructed to void, or did not, were not, you know, made to void. I apologize for that error in how I presented it. Operator: Thank you. Our next question comes from Justin Walsh with JonesTrading. You may proceed. Justin Howard Walsh: Hi, thanks for taking the question. In the medium to long term, can you comment on your expectations for the relative revenue contributions for your product portfolio segments? Just wondering how important prostate cancer is versus other solid tumors versus neurology and PET imaging. Mary Anne Heino: I absolutely am happy to comment on that, I hope also that kind of came through in our comments to say that while we are incredibly fortunate to have up to four approvals this year, I think I was repetitive, as was Bob and even Amanda, in sharing that we expect revenue uptake to begin significantly in 2027. That really is related to the nature of how these products come out into the market. The very important considerations of ensuring that you have access and coverage, as well as insurance coverage, but here we are talking about market coverage as well, in place before you commercially, you put your commercial effort really behind it. It does not mean we are not getting ready for the launches; it just means that we will not execute the launches, and see the return for them, we are saying largely in 2027. From a revenue perspective, I hope you appreciate how much effort we did throughout end of 2024, all through 2025 to diversify our revenue base. Going forward, it is safe to assume that revenue derived from our prostate cancer franchise of products will be the main driver. We see lovely contribution from Neuraceq. We have, absolutely have strong expectations for contribution from our other launch products that we will be taking to market. Fair to say that the cornerstone and the majority of our revenue will be from PYLARIFY. That is why for 2026, we... We again repeated this several times, we are laser-focused on the transition to and introduction of our new PSMA PET formulation. Operator: Thank you. Our next question comes from Andy Hsieh with William Blair. You may proceed. Tsan-Yu Hsieh: Great, thanks for taking our question. Like a Neuraceq, you are going to be launching into markets with incumbents with Pluvicto and the therapeutic 2003. Can you outline some product-specific and commercial infrastructure differentiations that you can leverage to gain an upper hand as you launch these two products, you know, in the future? Thank you. Mary Anne Heino: Yes, the very good question. Just to clarify, of course, Neuraceq is already in the market. We did not launch Neuraceq. Those products have been in the market for over a decade. I will say that Neuraceq is the second most utilized product in what is a 3-product market. Important notes about the other products that you mentioned, we will put PNT2003 aside because that is a therapeutic. As Amanda mentioned in her comments, Pluvicto, one of the important considerations of Pluvicto is that it will have transitional pass-through status and reimbursement, as will our new formulation in the PSMA franchise. That will be an important consideration and is an important consideration for many customers, especially given that the Pluvicto market is approximately 80% hospital-based. As everyone is aware, the concept of transitional pass-through payment is really applicable for traditional Medicare patients who are seen in the hospital setting. We see that as a key advantage as we take that product to market. From MK-6240, which also has, you know, an approval and a PDUFA date later this year, that is a product that is already well established through our biomarker solution business, and there we will continue to support that its role as being the number one tracer used in what are the wealth of clinical trials being undertaken by pharma in the study of tau and amyloid-based Alzheimer's disease. Operator: Thank you. As a reminder, you may reenter the queue after you ask your question. Please press star one one on your telephone to ask a question. Our next question comes from Kemp Dolliver with Brookline Capital Markets. You may proceed. Brian Kemp Dolliver: Thanks. Quickly, for Bob, could you go through the comments again on the sales and marketing guidance for 2026? Robert J. Marshall: All right. That is fine. I can manage that. More or less what we are thinking of in terms of like total OpEx, you are gonna see two of our sort of three sort of OpEx categories, sort of increase in spend. I did note specifically that we would see R&D up around that 10%-11% mark. With regard to sales and marketing, and I do think that this is when I look at consensus files, this is, I think, the one sort of like underappreciation for the work that we need to put in front of 20, you know, the different products that we are hoping to launch, you know, going into 2027. The work and it mirrors almost what we did with PYLARIFY back in, when was that? 2021. Mary Anne Heino: Mm-hmm. Robert J. Marshall: From that perspective, I think you are gonna model it somewhere in, call it the 12-ish, 12.5% range of revenue. That, I think, together with a flat G&A, you know, again, keeping some leverage in those functions that are supporting, but really kind of putting the money in the investment where we hope to see a solid return for shareholders. That is how you should model things. Mary Anne Heino: Oh, sorry. I just did want to add a comment there, that kind of finishes out Bob's thought. I think also what we were also trying to communicate that is important here is that we have leverage as we take these new launches through, and certainly sales and marketing expense is part of that, as we take these new launches out to the market, that one of the great opportunities we have is leverage, as we have already got a full voice and presence, with those, that customer base. You heard me say, and I will repeat it again, fit for purpose investments commensurate with the opportunity, but also with the investments we have made, prior in those same customer bases. I would say overall in the channel. Operator: Thank you. Ladies and gentlemen, there are no further questions at this time. Thank you for participating in today's conference. This concludes the program. You may disconnect and have a wonderful day.
Operator: Hello, and welcome to Intellia Therapeutics, Inc.'s fourth quarter and full year 2025 conference call. My name is Drew, and I will be your conference operator today. Please be advised that today's call is being recorded. I will now turn the call over to Jason Fredette, Vice President of Investor Relations and Corporate Communications at Intellia Therapeutics, Inc. Please proceed. Jason Fredette: Thank you, operator. Hello, everyone. Earlier this morning, we issued a press release outlining recent business updates in our fourth quarter and full year financial results. This document can be found on the Investors and Media section of Intellia Therapeutics, Inc.'s website at intelliatx.com. At this time, I would like to take a minute to remind listeners that during this call, Intellia Therapeutics, Inc. management may make certain forward-looking statements. We ask that you refer to our SEC filings available at sec.gov for a discussion of potential risks and uncertainties. All information presented on this call is current as of today. Intellia Therapeutics, Inc. undertakes no duty to update this information unless required by law. Joining me on this call are John Leonard, our Chief Executive Officer, and Ed Dulac, our Chief Financial Officer. With that, I'll turn the call now over to John to begin our business discussion. John Leonard: Thank you, Jason. Thanks to all of you who have tuned in for today's call. We'll begin with a brief recap of our 2025 accomplishments, and we'll then review the status of our nex-z program in ATTR amyloidosis. After that, we'll provide updates on the significant progress we've made with lonvo-z, which is being developed as a potential one-time treatment for patients with hereditary angioedema, or HAE, and we will close with Ed's financial review. First, let's take a step back to the origins of Intellia Therapeutics, Inc. This company was formed over a decade ago based on the belief that we could help revolutionize medicine utilizing CRISPR gene editing. From the outset, we designed our gene editing product candidates to reset the treatment standard in our disease areas of interest. This new standard would raise the bar by conferring highly competitive and durable efficacy for patients via a one-time treatment that is administered in an outpatient setting. We believe our two lead candidates, lonvo-z and nex-z, fit this profile. With up to three years of patient follow-up, we have yet to see any waning of effect in serum kallikrein or TTR levels in the extended follow-up of our phase 1 and 2 trials. Even more encouraging, the observations of improvement in clinical and disease measures that we track in the phase 1 and 2 trials also have not waned. Given these clinical data and our preclinical work showing the edits we make are permanent in edited cells and in all subsequent generations of those cells, we expect patients to benefit for many, many years, if not their entire lives. and nex-z are administered in an outpatient setting. After a simple prophylaxis regimen to reduce the risk of infusion-related reactions, patients visit a clinic where they receive an IV infusion over the course of two to four hours, and then they go home. A decade plus after our founding, it's for good reason that our excitement is building as we approach the world's first phase 3 data readout for an in vivo gene editing candidate by mid this year. Now for some reflections on 2025. Simply put, it was a time of both accomplishment and resiliency for Intellia Therapeutics, Inc. With lonvo-z, we rapidly enrolled HAELO, our phase 3 clinical trial in HAE, and we did this well ahead of schedule. Until the clinical hold in October, we achieved similar enrollment success with nex-z. At the start of the year, we were expecting to have enrolled about 550 patients with ATTR amyloidosis with cardiomyopathy in our MAGNITUDE Phase 3 clinical trial by year-end, and we had not yet begun enrollment in MAGNITUDE-2, our Phase 3 trial for patients with polyneuropathy. By October, just 10 months later, we'd enrolled more than 650 patients in MAGNITUDE, and we're already approaching full enrollment in MAGNITUDE-2. In late October, after elevated liver transaminases and total bilirubin were observed in a MAGNITUDE patient that met the trial's protocol-defined pausing criteria, we suspended enrollment in MAGNITUDE and MAGNITUDE-2. Shortly thereafter, the trials were placed on clinical hold by the FDA. Our team immediately took action to address the hold, working in concert with external experts, our clinical sites, investigators, and regulatory authorities. In late January, we were pleased to announce that the FDA lifted the clinical hold on MAGNITUDE-2. We aligned with the agency on certain study modifications. These include addition of supplementary liver laboratory tests in the weeks following patients' enrollment and dosing, and guidance that patients receive a short-term steroid regimen if elevated liver transaminases are detected in the weeks immediately following dosing. The rationale for this is that the LFT elevations appear to be consistent with an immune-mediated reaction. We also have modified our screening criteria to exclude the enrollment of patients who may be the most susceptible to a potential liver injury. These include patients with significantly elevated liver enzymes at screening and those with a history of MASH or autoimmune hepatitis. We expect these new criteria will help to safeguard patients while also having a minimal impact on our screen failure rate. As a reminder, we've already enrolled 47 patients in MAGNITUDE-2. As part of the protocol amendment, we also proposed, and the agency accepted, that we increase the trial's target enrollment from 50 patients to approximately 60 patients. This allows us to accommodate patients who had already been identified for screening prior to the hold. Since MAGNITUDE-2 is being enrolled outside the U.S., we are now working through the relevant local regulatory processes to resume patient screening. We're confident we can complete enrollment in the second half of this year. At the same time, our FDA engagement is ongoing as it relates to MAGNITUDE. As we've mentioned in the past, MAGNITUDE and MAGNITUDE-2 are very different trials, enrolling very different patient populations, we're considering these factors in our ongoing work. While nothing is done until it's done, we've made a lot of progress in our effort on this front. Given the positive phase 1 data that's been presented for nex-z, including the encouraging post-hoc mortality data derived from a contemporaneous and well-matched cohort of nearly 1,800 patients that we shared at AHA this past November, we continue to believe strongly in this candidate's potential to benefit patients with ATTR amyloidosis. Now let's move on to lonvo-z and HAE. We completed enrollment in the HAELO phase 3 clinical trial with 80 patients in September, just nine months after we dosed our first patient in the trial. This is due in large part to the tremendous amount of interest we have seen in lonvo-z among those with HAE and their treating physicians. This interest is also reflected in market research we recently conducted and shared at J.P. Morgan in January. In late 2025, 104 U.S. patients and caregivers were surveyed by a third party. They were shown a target product profile based on data from our phase 1 and 2 trials on a blinded basis, and were told the data was from a gene-editing candidate. They were asked if they would be likely to take the treatment if it were to be approved. 99% of the patients responded they would at least be somewhat likely, and nearly two-thirds said that they would be extremely or very likely to take it. The interest also carried over to prescribing physicians. 151 US healthcare providers were presented the same target product profile and asked if they could identify a patient in their practice to whom they would prescribe the drug. 92% of them said yes. These HCPs reported they were managing the care of more than 4,000 patients collectively, which would represent about 60% of the entire treated patient population in the United States. When asked how many of these patients would they prescribe lonvo-z to, that number came out to about 2,200 patients, or 54% of the patients under their care. What's driving this interest? Well, it's because a substantial unmet need still exists despite today's available HAE therapies. At ACAAI in November, we presented data from another 100 patients who were surveyed, about 90% of whom were on long-term prophylaxis therapies, otherwise known as LTPs. The results shed further light on the burdens that many patients continue to face, the burden of their disease and the burden of their chronic treatment. The results showed that nearly 70% of patients were concerned about having to take LTP and/or on-demand medications for the rest of their lives. Nearly 60% were concerned about the unpredictable nature of their HAE, and most patients also are concerned about the logistical and financial burdens of the disease. Also striking was the fact that only 20% of surveyed patients reported they were attack-free for the past 12 months. This 20% figure contrasts with the clinical data we presented in November from our phase 1 to pooled analysis, showing that 76% of patients who were at least a year beyond a 50-milligram dose of lonvo-z were free from both attacks and ongoing therapy for at least 12 months. We're looking forward to presenting more insights from this patient burden study at the AAAAI meeting that is taking place this weekend in Philadelphia. Our march continues toward top-line data by the middle of this year and a planned BLA submission in the second half of this year. We've been asked from time to time what our expectations are for this readout. When looking at the phase three data for approved LTPs, the best attack reduction rates have been in the eighties, and the very best attack-free rate we have seen from an LTP is approximately 60% of patients. Of course, these results were achieved only with chronic therapy. In our placebo-controlled HAELO trial, we believe the lonvo-z arm will be highly competitive with those numbers, with the added and unique benefit that it is a one-time therapy. As was shown in the pooled analysis that was presented at AAAAI, lonvo-z could perform even better outside of a placebo-controlled trial and in the real-world setting, where patients know they are on active treatment. As I've laid out, it's going to be a big year for Intellia Therapeutics, Inc. with many meaningful milestones. We look forward to updating you on our progress along the way. I'll now hand the call over to Ed, our Chief Financial Officer, who will provide an update on our financial results for the fourth quarter of 2025. Ed Dulac: Thank you, John. We do indeed have a big year ahead, particularly as it relates to lonvo-z and what will be the world's first pivotal readout for an in vivo CRISPR-based gene-editing therapy. As we look toward a potential launch of a product that we believe would have a highly attractive profile for patients suffering from HAE, we've made a lot of headway with our team and our thinking in terms of commercial readiness. We have scaled our field medical team, ramped up our engagement with treating physicians and patient advocacy groups, engaged with payers, and developed our launch strategy. This year, we plan to continue building out our sales and reimbursement field teams, finalize our distribution models, identify our U.S. treatment centers, and finalize our pricing and contracting strategy. It is, of course, premature to get into any specifics about our plan to go-to-market strategy or pricing. However, those of you who know the HAE space are well aware that LTPs carry ultra-orphan price tags. Given the average U.S. patient with Type 1 or Type 2 HAE is diagnosed at about age 20, and that patients also tend to require on-demand prescriptions, the cost of lifetime treatment tends to be measured in the $multi-millions. Given this backdrop, we believe a one-time treatment like lonvo-z could deliver significant savings to patients and payers, greatly reduce or eliminate many of the social, emotional, treatment, and quality of life burdens that are experienced by patients, and reduce burden on physicians, given their need to repeatedly process time-consuming prior authorizations that are required for patients to remain on today's available therapies. From a broader company standpoint, if approved, the commercial success of lonvo-z could fundamentally change the future capital needs of the company. With about 7,000 patients receiving treatment for HAE in the U.S., lonvo-z's anticipated margin profile and our overall expected cost structure, if we were to achieve a mid-single digit market share in a given year, the resulting cash flows would likely enable us to fully fund our entire operations. More on that topic when we get to BLA submission and potential approval. I'll now review the Q4 financials. Cash, cash equivalents, and marketable securities were $605.1 million as of December 31, 2025, compared to $861.7 million as of December 31, 2024. We believe this cash balance will be sufficient to get us into the second half of 2027 and beyond several important milestones, including the restart of enrollment in MAGNITUDE and the completion of enrollment in MAGNITUDE-2 this year and the launch of lonvo-z next year. Collaboration revenue was $23 million for the fourth quarter of 2025, compared to $12.9 million for the prior year quarter. The increase was mainly driven by revenue that was recognized related to the termination of our license and collaboration agreement with SparingVision and an increase in cost reimbursement related to our collaboration with Regeneron. R&D expenses were $88.7 million for the fourth quarter of 2025, compared to $116.9 million during the prior year quarter. The decrease was primarily driven by reduced employee-related expenses, stock-based compensation, research materials, and contracted services, partially offset by an increase in clinical trial expenses related to lonvo-z. Stock-based compensation expense included with the R&D was $10.5 million for the fourth quarter of 2025. G&A expenses were $33.1 million during the fourth quarter of 2025, roughly flat from the $32.4 million spent during the prior-year quarter. Stock-based compensation expense included within G&A was $6.2 million for the fourth quarter of 2025. Finally, net loss for the fourth quarter of 2025 was $95.8 million, down significantly from $128.9 million for the prior-year quarter. With that, we are ready to begin our question-and-answer session. Operator, would you please open the line for questions? Operator: We will now begin the question-and-answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Please limit yourself to 1 question, if you have additional questions, you may rejoin the queue. At this time, we will pause momentarily to assemble our roster. The first question comes from Maury Raycroft with Jefferies. Please go ahead. Maury Raycroft: Hi, good morning. Congrats on the progress, thanks for taking my question. I'm going to focus on HAE. A lot of questions on how the study could read out. The phase 1/2 data was generated primarily ex-U.S., whereas the phase 3 trial includes U.S. patients. Do you anticipate any differences in baseline patient characteristics, such as BMI or background prophy use, that could impact the reproducibility of results, especially as it relates to the control arm? I guess, how should we think about what to see in the control arm? Ed Dulac: Morning, Maury. Thanks for the question. It's correct that the phase two work and phase one work was done, outside the United States. The phase three trial is done globally. John Leonard: In some of those same countries, especially in the United States. As we look at the patient populations, in the phase 3 group versus the phase 2 group, they're largely overlapping. It's not skewed in any way towards one demographic or particular characteristic. In fact, it was designed to represent what is a pretty standard patient population for patients suffering from HAE, with a range of severities and a variety of different drugs. In fact, many of them taking the market-leading drugs. I think it's important to note that, especially when you think about the United States, patients to come into the trial needed to stop taking whatever drugs they were, wash out, get a baseline, read on their attack rate, and then go on to a placebo double-blind phase of the study. We think that that's indicative of patient interest, that they're willing to go through all of that, to participate in the trial. From a comparability of data, perspective, or at least from a patient population, point of view, what you're seeing for the phase 2 patients is largely representative of what we expect to see demographically for U.S., for the phase 3 trial. Maury Raycroft: Got it. Okay, that's helpful. Thanks for taking my question. Operator: The next question comes from Mani Foroohar and Leerink. Please go ahead. Lidiya Rizova: Hi. Good morning. This is Lidiya Rizova on for Manny. Maybe just 2 questions from us. One, on HAE, can you maybe give us a little more color in terms of how you think about the commercial strategy there, especially as it relates to the type of patients that you expect to be the most amenable to gene therapy, meaning, the ones that are the youngest or the ones that are the sickest? If you could give us a little color there. 2nd question on the PTR program. Thinking back about the resolution of the hold, how should we be thinking about timing, and has your understanding of the underlying event that led to the patient death evolved? Thank you. John Leonard: Thanks, Lydia. I'll start with some comments about the PTR program and then hand it over to Ed, who can speak about your questions with respect to HAE. With the PTR amyloidosis program, NTLA-2001, as you know, the polyneuropathy study is off clinical hold, and we're going through all the operational things to resume accrual. That's going very, very well. And as we've said, we expect to have that study fully accrued by the end of the year, and as we make progress there, we may be in a position to update guidance on that progress later this year. With respect to MAGNITUDE, which is the cardiomyopathy study, it's a bigger study. There's a lot more data. The patient population, although they have the same drug and the same underlying gene, there's just many other factors to take into consideration, and we've been working through that with the FDA. It's a long list. We've been making excellent progress. I think we're very, very far down that road. The hold's not lifted until the hold's not lifted. I want to make that point, but I think that, you know, the progress is substantial, that we've made. With respect to the patient that you referenced, I just want to remind you that this is a patient who had a very complicated clinical course. It's true that he had LFTs that increased to Grade 4 for transaminases and had a bilirubin increase. The patient ultimately died from a ruptured duodenal ulcer, which may or may not have been related to his treatment. It may or may not have been there, when the patient was originally coming to medical attention. He did present with abdominal pain, which is a little unusual for pure transaminase elevations. We're never gonna really know exactly what happened to him, but he's an outlier. As you might imagine, the work that we're doing with the FDA is to give the trial patient participants the best ability to receive the drug in the safest possible circumstances, and that's what we're working on. As we have more information, we will obviously update everybody and bring you up to speed. Ed, maybe you want to say a few words about how we're thinking about HAE. Ed Dulac: Yeah. Thanks, John. I think the question was more about the commercial strategy, and we'll be in a position, as we get through the year, to share increasingly more details. I would say, generally, we just start thinking about this market as not about the modality per se. You mentioned a question about gene therapy. We have a gene editing approach that so far to date has a very simple to administer profile and long-term durable effects. We think that will play very well. When we talk to patients, they're not really concerned about the modality. What they're really concerned about is the treatment effect and the outcomes from the product. As we look at our target product profile, we feel like we're playing from a position of strength. We've got this long-term durable effect. Quite frankly, we're the only therapy that can provide both freedom from attacks and freedom from drug therapy. We like the profile we're playing with, and we also see that, you know, as we think about going to market and the strategy there, we are looking for, you know, how do we make sure that physicians are educated? How do we input the infrastructure required to do that? We've been working for the past year or so, thinking about the commercial team that we have now in place. We've had field medical team for the last year or more, looking in the field, educating physicians on the therapy that we have, gene editing, the aspects that are important to the treating physicians. We've been engaged with payers for quite some time. We're encouraged by what we see there. We have our overall long strategy plan in place. We're already playing from a position of strength from an operational perspective. This year, the focus is really gonna be on scaling the field force and the reimbursement teams that we have at the company. We'll be looking to finalize the distribution model that we've been thinking carefully about, and we'll have identified a number of treatment centers that we think will be very relevant. Things like pricing will come with time. We feel like we have a very strong value proposition, and we'll be thinking about contracting strategy as well. We'll stay tuned for more information, particularly after the top line data. Overall, we feel really good about the prospects we have in HAE. Mani Foroohar: Very helpful. Thank you. Operator: The next question comes from Alec Stranahan in Bank of America. Please go ahead. Alec Stranahan: Hey, guys. Good morning, thanks for taking our question. Maybe on the PN study, now that that's restarting, do you think an interim analysis would be possible here? Curious what you think about the nine-month endpoint on NIS for the new eplontersen study. Thank you. John Leonard: I'm not gonna be in a position to comment on other people's studies. I would, you know, contrast the work that we're doing just based on our own extended follow-up from our phase 1 patients, and we've presented that data previously. What we've seen in that data, which I think was very encouraging, is that patients with these very, very deep PTR reductions largely do not progress, and many of them, in fact, there's a cohort of patients in that group that had failed patisiran, i.e., progressed on the drug, who actually improved relative to their baseline. That thinking goes into the design of the study and the patient number of the study. Remember, the target population was 50. We've increased that to 60, as I said in my comments, to accommodate some of these patients that were waiting, just as we meet, at the stopping criteria negative. An interim analysis is possible, and that's not part of our current thinking, but as the study progresses, et cetera, we can always reconsider, depending on how we're thinking about what we see within the behavior of the patients. Right now, it's the endpoint is set for 18 months. Operator: The next question comes from Joseph Thome and TD Cowen. Please go ahead. Joseph Thome: Hi there. Good morning. Congrats on the progress, and thank you for taking my question. Can you comment a little bit on your CMC readiness for the lonvo-z potential approval and launch, and if there were any manufacturing changes between the phase 2 and the phase 3? Maybe a little relatedly, have you aligned with ex US regulators that this package would also be sufficient for approval outside the US? Thank you. John Leonard: Thanks for the question. Let me make a comment overall with respect to BLA preparation and readiness for the lonvo-z program. As you might imagine, we've been working on that submission for some time now. The preclinical work has been completed, and that's being written up or has been written up in many circumstances. The CMC work, and here our team's just done a wonderful job of getting to readiness in a very, very robust fashion. We're in a position of complete preparation with respect to that and have completed the work necessary. I would point out that in our phase three trial for HAELO, we're actually using the material that will be the same sort of commercial material. There's no necessary comparability tests or things like that at the end of the study to change manufacturing sites or anything like that. The material we're using now is what you're gonna see in the marketplace. We feel that we're really in an excellent state of preparation. Really, what we're waiting for at this point is the maturation of the phase 3 study. As we said, we've completed enrollments. We over-enrolled substantially. We've said we'll share those top-line data here this year, and the team is ready to write that up and include it into the submission that will be going in the second half of this year. Ed Dulac: I'll do that, Joe. I mean, we have a network for lonvo-z CDMO providers that have been long established, primarily in Europe, for the product. These are all, as John mentioned, commercial scale processes that are all been validated. We are already operating at a very high level and very well equipped for commercial launch. Operator: The next question comes from Luca Issi with RBC Capital Markets. Please go ahead. Shelby (for Luca Issi): Oh, great. Hi, team. This is Shelby on for Luca, and thanks for taking the question. Maybe on HAE, did that program come up at all in your discussions with the FDA around the clinical hold? Then maybe also, in your conversations with payers so far, have they given you any sense of what the efficacy bar is to avoid any pushback on coverage? Any color there, much appreciated. Thanks. John Leonard: I can say a word about our dealings with the FDA. First of all, just to comment, the FDA has been super engaged. It's the same review team that we've been working with throughout the program, we're really appreciative of the work that they've been doing. They've been treating in their meetings with us, HAE and the PTR programs as distinct. In fact, largely the PN and the CM programs are, I think, viewed as somewhat distinct because of the patient populations there. That has not been a matter for discussions or submissions that we've made to the FDA. I don't know if you want to say a word about payers and lonvo-z. Ed Dulac: Yeah, I'll say generally, the discussions that we've been engaged with payers so far have been very encouraging. Payers appear to recognize the unmet need with the current therapies that are available in HAE. These are high-priced products, as we talked about in our prepared remarks, and they see the value of a one-time therapy like we're presenting with them in lonvo-z. We haven't talked price specifically, but we have had really good positive feedback. I mean, as we, as John mentioned, the current standard in terms of attack rate reductions is in the 80%, and we're looking at, you know, 60% as the largest number we've seen to date in terms of attack-free rate. That's kind of the efficacy bar. We expect to be very competitive on those figures. When we layer in the value proposition, broadly speaking, keeping in mind these patients are very young, they have many years, if not decades, of fairly high-priced, expensive drug therapy. This is a win for many different stakeholders. We see patients responding well to the profile. We see our physicians responding well to the profile, and we see that payers understand the value proposition that we will be bringing forward with lonvo-z. Operator: The next question comes from Jonathan Miller with Evercore ISI. Please go ahead. Jonathan Miller: Hi, guys. Thanks so much for taking my question. I want to go back to the mechanism of liver injury that you were talking about earlier. If it is immune-related or immune-mediated, is it reasonable to expect that affected patients are going to have ongoing liability for as long as the edited gene product is being translated? Sort of the same question, if you're excluding patients with liver risk, you know, that might reduce enzyme spikes, that makes sense. It likely doesn't reduce the rate of immune reaction to edited protein. Is that fair to say? If that's true, is it possible to screen patients for reactivity ahead for edited peptides ahead of dosing? John Leonard: Thanks for your question. As we've said in our comments, we do believe that the process is most consistent with an immune-mediated reaction. It has the hallmarks of that. The pattern resembles that. The patients that have seen this, which is, you know, a very small number of patients participating in the study, behave in a very stereotypical fashion in terms of timing, the appearance of LFTs, et cetera. That's why we've taken the approach of, in MAGNITUDE-2, and we'll see how it plays out for MAGNITUDE, of using steroids that would be triggered by an LFT rise that's, you know, something in, defined in the protocol. Steroids are well known to work with a broad set of immune-mediated processes. They're usually very well tolerated, and especially in this case, we would expect it to be a very, very short-term use of them. With respect to some long-term susceptibility, we just don't see that in the data. As we shared on prior calls, the patients that have had any of these rises have occurred within this window of three to five weeks, typically, and we do not see anything that resembles that subsequent. As far as long-term susceptibility, I don't think that's going to be an issue. As you might imagine, if we could identify patients in advance that are going to have this with a very, very high likelihood, we would take actions to probably screen them out or take other actions. We don't have that information just yet. The approach that we're taking is to make sure that we're carefully following the patients and intervening very, very quickly if something should arise. Remember that of all of the patients that experienced, with the exception of this gentleman who passed away from a very, very complicated, somewhat unrelated clinical course, every other patient has had a rapid decline in those LFTs and has recovered essentially with no therapy. In most cases, I think there's going to be just not a particularly meaningful concern in that number of cases in which we would actually use steroids, I think is going to be very low, single digits. Operator: The next question comes from Andy Chen with Wolfe Research. Please go ahead. Emma (for Andy Chen): Hi, this is Emma on for Andy. Thanks for taking our question. Can you elaborate a bit more on why the FDA was comfortable lifting the hold in PN but not CM, just given they're the same product, so we would think safety would be the same? Are there specific factors that differentiate the FDA's view across the two indications? Thank you. John Leonard: Well, I'm not going to be able to articulate all of the FDA's thinking because I'm not privy to it all, but I think I would summarize it as they view the patient populations as somewhat distinct. You, you're correct in that they're receiving the same drug and it's the same gene that is being edited, but the patient populations have different characteristics. The PN patient population tends to be younger, sometimes several decades younger than those with cardiomyopathy. The typical age of presentation for patients with cardiomyopathy is into the seventies or beyond.... Remembering cardiomyopathy tends to be a disease of aging, I would say, and most of these patients have a wild-type gene. The patients with cardiomyopathy have polypharmacy. Many of them have other ongoing medical problems, which tends not to be the case with the patients with peripheral neuropathy. I think that set of demographic characteristics is probably driving a lot of the thinking. Plus, we've had actually very good safety profile thus far in the patients treated in the PN study. As I said earlier, you know, there's a lot of data to go through in the cardiomyopathy patient population. We are very, very far down that road. The hold will be lifted when it's lifted, but I think we've made a lot of progress with respect to working with the FDA. Operator: The next question comes from Salveen Richter with Goldman Sachs. Please go ahead. Mark (for Salveen Richter): Hi, this is Mark on for Salveen. Thank you so much for taking our question, and congrats on the quarter. From your conversations with regulators, do you expect that additional mitigation strategies would be necessary beyond what you've already implemented in MAGNITUDE-2 in order to resolve the MAGNITUDE study clinical hold? Also, we just wanna confirm that in addition to the patient who passed away, there were only two other instances of liver enzyme elevations, or were there other patients who saw such elevations? Thanks. John Leonard: We've said previously that the incidence of Grade 4 elevations was less than 1% in the entire patient population of MAGNITUDE, I'd work with that number. That's part of the thinking that we're addressing with the FDA, we're thinking very, very broadly about how to deal with those patients, as I said in my prior remarks here. We're up and running with the polyneuropathy study going through the operational aspects to get the study accruing. With respect to MAGNITUDE, I think it's premature to say exactly where we're going to sort out, there's many, many points of commonality between the two patient populations and some of the assessments. When we get to a final readout here, we'll take everybody through exactly what's the same, and if there are differences, we'll point them out so that it's very, very clear. Operator: The next question comes from Yanan Zhu with Wells Fargo Securities. Please go ahead. Yanan Zhu: Hi. Thanks for taking our questions. I think maybe our question is a little similar to the prior one, maybe asked differently. Do you think this Grade 5 AE in a CM study, you know, how might that have been impacted with the mitigation strategies that you have proposed for the PN study? I understand you may have additional proposals for the CM, do you think those two proposals would have changed the course or prevented this Grade 5 AE case? Separately, I was wondering, Argo Biopharma issued a press release for their AAAAI presentation last night. I'm wondering your thoughts about that data, would that, you know, introduce any new considerations in a competitive landscape for ramucirumab? Thank you. John Leonard: Well, thanks for the questions. I'm not in a position now to comment on the Argo reference. With respect to the patient who passed away in the MAGNITUDE study, remember, we were working on the mitigation strategies for the CM study, and those are not yet finalized. You're asking me if what we're doing in the PN study would have either prevented that or changed, I think you said, the course of the patient's clinical course. It's not clear that the patient would have been screened out in advance, although I think knowing what we know now and investigators knowing, they may have will interrogate patients more carefully in terms of other medical issues that they have and somebody with also disease, if in fact it's active, would be something that we would not want to have come into the study. With respect to the actual LFT rise, what would be different is that it would be detected earlier, and the course of steroids would be begun, substantially earlier than having the patient develop the full-blown transaminase elevations that happened in the case of this particular individual. Would that have changed going to the hospital and the rest of the clinical course? We can only speculate, and I'm not gonna do that. Things would have been handled somewhat differently, and I think that's important. Operator: The next question comes from Brian Cheng with J.P. Morgan. Please go ahead. Brian Cheng: Hey, guys. Thanks for taking our question this morning. In the MAGNITUDE-2 trial, can you give us a bit more color on how frequent the added supplementary, liver blood test will take place after dosing? Is it fair to assume that, added liver blood test will also be part of the trial modification that will take place for the, MAGNITUDE trial? Thank you. John Leonard: I would start by saying that we already introduced some additional blood draws into MAGNITUDE-2 when we put the clinical trial on hold. It's important to remember, and I think this sometimes get lost, that these trials are ongoing. What we're not doing is actively accruing patients. That's the one part of the study that is on hold. In terms of ongoing clinical evaluations, clinic visits, all of the standard assessments that are part of the protocol, that's happening. We're collecting endpoints as we go from the 650+ patients that were enrolled in MAGNITUDE. Things are moving, and I just, I don't want that lost. You know, as we put the trial on hold, for those patients who had just been dosed and had not passed through that window yet, we did implement measures that included additional screening of LFT. That's already in the protocol. If that changes or not, we'll see, you know, when we finalize that any protocol modifications with the FDA. I, in terms of the number of assessments, think of it as a couple of additional assessments in the weeks immediately after dosing. Essentially weekly early on, and then biweekly, or I should say semiweekly, I guess, for weeks three, four, and five. We have a really good bin sampling through the time when patients are most at risk. Operator: The next question comes from Silvan Tuerkcan with Citizens. Please go ahead. Silvan Tuerkcan: Hey, good morning. Congrats on the quarter, and thanks for taking my question. I just wanna circle back to the prior question on maybe Argos data and ADARx. You know, I appreciate you can't comment without seeing the data, but maybe on a high level, what can you tell us about the delineation or how you would want to position this once and done gene editing versus some of these more spaced out, you know, potentially 6, or dosed every 6 months, silencing RNA technologies that may be coming to the market? Do doctors already appreciate the difference here? Thank you. John Leonard: That's an important question, and I think one part of this that gets lost is what is the so-called burden of care? The burden of care is not just getting an injection, whether it's every 2 weeks, every 4 weeks, every 6 months, et cetera. It's also what patients need to go through to get access to these drugs and how they constrain life choices to do that. Think of it this way, if a patient needs to get prior authorization once or twice a year, that is a burden. There's risk associated with it. There are sometimes delays associated with it. Then the next year, you do it all over again, and the year after that, you do it again. These doctors are also engaged in this. If you ask the patients how they feel about that, they view that as an inherent risk to get access to the drug and continued access to the drug. You know, it's attack rates are important, and attack-free rates are, you know, critical for the actual outcomes of these patients. As we've said, we think we have a very, very attractive profile that you can look at what we've seen from, you know, the pooled analysis. The ongoing constraints that patients deal with, including maybe not changing jobs because they'll lose their insurance, is something that gets lost in all of these data, but is top of mind for patients when you go and ask them. Ed Dulac: Yeah, I'll just add on top of that. I mean, we don't really talk about the emotional, social aspects. There's financial aspects to prior authorization. I mean, again, these patients are pretty young and have oftentimes decades of drug therapy that's required. When you speak to them, it's very clear they'd prefer not to have HAE, and they'd prefer not to have drug therapy. We are gonna be the solution for the market for that, and we like what we see in terms of the large market. It's a highly informed, well-educated patient population. There is a trend towards LNP use, and we do see it as a switchable population for the most part. We're, we've got a lot of tailwinds here. I would say, without knowing the data that people are referencing, I do want to remind folks that study design does matter. There's pre-phase 1 or phase 2, that depending on how patients have come on to the study, are they on LNP or are they not, in addition to the open label nature, really has a way of changing the numerical responses as people would report them. You know, we had our own pooled analysis going back to November of last year from our phase 1, 2 study. That's the benefit of patients knowing they're on therapy, and you see, you know, very different outcomes, you know, very high attack-free rates and very high attack rate reduction. That's not necessarily the case in a phase 3 study, as we've talked about before. When you're in a randomized, placebo-controlled study, patients are risking coming off their existing LTPs. They are risking going on to a study where they may or may not receive active treatment, and that can lead to behaviors often seen in HAE patients that lead to additional attack rates being reported in that primary observation period. I think we're very careful about how we think about our phase 3 data that we'll report out. As we said before, we're very encouraged by pooled analysis that we shared in November. We think that's the best representation of what the real-world profile of lonvo-z will look like in the market. Operator: The next question comes from Myles Minter with William Blair. Please go ahead. Jake (for Myles Minter): Hi, this is Jake on from Myles. Thanks for taking our question. Is it your current stance that the liver enzyme elevations you're seeing from nex-z are specific to the editing of the TTR gene with no read-through to the rest of your pipeline? Maybe could you sort of dig into the underlying biology that would lead to that hypothesis? Does the evidence of this liver enzyme elevations being immune-mediated sort of influence your analysis of that question? Thank you. John Leonard: Thanks for the question. It's not something that I'm going to be able to speculate on at this point. You know, you're essentially asking me what are the molecular events that might be driving this? The simple answer is, at this point, we really don't know. Of course, we edit the TTR gene. That's the entire therapeutic hypothesis here. Whether or not that by itself or some other factor is what's driving this is not clear. As you might imagine, we've looked extremely carefully at the patients in the trial for any threads of evidence that would help us sort that out. On a going-forward basis, we're gonna continue to look for clues that may help us sort this out. If we could identify some aspect of a patient that said, "This is the person who's going to have this," obviously we would take action to address that, but we don't know that yet. As we step back a click or two, we see all the hallmarks of something that's immunologic, and that's why we're proposing, well, implementing in the case of polyneuropathy, and we'll see how MAGNITUDE-2, sorry, how MAGNITUDE sorts out, the use of steroids, which is time-tested. It's well known to be broadly applicable for immunological processes, and physicians tend to have a lot of experience with those drugs, which they can use safely. When it's used, we would expect it to be a very, very short course, in most cases, probably substantially less than even a week. We'll see what we learn as we go forward. To your broader question, does it speak across the entire pipeline? We don't think so. There's different genes, different edits, different patient populations, different demographic characteristics. As we've reported elsewhere, whether you look at our phase one work or phase two work or the phase three work across the HAELO study, we just don't see this phenomenon. There's been no Grade threes or Grade fours that have been observed at any point in those studies. We think that we're dealing with something that's primarily playing out in the CM patient population. We hope to be off hold so we can test the strategies that we're putting in place, to get to what we think is a very, very attractive efficacy profile, when we complete the study. Myles Minter: Thanks for taking the question. I was just wondering if you can remind us on the payer mix in HAE, in terms of commercial versus Medicaid, then how to think about, you know, timing of any Medicaid coverage in the event of approval? Then on the expense side, you know, your comment about if you achieve mid-single-digit market share in a year, that the cash flow could fully fund your operations. Is that assuming expenses are at steady state, or is that assuming that expenses ramp from here? Just want to kind of understand what the underlying direction is for the expenses when you make that kind of a statement. Thank you so much. John Leonard: Maybe you can help us look down the road a little bit for how you think about the expense profile and then maybe speak to the commercial Medicaid mix of carriers. Ed Dulac: Yeah. Thanks, John. Thanks, Aaron. From a cost perspective, and we're not giving long-term cost guidance, but if you look at where the business is, and 2025 is a pretty good year. I mean, we undertook a restructuring with a very thoughtful plan. We kind of ratcheted back R&D, have become much more focused there, but still very active on the R&D front. We did that to create capacity for the build that we were gonna need to do on a commercialization. That started in 2025, so the mix of the business has already started to shift in that direction, and that will continue. As you heard in the prepared remarks, we've got still some final build-out capabilities that we need to do for 2026 to be prepared for a first half 2027 launch. Roughly speaking, we've been guiding for around $400 million in net cash use over the last 12 or 24 months, and I think that's a reasonable number to be thinking about going forward. We'll have a little bit more investments on the sales and marketing side, but we've got a really good handle on what the needs of the business are beyond that. We're not going to be substantially higher than where we are today, and that allows us to kind of feel really comfortable about. While we have much higher expectations for lonvo-z, a little bit goes a long way for a company our size, and from an operational perspective, this is an opportunity that, you know, we can definitely do ourselves. You know, we've been very thoughtful about the approach that we're taking. That's behind the commentary this morning. From a commercial split perspective, roughly 70% of the opportunity is commercial payers for lonvo-z. Operator: The next question comes from Mitchell Kapoor with H.C. Wainwright. Please go ahead. Mitchell Kapoor: Good morning. Congrats. Mike on for Mitchell. Congrats on the year and the quarter. What are the gating factors to get the ATTR studies back up and running? For ATTR-CM, what have you heard from regulators on the path forward? Thank you. John Leonard: The gating factors for PN are really local, operational issues at sites, and we're engaged in that currently. There may be IRB submissions or some local regulatory considerations. All of that is happening, and we would be expecting to be actively accruing patients in the not-so-distant future. As we've said, we expect to have the study fully accrued by the end of this year. And, yeah, as we make progress, we'll provide updates as appropriate. With CM, the gating factor is having receiving a letter from the FDA that says you're off hold. And, as we've said, we've been very, very actively engaged with respect to addressing any questions, supplying information, et cetera. I think that we are very, very far down that road. Until we receive a letter that we're off hold, we should just wait and see. As soon as we get that letter, should we receive it, we will bring everybody up to date as quickly as possible, and then we'll go through a similar process that we are with PN, where it's local operational issues, to make sure that if there's, outside the U.S., any additional regulatory submissions that may apply to any particular country. Once we're off hold, should we get off hold, we will tell everybody exactly Operator: The next question comes from Jack Allen with Baird. Please go ahead. Jack Allen: Great. Thanks so much for taking the questions, and congrats on the progress over the quarter. I wanted to ask on the MAGNITUDE-2 peripheral neuropathy protocol amendments. Have you discussed with the FDA any impact as it relates to the comparability of the dataset pre- and post- the implementation of those protocol amendments? Is there any risk that the FDA views the protocol amendment as creating a differentiated dataset, you know, given the change in protocol? John Leonard: I can't speak for the mind of the FDA, but I would point out that the interruption in time was actually quite brief. When you think about clinical holds, generally, we are at the upper end, by that I mean, the shorter timeframe to get off clinical hold. In the case of PN, it was 3 months. The evolution of the patient population, you know, things like new therapies, et cetera, really doesn't come into play. Remember that of the target patient population that we started with, which was 50 total patients, we already had 47 at the time that we went to hold. we are very, very close to the accrual finish line, and from the standpoint of, you know, patients who came in before the hold and after the hold, I think the differences, if any, are likely to be de minimis. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Jason Fredette for any closing remarks. Jason Fredette: Well, thanks, Drew, and thanks, everyone, for joining us. We'll look forward to seeing many of you at the upcoming TD Cowen, Leerink and Barclays events that are taking place in Boston and Miami. That concludes the call. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Ladies and gentlemen, thank you for joining us, welcome to the Thryv Holdings, Inc. Fourth Quarter 2025 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute. I will now hand the conference over to Cameron Lessard, Senior Vice President, Corporate Development and Investor Relations. Cameron, please go ahead. Cameron Lessard: Good morning. Thank you for joining us for Thryv Holdings, Inc. fourth quarter 2025 earnings conference call. With me today are Joe Walsh, Chairman and Chief Executive Officer, Sean Wechter, Chief Technology Officer, and Paul Rouse, Chief Financial Officer. During this call, we will make forward-looking statements that are subject to various risks and uncertainties. Actual results may differ materially from these statements. A discussion of these risks and uncertainties is included in our earnings release and SEC filings. Today's presentation will also include non-GAAP financial measures, which should be considered in addition to, but not as a substitute for, our GAAP results. Reconciliation of these measures can be found in our earnings release. With that, I'll turn the call over to Joe Walsh, Chairman and CEO. Joe? Joe Walsh: Thank you, Cameron. Good morning, everyone. 2025 was a solid year. Our team accomplished a lot. SaaS revenues grew 34% year-over-year. SaaS adjusted EBITDA margin was strong at 16.8%. We are accelerating on the AI front. It is advancing our product roadmap. We are well-positioned as a leading SaaS platform for small businesses. I want to spend my time today clearly framing the future of Thryv Holdings, Inc. I want to be direct about what we are building, because the results you see for the quarter and our guidance for the year only make sense when viewed through that strategic lens. Over the past several years, we have communicated our transition from legacy print and marketing services into a leading SaaS company. This has been a successful transition that is well underway. What we have not shared yet is our next phase, not just evolving into a leading SaaS company, but becoming the platform of choice for small businesses who need to market, get found and chosen, who need to sell with automated follow-ups and capture every lead, and who need to grow by reaching more customers than ever before. Let me explain why this is important and what we have been building toward. Our Marketing Center is our fastest-growing product, a differentiated and valuable offering in the market that is growing north of 50% year over year. In fact, in 2025, it more than doubled in revenue. If you look at our old paradigm of centers, it would be our largest center. We recognized a gap. We were very good at helping businesses get found online and attract customers, but we needed to be equally strong at helping them convert those leads into sales, turn those customers into repeat buyers, and scale the entire cycle. Small businesses simply do not need more leads. They need to drive more revenue. That requires mastering the full journey, get found, land the sale, deliver great service, earn repeat business, and do it again and again. A network effect with increasing efficiency. That is precisely why the Keap acquisition was so strategic for us. We acquired years of development time and product sophistication that would have been nearly impossible for us to replicate internally. The value is not in Keap's revenue today, it is in the platform capabilities and the engineering talent integrated into our new platform that has let us accelerate our entire roadmap by multiple years. That is exactly what we have been engineering, combining Marketing Centers' proven ability to grow your business and get found online, with Keap's powerful capability to move leads through the sales funnel and turn them into customers, all in one unified platform. No more separate products, no more fragmented experiences. Going forward, our entire strategy centers on one powerful offering. The Thryv Platform, powered by AI, will be launching later in 2026. The Thryv Platform represents a fundamental paradigm shift from selling individual products and centers to delivering a unified growth platform for small businesses. This is an architectural go-to-market and operating model transformation designed to help businesses market, sell, and grow within one integrated system. Historically, our software portfolio evolved as a collection of distinct solutions. That structure worked in a sales-led world. Small businesses do not think in terms of products. They think in terms of outcomes. How do I attract customers? How do I convert demand? How do I manage relationships? How do I grow revenue with limited time and expertise? The Thryv Platform is built to deliver those outcomes through a single experience, with 3 tiers aligned to where a business is in its life cycle, from a very small business just getting started, to growing small businesses, and then eventually to established businesses that want one platform to run their growth. A critical foundation of this platform is our CRM and automation layer. We invested here because the system of record is essential to building modern, product-led experiences. CRM is no longer a standalone tool. It is the backbone, really, that facilitates onboarding, automation, AI-driven insights, and expansion across the customer life cycle. At the same time, we are modernizing the platform around AI to reduce the effort required for customers to see value. AI is embedded directly into the customer journey to accelerate time to value, guide next best actions, and help small businesses grow without needing specialized marketing or technical expertise. This platform strategy also underpins a major evolution in how we go to market. We are moving deliberately toward product-led growth and a product-led sales hybrid model. Entry-level customers increasingly come in through self-service, product-led motions, while our sales organization focuses on higher value tiers, more complex needs, and expansion over time. There is one additional point I want to address directly as you think about our outlook. Over the past several years, our SaaS growth benefited materially from these initiated upgrades, where we took marketing services clients and moved them from legacy platforms onto our modern SaaS platform. That motion was effective and helped us scale quickly, but it was always going to reach a conclusion. As we exited 2025, that upgrade pool is largely behind us. We have some remaining on our roadmap for the next few years, but they are smaller as a proportion of our overall revenue growth. Going forward, our growth will be fueled by 3 primary drivers: organic customer acquisition, expansion, and retention. The Thryv Platform is explicitly designed for this next phase. As a result, near-term growth rates will moderate, but the underlying quality of that growth improves meaningfully as we move out. How to think about us going forward? Let me discuss how you should evaluate Thryv Holdings, Inc.'s performance, because I think there is an important distinction between signal and noise in our metrics. I want to make sure you are focused on what exactly matters on our long-term business value. Our business quality is fundamentally defined by customers spending $400 a month or more. We call these quality customers. This is not an arbitrary threshold we picked for convenience. This is where our unit economics work and where retention is materially stronger, where stronger expansion is attainable, and where we are building a compounding business model. Who are these customers? These are established small businesses, typically doing close to $1 million or more in annual revenue, and they have 4, 5, 6, even more employees. These are not solopreneurs agonizing over a $50 expense. These are real businesses with real operational complexity. We are spending $400, $500, $600, $700 a month on a platform that drives customer acquisition, manages their sales pipeline, and helps run their operations, is, frankly, a straightforward return on investment decision. The data on this segment tells a really clear story. Retention rates are significantly higher than our blended average, and they are improving. They tend to expand over time, adding capabilities, increasing their monthly spend, and deepening their investment in the platform. This segment is growing both in absolute customer numbers and as a percentage of our total base. These are businesses that integrate Thryv Holdings, Inc. into their core operations, and they see measurable returns. Together, we become true partners in their growth. This is where we win, and this is where we are deliberately concentrating our product development, sales resources, and our customer success efforts. Now, let me address what has created noise in the overall numbers. We carry a legacy tail of smaller customers, many spending well under $200 a month, that came into our base through acquisitions, upgrades initiated by us, or promotional offers that made sense at different points in our history, but do not align with our current platform value proposition or our current pricing structure. These are fundamentally different businesses. These are micro-businesses, solopreneurs, side hustles, operations where $100 or $150 a month is a meaningful recurring expense that they are constantly evaluating. We manage this segment in two ways. First, we actively upgrade these customers into higher value packages. We run targeted outreach, demonstrate additional capabilities. We show them the ROI of expanding their use of the platform, and it works. Many do upgrade. They see value, scale their usage, and transition into that $400+ segment, where the retention and expansion economics really kick in. You can see evidence of this working in our ARPU trends. The second way we manage them is we accept the fact that these smaller customers do sometimes churn, and we are okay with that outcome. While it creates some pressure on our aggregate retention metrics, it does have minimal impact on our overall revenue. Here is the key distinction: If you evaluate us purely on total customer count or on blended retention metrics that treat all customers equally, you are essentially measuring the wrong thing. You are giving equal analytical weight to a $75 a month customer, a solopreneur who is extremely price sensitive, and likely to churn software vendors regularly, and a $600 a month established business with $1 million in revenue that views Thryv Holdings, Inc. as mission-critical infrastructure for their operation. Those are not the same business relationships. They do not have the same economics, and they should not carry the same weight in how you think about our business trajectory. What should you be measuring? Growth in quality customers spending $400 a month or more is 18+% in the fourth quarter of last year. We have had steady growth in that segment. Quality customers now account for 69% of our revenue in Q4, compared to 60% the prior year. Marketing Center is our largest and fastest-growing center within our market sell growth strategy. At two-thirds of our SaaS revenue, growing 34% in Q4, it is one of the clearest signals of where this business is headed. You know, Marketing Center as a center is actually growing faster than the 34%. The 34% refers to the whole kind of platform of market sell growth. This matters enormously because Marketing Center represents an AI-enabled platform. These are customers saying, "I want technology that helps me acquire customers, manage my pipeline, and grow my business, and I am willing to pay for it." Here is what we are learning: customers genuinely love software when it delivers results. Marketing Center customers fit our ideal profile almost perfectly. They are spending meaningful amounts. They are seeing return on investment they can measure. They are expanding into additional capabilities as they see value. They are sticking with us because the platform becomes increasingly embedded in how they run their business. This is our business model. This is what Thryv Holdings, Inc. looks like at scale. It is the right product for the right customer profile. The performance validates everything we have been building toward. When you are thinking about how to evaluate our performance and trajectory, do not just look at the blended customer counts or aggregate metrics. Look at the growth that we are seeing in our market sell growth strategy. Look at the $400 a month cohort expansion. Those are your forward-looking indicators. That is where you can see proof that when we execute our strategy with our target customer base, we can drive strong, sustainable SaaS growth. Let me bring this together. Performance of MSG proves the model works. We are taking those learnings, combining them with Keap's customer conversion and lifecycle capabilities, and scaling that proven success across the unified Thryv Platform. Judge us on the quality and trajectory of our customer base, not just the quantity. That is where the real value creation story is unfolding. With that context, let me introduce our Chief Technology Officer, Sean Wechter, who will talk about the progress we are making on the AI front. Sean has multiple tours of duty at market-leading public and private technology companies and joined our company about half a year ago. I will hand it over to Sean now to share a bit about what his team has been focused on. Sean? Sean Wechter: Thank you, Joe. Good morning. My name is Sean Wechter, I am the CTO of Thryv Holdings, Inc. I joined Thryv Holdings, Inc. in October and have been super impressed with the foundation that we have built and the large customer base we have to build on. The first two levers I pulled when I arrived were to amp up our AI efforts and our data assets, get them cleaned up. I was fortunate to be starting on third base because the products and ecosystem at Thryv Holdings, Inc. are already API rich. Since we are going to be talking about artificial intelligence, I just wanted to go over a few caveats. Things in the AI world are rapidly evolving, our strategy is to adopt the latest and greatest AI tools and partners, and this may change as new leaders emerge. Our strategy is also to conduct a portfolio of experiments and double down on the winners. What we are going to cover today, we are going to go over a summary of our AI strategy and my favorite AI programs. A summary of our AI strategy at a macro level is that we want to partner with the latest and greatest AI solutions on the market. When we think about our strategy, we break it into a few buckets. We have the enterprise, we have our engineering team, and we have our product. On the enterprise, my favorite author is Jim Collins. He wrote the book Great by Choice and Good to Great, and he has this concept of bullets versus cannonballs, which means, you know, you try lots of things, and then you double down on the winners. We are going to do that, exactly that in the sales, customer success, and engineering domains. The reason for that is there are lots of new AI solutions hitting the market every day, and some of them are great, and some of them are not so great, and you have got to sift through them all, and thus, bullets versus cannonballs. On the engineering front, developer productivity is the name of the game. We want to make sure our engineers have the latest and greatest tools in their hands, and we also want to be great at rapidly integrating and interoperating within our customer's ecosystem and our ecosystem. On the product front, we want to bring AI down market to small businesses in an ambient way. Meaning, ideally, AI does the intended task for you, hopefully proactively. For example, if you want to reschedule your next appointment or move a lead from one system of record to another, simply do it by voicing your request, and it is done. We want to be strongly embedded in the top AI models. We believe that that is going to make our products more sticky, and we want to partner like crazy with the winners and rapidly evolve and iterate as those winners rotate every 6–12 months. My favorite uses of AI so far at Thryv Holdings, Inc. is one, our Budget Optimizer, which is a super cool program that used AI to transcribe calls, then used AI to score those transcripts. Then we used machine learning to optimize that data for the best lead sources and the best use of the customer's budget. When we think about our data and our scale, we have LLM data like everybody else, but we have industry data and customer-specific data that helps us on our AI journey. Another cool program we have is the New Zealand Directory Assistance Program, where we used market-leading AI voice interaction solutions with market-leading AI workflow automation solutions and our data to bring a fully AI directory assistance experience to New Zealanders. Then we have our MCP solution, which, you know, really helps us integrate with the top frontier models. I think we were second to market in launching our native MCP solution, which made me happy because we are in the race. We are going to keep it right now as a frontier program because MCP, in general, is still maturing, but we are committed to being deeply embedded into the best AI models. To wrap up, we are working to accelerate our AI efforts meaningfully. I am really proud of the teamwork and excited about this next chapter of the technology industry. 10 years ago, our customers needed a mix of technologies to market and sell and grow their business. 10 years from now, they are going to need a mix of technologies to market, sell, and grow their business. I am committed to ensuring we are leading the way. With that, I will turn it over to Paul Rouse, our CFO. Paul Rouse: Thanks, Sean. Let us dive into the quarter. SaaS revenue increased 14.1% to $119 million in the fourth quarter and was within guidance. Keap contributed $16.2 million in the fourth quarter. SaaS revenue increased 34.2% year-over-year to $461 million for the full year. SaaS adjusted gross margin was 70.4% in the fourth quarter. SaaS adjusted gross margin increased 70 basis points year-over-year to 72.7% for the full year. SaaS adjusted EBITDA increased to $20 million in the fourth quarter, within guidance and resulting in an adjusted EBITDA margin of 16.8%. SaaS adjusted EBITDA increased to $73.8 million for the full year, resulting in an adjusted EBITDA margin of 16%. We ended the fourth quarter with 100,000 SaaS subscribers. SaaS ARPU reached $373, representing a 15% increase year-over-year. Seasoned NRR stayed flat at 94% for the quarter. Growth in quality customers spending $400 a month or more grew by 3,000 or 18% year-over-year, and now represents more than 20% of our client base. Multi-product adoption continued to accelerate in the fourth quarter. Clients with two or more SaaS products grew to 19,000, or 23% of our base, compared to 15,000 or 16% of our base one year ago. Thryv Holdings, Inc. clients with two or more centers was 15% at the end of the fourth quarter, compared to 12% in the prior year. Marketing services revenue was $72.6 million for the fourth quarter, in line with our guidance. Marketing services revenue was $324 million for the full year. Marketing services adjusted EBITDA was $18.8 million in the fourth quarter, within guidance and resulting in an adjusted EBITDA margin of 25.9%. Marketing services adjusted EBITDA was $78 million for the full year, resulting in an adjusted EBITDA margin of 24.1%. Fourth quarter marketing services billings totaled $60.9 million, down 34% year-over-year, reflecting our intentional shift in our strategy as we continue to initiate upgrades of legacy digital marketing services products for clients to our SaaS platform. The decline will persist, but at a managed pace. We remain on track to exit marketing services by 2028, with cash flows lasting through 2030, providing liquidity as we fully transform to a pure play software business. Free cash flow was $31.1 million in 2025, for the first time, we expect the number to grow meaningfully to $40 million–$50 million in 2026, a direct reflection of our software business having reached size and scale that is now driving the majority of our profitability. We ended the fourth quarter with net debt reduced by $15 million to $251 million, bringing our leverage ratio to 1.7 times. Turning to our outlook for 2026. For the first quarter, we expect SaaS revenue in the range of $114 million–$115 million. For the full year, we expect SaaS revenue in the range of $461 million–$471 million. For the first quarter, we expect SaaS adjusted EBITDA in the range of $12 million–$13 million. For the full year, we expect SaaS adjusted EBITDA in the range of $70 million–$75 million. For the full year, we expect our marketing services revenue to be in a range of $150 million–$160 million. For the full year, we expect marketing services adjusted EBITDA in the range of $30 million–$35 million. I will turn the call back over to Joe. Joe Walsh: Thank you, Paul. You will have noticed in Paul's guidance that is a little bit conservative on the quarterly guide and the guide for the year for SaaS. We have a tremendous amount of faith in our market sell grow platform, this initiative I talked about in the opening. We basically have struck oil. This is really selling very quickly and working well. As we are setting up this transition, we expect slower growth for a few quarters, re-accelerating later in the year and going strong into next year. We are taking a conservative guide as we work our way through that transition. I will turn it over now to the operator for questions. Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now. If you have dialed into today's call, please press star nine to raise your hand and star six to unmute. Please stand by while we compile the Q&A roster. Your first question comes from the line of Arjun Bhatia with William Blair. Your line is open. Please go ahead. Arjun Bhatia: Perfect. Thank you guys so much. Some interesting announcements there. Joe, with the new platform, maybe we can touch on that first. I am just curious how you kind of envision the adoption kind of curve of the new platform. Like, is there going to be a migration of existing customers? You know, like what are the kind of, you know... Is that disruptive for customers? How do you plan to do that? Then just how long might it take before the new platform is sort of fully ramped up for your entire customer base, and you are selling it to new customers as well? Joe Walsh: That is a great question. Thanks, Arjun. It is interesting, you know, Marketing Center has been around, and it has been steadily building, and we have been sort of dialing it in, and it is fitting in beautifully in a market where, you know, there are a lot of people with vertical CRMs and, you know, other kinds of offerings. You know, we are uniquely placed in this ability to find customers. You know, we still own and control, you know, lots of big directories like YP and Superpages, and we have got a big network of partners like Yelp and Nextdoor and many, many others, both here in the U.S. and over in Australia and New Zealand. We are really plugged in, and we are really good at finding new customers and bringing them in. This top-of-the-funnel thing, we have always been amazing at. What Keap gave us was it gave us sort of the bottom of the funnel, the ability to follow up and convert, and then once the customer was a customer, to nurture them for more business, for a longer lifetime value run. What we have done is we have engineered everything together into one platform, and the more progress we have made on that, the more we have met with customers and begun to put that in place, the more we have realized that, you know, we have just captured lightning in a bottle. Like, this is really good. You know, you do not have to get somebody to take out their other CRM to put it in. We can actually be agnostic about what CRM you have, and we can work with you. It is really opened up a whole new vista for us of people to work with, of partners, the whole bit. We are really excited that this is a space that we have a tremendous right to win in. I am not sure we have a right to win in just the kind of original BC product. You know, there are people that are doing a lot of work deeply down into verticals, mapping processes in particular industries and all that. You know that is a harder putt, if you will. Back to your question, how do we see it sort of developing? Well, it is the Market Sell Grow platform is made up of some bits that we have been doing for a while, and some of the newly developed AI kinds of tools that Sean talked about a couple of minutes ago. We, you know, we have sort of replatformed everything and are building it in that way. It is well over $300 million in revenue already. And yeah, there is a little bit of cannibalization where it is eating up some of Business Center customers who bought it, who really more had an interest in growing and, you know, and leads, lead gen and some of those tools. There has been some people, you know, moving from Business Center over to this exciting new Platform. Look, you know how this happens in a company. When you bring out something that is just hot and really working well, everybody gets excited about it. It becomes the thing that, you know, they really believe in, and they want to talk to customers about. In some cases, you know, that enthusiasm is transferring into them, you know, moving customers over, because they feel it is a better fit, and it is going to really help them. You know, we are still selling some new business center customers, and we have a large installed base of business center customers that are using it and doing well on it. But it does not have the heat and light that it had before because the market sell and grow platform has really captured everyone's imagination, and that is where the focus is. Hopefully that answered your question. There is kind of a little bit of cannibalization. It is mostly selling new out there, but there is a little bit of people moving from Business Center. Arjun Bhatia: Yep. Yeah. Perfect. Very helpful. Appreciate that color. Then, going back to just how you think about your customer base and the new sort of segmentation around quality customers, how should we just view the retention metrics and LTV dynamics of this quality customer cohort? How does it differ, or maybe the better way to phrase it is, what is the overlap with the seasoned customer metric? You know, are these all tenured customers, or are there new customers that are also spending over this $400 mark per month? Joe Walsh: There are definitely some new customers that are coming in right away. I mean, if you look at what our field sales force is selling right now, on average, they are selling customers that are over $400 a month. I mean, they, you know, they are out there selling big, and they are having a lot of success, you know, selling this kind of fully hatched program. We tried to talk about it a little bit in the press release, prepared remarks. You know, we have been transforming the directory business of the past into this SaaS business, and in so doing, we... Some of the legacy platforms that date back to some of the old Regional Bell Operating Companies that were bought and rolled up and were a part of this, some of these platforms were, you know, 20 years old and older, that clients were running on, and we literally needed to shut those down and get them off. We landed them on our modern SaaS platform, and we gave them a lot more value, gave a lot more functionality, a lot more tools, and we moved them over, you know, without disrupting them with a big price increase. A lot of these people came over, and they were, you know, below our rate card and not necessarily natural, you know, SaaS customers or natural customers that really were wanting to invest and build and grow their business. We have been working with them, trying to get them engaged with their tools, and in many cases they are getting engaged, and they are buying more, and they are becoming quality customers. In some cases they are saying: "Look, you know, I do not really care about this. It is not really what I want," and they are churning away. That is part of why you are seeing noise in the gross customer number and why we have kind of pointed you to what is going on under the hood. You have got this $300 million plus dollar business that is growing fast, that is really strong, and you have got this big client base. About, you know, 69% of our clients are this quality metric where, you know, we make good margins. These are a little bit larger businesses. These are businesses that have the ability to buy more from us. I get it. There is so much noise in our numbers, it is hard to kind of see it all. That is kind of been our approach. Arjun Bhatia: All right. Perfect. Thank you. Operator: Your next question comes from the line of Zach Cummins with B. Riley Securities. Your line is open. Please go ahead. Zach Cummins: Hi, good morning. Thanks for taking my questions. Joe, I wanted to ask you how your go-to-market approach is going to evolve now with this greater focus on quality customers. Can you just dive a little bit deeper in terms of how you are thinking of serving the lower end versus your direct sales approach and maybe even working with some larger partners over time? Joe Walsh: Yeah, thank you. We made, you know, sort of a natural mistake, if you will, in the early going. You know, we were, you know, anxious to build a software company. We were anxious to talk to anybody that would talk to us to sell it. We sold anybody that would talk to us. In the process, we did a massive experiment to figure out who our ideal client profile is. We sold a lot of solopreneurs, very small businesses, where, you know, they may have come in for an initial kind of $300 a month-ish kind of deal, and that was a big bill for them, and they, you know, worried every month about it. You know, they were not necessarily able to fully utilize all the functionality in the software. At the same time, we went out and we sold some bigger businesses, and we saw them really engage with the product, really begin to use it. We saw them buy more, and so on. What we pretty much have decided is that our phenomenal, you know, in-person sales organization should really spend its time with the larger businesses. We should develop more of untouched by human hands motion for the smaller. We are, you know, we have been building this sort of product-led growth approach, where, you know, for a smaller business that wants to come in, you know, we are going to have products that they can buy, and, and they will be able to do that. There will be, you know, all kinds of, you know, communities and, frequently asked questions and videos they can watch, and so on. We are not necessarily going to, you know, deploy somebody who makes six figures out there calling on them to help them with that. The economics of that just are tough to support. We really have put, you know, most of our emphasis and most of our focus on marketing to and prospecting for larger businesses, more businesses with more like, you know, $1 million in revenue or close to it, and less of the kind of very, very small person that works alone or maybe a two-employee business. Those we hope will still come in and, you know, come in through our product-led growth motion that we are developing. You know, we think the majority of where we will spend our time is with these bigger businesses. Zach Cummins: Understood. Just one follow-up question around the launch of the new platform. Can you clarify how much more development work needs to be done, and when you are planning to really kind of broadly roll out this new MSG platform as you referred to it? Joe Walsh: Yeah. We are selling it right now, and it is going really, really, really well. What is happening though is we are doing more work to put more functionality, and I do not know if any product is ever really done. Bringing it, you know, further along, there are some really bold AI initiatives where we use the MCP layer, and we are making it do all kinds of interesting things that are sort of happening in the lab that will be, you know, coming into the product fairly soon. It is progressing nicely. We, you know, we have a, you know, a trial version out and a small beta that will be expanding more broadly fairly soon. It is all coming together now. It is not like a flash cut where we are not doing it, and then we are going to do it. We are selling it right now. There are dramatically improved versions of it that we plan over the course of the year. Operator: Your next question comes from the line of Matthew Swanson with RBC. Your line is open. Please go ahead. Matthew Swanson: Yeah, great. Thank you guys so much for taking my question. I was curious on the tiers of kind of how you are pricing the new platform. I think it makes a lot of sense from kind of a streamlined standpoint. What are you seeing or kind of what are your expectations in terms of how your quality SaaS customers are going to transition over, at what tier, and does that have any kind of distinct differences from a pricing standpoint compared to the existing products they are on? Joe Walsh: I think it is more. It is a great question because, you know, you have got different kinds of businesses. You have got the very small kind of dreamer, just getting started business, and we are going to have a product for them. As I mentioned, that we are not really going to talk to them about it, per se. We are going to, you know, let them come to our website and sort of do it on their own. We are going to have kind of a mid-price thing that is a nice step up for those people who start on that trialer tier, and that second tier might also be an area that an in-person salesperson might be able to land somebody on, and then there will be a higher tier. You know, my experience is to scale anything. You need to keep it relatively simple. It cannot really be, you know, a blizzard of different choices, and all that just becomes too confusing. You know, that is why we are coming up with this more streamlined, simple approach. There will be add-ons and things that you can buy over and above that initial triplicate of choice so that we can continue to grow the customer. You know, we will have an offering, you know, at the low end for a smaller business so that they can come and they can buy, but we are not going to deploy a whole bunch of sales or services costs against that. Matthew Swanson: Yeah, that is helpful. Maybe following up right where you left off there and just kind of thinking about some of the efficiency gains that you could have by having such a, you know, simplified or centric go-to-market approach, would the plan be to end of life the other centers or other products over time, or is it just too early to think about that? Joe Walsh: I think it is too early to think about that. I mean, the market sell growth platform is pulling across our product range, all the things that we think support that. What was it, at one time, Thryv Reporting Center is powerfully in the middle of that now. You know, Thryv Business Center is a separate thing, and I mentioned quite honestly, there are, you know, some numbers of customers that have opted more toward the market sell grow piece because that is really what they want. They really want the phone to ring. They really want a bunch of business coming in. You know, they were not prepared to really fully use all the functionality of an operating system in their business. That is kind of right. That is the way it is working out. That is part of the reason that you are seeing a little flatness in our top-line revenue growth and our guidance, is we are trying to give a little room because we are seeing some of that cannibalization. In terms of the longer term, you know, we have got a very large base of Business Center customers engaged and using it and happy. You know, we do not intend to kick them off. We want to continue to serve them, and we are really happy with them. In some cases, they have got Business Center, and they also are buying all the marketing tools and doing that as well. We have more cleaned up and segregated that. We feel like we can scale bigger, better, faster, and run a more efficient business with a more streamlined set of product offerings. Operator: Thank you. Your final question comes from the line of Jason Kreyer with Craig-Hallum Capital Group. Your line is open. Please go ahead. Jason Kreyer: Thank you, guys. Joe, I was wondering if you could talk more about the AI functionality that you are embedding in the platform, and how that creates more value or more efficiency for your customers. Joe Walsh: I would love to. I am going to share my answer with Sean. I am going to give him a look at it because Sean is, I think his middle name might be AI. He is Mr. AI. I will start a little bit, and then I will give it to Sean. You know, there is just a long list of different things that AI can do, and I know there is a lot of debate out there about, you know, will AI, you know, replace software, or will it augment it, or whatever? You know, look, the price point that we are offering here, it is not worth your time to sit down and try to figure out how to hack together your own stuff. I mean, we are organizing and pulling it all together and making everything in a complete package to help you accomplish growing your business. Most of the people that we work with do not have a lot of expertise in marketing. They do not have a lot of expertise in AI. They are good plumbers or carpenters or, you know, whatever they do, and they really need us. It is sort of AI with human in the loop, but the whole idea is this platform becomes easier and easier to use. If I am really honest with you, our biggest problem over the last, you know, decade has been getting the small business to really engage and do even small things that they need to do to make the whole wheel work, and the AI can come in now, and it can do those things to kick it over and create, you know, a cycle that works. The automations that we got in Keap do that same thing. There is a lot of really cool stuff like, you know, your customer calls you, and this thing can, you know, capture the transcript of the call. It can rate, grade, you know, was it a one through five lead? Where should it go in your lead funnel? It can follow up on that thing for you. It is really incredible, the stuff that it is doing. Sean, I know you have got some observations the way you think about it. I cannot seem to shut you up about it when we talk about it. Sean Wechter: Yeah, I am equally excited about it as well, Joe. Jason, you know, we sit in the value chain between buyers and sellers and have for a long time. That means we have got a lot of really rich data around that, from call transcripts to leads to form fills. We are just trying to get creative on how to use that to benefit the actual small builder and small business. You know, there are just things that our small business needs to evolve into, like, you know, we call it AEO, answer engine optimization. You know, you had SEO, well, now you have to show up in all the frontier models and helping them do that. We have website generation, we have social posting, call analysis, AI Receptionist, you know, they are missing calls. They can now have an AI help them take that call, transcribe it, moving data around from a mix of ecosystem, you know, solutions in their ecosystem, you know, systems of record for finance and other CRMs and so forth. Eliminating that complexity is pretty exciting. When I talked about our strategy, there are new awesome tools that are popping up left and right, and we are committed to taking the best of them, simplifying them, and bringing them down market to our customers. That is really just a race without an end. Did that answer your question? Jason Kreyer: Oh, that was great. Thank you. I appreciate that. Maybe just one follow-up for me. Curious if you have any expectations for churn as you migrate customers kind of from where they are into these higher value packages? Thanks. Joe Walsh: Yeah. We are seeing churn overall gently trend down. Now, we definitely had a little bit of a hump of churn following the massive migration. I mean, you will remember if you have been tracking our numbers closely, we went from around 50,000 customers to 100,000 really fast, and that was, you know, just a whole bunch of systems that we were sunsetting in the old, you know, phone company, you know, marketing services and Yellow Pages environment that we wanted to move over. We have had a chance now to, you know, really work with those customers and some of them, we worked with them out, and some we worked with them up. There is a little bit more of that to go, but the way I would say, Jason, is I think that when you look at our business over the next, say, you know, three years, kind of the arc of where we are going, we are subtly moving up market. As we move up market, I think we will get lower churn. Just when I study the base that we have now, you know, those customers that are, you know, down in that lower spend tier or the smaller businesses, have churn profiles that are higher than the bigger businesses that we are selling. When we sell a business that has, you know, eight or 10 employees and, you know, maybe $1.5 million of revenue or something like that, they tend to be very stable and behave really well. They have a persistent need for leads. They have an employee staff that is counting on, you know, the business ticking over and doing that next thing. When we sell a solopreneur or a two-employee business, they sometimes hit a rough patch and just decide to go get jobs and stop doing the business anymore, and it becomes a churn, and it has nothing to do with our software. I think my expectation is where we are trying to run the business is for lower churn over time. I am not saying we are going to go to enterprise-level churn, because we still are dealing with small businesses, but I think you will see it trend down over time. Operator: There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.
Operator: Good day, and thank you for standing by. Welcome to the APA Corporation Fourth Quarter and Full Year 2025 Financial and Operational Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stephane Aka, Managing Director of Investor Relations. Please go ahead. Stephane Aka: Good morning. and thank you for joining us on APA Corporation's Fourth Quarter and Full Year 2025 Financial and Operational Results Conference Call. We will begin the call with an overview by CEO, John Christmann; Steve Riney, President, will then provide an update on our Permian inventory; and Ben Rodgers, CFO, will share further color on our results and outlook; Tracey Henderson Executive Vice President of Exploration is also on the call and available to answer questions. We will start the call with prepared remarks and allocate the remainder of time to Q&A. In conjunction with yesterday's press release, I hope you have had the opportunity to review our financial and operational supplement, which can be found on our Investor Relations website at investor.apacorp.com. Please note that we may discuss certain non-GAAP financial measures. A reconciliation of the differences between these measures and the most directly comparable GAAP financial measures can be found in the supplemental information provided on our website. Consistent with previous reporting practices, adjusted production numbers cited in today's call are adjusted to exclude noncontrolling interest in Egypt and Egypt tax barrels. I'd like to remind everyone that today's discussion will contain forward-looking estimates and assumptions based on our current views and reasonable expectations. However, A number of factors could cause actual results to differ materially from what we discuss in today's call. A full disclaimer is located with the supplemental information on our website. And with that, I will turn the call over to John. John Christmann: Good morning, and thank you for joining us. On today's call, I will review our full year 2025 results, outline our continued progress across key strategic initiatives, and discuss our outlook and plans for 2026. 2025 was a highly successful year for APA, defined by continued progress against our strategic priorities and strong execution across our asset base. We entered the year with a clear objective to materially reduce our overall cost structure, part of which was to make significant further strides in terms of operational excellence. We set a goal to reduce our controllable spend by $350 million on a run rate basis by the end of 2027 without compromising safety, asset integrity or our commitment to exploration. Through the dedication of our employees and strong leadership alignment, we exceeded this target over a significantly shorter time frame and have line of sight to exiting 2026 at a $450 million run rate. Ben will provide more details on this topic. During the year, we also met or exceeded oil production guidance in the Permian every quarter in 2025 on a lower-than-planned capital budget. In addition, we also made significant progress on a comprehensive assessment of our Permian Basin inventory, incorporating our improved cost structure. This effort confirmed the depth and quality of our drilling opportunities and validated substantial upside potential. Additionally, it increased our confidence in sustaining long-term oil production while delivering competitive capital efficiency. Steve will provide further color on our Permian inventory position shortly. Moving to Egypt. Our focused activity under the new gas pricing framework drove meaningful production growth, establishing the foundation for a sustained multiyear strategic focus. On the oil side, strong reservoir management through targeted waterflood activity has helped stabilize gross volumes over the past three quarters. In Suriname, our partner, Total, continues to execute at a high level as we advance toward a mid-2028 first oil date. On the exploration front, our Sockeye discovery in Alaska further confirm the prospectivity of our approximately 325,000 acre position, providing a strong basis for future exploration and appraisal activity. In summary, the disciplined execution across our asset base and strong delivery of our cost reduction initiatives drove more than $1 billion in free cash flow generation in 2025 of which we returned approximately $640 million to shareholders. We also significantly strengthened our balance sheet, ending the year with less than $4 billion in net debt. Turning to 2026. Our strategic priorities are clear and our capital plan is disciplined. We will sustain operational momentum, further reduce our cost structure, continue strengthening our balance sheet, and invest in the future through exploration. In the United States, our $1.3 billion capital program is designed to maintain relatively flat oil production year-over-year at approximately 120,000 to 122,000 barrels per day despite significant weather-related downtime in the first quarter. This represents an improvement relative to our preliminary outlook discussed in November, reflecting continued gains in operational and capital efficiency. In Egypt, we will invest approximately $500 million to slightly grow BOE production year-over-year. As our activity becomes increasingly gas-weighted, gross oil production is expected to decline slightly, while gross gas volumes continue on a growth trajectory year-over-year. After just 1 year of focused successful gas drilling, we now have visibility into a runway of new development inventory and near-field exploration opportunities. This has laid the foundation to support continued growth, and we expect to deliver approximately 540 million to 550 million cubic feet per day this year. This volume outlook includes a minor impact from our withdrawal from a small noncore concession, which Ben will address shortly. Under our new pricing framework increased gas production strengthens free cash flow and further establishes Egypt as a key value driver within our portfolio. For the GranMorgu development in Suriname, we will allocate approximately $230 million in capital. On the exploration front, we are investing approximately $70 million to advance high-impact opportunities across our portfolio. This includes a return to exploration drilling in Suriname Block 58 in the fourth quarter and planning and readiness spend ahead of an active first quarter 2027 drilling season in Alaska. In aggregate, our total portfolio spend is $2.1 billion, roughly 10% lower than last year. This plan is operationally manageable and preserves flexibility to scale activity in response to commodity price movements. In closing, the progress we delivered in 2025 reflects a fundamental transformation of APA's base business over the past several years. We have high-graded the portfolio, significantly reduced our cost structure, strengthen the balance sheet and further advanced our exploration efforts, resulting in a more focused, resilient and capital-efficient company. These actions have translated into stronger free cash flow generation in a structurally more competitive asset base in both the Permian and Egypt. In the Permian, we have enhanced returns through disciplined capital allocation and significant efficiency gains while building depth and durability in our inventory, which is expected to sustain oil production and deliver competitive capital efficiency for the next decade. In Egypt, we continue to strengthen asset durability through both commercial and operational initiatives. This includes a focused gas strategy supported by an improved pricing framework that complements our established oil base. Our high-quality development and near field exploration program is expected to drive gas growth and support a strong long-term outlook. Together, the strength of these base businesses form the foundation for sustained free cash flow generation for the next several years. Starting in 2028, the addition of Suriname will provide a meaningful step change and continued growth in free cash flow through at least the early 2030s. I will now turn it over to Steve, who will provide more details on our Permian inventory. Stephen Riney: Thank you, John. The Permian Basin is Apache's foundational asset. It's our largest source of both production and free cash flow, and it consistently attracts the largest amount of capital. One of our strategic objectives is to build and grow a high-quality portfolio of assets. In the Permian, we have made great progress on this over the past 2 years. That progress can be summarized in three key efforts. Portfolio actions, cost structure improvements, and refining our development approach. So let's take a quick look at each of these three key efforts. Throughout my remarks, I will reference slides from our financial and operational supplement, which is available on our website. In terms of portfolio actions, we have high-graded our Permian asset base, leveraging scale and localized knowledge to maximize economic inventory. This was enabled through the Callon acquisition and exits from noncore assets like the conventional Central Basin platform and our fragmented position in New Mexico. We now hold approximately 450,000 net acres across the Midland and Texas Delaware basins with more than 95% of that acreage held by production. Our position is now concentrated in a few key areas, presenting two primary benefits. It enables economies of scale in our operations and provide significant flexibility in the pacing of activity. Turning to our progress on the cost side. Our momentum has been evident over the last several quarters. Beginning in 2024, the successful delivery of Callon synergies significantly lowered breakeven oil prices from what Callon experienced in 2023. In 2025, we made further strides in drilling, completions, equipping and facilities costs on a per lateral foot basis. As shown on Page 11 of our supplement, our current drilling and completion costs averaged $595 per foot in the Midland Basin and $750 per foot in the Delaware Basin. These costs reflect a mix of landing zone depths and compare very favorably to both public and private peers. We have also significantly reduced facilities costs as we have moved to more brownfield expansions. Finally, our development approach has historically involved wider well spacing with larger completions. That approach drove very strong per-well productivity. However, as our cost structure improved, it enabled us to drill more wells on tighter or denser spacing and to moderate completion intensity. This translated to more economic inventory greater recoverable reserves and a higher overall net asset value. There is a reinforcing mechanism at play here as well. Lower cost enables more dense development. increasing density accesses economies of scale and economies of scale, reduce costs even further. Taken together, these three efforts, portfolio actions, cost structure improvements and a refined development approach, have significantly improved both the quantum and the quality of our economic drillable inventory. Importantly, these are not temporal improvements resulting from macro drivers. These are sustainable improvements, and we expect to see more in the future. Before I dive into the details of Permian inventory, let me share our perspective on how we classify locations. Every location or opportunity in our Permian portfolio falls into one of three categories. Economic inventory, technical upside and prospective leads. The first category is what we call economic inventory. On Page 12 of the supplement, you will find a skyline plot of how we currently view Permian economic inventory. This includes only operated locations expected to generate at least a 10% rate of return. At this point in the characterization process, there are two factors driving a naturally conservative outcome. First, this is entirely based on our current cost structure, assuming no future efficiency gains or technology improvements. Secondly, there has to be a high level of confidence in the production forecast, where further appraisal or delineation is required, we reduced location counts oftentimes to zero until they are further derisked. We currently carry around 1,700 locations in economic inventory, which is a baseline that we will continue to refine and build upon. We are confident this will continue to improve, both in quantity and quality through advances in resource understanding, technology and capital and operational efficiencies. We refer to the second category of locations as technical upside. Technical upside represents locations in established or emerging Permian Basin plays that we believe will be the next subset of locations to progress to economic inventory. As you'll see on Page 13 of the supplement, we believe there is significant technical upside potential. Continued delineation success and ongoing efficiency gains remain key drivers for advancing these locations into economic inventory. Approximately 2/3 of our technical upside today is in the Delaware Basin with the vast majority in shallow landing zones. The Avalon and the first and second Bone Springs. There has been significant activity in these zones in the Northern Texas Delaware, and we have recently drilled two First Bone Spring wells in Ward County. While there hasn't been much industry activity that far south, early performance is promising. Therefore, we are planning a 4-well appraisal test later this year. Opportunities like this are largely unrepresented in our economic inventory, but this appraisal could advance a full year of drilling activity from technical upside into economic inventory. The best part of having this much upside in the shallow zones as this should be some of the lowest cost development in the Delaware Basin. With less geologic complexity and a longer track record of development, our subsurface understanding is much more advanced in the Midland Basin. Despite this, we continue to see technical upside through spacing refinement and further delineation of both established and emerging zones with roughly half of this technical upside residing in the deeper benches. For example, there has been extensive industry activity in the Barnett in Western Midland County, and most of our DSUs there carry locations in economic inventory. By comparison in areas like Upton County, there has been very little Barnett activity. As a result, the vast majority of our DSUs carry Barnett locations only as technical upside. In our view, this reflects a need for further appraisal, not a lack of prospectivity. In aggregate, we have roughly 1,700 additional locations within our technical upside. The boundary between economic inventory and technical upside is not a function of economics, but a technical maturity. As these opportunities advance, we expect many to compete favorably with the economic inventory illustrated in the skyline plot on Page 12. It is equally important to understand we have not attempted to characterize all potential locations in the first two categories. The third category, prospective leads are those which we have not yet characterized at all. These opportunities are not currently included in our technical upside. They carry subsurface or completion-related risk and have limited or no historical development. As the basin continues to mature, some of these leads may underpin future upside. In closing, as we see things today, we are confident we can sustain oil production volumes at today's levels for at least the next 10 years. And we see meaningful potential to extend that further. The scale of the technical upside characterized in actual location counts is at least as large as the economic inventory we are presenting today. We believe the future will bring more locations from technical upside into economic inventory, and locations will continue to move to the left on the skyline plot with improving economics and lower breakeven prices. Our progress in 2025 demonstrated our standing as a leading operator in the Permian Basin. We improved capital efficiency, strengthen the depth and quality of our inventory and increased confidence in long-term performance. Our Permian position is anchored by a long runway of inventory with a sustainably improved cost structure and a competitive development approach. All of this is underpinned by a cored-up asset base that is largely held by production. The Permian is well positioned to underpin robust free cash flow generation for the company for the next decade and beyond. I will now turn the call over to Ben. Ben Rodgers: Thank you, Steve. For the fourth quarter, under generally accepted accounting principles, APA reported consolidated net income of $279 million or $0.79 per diluted common share. Consistent with prior periods, these results include items that are outside of core earnings. The most significant after-tax items impacting adjusted earnings include $36 million of noncash impairments and $29 million for unrealized losses on hedges offset by a $47 million gain on our decommissioning contingency. Excluding these and other small items, adjusted net income for the fourth quarter was $324 million or $0.91 per diluted share. APA generated $425 million of free cash flow in the fourth quarter, of which $154 million was returned to shareholders. For the full year, free cash flow was more than $1 billion, and APA returned 63% to shareholders through both common dividends and share repurchases. Permian oil production significantly exceeded our fourth quarter guidance. Primarily driven by incremental completion activity, improved run time and milder than normal weather. In the first quarter of 2026, we have already experienced 3,000 barrels per day of weather-related downtime which is reflected in our guidance. In Egypt, gross gas production of 501 million cubic feet per day was below guidance due to unplanned temporary pipeline disruptions late in the quarter. This was remediated and operations have since resumed to normal. LOE came in below guidance, driven by progress across our portfolio from ongoing cost-saving initiatives, namely in the North Sea and Permian. Net debt ended the year just below $4 billion, down approximately $1.4 billion from year-end 2024 through a combination of free cash flow generation, asset sales and payments from Egypt. This progress brings us closer to our long-term net debt target of $3 billion. Additionally, interest expense was approximately $80 million lower compared to 2024. Wrapping up 2025, our proved reserves increased approximately 9% year-over-year, surpassing 1 billion barrels of oil equivalent, and our all-in reserve replacement ratio exceeded 160% for the year. The team's execution in the Permian and in Egypt enabled us to grow reserves despite a 13% year-over-year decline in SEC oil prices underscoring the quality of our inventory and the capital efficiency of our development program. Turning to our cost reduction initiatives. 2025 marked a year of remarkable progress across the entire company. We captured over $300 million of savings and exited the year at a $350 million run rate, achieving our original target 2 years ahead of schedule. This reduction in controllable spend improved margins, expanded free cash flow and strengthened the resilience of our base business. For 2026, as outlined on Page 7 of the supplement, we expect controllable spend to decline by another $200 million. Only half of this reduction is incremental savings, with the remainder driven by lower Permian activity relative to 2025. All of this is incorporated in our annual guidance for capital, G&A and LOE. Each category is below 2025 levels with the exception of LOE. While we expect operating expense savings to continue through the year, they are being offset by various market-related headwinds, primarily in the Permian and North Sea. We will work throughout the year to mitigate these pressures, but at this point, we expect 2026 LOE to be slightly above 2025. The progress achieved in 2025, combined with the additional savings we expect to capture in 2026 positions us for a structurally lower spend profile as we move into 2027. By year-end 2026, we now estimate our run rate savings will reach $450 million. These savings are sustainable and position us to be a cost leader as we continue to drive efficiency and long-term value creation. Turning to our outlook for 2026. John already outlined our high-level capital investment plans and expected production trajectory. So I will focus on a few additional items. Starting with the Permian, 2026 development capital is expected to be around $1.2 billion. In addition, we plan to invest approximately $100 million for base capital projects aimed at structurally reducing LOE and improving uptime. These projects offer attractive 6- to 24-month paybacks and enhance the durability of the asset with LOE benefits starting in the back half of 2026 and building into 2027. As a result, total Permian capital will be approximately $1.3 billion for 2026. Moving to Egypt. We recently elected to withdraw from a small noncore concession as part of our ongoing portfolio high-grading efforts. These assets fall outside of the merged concession area established in 2021 and do not benefit from the new gas pricing framework. While the concession did not generate free cash flow, our exit will reduce oil and gas production volumes. The quantified impact is detailed on Page 16 of our supplement. Shifting to decommissioning and asset retirement obligations, we expect combined gross spend to increase to approximately $280 million in 2026. This reflects lower spending in the Gulf of America, offset by higher planned activity in the North Sea. As a reminder, all North Sea decommissioning expenditures receive a 40% tax benefit. After incorporating these tax impacts, we expect net spend for 2026 to be approximately $225 million. Shifting now to our oil and gas trading portfolio. which continues to be a meaningful contributor to free cash flow. Based on current strip pricing, we expect these activities to generate approximately $650 million of pretax income in 2026. From 2020 through the end of this year, we expect to have generated nearly $2 billion in cumulative pretax income from our trading activities underscoring the scale, consistency and value of this business within our portfolio. In closing, 2025 was a strong year for APA. We significantly exceeded our cost savings targets, generated over $1 billion of free cash flow, reduced net debt by more than $1.4 billion and continue to high grade our portfolio. Our focus remains on disciplined capital allocation, further cost efficiencies, continued balance sheet improvement and advancing our high-return development program and exploration opportunities. With that, I will now turn the call over to the operator for Q&A. Operator: [Operator Instructions] Our first question comes from the line of Doug Leggate with Wolf Research. Douglas George Blyth Leggate: John or maybe this one is for Ben. But I'm trying to understand this Permian CapEx guidance, the $1.2 billion -- $1.3 billion to $1.2 billion. I wonder, can you offer any color on the impact of this $100 million? What's the nature of that spend? How does it show up in the payback you talked about? Any kind of color on the LOE, for example, impact would be appreciated. And then my follow-up, John, if I may hit exploration. There's been a number, it looks like EGPC has been announcing a series of recent gas discoveries, a quick hit stuff, if you like. But you've also put new exploration numbers in the budget for this year, presumably Alaska and Suriname. I wonder if you could offer any color on what the program looks like in those three areas. And specifically, I believe there's a potential game changer target in Alaska, if you could speak to the prospectivity around that as well, that would be great. John Christmann: Yes. Thank you, Doug. What I'll do first is just address the exploration. Maybe have Tracey chime in, and then I'll have Ben come back on the LOE and the capital question. In general, we've got $70 million in the budget this year. $20 million of that is really prep work in Alaska for ice roads. There's another $50 million that's late in the year for predominantly Suriname as we will be returning to exploration in Block 58 with a well, the exact spud date is not yet set, but we expect it to be late fourth quarter. So that's how that $70 million breaks out. Clearly, we're also active in Egypt. And just to spend a couple of seconds there, what you've seen and with the progress in Egypt, last year, when we -- or November 24, when we updated our new price mechanism, it really shifted a gear for us and let us start focusing on gas in the Western Desert of Egypt. You saw last year with the progress in terms of what we're able to do in growing our gas volumes. We went after some low-hanging fruits, some things we knew were there. But now we're really starting to work the exploration inventory, and I'm very, very excited about what's coming in Egypt. We've got some pretty key wells that we'll be drilling. Some of the things you referenced. EGPC has been announcing some of the smaller things. But we're excited about that. And I can let Tracey talk about Alaska, but in general, we're prepping for a big winner. Likely two wells in early '27, likely an appraisal at Sockeye. We're still in the process of getting back the seismic that we're having reprocessed. So that's still coming in. But you'll likely see us drilling an exploration well and an appraisal well in early winter of '27 in Alaska. So Tracey, you can comment a little bit just on the geology there. Tracey Henderson: Sure. We've got a really robust and diverse prospect inventory on the block. And as John said, we're focused right now on reprocessing the new seismic data and maturing that entire inventory. We've had success in the bottom set play at Tumbleweed and in the top set play at Sockeye. And so we're going to be focusing really in the near term on maturing a lot of what we see as analogous prospects to the Sockeye discovery, and that will be a focus for the near term in the next drilling season. And as John said, we'll be looking to appraise the Suriname discovery as well. So we've got a lot going on in the background, getting ready for the next season in terms of defining the inventory and next steps. John Christmann: Yes. And just to clarify, we'll start building ice roads this winter for the late '26, early '27 Alaska drilling season. So Ben, I'll go back to you now on the Permian Capital and the $100 million we're spending. Ben Rodgers: Sure. So Doug, we started spending some capital last year we talked about in August and November on some of these LOE projects. As we did that, we identified some additional opportunities going into 2026. A lot of it is around compression and facilities consolidation. There's some artificial lift dollars in there as well. But -- so it's a lot of different projects spread throughout the basin. And the way to think about it is, as you get to the back part of '26, we expect that our LOW will come down by somewhere around $3.5-plus million per month. And so when you annualize that number, you're kind of in the $40 million to $50 million of ongoing savings in LOE. So spending that $100 million gets you $40 million to $50 million of savings, which is pretty much in line with the kind of 1- to 2-year payback. Douglas George Blyth Leggate: Ben, just to be clear, that -- so presumably, that's like rented equipment becoming capital equipment or something of that right? Ben Rodgers: That's a portion of it. But it really -- it spans across a lot of different pieces in the basin. Steve, I don't know if you want to add some color? Stephen Riney: Yes. I just -- I wanted to add some color to the LOE investments because really, they have three purposes. Obviously, one is just -- it's $100 million of capital investment that will drive down costs. And actually, we -- our estimate is that we'll exit '26 on a monthly LOE run rate that's $3 million to $3.5 million lower than it otherwise would be. So that's just the cost side, just investing to reduce costs. But we're also investing in things that will increase the reliability and the resilience of production volume. As John said, we had an amazing fourth quarter on uptime. And we've been looking at what are all the various sources of downtime that we have and we experienced and some of it is related, just the reliability and resilience of facilities and equipment. And so there are some investments that could be made there that could improve uptime for the future, maybe not as good as fourth quarter, but maybe better than what we've experienced in the past. And then thirdly, there are some opportunities on the inventory side. I'm sure we'll talk about inventory in a bit, Permian inventory. But there are some actual -- actually some high LOE areas where if we can invest in some of the facilities, we can drive down LOE. That moves some of -- maybe some of the high breakeven inventory that you see on that inventory skyline plot to the left, it also will serve to bring some of the technical inventory onto that skyline plot. So there's lots of purposes for that LOE investment. John Christmann: And last thing there. Some of that would be rental equipment that Callon had that we will be investing in. So -- but thank you. Operator: Our next question comes from the line of John Freeman with Raymond James. John Freeman: The first question, you all had a huge beat on U.S. oil volumes, and you all cited a few different items that drove that improved run time, incremental completion activity and more moderate weather. This may be difficult to answer, but if you sort of went back and I guess, like a post you looked at your original guidance versus the big beat, can you sort of flesh out a little bit for us sort of the impact that each of those had, like the improved run time versus a few incremental completions versus the moderate weather? Just trying to flesh that out a little more. John Christmann: Yes. I mean, John, I'll take a cut at it and have Steve add some detail if we need to. But I mean, first of all, you look at fourth quarter, first quarter are historically are periods when you've got the most weather impact. And fourth quarter was almost flawless in terms of no downtime. So that in itself is something we typically will bake in. Fourth quarter where there was virtually no weather, obviously, that changed in January. And we've had a lot of weather in the first quarter. So when you look at fourth quarter versus first quarter, that is a big chunk of it. Secondly, we were able to bring some TILs earlier into the year and some of those just cleaned up a little quicker than we expected them to. And that's going to drive a pretty big portion of it just because we had wells cleaning up, you had forecasted downtime. In fact, we were able to give the workover rigs both holidays off, both Christmas and Thanksgiving because the run times were so good fourth quarter. Stephen Riney: Yes. We don't have -- I don't have exact numbers on any of that, John. But I would just say roughly 1/3 each, three big impacts virtually no weather downtime in the fourth quarter. the TILs and then the actual improvement in underlying run time was just phenomenal during the fourth quarter. So I would just say 130 each, probably. John Freeman: Great. That's helpful. And then my follow-up, looking at Slide 11, we also show the really good progress on the D&C per foot down 30%. And then sort of looking at your development plan on Slide 14, and I don't quite have everything I probably need on there to back this exactly, but it just looks like back of the envelope, the D&C per foot looks like it's continued to go lower on your '26 program. Would it be possible to maybe get sort of the just rough breakdown of those 130 completions in the Permian between Midland and Delaware and then just sort of a rough idea of kind of what you all are baking into the plan on like a D&C per foot basis? Stephen Riney: Yes. We're not prepared to do that on this call. You can maybe have a follow-up call, with Stephane and Ben and the team after this, John. What I would just say is that we made huge progress on drilling and completion costs in 2025. The at the end of the year, especially in 2025, if you looked at some of the shallow wells that we were drilling in both basins we actually got to a point where in the Midland Basin, we were under $500 a lateral foot. And in the Delaware Basin, we were under $700 a fit. So we are continuing to make progress. We're not -- we're certainly not done with that. And the drillers, I know are anxious to get after other opportunities here in 2026. So we believe that will continue to improve. There is a mix effect on all of that. But I think when you go through the math, you'll find that it's pretty in line with what we've been doing as we went through '25 and ended 2025. But I'll let you guys do that off-line in a separate call. Operator: Our next question comes from the line of Neal Dingmann with William Blair. Neal Dingmann: Sorry, guys, to the delight. Can you hear me? John Christmann: Yes. Neal Dingmann: John, for you or Steve, just wondering, could you talk a little bit about just Permian inventory, how the potential sensitivity is, especially around some of your gassy assets? John Christmann: Yes. I mean, if you look today, what we looked at was really the oil inventory. So you're not going to have any of our pure gas location counts in there. Those will be separate. And Steve, you can jump in a little bit on. Stephen Riney: Yes. Just to kind of not maybe a bit of an overview on inventory. Yes, sorry. A bit of an overview on the inventory in general, as we said, economic inventory, I'd say the cutoff that we have between economic inventory and technical upside is probably, I would say, and you probably imagine this to be true for us. We are maybe a bit on the conservative side. But 1,700 gross locations in economic inventory. What do we mean by economic inventory? We have -- it's got to have a very high confidence in terms of being able to draw a type curve for it. And we have that confidence either from our own experience or offset operators that have good analogs to what we're going to be drilling. The economics include all drilling, completion, equipping and facilities costs, and it's actually burdened with central facilities, which some people don't do, they just stop at ped level facilities, but we include the gathering system, saltwater disposal, we include central tank batteries. And it has to have a 10% rate of return to make it into economic inventory. The technical upside inventory is, as I said in my prepared remarks, it's stuff that it's the next -- it's the next best opportunity for bringing stuff through appraisal and development into the economic inventory bucket. And I don't want people walking away from the call thinking, okay, this is kind of like pie in the sky stuff. Actually, it's not at all. 40% to 50% of our entire technical upside inventory is shallow Delaware Basin. So it's the Avalon and first and second Bone Springs. And in my prepared remarks, I talked about -- there were two wells that we drilled that had pretty promising results. Well, if we drilled those two wells today at our current cost structure for drilling wells, those wells would be breaking even at $41 WTI. And so this is stuff that falls right into the good end of the Skyline plot. That's all -- every bit of that stuff is in technical upside, not in inventory. And so we're going to be drilling a 4-well spacing test later this year in that area. And those are the types of things that we're going to be doing to move technical upside into economic inventory. We actually -- we actually have several appraisal tests or spacing tests going on, both in the Delaware Basin and in the Midland Basin this year for that very purpose, moving quantum of inventory out of technical upside into economic inventory. Neal Dingmann: Great detail, Steve. And then just a second one just on Suriname. I just want to make sure I think this is the case. Is the 100% of that $230 million in suggested capital for the year strictly focused on the GranMorgu? Or are you assuming any other parts of -- would it be spent in any of the maybe parts of Block 58 or 52? John Christmann: No. The $230 million there is for GranMorgu and then the exploration capital would be covered in the exploration side. Operator: Our next question comes from the line of Bob Brackett with Bernstein Research. Bob Brackett: If we can talk about Egypt and the 7.5 million acres you have there much of that -- some of that acreage is well connected with existing gas pipelines, but there's a whole lot of territory fairly far from gas pipelines that could hide some fairly large needs or prospects. Can you talk to your exploration philosophy for gas out there? Is it efficient from the peer? Or is there some appetite to step out to some of the more distant opportunities? John Christmann: No, Bob, I mean, I think the big thing to think about there is we've been in the Western Desert for 30 years. We've shot multiple versions of 3D seismic as we learned to try to see deeper searching for oil. We started out drilling the big bumps on the oil side, the 4-way closures to the 3-way migrated to the strat traps. And really, November 24, we enter into a new gas price environment, and it lets us start that process over on the gas side. So as I mentioned, we went after some things we knew were close that we could tie in and now the exploration team is stepping back and really looking in the pockets that are deeper where we knew there was gas that we stayed away from. We've also added 2 million acres last year of new acreage. So we're stepping back and doing a regional look and Tracey can comment a little bit on that, but we're taking a regional approach on the gas side. And that's what I'm excited about is, is it's bringing a lot of structures into play that historically, we knew were gas, we steered away from. Tracey Henderson: Yes. Thanks, John. No, I think as John said, we put a lot of effort in the last year of going back and building a better regional picture too with lookbacks over what we've been exploring for the last few decades. And as John said, we've got a lot of areas that we've historically avoided because we knew that they were going to be gas prone. So we've reprocessed seismic data. We stood up teams to really focus on this specifically and are currently building out more of an inventory of what we see as our longer-term gas portfolio of some of which of those wells we will start to see this year. So I think we've got -- we're in a really good place on that. Operator: Our next question comes from the line of Michael Scialla with Stephens. Michael Scialla: I wanted to follow up on the Permian inventories, Stephen, I think you said in your prepared remarks that if the test, I think you were referring to on the Bone Spring were to be successful, that could replace a year's worth of drilling inventory. Is that essentially saying this 4-well spacing test in the Bone Spring could add like -- could move 130 locations from the technical to the economic inventory is that a correct read? Stephen Riney: Yes. That's a correct read. And that's just for the first Bone Spring. As I said just a few minutes ago, actually 40% to 50% of our 1,700 technical upside locations are in the Avalon first or second Bone Springs in Delaware Basin, mostly in Ward and Reeves County and a bit in Southern Winkler County. And that test in the First Bone Spring won't prove up all of that, but we'll prove up concepts related to all of that because we believe, at least in some places, that's one big tank. So yes, it can prove up just in the First Bone Springs in that area up to another year worth of drilling, but there's a lot more at play there. Michael Scialla: Got you. And then I wanted to follow up on Suriname. The $230 million of development. Is all that going toward the FPSO? Or is there actually a development drilling that's going to take place? I know you've got some exploration drilling plan on late '26, but is there any development drilling in that $230 million number? Or is that separate? John Christmann: It's everything, Mike, and we will be starting the drilling. Those rigs coming on late next year, early '27. So there could -- some of that would fall in on the drilling side, too. But the whole $230 is for the GranMorgu development project. But yes, that's -- it's on the FPSO, the umbilicals, a little bit of everything, and we will start drilling development wells. Michael Scialla: So you're contemplating two rigs running kind of late in the year there, exploration... John Christmann: There will be multiple rigs, yes. Operator: Our next question comes from the line of Scott Hanold with RBC Capital Markets. Scott Hanold: Yes. Could you give us a sense of in the $1.3 billion spending in the Permian, how much of that is going to run these various sets to look at the technical upside? And is that something that you plan on having sort of working into the budget in 2020 and beyond? Or will there be a point where we see a little bit of drop off in Permian spend because you've kind of done most of that work? John Christmann: No, Scott, I mean, we've got a steady diet. I mean last year, we're flowing back now a 4-well Barnett test. So you should just envision in that one. Two, we've got a steady diet of testing that we're doing, both delineation and appraisal. And that's going to continue. I mean, that's the nature of the basin, right? So we've got the development piece that you're drilling off of those results, but you're going to constantly be drilling wells in that technical category that can move things up. So a pretty steady diet. We've got several we did last year, the last several years and several more this year. We've got a path we're flowing back, and there's more Barnett we'll drill later this year. Scott Hanold: Okay. Okay. Understood. And could you talk about your growing a little bit. It doesn't look like there's any exploration spend there you look initially farm down part of that right now. But like what is sort of the path? What are the next steps there? And what could be to start seeing some activity? John Christmann: Yes. I mean our next step in Uruguay, we have had a data room open. There have been a lot of interest from the industry. We are looking to farm down. So at some point, we'll have something to say about that. And then we'd be looking at a well. It's probably likely '27, but it could be -- there's a chance it could be late this year, but it's likely '27. Operator: Our next question comes from the line of Josh Silverstein with UBS. Joshua Silverstein: The capacity and the trading benefit continues to be a positive driver for you guys, and clearly still a big beneficiary of wide spreads in 2026. Can you talk about how you see this trending next year in '27 as 4-plus Bcf a day of new Permian pipeline capacity comes online, does that 650 start to come down? And then maybe do you offset any of that with some higher of your own volumes. So there's kind of no net reduction there. Ben Rodgers: Sure. Yes. So this year's $650 million, you look at next year, it does come down just based on strip there is quite a lot of takeaway coming online late this year, a little bit next year. We'll kind of see what happens to Waha. This is a trend that we've seen over the last really 7 years, of deep discounts, and then you get an increase when the pipelines come on as they fill up and then it gets challenged again. So we'll see what industry activity and things do to continue to push gas production in the basin and where that lands. Some people say it will fill up pretty quick and others are skeptical. And that's just going to be driven on types of wells that are drilled, GORs, the amount that's flaring now that can be put on the pipes, et cetera. So it does come down next year. It's still positive actually for 2 years out for us kind of through '28, and then our extension options on those begin in '29. And so we'll look at the market at that time and figure out what to do. But as you look for the next 3 years, it's positive for us across that and the LNG book. And to your point, if those spreads do compress and that is through Waha strengthening, then yes, we do get better prices than on our equity gas and it doesn't fully offset that because we have a little bit more capacity than our production, but it does mitigate that drop on the marketing side because you're making more on your equity gas that you're producing. Joshua Silverstein: Got it. Maybe just sticking on the financial front. The balance sheet improvement efforts have been really good, now down to $4 billion at year-end '25. You still have the $3 billion kind of long-term target there. Is the goal to stick with that 60-plus percent of free cash flow going to shareholders until you meet that target? Is there any sort of flex to this? Or do you want to make sure you're hitting that target this year? Ben Rodgers: Yes. I mean, we think that 60% is competitive. We've exceeded it every year since we outlined that in 2021. We've exceeded the 60% and we think that that's a prudent level right now. We also are using portions of our free cash flow to invest in exploration. And I think a lot of our peers don't have the exploration portfolio that we have. We're thinking about that longer term as well. And so that 60% takes that into account as well as balance sheet management and managing our ARO and decommissioning spend and so we're managing all of that. The $3 billion target we put out, recall that was kind of at a mid-cycle price of $70, we'd get there in kind of 3 to 4 years. Prices go higher than that. We can get there potentially by the '27, '28 time frame, and they're lower, then it will be end of the decade. The point is that we've made a lot of progress through cost savings, capital efficiency, execution in the field and all of that pulled together has increased free cash flow last year. You look at '25 free cash flow compared to '24 free cash flow. It was up over 20% with lower prices. And so that's just a testament to what the team has done and we used a lot of that to return to shareholders, but we also paid down a lot of debt. So just -- we've got flexibility in our program, as outlined with the Permian inventory and the Egypt Gas, you take all that together, we still feel pretty good about reaching that $3 billion kind of at current prices in the next couple of years. Operator: Our next question comes from the line of Leo Mariani with ROTH. Leo Mariani: I just wanted to follow up a little bit on the Permian inventory. Just wanted to make sure I sort of understood it from a definition perspective here. when you guys kind of talk about a 10% or greater rate of return, is that like a field level sort of pretax return. Just wanted to make sure I sort of understood that. Does that not include like any kind of corporate burden or anything for G&A? Stephen Riney: It doesn't include a corporate burden, but it does include full field cost burden. And it is before tax and after tax, we probably won't be paying tax for quite some time. Leo Mariani: Okay. That's helpful. And I just wanted to follow up on Egypt. You guys spoke about this. I mean, you could give us a little bit of a quantification, you did speak about how Egypt gross oil was going to decline in 2026. Is there kind of a rough ballpark percentage on that in terms of the decline you're going to see? John Christmann: Well, Leo, I mean, if you look at it, we've been able to with the waterfloods, hold oil volumes flat for the last 3 quarters. So we're still prioritizing oil we've just shifted the gas rigs up to 50% from we started last year at 25%. So we're just going to be drilling more gas wells on a relative basis. And so as a result, we're going to forecast gross BOEs, gross gas or gross oil to slightly decline. But we've had a pretty good track record of being able to sustain that through the waterflood projects. Stephen Riney: Well, and also quite a few of the gas fields. Our rich gas have condensate with them, and so that shows up as oil volume as well. John Christmann: And some of the new exploration acreage also is perspective for oil as well. So -- but it's just how we steered gross oil. Operator: Thank you. I would now like to turn the call back over to John Christmann, CEO for closing remarks. John Christmann: Thank you. In closing, let me leave you with the following thoughts. 2025 was an excellent year for APA, reflecting strong execution and meaningful progress towards cost leadership. We delivered substantial cost reductions ahead of schedule, generated over $1 billion of free cash flow and significantly strengthened the balance sheet. At the same time, we sustained Permian oil production on lower capital grew gas volumes in Egypt and continue to advance the Grand Margo development in Suriname. With a structurally lower cost base and a stronger balance sheet, we are well positioned to unlock the full value of our high-quality Permian inventory and expect to deliver sustainable production and competitive returns for the next decade and beyond. With a strong foundation, disciplined capital allocation, and a clear line of sight to incremental free cash flow from Suriname beginning in 2028. We are very well positioned going forward. With that, I will turn the call back to the operator. Thank you. Operator: Thank you. This concludes today's conference. Thank you for your participation. You may now disconnect.
Operator: Thank you for standing by, and welcome to the Lynas Rare Earths Half Year 2026 Results Briefing. [Operator Instructions] I would now like to hand the conference over to Lynas Rare Earths. Please go ahead. Jennifer Parker: Good morning, and welcome to the Lynas Rare Earths Investor Briefing for the half year ending 31 December 2025. Today's briefing will be presented by Amanda Lacaze, CEO and Managing Director. And joining Amanda today are Gaudenz Sturzenegger, CFO; Daniel Havas, VP, Strategy and Investor Relations; and Sarah Leonard, General Counsel and Company Secretary. I'll now hand over to Amanda Lacaze. Please go ahead, Amanda. Amanda Lacaze: Thanks, Jan, and good morning, everybody. Thank you all for joining today. I always think that it's a bit funny. You can see me, but I can't see you, but I hope that you're all well. And I'm incredibly pleased to be able to do this presentation. The first half of FY '26 has been one of those sort of half years where we were very busy, but it's really only in retrospect that the scale of what we were able to achieve has been properly illustrated. So look, I think it will be helpful to really step through the presentation that we launched today. We've got the obligatory disclaimers. And we have the important recognition of country as an operator in Australia in the mining sector, acknowledging and respecting the Traditional Owners of the lands on which we live, work and meet across Australia is important, and in particular, acknowledging and valuing our Aboriginal and Torres Strait Islander employees, partners and communities. So in the year-to-date, as I said, in the first 6 months of this year, we were busy. But as we look back on it in the rear vision mirror, gosh, we were really busy. Many achievements. So for a long time, we've been talking to you about the Lynas 2025 capital projects. And during this first 6 months of this financial year, a lot of milestones have been achieved with respect to those. The Mt Weld expansion project has been largely commissioned with the new flotation circuit operating at 70% of nameplate. I know that oftentimes, it's sort of, people will look at Mt Weld and I'll just say, well, we know the Mt Weld resource. We know the beneficiation circuit, all of this is pretty easy. I just would like to remind everyone, this is a big, complex project, as big as many other mining firms in Australia who don't do any processing past that initial beneficiation. We've had to commission 3 new mills. We've got new processes. We've got significant investment. I'll talk a little bit more about with water recycling. And so all of these things, it has been a complex commissioning and process and ramp-up process. And I'm really pleased with the progress that the team has made. Also of really important note is our 65-megawatt hybrid renewable power station is operational, and you can see some of the photos further on of the new wind turbines. The ramp-up at Kalgoorlie continues. We've undertaken a number of process modifications there to improve its performance. And I think as everybody knows, it has not been without its challenges, both internally and most particularly externally. It's very difficult to run a big complex plant like Kalgoorlie without reliable power. In Malaysia, where I think that we often don't put quite as much focus as we're talking about these things have been significant changes implemented as part of Lynas 2025, the uplift in production capacity, the processing of mixed rare earth carbonate and of course, the -- we had our first full 6 months of HRE or separation of dysprosium and terbium. So having done all of those things, and we've drawn the line under the Lynas 2025 capital program. It's really about how we're setting up the business for the next growth phase. And we started with the capital raise. We've announced the larger HRE separation facility that will go into Malaysia. We've announced some elements of our contribution to continuing industry development, including in metal and magnets, but also in terms of resource development. So as we look at all of this, I am minded to remind everybody that this is complicated. And I think I have mentioned it previously, but I would recommend to any sort of observer of this market, a particular study done by an engineer, Jen can provide information on this, but a consulting engineer on ramp-up curves for critical minerals and the fact that if you use McNulty, which is a 1 to 5 in rare earths outside China, you've never had anyone who's -- or in critical minerals projects generally, you've only had 1 or 2 projects. And this includes things like vanadium and nickel and as well as rare earths and a variety of other materials that has ever come close to a McNulty 1 or 2, which is the fastest, most trouble-free ramp-up. In other sectors, Lynas has performed best, and we were at a McNulty 4 ramp-up in Malaysia, and then we jumped up to a McNulty 2 in around about 2016. It is easy because we are an established player for people to think, oh, well, we've just brought on a new facility here and brought on a new facility there and everything is fine. But I would just remind everybody of the complexity and the value that derives from the fact that we are an established and experienced operator and indeed have been able to bring our new assets online, not trouble-free. That would not be fair to my operations team to say that, but certainly in very good order, and we continue that ramp up as we speak. We continue to put safety at the heart of everything that we do. And I was talking to our Board about this and as we were thinking about how do we present some of the safety information. And I made the point that it's a little bit disappointing in some ways that we hardly ever spend any time on the safety slide externally. We spend a huge amount of time, however, on safety, on personnel and process safety inside the business. And I would also take this opportunity to remind everyone that Australian mining leads the world in terms of both our approach and our performance with respect to safety and other sustainability practices. We're incredibly proud that the major maintenance that we undertook in Malaysia late in the second quarter, which involved over 30 subcontracting companies and 100,000 work hours was executed to schedule and without injury. We're incredibly proud that Mt Weld and Kalgoorlie employees achieved 12 months without any recordable injuries in December 2025. And as our projects move from commissioning to operations, we are very focused on our Yes, We Care HSE strategy because, yes, we really do care that everybody goes home safely and well every day. Then if we look at our financials, well, this is very pleasing for me as I make my last half year report, to be able to report such an excellent results. I'm also a bit sad that the next CEO will get all of the second half glory because as we've foreshadowed in our announcement, we expect that the market settings will continue to be positive. And I think everyone who's been following Lynas for some time would appreciate we are the only company that can take full advantage of the positive market settings because we are the company that is operating and producing today, not just lights but also heavies. So excellent performance, sales revenue, net profit after tax, EBITDA, all up. And of course, we have the big jump in cash and short-term deposits as a result of the capital raise, which is setting us up for towards 2030. When we look at it operationally, and this is one of my favorite photos. And I think some folks have been in Malaysia in the last 6 months would have seen this new part of product finishing. And it is just beautiful. It's part of our uplifting capacity that we have available to us now in Malaysia. So NdPr production was absolutely on track for record 6 months until we hit the problems with power in Kalgoorlie. So we're just a little bit off. But -- and as you can see from this, we're starting to roll off in terms of sort of final payments related to the capital program with Lynas 2025. Looking at that sort of with a bit of history, we've just put in the half years since FY '20. You can see that we are sort of consistently increasing on a rolling 12-month basis, we've certainly had -- and rightly so with all of the investment that we've made, we continue to set new production records. As I say to our operations team, every month should be a record as we continue our ramp-up of the new facilities. And then, of course, you can also see the benefits that come from the increased benchmark selling price. So the benchmark is moving higher, but our internal measure is how much we can beat that benchmark by as a result of our efforts and our negotiations with various customers. The market generally is very constructive right now. As we've indicated, the price in December 2025 was sitting for -- NdPr was sitting at $74 a kilo compared to $49 in December 2024. That price has continued to firm. And yesterday, we reached over the sort of magic $110 a kilo mark. And this really reflects a number of things. It does reflect the government actions in -- which is really starting to reshape the market. We are seeing governments Australia, Japan, EU and of course, the U.S. taking action to create a functional market, right? We have never asked for subsidies, but there is no question there has been market failure for many years in the rare earths industry and acting policies, which ensures that the market is functioning properly, we think is really important. And as those policies are implemented and the market responds, then the potential cost to government just goes down. I mean like at present, as the price sits above the $110 NdPr floor price, I'm sure the U.S. government is feeling very relaxed. We continue to be engaged closely with relevant governments, and I'm sure many people will have read various articles on the likelihood of governments other than the U.S. government also putting in place policy measures to facilitate a proper functioning market. So for us, huge opportunities. We make lots of NdPr, and we make now Dy and Tb. These are the products in greatest demand in terms of total volume, and we will shortly be producing some other materials, particularly samarium, which we expect to come through before the end of this financial year. I was hoping -- so -- and then it will follow up with gadolinium and neodymium and then other elements as we bring our new production facility in Malaysia online. Japanese magnet makers are winning new business. Ex-China magnet buyers are seeking direct supply to mitigate supply chain risks. As recently as yesterday, we had Chinese indicating further controls on materials to be exported to Japan. We have a very long-standing and productive relationship with our Japanese customers, and this certainly provides an opportunity for Lynas. And we are seeing significant demand for our bundled lights and heavies sort of being able to sell these together in the ratio that customers require them gives us a significant competitive advantage in the market. So we are -- this says we can capture value, we are capturing value from the current market upside. Just then just everyone can step through. I love this picture of Mt Weld. We've gone from this tiny baby little sort of concentrator, which is sitting sort of in the sort of top right-hand corner there below the process water pond. On your top left, I think it's quite helpful for people to see. Those are our tailings dams. But as you can see, they're like a beautifully sort of plowed field, not ready to be sown with wheat, but certainly ready to be remined and put back through our processing facility. Some of the elements of the new beneficiation plant means that we will be able to liberate some of the materials, which we did not recover in the first instance. And in those tailings dams facilities, we've actually been able to track the rare earths concentration at somewhere around about 7% to 7.5%, which makes it in and of itself a highly valuable mineral resource. Kalgoorlie continues to ramp up. Sorry, I missed -- no, Jen, you can go back. You can see 3 of our 4 wind turbines there. This is just terrific. We are so pleased with the new power station. It is not cheap. And I do get frustrated when people talk about how sort of the unit cost of a kilowatt hour of renewable power is cheaper than any other option. That's true, but only after you've covered the capital cost of the 4 wind turbines and 2,500 solar panels and the gas turbines, which need to be there to provide baseload power and the batteries as well. Having said that, it is true that on a variable cost basis, we now have electricity, which is significantly less costly than our previous diesel power station. But more importantly, we are really, really pleased that we've been producing in December, 92% of our power has come from renewable electricity. The wind at Knight has been a better source of power than we were expecting. And the power station is performing better than our initial target of 70% renewable content. So really very excited about that. And the second really significant initiative as part of the Mt Weld expansion was commissioning of some of the new water treatment facilities with our objective to achieve 90% of our tailings water to be recycled. We've been able to demonstrate that. We're not yet reliably and sort of delivering at that level, but we are confident that we will get there. And then Kalgoorlie, Kalgoorlie, I think I've said previously, we need to recognize there are 2 parts. Cracking and leaching, but -- we have many skills when it comes to sort of cracking rare earth ores in our company and the cracking and leaching part of Kalgoorlie is actually running pretty well, notwithstanding the outrageous, frankly, power disruptions that we had during the second quarter. The mix -- the carbonation circuit as with all new processes, we found as we've ramped it up that bottlenecks move around and that we need to enhance or improve certain processes. And we are doing that in a very managed and measured way, just like we did when -- really when we were ramping up the LAMP 10 years ago. And so Kalgoorlie continues to improve, but not yet where we would like it to -- quite yet where we would like it to be on a long-term basis. And then Lynas Malaysia is, once again, not giving me any sleepless nights at all. The Malaysian plant is running extraordinarily well. The -- particularly, we're seeing the benefits of the major maintenance on the cracking plant in the second quarter. It's running better than it has ever run in its life. The new separation circuits are stable and producing. And really, it's just a case of can we keep feedstock at the sorts of rates that we want them to. I think as we said, we produced Dy and Tb last year, and we've announced the new expansion, Heavy Rare Earths expansion plant, and we expect samarium production soonish. So all looking very good in Malaysia as well. In the U.S., the U.S. has -- well, boy, has the U.S. government really sort of discovered rare earths. We have continuing discussions with the U.S. government, particularly with respect to an offtake agreement, which is acceptable to us. Having said that, our engagement with particularly U.S. defense industries is really strong. And we are selling material into U.S. defense industries at very pleasing prices. We've also taken the opportunity to do a little brand promotion. I thought everyone would like to see our billboards as they were in various locations in Washington. So just -- Jen, moving on to the next one. I've really already talked about the hybrid power station and -- okay, now we'll move on to communities. And I think everybody who has even spent a few minutes with me over the years knows my view, which is that we cannot prosper if the communities in which we operate do not prosper as well. So in each and every one of our locations, we are incredibly connected to community. We think that it is a really important part of our success and also our culture. And I look at the faces whenever we have these photos. I look at the people that -- our people who are engaged in our community events. And I'm just really proud of them and really proud of the contribution that we make to improving the lives of the people who both work for us, but also their families and their community. So with that, I am very happy to -- yes, then we got the stuff about people. Then I'm really happy to take questions. Operator: [Operator Instructions] Your first question comes from Rahul Anand with Morgan Stanley. Rahul Anand: I just wanted to ask a question on sort of how you're going with securing that ionic clay deposit or supply from Malaysia for the HRE plant? And I guess, how much can you produce from the plant; currently in terms of yttrium, dysprosium and terbium if you're only using the Mt Weld feed? Amanda Lacaze: So we can't produce anything from the plant yet because it's not actually constructed. So we do just have our small little circuit that which is just doing the Dy and Tb, right now, we will have some samarium come out, but that's actually not from the ultimate facility. We're doing that via a bit of flow sheet development within our normal operations. We are working closely with a number of firms in Malaysia on working through the ionic clay development with the objective that we will have that as feedstock at the same time as we're bringing that new plant online, which we expect to be towards the end of calendar year '27. Rahul Anand: Yes. So my question was related to the new plant, Amanda. But I guess just as a follow-up, if there is at all a restriction from China in terms of, I guess, IAC leaching reagents or SX chemicals, is there a contingency plan? Or can you source them elsewhere as well once that plan comes up? Amanda Lacaze: We've already done that. We've already put in place contingency plans for all reagents and all equipment, which is required in Malaysia. We've been working on that since -- well, actually since before the initial issues in April last year, but certainly since that time. And so where when we started last April, there was a couple of critical path items, we have identified alternate sources for those items. And we are confident about our ability to continue to operate. But the point that you're making about sort of availability of reagents, equipment and expertise out of China is an important one and is another reason why Lynas is in such a strong position to take advantage of current market dynamics compared to other firms. Operator: Your next question comes from Neal Dingmann with William Blair. Neal Dingmann: Amanda, a quick question. Could you talk a little bit about offtake agreements, maybe even including, I know with Noveon, you have the MOU. So I'm just wondering, it seems like, again, now that you are cranking up production, I would assume everybody is sort of knocking at your door. Amanda Lacaze: Of course, sometimes we knock at their doors. Certainly, our objective is to ensure that we have -- ultimately that we have 100% of our offtake contracted to the highest value customers in the market. Our ability to be able to sell bundles of NdPr and Dy and/or Tb certainly gives us the opportunity to be able to capture, as I said, the highest value customers. And we're confident that as we ramp up over the next 3 years as some of the downstream capability outside China, downstream capability comes online that we will be to place 100% of our material outside China. Having said that, China is the largest rare earths market in the world, and we're happy to participate in the Chinese market as well. Neal Dingmann: Very good. And just a reminder on the heavies, what is the -- what's your capacity on the heavies? Can you remind me again? Amanda Lacaze: Well, at present, we haven't provided explicit capacity on Dy and Tb because it's a bit of an opportunity sort of circuit that we've put in place. But on the -- we have provided that. And actually, it would probably be best if I point to Daniel to give that sort of data. But at present, we -- if you take our production stats that we provided as part of the quarterly report for the first 6 months, that's probably a reasonable sort of an indication. Daniel, did you want to add anything to that? Daniel Havas: Well, the current circuit is doing -- has the capacity of 1,500 tonnes throughput. But as Amanda points out, we've not provided guidance on the breakdown of the Dy and Tb coming out of that. The new facility will allow us to have 5,000 tonnes of throughput and the figures were outlined in the release when we announced the heavy circuit -- sorry, the heavy facility that we're putting in Malaysia. Operator: Your next question comes from Austin Yun with Macquarie. Austin Yun: Just first question is on the cost side. Looking to understand what's driving the rise in the general and admin costs in this period. Also, understand how should we think about the depreciation charges given the run rate is ramping up at Kalgoorlie? Amanda Lacaze: Sorry, what was -- Austin, what was the second part of that question? I just missed it. Austin Yun: Sorry. The second part is on the depreciation charges. Amanda Lacaze: Depreciation? Okay. Austin Yun: Yes. The first one is on general and admin expenses. Amanda Lacaze: Okay. So I'm just going to ask Gaudenz to deal with both Part A and Part B, Gaudenz. Gaudenz Sturzenegger: Yes. Austin, thank you for the question. I think the first one, I understood was a G&A question. The other one was a depreciation question. On G&A, I think if you go a little bit to Note 10, which -- and the Note 2, which Note 2 in this case, I think a big portion of the increase is related to not absorbed depreciation and employment cost charges, which relate to Kal. So we are not yet running at the run rate we are planning. So that has impacted about $20 million, $25 million on this. And on depreciation level, I think here, important to go back to our main projects we have or we had. I think it's $800-plus million on Kal, $550 million for the Mt Weld expansion. And most of this has been capitalized before. So you will see now the impact on the depreciation side, there is a smaller portion, $100 million to $200 million, which is still to be capitalized in Mt Weld expansion, which should happen in this quarter. So I think it's a pretty solid base. You have seen there. There's probably a little bit more due to the second phase of the Mt Weld. But fundamentally, it's just the $1.35 billion, which are coming into operation and where we had the capitalization event. I hope that helps. Austin Yun: Yes, sure. So the depreciation charges will be even higher in the second half, potentially given the ramp up? Gaudenz Sturzenegger: Yes, exactly. Austin Yun: Okay. Just the second question is on Kalgoorlie. Amanda, you mentioned that it's still kind of in the ramp-up and the bottleneck is sort of shifting. I'm just keen to understand your operating model plan for this plant in the next 12 months. Are we still expecting a batch operation model? Or would you aim to switch to continuous towards the end of this calendar year? Amanda Lacaze: At present, we aim to -- at present, Kalgoorlie is extra capacity to the baseload in Malaysia. And so we manage production to that. And so that's not hard to work that out. We added 50% capacity to downstream. So we've got baseload comes out of cracking in Malaysia, plus half of that again coming out of Kalgoorlie. And we'll just manage it, whether it's sort of decisions on batching or continuous operation for longer batches, I guess, they're just operational decisions that we will make on what's the best operating and financial outcome. Operator: Your next question comes from Chen Jiang with Bank of America. Chen Jiang: Thank you for all the color on the rare earths market and comments about your sales in the presentation. First question, I'm just trying to understand your comments about Lynas continue to optimize your sales model, direct contracting and also you have ongoing negotiation offtake agreement with U.S. government. What's going to change going forward, especially for your 7,500 tonne per annum NdPr priority sales to Japan? And because you are ramping up, there will be incremental sales ex Japan. I guess, given -- how should we think about your pricing mechanism for NdPr? Because as you mentioned in the call, China NdPr price is $19 or 17% above the price floor. So I guess you are getting that USD 120 per kilogram higher than price floor or you can beat that benchmark for NdPr. Amanda Lacaze: So you've answered all your own question, Chen. Yet, our job -- the sales job and the sales measure that our Head of Sales provides to me on a monthly basis is what percentage above the equivalent benchmark rate are we achieving in terms of price. And we do achieve a premium versus the benchmark. It is different customer by customer for customer-specific reasons. And we don't provide sort of detail on all of our customer contracts, which wouldn't surprise you. I mean they're commercial and confidence and really such an important driver in our business. So we do still have -- however, we have some contracts which have floors and ceilings and the ceilings sometimes can be lower than the market price, but we've made a decision that made sense when we put those contracts in place. We have other contracts which are just pegged to the market price. So as the price goes up, we make more money. And then we have increasingly longer-term contracts and our discussion with all of particularly magnet buyers is that we're not interested in short-term contracts. We're interested in long-term contracts, which properly reflect the value of the materials that we produce. So we've always said this that we have a variety of different pricing mechanisms and the task of our sales team is to optimize that to give us the best possible return. And really a key measure on that is how much value are they adding, which is the size of the premium versus the benchmark. [ It's ] really good right now, as you can see. Chen Jiang: Yes, yes. I guess for your priority sale to Japan versus ex Japan, you would get a better price ex Japan. Is my understanding correct? Amanda Lacaze: We seek to get the best price in every instance, which is the right price for our customers and the right price for us. We have a very long-standing relationship with our Japanese customers. We have commitments, which are mutual commitments as far as those contracts are concerned. But I think that trying -- I understand why you are asking this and you're trying to deconstruct our revenue line. I'm not going to even give you breadcrumbs to be able to do that because the way that we deal with our customers is an important part of adding value in our business. And I don't want to be deconstructing the way that we deliver the final outcome. The issue is are we continuing to drive extra growth from our business? And are we driving that growth from a combination of volume and price. And I think that our results tell you that we are doing that. Chen Jiang: Sure. I understand. And just a second question on your balance sheet. So I guess you have over $1 billion cash sitting there from the equity you raised last year. Now thinking of the incoming operating cash flow over the next 12 months given NdPr price is so high and you continue to ramp up production. So you will have a lot of cash printing over the next 12 months. But your FY '26 CapEx kind of guided last year $160 million. So how should I think about your CapEx profile? I guess you won't keep piling the cash. How should I think about your CapEx profile and your organic growth over the next, I guess, near term or medium term? Amanda Lacaze: Thanks, Chen. So I think the first thing is that we did -- if we separate these 2 things, and actually, we do separate these 2 buckets of money as -- even on -- we still do a weekly forecast, and we separate these 2 buckets of money. We manage to the ex capital raise bucket. So really, what are we doing in terms of generating cash from operations and improving our position there. And that is really because it remains my heart desire that we are able to return some of that capital to our shareholders. The second piece, which we manage as a separate sort of bucket of money is the money that we raised for the Towards 2030 growth initiatives, and we will spend that money on those initiatives. So far, we have announced the $180 million, which is for the new HRE plant in Malaysia as well as that we are progressing rapidly on detailed documentation around things like the JS Link magnet factory in Malaysia, and we will be making further investments in terms of resource development once again, particularly in Malaysia. So that's the way that we are thinking about this with the objective that as we continue to generate more cash out of the business that we manage that accordingly, and we have the ability to make a decision on how and at what time and in what form might that be returned to shareholders, recognizing that we are still a growth business. The capital that we raised in August actually underpins our growth capability and we'll continue to do so. Operator: Next question comes from Jonathan Sharp with JPMorgan. Jonathan Sharp: Congratulations on the good result. Nice to see those NdPr prices coming up. First question just on the Towards 2030 5-year growth strategy, which one of the pillars is increasing capacity. But my question is, will this include expanding NdPr capacity at some point beyond 12,000 tonnes per annum? Now I understand that you're currently embedding the expansion that you've just done and some -- but yes, will it include expanding beyond the 12,000 tonnes per annum? And if I'm correct, my understanding is that there's a pathway to an additional 2.4 kilotonnes per annum at the concentrator, which was previously disclosed. You have the capacity of cracking and leaching once Kal's ramped up. And I would imagine the ability to expand solvent extraction is there with not too much capital. So really, my question is, why not expand further beyond 12,000, even if that's after 2030? Or is it more to do with the market being there to sell into? Amanda Lacaze: Thanks for the question, Jonathan, and welcome. I see that you're now [indiscernible] at JP. So yes, we will consider expansions beyond the current -- well, we've got -- we've said in the Towards 2030 like today, we got 10.5. We've said the stepping up to 12 is sort of a bit of a no-brainer. There are, however, some more substantial investments required to take it beyond that, but we know what they are. Some are at Mt Weld and some will actually be in Malaysia. You're right about our ability to be able to increase throughput and solvent extraction very cost effectively. But bear in mind, we just put on about 50% capacity increase in solvent extraction without a really serious price tag attached to it. The next step is going to have a few more costs associated with it. And some of those are going to be related to utilities and other management capabilities in Malaysia. The team is working on that. We expect over the 5-year period, yes, we will have placed 100% of what we produce outside China, and we will be looking for more production. And so therefore, we will be looking to drive production higher. But we don't have the precise plan on how all the bits of the jigsaw fit together to do that quite yet. Jonathan Sharp: Okay. And maybe just to dig in a little bit more on that. Would it be right to do 14,000 tonnes per annum after 2030? Or is there a number that you could give us? Amanda Lacaze: Well, I think -- as you've noted, Jonathan, we have identified 2,400 tonne uplift that would come out of Mt Weld. And we've previously identified that that's available and maybe towards -- I would think that our ability to place all of our NdPr outside China is dependent upon the speed with which the downstream industry develops. And so I think there's something like 7 different magnet projects in the U.S. at present. Some of them will never see the light of day. Others will come to market. We've got the projects that we're partnering with, particularly in the Korean metal and magnet making projects. We are confident that they will come online. So we will increase our NdPr production as downstream processing increases. So hopefully, those projects which do successfully come to market will start producing sometime in late '27, early '28. We'll have a watching brief on those to make sure that we're matching our production to that capacity. Jonathan Sharp: Okay. Great. And just second question. Congratulations on the very good... Amanda Lacaze: You get 2 questions -- I'm sorry. Go on, Jonathan. I shouldn't have joke. Yes, go on. Jonathan Sharp: Now I know you're still there. But as you do look to appoint the next CEO, what are you looking at in terms of capabilities? Is it operational execution, marketing, maybe government relations? And should we expect any changes in the direction under the new CEO? Amanda Lacaze: Look, you'll have to ask the Board that despite the fact that I think that I'm by far the most competent person to select the next CEO, the nonexecutive directors on our Board think they have the say, too. Anyway, I think that we have -- my job is to make sure that we have a business which is strong, which is resilient and which is able to continue to demonstrate the same sort of success that we've been able to demonstrate over my tenure. I would expect that given the quality of our track record that we would not be -- the Board would not be seeking to make an appointment, which would take the business in a fundamentally different direction. Sorry, everybody. I've just got a message that says that there are 7 more questions in the queue, and it's 10:54. So please, can we just have 1 question each so that we can try to give everybody a chance to ask a question. Operator: Your next question comes from Daniel Morgan with Barrenjoey. Daniel Morgan: Just on the market, it's clearly improved. Spot prices are rallying, customer inquiries is increasing. I'd basically just like to circle back to how you plan to run the volume side of the business going forward. So can you lift volumes materially from here? When do you think you can run the system at 10.5? Or is rectification and power issues that probably meaning that in the short term, you're going to be kept at 8,000 to 9,000 tonnes per annum? Amanda Lacaze: Daniel, good question. In the very short term, the 8,000 to 9,000 is probably right. In the short term, but not quite so very short term, we continue to be focused on the 10.5. 10.5 is roughly 30 tonnes a day. We know how we get that 30 tonnes a day, and we have many days where we are achieving the 30 tonnes a day, we're just not achieving it every day yet. And yes, that is primarily about Kalgoorlie and about the amount of feed that we're able to deliver into LAMP ex Kalgoorlie. Operator: Your next question comes from Scott Ryall with Rimor Equity Research. Scott Ryall: Amanda, on Slides 5 and 6 -- no, sorry, 5, you talked to how well the business was set up as an incumbent and with lots of capability and opportunities to expand into other areas. So I guess what you didn't say was that's your legacy, so congratulations. I'm wondering, just on a 3- to 5-year basis, given the excitement around rare earths in the last couple of years that has stepped up big time. How do you keep your staff and -- or protect your staff and protect your intellectual property, please, just in the context of your incumbency advantages? Amanda Lacaze: Yes. I think that's a really intelligent question because many times, people forget the importance of people in the business. We talk about IP, and there is no doubt that some of it is scientific IP, which can be properly documented, et cetera. But there's huge value that comes from just every operator in the company actually knowing what their job is, and that's a form of IP as well. We're very focused on ensuring that we are an employer of choice, and I don't expect that to change when we transition to a new CEO because Lynas is so much more than a single person. Lynas, I know that I'm the figurehead, but Lynas is every person who works in the company. And so the care and -- the care for each other that is a feature of the way that we operate and our focus on achievement and excellence, I believe, will survive me. Our people continue to work at Lynas because they get satisfaction from their jobs. They know they're doing something which is valuable and that they are valued for doing it. And I think that, too, after 12 years will definitely survive me. So being an employer of choice, yes, it's about making sure that we pay well and all of those things. But it's mostly about making sure that when you go home at the end of the day, you can say, I made a difference today, and we work very hard to make sure all of our people can feel like that when they go home every day. Operator: Your next question comes from Dim Ariyasinghe with UBS. Dim Ariyasinghe: Can I just get an update on the LAMP license? So it's due to expire on Monday. It feels like it's maybe just a rubber stamp that you need. But in the unlikely case that it doesn't go ahead, what contingencies do you have? Can Kal step up to ensure that the rest of the quarter is okay? Yes, if that's one question, that's it. Amanda Lacaze: Dim, I'm not sure that I've got a lot constructive to say about sort of the hypothetical of, let's say, we don't get sort of an extension on the license. I don't think that that's likely to happen. I think that the licensing environment, as we indicated, has changed. The new legislation went through and was gazetted at the beginning of December last year. It certainly should ensure that we're no longer in this sort of every 3 years, what's going to happen, but in a much more normalized licensing environment where if we meet sort of our requirements, we can reasonably expect that the license will continue. As we've indicated, we've done the things that we need to do. We've had the Atomic Energy Department has been in done its audit. We've received a very satisfactory rating, which is the highest rating available and we continue to run our operations safely for our people and our communities and the environment. So yes, would I have liked all of this to be resolved a month ago? Yes, but that's not the way the system works. But we will provide you with an update, I would expect within the next few days. Operator: Your next question comes from Paul Young with Goldman Sachs. Paul Young: Just this one should be pretty easy. I noticed that you've got a really good provisional pricing tailwind in the half of about $20 million. So your revenue beat the Street's expectations, and it was well above the cash receipts because of receivables increase in inventories, et cetera. But just on the provisional pricing tailwind, just to help us out going forward because you should actually see this benefit over the next 6 months as well, like a revenue tailwind on repricing of product you forward sold, but the price hasn't been locked down. Can you just help us just think about or just explain what your quotational pricing period is? Like as far as -- so we can look at -- we can actually just judge provisional pricing adjustments going forward? Amanda Lacaze: I can't give you chapter and verse on that, Paul, because it is different by customer. And the provisional pricing mostly relates to sales which are made into Japan. Sojitz carries that inventory and does actually denominate certain inventory for certain customers, which is why sometimes the tail is longer than we might otherwise expect it to be. But I'll invite Gaudenz to speak to it as well, but I would think that we should have most of it find its way through the system sort of within the next 3 months. Gaudenz, do you want to add anything to that? Gaudenz Sturzenegger: Yes, Paul, I think that's correct. You see it on the balance sheet receivable side already. But yes, it depends sale by sale also when the final sale is made to the customer. And that varies between 1 month and 3 months. Probably best you take -- if you want to model it, take about a 2 to 3-month lagging impact into consideration, then probably another 3 months before you see the cash really coming in or going out. I mean it's positive at the moment, has not always been like that, but we obviously enjoy the current setup, okay? I hope that helps. Amanda Lacaze: A little bit more color, Paul, because I think it's an interesting question, a little bit more color. We basically invoice when it leaves our factory gate. We go through a process of then tolling it in our toll metal makers. And then it goes from there into the magnet makers. And that actual -- that's part of what drives the difference here. And that is, as Gaudenz said, it's at least a 2-month period that we're talking about before it finds its way into the magnet makers. So yes, for modeling purposes, I think that you could assume a 2 to 3 months sort of lag is reasonable. Operator: Your next question comes from Austin Yun with Macquarie. Austin Yun: A quick follow-up. Just looking at your term deposit, keen to understand how did you explain the budget for that figure? Should we assume that the remaining balance will be what you set aside minus working capital requirement set aside for the downstream... Amanda Lacaze: Austin, I'm sorry, I have not -- you've just been garbled on my line. I don't -- can you start this question again, please? I can't understand what you're asking. Austin Yun: Sorry. I'm keen to understand the thinking for this term deposit and the remaining cash for the next 12 months, would that be the amount you set aside for the ionic clay project in Malaysia and also the downstream plant, the capital requirement? Amanda Lacaze: So that's basically a treasury question. So I'll let Gaudenz do that. I mean in terms of allocation into the different projects, we will disclose those as we finalize each of the projects. So we've disclosed the $180 million on the Heavy Rare Earths. We understand the profile of expenditure of that money and are managing it accordingly. But in general terms, treasury, I'll let Gaudenz say a few words to that. Gaudenz Sturzenegger: Yes. There -- I think it's probably better to look at it as a very dynamic process. I wouldn't really draw conclusions as you try to do that this is really specifically for certain spendings later on. I think also the terms we have there in that category are between -- beyond 3 months, but shorter than 12 months. It's more interest optimization approach we have there. So I will not read too much into the figure as such. And overall, we try to have a balanced approach, a cautious approach, but obviously, at the same time, optimizing the interest income. And at the moment, some of the shorter durations are better than the longer one. So it's pretty mixed. Operator: There are no further questions at this time. I'll now hand back to Ms. Amanda Lacaze for closing remarks. Amanda Lacaze: Okay. Thank you very much, and thank you all for your participation today and the questions that you have asked. And as with, I think, every CEO, I would remind you that any day that ends in "y" is a good day for Lynas and Lynas shareholders. So I look forward to seeing many of you over the next week or so. Thanks. Bye. Operator: That does conclude our conference for today. Thank you for participating, and you may now disconnect.
Operator: Good morning. We welcome you to EDP's 2025 Final Year Results Presentation Conference Call. [Operator Instructions] I'll now hand the conference over to Mr. Miguel Viana, Head of IR and ESG. Please go ahead. Miguel Viana: Good morning. Thanks for attending EDP's 2025 Results Conference Call. We have today with us our CEO, Miguel Stilwell de Andrade; and our CFO, Rui Teixeira, which will present you the main highlights of our strategic execution and 2025 financial performance. We'll then move to the Q&A session, in which we'll be taking your questions, starting with written questions, you can insert from now onwards at our webcast platform and then by phone. I'll give now the floor to our CEO, Miguel Stilwell de Andrade. Miguel de Andrade: Thank you, Miguel. Good morning, everyone, and welcome to the 2025 results conference call. Just before presenting our results yesterday, I just wanted to address the extreme weather events that impact Portugal. And as you know, Portugal was hit by a series of devastating storms starting at the end of January and then well into February to a certain point, had winds over 200 kilometers an hour, which really caused unprecedented physical damage to infrastructure in the country, including our own network infrastructure and also customers. I think the first thing to say is that we immediately responded with a very coordinated large-scale support from all the internal and external teams. I mean we had people coming in from Spain, Brazil, France and Ireland, and I just wanted to thank also all those teams. The networks and the hydropower teams worked around the clock to limit the damage caused by the storm and to restore power to our consumers. Naturally, the first thing is our thoughts are with the people and the communities affected. We understand the damage that this has caused, the frustration from people that had no power over those weeks. And from the beginning, our first priority was to reestablish power in the quickest, safest and the most effective way possible. We have now recovered 100% of the customers, only a very few specific situations outstanding that will be resolved very shortly. But I think the worst is definitely over. I also wanted to extend a really sincere word of appreciation for the absolutely extraordinary professionalism and dedication demonstrated by the teams, both internal and external across all the country. I mean the response from grid repair to the hydro power management, the community support, emergency logistics. I mean, it was absolutely exemplary. And I think it really showed the best of EDP in terms of the commitment to stand with our customers and with the communities that we serve, especially in the moments where they need us most. So I will come back to this later in the presentation just to talk a little bit about the impact on us in more detail. But I would move now into the bulk of the presentation. And on to Slide 3, which essentially shows an overview of our results for 2025. And I'd start off by saying EDP had a very strong set of results for 2025. The recurring EBITDA reached EUR 5 billion, so outperformed the EUR 4.9 billion guidance. It's mostly on the back of a better-than-expected fourth quarter in the integrated segment in Iberia from above-average hydro resources in the fourth quarter. If we compare that with 2024, EBITDA was up 1% year-on-year. So it reflected a rebound in EDPR's performance, which as you know, had record capacity additions towards the end of last year. Recurring net profit came in at EUR 1.3 billion, so also above the guidance, although it's down 8% versus 2024, and that's mostly explained by higher financial expenses. Net debt ended the year very well. So at EUR 15.4 billion, better than the EUR 16 billion guidance, and that led us to have a great FFO over net debt of 21% compared with the 19% guidance. So the upside versus guidance at all levels allowed us to then increase the shareholder return. So we're proposing a dividend of EUR 0.205 per share. So that's a small increase, which will be paid this year already in 2026, obviously subject to the General Shareholders Meeting approval. If we move forward into the next slide to talk a little bit more detail about the FlexGen and customers. So here, we see a structural uplift in the value flexibility. And I really wanted to highlight, if you see here on the left-hand side, there's a chart from the International Energy Agency recently that shows the capture rates in Spain by technology. And it shows how the market is increasingly rewarding assets that can respond to price volatility and the system needs. And you can see natural gas capture prices obviously rising in 2024 and '25. Hydro with reservoir also trending upwards and more intermittent and less flexible technologies, particularly solar, you see obviously a decline in capture rates in 2025. The takeaway here is that flexibility is being structurally priced in and that we expect that to remain a long-term feature of the market. And you can see that in the figures for EDP for 2025. The hydro net generation was almost 10 terawatt hours. It's down 2% year-on-year, but still a very strong year for them. Hydro premium versus baseload increased to 21%, so reinforcing the value of the flexible output. And on pumped hydro, the pumping volumes increased to 2.3 terawatt hours on the year, so up 24% year-on-year, with the pumping spread versus baseload reaching 75%. If you look at the right-hand side of the slide, and we give there an update on the reservoir levels in 2026. So given the heavy rainfall, reservoir levels are at historically all-time highs. They've reached around 96% in February 2026, up from roughly 76% in January. And that's consistent also with the hydro production index in Portugal, which has doubled its historical average year-to-date. So obviously, that's following the heavy storms, which I just talked about in Portugal in January and February. One important thing to note is that the market consequence of these extreme weather conditions is that we also had abnormally depressed pool prices, which together with higher ancillary services costs in February. It's shown by the Portuguese pool prices going from around EUR 71 per megawatt hour in January to roughly EUR 8 per megawatt hour until mid-February. So more depressed pool prices in February and higher ancillary service costs. If we move forward to the next slide and just in a little bit more detail on the storms here in Portugal in the first half of 1st February essentially. First, as I mentioned, just highlighting the efforts made by the team. So a huge effort done to restore power and to make sure that the dams and that the flooding was limited. The storms impacted around 6,000 kilometers of grid, damaged around 5,800 towers. We had more than 2,000 people mobilized on the ground, around 2,400 people. And as I said, we were able to restore 100% of the customers already by this week. On hydro, we continuously monitor the rainfall. And I think here it was great to see using advanced hydrological model, so we were able to proactively sort of anticipate what was coming down the road and to be able to also anticipate some of the discharges and coordinate that with the environmental authorities. So I think there was a meaningful role in flood control. Then on the practical side with customers and communities, we have put in place schemes to ensure that payments and invoicing support for the customers impacted as well as the assistance with the solar DG reinstallations. On a more social level, we also delivered over 90 tons of essential materials, including fans, roofing tiles, parklands basically to help people protect their homes. And we also helped people in more isolated areas get access to communications, including Starlink devices and power banks. In terms of financial impact, we're expecting that this will result in around EUR 80 million in CapEx with infrastructure to rebuild, will be partially supported by insurance. We're still evaluating additional cost and impact, and we'll update that in the first quarter results, but clearly shows increasing vulnerability that climate change is causing and the importance above all of resilient flexible systems and long-term investment in networks. And that takes me to the next slide, where I wanted to just stress that already before these events as of last year, we're already significantly ramped up the investment to respond to the growing needs of the system. The electrification, the renewables integration, the grid resilience, gross investments for the period '26 to 2030 will reach EUR 4.1 billion compared to the EUR 2.6 billion in the '21 to '25 period. So that's a 58% increase overall in Iberia, slightly more in Portugal than in Spain, although both geographies are contributing significantly to Portugal around 66%, so almost 70% increase. The big part of this is strengthening grid resilience. We're assuming around -- or more than EUR 500 million for grid resilience to ensure that the network is prepared for higher loads, more distributed generation and greater system complexity. And fortunately, this greater investment is underpinned by much stronger regulatory visibility, as we showed here on the right-hand side. So as you know, the new regulatory framework sets up the 6.7% nominal pretax return for this period until 2029 in Portugal. And in Spain, the framework establishes a 6.58% return for the period out to 2031. So importantly, both framings closed as of the end of last year, giving us clarity and stability for the upcoming investment cycle. I think it's also important to note that in Portugal, the 2026 state budget clarifies and -- the conditions under which new investments in the networks are exempted from the extraordinary tax. So that supports really this incremental investment that we're doing in the networks. Still on networks. If we move forward to the next slide, you can see that the new regulatory terms and approval plans will allow an EBITDA growth in Iberia for networks. So it grows to around over EUR 1 billion over this period. We have to consider that in this period in Portugal, there are legacy revenues that end in 2026 worth around EUR 40 million, removing that means that we'd have a normalized 2025 EBITDA of around EUR 0.89 billion and that then reaches the EUR 1.05 billion in 2028. So that's an 18% EBITDA growth for '25 to '28 with -- updated already with the new terms. So this isn't just a one-off to 2028. This then continues to grow beyond 2028, and that's supported by the approved returns and also the investment plans that we discussed on the previous slide. So all of this gives us confidence in the continued momentum well beyond 2028 to 2030 and beyond that. If we move on to the next slide and just talking quickly about Iberia. I think what I'd say here is that Iberia is entering a period of much stronger electricity demand growth, driven by electrification. On the left, you can see the power demand growth in 2025 versus '24. Portugal leads at 3.6%, Spain at 2.8%, which means Iberia clearly outperforming several of the European markets. And it's not just a 1-year effect. I mean obviously, we're seeing strong momentum into 2026. So just in January, the demand was 7.9% in Portugal and 4.8% in Spain already adjusted for temperature. And going forward, we see our estimated 2% CAGR in the Iberian electricity demand over the period leading up to 2030. So demand growth should be supported overall, not just by the economy is doing well, but by more than 18 gigawatts of data center projects pipeline that have been announced or that are publicly available. I'd have to highlight here that EDP is obviously engaging with a lot of these projects, 2 of the more advanced ones that's certainly here in Portugal are the Merlin Data Center, North of Lisbon at 180 megawatt. We had an MOU signed with them back in July of 2025. And also the Start Campus project in Sines with an MOU that we signed yesterday. And the Sines project, as you know, is expected to reach 1.2 gigawatt over the next couple of years. And I can detail a little bit more what that means in the Q&A if you think that's appropriate. If we move forward to still to talking about Iberia. And this is a slide, which I think is also extremely important because it's not just about demand growth. It's also that Iberia combines this demand growth with structurally affordable power prices. And that's supported by improving system fundamentals. And that's really an important advantage for customers, for electrification, for the broader competitiveness of the economy. So when there's so much talk in Europe and elsewhere about affordability and about competitiveness, Iberia has a really distinctive advantage in Europe, and I think we will benefit from that sort of on the electrification front. On the left-hand side, you can see the evolution of the B2C electricity prices. And the key takeaway is that Portugal and Spain fit among the most affordable markets in Europe, around 17% below the European average. Going forward, at the European level, Northern Europe faces higher expected network investments that typically puts upward pressure and then user prices over time. But by contrast, in Portugal and Spain, we have several structural elements that we think will support the affordability. One is that the historical electricity system that is expected to be fully paid by 2028. That means that there will be significant cost reductions in the tariff structure going forward. Second, there's a gradual phase out of legacy support schemes like the Feed in Tariffs in Portugal and the Recore scheme in Spain that also reduces access tariff costs. And so in Portugal, specifically, the regulator has simulated annualized reductions in the B2C reference end user tariffs from 2026 to 2030. So that helps create room to accommodate new system needs like ancillary services, capacity mechanisms, additional investments in networks without compromising competitiveness. So I think it's -- we are able to get the best of both worlds, which is more investment, more ancillary services, more capacity mechanisms to make sure that we have a stronger, more resilient system and still have sort of annualized reductions in the end user tariffs. Moving on to EDPR. Again, you have more detail on that yesterday. So just a quick note here. We are seeing really strong execution momentum and better visibility on the business and plan delivery. Over the last 6 months, EDPR secured 1.3 gigawatts of capacity. And on the left-hand side, you can see the main projects secured during this period. It's a combination of PPAs with utilities, global tech companies. We also have Build and Transfer agreements in the U.S. So it's really a diversified set of offtakers and structures. And across the '26 to '28 period, we already have 2.8 gigawatts secured, and we expect to continue on securing more projects over the coming weeks and months. If we break it down year-by-year, 2026 is already 100% secured. So almost all of that under construction, a couple of projects coming under -- into construction in the very short term. So that gives us very good confidence on the 2026. '27 is already 65% secured and 2028 is at 10% secured. So that gives us roughly already 55% secured for '26 to '28. As I say, we have good visibility on additional projects that are coming down the pipeline to help us meet the rest of this project. And with that, I'd stop here, I pass it over to Rui to go through the '25 results in more detail, and I'll come back for closing remarks. Thank you. Rui Manuel Rodrigues Teixeira: Thank you, Miguel, and good morning to all. So let me start with the EDP's results. Recurring EBITDA reached EUR 5.03 billion in 2025. It's up 1%, but if we exclude asset rotation gains and FX, the underlying growth was 7% year-on-year driven by strong EDPR performance in resilient network space. So looking at the recurring figures by segment, Renewables, Clients and Energy management increased by EUR 65 million year-on-year, reaching EUR 3.4 billion and all represent 69% of group EBITDA. Within this segment, the Hydro Clients and Energy Management declined EUR 216 million year-on-year, mainly reflecting the normalization of gas sourcing conditions in Iberia versus the external environment that we have in 2024. This was more than offset by strong EDPR performance up to EUR 190 million year-on-year, reflecting 2024 record additions translating into higher generation. On the network side, recurring EBITDA stood at EUR 1.54 billion, now representing 31% of group EBITDA. While EBITDA decreased EUR 68 million year-on-year, this is mainly explained by Brazil FX impact and the assets of capital gains, again, excluding FX and asset rotation, the underlying networks EBITDA increased 3%, supported by a positive performance in Iberia, both from a regulatory framework and reinforce operating discipline. So finally, recurring OpEx decreased 2% year-on-year or 5% in real terms, reinforcing also the operational discipline, which I will detail in the next slide. So if you look to the OpEx, this slide highlights an important enabler of our EBITDA performance, which is sustained cost discipline. Recurring OpEx decreased EUR 1.88 billion, trending down year-by-year, a total reduction of around EUR 160 million in '25 versus '23. Over the last 12 months, inflation was around 3%, and yet we still delivered a 2% nominal reduction in recurring OpEx. Excluding FX, OpEx is slightly below, which means that we are effectively absorbing inflation through efficiency and productivity gains. This is translating into improved efficiency ratios. OpEx as a share of gross profit improved from 28% in '23, down to 26% in '25. Key drivers for these, EDPR is delivering efficient growth. We're reducing adjusted OpEx per megawatt by 12% year-on-year to EUR 40,000 per megawatt, this while scaling capacity, a leaner more focused workforce aligned with the company's growth priorities, digital and AI-driven initiatives to improve O&M efficiency, decision-making, customer experience. So I think the message is very clear. We are growing and investing while structurally improving the cost base. And obviously, this supports cash generation as we deliver the plan. So now let me move to FlexGen and Clients segment. EBITDA for '25 stood at EUR 1.46 million. This is down 13% year-on-year, and this reflects the normalization versus an extraordinary 2024, but also flexibility revenues structurally increasing. In Iberia, 2024, as you know, was impacted by extraordinary gas sourcing costs. 2025 baseload hedging price normalized from EUR 90 per megawatt hour to EUR 70 per megawatt hour. However, this was partially offset by stronger flexible generation revenues. Pumping generation increasing by 24%, pumping spreads reaching 75% over baseload prices. Hydro premium improving to 21% and CCGT generation increasing by approximately 3 terawatt hours, reflecting the system operator needs. In Brazil, EBITDA declined from EUR 184 million to EUR 156 million, mainly due to ForEx impact. So overall, while the headline EBITDA reflects normalization, the structural uplift in flexibility was very solid with EUR 0.3 billion contribution to overall group. So now we move to Slide 15, turning to EDPR, which we also commented on yesterday's call, recurring underlying EBITDA ex ForEx grew by 27% year-on-year. This growth, very robust growth reflect a significant step-up in the generation following the record capacity additions in '24, offsetting worse renewable sources and also normalization of selling prices primarily in Europe. Overall, EDPR continues to deliver strong operational momentum and translate to capacity growth into earnings growth. Now looking at the Networks EBITDA on Slide 16. Recurring EBITDA reached EUR 1.54 billion in 2025, representing a 4% decrease year-on-year, but this is primarily explained by devaluation of the Brazilian real. The absence of asset rotation gains in Brazil, which amounted to EUR 71 million in '24, combination of deconsolidation of transmission assets, the decrease on the distribution company's residual value update and transmission inflation update. But this is compensated overall by improving operating performance. Again, excluding FX and asset rotation, underlying EBITDA increased 3%. It has an important contribution of EUR 56 million in EBITDA from Iberia, the following inflation update in Portugal and RAB growth overall. So all in all, the network segment is showing a resilient operational performance with a very supportive regulatory farmwork as Miguel just described going into the future. On financial costs, following slide. Net financial costs increased from EUR 865 million to EUR 989 million. There are 2 mains drivers to this. The first one is that net interest costs, which add about EUR 54 million. They reflect higher average debt and a higher cost of debt in Brazilian reals, where the average cost rose from 11.7% to 14.1%, reflecting the macro conditions in the country. Excluding Brazil, the average cost of debt reduced to 3.3%. Second, lower capitalizations and other effects contributing with an addition EUR 69 million. This is largely explained by the EUR 1.2 billion reduction in work in progress as projects enter the operation, and therefore, reducing capitalizing interest. If you look to the right-hand side, average nominal debt by currency remains broadly stable year-on-year. The portfolio continues to be predominantly euro-denominated with 64%, followed by U.S. dollar, 16%; and Brazilian real at 15%. Finally, in terms of recent financing activity, we issued a 6-year senior bond EUR 650 million in January with a 3.25% coupon. So this confirms the competitive access of EDP to funding in the debt markets. Now let's move to the cash flow on the following slide. Organic cash flow reached EUR 3.3 billion, up EUR 0.5 billion year-on-year, driven by EBITDA improvement in working capital management. Net interest paid amounts to EUR 0.8 billion, partially offsetting the operating improvement. And on investments, gross investments totaled EUR 3.9 billion, mainly EUR 2.4 EDPR and EUR 1.1 billion in Electricity Networks, plus EUR 0.4 billion in FlexGen and Clients. These gross investments were funded through EUR 1.6 billion of asset rotation and EUR 0.8 billion of Tax Equity proceeds. There are also EUR 0.5 billion of other impacts, mainly related with payments to fixed asset suppliers. So as a result, a total of EUR 1.7 billion of net cash investments, of which close to 50% in electricity networks and around 40% in EDPR. Now on Slide 19, net debt stood at EUR 15.4 billion, down from EUR 15.6 billion at the end of 2024 and outperforming EUR 16 billion guidance that we gave to the market. The key drivers for the change in net debt includes EUR 3.3 billion of organic cash flow. Obviously, the EUR 0.8 billion of dividend annual payment and the EUR 100 million share buyback throughout '25. The EUR 1.7 billion of net cash investments that I just explained, also EUR 0.8 billion of regulatory receivables and about EUR 0.3 billion from FX and other, mostly related to U.S. denominated debt. So as a result of cash flow management, balance sheet discipline and obviously, very strong operational cash flow, we do have solid credit metrics with 20.9% FFO net debt and 3.3x net debt EBITDA. Now on the net profit. Net profit reached EUR 1.28 billion. That's a reduction of 8% year-on-year. And this is mostly reflected or driven by the higher EBITDA, EUR 74 million, higher D&A and provisions, increasing EUR 60 million year-on-year, reflecting the investment path, higher net financial costs due to higher cost of debt and lower capitalizations, slightly higher income taxes and noncontrolling interests. Excluding asset rotation gains and the ForEx, the underlying net profit increased 3%, confirming a very solid operational performance, as we just described. Reported terms, net profit reached EUR 1.15 billion, including the negative impact of EUR 130 million, mostly related with some nonrecurring items in EDPR. Year-on-year reported net profit, therefore, increased 44% also driven by EDPR performance rebound compared to a negative 2024. This improvement in net profit supports our proposal to increase the dividend to EUR 0.205 per share, up 2.5% versus the guidance to be paid in 2026, obviously subject to the approval at the shareholders' meeting. And now let me just address a topic, which I think is relevant regarding the net income sensitivity to power prices versus what we presented at the CMD. So on this slide our -- just again to remind everybody. So our exposure to energy market is well diversified. And as you know, we have a very active energy management. The portfolio is predominantly long-term contracted. This provides strong cash flow visibility and obviously reduces short-term impact from price volatility. In Iberia and Brazil, we have a structural short position in generation, which hedged through our supply business, so partially offsetting wholesale price movements. At the CMD, we disclosed that the simultaneous 5 years per megawatt hour movement in all markets, would imply approximately EUR 60 million impact on 2028 net income. Since then, Iberia 2028 forwards have declined around EUR 10 per mega hour. But on the other hand, U.S. and Brazil forward curves are moving upwards. So this portfolio diversification plus an active energy management have actually reduced the sensitivity. So today, the same 5 years per megawatt hour movement across all markets in the same direction would imply approximately EUR 45 million impact on net income 2028 again versus the EUR 60 million that we presented at the CMD, so a reduction on the sensitivity. The merchant exposure split is about 65% Europe, 20% Brazil and 15% North America. So with this, I would hand over to Miguel for final remarks. Thank you. Miguel de Andrade: Thank you, Rui. As you say, I think to push on the sensitivity to power price is an important point to note because I know there are questions on that. Anyway, if we move forward to the final slide, just before we open it up for Q&A. So summarizing the 2025 results and how we're seeing 2026 and beyond. First in relation to '25, I think it's undeniable that it was very strong execution and delivery of what we had promised. Across the group, we delivered ahead of guidance, and we're seeing a clear structural change in FlexGen and Clients with the value flexibility coming through very strongly. At the same time, EDPR also improved its performance, has its continued focus on A-rated markets. It's got better visibility on the business plan execution. In networks, we have significantly improved visibility with the regulatory periods closed in Portugal and Spain, and we also advanced in Brazil with the extension of the concessions. And importantly, all of this was delivered with financial discipline and increased efficiency in Sweden. Spoke about, particularly on the cost side, but also on the debt side, supporting the maintenance of sound credit ratios. Second, looking at the 2026 guidance. We expect to recurring EBITDA of around EUR 4.9 billion to EUR 5 billion, and this is supported by the balanced contribution across the portfolio. We have the networks around EUR 1.5 billion to EUR 1.6 billion. And EBITDA at around EUR 2.1 billion as mentioned yesterday. FlexGen and Clients is around EUR 1.3 billion to EUR 1.4 billion, and we reaffirm our recurring net profit of EUR 1.2 billion to EUR 1.3 billion. On the 2028 targets. And over the course of the next couple of years, we continue to expect around EUR 12 billion of gross investments. And I say this will be funded with discipline and supported by around EUR 6 billion of asset rotations and disposals. We'll keep our balance sheet targets unchanged. So we're targeting FFO over net debt of around 22%. And in terms of earnings delivery, we remain committed to the EUR 5.2 billion of recurring EBITDA and the EUR 1.3 billion of recurring net profit by 2028. So overall, this is consistent. We executed strongly in 2025. We have very clear visibility for '26, and we are reiterating our 2028 guidance. With that, happy to turn it over to Q&A and back to you, Miguel. Thanks. Miguel Viana: We will begin by addressing the questions submitted in writing. After that, we will move on to the live questions by phone. [Operator Instructions] So we'll start with the written questions. And we have for first question from analyst at RBC and the other analysts GB Capital, Deutsche Bank, CaixaBank regarding the guidance for 2026 that we provide. So we are guiding stable EBITDA versus what we present at CMD, while at EDPR, there was a slight revision. So if we can explain this in detail, this better guidance. Miguel de Andrade: Sure. So as I mentioned, I think 2026 we're very comfortable with it. I mean a couple of points that have improved since the Capital Markets Day last November. The regulated rate of return for the distribution in Portugal was better than the initial proposal. So that was an upside. The callback was suspended as of December. And previously, we're assuming that we will have that over the next couple of years. So that's also positive. January and February saw obviously very strong hydro inflows. And I showed you the numbers in terms of how the reservoirs are, they're sort of all-time highs. So full capacity there. So good visibility also in the next couple of months in terms of hydro. On slightly negative low wholesale prices in February and higher than normal ancillary services in terms of supply, also some transmission grid restrictions due to the storms, still be fixed. So that's on the negative side. But we are expecting these to decline over the next couple of months and also the wholesale prices in Iberia to normalize again, also over the next couple of months. On ForEx and FX, we have a slightly lower dollar versus the euro, as we commented yesterday on the EDPR level. But on the other hand, we're seeing a positive rebound of the Brazilian real. So we're now seeing BRL 6 per euro versus our business plan assumptions of BRL 6.6 per euro for 2026. So quite a few positives, a couple of negatives, but all in, quite frankly, we feel very confident with the 2026 guidance. Miguel Viana: Yes. We have then a second question about net debt. So what contributed to the positive deviation of our net debt figure in 2025, so the EUR 15.4 billion versus the EUR 16 billion guidance that we have provided. And also a question around update for net debt expected evolution over 2026. Rui Manuel Rodrigues Teixeira: Thank you, Miguel. So first of all, Q4 was very good in terms of operational call, strong contribution from the integrated segment in Iberia. So that's the first one. Obviously, there is some impact from working capital that we will see then reverting in the -- now in 2026. So what I would say is that, first of all, 2026 we are looking at around EUR 16 billion of net debt towards the year-end. Typically, as you know, we have, during the first half rise in net debt coming either from this working capital. Also, bear in mind that we have the Greek transaction, but also dividend payments in the second quarter. And then as we start having the -- also the cash in from asset rotation tax equity proceeds towards the end of the year, it tends to go down again. So that's why we are looking at around EUR 16 billion by the 2026. Miguel Viana: We have then a question around the news of yesterday regarding memorandum of understanding with Start Campus. What does it mean for EDP and this engagement? So questions from Alex from Bank of America, Fernando, CRBC. Miguel de Andrade: So it's an interesting step. I think it's one of many we've been taking. It's -- essentially the MOU just an interest of both parties to explore the synergies between their activities. I mean, obviously, we as experts on the energy side and them on the infrastructure side. I'd say there's actually 3 parts to the MOU. I think the first is for EDP to be considered the strategic energy partner to the Start Campus projects, whether it's through power supply as is or through additionality of projects, sort of the Start Campus infrastructure to be built out. The second is just synergy between the data campus center or project and the infrastructure that we already manage, for example, in the Sines power plant. So for example, like on the water side in terms of cooling. And the third is really potential collaboration for other data centers in Portugal that campus might want to develop, leveraging on EDP's assets and capabilities of land and generation assets that we own in Portugal and so explore potential collaborations. I think above all, it's opening up the possibility for creating additional value from our existing assets and operations as well as getting additional visibility on future demand volumes, which could support the development of a sizable pipeline of renewable energy projects as we've discussed in the past. So overall, it's just, I think, a step, one of many that we expect to take in this area. Miguel Viana: Then also a question from Pedro Alves, Caixa Bank regarding the effective tax rate evolution. So from the 28% in 2025 and also explaining where do we see -- so explaining the 28% and how we see the evolution for '26. Rui Manuel Rodrigues Teixeira: So 2025, 28% tax rate was primarily driven by the fact that we had lower asset rotation gains and some costs that are not deductible -- tax deductible and that was basically impacted the rate. But if you think about 2026, you could consider as sort of low 20s. And this is because we expect again to increase the capital, the asset rotation gains from the transactions and also the declining tax rate in Portugal, which as you know will be dropping by 1 percentage point every year until 2028. So '26 around the low 20s. Miguel Viana: We have then a question from Pedro from CaixaBank regarding, if we can explain a little bit better the inflation update in terms of real, in terms of the impact in our EBITDA in Brazilian networks in 2025? And how do we see it evolving for '26, '28? Miguel de Andrade: So in '25, we had the extension of the concession in Espirito Santo for another 30 years. And we expect to have that extension as well for Sao Paulo and that's been sort of approved by the regulator. We're just pending the final signature in the next couple of weeks. So there's a positive impact from the inflation update of this residual value, which existed in '25, which becomes immaterial from 2026 onwards. To be specific, in '25 in the Electricity Networks in Brazil, we had around EUR 70 million of EBITDA from inflation updates in both the distribution companies and the transmission companies. And we had around EUR 20 million from EBITDA from the 2 transmission lines that we then sold in the fourth quarter of 2025. So the impact of this inflation update in the networks has declined in 2025 already versus '24, but in '23 -- in '26, it will be immaterial. I think it's important to note the following. We are under discussion with ANEEL and which is the regulator in Brazil. We and the other distributors, but we are more advanced in this process because we're the first ones to have our concessions renewed, but to change the recognition of investments in the company's asset base. As I mentioned, I think, at the Capital Markets Day, and I'll just reiterate, they're currently only recognized every 5 years with tariff provisions. So there's still no conclusion, but we see a positive sign that at least the regulator is willing to consider this and that would allow us to have this intra-cycle recognition of investments rather than having to wait for the end of the regulatory period. So that's work in progress. We're certainly very committed to it, and we think others will be as well as soon as they start seeing our concessions being renewed as well. Miguel Viana: We have a question from Jorge Alonso from Bernstein. Also, regarding the current power price environment, how confident are we to maintain our 2028 guidance. And regarding the assumptions that we provided at CMD and the current forwards as we see the guidance for '28? Rui Manuel Rodrigues Teixeira: So as I also briefly explained with that slide on sensitivity, I mean, effectively, we do have, as you know, short positions in both -- structurally short positions in generation in both Iberia and Brazil. This we hedge primarily through our clients' business, but we also have a very active energy management. And then on the rest of the other markets, as you know, we have from an EDPR standpoint, 85% is actually long-term contracted. On this, basically, what we have done since the CMD is obviously to increase the hedging. So we have been working actively on the hedging on the energy management. So for 2026, 85% of the volumes are hedged at a price which is north of EUR 64 per megawatt hour. For '27, '28, we have about 50% of baseload volumes hedged above the current forward prices. So obviously, this gives us stability and predictability versus the changes in the forward curves. But also on the other markets, U.S., the exposure is mostly concentrated in PJM and MISO. We have -- we are seeing forward prices going up by around $5 per megawatt hour. Also in Brazil, where we have lower exposure, but still relevant, the PLD has been rising significantly since the CMD. So that's why, all in all, again, this portfolio diversification, the very active energy management is giving us confidence towards the 2028 guidance. So more importantly, as I said, we actually reduced the portfolio exposure to these price movements. So at the CMD in November, we were estimating around EUR 60 million. And now we are looking at a substantially lower number. Miguel Viana: We have now question Manuel Palomo, BNP. What is your take about increasing concerns about affordability and the approval of the energy decree to reduce price by the Italian government and if we could expect any contagion effect? Miguel de Andrade: Well, I think this is an important point just to take a step back. I think we are all focused on competitiveness of the economy. And what's good for the overall economy is good for the companies. As I mentioned, most of our exposure is in Iberia, and we specifically put up a slide, which shows that in Iberia, Portugal and Spain, we already have some of the lowest prices in Europe. And they are expected to even trend lower as some of the existing costs in the system come to an end, like the tariff deficit payments, which are being amortized and like the feed-in tariffs, for example. So the trend is -- it's already much lower than the rest of Europe and trending lower. So the affordability and competitiveness, I think, in Iberia is actually a positive. And it means they can take additional investment, they can take sort of some of the ancillary services without impacting the affordability. On the Italian case, I think it still has to go through the, let's say, finally prolongated, and I'm sure you have a lot of discussion at the European level. Conceptually, sort of understands, but disagree with what it's doing. There's been a lot of discussion already 2 years ago about market design, about how to make things -- make the wholesale market work differently. And ultimately, it always comes back to the marginal pricing system is the system that works best. CO2 has to be internalized and that continues to be a key priority for Europe. And so this is something to watch, but we don't expect it to have any material impact in Iberia. Miguel Viana: So we move now to the questions on the phone, and we start for the first question that comes from the line of Fernando from Royal Bank of Canada. Fernando, please go ahead. Fernando Garcia: I'm curious because I am seeing a significant increase in CCGT's output in Portugal and this despite the strong hydro and wind output so far in the year, particularly in February. So my question here is this is explained by the elimination of the Portuguese clawback? And if this could be a potential upside to your estimated positive impact, I think you mentioned EUR 25 million for 2026. Miguel de Andrade: Excellent. So you're right, CCGT output has increased. It's more related to -- so the ancillary services means the system operators wanted to keep these working sort of as backup as the system. So it's already this trend, as you know, following the blackout of last year. It then started to decrease. Now it's increased significantly because of some specific issues here in Portugal relating to all the storms that happened and sort of the disruption to the network. I wouldn't say it's an upside, probably it's a downside in the sense that higher ancillary costs would have a knock-on impact if they're not passed on to the suppliers. So it's something to watch. We expect this to normalize over the next couple of weeks, but it's basically the CCGTs working over time basically over the month of February. Miguel Viana: And we have a final question from the line of Alberto Gandolfi from Goldman Sachs. Alberto, please go ahead. Alberto Gandolfi: So my first question is, I wanted to ask you about Brazil. Is it a region where you think you might be growing exposure? There are potentially assets for sale. You're happy with the status quo? Or is it something that given the better returns in Portugal and the clarity in Spanish networks, you might think about deemphasizing a little bit. The second question is a clarification on Slide 21. Am I right in saying that the EUR 45 million impact on net income is therefore adjusted for 50% hedging. So in other words, without hedging, do we just double the EUR 45 million? Or is it -- so can you maybe help us on that a little bit? And last one, on this data center opportunity, it seems you're very active in this booming Portuguese market. Can I ask you if you are planning to build potentially incremental capacity if you were to sign a PPA there? Or would it be from existing? And would it be done at EDP or EDPR level if it were to happen? Miguel de Andrade: So good questions. I think in relation to Brazil, listen, we have a long track record in Brazil over 30 years. I think we have a great business there. We continue to look at opportunities for growth there to the extent that it makes sense within the overall Brazilian exposure that cap that we've always talked about. Obviously, we continue to see how best to allocate capital. And so we've sold assets in Brazil in the past. I mean, even recently, we did the asset rotation of the transmission lines. We sold the hydro. So we will continue to adjust and fine-tune our exposure to Brazil and obviously, reallocate capital to where we think is best at any particular time, whether it's Europe or the U.S. at the moment. But I'd say that we like having this diversification of geographies because it does allow us to allocate capital quite well, depending on the different cycles in the different geographies. On the third question, and then I'll let take the second question. On the third question, so essentially, what we're seeing is that there's a certain amount of power that can probably be supplied just as is because there's sufficient reserve margin in the system to be able to supply these data centers without necessarily having to go and build new power plants. And so that's a positive, I think, for the system. We just need to make sure the networks are there, but that's essentially the key issue because as long as there's reserve margin, you can feed it. If the demand then starts getting above a certain level and if you start having to Start Campus and Merlin and others, then yes, then we need to think about incremental capacity of different technologies. And then depending on what that incremental technology is, if it's renewables, it will definitely be done through EDP Renewables, which as you know has the exclusivity for renewable development, well, certainly in Nigeria, but elsewhere in the world as well. If it's, for example, if it was to be like a thermal technology, then obviously it would be, for example, with EDP or if it was hydro, for example, would be through EDP. But -- so there's a certain amount that can be done with existing capacity -- supplied with existing capacity and then above that level, then you start getting into having to build incremental capacity, and we're obviously looking at that and thinking about when that would come down the pipeline. But it will depend on also how the demand is evolving. Rui Manuel Rodrigues Teixeira: Alberto, so on the second one, I mean, this is also the result of different diversification effects. So looking at the portfolio as a whole, through the different trends, again, the active management that we run on every single market. This is how we are bringing down the sensitivity from the EUR 60 million to the EUR 45 million. And again, just bearing in mind, this is -- if all the markets would move in the same direction to preserve the plan. So no, you cannot sort of double the sensitivity if the hedging was coming down to 0. It's a bit more complex than that. Miguel Viana: So I'll pass now back to our CFO for final remarks. Miguel de Andrade: So final remarks. I just reiterate, again, 2025 was a great year for EDP. I think we delivered and delivered solidly on all of the different metrics, whether it was on EBITDA, net income, net debt, the credit ratios, improving the dividend. So a really solid, solid year for '25. And I think we come into 2026 also on a good footing with record high hydro levels and reserves with improved regulation, improved perspectives in both Spain and the other geographies we're in like the U.S. So really, I think we are very confident also on the guidance for 2026. And I think that's one of the messages that I really wanted to reiterate. And going forward, we continue to see great projects coming down the pipeline, certainly on the EDPR side, which makes us feel confident in relation to 2028. I mean, obviously, we'll go on monitoring this issues around the power prices. But as Rui has mentioned, we are relatively protected in relation to that. And we think that is a discussion that will play out over the next couple of months in Europe. But at the end of the day, we're all aligned that competitiveness is important, but it's also important to keep the stability of the rules and make sure that there's space to invest or for investors to the capital allocation and feel safe about their investments, whether it's on the network side or on the generation side. So listen, good '25, good prospects for 2026 and reiterating the guidance with confidence and looking forward also to the next couple of years, reiterating also our 2028 guidance. With that, thank you very much. Look forward to seeing you soon and keep in touch.
Operator: Good day, and thank you for standing by. Welcome to the Idorsia Full Year 2025 Financial Results Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Srishti Gupta, CEO. Please go ahead. Srishti Gupta: Thank you, Nadia. Good afternoon and good morning, everyone, and welcome to our webcast to discuss the financial results of 2025. My name is Srishti Gupta, I'm the CEO of Idorsia, and I'll start the call today with an overview of the operational progress we made in 2025 and the exciting plans we have for 2026. I'll then hand it over to Arno Groenewoud, our CFO, to walk you through the company's financial position. We'll then take your questions. Next slide, please. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties and other factors. These may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Next slide, please. We entered 2025 facing significant financial pressure, but we leave the year stronger and more focused. 2025 was a year of stabilization and preparation. We reinforced our balance sheet, delivered disciplined commercial execution and positioned our pipeline for decisive milestones ahead. Most importantly, we continued advancing medicines that address meaningful unmet needs for patients. Our Idorsia-led QUVIVIQ sales for 2025 have more than doubled compared to 2024, rising from CHF 60 million to CHF 134 million, just above our target, which we upgraded in May last year. This performance was a result of strong commercial traction and growing demand for QUVIVIQ in Europe and Canada, the stabilization and optimized model in the U.S. I will share more on this later. Our non-GAAP operating results have improved from a loss of CHF 308 million to a loss of CHF 100 million. Key to this operational recovery has been our commercial strength paired with cost control. Arno will share more on our financial performance later. Next slide, please. Idorsia represents a rare combination of valuable assets. We are a commercial stage pharma company with 2 products that have blockbuster potential. We also have a rich pipeline of first or best-in-class medicines. We have a clear path to making QUVIVIQ the standard of care in insomnia. In parallel, we are actively engaging in partnership discussions to maximize the value of TRYVIO/JERAYGO and change the treatment landscape of uncontrolled hypertension. We also have plans to advance our innovative pipeline, leading where we can and partnering where we should. Next slide, please. Let's start with QUVIVIQ. As you know, QUVIVIQ is a best-in-class dual orexin receptor antagonist. It works by suppressing an overactive wake signal rather than sedation as some older drugs tend to do. As a result of this mechanism and the best-in-class pharmacokinetic properties, we can confidently say that only QUVIVIQ offers restorative sleep and revitalized days. Before we talk about the commercial performance of QUVIVIQ, it's important to ground ourselves in the patient experience of insomnia. Insomnia is not just the loss of a night's rest and it does not end when the night is over. It infects the entire next day. Patients describe difficulty focusing, feeling emotionally depleted and struggling to keep up with work and family responsibilities. What they value most is a treatment that helps restore their ability to function during the day. That next-day benefit is what matters to patients and it's central to how we think about addressing this condition. Next slide, please. We continue to expect sales growth of QUVIVIQ in 2026 as we guide to sales of around CHF 200 million, but this is just a step on our path to changing the treatment landscape and becoming a global blockbuster. We have a clear plan to achieve this. First, market expansion in Europe and Canada; second, unlock the true value of QUVIVIQ in the U.S.; and third, continue to build a global brand. Let's look at the progress we are making on this and what's ahead. Next slide, please. In Europe, QUVIVIQ is the only pharmacological treatment for long-term management of insomnia disorder. Our 3-pronged approach to market expansion in Europe and Canada is proving very successful. First, we secure public reimbursement. Second, we invest in focused promotional efforts targeting psychiatrists, neurologists and sleep specialists. Finally, we expand into primary care with co-promotion partnerships. Starting 2025, we had secured reimbursements in France, Germany, the U.K. and the private insurance markets in Switzerland and Canada. We continue to focus on reimbursement. And during the year, we obtained public reimbursement in Austria, successfully negotiated premium reimbursed price in Germany, entered price negotiations in Quebec, while submitting in Finland, and continuing our discussions in Spain. This continues to be our top priority for additional markets. And in 2026, we expect to secure public reimbursements in Spain, Finland and Quebec while preserving our price corridor, submit in the Republic of Ireland and continuing discussions in Sweden, Italy and the rest of Canada. Our promotional efforts targeting psychiatrists, neurologists and sleep specialists are leading to strong positioning in retail and hospital settings. We've expanded into primary care with co-promotion partnerships with Menarini in France in October 2024 and Germany in April 2025. And in February 2026, we added the U.K. This is having an incredible effect on our reach, and we continue to look for partners who have established presence and relationships with GPs in other countries. The result of these efforts has been an outstanding trajectory, particularly in France, but closely followed by Germany, the U.K. and Switzerland when considering the relative market sizes. And that trajectory can continue. Just to highlight a few markets, demand in the final quarter of 2025 increased by 25% in Germany, 38% in Canada and 45% in the U.K. Next slide, please. In the U.S., in 2025, we executed a targeted digital marketing strategy with Syneos Health to establish stabilize sales and maintain our core patient base. Going forward, ensuring more patients have access to QUVIVIQ remains a priority. To achieve this, we are advancing 3 key initiatives. First, descheduling the DORA class, recognizing the safety in the same way as it is recognized in all other countries. This would simplify prescribing, facilitate access, expand the prescriber base and improve the patient experience, especially with regards to refills. Second, we will conduct a streamlined label-enhancing clinical study agreed with the FDA to have QUVIVIQ's benefits on daytime functioning recognized in the U.S. label, again, in the same way as it is recognized in all other countries. This would reinforce our differentiated profile with physicians, patients and payers. Third, we will be launching a direct-to-patient digital distribution model aligned with the evolving U.S. market and to increase access. Next slide, please. In 2025, we continue to expand QUVIVIQ's global reach and change the standard of care for insomnia with new approvals, launches and strategic commercial partnerships. Several license agreements help cover markets shown here in green. QUVIVIQ is available in Japan through our partner, Nxera, and they recently saw positive Phase 3 results in South Korea. Our partner, Simcere, has had a very strong uptake in China within the private setting with 300,000 to 400,000 patients treated within the first 6 months. In June, we signed a licensing and supply agreement with CTS in Israel and more recently in 2026 with EMS in Latin America. In Brazil, the regulatory dossier has been submitted to ANVISA, marking an important step forward towards market entry in that region. In red, you can see the next wave of planned distribution agreements focused on Central and Eastern Europe as well as the Middle East and North Africa. These partnerships are part of our strategy to broaden geographic reach efficiently. We expect to make further progress through mid-2026, and we'll keep you updated as these agreements are finalized. Next slide, please. In 2025, we completed the recruitment into our pediatric study of daridorexant, enrolling children aged 10 to 18 with data expected in early Q2 2026. This will be an exciting readout that can pave the way for the first therapeutic option for children suffering from insomnia. Pediatric insomnia is a major unmet need with an estimated 12 million children in the U.S. affected and no FDA-approved therapies available. Insomnia is more prevalent in children with neurodevelopmental disorders like autism spectrum disorders and attention deficit hyperactivity disorder, and our study includes these patients. Daridorexant is the only DORA in pediatric development and, as the new standard of care, could revolutionize the treatment paradigm. We are particularly excited to share the results in the coming weeks and discuss the path forward with regulators. Next slide, please. Our second approved product is aprocitentan, commercially available under the trade name TRYVIO in the U.S. and JERAYGO in EU. We secured regulatory approvals in the U.K., Switzerland and Canada during 2025. It is the only -- the first and only endothelin receptor antagonist approved for the systemic hypertension market. We are actively engaged in partnership discussions, evaluating global and regional deals. Our objective is to expand access for patients while creating value for all stakeholders. Next slide, please. TRYVIO/JERAYGO is uniquely placed in the treatment landscape for difficult to control or resistant hypertension. Its efficacy and safety profile differentiates it to existing therapies and any of those in development. Our registration trial, PRECISION, remains the only hypertension study to enroll true resistant hypertensive patients, all on 3, 4 or more drugs when entering the study. Notably, there was no exclusion based on any antihypertensive drug class. It also had the broadest inclusion criteria, including patients with eGFRs as low as 15. Aprocitentan delivered a double-digit blood pressure reduction of 15.4 millimeters of mercury in just 4 weeks, on top of a standardized triple therapy administered as a fixed-dose combination pill. Aprocitentan has an excellent safety profile with low discontinuation rates observed over 40 weeks, no drug-drug interactions and no increased risk of hyperkalemia, hypotension or a decline in eGFR. The FDA approval provided a broad U.S. label that indicates TRYVIO is suitable for use in all patients who are not adequately controlled on other therapies with the cardiovascular outcome benefit cited within the indication statement. TRYVIO benefited from several important derisking milestones in 2025. In March, the FDA removed the REMS requirement, simplifying prescribing and distribution. Then in August, aprocitentan was incorporated into the updated comprehensive hypertension guidelines issued jointly by the American College of Cardiology and the American Heart Association, which was an important step in reinforcing its role in clinical practice. Our recently published CKD subgroup data shows strong blood pressure lowering plus significant reductions in proteinuria, supporting TRYVIO as a compelling and differentiated option for these patients. Market access work for JERAYGO is also underway in Europe to support our partnering efforts. Next slide, please. TRYVIO is currently being prescribed at more than 25 of the top hypertension centers as part of our focused prelaunch activities to generate on-market experience. In the clinical setting, we see consistent double-digit blood pressure lowering across subgroups, including CKD stages 3 to 4 with excellent safety and tolerability. We see prescriptions coming from key specialties, including nephrology and cardiology. Early on-market experience is translating into increasing new patient starts and improving refill rates, reflecting growing physician confidence in the therapy. Prescribers report meaningful and reliable blood pressure control and comfort using TRYVIO across diverse comorbid patient types. TRYVIO's early real-world experience confirms and reinforces the pivotal trial data from PRECISION. Next slide, please. Our U.S. label allows us to target patients with uncontrolled hypertension despite treatment on 2 or more therapies. Within this broad patient population, there are clear and identifiable patient subgroups that would be the natural initial choice for prescribers. These include patients who remain uncontrolled despite treatment with 3 or more therapies, truly resistant hypertension by definition. This is a group with significant unmet need and high clinical urgency. Second, patients with uncontrolled hypertension and comorbidities where endothelin is known to play a role, such as diabetes and obesity. Third, there is a clear need among patients with uncontrolled hypertension and chronic kidney disease, including those with eGFR down to 15. In this setting, TRYVIO offers a differentiated option without the hyperkalemia risk or eGFR decline that often limits other therapies. Importantly, our on-market experience shows strong uptake across these same patient segments. Notably, given the significant unmet need and clear medical value in these patient populations, the prior authorization process has been very smooth. Next slide, please. Let's turn now to our pipeline. 2025 was a year of meaningful progress, laying the foundations for long-term growth. We are making deliberate focused investments to accelerate our most value-creating assets, supported by a leaner and more streamlined R&D organization. We have advanced our first-in-class immunology portfolio of 3 chemokine receptor antagonists. The study for our CCR6 receptor antagonist is already enrolling in psoriasis with broad potential in T helper 17 driven autoimmune disorders. A study to show anti-inflammatory and remyelinating properties of our CXCR7 receptor antagonist is in progress and progressive multiple sclerosis will start shortly. And a study for our CXCR3 receptor antagonist as an oral precision treatment for vitiligo will begin later in the year. Each will be a proof of concept in a specific indication under investigation as well as a proof of mechanism for a range of related disorders. Next slide, please. We recently announced the exciting news that we have established a clear route to registration for lucerastat in Fabry disease. Fabry disease is a serious and progressive condition affecting around 16,000 people today, a number expected to rise to 21,000 by 2034. There is a high need for treatments capable of addressing disease biology across the full Fabry population as existing therapies are partially effective, have cumbersome intravenous administration or are limited to specific mutation types. Lucerastat's mutation-independent mechanism, oral delivery and long-term data make it uniquely differentiated option in a market expected to reach USD 4 billion. The body of evidence we have generated to-date shows that long-term treatment with lucerastat consistently reduces the glycosphingolipids substrates that accumulate in Fabry disease. We also observed a slower decline in kidney function compared with patients' prior historical trajectories. Importantly, kidney biopsy data from patients receiving long-term treatment demonstrate low to no levels of characteristic lysosomal deposits per our related data recently published at WORLD Symposium 2026. Next slide, please. Following constructive interactions with regulatory authorities, we now have a clearly defined clinical program for lucerastat. This program builds on the substantial body of data already generated and outlines the agreed path towards future NDA in the U.S. and in line with feedback from the European Medicines Agency. The agreed development plan includes a pivotal baseline controlled biopsy study supported by a second study designed to demonstrate that an oral therapy has the potential to deliver clinical benefits comparable to enzyme replacement therapy, which is complex and burdensome for patients. This developmental program is structured to reinforce lucerastat's potential as the first oral monotherapy suitable for all Fabry patients regardless of mutation type. If successful, the data are expected to support regulatory submissions as early as 2029. With that, I will hand it over to Arno to take you through the financial results and our guidance for 2026. Next slide, please. Arno Groenewoud: Thank you, Srishti. Good afternoon and good morning to everyone on the call. In my first slide, you can really see the impact of our increased QUVIVIQ sales and contract revenue, together with our cost-saving measures, resulting in a significantly improved operating result. Net revenue of CHF 214 million includes CHF 134 million from QUVIVIQ product sales, excluding partner sales, a significant increase compared to the CHF 61 million of sales in 2024. The main driver of the sales increase is the EUCAN region, where sales increased from CHF 32 million to CHF 108 million. The sales in the U.S. remained flat despite a significant reduction in sales and marketing costs. As mentioned by Srishti, the aim is to maintain our U.S. prescriber and patient base in a cost-efficient manner to bridge to a potential descheduling. Non-GAAP contract revenue of CHF 72 million includes the USD 35 million exclusivity fee from the undisclosed partner for aprocitentan that was received in Q4 '24, but recognized in Q1 '25 after the exclusivity period ended without resulting in a deal. As a reminder, the undisclosed partner was not able to close the deal for reasons absolutely unrelated to aprocitentan. In addition, we received a CHF 40 million signing and approval milestone from Simcere related to the out-licensing of QUVIVIQ in China. The cost rationalization efforts initiated in '24 and '25 further improved our operational cost base with savings of more than CHF 80 million compared to 2024. As a result, the non-GAAP operating results improved from a loss of CHF 308 million in 2024 to a loss of CHF 100 million in 2025. Based on successful negotiations with Viatris in Q1 '25, Idorsia's cost-sharing commitments were reduced by USD 100 million against a reduction of potential future regulatory milestones. This resulted in a gain of CHF 90 million. Other non-GAAP to GAAP differences mainly include depreciation and amortization and stock-based compensation. This resulted in a U.S. GAAP EBIT loss of CHF 33 million. The U.S. GAAP net loss of CHF 112 million also includes the financial expenses of CHF 72 million, which also includes a CHF 61 million noncash expense related to the convertible bond restructuring and the new money facility. And we had an income tax expense of CHF 6 million. Next slide, please. In addition to outstanding -- to an outstanding operational performance in 2025, we were also able to successfully strengthen our financial position and access to liquidity. As you know, we started the year with CHF 106 million in cash. Operational cash inflows included CHF 142 million from QUVIVIQ product sales, including sales to partners, and operational cash outflows included CHF 215 million of SG&A and CHF 93 million of R&D costs. The CHF 11 million other cash outflows mainly included working capital movements. Further, as announced in May '25, we secured a CHF 150 million funding facility from our bondholders. And in June '25, we drew the first tranche of CHF 70 million. We also raised CHF 68 million net of cost through an equity raise in October '25 by way of an accelerated book building process as well as the sale of some of our treasury shares to bondholders. We were very happy with the oversubscribed demand from the top-tier institutional investors that participated in the book building process. This resulted in a liquidity of CHF 89 million at the end of the year. And in addition to that, we still have access to a further CHF 80 million from the new money facility, which totals CHF 169 million liquidity available to Idorsia. All in all, I think we can conclude that we finished the year with a strong liquidity that puts us in a good position to fund our activities going forward and leading to next inflection points. Next slide, please. Here, we come to the comparison against the guidance. We are proud of our strong performance against an ambitious guidance target, which was significantly upgraded in May 2025. Our QUVIVIQ sales of CHF 134 million exceeded the guided sales of CHF 130 million due to an excellent execution of our commercial strategy, as Srishti already alluded to. The company also delivered on the announced reset of the cost base. And as a result, the operating expenses, net of other income, were in line with the guidance that we provided in May '25. The U.S. GAAP operating loss of -- or U.S. GAAP loss of CHF 33 million is lower than the guidance, mainly due to one-off lower stock-based compensation costs. Equally important compared to achieving the financial guidance for 2025 is that we've built the structures to transition this momentum into the future. Next slide, please. We continue to guide on Idorsia net sales, excluding sales to partners because this is the performance that we can actively steer and have control over. We expect a continuous QUVIVIQ sales growth and with sales of CHF 200 million, we will have a positive commercial contribution for the first time. Our 2026 OpEx, including cost of goods sold, will be flat compared to 2025, a little bit higher than might be anticipated in the market, but purposefully so, focused on creating shareholder value and within strategic guardrails. Our 2026 OpEx is fully consistent with a disciplined plan that supports the next wave of growth drivers. These expenditures are targeted, program-specific and clearly tied to our medium-term value creation plans, such as lucerastat program and the proof-of-concept studies with our immunology portfolio. In a nutshell, sales are going up, OpEx remains flat and overall losses are going down, reflecting the improved underlying business performance and the embedded operational leverage within our business model. And with that, I hand over to Srishti. Srishti Gupta: Next slide, please. Thank you, Arno. 2026 is shaping up to be a catalyst-rich year across commercial execution, strategic partnering and important scientific readouts. We are particularly looking forward to sharing the pediatric insomnia data in early Q2, along with several additional milestones throughout the year that we believe have the potential to meaningfully advance our portfolio and create value for shareholders. Next slide. With 2 approved products with significant commercial potential and a pipeline of first and best-in-class compounds, Idorsia is positioned to create meaningful value. I am proud of the team's performance in 2025. We delivered on upgraded ambitious guidance, accelerated QUVIVIQ's commercial trajectory and continued building the foundation for long-term growth. TRYVIO/JERAYGO represents the fourth endothelin receptor antagonist brought to approval from our pipeline, underscoring our deep expertise in this pathway and its potential in an area of high unmet need. We continue to advance other assets with discipline and focus. And as we look to 2026, we are committed to executing against even more ambitious objectives with a clear focus on delivering sustainable growth and long-term value. With that, Nadia, please open the line for questions. Operator: [Operator Instructions] And now we're going to take our first question. And it comes from the line of Raghuram Selvaraju from H.C. Wainwright & Co. Raghuram Selvaraju: Firstly, I was wondering if you could elaborate a little bit further on the digital distribution model for QUVIVIQ. And specifically, a, how you anticipate this to have an impact on the forward sales trajectory; b, how it might improve your operating efficiency going forward; and c, how it could conceivably be leveraged for the use of launching additional products in the future or if it's going to be very specific to the needs of QUVIVIQ as a product franchise and wouldn't be applicable necessarily to other potential products that you bring to market in the future? And then secondly, I was wondering if you could provide us with kind of what you see as the ideal time frame within which you would want to have a TRYVIO/JERAYGO partnership in the United States as well as regarding guidance, just some clarificatory points. Are you still confident in the previous 2027 top line guidance? Or how has that changed? And are you including in that forward assessment any potential contribution from TRYVIO/JERAYGO? Or is that going to be entirely driven by organic growth in the internal products over which you maintain commercial control? Srishti Gupta: Thank you, Ram. So the first question, area, we can tackle first on the distribution model that we're thinking about for the U.S. for QUVIVIQ. Is that the first question, area? Raghuram Selvaraju: Yes. Srishti Gupta: And so we have -- yes, we're thinking a little bit about -- I mean, what we've learned from the weight loss space is that when there's a high degree of self-diagnosis, the ability to then find a provider and find -- be able to go into online to broaden access and broaden the availability to patients that that can have a huge unlock for certain therapeutic areas. And we very much believe that sleep could be the next therapeutic area that could benefit from this type of model. So we've been exploring right now in the U.S. how we could do a direct-to-patient distribution model for QUVIVIQ. We've heard this is a friction right now in terms of both on the prescriber side as well as on the distribution side with pharmacies that they're not always stocking because of the DEA oversight. And so what we've understood is that some of these models for distribution can consolidate the regulations and the oversight, both on the telehealth providers as well as for the distribution. And so that's what we're exploring right now to start as a pilot in 2026. So we definitely anticipate that this could -- in addition to our current model, be on top of that, we would anticipate that as we can get this up and running, it would have some forward momentum on our sales for QUVIVIQ. And then we would also expect that given its efficiency, we could, at some point, it would have impact as having a lower OpEx. DTP models are common now, are getting more and more common in the United States. And so we would anticipate that if we were to make other products like TRYVIO available through that model, it might actually have an impact. But right now, the current focus really is QUVIVIQ, especially because we have more experience with QUVIVIQ and understand the points of friction that were there for patients and prescribers. So then moving on to your second question area of TRYVIO and the ideal time frame for a partnership in the U.S. I mean with the approval and the availability of TRYVIO in the U.S., obviously our focus is to make sure that this is available to patients as soon as possible. We would actually love to scale. We know that patients are benefiting already from our focused efforts to introduce this in the top hypertension centers. Prescribers are very eager to make sure it's available to patients. So we would absolutely love to be able to build on our very, very focused prelaunch work and scale that through partnership. And so that is top priority for the company right now is to be able to find a partner and move that forward as soon as possible. And our efforts to do all the work that we've done on distribution with Walgreens Specialty, our work with the hypertension centers, our work on the guidelines and making sure that we're continuously present at conferences and hosting ad boards and working with KOLs is really to make this as turnkey as possible for a potential partner. So we would love to make sure that as they -- as we find that partner in the U.S. that they are able to make TRYVIO available to more and more patients. In terms of your questions on guidance, I'll start with that, and then I'll hand it over to Arno. I think right now, the company is really focused on guiding on a one-year timeline. I think with the catalytic events and sort of the unknowns with things like descheduling, the partnership timeline, we -- it's not meaningful to guide beyond a year. And so our 2027 with outlook that we provided in May 2025, at the time it was the best available information we had. But of course, as we move forward, we are seeing more data. We see potentially we could see the descheduling, we could get more information on partnership. And so our forward-looking guidance could change in the next year. I think 2026 is actually quite a shaping year for us. But with that, I'll hand it over to Arno to see if he has anything to add. Arno Groenewoud: Yes. Maybe also to take it a bit broader because, I mean, the outlook that we gave in May 2025 was in the context of the whole financial restructuring. And I think after that, I think with the 2025 performance and the guidance for '26 and in particular, the growth of QUVIVIQ sales, we are really making clear steps to profitability and cash flow breakeven. The 2025 sales were in line with our guidance. And our guidance for '26 is also in line with what we said in May 2025. But like Srishti said, I mean, going forward, we will limit our guidance to the current year as there are many variables and inflection points in '26 and onwards in commercial, in partnerships and also with our pipeline. And considering these moving parts, I think giving guidance beyond 2026 would not be meaningful for the market. And we would like to stay credible and transparent with guiding on numbers where we have a solid visibility. Operator: Yes, of course. Now we are going to take the next question. And the question comes from the line of Joris Zimmermann from Octavian. Joris Zimmermann: This is Joris Zimmermann from Octavian speaking. Two, if I may. First, on the QUVIVIQ pediatric data that you expect later this year in I think Q2, what is the immediate impact that you expect and kind of the next steps that would follow those data? And then also a bit from a longer term perspective, what's your strategy here? Will you pursue an updated label? Does it have -- does it come with a pediatric extension as well? So that would be on QUVIVIQ. And then the second question on your cash and cash reach. With the current cash of around CHF 89 million and the CHF 80 million remaining from the new money facility, how would you assess your funding situation? Kind of what is the estimated cash reach? And does that include all the costs to cover the -- kind of to drive your pipeline assets and to reach all the key inflection points that you outlined in the presentation? Srishti Gupta: Joris, thank you for joining, and thank you for the questions. I'll take the first one and hand the second one over to Arno. On the pediatric QUVIVIQ daridorexant study that is -- we're expecting in Q2 2026, it's a dose-finding study. So we tested in 3 doses and we'll do a dose response curve. And so what we're expecting hopefully to see is both positive results with daridorexant in insomnia in the pediatric population as well as to get some data on the dose. The next step would then be to take that information to the regulators and agree on a pathway forward, both with the U.S. as the FDA as well as the EMA. So we would have to run a Phase 3 program. We're expecting to be running a Phase 3 program, but we would like to shape that program based on the findings of the Phase 2. So that's where we are on the data. I mean we're very excited, though, because there is no FDA-approved therapy for insomnia in this pediatric population. And there are no other doors with the safety profile that does non-sedative to work on the wake signal in this population. And as we know from the data that we have in the adult populations that we use all around the world, the daytime functioning could have a huge impact for pediatric patients as well. So we're very curious to see how the Phase 2 results pan out, and we're very curious to be able to shape a Phase 3 program that is able to do that later. The other part of it for me that's very exciting is that there's the huge safety halo that comes from having a product that's effective in the pediatric population. And especially in the United States where we've had the burden of being a Schedule IV product, we would love to be able to have the safety halo that comes from showing use in the children with insomnia. With that, I'll hand it over to Arno. Arno Groenewoud: Yes. Thanks, Joris, for your question about the cash and the cash reach. I think we're very fortunate that we have a very strong liquidity at the end of the year with CHF 169 million. We clearly have sufficient cash to bring us to the next inflection points. And as already mentioned by Srishti with the previous question, I mean there are many variables and inflection points to come. So that will also clearly have an impact on our cash need going forward. But for now, I'm pretty happy with the cash runway that we have and that we're able to reach the inflection points based on which we can take additional decisions on whether to further invest or not. Operator: Now we are going to take our next question. And the next question comes from the line of Niall Alexander from Deutsche Bank. Niall Alexander: Hi, it's Niall Alexander from Deutsche Bank. So I guess maybe just moving to the pipeline, just on your CXCR7 antagonist in MS, I understand it's just a proof of concept right now. But it would be helpful to understand how you feel this mechanism could potentially be differentiating, and especially so to the likes of the CD20s right now or even the BTKs in the space. Just trying to understand what your hypothesis or views are on the mechanism. And then the same applies to the CCR6 and CCL20 in psoriasis. Just wondering how the mechanism there can potentially be different from the likes of IL-17s and 23s in this space. Srishti Gupta: Thank you, Niall, for the questions. Maybe I'll start with CCR6 first because that's the one that's enrolling right now. So it's a first-in-class oral small molecule, and it's selective for the CCL20-driven recruitment of the pathogenic CCR6 expressing immune cells. So we -- first thing, I think, is the potential for an oral therapy that delivers a biologic-like efficacy, and that's very compelling. We've designed the trial that evaluates the speed and the magnitude of the response as well as the dose performance and safety in the T helper 17 driven psoriasis in the PASI. And the reason we went with that test as well as with this -- with psoriasis is because that mechanism is the most clean. I think we don't see sort of off-target in that area. So we were really hoping that we could get a clean response on the PASI. So a positive outcome in this proof of concept would confirm that in the mechanistic validation and the expansion to other associated indications. And so that's kind of what we're thinking about for CCR6. In terms of CXCR7 and the kind of the unique or the differentiating is that we have this oral, again, that is both potentially anti-inflammatory as well as remyelinating. And the brain penetrating potential is quite strong, which would have an impact in the -- to be able to transform the treatment paradigm in MS. And so the proof of concept is primarily the progression and so of the multiple sclerosis. And so what we're trying to see is if we can -- through the -- its imaging -- yes, with via imaging, we could see a slowing of the demyelination. And so that's kind of our -- the proof of concept that we've designed for the CXCR7. Operator: Now we're going to take our next question. And the question comes from the line of Sushila Hernandez from Van Lanschot Kempen. Unknown Analyst: This is [ Sandrine ] on for Sushila. We have 2. First, could you provide more of an update on the QUVIVIQ descheduling process? Like how likely is it that it will happen this year? And second, on the Fabry disease, now that you've reached alignment with the FDA, what are the next steps? Like when will you start the kidney and the renal studies? Srishti Gupta: Thank you, Sandrine, thank you for joining. So on the first question on descheduling, we expect the next major update to be the initiation of the public comment period from the DEA. And so that's the next time we think we'll have public information available on the descheduling process. In terms of where we are, I mean, we've now seen that -- we have probably around 13 million patients ex U.S. that have been on ADAURA across the globe between Japan, China and Europe and a couple of million patients in the U.S. And we consistently know that QUVIVIQ is valued for its safety. We don't see any meaningful signals of abuse dependence or withdrawal. And so part of our update to the FDA has been to share this kind of comprehensive ex-U.S. data. This is on top of the Citizens Petition from '23 and a recent update that we did to the FAERS analysis. So the FAERS is the FDA's own adverse event reporting system database and where we -- again, we went back to the database and we did an updated analysis and we demonstrate that the DORA class has significantly reporting odds for adverse events related to drug abuse compared to the Z drugs and other nonscheduled drugs such as trazodone, which are used in the U.S. off-label. So we're kind of combining those things in our mind and hoping that the FDA's recommendation that moves forward is to be descheduled, but we'll only know when the DEA opens it for public comment. That being said, I think it's important to know that we're not waiting for the descheduling to unlock the value of QUVIVIQ in the U.S. The daytime functioning in the label, the label-enhancing study as well as the work with the direct-to-patient, we're setting up those -- we're setting up the model on direct-to-patient to be able to accommodate for the current schedule as well as then expand based on any descheduling that happens. So we are really focused on making sure that even in its current form that we can increase access for patients and they can have the benefit. And then, of course, all of those things in total, as we get more and more patients on QUVIVIQ, we can update the FDA with the safety profile and the lack of abuse signals. So that's the question, I think, probably on descheduling, but we'll only know when it goes from the DEA into public comment. On Fabry, we're expecting to initiate the pivotal study for the biopsy in this year. And so that's the pivotal. That's the 16 patients I showed it earlier. It's baseline controlled. We're expecting to take patients that are treatment naive or pseudo-naive, and it's 18 months of treatment, and we're expecting that it's in our budget to be starting that study this year. Soon thereafter, we'll do the second study, which is to show the switch from ERT. So we'll take patients that have been on ERT therapy for a year or more, and we'll do the switch study. And so with the idea that we'd like to submit in 2029. Did I answer? Operator: [Operator Instructions] And the question comes from the line of Myles Minter from... Unknown Analyst: Congrats on the progress. A couple on lucerastat. Just wondering if you can comment on kind of the powering assumptions for that 74-patient renal function study that you're doing against ERT in Fabry. And then I noticed at the WORLD Symposium, you seem to see a greater efficacy signal in patients with pretty severe declines in eGFR but at baseline and also antidrug antibody positive patients on the ERT side. So I'm just wondering whether you're going to stratify the readout of that trial in any way based on those factors? And the final one is just in terms of the number of patients that remain in the open-label extension there. I think it was 47% of the original amount that crossed over. Can you just provide any sort of major reasons as to why there was discontinuations there? That would be very helpful. Srishti Gupta: Myles, thanks for joining, and thanks for the questions. I think your first question was on the power of the second study. So we were not requested by the FDA to power the eGFR study. And so that's -- so we were working under the assumption that we don't have to have statistical significance. So we designed that study with that idea. In terms of the WORLD Symposium, the decline in the eGFR and the antibody and the stratification, I think we'll have to see where we are in terms of the eGFR study and the enrollment on how we might want to stratify that study. But right now, as we're looking for a broad monotherapy label for all adult patients with Fabry, we're not looking to kind of have a specific use in those patients with ADA. We are trying to get the label to be as broad as possible. We would like to make sure that our study design is consistent with that. And then finally, on the open-label extension for MODIFY, that was 43 months, which was, I mean, I think, 6 years, right? Like we're in total with the 6-month MODIFY trial, that's 6 years. I mean 50% is actually a really good retention rate after 6 years. I don't know if there's anything I'm doing right now that's the same as I was doing 6 years ago. So I think that retention rate actually seems pretty good for this type of study for chronic -- for a daily oral and with for chronic condition. Operator: And the question comes from the line of Joris Zimmermann from Octavian. Joris Zimmermann: One more question from my end on the aprocitentan partnering, if I may. I was just wondering, looking at like the data is there, the data is good. The first market feedback, to my understanding, is also very positive. And now you have the whole REMS requirements omitted and you're even in the guidelines. So I was wondering what is it that is kind of -- why do the aprocitentan partnering discussions still go on? Can you maybe comment on that? So is it more on the finding the right partner in the U.S. and Europe probably? Or is it more on the deal terms? What's kind of the main discussion topic you're currently having here? Srishti Gupta: Thank you, Joris for the question. The second -- the third question, actually. So I mean, there's a lot of the positives, right? We have the data, we have the market feedback, the REMS, we have the differentiation, especially for those patients that have an eGFR down to 15 where there are no other options. And we've been in the process of looking for a partner for a while, I mean, especially even to the time when J&J decided to not pursue work in cardiovascular anymore, and we took the rights back for apro so that we could bring it forward because we have such conviction in the endothelin receptor antagonist space and its ability to be used in systemic hypertension. Now after the approval process, I think we have gotten into a point, we're having a commercial asset that has not had the ability to be resourced for a launch. That's a new mechanism of action that is -- needs to be introduced in a pretty complex health care system right now with incredible cost pressure. And with the commercial payer system that's highly under evolution with PBMs and it's like every other week, a pharma company is being hauled into the White House. I think it's really important for partners to be able to understand the commercial fit. And so with a commercial stage asset, the commercial fit, I think, from the partner perspective is one of the things that needs to be worked out on both sides. Like, we need to see that they're able to resource that apro or TRYVIO gets to the patients and are willing to put the effort to make sure that TRYVIO can reach the most patients, but they also need to make sure that it fits with their programs given that it's commercial stage. A lot of the -- sort of the sweet spot for most deals is kind of a little bit before Phase 3 or at this derisking stage where they can prepare the market. And so I think right now, we're just in a peculiar stage with TRYVIO, but we are actively engaged in a range of conversations. I think one last point to make is that the sort of complicated U.S. drug pricing system and its implications for internationally are also impacting. And so that's why I think we are exploring both global as well as regional partnership. We have 2 different labels, 2 different brands, 2 doses for TRYVIO/JERAYGO, and I think that gives us the flexibility to really pursue regional opportunities. And so that's also kind of evolved our focus on the partnership discussion. Operator: Dear speakers, please be advised there are no further questions for today. And I would now like to hand the conference over to the management team for any closing remarks. Srishti Gupta: Well, thank you, everyone, for the time today. We will have our first quarter results on April 28. And together with some of the participation that we have in investor conferences on this side of the Atlantic as well as in the U.S., we hope to get the opportunity to speak to more of you in the near future. Thank you again for joining. And with that, we can close the lines. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.
Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Koppers Holdings Inc.'s fourth quarter and full year 2025 earnings conference call and webcast. At this time, all participants are in listen-only mode. If you need assistance, please alert a conference specialist by pressing star followed by zero. Following the presentation, instructions will be given for the question and answer session. Please note that this event is being recorded. I will now turn the call over to Quynh McGuire. Please go ahead. Quynh McGuire: Thanks. Good morning. I am Quynh McGuire, Vice President of Investor Relations. Welcome to our fourth quarter and full year 2025 earnings conference call. We issued our press release earlier today. You can access it via our website at www.koppers.com. As indicated in our announcement, we have also posted materials to the investor relations page of our website that will be referenced in today's call. Consistent with our practice in prior quarterly conference calls, this is being broadcast live on our website. A recording of this call will be available on our website for replay through May 26, 2026. At this time, I would like to direct your attention to our forward-looking disclosure statement seen on slide 2. Certain comments made on this conference call may be characterized as forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of assumptions, risks, and uncertainties, including risks described in the cautionary statement included in our press release and in the company's filings with the Securities and Exchange Commission. In light of the significant uncertainties inherent in the forward-looking statements included in the company's comments, you should not regard the inclusion of such information as a representation that its objectives, plans, and projected results will be achieved. The company's actual results, performance, or achievements may differ materially from those expressed in or implied by such forward-looking statements. The company assumes no obligation to update any forward-looking statements made during this call. Also, references may be made today to certain non-GAAP financial measures. The press release, which is available on our website, also contains reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures. Joining me for our call today are Leroy Ball, Chief Executive Officer of Koppers Holdings Inc., and Brad Pearce, Interim Chief Financial Officer and Chief Accounting Officer. At this time, I will turn the discussion over to Leroy. Leroy Ball: Thank you, Quynh. Good morning, everyone. I am pleased to join you this morning to provide more insight on Koppers Holdings Inc.'s performance in 2025 and how we see 2026 developing based upon current information. Let me start on page 4, which lists highlights for last year overall, which include adjusted EBITDA of $256.7 million and a 13.7% adjusted EBITDA margin, the second highest year on record for both when you exclude KJCC, and on an as-reported basis, 13.7% adjusted EBITDA margin actually represents a new high watermark for Koppers Holdings Inc. We reached operating profit of $167.8 million, also the second highest year on record, $4.07 in adjusted earnings per share, marking the sixth consecutive year above $4 after never reaching that mark previously, and operating cash flow of $122.5 million for the seventh straight year of more than $100 million in that category. In addition, we have tapered back our capital expenditures to a normalized $55 million, enabling a heavier capital deployment allocation to shareholders, as demonstrated by $38.2 million in share repurchases and $6.4 million in dividends. $21 million went towards inorganic growth, with a small acquisition of a utility pole procurement business in one of our targeted growth areas, UIP, and we still had $12 million remaining to pay down debt. In early 2025, we launched our transformation process named Catalyst, which delivered $46 million in benefits during the year. Catalyst helped to deliver EBITDA within 2% of prior year, while our sales declined by 10%. The conscious decisions to exit our phthalic anhydride business and sell our railroad structures business accounted for 4% of the overall sales decline, with the other 6% resulting from softer market conditions and some net loss of market share. Other benefits derived from Catalyst in 2025 include reducing our adjusted SG&A costs by 15%, while also reducing our employee count by 11% from year-end 2024, and 17% from our employment high water mark in April 2024. With 1 year of Catalyst under our belt, I believe we are on track to reach our goals of double-digit adjusted EPS growth over the next 3 years, $300 million of cumulative free cash flow over that same time period, and a mid-teens margin run rate by 2028. To ensure that our leaders remain highly motivated to achieve those goals, earlier this year, our board approved a long-term incentive program that has target goals that substantively align with the external targets I just summarized. I will speak in more detail on Catalyst later in this presentation. Let us move on to our zero harm accomplishments, as seen on page 5, which are just as important as our financial performance. We had 21 of our 41 sites work accident-free with our European CMMC and PC businesses, as well as our Australasian PC business, having zero recordables in 2025. Significant improvement was achieved company-wide, with leading activities up by 26%, which is a key contributor to our serious safety incidents being down by 70% compared with the prior year. It also led to a 19.5% year-over-year improvement in our total recordable injury rate, driving it to a new all-time best for the second year in a row. It is a true testament to our team and their leaders, who persevered through a stressful environment in 2025 and never lost focus on what is most important, the health and safety of their colleagues. Congrats to the Koppers Holdings Inc. team on a tremendous accomplishment and never losing sight of our goal of zero. Turning now to page 6, Koppers Holdings Inc. was named in Newsweek magazine's listing of America's Most Responsible Companies 2026, representing our 6th consecutive year on that list. This honor is a result of some 600 companies being evaluated on upholding their social responsibility based on key performance metrics that include environmental, social, and governance performance, financial results, and more. During the past year, we also earned recognition as one of America's Best Mid-Sized Companies of 2025 from TIME Magazine, based on employee satisfaction, revenue growth, and sustainability transparency. Like zero harm, sustainability has been woven into the fabric of how we operate at Koppers Holdings Inc., which has enabled us to punch above our weight in this area. National recognition from organizations like Newsweek and TIME help lend credibility to our results, and while this alone will not win us business, it will most definitely be part of the overall decision-making progress and maybe tip the scales in our favor when we are in a tight competitive situation. Kudos to the Koppers Holdings Inc. team for refusing to just check the box on zero harm and sustainability, and instead making it a way of life at Koppers Holdings Inc. I will return in a bit to provide my view on how we are seeing the current year within each business, while also reviewing our 2026 projections and give more flavor for our potential in 2027 and 2028 as Catalyst hits peak acceleration. Before I turn things over to Brad Pearce, our Interim CFO and Chief Accounting Officer, I would like to take a moment to recognize Jimmi Sue Smith, who announced her retirement from Koppers Holdings Inc. earlier this year. Jimmi Sue joined Koppers Holdings Inc. as our VP of Finance and Treasurer mere weeks before the pandemic in 2020. She was part of a leadership team that navigated the company through those trying times and positioned us for success as the world gradually returned to a new sense of normal. She was promoted to be the company's CFO, excuse me, in January 2022, and continued making her mark by leading the shift of capital deployment towards shareholders by reinstating the company's quarterly dividend and taking a more aggressive approach to repurchasing our undervalued shares. I could go on and on with Jimmi Sue's accomplishments. I will save that for her retirement celebration and just finish by saying that I thank her for her contributions and wish her the best in retirement. Now, I will turn it over to Brad, who has done a wonderful job stepping into the CFO role as we go through a more deliberate search process for Jimmi Sue's successor. He will speak in more detail to our fourth quarter and full year financial performance. Brad Pearce: Thanks, Leroy. Earlier today, we issued a press release detailing our fourth quarter and full year 2025 results. My remarks today are based on that information. As seen on slide 8, we reported consolidated fourth quarter sales of $433 million, down $44 million or 9% from the prior year. Relative to the prior year quarter, RUPS sales decreased by $7 million or 3%. PC sales were down $20 million or 14%, and CMMC sales decreased by $17 million or 15%. As shown on slide 9, full year sales totaled $1.9 billion, a 10% drop from prior year sales of $2.1 billion. RUPS continued to be our largest segment, with sales of $927 million, followed by PC with sales of $544 million, and CMMC with sales of $409 million. Each segment was lower as compared to the prior year, with a 2% decrease at RUPS, followed by 17% and 18% decreases for PC and CM&C, respectively. On slide 10, adjusted EBITDA for the fourth quarter was $53 million, which represents a 12.3% EBITDA margin on sales. By segment, PC delivered adjusted EBITDA of $28 million, followed by RUPS of $22 million and CM&C of $4 million. PC led with adjusted EBITDA margin of 22%. RUPS maintained adjusted EBITDA margin above 10%, while CM&C reported a 4% margin. Full year adjusted EBITDA results, as seen on slide 11, were $257 million, reflecting a 13.7% margin. RUPS adjusted EBITDA was $108 million, returning a 12% margin, while PC delivered adjusted EBITDA of $103 million, a 19% margin. CMMC adjusted EBITDA totaled $46 million, resulting in an 11% margin. Focusing on the RUPS business, slide 12 shows fourth quarter sales of $209 million, compared with $216 million in the prior year quarter. Approximately $5 million of the decrease in sales was due to lower volumes of commercial crossties and lower activity in the maintenance of way businesses. The lower maintenance of way revenue is due in part to the sale of our railroad bridge services business earlier this year. These were partly offset by volume increases in our domestic utility pole business of around 10% and $4 million of price increases, mostly in crossties. Rupp's delivered improved adjusted EBITDA of $22 million, compared with $18 million in the prior year. The improved profitability was primarily driven by approximately $7 million in lower operating expenses, coupled with decreased SG&A costs and net sale price increases. These improvements were partly offset by net lower sales volume. Turning to slide 13, our Performance Chemicals business reported fourth quarter sales of $128 million, down from $148 million in the prior year quarter. The decline in sales was primarily due to volumes decreasing by 16%, mostly as a result of market share changes in the United States. This was partly offset by net sales price increases. In spite of the drop in sales, adjusted EBITDA for PC was $28 million, just below the $29 million of adjusted EBITDA in the prior year quarter. While profitability was impacted by lower sales volumes, it was largely offset by lower raw material costs, net of our Koppers Holdings Inc. hedging program, lower logistics costs, and higher royalty income. Slide 14 shows that sales in the fourth quarter for our CM&C business were $96 million, compared to $114 million in the prior year quarter. This decrease was primarily driven by $17 million of lower volumes related to our discontinued phthalic anhydride product line, lower volumes and sales prices for carbon black feedstock, and a 7% reduction in prices globally for carbon pitch. These were partly offset by volume increases in carbon pitch, primarily in Australia, and around $4 million of favorable impacts when translating our foreign currency sales into U.S. dollars. Adjusted EBITDA for CM&C in the fourth quarter was $4 million, compared with $9 million in the prior year quarter. This was due to net sales price decreases and lower plant utilization, partly offset by operating cost savings associated with discontinuing our phthalic anhydride business. Compared with the fourth quarter of 2024, the average pricing of major products was lower by 4%, while average coal tar costs were higher by 10%, which led to lower EBITDA margins. As shown on slide 16, we continue to pursue a balanced approach to capital allocation. In terms of investments to position ourselves for the future, $12 million was related to the termination of our U.S. pension plan. $21 million was earmarked for the acquisition of the utility pole procurement business, and approximately $48 million was allocated for capital expenditures, net of cash received from insurance proceeds and asset sales. Our share buyback activity in 2025 totaled approximately $38 million, or a total of just under 1.3 million shares. We have approximately $67 million remaining on our $100 million repurchase authorization. In addition to the share repurchases, we also returned capital to shareholders during 2025 through our quarterly dividend of $0.08 per share. At December 31, we had $383 million in available liquidity and $881 million of net debt, representing a net leverage ratio of 3.4 times. We remain focused on our long-term goal of reducing the net leverage ratio to 2 to 3 times. On slide 17, total capital expenditures for the year were $55 million gross, or $48 million net of asset sales and insurance recoveries. The majority of our investment was allocated to maintenance capital spending of $45 million, with spending on zero harm initiatives and growth and productivity projects, each totaling less than $6 million. Capital expenditures were evenly distributed among the three business units of between $15 million and $19 million apiece. We are projecting CapEx to be approximately $55 million in 2026, a level on par with 2025. Finally, as highlighted on slide 18, our board of directors declared a quarterly cash dividend in February of $0.09 per share of Koppers Holdings Inc. common stock, reflecting a 13% increase from 2025. This dividend will be paid on March 23 to shareholders of record as of the close of trading on March 6. While future dividends are subject to ongoing board approval, maintaining a quarterly dividend at this rate will result in an annual dividend of $0.36 per share for 2026. With that, I will turn it back over to Leroy. Leroy Ball: Thanks, Brad. Before I dive into each of the businesses, I would like to provide our perspective on the recent Supreme Court ruling, which vacated tariffs under IEEPA. Prior to the ruling, we were estimating a tariff impact on our business of around $5 million-$6 million in 2026. Removing the IEEPA tariff and replacing it with a worldwide tariff of 10% essentially reshuffles the deck and leaves us in a slightly better position. Of course, these are only in place for 150 days, the administration has promised to use this time to put more permanent tariffs in place, it remains to be seen how it will impact our business. Perhaps a greater concern are potential tariffs under Section 232, which has an ongoing investigation into refined copper imports. We do not import copper for our products, as we use domestically sourced scrap copper, for unhedged copper requirements, any tariff on refined copper will increase the market price of this key raw material for our PC business. The uncertainty of tariffs continues. The numbers seem to change from day to day. While I am providing our most current view, that can obviously change quickly. For now, I am going to review the market outlook for each of our businesses, starting with Performance Chemicals on page 20. Let me lead with the good news. We are projecting a top-line increase of approximately 11% in 2026, driven entirely by market share expansion in both our residential and industrial product lines. A large component of our Catalyst initiatives for PC centered around converting commercial opportunities that we knew were in play coming into 2026 as new business. We realized success on a number of accounts, refocusing our attention on serving the customer, while also demonstrating the value of our R&D and tech service capabilities to convert a portion of business to new technology. In addition, our PC team continues to be focused on commercializing the next generation of reduced copper wood preservatives and in-demand fire retardants. Moving to the external market data, we interpret market sentiment as neutral to slightly positive for 2026, with our internal models reflecting overall flat market demand. Existing home sales in 2025 were flat compared to 2024, and while a fourth quarter upswing gave some hope of stronger existing home sales activity in 2026, January's numbers were disappointing as they registered an 8% month-over-month decline, getting the year off to a tough start. The average mortgage rates fluctuated between 6.2%-6.3% in the fourth quarter, down from earlier in the year. The rates are currently at about 6%, and expected to moderate slightly in the near term, although that is not expected to have a meaningful impact on the housing market. The leading indicator of remodeling activity, or LIRA, is forecasting year-over-year growth in home renovation and repair spending of 2.9% in early 2026, and eventually easing to 1.6% growth by the fourth quarter. Building product sentiment remains neutral, with cautious optimism in select commercial and infrastructure segments. Listening to our customer base, it seems the disappointment of 2025 is still fresh in their minds, and so they are reluctant to build in any significant rebound until they can get clearer signals. This has our model for 2026 baking in flat organic volumes for residential products, with a modest low to mid-single-digit volume increase expected for our industrial product segment, driven by growth in utility pole demand. On the cost side of the equation, excluding copper, we are expecting a mix of increases and decreases in our raw materials to mostly balance out and have little impact. Copper prices have continued their steady rise over the past year and currently are 25% higher than average prices for 2025. Because of our hedging strategy, we are mostly insulated from the increase at current price levels, assuming scrap copper pricing continues to behave as it historically has. The price separation between the LME and COMEX indices that we discussed last year has not been an issue recently, but changes in the tariff environment could see this return. In the meantime, we continue to work to manage this risk. If the copper markets do not abate as we enter into contract discussions later in 2026, current prices would represent a $50 million pricing pass-through necessary to account for the increased copper costs. The Catalyst benefits for Performance Chemicals targeted in 2026 are mostly commercially driven and are already secured, where PC results ultimately end up in 2026 will depend more on the direction of base demand compared to our flat outlook and the uncertain cost environment driven by tariffs. Moving on to our utility and industrial products business, shown on page 21. Market sentiment remains bullish, mainly due to increasing electrical demand related to build out of AI infrastructure. In addition, it is anticipated that crypto mining, EV development, and new manufacturing will contribute to increased electrical demand over the next five years. Utilities are being pressured to limit price increases resulting from higher demand, and data centers owned and operated by large tech companies are expected to be required to share the resulting cost burden with consumers. Now, we entered 2025 with a clear objective to grow our business outside of our traditional regional markets in the U.S., and we were able to do that, growing our non-traditional markets by 17% on the top line while keeping our core regional markets flat, which resulted in an overall 6% sales increase. We are targeting an even greater top-line performance in 2026, driven once again by growth in targeted regions, added sales from the pole procurement acquisition made in late 2025, and a modest organic market improvement after lower than expected growth last year. In 2025, we made investments in our distribution assets, fiber supply, technology platform, and sales team, including adding new sales leadership at the beginning of 2026 that we believe position us as a formidable competitor on new accounts. As to the acquisition I referenced, in December, we acquired a small business specializing in the procurement of Douglas fir fiber, which is traditionally used for transmission poles. This is important for solidifying opportunities to grow our sales base by adding to the opportunities we have historically been shut out from, due to not having that wood species in our portfolio. It represents our next step in building out our portfolio in a measured way. To quell any worries that we would spend significant amounts of capital in the hopes of future business, this transaction represents a lower cost, lower risk approach to securing a new critical supply chain. This will open doors in existing markets while also providing a platform to potentially build from as we think further about the Western markets. While sales showed modest gains in 2025, we took a step back on our cost management in UIP last year. That makes this business ripe for the planning and execution discipline that Catalyst fosters. Opportunity abounds on the cost front in UIP. We will be going after it hard in 2026. Of the improvement targeted for UIP in 2026, over three quarters of it is cost related. Part of the cost improvements relate to a consolidation of production resulting from the recent idling of our plant in Vance, Alabama, mentioned earlier. That production has moved to our nearby facility in Kennedy, Alabama, which will realize the benefits of improved cost absorption. Vance will remain in our network, but not operate as we continue to monitor our long-term manufacturing requirements in this important growth market. The market outlook for our railroad products and services business is summarized on page 22. Railroad industry consolidation continues to impact market trends and the pressure to improve operating performance, resulting in reduced capital spending by our customers. As mentioned on prior calls, for the second straight year, our railroad customer base reduced their forecasted tie requirements communicated to us heading into the calendar year, as they pulled back on their tie programs. Thankfully, this past year, we were able to balance out the lower than anticipated volumes with some aggressive cost actions, improving our profitability in this business to a level not seen in a decade. As we approach customer discussions for 2026, two Class I customers indicated an additional pullback in volume for this year, which would have a significant impact on our RPS profitability without some counteraction. We believe we have been able to primarily offset that impact in 2026 by agreeing to provide price relief while receiving a larger contractual commitment from one customer, as well as an extension of our current agreement. We are also mitigating the impact of lower volume from a second customer by idling production capacity and consolidating operations across our remaining treating network, as mentioned earlier. There is a lot going on with the Class I customer base, but the main point for our shareholders is that we are in the most competitive position to capitalize on a Class I market dealing with a lot of uncertainty right now. While the pie may be smaller, our piece of it is expected to grow to volumes that we have not seen since 2017. The commercial crosstie market remains very competitive, but we continue to make inroads there, and as of the end of January, have the highest backlog that we have had in the past five years. As for operations, we have realized much of the low-hanging fruit over the past 18 months and are looking to maintain the gains we have made heading into 2026. Much of the benefit has been derived by doing more with less. In 2025, we had 1% more in crosstie sales than 2024, with 38 or 7% fewer people than where we ended 2024. In the crosstie portion of our business, we are down by 105 people, or 16%, compared to our peak employment level at April 2024. The idling of the plant that I mentioned will result in another net 76 employee reduction, which will serve to offset anticipated price reductions. Sawmills are experiencing the impact of the industry pullback, resulting in sharply reduced production and widespread mill closures. It remains to be seen what long-term impact this could have on hardwood availability and pricing, but in the near term, it is a buyer's market. Catalyst benefits included in our 2026 projections primarily relate to plant consolidation, material waste reduction, and commercial and operations improvements. The outlook for our CMC business is summarized on page 23. Overall, the CMC market remains in turmoil, as evidenced by sharply reduced financial performance realized in Q4. Structural improvements made in 2025 by closing our phthalic anhydride plant, along with successfully executing on several Catalyst initiatives, are projected in the near term to be offset by higher net global coal tar costs, reduced throughput as a result of a key raw material supplier exiting the market, and pricing pressure brought on by trying to maintain business in a troubled market. On the plus side, we do have a strong base of raw material supply locked down for several years in each of our geographic markets, which assures us a certain level of throughput. Also, as mentioned during my RPS commentary, I believe we are positioned to grow our share of the crosstie market, which will provide a strong baseload of creosote demand. The strong connection of our U.S. and European logistics network also keeps us on par with our major competitor. It also provides an advantage against other European competitors, more reliant on less attractive export markets to supplement their domestic customer base. We think we will see some capacity rationalization in Europe at some point as it gets tougher to withstand the current market headwinds. The loss of tar supply in the U.S. from a supplier that is closing their coking operations presents a challenge to U.S. operations. It presents an opportunity for our European operations to increase their share of the market as they have ample raw material availability. Catalyst benefits targeted for CMC in 2026 cover all aspects of the business, from production to logistics, procurement, and sales. Our greatest opportunity for improvement remains in CMMC, I have confidence that we will see it realized over the next three years. As shown on slide 24, we are about a full year into our Catalyst transformation and executing successfully on many initiatives. The $46 million of benefits that we realized in 2025 more than offset the $40 million something impact of lower sales on our PC business, and almost got us back to our 2024 adjusted EBITDA level. As we have continued to evaluate Catalyst opportunities, we have been able to increase our pipeline from what we previously communicated, and now believe we can generate up to $75 million of benefits in the 2026 through 2028 time frame, compared to the $40 million that we had expected back in November. The main driver for the increase is due to the optimization of our manufacturing network, and we were also able to add to each of the other targeted functional areas. Of the $75 million estimated over the next three years, we have targeted between $20 million and $40 million as achievable in 2026. Like 2025, we are experiencing headwinds that are preventing the full impact of the benefits from being reflected in EBITDA, although adjusted EPS and operating and free cash flow should both increase significantly. I will reiterate what I said back in November. When I look at our full potential, I see an organization that should be able to deliver 15%+ margins on a consistent basis, an organization that should be able to drive earnings improvement of greater than 10% on average over the next three years. An organization that should be able to reduce leverage to the low end of our stated range, below two and a half times, driven by significantly greater free cash flow generation. What we have targeted to be $300 million or more over the next three years. Our path to get there is the continued evolution of our portfolio that would make PC and RUPS a larger share of our top and bottom line as we focus on our more structurally sound businesses that have opportunity for growth and have proven to consistently generate higher margins with lower capital requirements. You are seeing that playing out in our 2026 projections, which I will move on to now. As shown on slide 26, our consolidated sales guidance of $1.9 billion-$2 billion in 2026 compares with $1.88 billion in 2025, with PC and RUPS making up 80% of our top line, the highest percent of total sales in company history, and closing in on our 85% of sales target. On slide 27, we are forecasting adjusted EBITDA of $250 million-$270 million in 2026, compared with $257 million in 2025. The biggest risk to achieving the midpoint include realizing the lower end of our Catalyst capture rate and seeing further end market softness. Additional risks are higher costs, driven by tariffs or other factors, and extended operational disruptions. Our biggest opportunities of exceeding the midpoint are if we meet the higher end of our Catalyst capture rate and see end markets strengthen. Slide 28 shows our adjusted earnings per share bridge, reflecting a range of $4.20 to $5.00 per share in 2026, compared with $4.07 in 2025. At the midpoint, the contribution from operations, interest savings, lower depreciation and amortization, and benefits from a lower share count are partly offset by higher taxes from higher net earnings. While we do not provide quarterly earnings guidance, it is worth noting that our first quarter this year will be the weakest of the four. This is due to the greater than normal effect of the severe winter weather that has impacted our operations and shipping schedules. In addition, there are several Catalyst initiatives that are in earlier stages and will not pick up momentum until the second and third quarters. On slide 29, as I have been signaling for the past several quarters, we are expecting to see a sizable jump in both operating cash flow and free cash flow this year. As a result, this will provide the most cash we have had for debt paydown since 2020, when we received the cash proceeds for selling our KJCC business. Not only would operating cash flow and free cash flow represent new highs at these projected levels, but more importantly, 2026 will represent an inflection point for our step change in cash generation, as we expect these new higher levels to become the norm. At our current market cap, this equates to a better than 15% free cash flow yield. This places Koppers Holdings Inc. at the top end of whatever industry you want to compare us to and provide several attractive options for how we deploy our excess cash. This also implies about a 50% opportunity in our share price just to bring it back to the current 10% yield level based on 2025 free cash flow. The foundation we have built over the previous five years has set us up to create significant shareholder value over the next several years. I am confident we will deliver. We still maintain leading shares in niche markets that utilize our essential products with low capital requirements in the near term and rising cash flows to deploy towards further reducing our share count and our debt. I would like to open it up to questions. Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Gary Prestopino with Barrington Research. Please go ahead. Gary Prestopino: Good morning, everyone. Leroy Ball: Hi, Gary. Gary Prestopino: Hey, Leroy. I want to refer to slide 20 here with the PC business. Last year, you said there was a competitor that came in and took share, lowered prices, now what you are saying is that for 2026, you are looking at market share capture in both residential and industrial markets. You have raised prices. Could you maybe square what is actually going on and take a deeper dive into that market, how you are able to get share? Prior share was lost because of, you know, price competition. Leroy Ball: Yes, so Gary, we did take a market share hit in 2025. It was the, you know, the most significant portion of our PC sales decline. Gary Prestopino: Mm-hmm. Leroy Ball: You know, there was some business that was available to potentially recapture in heading into 2026, and we were able to, you know, convert on a portion of that. There is, I would say the bulk of the business that we are adding in 2026 is unrelated to that market share loss. It is current customers where we, you know, had already had a pretty good footprint with them, but through some consolidation that they had done, that had business with, again, one of our major competitors, they had elected to move some of that business over to our new technology in those areas. That is a good piece of it. You know, the industrial business we have made inroads in over the past number of years, so there is kind of nothing new from that standpoint. I will say, and I do want to make sure I clarify, like, we are not growing market share and improving price in 2026. That is not happening. You know, it is a competitive market out there. It continues to be. You know, I expect that we will see some price compression in 2026, but we will see market expansion in 2026 on the PC side. Gary Prestopino: Okay. You may have done this. There is a lot of information here we have got to go over, obviously. Did you kind of segment what you anticipate the Catalyst benefit to be in 2026? Leroy Ball: Yes, I mentioned in my prepared remarks, I think, We are targeting somewhere between $20 million and $40 million of Catalyst benefits in 2026. Gary Prestopino: Okay, thank you. Leroy Ball: Yes. Gary Prestopino: I am sorry, I missed that. Leroy Ball: No, no worries. Gary Prestopino: I am trying to keep up with everything. Leroy Ball: Yep. Gary Prestopino: Lastly, and it just a kind of a philosophical question here. You, in the slide 24, where you are talking about your objectives of getting PC and RUPS up to 85% of sales. Leroy Ball: Yep. Gary Prestopino: I would assume that you would expect at least the percentage of EBITDA contributed to be at that 85% or better from both of these divisions? Leroy Ball: That would be correct. Gary Prestopino: Okay. Can I just... The rationale for even keeping the CMMC business, now I understand that you have got, you know, some intercompany sales there with the creosote and all that, but is that really the rationale for keeping that as it becomes so small? Could you possibly sell it and get, you know, contracts locked in, that would be advantageous to you for your supplier creosote? Leroy Ball: Yes. Good question, right? Complicated answer. Long complicated answer. Gary Prestopino: Oh, no. Leroy Ball: No, no. I mean, you know, because it is a, you know, it is a significant, it is a significant component of our supply chain. There is no question there is that. Gary Prestopino: Yeah Leroy Ball: that component of it, right? Gary Prestopino: Mm-hmm. Leroy Ball: Which, you know, can, I think, you know, you can probably work through that potential complication. You will end up having to deal with it whenever, you know, whatever contract you put in place ultimately ends up coming to an end, which it will at some point in time. Gary Prestopino: Right. Leroy Ball: In terms of in initially, yes, that can probably be overcome. You know, I would say, you know, you have got issues around a descaling of the entire organization as a result of that, and stranded costs that would come. You know, the environmental footprint around that would probably be somewhat restrictive in terms of what you might be able to get in terms of an attraction for an individual wanting to come into the market. Gary Prestopino: Mm-hmm. Leroy Ball: You know, consolidation opportunities are really limited, because there is only a few folks that are really doing it, in our geographies that we serve. You know, there is just a whole host of constraints around that. Gary Prestopino: Right. Leroy Ball: Look, I mean, I have continued to say, and, you know, it is not just, you know, it is not just bluster. I mean, we continue to look at our business portfolio actively. If you have looked over, you know, the 11 years that I have been doing this job, our portfolio has shifted dramatically in terms of businesses that we have gotten into, businesses we have gotten out of, operations that have been rationalized, those sorts of things. We are constantly looking at that. Where we see opportunities to improve by, you know, by peeling back in some of our lower value areas, we will look to do that. You know, nothing is off the table, and that is something that we will continue to look at as we do regularly. Gary Prestopino: Okay. Thank you so much. Leroy Ball: No, you are welcome. Operator: The next question is from David Marsh with Singular Research. Please go ahead. David Marsh: Hey, thank you guys for taking the questions. Appreciate it. Leroy Ball: Yep. David Marsh: Just wanted to start, if I could, with a couple of kind of housekeeping type items. First, noticed that the DNA went up about $2 million sequentially versus Q3. Was hoping maybe you guys could give a little bit of clarification around that and kind of what the execution would be going forward. I did not know if maybe that was because of the sale of the business. Leroy Ball: I, you know, I, I do not have, you know, those details handy. I will say that, you know, you know, we are, again, as part of what we are doing relative to, you know, keeping costs in check, there is a lot of work and initiatives that continue to be in process around, SG&A and operating costs in general. Any particular. David Marsh: I am sorry, Leroy. I am sorry, Leroy. If I said SG&A, I meant DNA. Leroy Ball: DNA. Okay, thank you. David Marsh: DNA bumped up a couple million dollars sequentially. I was getting a little confused there. Leroy Ball: Oh, okay. Okay, no problem. I will, you know, I will turn that over to Brad, maybe, and ask him to comment on the DNA. Brad Pearce: Yeah, you know, I think the DNA obviously is going to change as we close, you know, projects and begin to depreciate them. I think it is really just probably a combination of some timing, right? We came off a couple of years of some higher capital spending, and that is now, you know, moved into depreciation phase. What can also be coming through depreciation might be some impacts for, you know, asset retirement obligations. As you know, we closed our phthalic operation in 2025, and some of those charges might be coming through for that. Leroy Ball: One thing I will say, David, is, you know, I referenced, we are expecting DNA to drop by a couple million, I think, in 2026, and would expect some further moderation as we, you know, basically have a certainly the next several-year run rate at a more normalized CapEx number that is below, you know, that current DNA run rate. Would expect that to improve as the years, at least over the next several years. David Marsh: Got it. You talked about Catalyst perhaps driving as much as $20 million-$40 million in savings in 2026. I mean, how would that break out in terms of a split between, like, COGS and SG&A? Would it have a, you know, kind of a little, maybe a little heavier impact on the COGS side, or is it kind of equally split, or how does that play out? Because I noticed the gross margin in the quarter was really nice. It was up really nicely. Leroy Ball: Yeah. It will be heavier on the COGS side. I mean, we got a lot of the low-hanging fruit on SG&A. There is still more we think we can do there. But it will be heavier on the COGS side. COGS and commercial benefits as well. You know, there is pieces to it, so we tend to default and sort of think of Catalyst as it relates to the cost side, but there is a, you know, a heavy component about this that is about putting ourselves in a position to, you know, win more profitable business. When I mentioned PC as an example, 2026, most of our Catalyst initiatives were centered around commercial, it was about being able to win additional business, take some additional market share, and we have achieved that, right. That is going to come through in the form of some of the market share penetration and increased revenues, as well as the profits that will come from that. David Marsh: Got it. Got it. Very helpful. Your interest expense in the fourth quarter was down a good bit sequentially on a percentage basis. You know, the overall debt was not really down a lot. Like, is there what, can you talk about what is at play there? I noticed, you know, it did look like you guys put some swaps back on in terms of the derivatives contracts coming back on the balance sheet. Maybe just give us a little bit of color around that. Brad Pearce: Just, sorry, interest expense? Yeah. Yeah. David Marsh: Yeah, it was down sequentially. Brad Pearce: Yeah, well, yeah, I mean, we are obviously getting some benefit on lower rates coming through, you know, as well as, you know, again, just lower overall borrowing. You know, that did have an impact. You know, our swap profile, where we have converted, you know, some of our variable into fixed, that has not changed, you know, over the past year. David Marsh: Okay. All right. Well, hey, thanks very much for taking the questions, guys. Leroy Ball: Yep, thank you. Operator: The last question comes from Michael Mathison with Sidoti & Company. Please go ahead. Michael Mathison: Good morning, you guys, and congratulations on all the margin improvement. Leroy Ball: Thank you, Michael. Michael Mathison: In particular, the adjusted EBITDA margin in PC was up 370 basis points sequentially, so quite an achievement. Can you comment on what drove the upswing, and is that the new normal? Is that margin level sustainable? Leroy Ball: You know, there is things that move around, if you will, right? It is not always, you know, clean quarters, I would say. We did have a benefit of an asset sale that I think helped their results for the quarter and probably added a little bit of that. That is, you know, something that is not repeatable. Overall, I would say the margin profile, I was really pleased with what they were able to do through a challenging, you know, sales year. I think with what we are doing moving forward, we certainly expect that we are going to be able to generate margins that are in that range on a go-forward basis. I will not necessarily commit to, again, getting back up above the 20% profile at this point. There is just still too many moving parts. You know, as Brad talked about, you know, relative to, you know, copper and things like that, you know, those sorts of things, you know, we try to insulate ourselves from, but there is always some level of exposure. We have, sometimes we are more successful at getting greater discounts than others, there is a whole bunch of factors that come into play there. I guess the main point I would say is, we were pleased with the overall margin performance, not just in Q4, but for the full year for PC, and expect that we will be able to continue to generate in that range, and obviously targeting to do a little bit better than that. You know, we think we have done a pretty good job of putting that business in a position to still consistently generate on the high end of the margin profile spectrum. Michael Mathison: Thanks. Turning to the CMMC business, you have spoken previously about potentially reducing the footprint at Stickney to a single column. Are you still planning to go ahead with that? What would that mean for CMMC margins? Is there any revenue impact from lost business? Leroy Ball: Yes, it is a good question. There is a high likelihood that we will be heading in that direction because we think that there is a whole host of benefits that come about as a result of that. In terms of what impact that would have on the revenues and profitability, nothing, as it relates to 2026, because of raw material that we already have in inventory that we need to run through and things of that nature. That would not be something that would be realized until, you know, we kind of really move out into 2027, the 2027 timeframe. The fact that we have less raw material to work with obviously means that, you know, we will be generating less sales as a result of that. If we move down to a single column, we think we can certainly cut costs as part of that, and, as long as pricing remains stable, improve our overall margin profile for that business. That is, it is part of the Catalyst initiatives that, you know, we are continuing to do some work around. You know, as I have more information on that, we will talk about that and potentially up in upcoming quarters. Michael Mathison: Great, thanks. Looking at your utility pole business, I did not see a press release about the Douglas fir acquisition. Could you just give us a little. Leroy Ball: Yeah. Michael Mathison: more color about Leroy Ball: Yeah. Michael Mathison: where they are located? Leroy Ball: Yeah. Michael Mathison: Will that help with your effort to, for geographic expansion? Leroy Ball: Yeah. Yeah. Yeah, small business. It is, it is out in Oregon, and it just, it really secures up a, you know, Douglas fir supply chain for us that we were, you know, beginning to access out over the last, 12 to 18 months. You know, there was a level of risk that, you know, that could potentially put us in a spot where, you know, we, you know, we would be, you know, dependent upon a source that, could move away from us at any point in time. We saw it as an opportunity to lock that in, secure that source of supply and assets, and capabilities, and bring that into our portfolio, which actually, you know, we think helps improve our opportunities in some of our traditional markets, where we might have been shut out of bids that would require some Doug Fir component that we, you know, could not offer, or we would need to try and, you know, work with others to be able to provide that. Right now, it is more geared towards helping us in markets that we are already in and trying to grow. You know, it could be a, you know, a, an initial jumping off point, at some point in the future if we want to think more aggressively about expanding out further west. Michael Mathison: Well, great. Thank you for taking my questions. Congratulations again. Leroy Ball: Thank you, Michael. Yep. Operator: We have an additional question from Liam Burke with B. Riley Securities. Please go ahead. Liam Burke: Thank you. Good morning, Leroy. Good morning, Brad. Leroy Ball: Good morning. Liam Burke: Leroy, on PC, we talked about the puts and takes on residential, but are you making significant enough headway on the commercial side of the business, where it is actually moving the needle and contributing to this anticipated revenue growth? Leroy Ball: I mean, we believe so. I mean, I think, if you again go back to our 2026 projections, I think that, you know, we are happy with the commercial wins that the team generated in the back half of 2025, that will carry into this year. You know, it is all good business, and it certainly helps us on the throughput side as well in our plants. You know, we are a manufacturer, right? I mean, the more we can put through our plants, the better we are going to do. You know, you are always balancing those things out against any potential price trade-off that you have. Throughput is king in our world, and so, it is important to be able to have that volume. The team again, our team came back strong in 2025 with a sort of a really a refocused effort on ensuring that we were making sure that our customer base understood that we value what they do for us, and we want to do everything we can to not just meet their needs, but exceed their needs and expectations. I think we were able to regain some confidence in some areas, and we already had confidence in others that I think, ultimately resulted in additional business coming our way, again, as certain customers consolidated their own production activities. Real happy and pleased with the efforts our PC team did in 2025, coming back from a tough year. Liam Burke: Great. In the past, you have talked about adding to the utility pole business by tucking in a pretty fragmented area. Leroy Ball: Yep. Liam Burke: Do you see opportunities there, or has pricing got out of hand with the bigger demand or increasing demand for infrastructure build? Leroy Ball: I, you know, I think that, you know, we are always open to those opportunities and always looking and, but wanting to make sure that again, we are disciplined in that process and how we go about it. You know, there are opportunities there, Liam. You know, it is tough to say if and when any of them could shake loose, but in the meantime, we think we, you know, we still have capacity to fill, and that opens up enough opportunities for us to continue to grow our business with the existing capacity that we have on hand. That is, you know, 2025, there was a tremendous amount of effort in terms of sort of upping our, you know, sales skills, if you will, and technology, right? We have added technology, we have added new sales leadership, we have added more boots on the ground. You know, we have gone hard in areas that we feel were underrepresented and provided opportunities for us. Again, also pleased with the efforts of our leadership and team on the UIP side, and I think we will continue to see, you know, those benefits come through in, you know, 2026 as well. Liam Burke: Great. Thank you, Leroy. Leroy Ball: Yeah. Thank you, Liam. Yep. Operator: This concludes our question and answer session. I would like to turn the conference back over to CEO Leroy Ball for any closing remarks. Leroy Ball: Thank you. I just want to thank everybody for participating on today's call and for your continued interest in Koppers Holdings Inc. Look forward to connecting with you again next quarter. Take care. Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Hello, thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the TETRA Technologies, Inc. fourth quarter 2025 and full-year 2025 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, we will open for questions. If you would like to ask a question during that time, please press star, then 1 on your telephone keypad. I would now like to turn the call over to Kurt Hallead, Treasurer and Investor Relations. Kurt, please go ahead. Kurt Hallead: Thank you so much. Good morning. Thank you for joining TETRA Technologies, Inc.’s fourth quarter and full-year 2025 earnings call. The speakers for today will be Brady Murphy, Chief Executive Officer, Elijio Serrano, Chief Financial Officer, and Matt Sanderson, Chief Commercial Officer. Before we begin, I would like to call your attention to the safe harbor statement in our Form 10-K. Some of the remarks we make today may be forward-looking and are subject to risks and uncertainties, as outlined in our SEC filings. In addition, we may refer to adjusted EBITDA, free cash flow, and other non-GAAP financial measures. Please refer to our press release for reconciliations of non-GAAP to the most comparable GAAP financial measures. These reconciliations are not a substitute for GAAP financials. We encourage you to refer to our 10-K that was filed yesterday. After Brady, Elijio, and Matt provide their comments, we will open the line for Q&A. I will now turn the call over to Brady. Brady Murphy: Thanks, Kurt, and good morning, everyone. Welcome to TETRA Technologies, Inc.’s fourth quarter and full-year 2025 earnings call. Before we get into the quarterly results and outlook, I would like to begin the call by acknowledging and highlighting the exceptional efforts and the 2025 performance of our leadership team and all of the TETRA employees. 2025 was a challenging year for the U.S. oil and gas industry, marked by reduced levels of U.S. onshore activity and a volatile global economic environment. Despite these headwinds, there is a long list of TETRA’s record financial achievements, as well as overwhelming support for the company’s strategic developments. I will highlight some of the outstanding financial achievements and progress against our 2030 objectives, which we communicated as part of our ONE TETRA 2030 strategy at our investor conference at the New York Stock Exchange last September. I will turn it over to Matt Sanderson and Elijio Serrano to summarize our fourth quarter results and provide an update on our balance sheet. Headlining our exceptional 2025 performance is our Gulf of America Completion Fluids team. For the fifth consecutive year, TETRA was ranked the top supplier in the Gulf of America for product quality and overall performance for offshore completion fluid suppliers in the well-respected Kimberlite International Oilfield Research Report. As the market and technology advanced to 20K ultra-high-pressure and ultra-high-temperature wells, our innovation leadership is resulting in market share gains. TETRA’s Gulf of America revenue increased well over 50% in 2025 compared to 2024, driven by participation in deepwater projects, including three CS Neptune wells that we completed in the first half of the year for a super major. Our unique zinc-free, high-density completion fluid allowed them to complete their high-pressure wells on schedule without exposing their production facilities to zinc in the production flowback. The performance of our Gulf of America team drove our completion fluids and products EBITDA margins to improve 420 basis points from 28.9% in 2024 to 33% in 2025. The combination of our vertically integrated business model as the only service provider that manufactures our own fluids and our unique technology portfolio gives us a very strong market position. Supporting our global completion fluids business is our West Memphis manufacturing team, which is the heart of our bromine-based completion fluids and our PureFlow electrolyte production. Using elemental bromine sourced through a combination of open market purchases and our long-term supply agreement, we produce offshore completion fluids, including CS Neptune, and the PureFlow-based electrolyte. 2025 was a record production year for West Memphis, producing 40% more bromine end products than our long-term bromine supply agreement allows. The West Memphis team also expanded their production and distribution capacity to ship PureFlow electrolyte to Eos in tanker trucks rather than totes to keep up with their expanded production. Another 2025 record performance is our global calcium chloride business, which set both revenue and adjusted EBITDA records and again outperformed GDP in 2025. We hold a market-leading position in Europe and a strong second place in the U.S. market. In addition to our food-grade products, we are encouraged by the outlook for our tech-grade product lines, supporting the reintroduction of chip and other high-tech manufacturing operations in the U.S. Although still a small percentage of our U.S. calcium chloride revenue, our tech grade for chip manufacturing grew by 144% in 2025 over 2024. The combination of these three record-setting operations, Gulf of America, West Memphis plant production, and calcium chloride business, not surprisingly, resulted in record-level revenue and adjusted EBITDA for the completion fluid segment as a whole in 2025. This performance occurred despite an estimated 55% fewer floating deepwater rigs operating globally than the 2014 peak, and we believe we are still in the early days of anticipated Eos production ramp-up. This is one of the reasons we are still very well positioned to benefit from the multi-year deepwater activity recovery and the electrolyte growth highlighted in our ONE TETRA 2030 strategy. Moving on to the strategic milestones for 2025 in the fourth quarter. During the year, we made significant progress on our new bromine plant and reached a major milestone in December by erecting a 120-foot-tall titanium bromine tower and support structure at our Evergreen plant site in Southwest Arkansas. We completed phase 1 of the planned three phases on time and materially below budget. We have advanced the detailed engineering design for phases 2 and 3, placed orders for long-lead items, refined the plant’s total cost, and are finalizing the detailed schedule. By designing the plant around the bromine tower’s capacity of 75 million pounds of bromine annually, we will have 56% more low-cost bromine available to us than the 48 million pounds we published in our definitive feasibility study in August of 2024. Since that study was completed, we have increased our demand outlook for deepwater completion fluids and now expect total bromine product demand to reach the 75 million plant capacity by 2029. Once we have the final upstream wellfield schedule from Standard Lithium and Equinor’s Reynolds unit, from which we intend to receive the post-lithium extracted brine, with board approval, we intend to FID the project. For the reasons highlighted, we expect the Arkansas bromine project’s economics to be improved from what we previously published. Continuing on with our Arkansas brine resources, we are pleased with the progress towards finalizing JV terms with Magrathea for the production of magnesium metal, using the rich concentration of magnesium, also in the same Smackover brine on our 40,000 acres. Magnesium is classified as a critical mineral by the U.S. government and is used to produce a highly valued metal for the Department of War and other U.S. industries. For our planned partnership, we would combine Magrathea’s advanced process technology with TETRA’s deep operational expertise and a world-class magnesium resource base from our Southwest Arkansas brine acreage. Magrathea has already secured Defense Production Act Title III funding from the Department of War to support its commercial phase one, planned to be on-site at TETRA’s Evergreen plant. We are optimistic that further government support is possible for our future commercial plans. Finally, as it relates to our Arkansas brine resources, and as we highlighted in our 2030 strategy, lithium has been viewed as a future opportunity beyond our 2030 targets. With lithium prices increasing back to over $20,000 per metric ton, we are reengaging direct lithium extraction technology companies and evaluating technological and cost efficiency advantages to understand the current economic environment. As a reminder, TETRA is the designated operator of the Evergreen brine unit and owns 65% of the brine minerals, including lithium, while ExxonMobil owns the remaining 35%. Our final strategy update concerns desalination for beneficial reuse. We are very pleased with the results of our EOG commercial plant desalination operation in the Permian Basin. This phase two grassland study has been running with over 95% uptime for the past four months following completion of the greenhouse phase one study. This grassland study is evaluating oil and gas-produced water desalinated through TETRA’s OASIS technology. Of great significance is that TETRA was issued a patent for our TETRA OASIS TDS end-to-end desalination solution. We are pleased that our unique pretreatment, combined with exclusive membrane and post-treatment technologies, has been recognized as a unique and patentable solution for desalinating oil and gas-produced water for beneficial reuse. The biggest desalination update since our Investor Day in September is the growing attractiveness of West Texas for data centers, which has shifted our customers’ priorities and our focus. With data centers straining electric utility grids and driving price increases, behind-the-meter, cost-effective power has become a major driver for data centers. With West Texas’ low-cost, abundant natural gas, ample and affordable land, and a friendly regulatory environment, it is easy to understand why. The one challenge West Texas does have is a lack of fresh water for power and data center cooling. With over 20 million barrels of produced water per day, there is far more water available by desalinating produced water. This is an extremely attractive option since operators need to reduce the amount of water they reinject for disposal, and converting it into a viable resource for power and data center cooling is a double win, given they now have a revenue source instead of incurring disposal costs. Our customer plan for 25,000 barrels per day plants has been shifted to greater than 100,000 barrel per day desalination plants, as one data center could require as much as 200,000 barrels of desalinated water. This is a very dynamic environment that has not changed the fact that operators need a solution for disposal well pore space filling up. It has provided an exciting acceleration opportunity that has significant potential for TETRA. All these efforts are contributing towards the goals we laid out for 2030, including our future segments focused on specialty chemicals and with water desalination and treatment. Looking forward to 2026, we see continued momentum towards our 2030 objectives. We expect incremental revenue growth driven largely by a material increase in electrolyte business and major contract awards in Argentina. Argentina has been a real success story for us as our team has secured contracts to meaningfully expand our production testing business, anchored by our proprietary and highly efficient SandStorm technology. In addition, our team secured three early production facility contracts. The combination of winning more early production facility contracts and gaining market share with SandStorm is expected to double our revenue in 2026 compared to 2025. Argentina’s margins are accretive to our overall water management and flowback margins, and are more stable given the long-term nature of our contracts. On the completion fluid side, Gulf of America activity in 2025 was heavily weighted towards completion and less towards drilling. 2026 activity is forecasted to be higher in drilling, including more exploration, with less completion activity. We do not expect the Gulf of America to reach the same record levels as in 2025. This is projected to cycle into stronger 2027 completions activity, and our 2030 targets for this business are on track. Our onshore water and flowback services business continues to benefit from longer laterals, increased sand and water usage, and more production-related activities, including water treatment and recycling. We expect the net impact of all these to result in overall modest growth in 2026. We have secured third-party bromine supply for 2026 and 2027 to bridge our growing bromine demand and until our bromine processing plant is brought online. These third-party supplies will allow us to keep pace with expected material increase in electrolyte and robust deepwater market, but they do come at an incrementally higher cost relative to our current long-term bromine supply agreement, which is consistent with our expectations. Although it is possible for one or more CS Neptune jobs to materialize in 2026, without CS Neptune projects and somewhat higher short-term cost of bromine, we expect our completion fluids and products adjusted EBITDA margins to be in the 25%-30% range, which is consistent with the average margin range for this segment over the past seven years. The increased cost for additional bromine supply has been anticipated as a bridge until we have our bromine processing plant operational. It further supports the strong business case and significant EBITDA increase we expect for this segment starting in 2028, when the plant is operational. For water and flowbacks, flowback services, the continued focus on differentiated technology and our profitable international growth contribute to improved adjusted EBITDA margins from 12% in 2025 to the mid-teens in 2026. With that, I will ask Matt Sanderson, who is currently, and for the past two years, done a great job as our Chief Commercial Officer, to update us on the fourth quarter highlights, and then Elijio Serrano to close out with our balance sheet and update. Before turning the call over to Matt and Elijio, I would like to again express my and the board’s deep appreciation for Elijio’s contributions and efforts over the past 13 years. Last October, we announced that Elijio had notified TETRA of his intentions to retire at the end of March. Over the past six months, Elijio has worked with Matt to ensure a seamless and orderly transition of the CFO responsibilities. Matt has been with TETRA for over nine years, and as stated, most significantly as Chief Commercial Officer. The board and I spend a lot of time on succession planning to ensure we have the talent necessary for the organization to execute on the base business and deliver our longer-term goals. This transition will allow us to do so. Elijio has agreed to remain available to Matt, me, and the board as an advisor, so we can leverage his skills, knowledge, and relationships with our investors, the financial community, our lenders, and the financial team. While this might be Elijio’s last quarterly earnings call, we fully expect that in the background, he will continue to support the organization as we methodically march towards our 2030 goals. With that, Matt will provide some additional color on the fourth quarter results before handing over to Elijio. Matt Sanderson: Thank you, Brady. As mentioned, 2025 was a record-setting year for TETRA on several fronts. This included our strong fourth quarter performance. Completion fluids and products revenue of $83.7 million was up 22% compared to a year ago, including a material increase in shipments of electrolyte. Our adjusted EBITDA margins remained strong at 28.2%. Water and flowback services revenue of $63 million was flat compared to the third quarter, despite the traditional year-end slowdown in the U.S. market. Inversely, we saw stronger activity in Argentina as we started another early production facility during the quarter. We expect to start another one this week, setting us up for a strong year in 2026 in the Vaca Muerta region, as Brady mentioned earlier. Production testing activity remained strong on the back of our SandStorm technology. Adjusted EBITDA margins improved 100 basis points on aggressive cost reductions and a continued focus on new technology and automation aimed at reducing personnel at the well site. Despite competitive pricing pressures in U.S. land, our adjusted EBITDA margins remained relatively flat during the year. Our focus remains on leveraging technology on higher margin opportunities and generating free cash flow in this segment. Corporate and other expenses were $11.3 million and included materially higher variable compensation expense, resulting from our team’s record 2025 performance. This variable compensation includes both short-term and long-term incentives, including returns on net capital employed targets and a total shareholder return, or TSR, over a three-year period, which is structured to align management’s interests with those of our shareholders. For the three-year period that we are being compared to our peers, we were in the top quartile of our peer group. As a result of that increase in shareholder value, our long-term variable cash compensation increased $2 million over the third quarter. In the fourth quarter, we also changed our corporate office location, which will reduce our corporate G&A expenses by approximately $2 million per year. We will be participating in several upcoming investor-related events in the first part of this year, which have been listed on our website. I look forward to working closely with our current and future shareholders, along with the broader investor community. On a personal note, I would like to congratulate Elijio on his upcoming retirement. I sincerely appreciate all of Elijio’s support during these past nine years, and I wish he and Mary all the best on the next chapter in their life together. With that, I will turn it over to Elijio to cover cash flow and the balance sheet. Elijio Serrano: Thank you, Matt. I will highlight three areas, then we will open the call up to questions. The first one is free cash flow. Cash flow from the base business in the fourth quarter was very solid at $21.8 million. For the year, free cash flow from the base business was $83 million. As you recall, all during 2025, we have been communicating our objective of generating over $50 million of base business free cash flow, and we did $83 million. Included in 2025’s free cash flow was $19 million in cash proceeds from the sale of our shares in Kodiak Gas Services, following our divestiture of CSI Compressco. Just like we did with our previous sale of shares in Standard Lithium, we timed our sale of Kodiak shares near their 52-week high. The organization is very focused on managing cash flow and managing working capital, so we can maximize cash flow from our base business to invest into our bromine project in Arkansas. Despite a $12 million increase in fourth quarter revenue compared to a year ago, our cash management efforts allowed us to reduce working capital by almost 20%, or by $21 million, to $88 million at the end of 2025. To demonstrate the quality of our customers and our internal focus on timely invoicing and collections, days sales outstanding improved 13% from 71 at the end of 2024 to 62 days outstanding at the end of 2025. Base business capital expenditures were $30.5 million, and investments in Arkansas were $45 million. We also capitalized $4.5 million of interest expense, consistent with GAAP requirements on large capital projects. Consolidated TETRA free cash flow, including all our Arkansas investments, was $33 million in 2025, demonstrating the strength of our base business to allow us to invest into the projects and still be free cash flow positive. This will allow us to keep making progress towards our 2030 goals without over-leveraging TETRA. The second topic of emphasis is our balance sheet. Even after we invested $45 million into Arkansas, we ended the year with cash on hand of $73 million, double where we started the year at. Net debt is $109 million, down from $143 million at the end of 2024. Our net leverage ratio improved from 1.8x at the end of 2024 to 1.1x at the end of 2025. We have nothing outstanding on our revolvers. As of this week, we had borrowing capacity of approximately $7 million on our revolvers. Brady mentioned the growth in our business in Argentina. Argentina is cash self-sufficient for us. We are not having to support Argentina by moving cash there to double the business in 2026. We expect to begin repatriating cash to the U.S. in 2027, given the strong performance that we expect from them with long-term, stable, early production contracts. The third topic is our tax loss carryforwards. As of the end of 2025, we have a tax loss carryforward of approximately $84 million that can offset almost $300 million of taxable income in the United States. In 2025, we were able to use approximately $7 million of this deferred tax asset to reduce our U.S. cash taxes in the United States. This tax loss carryforward is of significant value to TETRA and TETRA shareholders as we continue to grow our business and move towards the 2030 goals, with expected higher U.S. income from our bromine plant and from water desalination facilities. Lastly, given this is my final earnings call, I would like to express my appreciation to the TETRA organization, our board of directors, the research community, and our shareholders for the opportunity to work with all of you. TETRA is in a great position to deliver on our 2030 goals and create even more value to our shareholders as we grow our earnings. Tiffany, with that, we will open the call to questions. Operator: At this time, if you would like to ask a question, press star, then 1 on your telephone keypad. To withdraw your question, simply press star, then 1 again. We kindly ask that you limit your questions to one and one follow-up for today’s call. We will now open for questions. We will pause for just a moment to compile the Q&A roster. Your first question comes from Stephen Gengaro with Stifel. Please go ahead. Stephen Gengaro: Thanks, good morning, everybody. Matt Sanderson: Good morning, Stephen. Elijio Serrano: Good morning, Stephen. Stephen Gengaro: It will be odd without Elijio next quarter, but we will keep talking to him. I think the first thing is, when we think about the comments on the fluid side and how the deepwater market looks in 2026 versus 2025 for fluids, and how that evolves into 2027, can you just talk a little bit about what you are seeing, just any incremental color on how we should be thinking about the offshore, well, basically, the non-industrial piece of fluids? Brady Murphy: Yeah. Yeah, sure, Stephen. As mentioned, we had a record-setting year for our completion fluids business in 2025. Really, when you think about it, we are still way below where the market peaked in deepwater in 2014. As I mentioned, we are 55% below where we were in the peak, and we are setting records financially. We had a couple of tailwinds with us in 2025 because the Gulf of Mexico, as I mentioned, was largely in completion phase. These cycles happen in deepwater. If your drilling campaign is ongoing and you are doing less completions, that has an impact on us. If you are doing more exploration and less development, that has an impact on us. 2025 was a great year. 2026 is still going to be a very strong year for us. But we are seeing a cycle into more drilling phase and less completion phase. Again, that cycle will reverse itself in 2027. I will say the overall deepwater market is overall continuing to look very positive over the next three to four years. Hopefully that helps with your question. Stephen Gengaro: Yeah, it does. The other question I had on that was, when we think about margin progression and on the fluid side, obviously we can sort of back out the first half of 2025, which you had the TETRA CS Neptune work. Brady Murphy: Yeah. Stephen Gengaro: The guidance parameters you gave, is it what is driving that? Just kind of normalized margins, ex Neptune, and what is the pricing situation look like for the deepwater fluids? Brady Murphy: Yeah. Our pricing power is pretty strong in the completion fluids. We are the innovation leaders, and we think we get a premium for that. We are also vertically integrated from the standpoint of being able to produce our own fluids. We feel we have an advantageous position in that regard. I mean, as I have mentioned, we are securing third-party bromine at a higher pricing level, spot market pricing levels, than our long-term supply contract because we are growing in both the deepwater and the Eos demand. That does put a little bit of pressure on our margin side, but as we communicated, we think we are going to be in that range, 25%-30% for the year in the segment, which is really consistent with our past seven years. I think what it does highlight is, again, the strong business case that we have for our bromine plant, because when we bring that plant online, we will have 75 million pounds of bromine available to us at significantly lower cost than what we are paying today. That is, again, part of our 2030 objectives that we have outlined. Stephen Gengaro: Thanks. Just one really quick one on the margin side. I do not think you have ever said this. I do not know if you will tell us, but any guidance on how much of your bromine needs are serviced by the long-term LANXESS agreement? Brady Murphy: I do not know that we have communicated that. Stephen Gengaro: Okay. Brady Murphy: Stephen, do you know, Elijio, if that is public knowledge? Elijio Serrano: We have indicated that approximately 75% of our historical needs have been met under a long-term agreement, and we have been doing open market purchases for the rest of it. As Brady mentioned, with the volumes increasing, we are doing more and more open market purchases. Brady Murphy: The percentage of open markets is definitely increasing, Stephen, as we grow and we support the electrolyte ramp up. We are going to continue to see that in 2026 and 2027 until we bring the plant online, which will have a dramatic change. Stephen Gengaro: Great. Thank you for all the details. Brady Murphy: Yeah. Thank you, Stephen. Operator: Your next question comes from the line of Martin Malloy with Johnson Rice. Please go ahead. Martin Malloy: Good morning, Elijio Serrano, enjoyed working with you for a number of years and wish you the best in retirement. Elijio Serrano: Thank you, Martin. Brady Murphy: We are going to keep him busy, Marty. Do not worry. Martin Malloy: Okay, good. I wanted to ask about the desalination plants. It seems like, obviously, the size of the potential projects has increased substantially. I would imagine that there are a number of different parties involved, from E&P companies to midstream to the data/power providers. Can you maybe help us with how we should think about the timing of these commercial contracts potentially getting finalized and then the time to revenue? Brady Murphy: Appropriate question, Marty, because even since our Investor Day in September, we were going down a path with several customers who had a really sincere interest to stand up our 25K design plant in 2026. That has changed dramatically since our September discussion, and multiple customers, multiple data centers are now part of the discussion and have kind of taken over, I would say, the opportunity set that we initially were thinking about. It also includes the fact that we have to do additional engineering work. Well, we completed our 25K engineering study, but clearly, when you go to 100K and above, we have to kind of restart that engineering cycle. As you stated, there are multiple parties involved with this: the supplier of natural gas, a potential midstream supplier who has got water or an operator that has their own water, the power generation itself, and the potential hyperscaler, whoever that, in the case may be. It is a multi-party process, and it is an exciting process. West Texas is looking very favorable, I would say, in terms of the future of these data centers. Quite frankly, we have been open the fact that we, to date, and still, to our knowledge anyway, we are the only ones that have communicated an end-to-end full commercial offering for desalinating produced water for beneficial reuse. We are very encouraged by the patent that we received in the fourth quarter that provides more validation that we have got a cost or a technological advanced position. In terms of timing, look, we are hopeful that one of these data center desalination projects will materialize in the first half of this year. Obviously, we were not planning on much revenue in, if any, revenue in 2026. It does hopefully set us up for a first revenue of a large facility sometime in 2027. Martin Malloy: That is great. For my follow-up question, just wanted to ask about bromine and you are having to go out in the spot market and make purchases to meet the demand. It sounds like from Eos’s call earlier this morning, demand is not the issue. They have had some temporary execution issues ramping up, but the demand is certainly out there and they will be increasing their manufacturing going forward. Does it make sense to try to accelerate the timing of bringing that bromine project online? It seems like you were trying to pace it, so you kept it within free cash flow. Given the ramp-up in demand and potentially completion in the deep water coming back in 2027, does it make sense to try to bring in the completion date for the bromine facility? Brady Murphy: Yeah. The bromine facility is really being a schedule-driven project right now. The timing of being able to get the contractors on site, get all of the major equipment, tagged equipment, on location. We are not slowing the pace of this project by any means to try to pace it with cash flow funding. We are moving as quickly as we can. We are still on schedule for the fourth quarter of 2027, Marty, but there may be a little bit of opportunity to pull it in a little bit, but we want to be conservative with our estimates on that. Martin Malloy: Great. Thank you. I will turn it back. Brady Murphy: Thanks, Marty. Operator: Your next question comes from the line of Bobby Brooks with Northland Capital Markets. Please go ahead. Bobby Brooks: Hey, good morning, guys, and first want to say, Elijio, congratulations on the terrific career, and I am glad I have got to know you pretty well over the past couple of trips we have had the last few years, including you taking me on my first trip to Midland. Elijio Serrano: Thank you, Bobby, and hopefully, that was a very good experience for you. Bobby Brooks: Absolutely. Wanted to double-click on the desal stuff. Thought it was really exciting to hear the customer conversations have pivoted from the 25,000 barrel a day to 100,000 or more plants. What I wanted some more clarity on was, I thought when you did the engineering on the 25,000 barrel a day plant, that it was sort of modular and scalable in nature, so you could kind of just stack four to get to that 100,000 number. Maybe I am misunderstanding it. Could you just discuss if that is the case, like, why not just deploy four of them to hit that 100,000 goal? Brady Murphy: Yeah, good question, Bobby. We did anticipate that if we started out with 25,000 plants, that as volumes increased, we would be able to build them in a train type of environment, right? Another 25. When you know you are going to start, instead of a 25,000 plant, and you are going to start with a 100,000 or more, obviously, there are efficiencies to be gained out of a large 100,000 barrel per day plant versus just going and building four separate 25,000 facilities. With that in mind, our customer is asking us to prepare for a much larger facility, as opposed to, “Well, let us just build four 25,000s and put them together.” Because there are some economies of scale to be had. Bobby Brooks: Absolutely. That makes a lot of sense. Maybe to dive a little bit deeper there, I think it took a couple of quarters to get the engineering finalized for the 25,000 barrel a day plant. Do you think that might be a little bit accelerated, since I am guessing there is probably some crossover, where you are kind of starting at second base rather than starting at first base with this engineering plan? Brady Murphy: Yeah. No, absolutely. I mean, the fundamentals of the engineering are in place, so we will get some efficiencies as we move into the 100,000-plus plant site. If we were starting from scratch, this would clearly be a six-month exercise, but we are not. We feel fairly confident within the next three to four months, we will have a good range of where we need to be to move into a commercial discussion. Bobby Brooks: Great. Then just one last one for me. Just on the kind of base business, water and flowback services, U.S., if we think, if you take the assumption that onshore U.S. activity stays flat, do you think you can continue to outperform that just through the value add that you provide at E&Ps? Or is it probably more likely you kind of stay, if it is in a flat environment, you stay flat as well? Brady Murphy: Yeah. I mean, the SandStorm technology uptake really continues with our customers, and we have more room to grow on that side of the business. As I am sure you heard during our Investor Day, we are de-emphasizing our water transfer business somewhat. We are still supporting that business and looking for the efficiencies that we would like to get out of that business, but investing less in growth. As that piece of our business becomes, which is our lower margin business, becomes less of our North America business, we fully expect the flowback side of the business to continue to increase share. That is what is helping us, along with Argentina, to continually drive our overall margins up in that segment in 2026. Bobby Brooks: Got it. Great to hear. Maybe if I could just squeeze in one more. I thought it was really exciting hearing the industrial calcium chloride for chip production had really outstanding growth in 2026. Could you just maybe remind us, is that being supplied to domestic chip manufacturing, international chip manufacturing, or is it a mix of both? Brady Murphy: It is domestic chip manufacturing, and really, we are in the early days of that growth. Calcium chloride provides a really valuable part of the solution for these chip manufacturers because it neutralizes fluorine or fluorides, which we know are an environmental concern. We fully expect that business to grow as the chip manufacturing market grows here in the U.S. Bobby Brooks: Perfect to hear. Congrats on the excellent 2025. I will return it to you. Brady Murphy: Thank you. Operator: Your next question comes from the line of Jonathan Tanwanteng with CJS Securities. Please go ahead. Jonathan Tanwanteng: Thank you for taking my questions and next quarter. I was wondering if you would go a little bit more into the decision to bring on a third-party supplier for bromine. Does that indicate that you are having any issues with your current supplier, or perhaps any delays or shortfalls expected when you ramp the new facility? Or is it purely just the demand for bromine is exceeding what you already had contracted? That is the first part of the question. The second part is, are you expecting to pass on some of that higher input cost through to your customers? Brady Murphy: Remember, bromine feeds two important parts of our business: our completion fluids, our deepwater completion fluids, which had a record year in 2025. It also supports our electrolyte production, which, Eos electrolyte production as they ramp. We are definitely securing third-party supply well above now the long-term contract. There is no issue with the long-term contract. As we have stated publicly, that contract does wind down through the end of 2029, which dovetails very nicely with our bringing the plant online in 2028. We have some success with pricing because of our innovation leadership. That does help offset some of the increased price of bromine. Again, that is consistent with the guidance range that we have given between 25 and 30 for the segment, which is consistent with our past seven years, really even overcoming the increased costs of bromine, that we see the short-term issue in 2026 and 2027. Jonathan Tanwanteng: Got it. Thank you. Then you did mention you are expecting to hit that plant capacity in 2029, just two years after you open it. I am wondering if or what the plan is for excess bromine supply after that? Is it to stay with these third-party contractors, or are there extension opportunities that you can do with the assets that you have? Brady Murphy: Yeah, the 75 million will be the current tower that we have. We have plenty of resource in the ground, in our brine, to continue building out additional capacity. Most likely, we will go to the market with incremental bromine supply above the 75 million, at least for a period of time, until we see whether or not we have reached a whole new plateau of future bromine growth above our 75 million. For the short term, we would expect to go to the market for any needs above that. Jonathan Tanwanteng: Okay, great. Thank you. If I could squeeze one more in there, do you have any expected shortfall in supplying bromine in the short term to both your completion business or the battery business? Are you expecting to satisfy all the demand with these new agreements? Brady Murphy: We have secured, contractually secured, what we need for 2026. Obviously, as we get closer to 2027, we will do the same thing. We are in good shape for the supply. Jonathan Tanwanteng: Got it. Thank you. Brady Murphy: Thank you. Operator: Your next question is a follow-up from Stephen Gengaro with Stifel. Please go ahead. Stephen Gengaro: Thanks. Just a quick one, I might have missed this earlier, so I apologize. The margin guidance you gave on the water side for 2026 is pretty healthy. What is behind that guidance? Elijio Serrano: That is simply reflecting stronger pricing pressures in the Permian Basin, that we are working toward offsetting some of that with aggressive cost actions that Roy McNiven and his team are taking. We believe we will remain in the teens with that business, especially with Argentina coming on. Stephen Gengaro: Okay. Thanks. Just a quick follow-up. When we think about the progression through 2026, given what you know as far as seasonal factors, et cetera, any sense for or any color you could give on where the consensus sits for the first quarter EBITDA, which I think is like in the $23 million-$24 million range? Elijio Serrano: Yeah, as you know, we are not giving any guidance for the year, much less for the quarters. The only spike that we see will be the second quarter spike that we traditionally see in Northern Europe with the calcium chloride business. Otherwise, I think each of the quarters are going to reflect offshore activity and the timing of projects. Stephen Gengaro: Great. Sorry about that. My phone was not on silent. I apologize. Okay. Elijio Serrano: No problem. Stephen Gengaro: That is very helpful, and thanks for the details. Brady Murphy: Thanks, Stephen. Operator: Your next question is a follow-up from Jonathan Tanwanteng with CJS Securities. Please go ahead. Jonathan Tanwanteng: Hi, thanks for the follow-up. I do not know if you mentioned this specifically, but just given where you sit with the OASIS negotiations on the data center side, when is the earliest you think you could have a large-scale, the $100+ million plant online and starting to produce? Brady Murphy: Probably the earliest I would say would be Q2, probably more like mid-year of 2027, would be our expectation. Jonathan Tanwanteng: Okay, great. Does that also take into account factors like the relative difficulty of things like getting gas turbines on site and things like that, just given where backlogs are for power generation? Brady Murphy: Yeah, we cannot comment on the other partners in these programs, kind of where they are on securing everything they need for these projects. We are having specific discussions with multiple customers as it relates to data centers on our role, and they are aware of our timeline. They are obviously asking us if we can shorten that timeline, but that is a realistic timeline for us to stand up that size of a plant. Jonathan Tanwanteng: Okay, great. Thank you. One more just high-level question. Is there any sort of long-term impact that you might expect in the offshore business, based on just the changes in Venezuela and how that might be impacting the overall energy market? Brady Murphy: Yeah, I mean, our view of Venezuela, I think it is positive for both the country and the oilfield services long term. I do not think you are going to see a huge impact in the short term. We had a business, TETRA did, in Venezuela, that we will look at returning or at least selling completion fluids into that market, by way of participation. In terms of the overall energy market, my view is it will not be significant in the short term. Jonathan Tanwanteng: Understood. Thank you. Operator: That concludes our question-and-answer session. I will now turn the call back over to Brady Murphy for closing remarks. Brady Murphy: Well, thank you very much for joining us. 2025 is in the books as a record year for TETRA Technologies, Inc., and really a year that our strategic initiatives came into focus for us with our ONE TETRA 2030 strategy, and we are very excited about the future. Thank you all for joining us and participating with us today. Operator: Ladies and gentlemen, this concludes today’s call. Thank you all for joining. You may now disconnect.
Operator: Good day. Thank you for standing by. Welcome to Vital Farms, Inc.'s fourth quarter and full year 2025 earnings conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Please be advised that today's conference call is being recorded. I would now like to hand it over to your host, Brian Shipman, Vice President of Investor Relations. Please go ahead. Brian S. Shipman: Good morning, and welcome to Vital Farms, Inc.'s fourth quarter and full year 2025 earnings conference call and webcast. Joining me today are Russell Diez-Canseco, Vital Farms, Inc.'s Executive Chairperson, President, and Chief Executive Officer, and Thilo Wrede, the company's Chief Financial Officer. By now, everyone should have access to the company's fourth quarter and full year 2025 earnings press release issued this morning. During today's call, management may make forward-looking statements within the meaning of the federal securities laws. These statements are based on management's current expectations and beliefs and do involve risks and uncertainties that could cause actual results to differ materially from those described in these forward-looking statements. Please refer to today's press release, the company's annual report on Form 10-K for the fiscal year ended December 28, 2025, that was filed with the SEC today, as well as the company's other SEC filings for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please refer to today's press release and presentation, each available on the investor relations section of our website, for a reconciliation of non-GAAP measures referenced in today's call, including Adjusted EBITDA and Adjusted EBITDA margin, to their most directly comparable GAAP measures. While the company believes these non-GAAP financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. After our prepared remarks, we'll open the line for questions. As a reminder, please limit yourself to one question plus one follow-up so that we can hear from as many participants as possible. I'll turn the call over to Russell. Russell Diez-Canseco: Thank you, Brian. Good morning, everyone. Before we walk through our record 2025 results, I want to share an important leadership update. After nearly 20 years of visionary leadership, our founder, Matt O'Hayer, has decided to retire as executive chairperson and as a member of our board of directors. Matt founded Vital Farms, Inc. in 2007 with just 20 hens. Beyond building a brand, he pioneered an entirely new category in the grocery aisle based on the belief that we could scale the humane treatment of animals. Equally important, he was determined to operate Vital Farms, Inc. as a truly different company, one galvanized by a common purpose of improving the lives of people, animals, and the planet through food, and with a focus on positive long-term outcomes for all stakeholders. It is an honor for me to build on his legacy of vision and leadership over the last 20 years and continue our journey toward becoming America's most trusted food company. Matt O'Hayer remains our strongest advocate and our single largest shareholder, and I'm thankful to continue to partner with him as an advisor to me and the rest of our board. Effective February 24th, the board appointed me to serve as Executive Chairperson and CEO. This unified leadership structure is the most effective way to maintain our strong momentum, drive our 2026 strategic initiatives, and continue progressing toward the targets we set at the Investor Day in December. I'm also pleased to share that Denny Marie Post will continue to serve as our Lead Independent Director. Denny's extensive experience as a public company CEO and her deep commitment to our stakeholder model provide the oversight and strategic perspective that are vital to our governance structure. Our board remains committed to robust, independent oversight and will continue to maintain high standards of corporate governance as we enter our next phase of growth. I'm grateful to be able to partner with Denny as we look to the future. I want to start our update where I always do, which is by acknowledging our crew. In 2025, it was the resilience and commitment of our team that made that possible. As I reflect on 2025, it's clear that Vital Farms, Inc. has built greater organizational strength while also delivering strong financial results. We didn't just grow. We scaled while staying true to our mission. We're proud to have successfully completed our major 2025 initiatives. We added a third production line at ECS, implemented a robust new ERP system, and transitioned to a new dedicated cold storage facility less than one mile from ECS. We've also rebuilt our inventory and remediated the previous material weakness in our internal controls, which Thilo will discuss shortly. For the full year 2025, net revenue grew more than 25% to $759.4 million, which was the midpoint of the revised revenue outlook we shared at our Investor Day in December. Adjusted EBITDA exceeded $100 million for the first time in company history, growing 31.6% to $114 million. Now let me walk you through several of the milestones that I'm incredibly pleased our team accomplished last year, laying the foundation for our future growth. First, on the operations side, we successfully rebuilt our egg inventory throughout the year and brought our third ECS production line online in October. We can now dedicate the first two lines to longer production runs of our top four SKUs while using the third line for specialty SKUs with lower volumes. This change increases our efficiency, and we're excited to see productivity improve over time with all three lines up and running. We're also building both lines at our Seymour facility concurrently to stay ahead of demand. We believe by building concurrently, we will accomplish better construction economies as we build toward our $2 billion revenue target. This reflects our confidence in future demand and our commitment to staying ahead of growth opportunities rather than chasing them. Second, on the commercial side, this was a record revenue year. As I mentioned, delivering $759.4 million in revenue and $114 million in Adjusted EBITDA is a significant accomplishment for us. Our growth consistently outpaced the broader market. In 2025, we gained 25 basis points of volume share within all outlets of MULO+, according to Circana, making us the top share gainer in premium shell egg brands. According to the same data source, year to date through February 15th, we gained 35 basis points of volume share, again, positioning us as one of the top share gainers in premium shell egg brands. These share gains provide further evidence that we have created a strong and growing business built on improving the lives of people, animals, and the planet, while at the same time delivering world-class financial results. Third, our farm network expanded to more than 600 small farms committed to our pasture-raised standards, where hens roam freely on open pastures with year-round outdoor access. Adding approximately 175 farms in a single year is a testament to the trust we've built in the agricultural community around our unwavering commitment to humane animal care. Farmers want to be a part of what we're building because we offer a path to a sustainable livelihood while being stewards of the land and champions of animal welfare. Fourth, we successfully completed our ERP implementation with zero unplanned shipment interruptions, returning to and then exceeding pre-implementation production levels within a month. Finally, our recent marketing campaigns have driven brand awareness to 34%, an increase of 8 percentage points in 2025, widening the gap between us and our closest competitors. We are now working closely with our retail partners to convert that brand interest into actual purchases through an expanded shelf footprint and optimized promotional cadence. As we move into 2026, we are seeing a dynamic consumer environment, and our focus is on driving high-quality household penetration, resulting in profitable velocity, so that our brand maintains its premium position in the market as we march toward our 2030 targets. While we've successfully transitioned from a state of supply allocation to unconstrained capacity, we're managing this pivot with discipline. We're not interested in buying market share through aggressive discounting just because the commodity market is in a glut. Our current volume pace reflects a deliberate focus on high-quality shelf placements, ensuring that as we fill our expanded capacity, we're doing so with stakeholders that support our long-term goals and uphold our premium brand promise. At our Investor Day in December, we shared our updated long-term target of $2 billion in net revenue by 2030, with Adjusted EBITDA margin between 15% and 17%. These goals are grounded in the operational capabilities we're building and the market opportunity we see ahead of us. Our brand still represents only a fraction of the total shell egg market, giving us substantial runway for growth. We serve nearly 16 million households through approximately 24,000 retail locations, but there's so much more opportunity ahead. The capacity investments we're making, the operational excellence we're demonstrating, and the brand strength we're building create a powerful combination for sustainable growth. The progress we made in 2025 represents meaningful steps toward that goal, and I'm genuinely excited about what lies ahead. With that, I'll turn it over to Thilo to walk through the financials. Thilo Wrede: Thanks, Russell. Hello, everyone. I would also like to share my personal gratitude to Matt. His vision was the catalyst for everything we've built, and I've enjoyed his partnership and constant push to improve in my almost three years at Vital Farms, Inc. Russell, congratulations to you on your new expanded leadership role. I'll now turn to a review of our fourth quarter and full year 2025 performance. I will walk through our outlook and cadence for 2026. Net revenue for the full year 2025 was $759.4 million, up 25.3% year-over-year, and $213.6 million in the fourth quarter. This growth was driven by a balanced contribution from volume and price mix. Benefits from our May price increase and ongoing shift to the Organic portfolio were partially offset by increased promotional activity to drive consumer trial. Gross profit rose to $285.7 million, or 37.6% of net revenue. The modest margin contraction from 37.9% last year was primarily due to higher labor and overhead costs as we scaled our operations. SG&A expenses were $159.4 million, or 21% of net revenue. We demonstrated significant operating leverage here, reducing SG&A as a percentage of sales by over 110 basis points, but still increasing marketing investment by $10.4 million. This discipline, alongside improved shipping efficiencies, which helped offset higher line haul rates, helped to deliver our record profit. Adjusted EBITDA surpassed $100 million for the first time in our history, reaching $114 million for the full year and $29.2 million for the fourth quarter. Net income was $66.3 million, or $1.44 per diluted share. CapEx for the year was $82 million, which aligns with the outlook we shared at our December Investor Day. We ended 2025 with a strong balance sheet. Our cash equivalent, and marketable securities on December 28, 2025, stood at $113.4 million, a decrease of $46.9 million from the end of 2024, reflecting the investments we are making to expand our production capacity. We have no debt outstanding. Finally, before discussing our outlook, I want to highlight that we have successfully remediated our previously disclosed material weakness in our internal controls. We're glad to have this important work behind us as we move into the next fiscal year. Just to remind everybody, the material weakness had not resulted in any restatement of our financials. Looking ahead to fiscal year 2026, we're introducing a new net revenue guidance range of $900 million-$920 million, representing more than 20% growth, mainly volume-driven at the midpoint of the range. The revenue growth has us on track towards our 2030 targets. While this is a more measured start than our December outlook, we are building a rock-solid foundation in 2026 with stable retail inventory, rather than chasing short-term targets that could compromise the quality of our 21% long-term CAGR. It also is acknowledgment of the current macro environment and recent volatile scanner results we've observed so far in January and February. Even though we have already gained healthy volume share year to date, as Russell had mentioned earlier, volume growth so far is lagging our initial expectations. After the previously discussed several weeks of slow shipments following our ERP implementation last year during the lead-up to the peak holiday period, we are still recapturing shelf space. At the same time, we're having fruitful conversations with our retail partners about expanding our shelf space over the course of the year. Retailers are excited about our improved supply this year and the role that we continue to play in the egg set. In addition, the two severe winter storms over the last four weeks make retailer orders additionally challenging to calibrate against what we would consider normal demand. We believe all these fluctuations are more reflective of short-term market disruptions, and we see continued healthy consumer demand, which is supported by our consumer survey data. We continue to prioritize profitable velocity over simply chasing raw volume growth. Consequently, we are setting Adjusted EBITDA guidance to be within a range of $105 million-$115 million this year. This reflects a margin of 12.0% at the midpoint, which is within the range of our previous 2027 long-term targets and puts us strongly on the path to the new 2030 long-term targets we committed to at the Investor Day. With the improved supply dynamics also talked about, I want to spend a moment on how to think about cadence for the year. In the first half of 2026, we anticipate some short-term noise in order patterns from recent winter weather events and as our retail partners normalize their inventory levels following our move out of supply allocation. We view this as healthy stabilization that allows us to enter the back half of the year with a clean runway and high-quality shelf presence. With that, the first quarter of 2026 will likely reflect a more measured growth rate than previously assumed as the retail inventory channel normalizes. From there, we expect growth to reflect the lapping of last year's quarterly performance. As we operate in a more stable supply environment, we anticipate normal promotional spending this year with a heavier concentration in the middle quarters. We're intentionally utilizing the tailwinds from our May 2025 price increase to fund a return to a trial and conversion program. This is not defensive price matching. It is an offensive investment in household acquisition and reinvestment of price into penetration. Our margins reflect the strategic promotional activity, our continued investment in ECS staffing, and the impact of the volatile Q1 ordering environment. We expect CapEx of $140 million-$150 million in 2026. Our CapEx guidance reflects continued investment in long-term capacity and infrastructure, including progress at Vital Crossroads. We remain focused on disciplined capital deployment and free cash flow generation, consistent with our long-term owner-oriented mindset. While we expect to fund our 2026 projects primarily through existing cash and operating cash flow, we're evaluating the most efficient capital structures for our expansion, including the potential use of our revolver or other ways to optimize our balance sheet. To be clear on our capital allocation priorities, our primary commitment is the completion of Seymour. That leaves us with untapped debt capacity. And our board of directors authorized a $100 million 2-year share repurchase program. We're in the unique position of being able to fund our largest ever growth cycle, while simultaneously having the balance sheet flexibility to defend our intrinsic value if market dislocations occur. Looking forward, we anticipate a meaningful pivot to strong, sustainable, free cash flow generation in 2027 and beyond, once the heavy spending on VXR is completed. As mentioned before, we expect each CapEx dollar dedicated to our neutrality to generate more than $5 of annual revenue capacity. As these assets come online, we expect to see significant cash flow accretion as we leverage the infrastructure we are building today. Our long-term guidance remains unchanged. We're targeting $2 billion of net revenue by 2030, with a gross margin of 35% or better, and an EBITDA margin of 15%-17%. This is an exciting time at Vital Farms, Inc. We have highly loyal consumers. We continue to expand and deepen our relationships within our network of more than 600 small farms, we remain focused on driving greater retail penetration and raising brand awareness to deliver our eggs and butter to more and more households with each passing year. Once again, we thank you for the time and interest in Vital Farms, Inc. today, for the confidence that you have placed in us with your investment. Let me turn it back over to Russell. Russell Diez-Canseco: Thank you, Thilo. Before we open the call for questions, I want to circle back to where I started, with gratitude: to Matt for his vision and his leadership, to our crew who executed through our ERP transition and brought our third line at ECS online seamlessly, to our farmers who expanded their capacity alongside us while maintaining the highest standards of animal welfare, and to our retail partners who continue to believe in our mission. Thank you. This foundation of trust and collaboration is what gives us such confidence in the growth potential in the years ahead. The capacity investments we're making are about ensuring that when a consumer reaches for Vital Farms, Inc., we're there every time at full strength. The organization's values are as strong as ever, and our crew continues to raise the standards for the Vital Farms, Inc. brand and to drive the organization forward. Looking ahead, we believe we remain structurally advantaged with significant long-term opportunity. Our brand still represents only a fraction of the total egg market. We enter 2026 with unconstrained supply, giving us substantial runway for growth. Consumer awareness of animal welfare and food sourcing continues to increase. Vital Farms, Inc. has established itself as the trusted leader in this space. Once again, we thank you for your time and your interest in Vital Farms, Inc. With that, we're happy to take your questions. Operator: At this time, I'd like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. Please limit your comments to one question and one follow-up. Your first question comes from the line of Scott Marks with Jefferies. Your line is open. Scott Marks: Hey, good morning, all. Thanks so much for taking our questions. Morning. You know, obviously, just wanted to ask a little bit about expectations for the year relative to what was laid out at Investor Day. Obviously, been some volatility with winter storms and some of the order patterns you mentioned. Maybe what was it that gave you the, I guess, confidence to change, to change the outlook now, as opposed to maybe waiting a little bit, you know, until later in the year to see if some of this volatility normalizes? Russell Diez-Canseco: Thanks, Scott. Hey, it's Russell. I'll kick us off, and then we'll ask Thilo to chime in as well. You know, we've run this place with a lot of intentionality for a lot of years, and this isn't the first time that we've seen some kind of volatility in the broader category, and we've seen some noise from things like winter storms. We always wanna make sure that we're setting ourselves up for success and that we're setting ourselves up to meet and exceed the expectations we line out for ourselves and that you all have for us. I think this guide gives us the right amount of room and flexibility to, again, build on all the strengths we're coming into the year with, while still acknowledging that there's a broader macro environment in which we're operating, and there's a lot of short-term noise in sort of what all the various players are doing to make sure that they can sell all the eggs they're producing. Thilo Wrede: Yeah, Scott, I would just add to that. You know, we called it out in the prepared remarks. It is a bit of a volatile environment right now. We are clearly gaining share in the category, so we are outperforming the category. It is a bit of a noisy environment right now, and I think we've built a track record of beating our initial expectations that we set at the beginning of the year, every year since the IPO. We figured rather than going into the year and, you know, clawing our way to the initial outlook that we gave, we just set expectations very clearly at the beginning, and then we keep our pattern of beating expectations that we set at the beginning of the year. Scott Marks: Appreciate the color on that. Next one for me, just relating to the ERP. You know, I think as we think back to, you know, maybe ahead of ERP implementation, you had spoken about shifting some inventory in, you know, ahead of the cutover. And then I think Thilo made a comment in the prepared remarks today about regaining some shelf space that may have been lost during that period. So wondering if you can just kinda help us spur away, you know, what was the actual impact from ERP? You know, whether it was, you know, shelf space or changes in order patterns or anything that can just help us get clarity around what the actual impact was and how we should think about, you know, magnitude of recovery from that? Russell Diez-Canseco: You know, we've talked quite a bit about that short-term dislocation. As we've come back into a very, I think, advantageous supply situation with rebuilt inventories, the conversations with retailers have been, frankly, terrific. We've shifted from, "Hey, can you ship what you're talking about?" to, "How can we grow together?" I'm looking forward to reset cycles this year based on those early conversations, we're really talking about making those long-term plans to grow together. We are clearly a category leader. We're seen as playing that role for our retail partners, I think we're well on our way to kind of recovering and putting that process past us. Scott Marks: Thanks very much. I'll pass it on. Russell Diez-Canseco: Thanks, Scott. Operator: Your next question comes from the line of Brian Holland with D.A. Davidson. Your line is open. Brian Patrick Holland: Thanks. Good morning. I wanted to... about, you know, some of the comments that you made around, the challenging sort of macro environment and squaring that with, you know, your core consumer, and some of the behavioral metrics that you described. Just squaring how or why you would be incrementally concerned over the next, whatever, several months or year about the impact of the macro on your core consumer, just given everything that you've said, and I think historically, sort of, you know, been less concerned about competitive dynamics in the category, widening price gaps, et cetera. How do we square those two things? Russell Diez-Canseco: Sure. First of all, we're not seeing evidence of a big change in sort of the confidence or, sort of economic reality of our core consumers. That's not a primary source of concern or a change in how we view that. That said, I think we've all seen and continue to see a category that's going through some disruption as we've got plenty of players out there with maybe more eggs than they planned to produce or collectively planned to produce, and we're seeing some, you know, more intense action on the shelf as other players, I think, look to move their inventory. While that doesn't mean that we're losing consumers or volume to them, it's certainly competing for attention with retailers and with consumers for ad space and for mind share. In that situation, it doesn't prompt us to change our value equation. It doesn't prompt us to rethink our value proposition to consumers. It might mean that we have to be a little more patient as we continue to add consumers over the course of the year and convert all that great awareness to trial, because we don't want to, you know, frankly, waste a bunch of our time and money trying to compete in the short run for the attention of consumers who are looking for a hot price in an ad. We just have to, I think, set ourselves up to continue to take a really measured approach to adding high-quality households and high-quality new placements and let some of this other noise kind of play itself out. Brian Patrick Holland: Okay, kind of playing this forward, outlook this year, I think is, you know, low 20% range on the top line. That's an algorithm that you would have to hold from here through 2030, I think, to hit that $2 billion of revenue, if I'm not mistaken. The thought coming into this year was, you know, you'd be lapping capacity constraints in 1Q and a little less so in 2Q. 4Q, you would then have the ERP disruption. You know, quote-unquote, "easier compares." Now, we've obviously introduced some volatility, as you referenced, whether that's weather, or some other things in the category. How do we think about the level of confidence, the sources of confidence behind maintaining this level of growth, which really demands almost no deceleration from here through 2030? What are the sources of confidence behind that? Maybe if I could just ask, what flexibility would you have from a capacity standpoint and a build-out standpoint as it pertains to Seymour if the sales decelerated at a greater rate than what you're projecting? Russell Diez-Canseco: Sure. Again, the consumer value proposition is still very much there. You know, I start with all the work we did last year to make sure that we took supply chain constraint off the table in terms of being a constraint to our continued growth. We've got the capacity at ECS. We've got our third line, which gives us the opportunity to lean in both to capacity expansion and efficiency because we can allocate space to the various lines more efficiently. We're gaining volume share, and that's the thing I would point to as a continued proof point that what we're doing is working. As we head into 2026, the setup is we've got a massive gain in awareness, which is the leading indicator for us of trial and ultimately to loyalty. That's there in spades. We're very judiciously, as always, using our marketing and commercial resources to convert that awareness into trial. The capacity's there, the brand awareness is there, the consumer sentiment is there, and it's a question of, I think, operating and executing at a very high level. The thing is, we're built for this environment. We are, I believe we've got the best team in the business, the best brand in the business, the best supply chain in the business, and this is a year in which our ability to execute at a high level will continue to drive our growth. Thilo Wrede: Brian, I would add to that unlike in the previous last few years, growth this year is gonna be pretty much all volume growth. Our volume growth is actually at this guidance, is actually accelerating year-over-year. I think that's an important piece to keep in mind. It's a bit more expensive growth, because obviously, volume comes with costs associated with it, but it's high-quality growth, right? Brian Patrick Holland: Great. Thanks. I'll leave it there. Operator: Your next question comes from the line of Matthew Smith with Stifel. Your line is open. Matthew Smith: Hi, good morning. Thanks for taking the question. A couple of questions on the EBITDA guidance range. The midpoint suggests a couple hundred basis points of margin contraction. Within that, can you talk about gross margin versus middle of the P&L investment? I believe the expectation for revenue growth, Thilo, you just mentioned, is mostly volume-led. Would you expect price mix to be positive for the year with carry-in pricing funding the promotion normalization, or is that part of the margin bridge as well? Thilo Wrede: Price mix, I think we said in the prepared remarks that we are reinvesting the price increase from last year back into promotions. I want to be very clear with that. The promotional comparison, if you look at it year-over-year, even compared to the last few years, we're actually planning for a different environment this time around than the last few years. In the last years, when you had the Avian Influenza or we had our own supply constraints, there were times when every year last year, well, in the last few years, there were times every year where promoting didn't make a whole lot of sense for us because we didn't have the supply to support it. This year, it's a different story. This is not a step up in promotions to drive volume. It's really a return to where we should have been promoting for quite a while and weren't able to. As Russell said before, this is to convert the awareness that we have generated into trial and ultimately into household penetration, and to keep demonstrating to our retail partners that we're a good partner for them. We want to, we want to move the category forward. Obviously, this has an impact on gross margin. We still expect operating expense leverage, and we expect positive price mix benefits, certainly not to the same degree as in previous years. We keep benefiting from a shift towards Organic, it's not going to be the same price mix benefit that we had in prior years. Matthew Smith: Thank you. Just as a follow-up for clarity around first quarter expectations, there was some shipment noise, both in the fourth quarter, then you mentioned, you know, 2 factors in the first quarter. Within the first quarter, do you have a view on if you expect your shipments to be in line with consumption? Just some clarity there would be helpful. Thank you. I'll pass it on. Thilo Wrede: I mean, in general, our shipments are roughly in line with consumption. There's always timing differences. There are differences in how scanner data extrapolates, you know, contribution from different channels. We've always talked about that we have some unmeasured channels, food service and the wholesale channel in particular. There's always going to be a bit of a difference between our reported shipments and what you see in consumption, but directionally, they usually align. Operator: Your next question comes from the line of Robert Moskow with TD Cowen. Your line is open. Jacob Henry: Hey there. This is Jacob Henry on for Rob. Thanks for the question. I think just one from me. I know you've talked before about building confidence with retailers before getting more shelf space. On that topic, I'm just curious if you can provide an update on where you feel you stand in that process. Like, do you have any visibility into any green shoots with retailers, where maybe there are plans in place to get that third or fourth SKU, whatever it may be, or is this kind of more of a long, long-term conversation? Russell Diez-Canseco: Without being specific, the conversations are going very well. We are operating at a very high level. Our service levels have really recovered from a year of being much more constrained in supply, as we've talked about over the last four quarters. Those are very fruitful retail conversations. We're a powerful tool for a retail category manager to grow their category profitably, with our partnership. These are welcome conversations, they're fruitful ones, and we're excited to share more as those resets occur. Operator: Your next question comes from the line of Megan Clapp with Morgan Stanley. Your line is open. Megan Clapp: Hi, good morning. Thanks. Maybe just to follow up on the first quarter on Matt's question, just to put a finer point on it. You know, I think you said relatively in line shipments for scanner. I think, Thilo, in your prepared remarks, you also said just a more measured start versus what you had previously expected. I think you had previously expected the first half would be stronger than the second half, just given some of the easier laps. Is it still fair to assume in one Q, you would expect, and two Q for that matter, you would expect the revenue growth to be above the full year guide? Thilo Wrede: I think at this point, Q1, we're a bit more cautious on it than we were before. I think when we look at Q2 and Q3, there's no change in how we think about them compared to how we thought about them, let's say, 2 months ago. Q4, you know, expectations for Q4 compared to what we had at the Investor Day back in December, haven't changed. Q4, I think we have, if you want, relatively easy lapping because Q4, post the ERP implementation, with a few weeks of slow shipping, there's just a easy lapping that we can catch up on. With that, maybe the second half might be a bit stronger than the first half. That's how I would look at it right now. Megan Clapp: Okay. I guess just to follow up there, just trying to square, you know, why the first quarter is changing and the rest of the year is not, if shipments will be in line with scanner, because that would imply that demand is running a bit weaker than you had expected. As we get into the remainder of the year, are you embedding some sort of recovery in the shelf, in the shelf space? Are you assuming kind of that demand doesn't change in the rest of the year, or the promotional environment from others that you're seeing gets better? Just trying to kind of understand what changes as we get out of 1Q, understanding there has been a lot of volatility. Russell Diez-Canseco: Yeah, I think there are two kind of underlying or maybe spring-loaded drivers of that consistency and that growth. One is the continued benefit of the consistency with which we're showing up on shelf, regaining that space, some of which is a conversation with a retailer, and some of which is simply operational at the store level, when you've now got the product back in your back door, and you need to cut it back in or make sure you're giving it the space that was allocated to it. Then having consumers see us back on the shelf. That's an important part of the process. You know, the other part is that we're having very fruitful conversations with retailers about continuing to expand distribution, expand placements as part of our ongoing long-term strategy for growing with the best retailers in the country. A lot of that has to do with kind of the consistent strategy of expanding those top 4 SKUs and demonstrating the performance that they deliver for our retail partners. We've got the product, and that makes for a great conversation, and that will unfold over the course of the year. Megan Clapp: Okay, thank you. Operator: Your next question comes from the line of Jon Andersen with William Blair. Your line is open. Jon Andersen: Hey, good morning, thanks for the questions. You mentioned in the prepared comments, awareness, brand awareness levels are up, I think, 800 basis points year-over-year, which is a significant leap. I'm wondering if you could talk a little bit about the, you know, what you see as, you know, the key drivers there and that kind of acceleration in brand awareness over the past 12 months. I guess peeling the onion a little bit, you know, there's kind of really positive awareness and maybe more kind of awareness that might come into being for more mixed reasons. I'm just wondering if you could talk a little bit about the equity of the brand and what you're seeing and maybe some of the panel data in terms of loyalty and repeat at present, and if there are any levers or adjustments you think you need to make from a value proposition standpoint. Then if I could just follow up with a second one. You've announced a $100 million share repurchase. I'm not sure if you've had an authorization, share repurchase authorization historically, but maybe you could talk about, you know, the reason for that now and how you might think about utilizing that, you know, going forward, the criteria. Thank you. Russell Diez-Canseco: Thanks, Jon. I'll take the part about kind of brand equity and household awareness. I'll let Thilo talk about share repurchase. You know, a key message here and a key reason why I think we saw such substantial increase in household awareness is that we're pretty consistent in our approach to how we go to market. At a time when, you know, we were constrained on supply last year, we didn't go dark with our marketing because we think about marketing as a way to drive brand awareness over the long term, 12, 18, 24 months out, converting that to demand. This business is designed and built around the consistency of expanding households, expanding trial, and expanding production, and expanding farm count, all very much in line. The net result of which is that we didn't go dark when we might have simply because we didn't, you know, we didn't have as many eggs as we would have liked to sell or as much production capacity as we might have liked. That also means that we're not, you know, hitting the gas or wasting money, on unproductive marketing efforts in a year when we've got more upside. We're very consistent in our marketing approach. It's really a, you know, a playbook and an approach that we've owned over a lot of years to convert that awareness into trial and repeat, and that's what we're setting about to do this year. Thilo Wrede: Yeah, Jon, on the share repurchases, we did not have a share repurchase authorization before. This is the first buyback program that the board has authorized since the IPO. I would say there are two factors at play here. One is, look, we're listening to shareholders. We're listening to the buy side, the sell side. We've gotten a lot of questions over the last 12 months in particular about how we use our balance sheet. We have this unused debt capacity. As you know, we are debt-free. We have over $100 million in cash. We are investing this cash in building out the Seymour facility this year. That still leaves a lot of balance sheet potential there that we've been holding as dry powder. Now is a good time for us to think about what can we do with that dry powder to create shareholder value. That is where this decision to create the share repurchase authorization, so that when there is an opportunity in the market to buy back our stock at attractive levels, that we're able to step into that. That is really the reason behind it. It's I would look at it as a sign that we're maturing as a company a bit. We're doing the things that we think are the right things for creating long-term shareholder value. It's a sign that, you know, we're listening to the shareholder conversations that we're having. Jon Andersen: Makes sense. Thank you, guys. Operator: Your next question comes from the line of Benjamin Theurer with BMO Capital Markets. Your line is open. Benjamin Theurer: Hi. Thank you for taking the questions. My first is related to the aggressive recovery in industry egg supplies. That seems to have coincided with, you know, more volatile order patterns. I'm just wondering, in the past, you have stated that you look forward to supplies recovering because that will give Vital the opportunity to outperform. I was just hoping if you could revisit this view and maybe reaffirm your conviction that this will play out if we were to assume the industry supplies will continue to recover. Russell Diez-Canseco: Yeah. Our conviction is as strong as ever. The number one thing I'd point to is our continued gain in volume share. That's a great indicator of the health of our brand, the health of our supply chain, and the health of our consumer trust and consumer relationship. We are absolutely built for a time and a place where the brand is what's gonna matter. We're being differentiated is what's gonna matter. Where a strong, trusted relationship with a retailer is what's gonna matter. This is a year in which it's not simply enough to have eggs in a market that will take any egg available. That's where I think our strengths will really come to bear. Benjamin Theurer: Great. Thank you. My final question is a bit of a segue. Can you just talk about Amazon's move to add roughly 100 additional Whole Foods units and what the incremental opportunity might be for Vital? Thanks. Russell Diez-Canseco: You know, I think, first of all, it's certainly exciting for us. Amazon and Whole Foods continue to be our largest retail partner, and I don't think it's a coincidence that some of our largest customers are also the ones that are seeing the most success and the most opportunity to expand their footprints. We really look forward to continuing that partnership and to grow with them. There's an exciting opportunity to continue to grow with partners like Amazon and Whole Foods. That is all welcome, almost spring-loaded upside, for sure. Operator: Your next question comes from the line of Eric Des Lauriers with Craig-Hallum. Your line is open. Eric Des Lauriers: Great. Thanks for taking my question. Just wondering if you could provide a bit more color on what you're seeing year to date in the pasture-raised category overall. In terms of the second half stabilization or perhaps even, I guess, Q2 stabilization, do you see category stabilization as sort of a prerequisite to your order pattern stabilizing, or is there something in the conversations you're having with retailers that gives you confidence in that second half stabilization, sort of irrespective of what the category does? Thank you. Russell Diez-Canseco: Thanks for that. The pasture-raised, and I would say more broadly, the outdoor access category continues to be the strength in egg category overall. Gaining volume share, gaining dollar share, against the backdrop of more muted volume growth for eggs overall. Historically, egg consumption has grown about with population growth in volumes....That's been very different for specialty and branded products and offerings like ours, where we've driven a large share of overall category growth and much outsized relative to our share of the category. We're seeing that strength continue. It's pretty exciting because the ability of private label brands to trade up their purchasers of more commodity-type eggs into outdoor access private label is also quite strong. What we're seeing, that, is evidence of a much broader conversation, and a much broader set of households in this country that are becoming conscious of their food choices and are willing to vote with their dollars for something better. It's, it's a real validation of what we've been doing for a lot of years, and we see it as a sign of strength. Operator: Your next question comes from the line of Ben Klieve with Stifel. Your line is open. Ben Klieve: All right, thanks for taking my questions. I'm wondering if you guys can help us understand the magnitude of the promotional increase that you have talked about on the call today. We certainly knew there was gonna be an increase this year, I'm wondering, first of all, if the magnitude of the promotional increase this year is kind of in line with what you had thought it would be historically. Then also the degree to which the EBITDA margin compression this year is kind of in line with what your thoughts would have been around the Investor Day a couple months ago. Russell Diez-Canseco: Sure. Thanks, Ben. I wouldn't characterize our promotional cadence or stance as stronger or deeper than we had originally projected. This is very much a return to a more normal cadence of promotional spend, and that certainly hasn't changed. What's really different for us versus other players in the category is that we're not creating promotions to drive volume in the short run, which we see as maybe a way to rent volume share, but not actually to substantially move the business forward. We're using promotions to drive trial and begin that process of converting a consumer to our brand, and that continues to be the way we think about it. Our focus is on building this thing for the long haul and hitting that $2 billion goal that we set out for 2030, which we believe is still very much in our future. That hasn't changed. It's very consistent with what we had planned when we spoke to you at Investor Day. I'll let Thilo talk a little bit about the evolution of EBITDA over time. Thilo Wrede: Yeah, Ben, just to, you know, put what Russell just said differently, the way we are thinking about promotional spending this year is it won't be different from how we have spent on promotions in the past in specific quarters. The reason why I put it that way is, as I said before, over the last few years, I don't think there's been a single year where we ran promotions for the full year, because there was always some outside event, AI, our own supply constraints that prevented us from running promotions for the full year. This is gonna be a year where currently we're planning to run promotions for the full year. The level of promotions for the full year will mirror what we've done in individual quarters in the past. Unlike in prior years, where we've only hit it for specific quarters, we'll hit it for the full year. That will have an impact on gross margin and on EBITDA margin, and you see that in the guidance. That impact is not different from how we thought about it at the Investor Day. Ben Klieve: Okay, very good. Thanks for taking my question. I'll get back in queue. Operator: Your next question comes from the line of John Baumgartner with Mizuho Securities. Your line is open. John Baumgartner: Good morning. Thanks for the question. I'd like to ask about the composition of Vital buyers. I think at Investor Day, the buy rate for low incomes was up something like 50% over the past 3 years, and that speaks to the breadth of appeal. I'm curious the extent that might now be a drag in 2026, given financial stress in that cohort. As you modeled this year, are there any specific pressure points you're building in, either from low incomes or others? Maybe not so much from trade down, but more just limiting the rate of building additional households this year. Russell Diez-Canseco: Yeah, I, look, I think that the process of adding additional households doesn't change. The kinds of households that we do attract, may change with the benefit of hindsight, and we'll see how that plays out. We're seeing no, you know, we've got no reason to think that our ability to attract and retain new households this year is off algorithm or outside of our normal, sort of, growth formula. John Baumgartner: Okay. I apologize if I missed it, but if we think about, you know, aside from the promotion this year, how do we think about other marketing reinvestment, whether above the line, in the middle of the P&L? Any thoughts on marketing, either magnitude or shifts in delivery versus history? Russell Diez-Canseco: You know, I think in terms of magnitude, as we've consistently discussed, you know, we have a very measured approach to marketing. We continue to explore opportunities to find profitable ways to invest, as we expand into the 5%-6% range on marketing. I don't know that that changes a lot this year. I think that we've always used some portion of that budget on sort of baseline or more tried and true vehicles, and then we've always got some where we're experimenting and trying new things. Historically, we focused almost entirely on top of the funnel and adding households, growing that awareness. We now have the benefit of a lot of awareness built, so we'll have the opportunity to try some things perhaps we haven't focused on as much in the past around driving repeat and loyalty. We'll look forward to seeing how those play out as the year goes on. John Baumgartner: Great. Thanks, Russell. Thilo Wrede: That we're, you know, plan is still to keep increasing our marketing spend in total dollars. We continue to build the brand, to Russell's point. We've built a lot of brand awareness. There's a lot more that we want to do there. This is also a year where we want to convert a lot of that brand awareness into trial, right? If marketing can play a role there, I think that's that's a push that we need to go after as well. Russell Diez-Canseco: Perfect. Thank you. Operator: Your next question comes from the line of Gerald Pascarelli with Needham & Company. Your line is open. Gerald Pascarelli: Great. Thanks very much for taking the question. I just have one. I wanted to go back to one of Brian's previous questions, just on the confidence of the long-term targets, but specifically related to EBITDA. At a 12% expected margin this year, you're 400 basis points below the mid-point of your 2030 targets. I understand that pricing is muted right now, right? Like, given some of the compression we're seeing with private label. If the market remains volatile and gets increasingly competitive, you know, you essentially need to invest more behind your brand, I'm curious if you could just lay out the levers you have to drive operating leverage to achieve those targets. If you could bridge that for us. I guess specifically, does your target embed a certain range of rate increases in a more normalized environment? Any color there would be great. Thank you. Thilo Wrede: Gerald, let me start with the 12% implied margin. When we gave targets, long-term targets back in 2023 at our Investor Day back then, we had said that by 2027, we want to get to a 12%-14% EBITDA margin range. We were above that last year. We'll be in that range this year. Yes, it's a decline year-over-year in margin, but I would say we're still very much on track to where we thought we were a few years ago. We continue to be on track to the target that we set 2 months ago for 2030. I think as we continue to grow, we continue to get benefits of scale, especially in operating expenses. We talked about, and you can see that in our numbers, how our SG&A scaled, last year, will continue to scale this year. This year, because the growth is so much more volume-driven than prior years, there is an impact on gross margin, which flows through. Overall, in operating expenses, every year we're getting scale benefits, just from the growth that we are generating on the top line and not having to grow operating expenses to the same degree. Gerald Pascarelli: Perfect. Thanks. Operator: There are no further questions at this time. I turn the call back over to Brian Shipman. Brian S. Shipman: Great. Thank you for your time and interest today. Please feel free to contact us with any follow-up questions. Have a great day. Operator: This concludes today's conference call. You may now disconnect.
Operator: Greetings, and welcome to the Perimeter Solutions, S.A. Q4 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone requires operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Seth Barker, Head of Investor Relations. You may begin. Seth Barker: Thank you, operator. Good morning, everyone, and thank you for joining Perimeter Solutions, S.A.'s fourth quarter 2025 earnings call. Speaking on today's call are Haitham Khouri, Chief Executive Officer, and Kyle Sable, Chief Financial Officer. We want to remind anyone who may be listening to a replay of this call that all statements made are as of today, February 26, 2026, and these statements have not been, nor will they be updated subsequent to today's call. Today's call may contain forward-looking statements. These statements made today are based on management's current expectations, assumptions, and beliefs about our business and the environment in which we operate, and our actual results may materially differ from those expressed or implied on today's call. Please review our SEC filings, particularly any risk factors included in our filings, for a more complete discussion of factors that could impact our results, expectations, or assumptions. The company would also like to advise you that during the call, we will be referring to non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, LTM adjusted EBITDA, adjusted EPS, and free cash flow. The reconciliation of and other information regarding these items can be found in our earnings, press release and presentation, both of which will be available on our website. With that, I will turn the call over to Haitham Khouri, Chief Executive Officer. Haitham Khouri: Thank you, Seth. Good morning, everyone. I will start on slide 3 with key observations from 2025. First, structural earnings power expansion. Our 2025 results demonstrate the sustainability of our higher earnings power. This higher baseline profitability, first exhibited in 2024, is the direct result of the rigorous application of our operational value drivers. Second, financial consistency. In addition to increasing our structural earnings power, we have transitioned Perimeter Solutions, S.A. towards greater financial consistency. The primary driver is the change in our retardant contract structures, which have shifted from purely volume-based models towards more fixed and recurring structures, significantly reducing our sensitivity to fire season volatility. This greater consistency is further reinforced by the growth and diversification of our international retardant business, growth in our non-retardant businesses, including our suppressants business, and the impact of our operational value drivers on our results, regardless of external conditions. The third observation, M&A. 2025 established our M&A strategy through the acquisitions of IMS and NMT, both of which we feel excellent about and both of which we will discuss later in our remarks. Turning to a summary of our strategy on slide four. Our goal is to fulfill our critical mission by providing our customers with high-quality products and exceptional service, while delivering our investors private equity-like returns with the liquidity of a public market. Our strategy is built on three key operational pillars. First, we own exceptional businesses. These are niche market leaders that play critical roles in solving complex customer problems, qualities that support high returns on invested capital and durable earnings growth. Second, we rigorously apply our three operational value drivers to the businesses we own. We drive profitable new business, achieve continual productivity improvements, and provide increasing value to customers, which we share in through value-based pricing. Third, we operate our businesses in a highly decentralized manner, granting our business unit managers full operating autonomy, paired with the accountability to deliver results with a tightly aligned incentive structure for our managers to think and act like owners. We believe that our operational pillars will optimize our durable, long-term free cash flow. We seek to maximize long-term per share equity value through a clear focus on the allocation of our capital, as well as the management of our capital structure. Turning to our Fire Safety operations on slide five. Fire Safety delivered a strong year, primarily driven by execution on our value drivers. We continue to win profitable new business, including entry into preventative rail-applied retardant in Europe, expansion of our air-based services in multiple geographies, and ongoing penetration of our fluorine-free products globally. We continue to realize productivity benefits, including from our new retardant manufacturing facility outside of Sacramento, and we continually increase our customer value proposition across products. For example, in suppressants with our new multipurpose AD foams and in our Canadian retardant operations with enhanced air-based service and manufacturing capabilities, share in this value creation through value-based pricing. Combined, these actions increase structural earnings power, compound each year, while strengthening our customer relationships. Fire safety's 2025 results also showcased our transition towards greater financial consistency, with higher year-over-year revenue and adjusted EBITDA, despite a notably less severe North American fire season. We renewed substantially all of our key retardant contracts over the past 2 years, culminating in our cornerstone 5-year U.S. Forest Service contract. Our contracts have shifted away from purely volume-based models towards more fixed and recurring structures, notably reducing our sensitivity to fire season variability and increasing our business's consistency. As I mentioned prior, this increased consistency is further reinforced by the growth and diversification of our international retardant business, growth in our non-retardant businesses, including our suppressants business, and the impact of our operational value drivers on our results, regardless of external conditions. Looking forward, we will continue to rigorously apply our value drivers and paired with the secular growth drivers aiding our fire safety business, excuse me, including higher acres burned, an expanding air tanker fleet, continued growth in the wildland-urban interface, new retardant application methods, and the global transition to fluorine-free foams, our fire safety segment is well positioned for profitable growth. Switching to specialty products and starting with our P2S5 business, PDI. The operational and safety challenges at the Sauget Lenore facility, operated by Flexsys, continued in the fourth quarter and into 2026. As we have previously discussed, since the Flexsys assets were acquired by One Rock Capital in 2021, the plant has experienced a sustained deterioration in operating reliability and safety performance relative to its historical levels and relative to our owned and operated P2S5 facility. During the fourth quarter, unplanned downtime once again materially reduced production volumes and negatively impacted PDI's financial results. More troubling are the recurring safety incidents at and around the plant. These are not isolated events. They reflect a pattern of declining operational performance and safety standards under One Rock's ownership. We believe these incidents are likely to continue and may worsen so long as the current ownership and operating structure remain in place. In our view, One Rock, as the controlling owner of Flexsys, is directly responsible for the strategic, financial, and operational decisions that have led to the plant's instability and troubling safety incidents. We believe the decisions made under One Rock's ownership have prioritized short-term financial considerations over sustained investment in operational integrity, reliability, and safety. The result is a facility that is underperforming operationally, financially, and most importantly, from a safety standpoint. This is unacceptable. We believe that the fastest and most responsible path to stabilization is a change in operational control. As previously disclosed, in 2025, we exercised our contractual right to assume operation of the Sauget plant. Flexsys and its owner, One Rock, have refused to permit that transition. Instead, they have engaged in bad faith negotiations and obstructive conduct designed to delay and frustrate the transfer of control. We believe these actions have unnecessarily prolonged operational instability and increased risk exposure for employees, customers, and the surrounding Sauget community. Every month of delay has consequences. We are pursuing every available legal remedy in our ongoing litigation and will continue to press our claims aggressively. We intend to hold Flexsys and One Rock fully accountable for their actions and for the operational and financial damage that has resulted from their refusal to honor the contractual framework governing this facility. In parallel, we are evaluating strategic and legal alternatives available to ensure continuity of supply for our customers, safeguard the employees and communities affected by the plant's performance, and return to prior levels of financial performance with respect to the operations at Sauget. We will not agree to economically unreasonable proposals or coercive tactics. Our commitment to regaining operational control of this facility is absolute. Until this matter is resolved, investors should expect continued variability in our P2S5 business. Our track record of owning and operating P2S5 facilities safely and reliably ourselves is well established. If we assume control of Sauget or a separate P2S5 plant, if that is where this path ends. We are confident we can restore operational discipline, materially improve safety standards, and return the facility to stable, efficient production. Our priority here is clear: serve our customers, protect workers, support the Sauget community, and preserve the long-term value of this asset. Ownership carries responsibility. We intend to ensure that responsibility is met. Moving to IMS. IMS focuses on acquiring proprietary product lines and driving profitable growth through operational value driver implementation. In 2025, we executed on this strategy successfully, closing several product line acquisitions, including one in the fourth quarter. We expect IMS to deploy tens of millions of dollars annually into high IRR product line acquisitions and for IMS to represent an increasingly material portion of our company over time. Finally, I will turn to MMT, which closed in January. MMT manufactures engineered machinery and proprietary aftermarket components used in the production of complex, minimally invasive medical devices, specifically catheters and guidewires. MMT aligns with our operational value driver strategy based on four specific attributes. First, MMT is a leader in a highly-specialized industry where quality and reliability are paramount to customer success. Second, MMT has a track record of high single-digit to low double-digit organic growth, driven by increasing adoption of minimally invasive procedures, increasing device complexity, and a trend towards engineered machinery outsourcing. Third, MMT has a large and growing installed base, which must be serviced with aftermarket consumables, spare parts, and services, which are almost always proprietary. Fourth, MMT has a successful track record of tuck-in M&A, which we expect to continue. MMT recorded approximately $140 million in revenue and $50 million in adjusted EBITDA in 2025. One month into our ownership, initial value driver implementation validates our investment thesis. We expect MMT's 2026 results to reflect meaningful year-over-year growth as these operational changes take effect. With that, I will turn the call over to Kyle for a more detailed review of our financials, earnings power, and capital allocation in the quarter. Kyle Sable: Thanks, Haitham. Our results in 2025 reflect our higher structural earnings power and highlight our improved financial stability. I will start on slide eight, where all growth rates are shown versus the prior year comparable period. Consolidated revenue reached $652.9 million in 2025, up 16%, while adjusted EBITDA increased 18% to $331.7 million. In the fourth quarter, revenue grew 19% to $102.8 million and adjusted EBITDA rose 9% to $36 million. For the full year, this performance translated to a GAAP loss per share of $1.37, compared to a GAAP loss per share of $0.04 in the prior year. Adjusted EPS for 2025 was $1.34, up from $1.11 last year, representing an increase of approximately 21%. In the fourth quarter, GAAP loss per share was $0.94, compared to GAAP EPS of $0.90 in the prior year quarter. Adjusted EPS for both Q4 2025 and Q4 2024 was $0.13. The 2025 results were achieved with minimal contribution from M&A. With the acquisitions of IMS product lines and MMT, we are introducing a new value creation lever that complements and expands our operational value driver strategy that we expect will contribute growth in structural earnings power in 2026 and beyond. Moving into the segment results and starting with Fire Safety. Full year revenue totaled $488.9 million, up 12%, while fourth quarter revenue was $58.1 million, down 4% year-over-year. Adjusted EBITDA was $290.5 million for the full year, representing 21% growth, with the quarter producing $25.5 million, a 6% decline. The full year improvement reflects disciplined execution of our strategy across a broad range of products and geographies. Within suppressants, we expanded sales by winning new sales volume at attractive pricing, resulting in $21.8 million of incremental revenue versus last year. We made strong progress converting airports to our latest products, while also building replacement volume across our installed base. In retardants, performance was particularly strong outside North America, with sales increasing $18.3 million year-over-year. Larger markets such as Australia and France delivered robust results, while we also made progress in penetrating earlier stage markets like Italy, where we focused on new applications, including retardant deployments along rail lines. In North America, retardant revenue increased $12.6 million for the full year, despite a pronounced decline in acres burned in the U.S. This performance underscores both the strength of our operational value drivers model and the reduced sensitivity of our revenue base to fire activity. We saw strong execution across all three operational value drivers, driving new businesses and expanded our footprint to additional bases and faster loading equipment, improving productivity across sourcing and logistics, and applying value-based pricing where we have earned the right to sharing the value created for our customers. We continue to decouple our revenue from fire activity through contract renewals, intentionally shifting sales towards fixed fees and away from more variable revenue. The net effect has been a revenue base that is less sensitive to volume swings, improving overall revenue quality and supporting our strong 2025 performance. Finally, on North America retardants, more aggressive initial attack strategies by our customers, combined with a more even distribution of acres burned across time and geography, largely offset the impact of fewer acres burned in the U.S. Taken together, Fire Safety's adjusted EBITDA growth highlights the structural earnings power created by our operational value drivers and improved contract mix. Turning to Specialty Products. Revenue for the year reached $163.9 million, an increase of 31%, driven by $41.2 million from acquisitions, partially offset by a $2 million decline in our base business, which was impacted by ongoing unplanned downtime at the Flexsys-operated Sauget plant. Fourth quarter revenue was $44.6 million, up 75% year-over-year, driven by an increase of $13.4 million from recent acquisitions and $5.7 million from the base business. Full year adjusted EBITDA for specialty products rose to $41.2 million, an increase of 3%, while the fourth quarter increased to $10.4 million, up 85%. As Haitham discussed, results in our P2S5 businesses continued to be affected by instability at the Sauget. As previously announced, we acquired Medical Manufacturing Technologies LLC in January 2026 for $685 million in cash, funded with a combination of cash on hand and the issuance of $550 million of new senior secured notes. MMT is a high-quality platform with attractive returns and strong aftermarket dynamics. As with the other businesses we own, we see meaningful opportunity to compound value through the application of our operational value drivers. If Perimeter Solutions, S.A. had acquired all of MMT on January 1st, 2025, we estimate that it would have contributed approximately $140 million of revenue and $50 million of adjusted EBITDA. We expect MMT to deliver solid year-over-year growth in 2026 as we implement our operational value driver strategy. Taken together across the portfolio, our results demonstrate continued structural earnings expansion, improved predictability, and the ability to deploy capital into value-creating M&A. We have updated our long-term assumptions, as shown on slide 9, to reflect the business's evolution, the largest impacts being driven by our acquisition of MMT. We now expect annual interest expense to be approximately $75 million, driven by the MMT acquisition funding, which closed in January. Interest expense in Q4 totaled $9.7 million. Tax-deductible depreciation, amortization, and other items are expected to be in the range of $60 million-$75 million in Q4 2025. Capital expenditures are expected to run $30 million-$40 million per year, focused on projects with attractive returns. Capital expenditures for the quarter were $7 million. Our working capital needs fluctuate seasonally, and Q4's working capital levels are consistent with our expectations, given the level of activity in Q4. We expect that the annual change in working capital will be approximately 10%-15% of revenue growth going forward, reflecting the increasing size of our non-wildfire-driven businesses in the portfolio. We paid cash for income tax of $20.6 million in Q4 as compared to $43.1 million in the previous year. Going forward, we expect our cash tax rate to be 20% or better. Turning from operations to capital allocation on slide 10. We deployed approximately $149 million of capital in 2025 across organic reinvestment, bolt-on M&A, and opportunistic repurchases, each evaluated against our minimum targeted equity returns of 15% and underwritten to drive durable value creation. Our objective remains maximizing long-term per-share equity value through disciplined capital allocation and thoughtful capital structure management. We invested $26.5 million in capital expenditures in 2025, focused on initiatives that support our customers' missions while driving profitable new business and productivity. Our project pipeline continues to build, and we view this reinvestment as a core enabler of our long-term organic adjusted EBITDA growth trajectory. In Q4, we invested $7 million, primarily supporting growth and productivity initiatives. We were active in M&A in 2025, having invested $82 million to acquire product lines for our IMS business, as well as select fire safety assets from Compass. In Q4, we acquired our largest set of products yet in a $40 million expansion, validating our belief that we can deploy tens of millions of dollars annually at attractive IRRs for many years to come. Looking forward, our M&A capacity exceeds what we expect to allocate to tuck-in product line acquisitions, and we are actively evaluating additional platform opportunities. The acquisition of MMT is a good example of the type of high-quality businesses we want to own, where we can apply our operational value drivers to drive meaningful post-acquisition improvement, consistent with what you have seen across our portfolio over the past several years. As we have noted before, our acquisition strategy is not industry specific, it is strategy specific. What ties our businesses together is quality and the applicability of our operational value drivers, not whether a company is chemical, fire, or safety by label. As a result, we expect future deals may come from new subverticals within the broader industrials landscape. Let me reiterate what we look for. First, we prefer businesses that provide a small but essential component within a larger solution to a critical, complex customer problem, often serving a niche need where alternatives do not deliver comparable value. That positioning supports our value creation model. We need profitable new business, driving productivity through operational efficiencies, and earning the right to implement value-based pricing. In addition to those core elements, we favor businesses with recurring revenue, secular growth, strong free cash flow generation, and high returns on capital, and the potential for add-on M&A. Finally, earlier this year, we repurchased $40.4 million of shares when we viewed the risk-adjusted return as compelling and believed repurchases would not preclude value creating M&A. As the year progressed, our focus shifted towards pursuing M&A targets. MMT is an important step on that journey, but it is not the endpoint, and we believe we have capacity and momentum to continue building the portfolio via M&A. Turning to slide 11. The second half of our capital strategy is to maintain moderate leverage to enhance equity returns. Our debt profile remains attractive, with no financial maintenance covenants and substantial liquidity. In addition to our existing $675 million of 5% fixed rate notes due in the fourth quarter of 2029, we also closed $550 million of 6.25% notes due 2034 in January of this year. At quarter end, we were levered 1.1 times net debt to adjusted EBITDA, with LTM adjusted EBITDA of $331.7 million. We ended the year with $325.9 million of cash and equivalents and an undrawn $200 million revolver. On a pro forma basis, accounting for the closing of MMT and the $550 million notes offering, we were levered 3 times net debt to adjusted EBITDA. This leverage level remains below our ideal 4 times leverage level, leaving ample financial capacity to pursue value-creating M&A. Lastly, on our capital structure, we amended and extended our revolving credit facility in Q4, doubling the size of the facility to $200 million and keeping in place its attractive spring covenant structure, where we face no maintenance covenants if the facility is less than 40% utilized. The facility has never been used and remains fully available as of today, providing flexibility that supports our goal of deploying capital into value-creating activities while reserving adequate liquidity to support the organic needs of our business. 2025, we advanced our dual objectives of serving our customers and driving shareholder value. We introduced new products that expanded our solution offerings. We grew adjusted EBITDA through the implementation of our value drivers across each of our businesses. We improved the quality and predictability of our earnings stream through contracting and by diversifying the sources of adjusted EBITDA growth. We leveraged our financial strength and value-focused underwriting to deploy over $830 million of capital, including MMT. Looking ahead, our priorities are straightforward: execute on our commitment to our customers, integrate MMT, and apply our operational value drivers with urgency and rigor across the entire portfolio of businesses, and remain disciplined allocators of capital. We are proud of what our teams delivered in 2025. We believe we entered 2026 with stronger and more consistent earnings power, strong acquisition momentum, and a clear set of priorities for the future. With that, I will hand the call back to the operator for Q&A. Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question today comes from Joshua Spector of UBS. Please proceed with your question. Joshua Spector: Hi, good morning, guys. I guess first I have to say, congrats on a strong 2025, and I certainly hope that P2S5 ownership issue is resolved sometime in the near term. For my first question, I just wanted to ask on, you guys made pretty clear points around fixed versus variable mix, shifting within fire retardants. Obviously, you have the new contracts layering in next year. When you look at earnings in 2025 for the fire retardants business and into 2026, how much of that would you say is now under a fixed type contract or a service type payment versus variable, and how does that compare versus history? Kyle Sable: Hey, Josh. Good morning. Thank you for the questions. We have not broken out and are reluctant to break out a specific fixed variable split. That said, to answer the latter part of your question, the consistency and predictability of the cash flows that come out of each of these contracts, and therefore our retardant fire safety business in general, are dramatically more predictable than they were historically, and should actually get incrementally more predictable in 26 versus 25, given that the most recent U.S. Forest Service contract that has kicked in this year, adds yet more consistency to those contractual cash flows. Joshua Spector: Okay, let me try maybe one other way, I guess, around this, in that if we look at this last year, I mean, you talked about a more spread out fire season, health deployment, I think also, a more aggressive U.S. stance around firefighting also led to more deployments. I guess when you think about the amount of gallons that you sold, clearly we cannot really look at acres burned as the indicator anymore for what would be that variable piece of it. What would you suggest that we look at? Should we be looking at fire starts, or is there something else in terms of how we are deploying fire retardants that we should be looking at to think about what is going to drive volumes up or down year-over-year? Haitham Khouri: It is a good question because it is a very hard one to answer. There is no great metric to accomplish what I believe you are trying to accomplish. The best one of an admittedly not amazing set of metrics, I still think remains U.S. and North American acres burned. I would just say the % change in our revenue and EBITDA relative to the % change in acres burned is just dramatically muted relative to what it was in our historical financials. Joshua Spector: Okay. If maybe I pivot for one last one, the $40 million cash deployment into the electrooptical assets and product lines, how should we think about the accretion of those types of deployment? Is it higher or lower than your typical M&A? I do not know if you can give us an EBITDA multiple or how that kind of flows through so we could think about what that is going to mean as you do more of those. Haitham Khouri: We think the product line acquisitions at IMS are higher returning than our typical M&A. The beauty of the IMS business model is you can buy very attractive, fully proprietary, spec'd in, very aftermarket-heavy, if not exclusively aftermarket product lines at much more attractive multiples and therefore higher IRRs than you can buy whole companies. We did make a whole company acquisition as our platform when we bought the actual IMS business in late 2024. All the acquisitions in 2025, and we expect the majority going forward, are going to be these very attractive product line acquisitions. Josh, if we say that we will not deploy capital without seeing at least a 15% long-term IRR into any form of capital allocation, and we are telling you the IRRs on these product lines are nicely higher than other forms of capital allocation, I think you can safely infer that the IRRs are very attractive on these acquisitions. Joshua Spector: Thanks. That is helpful. I will turn it over and congrats again. Haitham Khouri: Thank you. Operator: The next question is from Dan Jester of Morgan Stanley Investment Management. Please proceed with your question. Dan Jester: Hey, thanks. Good morning. Haitham Khouri: Morning. Dan Jester: I just wanted to ask, as you are thinking through, I guess, kind of the five broad product lines that you have now, and you are thinking through growth drivers and growth prospects across those different business lines, is there any, would it be possible to kind of stack rank, where you see the most long-term growth or where you see relatively more or less long-term growth across the different product lines? Anything you could share to kind of help us think through, I guess the relative growth prospects would be great. Thanks. Haitham Khouri: Hey, Dan. Good morning. We hesitate to stack rank them. That said, we think there is very solid organic growth throughout our portfolio. Suppressants, individually and combined, have very nice long-term secular volumetric growth profiles. The other businesses in our portfolio generally have been acquired by us thereafter, and we are only going to acquire businesses with attractive long-term secular growth profiles. It is one of our target economic criteria. Therefore, our specialty product segment also has, we think excellent, long-term organic growth potential with strong secular drivers. Therefore, we think this is a solid long-term growth portfolio. Dan Jester: Yeah, that is helpful. Fair enough. Maybe on MMT, and you guys have kind of already commented on some of this, but now I guess that the deal is closed and you have been able to look even deeper under the hood for a month or two now. As you think about the opportunities to implement your operational value drivers, where do you see bigger opportunities between the OEM and the aftermarket? Where do you see kind of nearer-term opportunities? I guess maybe could you talk through which of the operational value drivers could potentially be most applicable to MMT? Thank you. Haitham Khouri: As far as the value drivers, we feel very good, Dan, that all three of them are going to be solidly applicable. This is a high innovation, high growth space in which MMT is a clear leader, which is a beautiful setup for aggressive internal reinvestment into R&D, innovation, engineering, which should drive meaningful long-term profitable new business. That lever is particularly attractive here, given the end market. The ability to add value to customers and share in that value through value-based pricing is also clearly present, given the absolute mission criticality and relatively low cost of MMT's products. We just always find productivity opportunities at businesses. All three are applicable. I just emphasize the profitable new business opportunity here. As far as OEM versus aftermarket, value-based pricing opportunities tend to more often exist in the aftermarket. Our experience tells us the aftermarket tends to be underpriced more so than OEM. That said, if you innovate and add value, you earn the right to value. Dan Jester: One last quick one. We are almost 2 months into the quarter. You guys obviously have a lot more visibility and a lot more resources to kind of track wildfire activity globally. Wondering if you could just kind of walk through any trends we are seeing in international retardant quarter to date in the Southern Hemisphere, where they are kind of in the peak wildfire season. Thank you. Kyle Sable: Sure, Dan. As always, we would not comment on intra-quarter, intra-quarter results. We are going to have to wait till March to see what those look like. That said, you are generally right, that there has been a long-term secular trend across the globe of having more fires and more intense firefighting activity. When we look at those secular growth drivers over long term, we continue to think that they are intact, both in the North American markets and in the international markets. Additionally to that, when we think about the international markets, there is a real opportunity for us to expand usage, and we have seen a lot of great applications of that across both geography and application method, where we have tried to branch out from just aerial deployment to broader ways to apply, including rail apply in some of our new emerging geographies. Dan Jester: Great. All really helpful. Thanks a lot. I will turn it back. Operator: As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Please stand by for closing comments. Haitham Khouri: Thank you, operator, for the good work. Thank you, Josh and Dan, for the great questions. Thank you to our investors for your support. We will speak again in a couple months. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.