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Operator: Good morning, and thank you for joining Becle's Fourth Quarter Unaudited Financial Results call. During this call, you may hear certain forward-looking statements. These statements may relate to our future prospects, developments and business strategies and may be identified by our use of terms and phrases such as anticipate, believe, could, estimate, expect, intend and similar terms and phrases and may include references to assumptions. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those in forward-looking statements. Before we begin, we would like to remind you that the figures discussed on this call were prepared in accordance with International Financial Reporting Standards, or IFRS, and published in the Mexican Stock Exchange. The information for the fourth quarter of 2025 is preliminary and is provided with the understanding that once financial statements are available, updated information will be shared in the appropriate electronic formats. [Operator Instructions]. Now I will pass the call on to Becle's CEO, Mr. Juan Domingo Beckmann. Juan Legorreta: Good morning, everyone, and thank you for joining us today as we discuss Becle's Fourth Quarter and Full Year 2025 results. 2025 was a year of navigating challenges across our key markets. However, we defended or expanded our leadership position in Tequila across our main regions, protected pricing better than the industry average by leveraging our strong brand equity, and delivered solid financial performance supported by the decisive actions and disciplined execution. We are proactively assessing market conditions to reinforce our strong foundation for sustained long term growth. At the same time, it is important to put the current environment into perspective. Spirits continue to take share from other alcoholic beverages, underscoring the structural strength of the segment. Within that context, Tequila continues to outperform other full-strength spirits categories with solid price mix growth, and premiumization trends remaining intact, favoring our core strengths. Cautious of shifting consumption trends, we believe the current slowdown is mostly cyclical, driven by macroeconomic headwinds and inflationary pressures. Historically, the spirits industry has experienced periods of expansion and contraction, and we expect demand to recover as consumers' confidence improves. In the U.S. and Canada, we are implementing changes to better capture both portfolio and route-to-market opportunities. We recently announced a full realignment of our U.S. distribution network with the transition beginning on February 1. In Mexico, we continue to advance premiumization, strengthening our on-premise capabilities and sharpen marketing through innovation. Even in a cautious demand environment, we remain confident in our ability to defend our market leadership and compete effectively. In Rest of the World, we are focusing on our core brands and strengthening our premium portfolio. We continue to execute with discipline as we navigate evolving consumer behavior and macro conditions, and we continue to capture a relevant position in strategic growth markets in the region. 2025 evidenced an unusually complex global spirits sector likely to remain in 2026. However, we've consistently shown that we can drive competitive advantage through uncertain times by focusing on what matters most, the strength of our brands, the discipline of our strategy and the quality of our people. We are entering 2026 with a healthy mix of realism and optimism as we anticipate that the years ahead will continue to require bold adjustments to position us better for 2027 and beyond. Thank you. And with that, I'll turn it over to Mauricio to discuss our U.S. and Canada results. Mauricio Herrera: Thank you, Juan, and good morning, everyone. Our fourth quarter performance in the U.S. and Canada region reflected a combination of continued industry-wide headwinds and delivered commercial actions taken to position the business for long-term success. As full-strength spirits demand decelerated through the back of the half year, we remain focused on the areas firmly within our control: execution, disciplined pricing, targeting investment behind our brands and a thoughtful management of shipments and inventory across the system. U.S. spirits trends deteriorated sequentially in 2025, with a slowdown, particularly evident to our year-end. Against this backdrop, tequila continues to stand out as the most resilient full-strength spirits category, delivering volume growth of 2.3% in the year, according to Nielsen data. While growth in the broader spirits market has skewed towards prepared cocktails, tequila has transitioned from a high-growth phase to a more normalized stabilization phase. It remains an attractive category and continues to outperform other spirits. Within this environment, our own portfolio continues to outperform the market, excluding prepared cocktails. [indiscernible] data for the 3-month period ending in November shows that Proximo continued to outperform the broader industry in value growth within full-strength spirits and more specifically within the tequila category. Nielsen data for 2025 further supports this performance showing that Proximo's volume declined 2.5%, outperforming the overall market by approximately 100 basis points. Pricing discipline remains a defining feature of our approach in the quarter. As demand moderated, competitive behavior intensified with the overall tequila category experiencing a price decline of approximately 9.2%. By contract, our average pricing decline was limited to 5.1%. While this discipline can create short-term volume pressure, we believe avoiding aggressive discounting is critical to protecting long-term brand equity and margin integrity, particularly in an environment where several competitors have leaned more heavily into aggressive pricing actions. At the same time, we continue to invest behind our brands. Our advertising and marketing investment as a percentage of sales remains above peer levels. Reflecting our conviction and sustained brand support is essentially in peers of category softness. These investments are tightly focused on expanding points of distribution, opening new on-premise accounts and improving in-store performance. From a category standpoint, strengthening our leadership position in Tequila continues to be our top priority. At the same time, RTDs represent one of the most attractive growth opportunities where we are currently underrepresented. During the second half of 2025, we increased our focus and investment behind RTDs and delivered solid double-digit growth. To further accelerate performance in this segment, we are building a stronger innovation pipeline and evaluating route-to-market alternatives that enhance coverage and execution. Turning to shipments and inventory. We took deliberate actions during the quarter to ensure healthy alignment across the system. In response to the broader slowdown in consumer takeaway, we adopted a measured approach to shipments with the aim of avoiding further inventory build. This resulted in shipments declining more sharply than depletions on a quarterly basis. Our inventory levels vary significantly across distributors with our highest level sitting in what were RNDC markets. We will actively be working on balancing inventory levels as part of the transition into our new distributors during the first half of 2026. In the quarter, retailers continue to reduce inventory to historically low levels. And in turn, distributors also actively work to reduce their own inventory levels. In addition, we had already anticipated our planned exit from RNDC, well ahead of the formal announcement, and we made a conscious decision to moderate shipments into RNDC during the end of the year to facilitate a smoother transition and mitigate disruption at the time of execution. As previously announced, we have recently completed a comprehensive review of our route-to-market strategy across the United States. As a result of this evaluation and while we value the relationships and history we've built with RNDC, we decided to transition our distribution away from them in all current markets, except for Georgia and New Mexico, effective February 1, 2026. This decision reflects our performance first mindset, aligning our brand with partners who demonstrate strong execution, focus on accountability. And while these transitions may introduce some near-term volatility, particularly in the first half of the year, we believe this change will significantly strengthen our commercial foundation and position us to compete more effectively in an increasingly dynamic U.S. marketplace. Looking beyond current market cycles, the long-term fundamentals of the U.S. spirits market remains strong. We believe tequila is positioned to be the industry's main growth category over the next decade, a trend that directly benefits Proximo as a category leader. We continue to see durable consumer appetite for premiumization and authenticity, reinforcing our confidence in the long-term trajectory of the business. I will now turn the call over to Olga Limon to discuss Mexico and the Latin America results. Olga Montano: Thank you, Mauricio, and good morning, everyone. Moving to our performance in Mexico. I would like to frame our 2025 results within the context of the broader industry landscape. While the spirits industry remained in contraction, it is important to highlight that the pace of decline moderated meaningfully compared to 2024. Within this context, Tequila continues to prove its status as a clear outperformer. Our brands not only held their ground, but consistently gained market share across both Tequila category and Total Spirits. According to [ NisCom ] data through November, our performance in Mexico clearly outpaced the industry. While Total Spirits volume declined 1.4%, our portfolio delivered a 2.5% volume increase. In value terms, we grew 2.0% against an industry decline of 1.6%. The Tequila category specifically remains a growth engine. While the category grew 2.5% in volume, we outperformed with 3.9% growth. These results underscore the continued strength of our portfolio and our undisputed leadership position in our home market. When evaluating our performance, it is essential to look beyond the quarterly volatility and focus on a full year trajectory. Additionally, moving forward to provide a more accurate reflection of our underlying business, it is important to look at results, excluding the b:oost brand. On a full year basis and excluding our b:oost brand, Mexico delivered a 1% volume growth, broadly in line with depletions. We which decreased 1% versus the previous year. While our fourth quarter volumes decreased by 10.3%, depletions declined 7.1%. These figures follow an exceptionally strong third quarter where depletions grew by 5.2%. We evaluated -- when evaluated on a second half basis, shipments increased 0.5%, while depletions decreased by 2.5%. It is also important to note that we are lapping a particularly strong fourth quarter seen in 2024, which created a high bar for comparison. In response to softer depletions observed late this year, we intentionally moderated shipments to ensure that we close 2025 with healthy inventory levels across the system. This disciplined approach to inventory management provides us with a clean runway as we enter 2026. Throughout the year, our shipments and depletions remain well aligned confirming that the underlying consumer demand for our brands remains robust. Looking at the global picture, Mexico continues to be one of the best performing regions for Tequila and for the company as a whole. Overall, our leadership in Tequila and our ability to gain share in a challenging market gives us great confidence. By prioritizing disciplined execution and protecting the long-term health of our equity, we believe we are well positioned to continue building value in Mexico and across the region. I will now turn the call over to Shane Hoyne, Managing Director of EMEA and APAC region. Shane Hoyne: Thank you, Olga, and good morning, everyone. In the fourth quarter of '25, the region sustained its positive momentum with both shipments and depletions growing. APAC continued to deliver double-digit depletions growth while EMEA recorded positive depletions compared to the same period last year. For the full year '25 shipments in the EMEA and APAC region were flat versus '24, while depletions increased by 1.5%, reflecting continued underlying demand despite a challenging trade environment. Inventory remained a key factor throughout the year. Particularly in the first half, elevated inventory levels across the broader industry impacted shipment patterns as distributors and retailers focused on reducing working capital and operating with lower inventory levels. These dynamics were evident across multiple markets and remained a consistent theme over the course of the year. Pricing conditions in '25 remained highly competitive with aggressive discounting across money markets as peers sought to defend volumes. While pricing pressure remains elevated, discounting activity appears to have largely stabilized. From a category standpoint, Tequila is gaining momentum across the region, driven by growing consumer interest and a deeper understanding of the category. And increasingly, tequila expanding into new occasions positioning itself as a more sophisticated option for cocktails and early evening parties. We also see tequila switch consumers from traditional brand spirits such as cognac and whiskey with many entering directly into the aged tequila segment, reinforcing the category's long-term premiumization opportunity. Overall, while the region is operating in a complex and uncertain environment, Becle continues to perform resiliently and underlying category dynamics remain constructive. Looking ahead to '26, we remain optimistic with Tequila offering significant long-term volume and value growth potential across multiple markets. Our portfolio strength and established route-to-market strategy position us well to capitalize on these trends. I'll now hand you over to Rodrigo, who will take you through the financial results. Rodrigo de la Maza Serrato: Thank you, and good morning, everyone. I will now walk you through the financial results for the fourth quarter and full year 2025. In the fourth quarter, the company reported consolidated net sales of MXN 11.1 billion, reflecting a 14% decline year-over-year and an 8.4% decline on an FX adjusted basis. This and other reported results were negatively impacted by the appreciation of the Mexican peso in Q4. Operationally, results were impacted by deliberate inventory rebalancing actions in the U.S., mainly due to a softer demand environment into the year-end. Our price/mix increased 0.4%, reflecting our ability to sustain pricing even under extreme competitive environment, leveraging our brand equity and portfolio. However, this was more than offset by 5.7 points of unfavorable currency translation. This quarter marks our eighth consecutive quarter of year-over-year gross margin expansion, a significant achievement given an unfavorable regional mix and the appreciation of the Mexican peso, which represented a significant drag on margins. We continue to benefit from lower agave-related input costs and ongoing cost efficiencies from strategic sourcing and manufacturing operations, resulting in a gross margin of 55.2%, an expansion of 110 basis points versus a year ago. While net sales remained under pressure, we maintained investment behind our brands to protect long-term equity and ensure we are well positioned for a better time. We have done so while remaining highly selective and focused on investment efficiency. Turning to operating expenses. Distribution costs declined 6.5% and SG&A expenses decreased 6.2%, reflecting continued discipline on overheads and strong cost control across the organization. Other income increased by MXN 438 million during the quarter, primarily driven by anticipated contractual settlements related to U.S. distribution agreements. As a result, EBITDA for the fourth quarter was flat year-on-year, with EBITDA margin expanding 340 basis points to 24.4%. Net income for the quarter was MXN 1.4 billion, benefiting from MXN 148 million year-over-year foreign exchange gain as the appreciation of the Mexican peso positively impacted our net U.S. dollar debt exposure. This benefit was partially offset by a retroactive full year effective tax rate increase to 27%, which was recorded in the fourth quarter. As of December 31, 2025, cash and cash equivalents totaled MXN 10.8 billion, while total debt was MXN 18.9 billion, a decrease of MXN 7.4 billion compared to the prior year. In 2025, the company generated MXN 8.1 billion in net cash from operating activities driven primarily by the setup in underlying operating profit and continued working capital and CapEx discipline. Our balance sheet remains very strong with adjusted net leverage of 0.9x, slightly below our targeted range of 1 to 1.5x. We remain confident in our long-term free cash flow generation and have ample balance sheet capacity to execute our capital allocation agenda, which prioritizes reinvesting in the business and returning capital to shareholders. Before moving to guidance, I want to take a step back and highlight the progress we have made over the past several years. Using 2019 as a pre-Covid reference point, net revenues are up 45%, driven by 10% volume growth and a 35% increase in average price per case. This reflects the significant premiumization of our portfolio with average price per case growing at a 5% CAGR since 2019. Importantly, our Rest of the World business has doubled in size since 2019 in net sales value, reinforcing that tequila remains a high-growth category with substantial long-term potential, particularly in markets where penetration remains low. Gross profit has grown at a 7.5% CAGR since 2019 and gross margin is now 320 basis points above 2019 levels. At the same time, marketing expenses as a percentage of net sales have declined by 90 basis points versus 2019 while consolidated net sales value has grown at a 6.4% CAGR, reflecting a more efficient and disciplined investment approach. Importantly, these improvements were not driven by foreign exchange movements as the average effects in 2019 was broadly the same as in 2025. From a working capital standpoint, we have improved our cash conversion cycle. Total inventory days are back to 2019 levels, even though we have significantly premiumized our portfolio since then. Payables have improved from 36 days to 56 days and receivables have shortened from 110 days to 100 days as of year-end 2025. CapEx has also declined both in absolute terms and as a percentage of net sales from 6.9% to 3.4%. We have continued to deliver consistent dividends and free cash flow has strengthened, improving from a 4% free cash flow yield in 2019 to 14% at the end of '25. When you look at our performance over the past 6 years, the company has evolved into a more mature and resilient business, one that has strengthened its ability to premiumize consistently, invest efficiently, improve cash conversion and capital return to shareholders through a sustainable and disciplined financial model. Finally, moving on to 2026 guidance. This will be a transition year for our business as we execute the previously announced realignment of our U.S. distribution network. Changes of this scale take time to fully stabilize and may create temporary disruptions, shipment volatility, inventory realignment and added complexity. Our priority is to start this new partnerships the right way by maintaining clear communication, aligning closely on execution standards and managing inventories carefully to avoid unnecessary stock build. At the same time, we expect the broader operating environment in 2026 to remain challenging with limited visibility given macroeconomic volatility and continued consumer uncertainty. Considering these factors, we expect net sales value to decline in the low single-digit range in 2026 on a constant currency basis. Additionally, we expect A&P as a percentage of NSV to be in the range of 19% to 21% and our capital expenditures to be in the range of $90 million to $110 million. We are not providing specific guidance on operating income, particularly as we will be lapping nonrecurring gains recorded in 2025 related to the sale of b:oost and distributor contractual settlements. While we recognize the near-term complexity, we believe the actions we are taking are necessary to build a more effective commercial platform positioning us for improved performance in 2027 and beyond. I will now turn the call back to the operator for questions-and-answer session. Operator: [Operator Instructions] Our first question comes from the line of Lucas Mussi. Lucas Mussi: I have one on margin performance this quarter. Gross margin was up about 100 bps year-over-year. And as you mentioned, Rodrigo, on your remarks, it was still heavily impacted by FX dynamics in the quarter, geographical mix. So I wanted to see if you could share more details on the drivers behind the quarter. That would be my first question. So how much could we think about as it pertains to agave contributing to your margin on a year-over-year basis? How much came from headwinds related to FX? So any color on that front would be welcomed. And my second question still on margin is how to think about 2026 from your main drivers, mainly raw material related. As we think about agave, how you're thinking about the spot price in the market today? Has it been stable throughout the year? Do you see -- do you still see more downside to market prices? So any color on how you're thinking about your raw materials into 2026 would also be very helpful? Rodrigo de la Maza Serrato: Thank you, Lucas, for the question. From a gross margin perspective, which was your focus, what I can share is that foreign exchange was a drag in terms of our ability to expand further by 170 basis points. So pretty much all components of gross margin equation worked favorably, the most important driver being the agave input costs which continue to be favorable to us, plus the productivity initiatives that I did mention on my script. So other than FX, the gross margin expansion could have been 280 basis points in the quarter. And looking forward, at this point in time, we don't expect major changes to this environment. Obviously, we rely on volatility from FX, which could continue to play a role. Operator: Our next question comes from the line of Nadine Sarwat. Nadine Sarwat: This is Nadine Sarwat from Bernstein. Two questions from me. The first on your guidance, you talked about this being a transition year to set up your business for the future. So related to that, can you unpack that transition that you referred to? How much of that is a weak macro versus deliberate strategy. And then if we look beyond 2026, are you expecting to return to solid growth? And then just one additional shorter-term question. In the Nielsen data over the last couple of weeks, we've been seeing an underlying improvement in the U.S. spirits market. Are you seeing that in your business? And if so, what do you think is behind that? Rodrigo de la Maza Serrato: So thank you, Nadine. On your first question, I think the way we see it in -- why we mentioned this is a transition year is mostly related to the realignment of distributor network in the U.S. It's mostly that where we expect conditions in terms of macro, et cetera, to remain challenging. Having said that, I'll pass it along to Mauricio to take you through the transition and expectations for 2026 and beyond. Mauricio Herrera: Nadine, it's Mauricio. From a transition perspective, I would make reference to the distributor changes we're making. So I do believe those changes, even though I have stated during the script will cause short-term disruption, they are definitely setting us for sustainable growth in the future. We are aligning with what we believe are the best distributors in each of the states. So as we go through that transition in H1, I think as we go into the second half of the year and especially into 2027, that should actually be reflected in improved performance in a sustainable way for the future. Regarding your question on share, we do see it. What I would say is if you could see the second semester of the year in the U.S., tequila started to decelerate even further. One of the things we have remained extremely disciplined is in managing prices. If you look at our average price has decreased a lot less than our competitors, and we continue to invest behind our brands ahead of industry benchmarks. So I think the combination of 3 things: very disciplined focus on execution, driving investment behind our brands and being able to balance pricing through promotional activity to stay competitive while still not being as aggressive to undermine long-term rapid equity, I think those things combined is what is actually driving our improvement in share in the short term. Nadine Sarwat: Got it. And just to clarify on that medium term looking past 2026, potential to return to growth. I appreciate everything you said on the distributor transitions and distractions this year. But just thinking longer term, you had that slide up that showed your historical growth. So trying to get a sense of what investors can expect after the transition? Mauricio Herrera: So look, from the U.S. perspective, leaving aside the transition in terms of distributors, I think what we will continue to do in 2026 and beyond, we'll continue to invest behind the brands to be perfectly positioned to capture growth as the category returns into growth. We do expect that in 2026, the category will continue to see compression. And what we want to do is make sure we're setting all the fundamentals in place in terms of route-to-market, brand health investment and being very strategic on pricing to actually start capturing, I would say, or disproportionate growth of the industry as it returns into growth, which I do believe we should start to expect happening in 2027. Operator: Our next question comes from the line of Rodrigo Alcantara. Rodrigo Alcantara: I guess the first one would be -- it's Rodrigo Alcantara at UBS. The first one would be follow-up on the RNDC transition in the U.S. We get this transition period, right? But any rough estimate or any number you can give us in terms of how much volume we're talking about that could be impacted just as a way of trying to quantify this transition period. That would be my first question. And the other one, if we could reflect a bit on the performance in Mexico, right? I mean you gave the figures there from a sell-in perspective, right? Just judging looking at performance of beer in Mexico in 4Q, it was not that -- the contraction was not as high, right, as what we saw today. So I mean, if you can help me here, understand, reconciliate the difference in the magnitude of contraction of other categories like beer versus the one we saw at spirits in Mexico? Those will be my 2 questions. Mauricio Herrera: Thank you, Rodrigo. On the first question you had in terms of the RNDC transition, I think providing a number would be very difficult to really estimate what the impact from a number perspective would be. All these transitions really have a very short-term impact, that we will manage. We have a PMO -- very disciplined PMO office in place to try to minimize the disruption. We did see, as I mentioned in my script, that because of this lower depletion, especially in RNDC markets at the end of the year, that's where our highest level of inventories were. So we will be working as part of this transition to rebalance that as we go to the new distributors. So that, combined with a very volatile environment in an industry that continues to actually experiment contraction, it's very difficult to understand or predict what volume impact will be from the transition, industry contraction and competitive dynamics. So for now, what we're focused on is executing this transition in the most disciplined way, making sure that -- and actually, we feel very confident that we have the right distributor in each market. In each of the new distributors, we are, if not the biggest, one of the biggest suppliers there that will guarantee more focus and attention behind our portfolio that gives a lot of confidence that once that transition is behind us, we should start to see improved performance. Olga Montano: Rodrigo, this is Olga. From the Mexico part, regarding the 7.1% decline in Mexico depletions this quarter, I would like to reinforce that we are seeing an improvement in consumer trends. In fact, the industry remains -- while the industry remains in contraction, the pace of decline has moderated significantly compared to 2024. And we continue to gain market share within this context. But I would like to talk about 2 factors that bridge the gap between the minus 7% and the reality of our business. There are 2 specific factors that accounted for nearly the entire decline. As we finalize the exit of the b:oost brand, we focused on clearing remaining inventory rather than commercial prioritization. These brands decline alone created a 200 basis point drag on our total Mexico depletions. The second factor is that we are being disciplined in not engaging in value-destroying activities. We intentionally chose not to participate in specific [indiscernible] promotions where we felt discounting in depth compromised our brand equity. This disciplined approach to price integrity impacted our quarterly depletions by almost 500 basis points. So when you strip away these 2 tactical factors, we are effectively flat. So basically, that would be my answer. Rodrigo Alcantara: That's a good point. So just to clarify, excluding the -- I mean, not participating in [indiscernible] had this 500 basis points impact. Did I get that correct? Olga Montano: Yes, that's correct, Rodrigo. Operator: Our next question comes from the line of Antonio Hernandez. Antonio Hernandez: This is Antonio Hernandez from Actinver. Just wanted to get a sense on nonalcoholic beverages and others that are also declining. Are these following similar trends, a competitive environment? How are you seeing there? And maybe you could provide an outlook on those? And if there are any organic or inorganic opportunities there? Mauricio Herrera: Sorry, Antonio, thank you for your question. If I understood correctly, you're talking about nonalcoholic beverages and how they may be... Antonio Hernandez: Exactly. Yes, how they performed this last quarter and throughout the year underperforming as well and your expectations going forward? Bryan Carlson: Antonio, this is Brian. So that's probably related to the b:oost brand. That was a significant impact for us in the quarter, and that's within the nonalcoholic beverages part that we report in the press release. That's a big portion of it. So it's probably related to that. Antonio Hernandez: Okay. And going forward, do you expect more stable, of course, excluding that comp from the b:oost brand? Olga Montano: Yes, we do. Operator: Our next question comes from the line of Froylan Mendez. Fernando Froylan Mendez Solther: Froylan Mendez from JPMorgan. On the gross margin effect during the quarter and going forward, I read the transcript from 1 year ago, and we were speaking about positive effect from agave. 2025, you also have positive effect from agave. So it's 1 year with positive effects from agave. Should we assume that the positive impact from lower agave in 2026 should be much lower than what we have seen in the past 2 years given just the lapping of the benefit now that your inventory probably reflects a much lower average cost of agave. That's my first question. And secondly, can you provide with some directional color on your top line guidance if it is coming from volume drops similar to last year, but with better pricing or the other way around. And within the different regions, which one are the ones growing a little bit better than the other? Which one is dragging? How you created that guidance of low single-digit drop for next year, please? Rodrigo de la Maza Serrato: Thank you, Froylan, for those questions. Regarding your first on gross margin, yes, in fact, we -- since last year, second -- last quarter of last year, we reported benefits on agave. As you see, overall, agave cost continues to benefit result this year. Excluding FX, as I mentioned, it was a significant contributor to positive gross margin expansion. We don't provide specific guidance on this topic. However, what I can say is that a lot of the -- let's say, extra benefit we've had this year and in particularly Q4, is related to simply higher agave sugar content on agave. And we expect that, that trend should continue going forward. So there is no changes necessarily expected there on agave cost from the market. And regarding your second question on top line guidance, the guidance, it's a combination, of course, in terms of volume, price mix, et cetera. So the guidance is general. We would like to stick with that guidance as it is because considering the volatility in the environment, we continuously manage those levers to deliver on the low single-digit decline that we announced. Fernando Froylan Mendez Solther: And sorry, my ignorance, but the low -- the higher agave sugar content, does that mean that, I don't know, the crop that you are having from agave, it contains higher sugar and so it will remain -- like you have an inventory with high efficiency for the next year? So how does that work? I'm sorry if this is a stupid question. Just to understand. Rodrigo de la Maza Serrato: Yes, no problem, Froylan. I think what's important to say is that market conditions on agave should remain similar. Internally, we do expect some further pressure on agave cost. As we balance the equation out, we have some, let's say, extraordinary, let's say, benefits this year that may not be replicable next year. So we should not expect, let's say, improvement over this year necessarily. But this is obviously something we manage on a day-to-day basis, and we expect to deliver the best possible results given that the market conditions will be similar. Operator: Our next question comes from the line of Nicolas Rodrigues. Nicolas Rodrigues: Nicolas Rodrigues from Citibank. My first question is regarding GLP-1. As the adoption continues to expand across key markets such as U.S., have you observed any change in consumption behavior, particularly in tequila. And my second question is about GLP-1 -- not GLP-1, about development in Jalisco. Could you comment how and if these events have any impact on Cuervo operations? Mauricio Herrera: Thank you, Nicolas. It's Mauricio. And I'll take a question on GLP-1. Look, it is very difficult, almost impossible to estimate what an impact on tequila is on GLP-1. We do see evolving consumer trends. I think there's a lot of different things happening in the market at the moment that consumers are looking for different alternatives. We see the emergence of RTD, we see changes in patterns of consumption. So attributing any sort of impact to GLP-1 becomes, I would say, almost impossible. So it's something that we do monitor closely, but at this point, attributing any impact to that is really difficult. Regarding the incidents in Jalisco, as of today, we have not seen any impact in our operations, and we don't foresee that happening. . Operator: [Operator Instructions] We have not received any further questions at this point. So that concludes today's call. You may now disconnect.
Jose Domecq: Good morning, ladies and gentlemen. Welcome to the ACCIONA's 2025 Results Presentation. Let me first introduce my colleagues. On the table to my left: Arantza Ezpeleta, CEO of ACCIONA Energia; to her left Raimundo Fernandez Cuesta, Chief Financial Sustainability Officer at ACCIONA Energia; to my right, Jose Angel Tejero, Chief Operating Officer at ACCIONA; and to his right; Jose Entrecanales, CFSO, Chief Financial and Sustainability Officer of ACCIONA. Before reviewing the performance of each division, let me briefly frame the environment in which we're operating. It is a volatile and fragmented context with shifting trade dynamics and technological anxiety. Governments continue to prioritize energy security, climate adaptation and investment in critical infrastructure, which translate into a stronger, more investable pipeline across our core business. Infrastructure including energy, of course, is no longer only about development. It has become a cornerstone of competitiveness and resilience. Energy security, cost and availability are the main constraints to industrial and technological development, while water and transport are critical in helping societies withstand climate-related disruptions and sustained growth. This is not a cyclical rebound but a structural shift. Rapid urbanization, accelerating electrification, digitalization and the renewal of aging assets are converging into what may be described as a global infrastructure super cycle. Estimates suggest that closing the global infrastructure gap will require several trillion dollars per year through 2040 across our main strategic segments, energy, transport, water and social infrastructure. At the same time, public budgets are constrained while private capital continues to seek long-duration derisked opportunities, supporting infrastructure as a mature and attractive asset class. ACCIONA is one of the few players with an end-to-end platform spanning development, engineering, construction, operation and long-term ownership across multiple infrastructure and energy solutions. This is already translating into strong results and record backlog visibility. 2025 was a good year, where we achieved record EBITDA of EUR 3.2 billion, representing a 31% year-on-year increase and exceeding the EUR 2.7 billion to EUR 3 billion target range set at the beginning of the year. This was driven primarily by a very strong performance of Nordex, together with a solid contribution from our Infrastructure division and the successful execution of our asset rotation strategy. In this regard, ACCIONA Energia to be a structural pillar of the group, generating EBITDA of over EUR 1.5 billion. Our infrastructure aggregated backlog exceeds EUR 120 billion with a particularly strong increase in future concessions, driven by managed lanes in the U.S. and is expected to grow further in the coming months following the pre-award of a 35-year water sanitation concession in Brazil. In energy, fundamentals remain supportive. Electricity demand is rising. Energy security is now a political priority. And what was once a green premium is increasingly becoming a green discount as renewables combine lower LCOE, levelized cost of energy, and less fuel price volatility than fossil generation in many markets. ACCIONA Energia has an approximately 22 gigawatt pipeline, while Nordex reached an all-time high backlog of EUR 16 billion, positioning the group to capture demand selectively and profitably while providing a clear example of how structural demand is translating into tangible results. The same demand for wind continues to be structurally supported by electrification, rising global power consumption, repowering mature markets and the growing strategic imperative for secure, locally sourced and independent energy supply, which more than offset somewhat weaker climate policies, particularly in the U.S. And the numbers back it up. Global wind turbine order intake reached 215 gigawatts in 2025, which is the second highest level ever recorded. In this context, Nordex is today the undisputed leader in Europe with almost 50% market share and the second largest global wind turbine manufacturer outside China. But let's not forget, Chinese competition is harsh and not always playing by the same rule book than European or Western manufacturers. We need to bear that in mind when protecting and promoting our few industrial champions. Those structural tailwinds continue to support our renewables platform, ACCIONA Energia. In 2025, we met our EBITDA target for the year and delivered strong progress in value crystallization with asset rotation transactions totaling EUR 3.2 billion and approximately EUR 900 million in capital gains since we launched our rotation program in 2024. Electricity demand is increasing well above historical averages driven by electrification, data centers, artificial intelligence, electric mobility and the reshoring of industrial activity. Renewables are indeed the cheapest and quickest to deploy source of new power in many markets. Improving storage economics are expanding the bankability of hybrid solutions and supporting more dispatchable renewable energy, reinforcing energy security and long-term investment effectiveness. This momentum is translating into tangible progress across our pipeline. We secured awards in PPA auctions in the Philippines and Italy. We reached financial close on 2 wind projects in South Africa with strong returns and improving battery economics enabled and attractive large-scale storage project in Chile. Beyond storage, we are actively advancing opportunities in repowering and data centers, strengthening the quality and optionality of our development pipeline and as always, prioritizing profitable growth. Despite the combination of extraordinary effects, including weaker-than-expected resource, some COD delays and the accelerated execution of our asset rotation, which resulted in a lower EBITDA contribution from the assets sold during the year, overall, our energy business performance was resilient. And we strengthened our portfolio quality, the visibility of our results while deleveraging and maintaining our credit ratings. Looking ahead, our strategy continues to evolve from capacity buildup to a more selective growth strategy. 1.3 gigawatts of projects already are committed until the end of 2027 while crystallizing value through asset rotation. Turning to Infrastructure. Population growth, as I was saying, urbanization, decarbonization and aging assets in general continue to drive demand across transport, water and social infrastructure. In this environment, the market favors integrated, technically led partners with proven global execution capacity, rigorous risk control and balance sheet strength. ACCIONA Infraestructuras performed strongly in 2025 with the largest project pipeline in its history. Construction maintained solid profitability with margins between 6% and 7% and around 80% of the order book with risk mitigation clauses supporting our healthy outlook. We achieved key milestones across our priority markets. As in North America, we reached the financial close of the SR-400 Managed Lanes project in Atlanta, and we were awarded the Eglinton Crosstown West light rail Extension in Toronto under a collaborative contracted model consistent with our disciplined risk approach. In Australia, we reached financial close of Central West Orana and continued progress in the Western Harbour tunnel, reinforcing the scale and complexity of our platform. In Latin America, we advanced flagship projects such as the Line 6 in the Sao Paulo Subway Grid and expanded our concession portfolio in Peru. Water also made very strong progress with EBITDA growing 50% in the year, driven by the efficient and faster-than-expected execution of key projects such as the Collahuasi and Casablanca desalination plants that's Collahuasi in Chile and Casablanca in Morocco. In Brazil, in sewage and water, we continue to build a strong platform with a pre-award of the Pernambuco concession alongside additional awards that reinforce the country as a strategic market for our Water business. Taken together, these results confirm our ability to translate structural demand into delivered complex projects, supported by disciplined execution and rigorous risk management. Other businesses also delivered solid progress with Bestinver managing EUR 8 billion in assets, supported by positive net inflows and continued progress in the alternative asset portfolio and top-tier investment performance. In Real Estate, we continue to rationalize our capital employed asset classes and geographical focus, while delivering record returns. Silence, while still far from breakeven, increased its unit sales by 41% in 2025 and continue to lead its categories, both in electric scooters and micro cars. Our Services business has reached a record level of activity, delivering all-time highs in both sales and margin contribution. In an environment where skilled labor in the Western economies is becoming increasingly scarce and costly, a trend that I expect will continue to intensify. Our services platform, with a workforce of more than 20,000 employees, provides a significant competitive advantage serving not only our own projects but also acting as a trusted workforce partner to third parties across multiple sectors and regions. In summary, demand for our assets and for our solutions remains very strong. We operate at the heart of structural trends, supported by an integrated platform, record backlog visibility and the capabilities required to convert opportunities into sustained long-term value. With that overview, let me now hand over first to the management team of ACCIONA Energia, followed then by the rest of the group, who will take you through a detailed operational and financial performance of '25. Thank you very much. Arantza, please. Arantza Ezpeleta Puras: Thank you, Jose Manuel. Good morning. 2025 has been a year of good progress across many fronts, particularly on asset rotation, credit rating protection and preparing the company for a new and more balanced period of growth. On the less positive side, output has been much lower than expected due to the ramp-up of new capacity, lower wind resources on markets and some asset rotation deals closing ahead of the schedule. This has translated into EBITDA from operations somewhat below our initial targets. The priorities we set for 2025 were aligned with our strategic adaptation announced in early 2024 around a more flexible and sustainable growth pace, asset rotation as a new business and source of funding and the protection of our investment-grade credit profile. With respect to asset rotation, our target for the period 2024-2025 was to deliver EUR 3 billion of disposals in total. In 2025, the objective was to complete the sale of the hydro assets to Endesa signed at the end of 2024 for around EUR 1 billion and agree and complete another EUR 1.5 billion to EUR 1.7 billion worth of additional transactions. All of this was oriented towards reducing our leverage and stabilizing the credit ratios within investment-grade threshold as well as generating significant P&L gains and show through the value of our asset base. In 2025, we signed incremental transactions of EUR 1.9 billion, two of which will close in 2026. Overall, disposals completed during the year amount to approximately EUR 1.8 billion, including the sale of the hydro assets to Endesa signed at the end of 2024. The impact on our headline net debt was EUR 1.1 billion when we take into account the debt that was already classified as held for sale at the end of 2024. EBITDA from asset rotation in 2025 amounted to just over EUR 600 million. All in all, that is EUR 3.2 billion of disposal during the last 2 years generating approximately EUR 900 million in total gains. The only caveat is that the U.S. Mexico transaction with Mexico infrastructure partners and the sale of our interest in our two South African operating assets will close in 2026. The timing of these 2 transactions has resulted in net debt at year-end not fully reflecting the huge effort made on the asset protection front. Both rating agencies, DBRS and Fitch, maintained their investment-grade ratings. This was another key target for the year. Still Fitch moved its outlook from stable to negative, reflecting the delay in materializing the disposal proceeds and the somewhat weaker cash flow due to the low output. This is something we will address in the current financial year. The other key chapter in our priority list was the addition of close to 1 gigawatt of new capacity during the year and the commissioning of approximately 2 gigawatts of capacity constructed the year before, reducing our work in progress. Here, we installed 532 megawatts of new capacity, having decided to put on hold construction of 2 U.S. battery storage projects representing 400 megawatts and which were expected to add 350 megawatts in 2025. Key highlights here include the completion of Tahivilla, our second wind repowering project in Spain, the construction of our 50-megawatt biomass plant, Logrosan, the completion of Aldoga PV in Australia, Forty Mile wind in Canada and progress in the construction of Pedro Corto in the Dominican Republic. We are somewhat down on our adjusted target of 300 megawatts of new capacity a year without the U.S. battery projects due to the slower progress on Kalayaan II in the Philippines and Pedro Corto in Dominicana. On the commissioning side, the ramp-up phase has proven more complex and difficult than expected, particularly in MacIntyre. The initial contribution from these assets has fallen significantly short of our expectations as a result. We have faced technical problem in some assets like MacIntyre, Forty Mile and a faulty transformer at Juna in India and several climate-related events. Most issues have been already resolved, and we will work through the rest over the course of 2026. Commissioning of the Logrosan biomass plant is underway and MacIntyre is undoubtedly our biggest task for the year. MacIntyre has been going through the complex outselling grid compliance process with many whole points to pass. And recently, that issues have surfaced that we believe are related to damage costs during transport. We have already started to repay the first test of blades while we continue with inspection across the wind farm to assess the full extent of the problem, and we are also developing a recovering plan. And our objective would be to commission the plant in full by year-end. In summary, the slow ramp-up, together with a low wind results in some markets and the closing of asset rotation transactions ahead of schedule have resulted in consolidated production of 24.4 terawatt hours, and EBITDA from operations below our target even if average capture prices of EUR 62 per megawatt hour were higher than expected, thanks to Spain. A very healthy level of capital gains from asset rotation of more than EUR 600 million has resulted in satisfactory total EBITDA above EUR 1.5 billion within the range we set at the beginning of the year. Finally, in our priority list, we also wanted to secure a good set of development opportunities to fuel our growth in 2026 and provide as much visibility as possible for 2027. We think 2025 has been a good year for us on this front with 1.3 gigawatts of projects under FID, with FID under construction already or soon going into the construction phase. On the next slide, you can find a summary of the main asset protection figures for the period 2024 and 2025 for your reference. Let me move to the next slide. In this slide, we have laid out where we see the main opportunities and priorities for the year. On the opportunity side, we see a gradual acceleration in our growth with around 700 megawatts of expected capacity additions in the year relative to the 500 megawatts the year before. This is part of the current batch of projects with FID currently under construction or about to start, which add up to over 1.3 gigawatts of capacity to be installed during this year and next. During the last 3 months, we have been revisiting our project pipeline and reevaluated our development strategy. I will cover the new development strategy and some delays in a minute. On the priorities, a key objective for the year is to regain our stable outlook with Fitch ratings, and we have next 10 months or so to achieve this target. Critical for this objective is to close the transaction that were announced at the end of 2025, the U.S., Mexico deal and the sale of the South African assets, but also signing and closing an additional around EUR 1 billion of disposals, taking the total debt reduction from rotation to around EUR 2 billion. We're going to put a strong focus on the delivery of the projects under construction on budget and schedule. The full commissioning of MacIntyre and other assets like Logrosan are very high on our priority list. With respect to Southeast Asia, we acquired the majority of The Blue Circle last summer, and our key focus is on the Philippines with 2 assets under construction and a development pipeline including offshore wind awaiting for coming up auctions and PPAs opportunities. We are constructing wind in Thailand and facing regulatory challenges in Vietnam. Efficiency is also an important part of our focus in 2026 with a plan to cut corporate overheads in a material way. We are also reevaluating some of our nongeneration businesses from a strategic and financial perspective apart from the new plans that we have for the energy services activity. We're also considering selected opportunities to invest in battery storage. In Chile, we are about to start construction of the Malgarida, 200-megawatts, 5 hours battery and have the rest of our PV plants to consider hybridizing with returns that look very attractive, given the reduction in the battery storage CapEx cost and the night and day price different sales and capacity payments and curtailments faced in the North of Chile. On the repowering, we continuously review the older section of our asset fleet for opportunities without estranging from our core and distinctive life extension strategy. In the next slide, I want to briefly talk about the streamlining of our development pipeline and our new strategy for the development activity. With respect to the pipeline, we have optimized our development pipeline to 20 gigawatts. It builds upon high quality of projects, geographical and technology diversification and aims at preserving ample flexibility to adapt to quickly changing trends in markets and growing renewable energy saturation. This pipeline, we believe, is an excellent base from which to build upon under new strategy for development activity. Our aim is to attain a level of 1.8 gigawatts of investment opportunities per annum over time, whether these opportunities are for our own book or for third parties. This should allow for ACCIONA Energia to extract full value from its development footprint and expertise and provides the opportunity to maximize early stage development and greenfield opportunities independently of ACCIONA Energia investment capacity or strategy at any given time. And besides, if we have more capital, we can fully utilize this development capacity for ourselves. In the next slide, you can see the projects that we will be delivering capacity during 2026 and support further growth acceleration beyond 2026. These projects totaled 1.3 gigawatts and have contained FID with a strong return expectations at the upper part of our spread over WACC thresholds. We've tied and succeeded in recent government auctions in Italy and the Philippines: a 20-year Italian state contract for differential with no curtailment support the construction of Panbianco and Benante PV plants. On the Philippines green energy auction, also with 20-year contracts, we'll give visibility to Kalayaan II wind projects and Daanbantayan solar PV. We have also managed to structure one of the first set of private wind energy PPL base in South Africa with Zen and Berg River, which recently completed a lengthy and complex financial process. The Promina PV plant in Croatia is starting its construction and is supported by a government 12-year PPA award at the 2024 auction. In the Dominican Republic, the Pedro Corto PV plant is underway, also covered by a 15-year PPA with one of the local distribution companies. And finally, we are back to investing in Chile with the 1,000 megawatt hour battery storage project at our Malgarida PV site that I was referring before, which expect to deliver double-digit project returns and an excellent fit within our generation portfolio risk profile in Chile. All in all, without wanting to sound overly optimistic, we detect some improvement in investment conditions for renewable energy as long as you have the ability to move fast from a market to another and are happy to discard projects that are subpar. We have also renegotiated a number of PPAs related to a project under construction and 2 development projects, resulting in a satisfactory and balanced outcome for all parties. Challenges remain. This is intrinsic to our business, and we will have to control increase in module prices resulting from Chinese changing government policies and constructing some of our projects in more complex locations, like Southeast Asia. And with that, let me now hand over to Raimundo. Raimundo Laborde: Thank you, Arantza. I wanted to start with our priorities in terms of leverage and credit ratings. In this next slide, we show you our indicative uses and sources of funds for 2026. We expect to generate around EUR 0.5 billion of operating cash flow, and we target proceeds from asset rotation of EUR 2 billion. With CapEx below EUR 1 billion and very limited dividend distribution this year, we target reducing debt by around EUR 1.5 billion, which would allow us not only to protect our ratings but to return to stable outlook with Fitch, which, as Arantza just said, is one of the key priorities we laid out for the year. In terms of asset rotation, as discussed, we're expecting to close the South Africa and the joint U.S. Mexico asset deal during 2026, which will bring around EUR 900 million of incremental debt reduction, and we plan to agree and close another EUR 1 billion or so in new asset rotation transactions during the year. These additional transactions are already in the market or we are preparing to launch several others to ensure we have good headroom and flexibility to deliver the targeted amounts. We are considering assets both in Spain and abroad across different technologies and transaction structures, whether this is outright sales or minority partnerships. With respect to CapEx, we estimate it will amount to around EUR 900 million, which compares to EUR 1.4 billion in 2025, which also included a significant net CapEx deferrals, including the payment for the Green Pastures wind farms acquired at the end of 2024. In 2026, there is limited net CapEx deferral as levels of activity have moderated and investment converges more closely with capacity additions. CapEx related to projects under construction should be somewhere between EUR 0.5 billion and EUR 600 million or so. This is what is committed. We're budgeting another EUR 200 million or so for new projects for '26 and '27. So this is projects that don't have an FID yet, but we're assuming that we will have FID by year-end and start spending some CapEx. And this is over and above the 1.3 gigs that we already have committed. And apart from CapEx related to identified and yet to be approved projects, there is investment in the development pipeline as well as in energy services, EV charging networks, IT and other. So let's move to the next slide with the 2025 results highlights. Consolidated capacity fell by 5% from 13.6 gigs to 12.9 gigs with capacity additions of 0.5 gigawatts and asset disposals of 1.25 gigawatts. Revenues are down 4% to EUR 2.925 billion, of which EUR 1.5 billion correspond to generation revenues, which fell 8% year-on-year on lower average prices at EUR 62 per megawatt hour. This was down 10% year-on-year and consolidated output of 24.4 terawatt hours, which is 2% higher than the previous year. Total EBITDA reached EUR 1.546 billion. This is 38% higher than the previous year. EBITDA from operations is down 11% to EUR 932 million, while EBITDA from asset rotation amounted to EUR 614 million. This compares to EUR 73 million in 2024. The rotation gains correspond for the most part to the Spanish hydro and wind disposals completed during the year. Profit attributable to the shareholders of ACCIONA Energia reached EUR 655 million. This is up 83% year-on-year. In terms of cash flow and net debt, net investment cash flow amounted to EUR 372 million with CapEx of over EUR 1.4 billion compensated with approximately EUR 1.1 billion of asset rotation proceeds. Net debt stood at just under EUR 4.2 billion. This compares with EUR 4.1 billion at the end of the previous year with debt associated to assets held for sale at the time of EUR 821 million. These assets have been sold already, and the net debt held for sale at the end of 2025 is just EUR 50 million. So there is a very significant reduction in underlying net debt. Moving to the ESG results and highlights for the year. I would highlight that 100% of the CapEx continues to be aligned with the EU Taxonomy. On the environmental side, our Scope 1 and 2 emissions have fallen by 12%, reflecting, in part, our efforts to decarbonize our vehicle fleet through electrification and use of HVO. We have avoided also significant new emissions by using HVO in the Lograsan biomass plant, which was firing its boiler to clean and test it. We have also reduced 100% of slag and ashes from our biomass plants, this is the primary source of our waste, and this represents almost 85% of what we do. With respect to social, we are pleased to report no fatal accidents, whether our own employees or contractors. And the frequency index stood at 0.37, which is below our 0.4 target for the year. On the next slide, on summary of investment, you can find the detail of our investment during the year, EUR 1.4 billion, as we discussed, including EUR 505 million of net CapEx deferrals including the price for the Green Pastures wind farms acquired the previous year as well as the tail end of payments for projects such as Aldoga, Forty Mile and MacIntyre. Investment has been concentrated in North America; also in Australia, Aldoga and MacIntyre as mentioned, the Tahivilla and repowering in the Logrosan biomass plants in Spain; and elsewhere, we have the Juna plant in India and Kalayaan II in the Philippines as well as the acquisition and consolidation of the other half of The Blue Circle joint venture in Southeast Asia that we did not own. On the next slide with the net debt evolution. With respect to the cash flow movements that drive net debt, here, we show operating cash flow of EUR 373 million, net investment of EUR 372 million, which is made up as discussed of EUR 1.1 billion of net disposal proceeds and EUR 1.4 billion of CapEx. Dividend last year amounted to EUR 143 million. And all of this resulted in EUR 4.2 billion of net debt at year-end. It's important to highlight the reduction in debt associated to work in progress, which stood at EUR 1.8 billion at the end of '25. And here, MacIntyre represents around EUR 1.1 billion of work in progress, and Logrosan plant which has been commissioned right now, that is another EUR 190 million. So as these assets come online, we expect a further significant reduction in work in progress. Moving to the operating results of the Spanish and International fleets, starting with Spain. In this slide, you can find the revenue drivers for the Spanish business. Volumes fell by 24%. This is mostly the result of the hydro asset disposal in late 2024 and early 2025. Disposals in Spain detracted more than 2.2 terawatt hours of output, and we also had lower wind resource, which meant a reduction of 0.5 terawatt hours relative to where we should have been. Merchant output represented 165 gigs of consolidated production. In terms of prices, the average recorded price amounted to EUR 76.7 per megawatt hour. This is flat year-on-year and higher than we expected initially. We have particularly good covariance in 2025, including very high capture prices in the hydro output while we had these assets with us and also in the wind perimeter. And also, the regulatory accounting contributed more than expected, including some EUR 20 million of positive one-offs in the banding mechanism. You can see that hedging is less of a driver as our short-term and long-term hedges have converged to prices more consistent with the current power price environment. Whereas last year in 2024, we still benefited from short-term hedges closed in the tail end of the energy crisis at more than EUR 90 per megawatt hour. In the next slide with the Spanish operating results. Revenues in generation fell by 24% to EUR 648 million. In this slide, you can see generation EBITDA of EUR 341 million, down 26.6%, and total EBITDA from operations at EUR 327 million relative to EUR 443 million the previous year. In the chart, you can see how EBITDA was impacted primarily by the loss of output and contribution from the large asset disposal transactions and, to a lesser extent, by the lower output on a like-for-like basis. Including asset rotation gains, EBITDA in Spain reached EUR 933 million, which compares against EUR 504 million the previous year. On the next slide, on the International revenue drivers. Output increased by 26% to almost 16 terawatt hours, principally due to new capacity in operation, which added 2.6 terawatt hours of production. And this is some improvement in output as well in the existing operating asset base during the year. Key growth assets include Forty Mile, Green Pastures, Union and Red-Tailed Hawk in North America. This is the region which shows the largest increase in output, and MacIntyre and Aldooga in Australia, which increased its output by more than 80%. In terms of prices, average capture prices fell by 12% to EUR 54.1 per megawatt hour with lower prices in most regions, particularly the U.S. and Australia, which saw very high prices in 2024. The underlying performance of Chile is very good. As last year, the average price contained extraordinary recovery of PEC tariff deficits for around $40 million embedded in that price. So the underlying performance is quite good, actually. International generation revenues increased 10% by EUR 862 million. And on the last slide in the ACCIONA Energia section, international operating results. Generation EBITDA increases by 5.6% to EUR 605 million, better output and contribution from the new assets, and we had negative impact from FX. In terms of the key geographies that are notable, we have the U.S., which grows on the large increase in new capacity, and that is despite the lower prices. Mexico grows on better prices and output, and 2024 production was very weak. Chile has performed well, again, taking into account extraordinary PEC revenues of $40 million in the previous year. Output was poor, but we have seen better PPA margins and slightly higher injection prices in PV. Australia improved, thanks to the large increase in volumes and despite lower prices, but should have been better. While Aldoga reached COD ahead of schedule, MacIntyre was behind us as discussed. And this concludes the review of ACCIONA Energia operating results, and let me hand over to Jose Angel Tejero. Jose Angel Santos: Thank you, Raimundo. We will now turn to present ACCIONA 2025 results. Starting with Infrastructure, 2025 has been another year of solid execution across our core activities, supported by a healthy backlog and a clear strategic focus. In Construction, profitability has been maintained at solid levels, reflecting a strong focus on OECD countries, contracts with appropriate risk-sharing mechanisms and an execution model that prioritizes predictability and margin protection. This allows us to convert backlog into earnings with high degree of visibility even in a volatile macro environment. Turning to Water. EBITDA has grown to close to 50% compared to last year, being one of the standout contributors in 2025, reflecting both operational leverage and an efficient and faster-than-expected execution of several key projects. In December, we have been selected as preferred bidder for a major contract in Brazil, the Pernambuco project, which further strengthens our positioning in this market and supports future growth. In Concessions, 2025 marked an important milestone with the signing of our first managed lane project in the United States, the SR-400, as well as the Central West Orana transmission line in Australia. These are highly relevant steps, not only because of these project themselves, but because it validates our integrated construction plus concession model. Our ability to structure, finance and operate complex assets and our ambition to grow selectively in markets with loan duration and stable cash flows. Looking ahead, our priorities for 2026 are very clear, to maintain profitability in Construction, to start operations of relevant water contracts as the first segment of Line 6 in Sao Paulo and to continue advancing transmission lines in Australia and Peru while exploring new opportunities in other markets and to remain highly active in management opportunities in the U.S. with 2 tenders expected next year. Going to the next slide. Moving to Nordex. 2025 marks a very strong year with both financial and operational targets achieved or even exceeded, including the medium-term margin target ahead of our schedule. Nordex continues to strengthen its competitive fair position, increasing market share and consolidating its leadership in Europe, where it is now the #1 player with a 48% market share and ranking second globally excluding China. This performance highlights the strength of our product offering, execution capabilities and customer relationships. A key driver of stability and visibility is the service business in Nordex. Service backlog has reached already EUR 6 billion, setting a solid foundation for stable recurring growth. Nordex has now 48 gigawatts under active service with an average contract tenor of 13 years and availability rate of over 97% in the fourth quarter, reflecting the quality and reliability of the fleet under management. Looking ahead to 2026, the focus remains on maintaining financial flexibility supported by strong balance sheet and ample liquidity, while targeting an EBITDA margin between 8% to 11% on sales of EUR 8.2 billion to EUR 9 billion. In addition, Nordex has introduced its first shareholder remuneration policy, targeting a minimum annual shareholder return of EUR 50 million to be delivered either through dividends or share buybacks and always subject to regulatory approvals, capital structure priorities and stable market conditions. Moving to the next slide and looking at other activities, mainly Bestinver and Real Estate. I would like to briefly highlight the performance of these two activities. Starting with Real Estate, 2025 has been an excellent year. We delivered 1,244 units, beating the guidance and continuing to optimize our portfolio through the disposal of nonstrategic land plots and the office building in Madrid. This performance has resulted in a record EBITDA of EUR 84 million. Looking ahead to 2026, our priorities are to maintain annual deliveries between 1,000 to 1,200 units, continue optimizing the land bank through selective disposals and pursue targeted investments aligned with our long-term strategy. In Asset Management, Bestinver has delivered a very strong year, maintaining an excellent performance in its liquid funds with a total year assets under management of EUR 7.7 billion. And Bestinver Bolsa has ranked as Spain top-performing equity fund in 2025 with 58% return. Looking at our 2026 priorities, one of our key initiatives is the planned launch in 2026 of our first fixed income fund for institutional investors in Luxembourg, which will further broaden the product offering and support growth. And with that, I will now hand over the floor to our CFO, Jose. Jose Carrion: Thank you, Jose Angel. Good morning, everyone. Let me walk you through ACCIONA's financial results for the full year 2025. Starting with the key financial highlights. We delivered solid full year 2025 results, beating guidance across the main metrics. EBITDA increased by 31%, profit before taxes by 82% and attributable net profit by 90%, primarily driven by the results from asset rotation in ACCIONA Energia, strong performance of Nordex and together with a solid contribution from the Infrastructure business. EBITDA contribution was well balanced across activities with 48% coming from ACCIONA Energia, 25% from Infrastructure and 23% from Nordex, reflecting the good diversification of the group. Net investment cash flow amounted to EUR 1.1 billion, supported by a reduction in ordinary CapEx to EUR 2.25 billion compared to EUR 2.8 billion in 2024 and EUR 1.1 billion in proceeds from asset rotation in ACCIONA Energia and a positive net cash flow contribution of around EUR 110 million from property development. As a result, we closed the year with a robust balance sheet and a significant reduction in leverage with our net debt-to-EBITDA ratio declining from 2.9x in December 2024 to 2.2x at the end of 2025, which is well ahead of our target of remaining below 3.5x. With regards to nonfinancial results. Our total workforce increased by 3.8% to more than 68,000 employees. Health and safety indicators also improved this year, and the number of social impact programs implemented across ACCIONA's projects increased, reaching 2.2 million beneficiaries in 31 countries. The group's Scope 1 and 2 greenhouse gas emissions amounted to 205,000 tonnes of CO2 equivalent, which represents a 4% increase year-on-year. Nevertheless, the company remains within its Science-Based Targets initiative trajectory, which aims to reduce emissions by 60% by 2030 compared to our 2017 baseline and by 90% by 2040. Circular economy indicators improved significantly, largely due to construction projects in Australia, which were able to recover a substantial portion of excavated materials, which are the company's main waste product as of today. Investment levels aligned with EU Taxonomy remain comfortably above our 90% target, and this has enabled the issuance of 37 new green financings amounting to EUR 2.4 billion, bringing the proportion of the group's debt classified as either green or sustainability-linked to around 84%. During 2025, the group recorded EUR 2.25 billion of gross investments, mainly across ACCIONA Energia and our Infrastructure division. Energy investments were concentrated in projects such as MacIntyre and Aldoga in Australia, Green Pastures and Forty Mile in the U.S. and Canada as well as the Tahivilla repowering project and the Logrosan biomass plant in Spain. Infrastructure investments amounted to EUR 624 million, mainly related to construction machinery, equity and equity contributions to concessions, particularly in the Line 6 project in Sao Paulo and Lima's Peripheral Ring Road as well as the CapEx of transmission lines in Peru. Divestments reached EUR 1.1 billion, thanks to 4 main transactions: the sale of the hydro assets, which Arantza mentioned at the beginning of the year, the wind assets in Peru, Spain and Costa Rica in the second half of 2025. On this slide, you can see the main drivers behind the evolution of net debt for the group during 2025. Operating cash flow reached EUR 2 billion with a positive working capital contribution for the third year in a row of EUR 656 million in 2025, mainly driven by Infrastructure due to a very good performance in terms of execution, advanced payments and collections. Net investment cash flow was EUR 1.1 billion and financing and other cash flows amounted to EUR 830 million, including approximately EUR 180 million invested in the acquisition of an additional 2.8% stake of ACCIONA Energia. As a result, net debt closed slightly below EUR 7 billion, including IFRS 16 adjustments, which is EUR 139 million reduction year-on-year. It is important to highlight that a significant portion of this debt, EUR 2.7 billion, is associated with energy assets under construction or not yet fully in operation as well as that linked to the Real Estate projects under development. Given that Raimundo has already covered ACCIONA Energia's financial performance, I will move straight to Infrastructure. In our Infrastructure division, 2025 was a good year in terms of execution and growth. Revenues increased by 6.7% with 82% of those revenues coming from OECD countries, reflecting the quality and geographic diversification of the portfolio. Australia remains our main region, accounting for approximately 38% of revenues followed by Spain, LatAm and EMEA. In terms of backlog, we reached a historically high level of EUR 30 billion in terms of global backlog and EUR 120 billion in terms of aggregate backlog, which includes our portion of long-term revenues expected to be generated by the concessional assets that we report on an equity-accounted basis. This aggregate backlog is up 124% year-on-year, driven mainly by the SR-400 project, which added about EUR 60 billion to it. The average life of the construction D&C backlog is around 2.5 years, which is consistent with the project-based nature of the activity. In Water operations & maintenance, the average backlog life extends to approximately 5.4 years, which reflects the more stable and recurring nature of those contracts. And lastly, our concessions asset portfolio has an average life of around 50 years. Geographically, aggregate backlog is highly diversified with a strong presence in North America and a clear focus on OECD markets. In the appendix of the full presentation, you have extensive details of the largest construction and concession projects in our backlog. Turning to Construction. Profitability remained resilient with EBITDA margins remaining at around 7%, in line with the previous year and reflecting a disciplined approach to project selection and strong risk control measures. Australia stood out with 13% revenue growth, driven by good progress in the execution of projects like the Western Harbour Tunnel, M-80 Ring Road or Central West Orana and Suburban Rail Loop. Construction backlog reached EUR 18.1 billion, which is up 2.6% versus 2024, which reflects a moderate year-on-year increase despite the relevant awards added during the year mainly due to ForEx impact. Beyond the sheer size of the backlog, equivalent approximately 2.5 years of activity, what stands out is the strong geographic diversification of it and it's increasingly derisked profile with 81% of the total incorporating some sort of contractual risk mitigation mechanisms, whether it is collaborative contracts, contracts related to our own concession projects or contracts with price protection clauses. Moving to concessions. The portfolio remains young with 90% of it remaining under construction and therefore, with limited P&L impact today. Sales grew by 103% and EBITDA reached EUR 160 million, driven by the financial close of the SR-400 project in Atlanta and the financial close of Central West Orana in New South Wales, Australia. The good performance of the Peruvian transmission lines also contributed and the commissioning of the Kwinana waste-to-energy plant in Australia was also an important factor. Equity invested in Concessions assets reached EUR 704 million with EUR 1.6 billion of equity commitments between 2026 and 2035. The portfolio remains well balanced with 54% of it with demand risk and 46% with availability-based payments. In 2025, our Water division delivered remarkable growth with revenues up 16.5% and EBITDA increasing by around 50%, driven by good execution in Collahuasi and the Casablanca desalination plants. Backlog also increased by approximately 11% to EUR 7.7 billion with key awards such as the Sanepar and Cesan projects in Brazil. And these backlog figures do not include the preaward of Pernambuco, which has already been mentioned and will add around EUR 30 billion to the aggregate concessions backlog. Given how relevant our Concessions business has become for the group and, more importantly, how relevant we expect it to become in the next decade, let we spend a few minutes going into more detail. Over the last few years, ACCIONA has emerged as one of the leading global players in greenfield infra concessions with particularly strong growth over the last 3 years. Between 2023 and 2025, we were awarded 17 new projects with total associated investments of EUR 27 billion and an average project size of EUR 1.6 billion. EUR 27 billion is total or 100% of these projects, not a share. Since 2019, our average project size has quadrupled and the average remaining life of our portfolio has tripled, which highlights the improvement in the quality of the portfolio over the period. 2025 was particularly significant with important milestones such as the financial close of SR-400 and the financial close of Central West Orana in Australia as well as the acquisition of transmission lines in Peru and major water awards in Brazil. The strategy underpinning our business model is to operate as an integrated development and asset platform, combining global expertise and structuring capabilities with strong local construction execution capacities. This differentiated approach allows us to originate, develop, finance, build and operate large-scale infrastructure projects while maintaining control over the risks that we are taking and the value that these projects generate throughout their life cycle. It is our key competitive advantage in this respect. Our growth strategy is clearly focused on a number of priority segments, including managed lanes and toll roads, urban rail and metro systems, transmission lines, high-speed rail as well as our selected -- or selected social and water concessions. Geographically, our efforts are concentrated on the U.S., Australia, Brazil and Peru, and Chile, which is where we see the strongest pipeline and the most attractive risk return profiles. A key feature of our model is the ability to take relevant equity stakes, either with control or with strong governance rights, combined with a flexible approach to asset rotation, allowing us to transform assets from greenfield to brownfield and optimize capital allocation over time. Looking ahead, growth opportunities are substantial. We have identified a pipeline of approximately 130 greenfield opportunities, which represent around EUR 300 billion of associated investment expected to be tendered in the coming years. Within this pipeline, managed lanes will be a major growth driver. We have identified 7 projects with high visibility that alone represent over $80 billion of total investment and around $30 billion of total equity investments. Over the next 2 years, we expect to submit more than 49 proposals across our core markets. The opportunity, therefore, is compelling, and we believe we are very well positioned to capture this growth. Our current concessions portfolio includes 78 assets in 11 countries with total investment for 100% of the projects of more than EUR 36 billion. On this slide, you can see both the geographical diversification of our portfolio with a clear focus on OECD countries and a strong presence in Europe, North America, Australia and LatAm and the well-balanced nature of our portfolio, which spans transport infrastructure, water concessions, transmission lines and waste-to-energy plants, combining different sectors and stages of development. Total equity investment to date amounts to EUR 879 million as of 31st of December '25, And we have additional equity commitments of approximately EUR 1.9 billion between 2026 and 2035, which will take the total equity invested at the end of 2035 with the projects that we currently have in our portfolio to EUR 2.7 billion. As you can see in the next slide, these investments are well spread out over the next 7 years with no significant concentration in any particular year. The average remaining life of this portfolio is around 50 years, and it is expected to generate approximately EUR 60 billion in dividends and cash distributions for ACCIONA over the period. With respect to Nordex, since the team presented results 2 days ago, outstanding results, if I may say so, I will not go into the details. I will highlight, however, that Nordex contributed EUR 749 million to ACCIONA's EBITDA which includes EUR 118 million from the reversal of provisions, which relate to the updated view of Nordex's quality cost program. That is on top of the EUR 631 million EBITDA that Nordex reported. Moving to Other Activities. Living, our real estate development business, has achieved extraordinarily good results in 2025 with an EBITDA that almost doubled versus 2024. Since Jose Angel has already gone through the highlights of '25 and priorities for 2026, I will not go into more details. But let me just highlight that our gross asset value at the end of 2025 stood at EUR 1.5 billion, which is an 8.4% decrease compared to '24, just consistent with the high number of units delivered and the asset sales and the strategy of land bank optimization through the sale of old stock. And finally, Bestinver also delivered a solid year with revenues increasing by 4.4%, EBITDA by 8% to EUR 55 million driven by higher average assets under management, which grew by 10% (sic) [ 9.8% ] year-on-year. And at year-end assets under management reached EUR 7.7 billion, up EUR 870 million as a combination of positive net inflows for another consecutive year and an outstanding performance of most of our funds with a particular really good performance of Bestinver Bolsa, which ranked in Spain's top-performing equity fund in 2025, delivering a 58% return. With that, let me thank you for your attention. And I will hand the floor back to Jose Manuel for the outlook and opening of the Q&A session. Jose Domecq: Okay. Thank you, Jose. Very briefly. I will do a 2026 outlook, where we expect a stable operating EBITDA, bringing total group EBITDA to a range of between EUR 2.8 billion and EUR 3.1 billion. For ACCIONA Energia, the outlook is exceptionally volatile and difficult to predict due to uncertainties in the timing of asset rotation and extraordinary weather conditions with very high hydrological inflows and reserves in Spain with FX volatility and timing of new assets reaching COD, which is, as you know, commercial operation date. However, given all these caveats, we would expect about EUR 1.2 billion total EBITDA for ACCIONA Energia. And we -- a month ago or a couple of weeks ago, we were finishing our final budget for the year, which I would have said comfortably flat operational EBITDA. At this stage with the exceptional rain and hydrological reserves in Spain, I would dare say that it's going to be a small decrease expectation for the year. And for ACCIONA Group, 2026, we will also expect an investment cash flow of between EUR 2.2 billion and EUR 2.5 billion, net debt-to-EBITDA to remain below 3x supported by asset rotation and CapEx discipline, basically in order to continue to maintain investment grade and a dividend per share of EUR 5.65, which we aim to maintain a stable with a small growth in the coming years. Beyond '26, volatility may persist, Geopolitics may remain unpredictable, and the execution environment will continue to be demanding. Our strategy, however, is focused on what we can control, which is disciplined capital allocation and operational excellence. We are, as I was saying in the beginning, globally diversified. Our integrated model is built for resilience. Demand is not a question. Obviously, the question is execution with selectivity and discipline and scale. Our strong asset base, deep technical capabilities and record backlog allow us to remain focused and selective on projects with sustainability, complexity and attractive returns genuinely reinforcing each other. ACCIONA enters in this new phase, better than ever, positioned to translate structural demand into long-term shareholder value by delivering essential infrastructure to what society needs. Thank you very much. And we will now enter the Q&A session, for which I anticipate my appreciation and thanks for the many questions we have received, which we will, in some cases, bundle together in order to save time. Jose Domecq: To start with, we will handle the energy questions, Energia questions. The first one comes from a number of market analysts from Caixa, JPMorgan, RBC, Kepler, JBCM, Santander and HSBC, thank you all. And the question is, can you please clarify the target EBITDA for 2026 excluding asset rotations as well as giving guidance post 2026. Arantza, please? Arantza Ezpeleta Puras: Thank you, Jose Manuel. So in relation to 2026 EBITDA and most completely in the operating EBITDA, first of all, we have to take into consideration that the most relevant factor to do that is the timing of the closing of the asset disposals as this can affect the perimeter, but also the contribution to the EBITDA that we have incorporated. If we leave this aside and excluding the asset rotation gains, a couple of weeks ago, I would have said flat. But now given the heavy rains that we have seen suffering in Spain in the last couple of weeks, I would have said that the -- and the impact that this must have on the Spanish prices, I would now say that probably we could expect a small single-digit decline versus 2025. Regarding the asset from operation -- asset rotation EBITDA, what I would expect is a more normalized amount than 2025, which was an extraordinary year in that front. And post 2026, looking at more midterm 2030, you should take into consideration a consolidated output of around 30 terawatt hours, coming up from the 24.4 terawatt hours we had last year. And this means around 1 terawatt hour per year of production contribution. With this and your assumption in prices and generation, you will see that this would guide you to an increase in our operating EBITDA, a CAGR of around mid-single digits. Jose Domecq: Thank you, Arantza. Let me make a very general rule of thumb, 2030, 30 terawatt hours. So it's kind of easy to remember. As things stand now, obviously, that target is subject to improvement if we would have the ability to do so in terms of capital and balance sheet capacity. Question number two, impact of efficiency measures. What do you estimate to be the impact of the efficiency measures in an annual EBITDA? This is from Flora at CaixaBank. Arantza, please, or Raimundo, whatever. Raimundo Laborde: Okay. I'll take that up if you want, Jose Manuel. We prepared a plan to address some of the key structural cost categories starting 1st of January 2026. But when we look at the run rate, which should be achieved during 2027, we are considering around -- or targeting around EUR 35 million of structural cost reductions. During 2026, it would be a part of it. Half or more than half, we think it will be achieved during the current year. Arantza Ezpeleta Puras: Yes. Jose Domecq: Thank you. Question number three from Flora, Italian proposal on energy prices. Can we make a comment on the Italian proposal to decouple CO2 prices from power prices? Arantza Ezpeleta Puras: Yes. So I'll take this one. I think, first, we have to take into consideration that our exposure to Italy is really limited. We have only 0.2 terawatt hours and, in terms of revenues, around EUR 30 million. Having said that, last week, the Italian government announced a Decree Law that incorporated some measures to reduce the electricity and gas cost and support the households and industry prices for the sake of competitiveness of the industry. The key proposal that was included in this Decree Law was to compensate the thermal generation for the CO2 allowance cost, preventing them from passing this into the auctions into the market prices. This could lower approximately -- in an initial estimation, this could lower the price around EUR 30 per megawatt hour. However, these measures would not enter into effect until January 1, 2027. And it has to pass the usually complex process of the European Commission stated approval. But also given the potential conflicts with the EU ETS and the internal market rules might be a little bit challenging. Having said that, from our perspective, we do not support the interventions in the generation market, especially those that weaken the signals -- the decarbonization signals by sealing emitting technologies from CO2 costs. Jose Domecq: Yes. Let me just underwrite that comment from Arantza. We find it somewhat surprising that we have -- sending the market decarbonization signals through carbon pricing and then offsetting those signals through opposite policies in the member states. It doesn't make a lot of sense. It would make a lot more sense to help out, as Arantza mentioned, the energy-intensive industries or needed households, whatever, but on the demand side, not on the supply side as we understand it, however. Question number four from Beatrice Gianola, Mediobanca and Flora at Caixa Bank. What are our expectation for asset rotations this year in terms of timing and geography? Let me just beyond -- besides Raimundo's specific answer to that question, let me say that as a rule of thumb, you should be aware that we are extremely selective in the transactions we close in the matter of price. So we have more transactions in the market than we need, and we will be selective and differentiate those which are more attractive. Therefore, it is difficult to predict. Having said that, please, Raimundo. Raimundo Laborde: Thank you so. Just to recap. On the one hand, we have to close the transactions that were signed at the end of 2025. This is basically South Africa plus the U.S. PV minority, which is also combined with the sale of 2 wind farms in Mexico. This is roughly in terms of incremental debt reduction as we said throughout the presentation, around EUR 900 million of additional proceeds. And we want to close another EUR 1 billion, EUR 1.1 billion of opportunities. As Jose Manuel was saying, we are managing our portfolio that is in terms of opportunities to sell that is larger than what we need, as we did last year. And at the moment, it's approximately 2.5 gigawatts of capacity in different stages of negotiation and process. We cannot be too specific on the particular assets that are in our list. But in Spain, perhaps we can be a bit more specific on -- we have potentially another large portfolio win in the market. We could also consider the sale of our residual or remaining hydro assets. In the international business, we're looking across all the continents. We have a very wide portfolio of assets, as you know, in present. And here, we're looking in some cases at selling out right 100% of these assets and, in other cases, a large minority holding in there. And with respect to what we're going to do beyond '26 and '27 and beyond, we would expect that the level of asset rotation is not as extreme or as high as what we've done in '24, '25 and we will need to do also in '26, but it will be more normal. We've indicated that this is part of our ongoing business. This is a source of funding for our growth. This is a source of capital gains, arbitrage between trading share prices and what we think the value of our assets is. So this is going to continue happening, although probably in the 400 to 500-megawatt per annum range. Jose Domecq: Thank you. Question number five. Question comes from Flora. Why do we find -- why do we think it's so critical to maintain the rating and the consequences of losing it? Quite frankly, I don't think maintaining the rating is critical. I think it's important. I think it's a commitment we've made to the market, and it improves our weighted average cost of capital, it improves our liquidity and it's very good to have, a very nice to have. We will try to maintain it and we will do our efforts to maintain it. Frankly, at this stage, we believe maintaining this -- and this, we expect this to remain this way, we think maintaining the rating is the best option. Anything to add, Raimundo, Arantza? Raimundo Laborde: No, I think this is pretty much it. Excess Liquidity, gives us access to the market. It reduces our cost of borrowing and it's something that gives us very good support to our plans. Jose Domecq: Very good. Thank you. As for question number six, from JPMorgan, Javier Garrido; Alvaro Soriano, Alantra; and Charles Swabey from HSBC. Within the 26 terawatt hour production target for '26, how many correspond to assets that are planned to be sold? Does it include any contribution from assets that will be commissioned during 2026? I guess the answer to that is the 26 terawatt hours are net of negative or reductions in rotated assets. But I don't know if there's anything to add to that. Arantza Ezpeleta Puras: No. What I would say is that, yes, it's precisely what you were mentioning. The guidance included -- these 26 terawatt hours were included were net of the reduction from the asset rotation but also incorporating the contribution of the new assets that are going to be put into operation during the years. Of course, the final figure will depend on the schedule of the timing of the disposals, which, as I was mentioning before, will, of course, might have a significant impact of the operating EBITDA. As a general rule of thumb, what I would say is that you should expect that -- I was mentioning before, this 30 terawatt hours for by 2030, which approximately will grow at 1 terawatt hour per year. And I think that's what you should use for your calculations. Jose Domecq: Thank you. Question number seven is from Javier Garrido at JP. What is our current open position in Spain and expectations for 2027? Raimundo? Raimundo Laborde: Okay. Yes, in 2027, our production in Spain should be somewhere around 8 to 8.5 terawatt hours, taking into account potential incremental rotation during 2026 and also the increased contribution from Logrosan biomass plant and other assets that although they're not huge, but they contribute to growth in output as well from new capacity. So let's just say 8.5. Out of that, we will have, including the Logrosan plant and assuming some of these wins that will be regulated that we sell, around 2 terawatt hours of regulated output. Our long-term and medium-term contracts amount to around 4 terawatt hours. So that's 6 out of 8, 8.5. So that would give you the portion that is contracted. Jose Domecq: Thank you. Question number eight, what is our sensitivity of Spanish power prices in 2026 EBITDA -- impact in EBITDA if prices were to move minus EUR 5 a megawatt hour versus our assumption? Arantza or Raimundo? Arantza Ezpeleta Puras: Yes. Well, our merchant position in Spain for 2026 is around 2.5 terawatt hours, in addition to some of adjustments due to the [ ban ] mechanisms of the regulated assets that are also exposed to changes in the pool price. Taking all things into consideration, the impact should be around EUR 20 million. Jose Domecq: Next question from Fernando Garcia at RBC, is how have you started in terms of output versus UP50 in January and February? And is your output guidance versus UP50 or incorporates the evolution of these 2 months? Arantza, Raimundo? Arantza Ezpeleta Puras: Yes. Well, I'll take this one. So in terms of the generation of the production, as I was mentioning before, the year has started very well, particularly in Spain due to the strong resource and rains that has driven an above-expectation in terms of production. This has been somehow offset by a more normal contribution for the international side. That's on the production side. On the other side, the prices have been, and particularly in Spain, precisely because of that, somehow below, what we were expecting. But in general and answering to the question, the guidance that we have given for the production of the year fully incorporates the performance of these first 2 months. Jose Domecq: Thank you, Arantza. Next question from Jose Porta of Kepler; Fernando Garcia of RBC; and Oscar Najar at Santander is a Classic is update on strategic optionality. My answer there is the same as has been over the years, which is there is an intrinsic value on the optionality of maintaining ACCIONA Energia publicly traded. The options, the many options are constantly analyzed. Maybe the only minor caveat that I may say there is that we have retained a bank to help us in that process of analyzing all the different alternatives. But the situation remains to be the same as usual. Thank you very much. Number 11, merchant exposure -- Pablo Cuadrado, JBCM, merchant exposure for this year in Spain and international markets. I think we've answered that question. So international markets, Raimundo? Raimundo Laborde: Yes. Spain is very much the same as we just discussed, and international markets tends to be around 17% hedged. And overall, we want to have roughly an 80-20 hedging across the portfolio. Jose Domecq: Yes. Thank you. MacIntyre, when do we expect the MacIntyre to be 100% commissioned? Did you find out the problem of the blades? And could you be compensated for that? Are you seeing any further delays in the commissioning of assets? From Pablo Cuadrado and Oscar Najar. Arantza? Arantza Ezpeleta Puras: Yes. So MacIntyre is currently going under the commissioning process. We successfully passed Hold Point 3 and we got the authorization to go through the testing process for Hold Point 4. During the commissioning process, we found damage associated to a significant number of blades. According to the preliminary analysis underway, we believe it is related to the transportation to site. We continue carrying out the delivery. And in the meantime, we're working, on the one side, on the insurance recovery. And on the other side, we are also working on having blades -- repair plan blades on site, which is already taking place. And also, we are incorporating accelerating and mitigating measures. With all in mind, we have a target of having the wind farm fully commissioned by year-end. Jose Domecq: Thank you. Question number 13 is from Pablo Cuadrado and Oscar Najar. Is the downgrade on gross installations guidance for the year a transitory decision to refocus on the leverage? Or shall we assume a slowdown in the gross installation targets for the next few years? I guess, is why not becoming ambitious again post balance sheet improvement? Well, yes, let me take that one, indeed, why not? We are, as you say, balancing out our balance sheet, and therefore, '25 and '26 installations are, I would say, somewhat lower than normal. In the coming years, I would expect installation or new capacity additions of between 1 and 2, 1.5 and reductions of anywhere around 0.5 gigawatt a year, so rotations of 0.5 gigawatt a year, to give a net of, whatever 0.7 0 8. The logic there is obviously that we are generating a significant value in putting up new assets and rotating more mature ones, why forgo -- that will, in itself, maintain our balance sheet capacity. So it's a good balance. This last 2 years have been more tilted towards asset rotations because we haven't rotated any assets in many years. So the balance sheet balancing out process has to be charged in the beginning. Anyway, so your comment is right, or I agree with it. We agree with it. That should be expected in the coming years. As for last policy, the decision to cut the dividend -- from Beatrice, Mediobanca, the decision to cut the policy, the dividend was being aimed at preserving investment-grade credit metrics. Could you elaborate on the specific factors that prevented the approval of the previous dividend level? Yes. Well, why don't you take that one, Raimundo? Raimundo Laborde: Thank you. Yes. So the decision to reduce the dividend that we propose to the Board and the Board, in turn, is proposing to the AGM is driven by the rating agency discussions. This is one of the mitigating measures that we have agreed. It doesn't have a massive impact on leverage, but it's a strong signal, I think, to the rating agencies, and I think, generally to our lenders that we are serious about returning to a stable outlook. So this is, in terms of dividends going forward, I guess, Jose Manuel, we would have the -- we would want to resume a more normal dividend level post achieving the stable outlook and the rate. Jose Domecq: Yes. Thank you very much. So that does with questions on ACCIONA Energia. We go on to the questions on ACCIONA Group, the rest of the company. The first one from Flora, Fernando and Oscar, RBC and Santander. Well, we have many questions about Nordex, one of which is considering the strong performance of Nordex, should a placement make sense? Are we comfortable with the high exposure? Is this exposure in industrial fit an industrial company and in our strategy to invest and develop operating infra assets? What would be -- and this is, I guess, it's 4 questions in 1. What would be the minimum level of stake that allows you to maintain consolidation. Let me answer the first part of it. We are very comfortable with Nordex. Nordex is an integral part of the group. It's an integral part of the company. I understand that the market or the analyst community often see Nordex as a financial investment, but I think you should change your approach because that's not how we see it. It's an integral part of the group. We were there when it needed help some years ago. We're there when it's producing excellent results. And that's what business is about. The alternative that subliminally many people or you are suggesting is trading, and we're not into that business. The other questions were whether we would sell 5%. I guess, it doesn't change much and it would be a significant change in our policy towards Nordex to start trading stakes. Let me remind you that we started the OEM industry 25 years ago and Nordex is a result of the ACCIONA Windpower merger with Nordex in 2016. As a matter of fact, it's called ACCIONA Nordex, ACCIONA Windpower. Therefore, our affinity to Nordex is the same as we have had to this industry for many years. Let me then end the answer to this question on a very important -- what I consider to be a very important comment that I somewhat made in my introductory words, which is the importance of maintaining industrial capacities within the European Union. And Nordex is a success story of industrial capacity, of industrial success, and we're very proud to be an integral part of that. And I believe that needs to be protected and needs to be enhanced and encouraged. The next question from Pablo is, could you clarify the criteria for provision reversal at Nordex EBITDA? Do further provisions remain that could be reversed in the following years? Jose. Jose Carrion: So no more. We don't have any more provisions on our balance sheet, on ACCIONA's balance sheet related to Nordex's nonquality costs. There are some negligible provisions related to other risks. And the reversal is mainly due to the fact that Nordex has already incorporated these expenses into the results, and therefore, we can't have them also on ACCIONA's books. And so we need to revert them. That is the underlying reason. Jose Domecq: Next question is from Flora at CaixaBank. Can you please share the list of potential awards in concessions? Okay. I don't have that list, but maybe you have it, Jose? Jose Carrion: Happy to take this one. In the short term, over the next 12 to 18 months, we're going to be tendering around 14 projects in our core markets, so heavy award or heavy activity on new award, new auctions and new projects. There's a strong focus in the U.S. both on managed lanes, where we will be tendering in Tennessee the I-24 managed lane project, in Georgia the I-285 projects and, shortly thereafter, the I-77 project in North Carolina. And we expect awards of at least the first 2 within 2026 or resolution of the participation in 2026 and the I-77 shortly thereafter. Also in the U.S., we will be participating in transmission line bidding for 2 projects, one in MISO, one in SPP. And there's also heavy activity in the short term in Brazil related to both metro lines and the extension of Line 6 and other metro lines that are being developed in Sao Paulo as well as the water concessions with a particular focus in Pernambuco, which we have our preferred bidders for, and we need to sign in the coming months. Jose Domecq: Thank you. Next question is an update on our asset divestment plans ex energy, including waste or water treatment plans or real estate. Jose, why don't you take that? Jose Carrion: We're always analyzing different options and not only divestments but also acquisitions. In our Real Estate business, it is business as usual or it is our day-to-day business. And our portfolio of concession assets, the portfolio is still very young. So 90% of it is still under construction, and therefore, we're not considering -- we don't think it is the optimal point for considering asset rotation. That is beyond the potential transaction around part of our waste-to-energy portfolio in Australia, which, as you will have seen, is part of the debt that is currently held for sale given that it's one of the most immediate transactions that we are considering in the group outside of our -- ex ACCIONA Energia. Jose Domecq: Thank you. Next question from Jose Porta at Kepler are on property development outlook, the EBITDA and the property development in our Living department. Jose, why don't you take that one? Jose Angel Santos: Yes. This year has been affected by the result coming from the Ombu transaction. That's an office building that we have obtained around EUR 37 million of capital gain, but we still expect revenues and EBITDA to improve significantly like-for-like in 2026, basically, on the delivery of the similar number of units but with a higher price per unit. And the average selling price for these deliveries will be consistently high because the product mix is a high-end product mix. We are talking about properties located in Marbella, [indiscernible] and also Catalonia and Madrid. Jose Domecq: Yes. Let me add to that, that the Ombu transaction shouldn't be considered as a extraordinary event or extraordinary sale. The Ombu transaction is a classic case of a multiyear normal operational transaction, by which we have reaped an urban facility and improved it and sold it. But that's obviously a more than 1-year process, which will be, I guess, recurrent maybe not every year, but it's a recurring activity. It's an important activity in our Living division. Next question is from Oscar Najar. What is the improvement in net debt, mainly working capital? Why is it so positive, almost EUR 1 billion in second half '25. Jose? Jose Carrion: The typical seasonality of our working capital profile usually shows better performance in the second half of the year than in the first of the year. And the movement that we've seen in the second half of 2025 is, in fact, quite similar to what we had in the second half of 2024. In -- the last 3 years have been -- working capital performance in the last 3 years has been particularly good in infrastructure with positive working capital for third consecutive year in 2025. In the case of 2025, it has been mainly driven by good management of advanced payments in Australia and the U.S. and good progress in some pending collections in the Infrastructure business. And going forward, for 2026, we should expect the working capital to normalize and reach more moderate levels for the year ahead. Jose Domecq: Thank you. Next question from Oscar is our expected net debt for 2026. Assuming the disposals in ACCIONA Energia, as I've said in my introduction, we will remain below 3, maybe lower. But our expectation is that -- our aim is to stay below 3. So if the debt levels are temporarily lower than 3, which maybe the case, we would use that additional slack to further investments. So yes, the target is to be below 3. Next question from Oscar Najar. When will you host the CMD on Infrastructure and Concessions? Who wants to take that one? When are we holding a CMD? Jose Angel Santos: Soon. Well, I think that the answer to that is that we want to have more visibility on the outcome of the bids of this year, and second, our portfolio is very young. And we would like to show a showcase an operating portfolio and probably will be soon by the end of this year or maybe beginning of next year. Jose Domecq: Yes. I mean I'd like to have one, but there are some moving targets that I think is best if we have them tied down. Question number eight from Oscar. What assets are held for sale in the balance sheet of ANA [indiscernible] ACCIONA Energia? Only South Africa or something else, how much? Jose? Jose Carrion: Besides the assets held for sale in ACCIONA Energia, which are our South African assets and our 2 wind assets in Mexico, the only asset held for sale in the rest of the business is the Kwinana waste-to-energy plant, which has associated debt of EUR 322 million. And it is what I was referring to on my previous question regarding potential transactions this year. Jose Domecq: Very good. Well, that does with all the questions we've received. Any doubts or further questions, kindly address us in - through our Investor Relations group or our financial department. I thank you very much for your attendance, and look forward to seeing you in the Capital Markets Day or sooner in the next report or on our road shows in the next few months. Thank you very much. Goodbye.
Operator: Good morning, everyone, and welcome to Docebo's Q4 2025 Earnings Call. [Operator Instructions] I'd now like to turn the call over to Docebo's Vice President of Investor Relations, Mike McCarthy. Please go ahead, Mike. Michael McCarthy: Thank you, Julianne. Earlier this morning, Docebo issued its Q4 2025 results. The press release, which included a link to management's prepared remarks and our quarterly investor slide deck were all posted on our Investor Relations website. This morning's call will allow participants to ask questions about our results and the written commentary that management provided this morning. Before we begin this morning's Q&A, Docebo would like to remind listeners that certain information discussed may be forward-looking in nature. Such forward-looking information reflects the company's current views with respect to future events. Any such information is subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking statements. For more information on the risks, uncertainties and assumptions relating to forward-looking statements, please refer to Docebo's public filings, which are available on SEDAR and EDGAR. During the call, we will reference certain non-IFRS financial measures. Although we believe these measures provide useful supplemental information about our financial performance, they are not recognized measures and do not have standardized meanings under IFRS. Please see our MD&A for additional information regarding our non-IFRS financial measures, including reconciliations to the nearest IFRS measures. Please note that unless otherwise stated, all references to any financial figures are in U.S. dollars. Now I'd like to turn the call over to Docebo's CEO, Alessio Artuffo, and our CFO, Brandon Farber. Julianne, can you open up the Q&A queue? Operator: [Operator Instructions] Our first question will come from Ryan MacDonald from Needham & Company. Ryan MacDonald: Congrats on a nice quarter. Alessio, maybe the first one for you. It was really interesting to read in the prepared remarks about the potential power of integrating Harmony Search with 365Talents, as it seems like that over time, that the search data that you can get from Harmony Search and identifying skill gaps and then sort of integrating that with 365Talents could potentially help close those skill gaps, I think, as the products are integrated. Can you just talk about sort of what the integrate -- where the integration efforts stand on 365Talents? And do you also see sort of this similar potential integration? And then as we think about 2026, how close are we to that vision state? Is there a sort of a sales training to sort of do that cross-sell motion kind of going into place for this year? Alessio Artuffo: Good morning, Ryan. Thank you for the question. First, let me tell you, I'm extremely excited to be able to talk about our acquisition of 365. It's been an important milestone for us. You are correct in saying that the integration between Docebo and 365 is strategically relevant for us. If nothing because, among other reasons, it gives us an incremental data moat, which in the agentic era is a very critical aspect of our strategy. Now when it comes to the integration, the integration is designed to be a Phased one. Let me ground it in the current times. We already have customers that we share. We already have an integration that is in production. We are aligned on our ideal customer profile. 365 operated in the strategic enterprise segment and their customers were very -- are very complex organizations with very complex people workflows. So when it comes to integrating the data of Docebo and the data of 365 and the opportunities, they are enormous and there are many. What I would say is one of the things that I loved about 365 and one of the reasons that led us to this acquisition is also their AI forward technology and thinking. To give you an example, they already have built agents that allow to build the entire job architectures, a job that would have required months with consultants even not as long as a couple of years ago to be done in instance. And so their agentic experience will accelerate our integration between the 2 platforms. You asked about our road map path and what it means for us. So a couple of examples of integrated workflows that we envision. Number one, imagine this skills architecture that, again, like I said, gets built via agents. Okay? This is available now. It's there. Learning programs, execution happens, right, like within Docebo. But as skill gaps are identified and detected as part of the regular workforce planning, skills are constantly assessed and skills remediation happens in an integrated way with Docebo. Imagine an agent that is capable of understanding where the workforce stands against certain business goals and the learning machinery via agents that creates content to continuously produce the material that remediates and empower that workforce to get better. That is the power of the integration between Docebo and 365. Brandon Farber: Ryan, just on the second part of your question of the sales motion and the cross-sell. So really on day 1, right after the acquisition, we started cross-training our sales staff. Our acquisition thesis remains that there's going to be 3 motions. We're going to continue to sell 365 on a stand-alone basis. We're going to sell back to our existing customer base and net new customers. We're going to sell a combined Docebo 365Talents suite. We do expect our existing customer base to start attaching on 365 in H2 of this year while we cross-train our staff in H1. Ryan MacDonald: Super helpful color there. And then maybe as we think about sort of taking a step back on AI, clearly, you have the product vision and road map out there. But obviously, in the markets over the last several months, there's been sort of obviously plenty of fears and concerns about sort of what AI can do in terms of disruption for broader enterprise software. I'm curious if you're seeing any signs of, let's call it, market fears and reactions actually in the field? What are customers saying about AI and sort of their internal initiatives? And how is that sort of affecting the budgetary environment as you look ahead into 2026 here? Alessio Artuffo: The demand environment has been very strong. The field is constantly helping us better qualify how our customers in the L&D, in the learning and management world think about AI within their organization. There's no doubt. Look, we do live in a transformation phase. But in terms of defensibility of our solution, look, I have done this for now over 20 years. And I would say that there are a few things that I am absolutely clear and sure about. The #1 thing that I'm sure about is that what we have built at Docebo now combined with 365 and the evolution of what we're doing is incredibly hard to build and replicate. You just don't Cloud Code this stuff overnight. That is just pure marketing speak for that type of concept. And I will add to that, I do spend nights in Cloud Code. I stop sleeping because of that. And what I would say is when you go beyond the surface of your first 15% to 20% creation of productive front end, the enterprise piping requires you to deliver at scale to hundreds of thousands of millions of users, things like unsexy things like database specifics, multi-tenancy, role-based access, permission, all this stuff is what actually powers an enterprise application. And so I really like to emphasize that because beyond the surface, there's a lot of hard coding piping that folks don't talk about in LinkedIn. And second, I would say, Ryan, what we're hearing from customers reflects our thought and knowledge of the industries, which is that enterprises effectively are evolutionary and not revolutionary. And particularly in L&D, okay? -- change, radical change is slow to come by. Now we're not standing still. Again, we own the data, we own the compliance data, the skills chart data and no LLM owns any of that. And so that data becomes then what the catalyst for those agents to take action, right? Agents are not magicians, right? An agent without data is like a Ferrari with no fuel. And so what we do is making sure that our data structure and data investments are very strong. And on top of that, we build the agentic layer so that now we have the data moat, the agentic moat and the combination of the 2 with our enterprise experience becomes just proof that we're going to be winners in this market. Operator: Our next question comes from George Sutton from Craig-Hallum. George Sutton: Alessio, I wanted to talk about your DNA. So growing 9% in Q4 and guiding for 10% to 11%. My sense is the DNA of this company is built very differently for much more significant growth. So I wondered if you could just discuss that, if anything has changed there. And then I wanted to kind of pair that with your substantial issuer bid and your desire to buy a lot of stock down at these levels. Alessio Artuffo: Wonderful. Love the DNA question. I think your intuition is right in the sense that over the years, we have continued to operate the company with a few drivers that when you look at those distinctly, then they make up for what you're seeing reflected in the data. What are those drivers? Number one, staying ahead of the curve in the market in terms of technology advance so that will fuel growth as a result. The investments in AI that we've made, not just now, but over the past few years are aimed at that, okay? This is not a story of roll-up. This is not a story of building a legacy business. It's a story of continued evolution. Second, disciplined execution. Innovating and building great products and being on the forefront of AI, in our point of view, should not be inconsistent with great financial discipline and focus on profitability. We believe that is something that we've gotten good -- very good, I would say, at and we can be even better at. So I do love this nature of a business that has the technology and the fuel to accelerate growth moving forward while having a rather strong profitability profile. And that's where I would end. Brandon? Brandon Farber: For 2026, if we think about how do we reaccelerate, how do we beat our guide, we really look at our business previously in 3 ways and now 4 ways. Firstly, mid-markets. Mid-market had a really strong 2025. We called it out for 3 quarters in a row. We expect that performance to continue, but that's not a real lever to reaccelerate growth. EMEA, again, had 2 strong quarters in a row. We do expect that continue. Enterprise, this is the real lever for us to reaccelerate and beat our guide. To be completely transparent, we were not happy with our performance in 2025. Some of it was macro, some of it was performance. And our guide does assume that we performed similarly in 2026 as 2025. We are seeing early warnings -- early signs that, that business is turning. The demand environment is there. Execution is getting better. And really, Q1, it's time for us to just execute. We have the demand, we have the pipe, and now it comes down to execution. And the last one -- or sorry, the last 2 is government. We're still in the early innings of government. If I could use maybe just a hockey reference, the National Anthem hasn't even finished singing. From partnerships to pipeline to RFPs, we're extremely early in this motion. We just became FedRAMP compliant at the end of May. We're seeing pipeline exceed expectations, and we have the pipeline to win some large whale deals in Q3. But when you think about how ARR converts to revenue, our baseline assumption is that ARR comes in September 30, and we really have 3 months of revenue. So not a significant revenue acceleration for '26, more '27. And then 365, I'd say we already have a fairly aggressive growth target embedded within the guide. So really, going back, enterprise is the main lever to beat our guide. From an SIB perspective, if you really just take a step back, SIB is designed with all shareholders in mind. It provides every shareholder an equal opportunity to participate. We filed our circular in late January, early February. Our view is clear, and it remains unchanged today. We believe the trading price of our shares does not reflect the underlying value of our business and our future prospects. From a mechanics perspective, the SIB is the most efficient path to meaningfully buy back shares. Under NCIB, due to our public floats and just the amount of shares traded daily, we're actually quite limited. To take out 3.6 million shares, it would take over 2 years under SIB. And lastly, I'd just note that even after the SIB, even after the acquisition, our net leverage remains low, and we still have flexibility to allocate capital. George Sutton: Great. Just one quick more narrow question on your QSR win. Understanding that organization is doing this through franchises. I'm curious if your deployment will be mandated by the entire system? Or is this a hunting license situation? Brandon Farber: Sorry, can you repeat that last point? George Sutton: Is this something mandated by the overall company, so all the franchisees take it? Or is this a hunting license where you need to go sell individually to the franchisees? Brandon Farber: No, it is company-wide corporate, and all franchisees. Alessio Artuffo: And you know the sandwich name, but we can't say it. George Sutton: I do know the name. Operator: Our next question comes from Josh Baer from Morgan Stanley. Josh Baer: Brandon, you just mentioned not being fully pleased with 2025, but some of those same sort of assumptions around that execution are embedded in 2026. So could you unpack that a little bit more? Like what exactly are you assuming in the '26 guidance with regard to converting that pipeline contribution from new customers, expansion from existing customers? If you could just kind of talk about the assumptions embedded in that guidance a little bit more. Alessio Artuffo: I think -- it's Alessio speaking. So I think our fundamental point of view is grounded on the observation of the work that our teams have been doing over the past few quarters and the leading indicators that are resulting out of that work. If you recall, a couple of quarters ago, we instituted effectively a new leadership team in the go-to-market team. After Kyle Lacy joining Docebo CMO, subsequently, a new CRO was appointed in Mark Kosoglow, and we have effectively reshaped our GTM motion as a result of these leaders coming in. This new GTM brought improvements across the board. I would say that, we have focused on a number of different areas where we thought we could do better, process reengineering, people optimization, and notably, a deliberate strategy to focus on qualitative demand as opposed to quantitative demand. What that means is we have taken steps to really be deliberate in the leads that we believe are most suited to win that belong to our category and have implemented processes to pass on to certified partners, very small business leads that are not necessarily anymore in line with the strategy of Docebo. We are a mid-enterprise to strategic enterprise company, and we need to focus there. And that exercise is paying off. We're seeing that in the leading indicators about enterprise pipeline. We're seeing that in execution in the field. And so the comments from Brandon are the result of that observation. So we have data and that informs our belief that the enterprise segment and government will be a catalyst for our reacceleration. Josh Baer: Just to follow up there with some of the refocused go-to-market, just looking at the ACV for new customers, which was down, is there anything to read into that? Like is that a result of the reshaped go-to-market? Or obviously, just one quarter of that new customer metric can move around a lot. How should we think about that? Brandon Farber: Yes. It's really our mid-market team is really firing on all cylinders. So when you look at that metric, it's heavily skewed by the number of customers you signed during a given quarter. Enterprise wins tend to be one unit at a high value. Mid-market tends to be many units at a lower value. So just the mix overall tends to skew it from quarter-to-quarter. But generally, we were actually quite pleased with all our segments in Q4. As mentioned in our prepared remarks, it was the strongest gross bookings we've had since Q4 of 2021. So the business performed. As everyone knows, we had some structural headwinds that masked the top line ARR growth with the wind down of Dayforce and the loss of AWS coming in effect in Q4. So Josh, it's just really a matter of mid-market performing really well in Q4. Operator: Our next question comes from Erin Kyle from CIBC. Erin Kyle: I wanted to ask and maybe dig into the net dollar retention for 2025, down year-over-year to 99%. I expect a lot of that was largely due to AWS, but maybe you can just unpack that number a bit for us. Brandon Farber: Yes, you're exactly correct. Excluding AWS, we would actually -- would have been up 1% year-over-year. So we would have been at 101%. There's a lot of good trends within NRR. We saw a sequential 3-quarter improvements in net retention, excluding AWS from Q2 to Q3 to Q4. When we look at 2026, obviously, from a retention perspective, we forecast 4 quarters out. And again, we're actually seeing strong trends in Q2, Q3, Q4 into 2026 as well. And one thing is when we look at Q4, even with a record gross bookings, we've talked about previously how typically our mix of gross bookings is 65% new logo, 35% expansion. In Q4 is 60% new logo, 40% expansion. So our expansion delivered in Q4. Our ideal mix is 60-40 or even 45-55. As we all know, expansion is just much more efficient from a cost perspective. New logos, acquiring new logos is very expensive. So we're really focused on the expansion perspective, 365Talents really helps us accelerate that. And we're focused on improving that NRR in 2026. Erin Kyle: That's a lot of helpful color there. And maybe one more for you or Alessio, if you can give us an update on the AI credit pricing model that you talked about last quarter? And is consumption pricing something you've been looking at moving towards more broadly? Or how should we think about that? Alessio Artuffo: Erin, yes, it's Alessio. One of my favorite topics. Let's go. AI credit pricing and more broadly speaking, the topic of monetization. Look, really hot topic in the industry right now. We have spent a considerable amount of time lately thinking through this really deeply. And so I'm going to share my thoughts. Include credits, but they need to be taken in the context more broadly of the overall AI monetization strategy that is becoming a very pervasive narrative these days. So first, let me start by saying head on, we are testing AI credits at Docebo. We have maybe 1.5 months worth of data. So it's early days. And the results of that work have been a mixed bag, frankly. In some instances, customers, particularly technology-first customers, I would say, are receptive to the idea of and in other instances and frankly, more, there has been pushback, pushback. Pushback that is kind of CFO, CIO-led, resulting from their desire for predictability and discomfort with non, strict controls and forecastability, okay? So that's where we stand with credits. If that's okay with you, though, I'd like to broaden that question to our point of view on the narrative on pricing because the argument that I'm hearing a lot of people bring it up is, hey, in this new AI-first era, per seat pricing is the legacy model, right? That's the general sound of it. And so what we did, we went and we dug deep. We looked at the number of companies over 30. We analyzed anything from, yes, AI native LLMs and et cetera, et cetera. And what we found out has actually been really interesting. The #1 pattern has been the majority of the companies even across AI native companies are using what we would call a hybrid model, which is what Docebo has today, which is a mix of per seat pricing combined with credit pricing. And then the second finding was that a lot of AI native companies actually do not have any concept of credit pricing or outcome pricing in that per seat only. And we've been analyzing the why, and that's actually really simple. And that's because the customers won't buy it. And that's because their use case and their industry doesn't lend itself to be adapt to a full outcome or a full credit-based model. So I'm really passionate about this topic. We're going to continue exploring new avenues. I do believe there is room for innovation on the pricing side in AI but I also have learned over the past 20 years that the best pricing model is the one that meets the needs of the company with the business processes of your customers. And so what we're not going to do is on the trend basis that everybody wants credits to be the thing is to shove a pricing model down customers throat. Rather we would work with customers to understand how their buying trends are and we listen to the field, and we do a lot of audience insights in our customers' calls. So great topic, more to come. We'll report back on our findings as we continue to explore credits. Operator: Our next question comes from Robert Young from Canaccord Genuity. Robert Young: First question for me will be on this force reduction that is after the quarter. It seems though it's optimization in R&D, but I'm trying to get a better idea of what the drivers are there, if that's just duplication after the acquisition of 365Talents or if it's a more permanent reduction, or are you preparing for a shift towards hiring up in AI? And maybe if you could just talk about what that implies on the strong EBITDA margins you reported this quarter. Should we expect that to continue to grow higher on the back of this force reduction? Alessio Artuffo: Our restructuring was followed a few specific criteria. First, the most important fundamental is we continue to use performance as a strong mechanism to grade ourselves against our own expectations, against our shareholders' expectations. And our job is to continue to have the best people in seat to deliver against those expectations. That's kind of I would say, an evergreen rationale that applies here. Second, a more targeted action was taken to accelerate something that is not new, and that is moving our product capabilities closer to our customers. As you very well know, over 70% of our customers are in North America and very few people in product are in North America. And that distance that has accumulated between our customers and our product culture is one that we believe needs to be remediated and addressed. And so we've taken steps to address that. We've chosen to co-locate these teams in hubs like Toronto. And just to be absolutely clear, that doesn't mean that we are exiting our developing Italian presence that remains foundational to our products. And it doesn't mean that there is any action that has got to do as a derivative of the 365 acquisition. We simply want to give our customers the confidence that we have a product team and organization that is also closer to them. As a result of that, we're not pausing anything to rebuild. We're just accelerating. We have retained our core architectural leaders to ensure that continuity. And this transition will not delay, if nothing, will accelerate our adjective road map. And I would say, in general, as we tap into new markets and as we have the ability to hire people in new territories, we're also excited about the opportunity to improve our hiring profile and continue to augment the skills of the people at the ship. And I think Brandon wants to add something on the EBITDA question. Brandon Farber: Rob, on the EBITDA side, as Alessio mentioned, the main goal of the reduction was not for a cost savings perspective. Although we are expanding EBITDA margins, the main reason for that is just discipline throughout the business while we grow it. When we -- when you look at the guide relative to how we performed on EBITDA in 2025, it's about 2% EBITDA leverage year-over-year. And when I think about that at a really, really just high level, there's going to be 1% leverage gained in G&A year-over-year. That's just continued discipline that we've talked about for years within G&A and then roughly 0.5% of leverage in sales and marketing and R&D, where we continue to just focus on sales efficiencies and gaining leverage in R&D as we continue to use various tools that allow us to become more efficient. Robert Young: Okay. Second question, I think adding on to a previous question around the QSR and the casual dining traction. You've had a lot of traction in that space over the last 5-plus years. Can you just talk about how much opportunity is left and what the competitive dynamic looks within that specific end market? Because it seems to be driving a lot of new customer growth over the last couple of years. I was just going to ask just a small quick question was in the gross bookings metric you gave the 12.5% growth, does that include Dayforce and AWS? Or is that just Dayforce? And then Alessio, I'll let you answer the question. Sorry about that. Alessio Artuffo: I'll start with the QSR part of the question, and then I'll pass on to Brandon on the gross margin question -- sorry, gross ARR question. So you're right. QSR is a relevant market for us, one in which we have continued to win landmark logos. And that is really the result of a couple of things, focus, yes. So I would say, sales strategy and a better defined targeting of the accounts that we -- that have a higher likelihood to convert with Docebo and two, a deliberate product strategy that addresses some of the peculiar needs that this industry has. Some of those include the way they report on data. Others include the way they organize their own personnel across franchisees and corporate offices, and that requires rather complex ways of mapping users across geos, entities and so on and so forth. And by the way, let me just use this example to my reference prior back to the defensibility of a true enterprise-grade system. This stuff is really complex. It's multilayer and takes years to build. Back though to QSR, we believe the opportunity ahead of us is pretty significant. We have in road map capabilities that further make us even more compelling. The QSR space is a very -- it's a space that requires also a deep usage of adaptive mobile technology. We are thinking and rethinking our mobile strategy in that regard to have a more frontline workers technology readiness available. And as part of that offering, let me finish by saying there is a module of Docebo called AI Virtual Coaching that is still, I would say, rather early days that has the potential to become an absolute killer in use cases for front-end workers and QSR like. We're very excited about it. We're investing in it. We are actually going to put more resources and more effort into it to accelerate its development. And so we believe this that the QSR opportunity is a really significant one for us. Brandon Farber: Rob, if we think about the top 10 QSRs, we have about 4 of them as customers. There are still top 4 largest QSRs that we do not have. So there's still large market opportunity for us to continue to gain. On your question on the gross bookings, the 12.5%, that's actually just our total ARR. So it includes growth and churn. That includes Dayforce -- sorry, that excludes Dayforce, but it includes AWS. So if you're looking for a metric of our growth, excluding both Dayforce and AWS, that was closer to 14.5%. Operator: Our next question comes from Richard Say from National Bank Capital Markets. Richard Tse: With respect to the environment in general, has this AI narrative impacted your sales cycles at all? And is there kind of like a slow building as your prospective customers evaluate really what they want to do? Because obviously, the environment is changing so quickly. Just kind of want to get your perspective on that. Alessio Artuffo: Richard, we really monitor our demand in multiple ways. And if the question is, are you seeing a headwind relative to this AI first narrative, the answer is no. As far as our sales cycle, our velocity of execution, one of the metrics that I am keeping an eye on in that area is exactly how long does it take us in different segments to get to deal done from qualification occurred. And the recent data is incredibly encouraging. We've shaved off weeks of sales execution, particularly in our mid-market and mid-enterprise space. And when you do that, what effectively means is that you're almost gaining a month of selling action in the year. And so that has been very significant, and we are taking steps to improve that even further. Richard Tse: Okay. With respect to capital allocation, obviously, with you continuing on the SIB, there's a high degree of conviction. Post that sort of SIB concluding, the stock doesn't sort of move higher off of the back of that. How are you thinking about capital allocation? Would you consider additional buyback programs? Or are you kind of evaluating acquisitions? And ultimately, what's sort of your comfort to leverage ratio here? Brandon Farber: That's a great question. Just on the acquisition front, doing an acquisition the size of 365Talents in 2026, it is unlikely. We have a lot of things to focus on for 2026. We want to really focus on execution and reaccelerate Docebo organic and really perform and execute on our acquisition of 365Talents. From a buyback perspective, if our shares continue to trade at depressed valuations, we will continue to buy back shares under the SIB even after the SIB. From a net leverage ratio, when we think about net cash to EBITDA, we certainly -- I think we get very uncomfortable above 3. Under 3, we are more comfortable. So that's kind of our line in the sand. Operator: Our next question comes from Ken Wong from Oppenheimer. Hoi-Fung Wong: Fantastic. Alessio, I wanted to just touch on 365. This is the largest M&A at the company, not exactly a competency or a muscle that you guys have. What's your comfort in your ability to absorb such an acquisition? And then any appetite for additional M&A beyond this? Alessio Artuffo: I would say a number of things on this. The discipline of skills intelligence is actually very adjacent relative to the learning space. There are obvious overlaps between the two. But you're absolutely right in saying that the use cases and in some instances, the persona buyer can vary. That is why we've taken a deliberate stance of maintaining for a period of time, the 365 entity and brand active as we implement both the integration from a product capability standpoint, that is priority #1. And in parallel, we integrate the commercial motions. That enablement that is necessary to blend the organizations is undergoing and will take time. But in the meantime, we have structured our organization at Docebo with resources that are going to be experts and are going to live within the 365 world to become really the translators of the value of 365 in our market. The other thing that I would say about this acquisition is that Brandon briefly mentioned earlier that I think it's really important. As we have this incredible base of over 3,500 customers active, one of the objectives was also to have an opportunity to differentiate and have another entry point other than LMS in these organizations they may already have an LMS in place. Dismantling an LMS setup from a large enterprise, it's -- it can be years worth of work. And so our opportunity here with this effectively our first true second product is to knock at the door of organizations and offer a value that integrates with their existing LMS. And as we enter that secondary door, we can then consolidate that account under a unified strategy. So you can appreciate how the adjacency of the capabilities, the integration strategy from a product and commercial standpoint lends itself to what will be a, I believe, a very successful second product story that will have an impact on our NDRR in the future. Hoi-Fung Wong: Fantastic. Really appreciate the look into the strategic rationale. And then Brandon, maybe kind of building on that, as we think about the fiscal '26 guidance, I guess, any change in your philosophy here as you have to think through some of the moving pieces that go along with 365, the ability to integrate, obviously, operating kind of 2 teams in parallel? Like how should we think about what prudence was baked in? Brandon Farber: From a 365 perspective, I would say we didn't take a conservative approach. We had a very tight business case. We're really factoring in high growth from that business, and we are expecting to execute on that. When we think about the different aspects of revenue, talking about Dayforce, it's going to be down to roughly 3% to 4% of our total revenues. We publicly disclosed that we'll generate roughly $9 million pro rata from 365Talents. And we continue to put no deals greater than $1 million ARR within our guide. We do have a number of those in our pipeline, but it has been over 12 months since we've closed one. So we feel like the prudent aspect is to exclude that from our guide. And then just as I mentioned, government, while it is in our guide, it's only there for 3 months, just given the seasonality of the Fed spend really geared towards September 30. And those are the main aspects that I think of from a revenue perspective. Hoi-Fung Wong: Got it. And then just a quick follow-up. Any kind of top line or bottom line synergies between the 2 orgs that are factored in? Brandon Farber: Bottom line, no. Top line synergies is really just what we've talked about is going back to the Docebo base and selling 365 to our current customer base. Operator: Our next question comes from Matt VanVliet from Cantor Fitzgerald. Matthew VanVliet: I guess now that you have sort of the go-to-market team reorganized like you want it, but with the addition of the federal opportunity maybe being a little bit more wholesome than it was before, where do you feel like you're at in terms of sales headcount? What's the plan kind of baked into the guide for '26? And then just maybe longer term, how do you think about headcount additions correlating with top line growth? Or can you decouple those a little bit with using AI tooling and other efficiency mechanisms? Brandon Farber: From a sales headcount perspective, on the government side, we really invested in 2025 to get additional quota carriers in seats -- so we feel like at the start of 2026, we're well set up from a quota perspective. And the focus is to win more business with the same amount of headcount. We're really focused on sales productivity, sales efficiencies, using tools to improve those efficiencies. And 2025, I think we ended the year on a good note from a sales efficiency perspective. We started the year fairly inefficient in 2025. So we're continuing to focus on it. We really look at our pipeline to indicate when we need to add quota carriers. So while we have a budget, we don't stick to it. We don't hire just to hire. We hire based on pipeline, and we'll continue to look at that on a quarterly basis. Matthew VanVliet: Very helpful. And then I guess just on the other side of the AI question, how much demand or maybe even deals closing are you finding as customers want to have a more complete platform to train their employees on maybe the usage of those LLMs, how to get value out of them, how to maybe protect the organization's data from not including overly proprietary things and prompts and things of that nature? Is it driving a fair amount of top-of-funnel demand and potentially even deal closing? Alessio Artuffo: I'd say among the trends in the audience insights that we have, I would say what I hear you describe more as AI readiness is one of those trends. I think specific companies in the tech sector are more concerned with advancing their people, AI depth. Conversely, what we're finding is that sectors that are more institutional like manufacturing, health care and data sensitive are, frankly, in an anticyclical kind of way, asking us to put in place measures for AI to be deeply controlled, enabled, disabled, toggled off. Those controls capabilities have become an absolute must requirement, and we are seeing evidence of that unsurprisingly, frankly, also in the government space. So I think it's a very interesting phase in which you have the ones that are on the offense side and want to use our technology to get smarter about AI, and you have the ones that are completely on the defense side and are still somewhat skeptical of the downsides of AI and ask us for observability, controls and compliance, and we're playing on both fronts. Operator: Our next question comes from Suzanne Sukumar from Stifel. Suthan Sukumar: For my first question, I wanted to touch on the competitive landscape. Aside from Workday by Sana, I'm not sure I'm seeing any major moves in the industry. I kind of curious from your perspective, more broadly, how are you seeing competitors respond to AI and executing on this opportunity? Alessio Artuffo: I'd say this. Look, first, I will tell you what I stand philosophically on the topic of competition. While we get educated, I'd like to say to the team, we are incredibly self-centric and self-focused. I don't want this company to chase others. I want us to lead the pack, innovate and be very, very focused on ourselves. That is the philosophy I take on competition. When I get education from the team about what they hear about the competitive landscape, I think your reflections are correct. There is not a high degree of innovation happening. Fortunately, for us, companies in our space historically have taken more prudent approaches to R&D. And I would say the biggest trend that we are seeing that I'm having evidence of is what I would call AI by marketing. AI by marketing is the art of calling everything agents even when they're not. What I see is a bunch of pretty simple copilots defined as revolutionary agents when they're not. An agent is an agent by definition, it should be studied what the definition is, an agent takes decisions, an agent solves complex business problems. And we understand the difference between a copilot and an agent because we're building both. So I would say the market is frothy. There's not a ton of real disrupting value. I'd say Sana acquired by Workday was that one start-up that had edge in that area. Certainly, it becomes challenging for a company like that to go at the same speed and pace within a machinery like Workday. I would assume, but again, none of my business. All I know is that when we go in the market and we introduce our AI capabilities, we stand out big time. And that's what we're keeping on doing. Suthan Sukumar: Okay. Okay. Great. For my second question, I want to touch on from more of a bookings and pipeline perspective. Can you speak a little bit about what the -- how contribution has been trending with respect to your pipeline from your SI partners like Deloitte and Accenture and any color on sort of how deal sizes and deal scope has been evolving when partners like these are involved? Alessio Artuffo: Yes. Answer straight to your question, nearly 80% of our enterprise pipeline now has a system integrator attached to it. We work with a number of system integrators from the Deloitte and Accenture of the world to smaller or medium-sized system integrators that are either regional or leaders in their respective market. And that work that has happened over the years is certainly paying off. Specific to system integrators, things that I can share is that we recently announced that with Deloitte, we've, for example, completed a process to enable Deloitte plus Docebo to become a product that you can purchase through the Amazon AWS marketplace, which means effectively that Deloitte customers that want to implement a learning platform can buy Docebo in partnership with Deloitte using the AWS credits, which is a very favorable vehicle of purchasing, especially for large enterprises that have oftentimes credits to be managed and spent on AWS side. And everybody wins because Deloitte wins, AWS wins and ultimately, Docebo benefits from what is a very CAC accretive type of sale. Additionally, we're working with Deloitte and other system integrators on their own academies. What we're finding is that these system integrators are implementing academies using Docebo, which means they power their own customer academy using Docebo. And this is becoming a catalyst for very large organizations that are approaching the system integrators. And notably, it's happening with major airlines, major transportation groups that are going to the system integrators and saying, hey, I'd really love to implement your academy. And then when they scope out what they really want, this becomes more of a -- less of a broad academy play, but more of a direct deal with the system integrator. And so it also acts like a lead gen opportunity for us. The work that our team is doing on system integrators is very good. There is more to be done. There are more integrators that we're talking to that we plan to sign over the next few quarters. And so I'm pretty excited about it. Operator: Our next question comes from Gavin Fairweather from ATB Cormark. Gavin Fairweather: Just on 365Talents, I'm sure you had a base deal or a base understanding about upsell and bundled deals when you did that acquisition. But I'm curious what market feedback you're getting from clients and prospects and how that's making you feel about the opportunity vis-a-vis your original expectations? Alessio Artuffo: Gavin, very relatively early days. We're a month plus in. And I can tell you that we had certain phases of amount of opportunities that we would generate of companies that want to look at 365. I recently was in a webinar with Loic, the CEO of 365 and close to 1,000 people registered for the webinar, a number showed up and a big percentage of the people after the webinar asked for a demonstration and declared in the webinar that they were looking for a solution or looking to improve their current solution. The pervasive feedback that we're getting across all calls is that companies do have a skilled strategy, but it's fragmented from a platform and system standpoint, meaning they may have a skills module in say, in their HRIS or HCM system, but it's not connected to their learning execution strategy in the way that we plan to do it. And so when we tell them a story of this automated cycle across the skilled engine, their workforce planning strategy, their career development, the internal mobility use cases with learning attached to it in a kind of seamless way and we demo that to them, their reaction is incredibly positive. And we are a month in. Our integration is still relatively simple, all things considered. But imagine what will happen when we execute on our real vision over the next 2 to 3 phases of integration, which will occur within the next 12 months. And so all of that to say, the leading indicators are incredibly positive. And I would also say the other thing that excites me the most is it's clear we have an enterprise-first strategy, complex organizations get the best out of Docebo and the numbers that we have in our integration dashboards of leads coming in are very skewed against that threshold of 1,000 employees and above, which we have set for this product. And so we're bang on in terms of the pain that is felt from the type of customers that we want to. That's product market fit, and now we just need to execute. Operator: Our next question comes from John Shao from TD Cowen. John Shao: You mentioned Docebo has the data moat. So could you maybe break down that data moat to help us understand what data belongs to you versus your customers? And maybe for data owned by your customers, how much liberty do you have to leverage that as additional resource? Alessio Artuffo: Sure. Well, when you think about what the LMS is, it's a complex workflow engine, so at the business layer where you have a lot of functionalities that connect learners to courses. And those courses can be in a variety of ways, right? The general concept of course can be anything from a PDF or procedural to a learning program that occurs over the course of 3 months to a classroom workshop to a series of virtual led instructor, Zoom-like programs. And all of that can be blended, by the way, in creative ways. When you are an enterprise of any sort, like particularly true in anything that is regulated, that data, that historical data becomes incredibly important, not just from a strategic standpoint of talent development and talent management, but particularly because there are regulators that you have to prove that you have taken certain steps to improve your people. And so you have a lot of data that companies sit on that doesn't live elsewhere and needs to exist and needs to be inspectable, auditable and there needs to be trails that prove what you've done when and if you were compliant at all times. That is the LMS in its own, I would say, most simple compliance-related form. Then you have data relative to external use cases. You have years of use of Docebo platform to prove that by enabling your customers and all your partners to do the work that they need to do or to buy more by educating them, they indeed deliver better experiences if they're partners or they buy more or they stick around longer if they're customers. That data is invaluable to any marketing organization, to any revenue organization. On top of all of this, we're adding the data moat of skills. Now we're talking millions of records at very large companies of knowledge that an individual went from a certain skill set to a new skill set over different levels over the course of years. That data, once again, is not available to third-party sources. The reason why all of that data is incredibly important is that in order to operate automation and decision-making on top of it in the form of agents, agents have not this [ ETL in ]. They are fundamentally workflow executors. They execute workflows on clean, well-organized structured data sets. And so whether the agent lives in your LLM and called via an MCP server or the agent is a hyper specialized agent that Docebo has the knowledge to create and solves very specific problems in the LMS world, is sort of kind of doesn't matter. They can live in a number of different places. The thing is, what they need in order to provide an outcome is the data that resides in our systems. I hope that helps. John Shao: And my second question is in terms of the customer spending. I understand that ACV is around $60,000 to $70,000. But how does that number compare to, let's say, your customers' corporate learning budget? Is it around 10% or is a much higher number? Because I'm asking this question because one of the key arguments for AI disruption is cost savings. Brandon Farber: Very interesting question, but the learning tech stack is much wider than you'd expect. Every company has from HRS system to LMS to skills, the tech stack is wide. If you actually look at a graph of the number of SaaS companies that are in the L&D or CHRO tech stack, it is wide. And LMS is not the biggest one. Obviously, HRS is by far in the lead, and it is materially, materially higher than the cost of an LMS. That's just the reality. The average ACV of $67,000, that's really Docebo continuing to move up and up market. We really look at enterprise ticket now at roughly $250,000. And while there is competition in the enterprise space, Docebo is typically very competitively priced, maybe on the top end. But compared to our competitors, we're roughly within the range. And we continue to see enterprise willingness to spend that money. And there's been no pushback on price, on renewals, on new prospects. Pricing is holding strong and companies see the value in LMS. Operator: And our last question will come from Kevin Krishnaratne from Scotiabank. Kevin Krishnaratne: Just one question, maybe two parts for Brandon. Brandon, you talked about in the prepared remarks on reaccelerating organic growth. I think you did 9.5% subscription growth in Q4. I think maybe you can help us here on what the organic growth expectation is for Q1 after 365Talents coming down a little bit, but do you expect that to sort of stabilize and grow in Q2? Or is there anything that we should be thinking about in Q2, whether that's anything from Dayforce churn, any kind of renewals coming up in Q2 that we need to consider? I'm just wondering how we think about the sort of organic growth trajectory here. Brandon Farber: Yes, reacceleration organic, we're modeling Q3, Q4 onwards. There's a number of factors. Number one, if you look at Q1 and Q2, our enterprise performance was below expectations. And as we lap some of the quarters that had material impacts due to Dayforce wind down, which was Q3 and Q4, as we lapse AWS, our ability to reaccelerate growth becomes greater and greater. So in our own internal models, that acceleration starts in Q3 and continues in Q4. Kevin Krishnaratne: Okay. That's super helpful. And then last piece, you talked about strength in mid-market, enterprise is going to be a driver. But can you talk about the SMB or the low end of your base and how much of that is in your ARR? And is there anything to think of there in terms of pressures, churn at those type of companies that are more on the low end of the customer profile? Brandon Farber: Yes. So ARR below $50,000, which is generally the benchmark we consider commercial or SMB, it's down to about 16% of our ARR. At the same time, it's actually interesting to note that our gross retention in that area actually improved year-over-year. We were always kind of in the low or I should say, mid-80s, and we actually saw sequential improvement in the commercial segment. So it's an area that we've restructured how we manage it from an account management perspective. We've put a little bit more focus, a little bit more investment, and we're actually seeing that investment pay off. That's more from an account management perspective. As Alessio mentioned, from a new leads perspective, we have new benchmarks, some go to partners, some to go to us. But that existing customer base below $50,000, it's actually a much healthier customer base than it's been in prior years. Operator: We have no further questions. I would like to turn the call over to Alessio Artuffo for closing remarks. Alessio Artuffo: Thank you, everyone, for being in the Q4 '25 earnings call. We are very excited about the trajectory of Docebo. And a milestone ahead of us is called the Docebo Inspire in April in sunny, warm Miami, and we look forward to seeing you there. Thank you. Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
Operator: Thank you for standing by. My name is Jael, and I will be your conference operator today. At this time, I would like to welcome everyone to the Delek Logistics Partners' Fourth Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Robert Wright, EVP, Chief Financial Officer. You may begin. Robert Wright: Good morning, and welcome to the Delek Logistics Partners' Fourth Quarter Earnings Conference Call. Participants joining me on today's call will include Avigal Soreq, President; Reuven Spiegel, EVP as well as other members of our management team. As a reminder, this conference call will contain forward-looking statements as defined under the federal securities laws, including statements regarding guidance and future business outlook. Any forward-looking statements made during today's call involve risks and uncertainties that may cause our actual results to differ materially from today's comments. Factors that could cause actual results to differ are included in our SEC filings. The company assumes no obligation to update any forward-looking statements. I will now turn the call over to Avigal for opening remarks. Avigal? Avigal Soreq: Thank you, Robert. 2025 was an exceptional year for Delek Logistics, highlighted by the achievement of a record adjusted EBITDA of $536 million. These results are a reflection of a strong execution across our businesses and the addition of high-quality business such as H2O and Gravity, but most importantly, because of our hard work of our great employees. During the year, we continued to advance our key initiatives across our natural gas, crude and water businesses, increasing our position as a premier full service provider in the Permian Basin. Now let me talk about each one of those businesses in detail. Starting with natural gas. During the year, we successfully commissioned the new Libby 2 processing plant, increasing the capacity of the Complex to around 160 million scf per day. The expansion in the processing capacity is being enhanced by the comprehensive acid gas injection and sour gas handling solution we are building. We are very excited about providing this comprehensive capability to our customers, further supporting long-term oil and gas production growth in the Delaware Basin. Moving to crude. Both DPG and DDG crude gathering operations delivered strong performance during the year. We have increased our overall gathering capacity and look forward to further optimize and grow the business in 2026. Our water business is also doing very well. We have largely completed the integration of H2O and Gravity into our operation. The combined gas, crude and water offering in the Permian Basin has increased our competitive position and build a strong platform of growth. With strategic foundation, strong operation and record results in 2025, we are well positioned for 2026. Today, we announced a 2026 EBITDA guidance range of $520 million to $560 million. This reflects the growth opportunity we have while managing leverage and coverage. We also intend to remain good stewards of our stakeholder capital. Our Board of Directors have approved our 52nd consecutive quarterly distribution increase, raising the distribution to $1.125 per unit, marking 13 consecutive years of distribution growth. This is an extraordinary achievement, and we are extremely proud of our team and financial prudence that brought us in. As we close the books on 2025 and begin 2026, Delek Logistics firmly positioned as a strong independent full suite midstream service provider. With the foundation we have built and the opportunities ahead, we are confident in our ability to continue delivering sustainable growth and long-term value for our unitholders. I will now hand it over to Reuven, who will provide more details on our operations. Reuven Spiegel: Thank you, Avigal. As Avigal mentioned, we are very excited about DKL's future and are working to increase our advantaged Permian position. Most significantly, I'm very pleased with the rising economic separation we have with our sponsor, DK. In 2026, we expect approximately 80% of our run rate EBITDA will come from third parties. This is an extraordinary achievement for the partnership and its increased independence will allow us to be more nimble in advancing the strong growth path we have been navigating. Turning to our business. We continue to work hard to bring an industry-leading sour gas solution in the Delaware Basin. The first step in the process was to complete our processing capacity expansion. Currently, we're working on completing the first AGI well and building the sour gas gathering infrastructure to fully optimize our capacity. As we have mentioned in the past, while our ramp-up has been slower versus our initial expectations, the need for sour gas solution is urgent, and we expect to see a step change in our utilization once our AGI and sour gas gathering infrastructure is fully complete. We also believe that the step change in utilization is likely to bring forward the need for additional processing capacity. We are looking at our options and have made selected investments that will support future expansions of the Libby Complex. We continue to believe that our expanded gas processing and sour gas handling capabilities provide a unique offering to our customers and provides us with a long runway for growth in the Delaware Basin. Our crude gathering volumes had a record fourth quarter. We are growing our crude infrastructure to provide our customers a more comprehensive solution. Our crude gathering business is in a very strong place, and our combined crude and water offering is yielding great results. Moving to our water business. The integration of 2 water gathering systems from H2O and Gravity has gone well. We are very excited about the opportunities our larger water footprint is bringing to us. We believe produced water gathering and disposal will require more innovation and different approaches as producer water cuts increase throughout the basin. We look forward to updating the market as we bring forward these solutions. With that, I will pass it on to Robert. Robert Wright: Thank you, Reuven. As Avigal and Reuven highlighted, we continue to make strong progress advancing the Delek Logistics growth story. While we are driving meaningful financial and operational growth across the partnership, we remain equally focused on achieving our long-term leverage and coverage objectives. 2025 was a significant year for the partnership. We successfully closed the acquisition of Gravity Water Midstream, which, together with the 2024 acquisition of H2O Midstream, were well timed from a purchase multiple perspective. In addition, we completed construction of the Libby 2 gas plant and are now in the process of converting operations to support sour gas treating, handling and processing capabilities. Our focus now shifts to fully capturing the value of these investments by optimizing synergies and executing our strategic priorities. At the Libby Complex, this includes completing the sour gas conversion and realizing the associated EBITDA uplift over time. From a balance sheet perspective, we ended 2025 in a strong financial position with approximately $940 million available liquidity under our credit facilities. This provides us with significant flexibility to continue executing our growth agenda while maintaining financial discipline. Turning to our fourth quarter results. Adjusted EBITDA for the quarter was a record at approximately $142 million, up from $114 million in the same period last year and $6 million higher than the previous record set in the third quarter of this year. Distributable cash flow as adjusted totaled $73 million, and our DCF coverage ratio as adjusted was approximately 1.22x. In the Gathering and Processing segment, adjusted EBITDA for the quarter was $71 million compared to $66 million in the fourth quarter of 2024. The increase was primarily due to the acquisitions of H2O and Gravity. Wholesale Marketing and Terminalling adjusted EBITDA was $21 million compared to $21 million in the prior year. Storage and Transportation adjusted EBITDA in the quarter was $35 million compared with $18 million in the fourth quarter of 2024. The increase primarily reflects the impacts of the sale of certain assets to DK as agreed to under the May 2025 intercompany transaction. Finally, the Investments in Pipeline Joint Venture segment contributed $26 million this quarter compared with $18 million in the fourth quarter of 2024, driven by strong performance from the Wink to Webster joint venture. Turning to capital expenditures. Total capital spending for the fourth quarter was approximately $32 million. Of this amount, $26 million was growth capital, primarily relating to initiating sour gas capabilities at the Libby Complex. The remainder of the spend was directed towards other growth projects, including advancing new connections across our Midland and Delaware gathering systems. Looking ahead to 2026, as Avigal mentioned, we remain confident in our earnings trajectory and are initiating our full year 2026 EBITDA guidance to a range of $520 million to $560 million. With that, we'll open the call for questions. Operator: [Operator Instructions] Your first question comes from the line of Doug Irwin of Citi. Douglas Irwin: I just want to start on guidance and maybe more specifically on growth expectations for the G&P segment. Could you maybe just help quantify how much of the variance within the high and low end of the guidance range is dependent on G&P performance and your ability to ramp up sour gas later this year? And then just with regard to the multiyear growth benchmark that you put out there, how should we be thinking about the ramp to that $70 million of incremental EBITDA over the next couple of years? Avigal Soreq: Doug, thank you for the question. I think it's a great question. But I will touch exactly what you asked, but I would like to start from a big picture standpoint. We defined a very clear concise strategy of crude, gas and water in the most prolific area of the Permian Basin. And if I want to highlight one number in the guidance we gave is the return on the investment that we see with the capital we invest now. You see it around 1 to 3x on the investment we see, which is very good. It's good to our coverage ratio. It's good to leverage ratio and very accretive to EBITDA. You see that over the course of more than 1 year. On a run rate basis, it's a very accretive number. And the main outcome of that is the results of our strategy. Second point I want to highlight is the growth and yield combination that we are seeing, that's probably best-in-class, if not best-in-class, probably among other best-in-class, but very, very good. We are on a very, very good trajectory in pattern. So we are very happy about that. The last point I want to make sure coming across, and then I will hand it to Reuven will be more specific around the sour is the fact that if you are taking the intrinsic value of each asset that we either build or bought, we need to get 7 handle on our unit price. So there is way -- much more room to go. We are very consistent with rewarding our investors. We have a very clear target for leverage ratio and coverage ratio, and we are prudently moving to those targets. Reuven, do you want to talk about sour gas just a little bit? Reuven Spiegel: Yes. Thank you, Avigal. We're actually very excited about the growth opportunity that gas will provide us. We mentioned in previous calls that gas in the region is turning to be more sour than originally anticipated, which made us accelerate our sour projects time line. Presently, we are drilling the AGI well and constructing our associated sour gas gathering and compression system. As we mentioned in the prepared remarks, we expect to see increased utilization as these projects are completed throughout the year. Even with the completion of this project, we still anticipate incremental processing capacity needed in our area. This is a long answer, but the short answer is we expect to be completed over the next few months. And the Delaware gas business will be one of our growth engines for years to come. Douglas Irwin: Got it. And maybe as a follow-up on an item from the DK release, you called out a transaction with DK for some assets that as the Tyler and El Dorado facilities. Just curious if you could talk about the EBITDA impact to DKL from those transactions and the use of proceeds. And then just looking forward, are there more opportunities like this that you could potentially do between the 2 companies? Avigal Soreq: Yes, absolutely, I will let Robert take that question. Robert Wright: Yes. Thanks, Avigal. Yes, these transactions really just helped us further the economic separation of the 2 entities. You'll see in our slides that DKL now has 82% of their EBITDA is now from third-party businesses as a result of this transaction. With this, our view is that we're materially complete with the inside Defense assets being sold to DK. We kind of have the right assets under the right roof now. And from an EBITDA perspective, it's really not material to either entity. Operator: Your next question comes from the line of Gabriel Moreen of Mizuho. Gabriel Moreen: I just going to ask in terms of maybe just pressing you guys a little bit on what the next steps would be on the Libby processing expansion. How big you would think the next chunk of processing addition would be and what would need to happen and when to make that come to fruition? Avigal Soreq: Yes. So I will tell you 2 things. First, you probably remember that we said a few quarters ago about the investment we already put for future expansion for Libby. You remember $15 million. So we will not try to take advantage around that. That's the first nugget I'm going to give you. The other one that I'm going to tell you that we are looking very, very carefully, and it's all public information, what our customer and producers are doing in the area. And in our area looks very good, and which means 2 things, which means more sour and which means more volume, both on the crude and gas. So I'm not going to commit to a time line that you asked, but you didn't expect me to fall into this stress. But I'm going to tell you that we are looking very good in all the macro that we are seeing and also the micro from our customers. So stay tuned. Gabriel Moreen: We do. And of course, I have to ask you, there's been a lot of, what I would say, sour gas midstream M&A over the last couple of months. So I'm just curious what your thoughts are on that, what you're seeing potentially out there in terms of packages on gas or water that they may or may not be out there? Avigal Soreq: Yes. So the cheapest company in the area, it's called DKL. We still don't see -- we are still not close to the valuation versus our peers. Obviously, you probably were very happy about the 2 midstream acquisition that we did, both H2O and Gravity. We do it both on the right timing on the right valuation. We are not shy of doing that, but we are not going to force ourselves into a deal that it's too expensive. So more to come. Every deal that we do needs to be accretive to free cash flow, leverage ratio and coverage ratio, and we are not going to shy from those principles in the future. And I will leave it to that. Operator: With no further questions, I'd like to pass it back to Avigal for closing remarks. Avigal Soreq: Yes. Thank you. Thank you. I just want to thank the great team in this room. Thank you to our great Board of Directors that support with the great support for the DKL journey to the investors and to the -- and mostly the great employees we have, I'm really proud of the progress we are doing and more to come. Thank you. Operator: This concludes today's conference call. You may now disconnect.
Operator: Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the CubeSmart Fourth Quarter 2025 Earnings Call. [Operator Instructions] I'd now like to turn the call over to Josh Schutzer, Senior Vice President of Finance. Please go ahead. Joshua Schutzer: Thank you, Jordan. Good morning, everyone. Welcome to CubeSmart's Fourth Quarter 2025 Earnings Call. Participants on today's call include Chris Marr, President and Chief Executive Officer; and Tim Martin, Chief Financial Officer. Our prepared remarks will be followed by a Q&A session. In addition to our earnings release, which was issued yesterday evening, supplemental operating and financial data is available under the Investor Relations section of the company's website at www.cubesmart.com. The company's remarks will include certain forward-looking statements regarding earnings and strategies that involve risks, uncertainties and other factors that may cause the actual results to differ materially from these forward-looking statements. The risks and factors that could cause our actual results to differ materially from forward-looking statements are provided in documents the company furnishes to or files with the Securities and Exchange Commission, specifically the Form 8-K we filed this morning, together with our earnings release filed with the Form 8-K and the Risk Factors section of the company's annual report on Form 10-K. In addition, the company's remarks include reference to non-GAAP measures. A reconciliation between GAAP and non-GAAP measures can be found in the fourth quarter financial supplement posted on the company's website at www.cubesmart.com. I will now turn the call over to Chris. Christopher Marr: Good morning, and thank you for joining us today. We are encouraged heading into 2026 that fundamentals have stabilized, and we are positioned to return to growth. Operating metrics have seen improvement over the last couple of quarters. And now that's beginning to flow through to financial metrics. Our more stable urban markets in the Northeast and Midwest continue to outperform, while our more transient supply-impacted markets across the Sunbelt and the West Coast are beginning to see green shoots in the form of second derivative improvement. Across all our markets, our existing customer metrics remain strong with no change to attrition rates or credit. 2025 was a year of stabilization for demand trends. Overall demand patterns were more consistent throughout the year and the environment has been more constructive, leading to move-in rates in the back half of the year moving positive year-over-year. The trend in move-in rates has been very encouraging with year-over-year quarterly growth improving from minus 10% in the fourth quarter of 2024 improving to minus 8.3% in the first quarter of 2025, improving again to minus 4% in the second quarter of last year, continuing to improve and turning positive at plus 2.5% in the third quarter of 2025 and increasing that positive momentum at plus 2.8% in the fourth quarter of 2025. In the early part of 2026, we have seen similar trends with the occupancy gap continuing to narrow with positive move-in rates. Specifically, the occupancy gap at the end of January of this year improved from year-end when it was down 70 basis points to end January at 88.7%, 40 basis points below January of 2025 with rental and vacate trends consistent with our experience during '25. With a few days left here in February, overall trends continue to be encouraging, with the occupancy gap continuing to narrow and the quarter-to-date move-in rate trend continuing to be positive with year-over-year move-in rates growing generally in line with what we reported with fourth quarter results. The improvement in operating fundamentals is beginning to show up in the financial results. It will be steady, gradual improvement as we typically turn over approximately 5% of our cubes in any given month. We started to see that momentum play through in the fourth quarter and would expect that gradual improvement to continue through 2026. Demand does vary across markets and submarkets with continued outperformance from 4 urban markets in the Northeast and Midwest and more supply impacted through the Sun Belt and Southwest. However, we saw improvements in fundamentals across many markets. With over 75% of our top 25 markets seeing revenue growth accelerate from the third quarter to the fourth quarter of 2025. As trends in our markets have been quite positive over the last 4 or 5 months, I am optimistic that we are inflecting and see a path to return to more historical levels of revenue and net operating income growth. In 2026, only 19% of our same stores are projected to face an impact of new supply, the lowest percentage since we began articulating this metric back in 2017. The magnitude of the impact of this competitive supply continues to lessen as more of the delivery is in that 3-year rolling impact from 2 or 3 years ago, and those stores are beginning to reach their first level of occupancy stabilization. Our highest quality portfolio and best-in-class operating platform, along with a seasoned management team with senior leadership having multiple decades of experience across cycles against the backdrop of declining impact of new supply and more constructive operating fundamentals has us well positioned to take on any challenges and maximize all opportunities through 2026. Now I'd like to turn it over to Tim Martin for insight on our thoughts on capital allocation and guidance for 2026. Timothy Martin: Thanks, Chris. Good morning, everyone. Thanks for taking a few minutes out of your day and spending it with us. I'll provide a quick review of fourth quarter results, discuss our recent investment activity and then jump in and provide some additional color on our '26 expectations and guidance. Same-store revenue growth accelerated from the third quarter to just shy of flat at negative 0.1% for the quarter, reflecting the continued stabilization of trends that Chris touched on and moving us to an improved starting point for 2026. Same-store expenses grew 2.9% during the fourth quarter, helped by some good news in real estate taxes and property insurance, offset by increases in marketing and R&M spend which are mostly timing related as compared to spend in those areas last year. Same-store then resulted in declining 1.1% for the fourth quarter. We reported FFO per share as adjusted of $0.64 for the quarter. And during the quarter, we announced a 1.9% increase in our quarterly dividend, up to an annualized $2.12 per share. On yesterday's close, that represents a 5.3% dividend yield. On the external growth front, it's been a challenging couple of years to find accretive on-balance sheet opportunities to deploy capital especially on marketed transactions. We had success with structured transactions in late '24 and then early into '25 when we were able to accretively invest a combined $610 million on a pair of transactions. One was a recap and one was a JV buyout. Since then, we've seen very limited opportunities to invest on balance sheet, given the disconnect in public and private market valuations but we've been focused on other creative avenues for capital deployment. We recently announced a new joint venture with CBRE IM with a $250 million mandate to invest in high-growth markets. This allows us to expand our JV relationships and provides another avenue to continue to grow the portfolio with enhanced returns. We also closed on two on-balance sheet acquisitions for $49 million during the quarter. In the fourth quarter, we also executed on our existing share repurchase program as the relative value for our portfolio made it a very attractive investment option. When considering, we own the highest quality portfolio of self-storage assets and combining that with the disconnected valuation reflected in our share price during the fourth quarter, repurchasing shares was compelling for us on a risk-adjusted basis compared to private market values for lower quality assets. Our Board has recently expanded the share repurchase authorization giving us approximately $475 million in capacity to repurchase shares based on current valuation levels. We generated approximately $100 million in free cash flow annually so we could execute under the share repurchase program on a leverage-neutral basis up to those levels. We're also looking at potentially selling some assets or contributing assets to a joint venture and using those proceeds to fund additional share repurchases should the public-private valuation gap persist further into 2026. Our balance sheet is in great shape with credit metrics very favorable to our existing investment grade credit ratings. Leverage ended the year at 4.8x net debt to EBITDA. We do have a few things on the to-do list for 2026. We may look at opportunistically accessing the bond market in the first half of the year and use proceeds to repay amounts currently drawn on our revolver. And then in the back half of the year, we may look to go again and use the proceeds to repay our existing bonds that mature in September. Looking forward, details of our '26 earnings guidance and related assumptions were included in our release last night. Overall, our FFO per share expectation for '26 is a range of $2.52 to $2.60 per share. For same-store guidance, our 2026 same-store pool increased by 16 stores. The midpoint of our guidance range for same-store revenues assumes a generally similar macro environment to last year, a lasting impact from competing new supply in our markets, a continuation of steadily improving competitive pricing, and a narrowing of our year-over-year occupancy gap as the year progresses. On the impact of supply, embedded in our same-store expectations for '26 is the impact of new supply that will compete with approximately 19% of our same-store portfolio, as Chris touched on. For context, that 19% is down from 24% of stores impacted by supply last year, and down from the peak of 50% of stores impacted back at the peak in 2019. We've been keenly focused on expense controls for several years. In fact, we've led the sector with the lowest expense growth over the last 3 year, 4 year, 5 year and 6-year period. So a bit of our growth overall in 2026 is in the context of us setting a really challenging comp for ourselves given our expense controls over the past several years. Areas that are pushing up our expectation for year-over-year growth include real estate taxes, especially late in the year as some of the good news in late 2025 creates a tough comp for us late in '26. Personnel costs coming off, again, a multiyear period of very, very low growth. And of course, the biggest impact is going to come from the winter-related costs from the storms over recent weeks, pretty impactful storms compared to really not much at all in early 2025 from weather events. Thanks again for joining us on the call this morning. At this time, Jordan, why don't we open up the call for some questions. Operator: [Operator Instructions] Your first question comes from the line of Michael Goldsmith from UBS. Michael Goldsmith: Maybe first, can we just start with supply? It seems like supply is coming down or at least new deliveries are. But I guess, at the same time, the demand environment has remained kind of stable, but not particularly strong. So how do you think about like how do you think about supply? Is it just kind of new deliveries? Is it the cumulative buildup over the last several years that's influencing it? And in the numbers that you quote, is that a reflection of expected deliveries this year? Or is that kind of like a multiyear number? Timothy Martin: Thanks, Michael. So the numbers that I quoted of the 19% of stores being impacted, what we have consistently disclosed over time is we look at supply and the impact of supply on our existing stores over a 3-year rolling period. So for the 19% of our stores that are impacted by supply in 2026, those are stores that within their trade ring are going to compete against something that is delivered in 2024, 2025 or 2026. And as Chris touched on, the stores that were delivered in 2024 are going to be less impactful from a headwind perspective than stores in '26 because they will be -- in the third year, they will be starting to approach higher levels of occupancy and tend to start pricing more competitively within the market. So it's not only the 19%, it's kind of the nature of the 19% is going to be a little bit less of a headwind, we believe, than certainly than when we were at the peak back in 2019. So it's a combination of those things, but all the numbers that we quote are on a 3-year rolling basis. Michael Goldsmith: And as a follow-up, the New York City Department of Consumer and Worker Protection filed a lawsuit over predatory practices in the New York market. So I just want to -- you have a large presence there. I just wanted to get your take on it. Has that influenced the way that you operate? And then obviously, this is a lawsuit against you guys, but just kind of how you're reacting to it? Christopher Marr: Michael, we're certainly aware of recent announcements, that specific one out of New York. There's been some similar attempts at legislation in other states around not only for storage, but just in general, pricing and transparency. We continue to monitor those and make sure we're in compliance. We are always focused on providing our customers with the optimum experience, and we'll continue to be flexible in terms of focusing in on that and doing that to the best of our ability. Michael Goldsmith: Good luck in 2026. Christopher Marr: Thanks. Operator: Your next question comes from the line of Viktor Fediv from Scotiabank. Viktor Fediv: I have a question regarding your operating expenses outlook for this year. And it's a bit higher versus, for example, your peers. Just trying to understand what are the key pieces impacting that difference. Probably New York, I see that in 2025 had probably a bit higher operating expenses growth. So can you provide some color on what's driving that? Timothy Martin: Yes. As we touched on in the introductory remarks, you have a couple of things going on. You have, again, having led the sector in expense controls and expense growth over the past several years, I do believe we have created a pretty high bar for ourselves from the standpoint of a baseline from which to compare. I think then the individual drivers of where we're getting a little bit of pressure, again, I mentioned, were on real estate taxes. In particular, in the later part of 2026, we're going to have some tough comps because we had some good news here in the fourth quarter of '25. And then the big one that I mentioned is the weather-related. We're going to have pretty significant year-over-year growth in weather-related expenses in the first quarter as we have a significant portion of our self-storage portfolio in the Northeast states. And frankly, the winter storms were impactful far beyond just the northeastern part of the country. So real estate taxes, weather-related costs are the big ones. And then even on a line like personnel, we've been able to manage personnel at flat to negative growth over a multiyear period of time. This year, we're looking at more inflationary or maybe just a little bit north of inflationary type growth in that line item. So those are the areas that are driving the thought process behind our same-store expense guidance. Viktor Fediv: Understood. And then as a follow-up, if you think about the new reform JV with CBRE, what is actually like your opportunity set? And what should we think about what is achievable for 2026 in terms of incremental investments there? Timothy Martin: Yes. So we're super excited to expand our JV relationship. And now we have what we had disclosed with our new venture with CBRE Investment Management. We've been working together with them for several years on the operational side and have established a great working relationship through our third-party management platform. The venture that we announced is focused on investing across the spectrum of core, core plus value-add opportunities. And ideally, that will result in us being able to assemble a portfolio of geographically diversified assets in high-growth markets. So fairly broad mandate and the $250 million mandate is hopefully #1, and then we're successful there, and we can move on and create additional venture opportunities with CBRE and then, of course, continue to look at creating additional joint venture opportunities with others, including some long-standing relationships that we have. Operator: Your next question comes from the line of Brad Heffern from RBC. Brad Heffern: Can you talk about the assumption for move-in rates during the year? Are they just sort of steady during the year at the levels we see now? Do they decline as comps get more difficult? Maybe do they go up because of supply? Timothy Martin: Yes. So we don't guide to the specific components. We guide to an overall revenue growth range expectation. I think what we have seen is what Chris touched on a little bit, which is we have seen a more constructive environment for pricing to new customers. And so we flipped to positive, and it's a good place to start the year. And then as I touched on, at least on the baseline of our expectations, would be in an environment where we're able to steadily close the occupancy gap throughout the year. That would be at the baseline of our expectation. The reality is busy season is going to come and market conditions are going to be what they're going to be, and our systems are designed to maximize revenue. And so could you get a little bit more rate and a little bit less occupancy, a little bit more occupancy, a little bit less rate? Could you move towards the higher end of the range, the lower end of the range? All that we'll see. But overall, we just guide to the overall number, which you see in our release. Brad Heffern: Okay. Got it. And then sort of sticking with that, you said in the prepared comments, you see a path back to historical growth levels. If we see move-in rates stay flat around where they are now, call it, 3%, when should we see same-store revenue get to 3%? I know there's a huge number of moving pieces, but just wondering, generally, is it quarters? Is it a year? Is it 2 years, et cetera? Christopher Marr: Yes. I think if you operate under the assumptions that you just described, then you see that gradual upward trajectory throughout the first year, which in this instance would be 2026, and then you would see yourself returning to more historical levels as you get into the second half of 2027 on a quarterly basis. And then ultimately, you would roll into that on an annual basis as you go out then another year. Operator: Your next question comes from the line of Todd Thomas from KeyBanc. Todd Thomas: First, just on New York, revenue growth improved from the third quarter, continued to outperform, as you mentioned, with -- along with some of your other sort of core coastal infill markets. Are you assuming that momentum persists in '26? And what's driving the strength in New York City in your view? Is it more the supply backdrop? Or are you seeing better demand? Any sense regarding the outperformance? Christopher Marr: Todd, it's Chris. I would think about New York broadly as continuing to be the MSA that we would expect to be among our top-performing MSAs in 2026 as it was in '25. I think you have 2 things moving in our favor. One is North Jersey and to a lesser extent, Westchester County and Long Island are recovering from the headwind of supply. So when Tim talked about that and I talked about that 19%, a good market that is benefiting from that is that North Jersey, Westchester and Long Island markets as part of the MSA. And then in the city itself, we continue to see very positive trends that we've experienced over the last several years. You have good lengths of stay. Again, folks using the product as an alternative to their living spaces, not as a market that's as reliant on that buying and selling of existing homes. We obviously have extremely good brand awareness there, and we would expect that positive performance in the boroughs to continue. Todd Thomas: Okay. And then, Tim, you talked about buybacks and the buybacks completed in the quarter, potential dispositions, some potentially seeding assets into the joint venture. The stock price is higher by almost 15% relative to the price that you executed at in the fourth quarter. I guess, how actionable are buybacks today? And how do buybacks stack up against some of the other opportunities that you discussed? Timothy Martin: Yes. I think we obviously have a share price, which is a little bit more favorable for us today than where we were repurchasing back in the fourth quarter. But who knows what tomorrow brings or next week brings or next month brings. I think the point trying to make is that we're not sitting around waiting for the day where we get back to having a green light to grow and our share price is such that we can get back to buying $400 million, $500 million, $600 million worth of assets and do so accretively. We haven't seen that environment now for a couple of years. And to the extent that we are in a continued prolonged period of time where private market valuations are very disconnected from public market valuations, then what's actionable for us. To continue to execute on our long-term strategic objectives would be to perhaps improve the overall quality of our portfolio by trimming some things that would have us improve the overall quality of the portfolio and turn around and redeploy that capital to buy back shares because implicit in that is it's an awfully good opportunity when you think about the implied cap rate, even at the levels we're trading today, while not as compelling from a share repurchase as where they were, still pretty compelling relative to opportunities to buy things on balance sheet. So we'll see. It will be great. It would be great for us if share repurchases were never attractive again and the share price continues to get back and we get back to where we believe we should be valued, which is at a premium to the value of our underlying assets. But to the extent we don't get back there and the disconnect remains, we're going to keep working to execute on our strategic objectives, and that might be a path for us to do it. Operator: Your next question comes from the line of Ravi Vaidya from Mizuho. Ravi Vaidya: I saw that in 4Q, your fee income line item as part of your same-store revenue was a bit elevated. Is this primarily from late fees or any other type of fees? And what is your assumption for this particular line item when considering your '26 guide? Timothy Martin: Thanks for the question. So that line, the other property income line in same stores includes a variety of things. So it includes merchandise sales, which would include sales of locks and boxes and other items. It includes fees. It includes truck rental income, among some other things. And so we're always looking at ways to enhance growing our cash flows, and we look at every opportunity, and we've been able to, over time, be successful in finding ways to grow that line item along with growing other revenue line items and controlling expense line items. And so what you're seeing there is the fruits of all of those efforts. Our 2026 expectations would be based on our expectation to continue to build upon what we -- what you see coming through the results in '25 and continue at those levels and perhaps find even additional opportunities as we go forward. Ravi Vaidya: Got it. That's helpful. And I wanted to kind of think about AI here. But from a demand perspective, some of the announcements that we've seen is some of the layoff activity, it seems to be coming in bulk and a little bit faster than what people might have initially anticipated. How do you think about these announcements and how it could reflect demand for self-storage and moving and displacement as part of your portfolio right now? Christopher Marr: So I think the resiliency of our business, and I think it shines through when you think about the last few years pressures on some of the demand drivers for our business and yet the -- in context, really solid results the sector has been able to put up. I think just speaks to the fact that we are a solution to a need for our customers regardless of the pleasurable or unpleasurable circumstances that create that need. So never want anyone to lose employment. -- certainly want an economy that is humming on all cylinders where there are plenty of opportunities for jobs and opportunities for advancement, what's made this business work so well for so long. But the reality is in an instance of displacement, we are a solution to help solve some of the related problems that come along with that. Operator: Your next question comes from the line of Michael Griffin from Evercore ISI. Michael Griffin: Maybe on the revenue side to start, I appreciate kind of the commentary as we've been through about 2 months of the year so far. But as you think about the interplay of rate versus occupancy, clearly, move-in rates are improving, but your occupancy is still kind of below your historical levels even pre-COVID. Give me a sense, does it make sense to maybe push on one of those levers over the other? I realize you're solving for revenue maximization at the end of the day. But in today's environment, does one feel more opportunistic or applicable to drive relative to the other? Christopher Marr: I think in today's environment, given where we've been over the last several years, I think if the opportunity is there, and it clearly has been over the last 5 months or so to be able to focus on maximizing the value of that customer as opposed to focusing in on the volume of customers, I think that's been our focus. I think we obviously, as an industry, need to get -- need to continue this momentum of having positive growth in rates in order to generate those more historic levels of overall revenue growth that we've experienced over time. So that's kind of where the mindset is. But as Tim articulated, those are decisions that are made on a daily, weekly basis, and we're constantly looking at that interplay between volume and rate. Michael Griffin: Thanks, Chris, that's certainly some helpful context. And Tim, I know you touched in the prepared remarks on some debt market activity. Curious what's contemplated in the guide as it relates to interest expense. And if you were to go out and refi those '26 maturities, what you think the interest rate on that would be? Timothy Martin: Yes. So I mean the guide has a range for a reason, and it's a little bit tricky because you're not only thinking about where we might execute from a -- if we were in the market today, is not super relevant for the guidance because it comes down to when do we go, what tenor do we go with and what does the world look like at that time. And so what I was mentioning was kind of at the plan today would be a consideration of going first half of the year, using those proceeds to pay down the line, which would then give us a lot of flexibility and capacity as we look at the back half of the year because if we found a compelling market to go again, that would be our preference and just term out the maturity. But by freeing up all of the capacity under the line, when our bonds mature in September, we would have capacity to use the line of credit if we didn't think that there was a good window for issuance at that time. So the range contemplates a variety of things when we go, how many times do we go, what tenor do we go with and what does the world look like at that time. Operator: Your next question comes from the line of Juan Sanabria from BMO Capital Markets. Juan Sanabria: Chris or Tim, maybe just hoping you guys could expand a little bit on dispositions. You mentioned maybe pruning some noncore assets or markets presumably. So just curious on how you think about that if the eventuality were to come to pass, would you want to sell out of kind of the current underperformers, whether it's certain Sunbelt or Southwest markets? Just curious on how you're thinking about that, recognizing it's kind of a fluid discussion or thought exercise. Timothy Martin: Yes. It is a very fluid discussion and exercise. I think it could it could end up presenting itself in a variety of ways. The reality is we like our portfolio. And so we don't have a long list of assets that we're anxious to get rid of. I think the reality is, as I mentioned, if there's a persistent environment in which there's a disconnect in valuations, then the opportunity for us to execute our strategic plan and to create shareholder value may be to find opportunities to trade assets and repurchase stock. I think the reason I wasn't specifically saying dispositions or necessarily joint venture contributions, the joint venture concept is pretty attractive because we could maintain an ownership position in some of these assets that, frankly, we don't want to sell. And we could also get a little bit of additional economics through a joint venture structure, through management fees, that type of thing. So it is a fluid -- as you -- it's a great word to say it's a fluid discussion. It's just the reality of where we are and just sitting on our hands and hoping for a better day is not what we're doing. Juan Sanabria: Understood. I appreciate that. And just a quick follow-up on the ECRIs. Just kind of curious on the expectation built into '26 guidance and/or the kind of recent history. Has there been any change in cadence and/or the percent increases you're passing through and/or customers' acceptance of those? Timothy Martin: Yes, not much of a change in the contribution that we're expecting going forward is very consistent with the contribution that we've been receiving. So nothing really from a modeling standpoint or an expectation standpoint that it's going to have a meaningful impact from ECRIs one way or the other. Operator: Your next question comes from the line of Spenser Glimcher from Green Street. Spenser Allaway: Yes. Sorry not to beat a dead horse here, but maybe just a follow-up on the share buyback discussion. So I appreciate the rationale you shared regarding your view of the disadvantaged cost of equity. But given you did buy 2 assets in the quarter and while I realize that the purchase price is only $50 million, what is it you're looking for in acquisition opportunities that would sway you to invest versus that simultaneous desire to shrink the asset base and buy back shares? Timothy Martin: Yes. Great question. The horse is not quite dead yet, but let's kick it a few more times. The 2 assets that we bought, it is a process. And so we had those under contract at a value that made sense to us. Inherent in those 2 opportunities are -- there's growth embedded in those opportunities that when they come on to our platform, we get some nice growth out of those. So we're still very excited about those 2 opportunities as the year progressed and the quarter progressed and the disconnect became even larger and more pronounced, then the share buyback was something that we focused on. So it is -- there are still -- there have been a lot of assets that have traded this year that were very attractive to us and would have been very complementary and attractive on our platform. Just the valuation didn't make a lot of sense for us at this time. So the world changes pretty quickly. I was going back to my notes from our year-end call a year ago, and we talked about selling shares on the ATM for an average of $51. So things change pretty quickly. And so next quarter or the quarter after, we could be talking about contributing some assets to a joint venture and repurchasing some more shares. We could be talking about buying a big portfolio and issuing shares under the ATM. We need to be prepared for any of those scenarios. Our investments team is working hard. Fortunately, for us, we do have other options, as we touched upon earlier, with co-investment strategies and the like. And so we're still looking at both. We're certainly not closed for business. We're very involved in underwriting a lot of different opportunities. And to the extent that we found something even on balance sheet that had a compelling enough return that we believe created shareholder value, then that's where we're focused. Spenser Allaway: Okay. That's great insight. And then would you mind providing some color on the stabilized cap rates that you underwrite on those 2 assets? Timothy Martin: Yes. So they weren't stabilized cap rates. I mentioned last quarter that those -- the assets that we had under contract that then we closed 2 of the 3 going in were in the low 5s, and they were stabilizing into the 6% range in year 2, 2.5. Operator: Your next question comes from the line of Brendan Lynch from Barclays. Brendan Lynch: The commentary around 19% of markets facing new supply in 2026 was really helpful. If the pace of new starts doesn't accelerate, what percent of your portfolio do you think would be facing new deliveries in 2027? Timothy Martin: Yes. So one point of clarification, it's not markets. It's not 19% of our markets. It's literally 19% of our assets. You can have assets within a market, some of which are competing with new supply and some are not. So just that is a point of clarification. We just disclosed the 19% and now you're asking for what is it going to be next year. We're never good enough. But the -- I think if you think about that 3-year rolling period for this year, it's deliveries in '24, '25, '26. So next year, when we disclose this number, it will shift to be deliveries in '25, '26 and '27. So you'll add '27 deliveries and you'll drop off '24 deliveries. I would think across our markets and across our portfolio that deliveries in '27 will be a little bit lower than deliveries were in '24. And so my expectation as we sit here today is that, that 19% would trend downward a little bit more. Brendan Lynch: Okay. That's helpful commentary. And then just on the CBRE joint venture, you mentioned that some value-added assets might be contributed as well. My sense is that value-added assets were something that you wanted to kind of hold on balance sheet for the upside that you get as you improve those assets relative to maybe some more stabilized assets being better candidates for joint ventures. Can you just walk us through the kind of the nuances of how you think about which assets are good candidates versus not with your JV partners? Timothy Martin: Yes. Sorry, we're covering a lot of different things. I think we might have mixed 2 things together there. So the venture that we have with CBRE is focused on external opportunities, nothing that we would contribute. So the value-add opportunities that, that venture is seeking are value-add opportunities that we can find that are maybe earlier stages on our third-party management platform or going out and trying to identify those opportunities. So they are external opportunities that would be across the spectrum of value-add, core, core plus. The concept of contributing assets is completely separate from that and is more -- is not as actionable here in the near term as the venture that we announced with CBRE. Operator: Your next question comes from the line of Eric Luebchow from Wells Fargo. Eric Luebchow: So maybe you could touch on the New York MSA a little more. It had some nice acceleration in the quarter. Could you kind of disaggregate where that strength is coming from between the boroughs, North Jersey, Long Island or anywhere else? Christopher Marr: Sure. So really, the acceleration was across the board in each of those contexts. I think when you think about it by borough, Queens has been pretty consistent Q2, Q3, Q4 in terms of its revenue growth, in terms of its occupancy stability, a little bit of supply. 1 or 2 stores, I think, have opened there over the last year or 2, but really not that impactful, seeing good growth in asking rent there. in a little pressure in Long Island City when I mentioned supply because we've had some competitors open some very large stores in the last 2 or 3 years, and they're very close by to the cubes. Brooklyn -- Brooklyn has been the leader through the year, putting up overall same-store revenue growth quarter in and quarter out north of 5% occupancies there, also pretty steady. So a good driver is good length of stay. So able to continue to focus on the existing customer and then seeing some good move-in rate growth there as well. And that's pretty much across the board with the neighborhoods in Brooklyn from East New York through Quantas. Bronx, pretty nice acceleration there throughout the year. That's somewhat going to be just a year-over-year comp. Occupancies there have been pretty steady, growing a little bit in the back half of the year. And when looking at that again by area, saw some strength throughout the year in getting better quarter in Riverdale, also the same a little bit in that Bronx River area. South Bronx, Calo City have stayed pretty consistent. And then I think, as I said, in our store in Manhattan continues to perform consistently and well. Staten Island recovering a bit from supply, which is the same story for the rest of the MSA, which would be that Westchester, Long Island, North Jersey, where new supply has become much less of a headwind than it was certainly in '24 and the first couple of months of '25. So hopefully, that color is helpful. Eric Luebchow: Yes. Very comprehensive. I guess just one for Tim. I know you called out some tough comps and expenses this year. Maybe could you provide us a little more color on some of the expense growth you expect across some of the key line items like real estate taxes, personnel, anything else to call out that we should keep in mind for this year? Timothy Martin: No, I called out the big ones. Those are the ones that were notable that I've discussed a couple of times here. Operator: Your next question comes from the line of Eric Wolfe from Citigroup. Eric Wolfe: You mentioned that your solutions of a displacement can occur during periods of job losses. So I was just curious if when you see accelerated layoffs or job losses in a certain market, how long that increased demand tends to last? And along with that, D.C. has definitely been one of your strong markets the last year, but I did notice that it decelerated a bit this quarter. So I was curious if that was just noise in the numbers, tough comps or maybe the lower employment is catching up there a bit. Christopher Marr: Great question. Thanks. When you think about storage, we're a neighborhood small trade ring business. And then when you think about displacement. Oftentimes, that can either be so broad in terms of where the employees displaced come from. So I'll use DC as that example. You have folks who work in the federal government in Bethesda at NIH in Washington, D.C. proper at other agencies who live as far away as Culpeper, Virginia or Frederick, Maryland or West Virginia, parts of Prince George's County. So when we have our general managers focus on demand and try to inquire from the customer as we always do, what's going on in your life. It's just so dispersed that you just never really see an impact on any particular store there. So the DC overall performance is comps. We just had been on a run there for many, many quarters, and we're -- we just saw a little bit of that tough comp in Q4. But otherwise, it will continue to be a market we expect in '26 to be a leader of the DC, the DMV and a very good market for us. We also saw the ebb and flow of supply there again, just given the broad nature of that MSA. But I think when you think about layoffs, then that might be within a plant or a business where the majority of the workers tend to be concentrated in a fairly tight geographic area, you would have a more correlated demand to the self-storage opportunities in that area. But in terms of like some historic trend, I don't have anything off the top of my mind and that would be super insightful. Eric Wolfe: That was very helpful. And I guess you talked about this a lot today, so I don't need to get too much more into it. But I guess one of the things that I'm trying to figure out is you talked about things improving throughout last year. They've stayed very strong recently improving some more. Is there some kind of common reason as to why? I mean, is it demand that's gotten better? Is it lower supply impact in the markets that are accelerating the most, just easier comps? Like what is actually driving that improvement? And I guess what gives you the confidence to know that you've actually reached an inflection in whatever is going to drive it going forward? Christopher Marr: I think it is all of the above. I think you've really touched on all of the drivers. So what we've seen over the last 4 or 5 months demand and throughout all of '25, frankly. We now have a new but fairly consistent demand profile for the business throughout the 12 months and that baseline of what we've seen in kind of '24, but really in '25 is the baseline that we're expecting here in '26. So if that's your baseline, but the impact of vacant space, new supply continues to ramp down very helpfully. Well then you're just in a better position than from, as Tim alluded to, from a pricing perspective because those new stores that had opened in '24 are reaching a better level of physical occupancy. And typically the savvy operators in our space then start to focus in on getting rate. So that's helpful for the submarket in which we operate. We still see a pretty healthy consumer for our product. And so that's helpful. So I think it's kind of all of the above that is embedded in sort of that range that Tim talked about, and that's been consistent now, as I said, for months. And so we're feeling pretty optimistic as we go into 2026. Obviously, we have a range, and we're comfortable within that. I think the one item that we do not have factored in, and this is more recent news but when you think about, is there an opportunity here for those pent-up homeowners, home buyers, animal spirits to be unleashed as the 30-year fixed rate dropped yesterday below 6% for the first time in 3 years, you sit here and realize that today, more homeowners have a mortgage rate above 6%, then a rate below 3% for the first time in 5 years. So we're not counting on it, it's not in guidance at all, but certainly, the kind of news over the last few days here on that front could be very helpful and would just be pure upside. Operator: Your next question comes from the line of Samir Khanal from Bank of America. Samir Khanal: I guess, Chris, I just wanted you to expand on -- you talked a little bit about the transaction market. Maybe talk about pricing. And the reason I'm asking is, there was a big portfolio that traded in New York, right? And I'm not sure how this is the Carlyle storage [ mark one ]. I'm not sure how that -- how should we think about that portfolio compared to your portfolio in New York? And if that was complementary to your portfolio, do we think about that disconnect, right, between sort of private market valuation and kind of where your stock trades today? Christopher Marr: Yes. Thanks for the question. So the portfolio that you're referencing, we were a manager of some of those assets. So we're a very good partner. And therefore, we don't talk about transactions that we weren't involved in, you can certainly get more take on pricing, et cetera, from the buyer. New York is a great market. We continue to look for good opportunities there in that particular instance. There just wasn't transaction that made sense for CubeSmart, but it made sense for another operator there, and I'm sure they'd be happy to give you insight as to how they thought about what that pricing was, whatever in their mind, they think it was. Operator: Your final question comes from the line of Mike Mueller from JPMorgan. Michael Mueller: Sorry to drag it out. Most stuff has been answered, but just a quick one. Are you likely to only sell assets if you see an opportunity with the stock being cheap or if there is something to buy? Or are there likely some assets you're just going to cycle out of no matter what? Timothy Martin: Yes. I think the last part of that cycle out of assets, no matter what was what I was trying to cover before that. That list is very, very short for us. We like our existing portfolio. So the focus for us and, frankly, the difficulty on executing on the concept that I'm putting out there is the timing piece, right? You can't sell something in a week and by the time you would sell it or contribute something to a venture, public market valuations change awfully quickly. And so the objective for us would be to, again, further the strategic objective, improve the overall quality of the on balance portfolio and doing so accretively, which would combine dispositions or contributions of assets to raise the capital and repurchase shares. So the execution of that is a challenge given the timing. And I'm back to Spenser's question earlier, we did -- we bought some properties and repurchased share in the same quarter. We didn't do them in the same week. But things change, and sometimes they change pretty quickly. So it comes down to if there's a prolonged period where there's a disconnect then -- and there has been the execution of that, we believe would make a lot of sense. Operator: And that concludes the question-and-answer session. I'd now like to turn the call back over to Chris Marr for closing remarks. Christopher Marr: Thank you, everyone, for your insightful questions. We've enjoyed the dialogue here this morning. We certainly are looking forward to the upcoming seasonal busy season for our industry. We've been off to a very solid start here in January and February notwithstanding the unappetizing weather that we've seen here on the East Coast, but spring is strong and sun is coming and the busy season for storage will be here before you know it, and we look forward to continuing our dialogue after we report first quarter earnings. Thank you very much. Have a great day. Operator: This concludes today's meeting. You may now disconnect.
Manuel Manrique Cecilia: Good morning. I'm Manuel Manrique, Executive Chairman of Sacyr. I'm joined in this presentation by Pedro Siguenza, Chief Executive Officer; and Carlos Mijangos, the company Chief Financial Officer. Thank you very much to all of you, analysts, investors and media representatives for attending this presentation of Sacyr's financial results for the full year 2025. In fiscal year 2025, we reached the halfway point of our 2024-2027 strategic plan. And I must say that the results have been highly positive. Over the past 2 years, we have delivered significant additional value in our concession assets and increased our cash flow to invest in new projects. Therefore, confirming that our business model is increasingly solid, growing and profitable. This strong performance has been accompanied by an increase in our share price and cash dividend distribution, directly delivering the benefits of this business model to our shareholders. Between 2021 and 2025, our market capitalization increased by 152%, significantly outperforming the IBEX 35, which rose by 114% over the same period. The solid balance sheet for the first 2 years of the plan makes us very optimistic about meeting and even exceeding the overall targets under the plan, which will bring us closer to our goal of becoming world leaders in greenfield project development by 2033 as we announced back in the day. Now looking at the specific figures of this midterm review, I should mention the following. Operating cash flow of EUR 1.359 billion. This has exceeded the target 2 years ahead of schedule. We have secured 5 new concession project awards by contrast with 3 or 4 initially estimated with EUR 905 million in new capital invested, we have almost reached the target of EUR 1 billion that we set for the 2024-2027 plan. Concession distributions amounted to EUR 224 million, well above expectations. Net recourse debt is at minimum levels. We have also obtained an investment-grade rating, and we have distributed a first cash dividend of EUR 225 million, which is the total that we planned to distribute over this period. These figures indicate that by the end of 2026, we shall have practically fulfilled the entire plan a year ahead of schedule, and we shall be ready to set new more ambitious goals, especially depending on the outcome of some significant tenders in Australia, Italy and the United States where we are competing. Thanks to the awards won in the last 2 years, future concession distributions have increased by 18% to EUR 19 billion, which is a real strength for the sustainability of this business model. Since the last Investor Day held in May 2024, total future distributions have increased by more than EUR 3.1 billion, excluding those received since then. This important data reflects the awards that we report each year. We are a company experiencing exponential growth, but one that needs a certain amount of time to build and commission assets. We are investing in the future because today's successes will be seen in 3, 4, 5 years down the road and in the form of distributions from our concessions. Concession distributions amounted to EUR 224 million in fiscal 2025, 17% more than initially estimated under the plan. And if we add to this the proceeds from the sale of the Colombian motorways, the figure exceeds EUR 500 million. I would like to take this opportunity to highlight the value of this divestment, which is 12% above our internal valuation due to the EBITDA multiple obtained and also because it helps us to balance our sources of income with a view to consolidating the global group we want to build. The 3 Colombian assets included in this successful transaction, which we carried out by taking advantage of an excellent opportunity were already part of Voreantis. We have everything ready and continue to see a lot of interest among potential investors. But as we do not currently need cash for the projects in our portfolio, we shall undertake this transaction when we see the right market window. After progress made, the valuation of the assets also continues to rise. As of December 2025, it reached almost EUR 4 billion, in line with the target of EUR 5.1 billion by the end of 2027. The EUR 4 billion valuation figure does not include the latest assets awarded to the company, including the 2 water plants in Chile. And I would like to highlight this as one of the major milestones reported in the prior fiscal period. That is why in the coming months, we are planning to offer an updated valuation, which would undoubtedly already be in the north of EUR 4 billion. As for 2025 income statement, noteworthy is the improvement across lines. Revenue grew by 2% to EUR 4. 6 billion with a net profit, excluding divestments in the amount of EUR 165 million. That would have been 46% more. 93% of EBITDA comes from concession activities. In this regard, 73% of the construction portfolio is for our own concessionaire already. Operating cash flow in turn amounted to EUR 1.359 billion, up 5% and the net recourse debt ratio is just 0.18 compared to 0.42 a year earlier and far below the 1 percentage point we had committed ourselves to. These rocket solid results demonstrate the success of the concession model for sustainable and stable growth. In 2025, we achieved a milestone that we had already announced back in the day. Cash flow exceeded EBITDA, which gives us great strength to face the challenges ahead. Let me remind you that financial assets of most of our concessions, once they become operational, EBITDA goes down and cash flows go up. Well, that has already occurred and cash flows will continue to rise as standing out from EBITDA, which will slide down progressively. Now I would like to mention other milestones achieved during fiscal year 2025, such as a record 5 concession awards, 1 in Paraguay, 1 in Italy and 3 in Chile, 2 of which are major water assets. The investment grade rating obtained from a global agency, that's another milestone. Our exceptional positioning for the future in the managed lanes sector in the U.S. and in the water sector in strategic markets. The outstanding divestment of the 3 Colombian assets, as I said, 12% above our initial valuation. Also the fulfillment of our commitment to pay a cash dividend together with a scrip dividend for the benefit of all our shareholders and the division of executive functions carried out during the fiscal year, which enables us to continue fulfilling our strategic plan and preparing for the future with the utmost assurance. Finally, I would like to mention Sacyr's leading position in the field of sustainability. With 5 years of continuous improvement having been reported in Standard & Poor's Global book. Also as the only European infrastructure company with a CPD rating in water and climate in 2025 and among the world's best companies with the lowest ESG risk profile according to Sustainalytics. Next, Carlos Mijangos will provide you with more specific data and details on the income statement and balance sheet. Carlos Gorozarri: Thank you, Mr. Chairman. We shall now analyze the company's operational and financial performance during fiscal year 2025. First, let's take a look at the results for 2025. Revenue reached EUR 4.66 billion, up 12% year-on-year. EBITDA stood at EUR 1.358 billion, maintaining a margin of around 29%, which reflects strong operating performance in terms of net profit, excluding divestment, there was a very significant increase of 46%, reaching EUR 165 million. However, the sale of assets in Colombia had a one-off effect of minus EUR 80 million, reducing the final net profit to EUR 86 million. Operating cash flow in turn amounted to EUR 1.359 billion, up 5% compared to 2024, demonstrating the company's ability to generate cash from its assets, and this is higher than EBITDA. As the Chairman pointed out, I would like to mention that due to the accounting associated with concessions with the risk of litigation, which are considered financial assets for accounting purposes, maximum EBITDA is achieved at the end of the construction phase. And as the years of operating -- operation elapse, EBITDA slides down, but operating cash flow climbs, resulting in this effect where more operating cash flow has already been generated than EBITDA. From a financial standpoint, the company has achieved an investment-grade rating from Morningstar DBRS, which is a sign of strength and confidence for investors, allowing it to diversify source of financing, reduce costs and simplify the prequalification processes for new projects. Furthermore, this opens up the opportunity to issue debt in the U.S. market through private placements known as USPPs. In the area of divestments, as the Chairman pointed out as well, the sale of 3 motorways in Colombia for EUR 1.565 billion stands out with a multiple of 2.7x the capital invested and 12% above our internal valuation. With regard to treasury share transactions, the company remains committed to value. We currently hold 30 million shares through forward contracts with an average reference price of EUR 3.36. As for shareholder remuneration in 2025, we made a steady progress on increasing the cash dividend with a payment of EUR 0.045 per share having been paid in July and a dividend in January, maintaining the policy established in our 2024-2027 strategic plan to remunerate with at least EUR 225 million in cash during the planned value. Capital contributions and distributions. Between 2025 and 2033, concession distributions of more than EUR 3.7 billion are expected with EUR 1.6 billion in capital contributions being committed to our projects. The net cash available for future growth amounts to EUR 2.14 billion, which is a very significant figure that will enable us to compete with top-tier companies in the sector for the largest infrastructure projects currently being tendered. Long-term outlook, total estimated distributions through 2021 amount to EUR 19 billion, driven by new awards, discounting asset turnover in Colombia, and this will generate an average annual distribution of EUR 460 million, which further reinforces the company's growth capacity. If we now analyze the evolution of consolidated net debt, it has been reduced by EUR 532 million. It is worth highlighting the strong operating cash flow generated by business activities amounted to EUR 1.358 billion. Then we had the financial result generated mainly by project debt amounting to EUR 609 million. We have invested more than EUR 800 million in our assets and received EUR 281 million from the sale of assets in Colombia. Finally, under the heading of miscellaneous, there is a decrease of EUR 335 million due to 3 main impacts. Debt reduction due to the effect of the consolidation of Chilean assets that were held for sale in 2024 and then the deconsolidation of Colombian assets already sold for a net amount of EUR 222 million. That's the net effect. There is also a debt reduction due to exchange rate differences in the amount of EUR 190 million and debt increased due to leases and dividends from the parent company amounting to EUR 82 million. As for net debt -- net recourse debt, the most notable event of the quarter were the funds received from the sale of 3 Colombian assets totaling EUR 281 million. And this cash inflow together with seasonal recovery in working capital and taking into account investments and financial expenses over the quarter brings us to a figure of EUR 59 million, which is the lowest level ever achieved by the company. With this positive debt figure, the ratio of net recourse debt to recourse EBITDA plus dividends is 0.18x, well below the maximum commitment of 1x. The process of deleveraging and reducing debt and risk undertaken by the company in recent years is quite evident, going from EUR 850 million in 2019 to EUR 59 million in 2025. And now I give the floor back to the Chairman. Manuel Manrique Cecilia: Now Pedro Siguenza will provide a detailed view of the performance of each business line. Pedro Siguenza Hernandez: Thank you very much, Mr. Chairman, and good morning, everyone. I will now address the company's performance broken down by line of business in fiscal year 2025. Once again, we achieved a record with 5 new greenfield concession projects awarded, representing a success rate in our bids of over 50% because we were awarded 5 contracts out of 9 bids submitted. In 2025, we were awarded projects totaling EUR 13.6 billion, increasing our portfolio as of December 2025 to a total of EUR 67.425 billion, and this affects all of our portfolios. We have created value for our water division with the award of 2 major concession projects, Antofagasta plant in Chile, the largest wastewater reuse plant in Latin America, which is a key project to secure water supply in the Antofagasta region with an investment of EUR 295 million, a duration of 35 years and an estimated portfolio of EUR 2.5 billion. And the Coquimbo desalination plant, which is the first desalination plant under a public concession tender in Chile with an investment of EUR 305 million, a duration of 21 years and an estimated portfolio of EUR 1.2 billion. The plant will have an initial capacity of 800 liters per second with the possibility of expanding that capacity to 1,200 liters per second and will directly benefit more than 540,000 people in the municipalities of La Serena, Coquimbo, and Ovalle. Within our hospital specialty segment, where we are a global leader with more than 80 premises built throughout our history, we have added to our portfolio, the City of Health & Science project in Novara in the Piemonte region of Italy. This is a multifunctional complex that will encompass a new hospital and a university campus with an investment of EUR 125 million, a duration of 25 years and which consolidates our position in Italy, one of our core strategic markets. As for transport infrastructure, we have been awarded 2 new concession projects. The Asuncion elevated Urban Highway, which extends the Eastern route in Paraguay. This is a project with an investment of EUR 174 million and a duration of 23 years. Then the Piemonte route in Chile, a 20-kilometer stretch of highway that is key to the road modernization plan in the Biobio region of concession with an investment of EUR 330 million and a duration of 45 years. With these high greenfield project awards, we continue to ensure our commitment to the steady growth of our successful concession model. Furthermore, today, we can announce that we have just signed the contract for our first concession project in Canada, the Ontario Science Museum in Toronto, a project that will transform the Toronto skyline and open the doors to one of the most modern science centers in the world. This is a 30-year concession entailing an investment of EUR 260 million. And we hope that this contract will be the gateway to other new concessions in Canada in the future. This slide shows a map with the main opportunities that we are bidding on, prequalifying for or studying in line with our strategic plan commitment to increase the weight of our portfolio in English-speaking countries with a special focus on tenders in North America and Australia, but without neglecting our strategic European and Chilean markets. In the United States, as you know, we are prequalified for the managed lanes in Georgia, the I-285 in Atlanta and the I-24 in Tennessee in Nashville, and we will be submitting bids before the summer break. In addition, last Friday, we were prequalified for the I-77 in North Carolina, another express lane on the southern approach to the city of Charlotte. As you can see, we're also pursuing other managed lane opportunities that are expected to be prequalified shortly in the United States. In Canada, in addition to the aforementioned Ontario Science Center concession, which we have been awarded, we are pursuing various hospital concession opportunities such as the Windsor Hospital for Ontario infrastructure, where we are preparing for prequalification as well as several collaborative construction projects such as expansion of the Toronto Airport and the extension of Line 1 of the city's subway system for Metrolinx. In Australia, we'd like to highlight the recent partnership with the local build group and the award of our first hospital project in the country, Peel Health Campus in Mandurah, Perth, for which the initial design contract was signed last January. Together with build, we are exploring other opportunities in the hospital construction sector, such as the Parkville Hospital concession in Victoria and various landmark buildings for the 2032 Olympic Games in Brisbane. In addition, we are competing for major water projects such as the desalination plant for Northern water supply in Adelaide, the wire long water treatment plant south of Brisbane and the Aurora reuse plant in Melbourne. In our strategic Italian market, we have submitted our prequalification for the A22 motorway connecting Modena with the Brenner Pass to Austria. And we are still awaiting the tenders for the Turin, Milan, and Brescia-Padua sections of the A4 motorway, which are due to be put up to tender shortly. Also in Europe, we are analyzing the tenders for the high-speed train from Porto to Lisbon and in Ireland for Metrolinx, the connection between Dublin and the airport, both under concession. I would also like to highlight the National Health Service program in the U.K., a framework agreement to build hospitals under a collaborative contract model with an initial wave of 11 hospitals worth GBP 15 billion which will be expanded to GBP 37 billion. And we are now expecting the official announcement of the company shortlisted for the execution of these projects shortly. And in Chile, we are pursuing several water and highway concession projects such as the Caldera-Antofagasta Highway, which is a private initiative developed by Sacyr, the Rio Bueno-Puerto Montt section, both on Route 5 and Route 57 between Santiago and the Andes among other opportunities. I will now provide you with some details on the performance of our lines of business. The Concession division recorded revenue of EUR 1.892 billion, representing an increase of 8% over the prior period. The impact of the exit from the scope of the 3 motorways sold in Colombia as well as the accounting effect of the evolution of operational financial assets have affected the division's operating income and EBITDA by 4% and 14%, respectively. Construction revenue in turn rose by 50% due to the progress of major new greenfield projects such as the Velindre Hospital in Cardiff, the Buga-Buenaventura Highway in Colombia and the Ruta de la Fruta in Chile. In fiscal 2025, we invested EUR 275 million in this division, bringing the total equity invested in our infrastructure assets in the transport sector to EUR 1.71 billion after deducting investments, whereas distributions from our concessions amounted to EUR 212 million in 2025. This year, we also commissioned 3 assets, all of them in Chile, the Atacama Airport in January, the Itata route in April and 68 on July. On March 1, we will commission the Antofagasta Airport project. As for Engineering & Infrastructure, revenue grew by 8% to EUR 2.971 billion, thanks to the growth of our activity in Italy and particularly the contribution of the A21 motorway. For this same reason, EBITDA rose 31% to EUR 552 million. If we analyze the construction activity only since, as you know, Italian concessions are included in this division, the EBITDA margin remains stable at 4.8% over the revenue figure. The division's portfolio set a new record, increasing by 18% over the year to EUR 12.47 billion, of which 73% of the portfolio, as the Chairman pointed out, corresponds to activities for our own concessions. Noteworthy milestones in the last quarter include the successful completion of the US 62 highway in Lubbock, Texas, bringing the total number of road projects completed in the country to 11 to date, which demonstrates our ability to execute complex projects in the U.S. As I mentioned before, the award and execution of the Peel Hospital contract in Perth. This is alliance-based contract, that is to say a collaborative contract, which is one where we prioritize the execution of works for third parties. Finally, our Water division continues to post the double-digit growth reported in 2025, both in terms of revenue, which is up 25% and now exceeds EUR 300 million and in terms of EBITDA, which reached EUR 62 million, 23% more year-on-year. The portfolio grows by 45% to EUR 6.979 billion. This figure does not include the Coquimbo desalination plant, which will add another EUR 1.2 billion to this portfolio in March once the contract is signed. Total equity invested in the concessions of this division amounts to EUR 128 million, and the assets have delivered EUR 12 million this year. So with this year's awards for 2 major concession projects, Antofagasta and Coquimbo, we have given a major boost to our goal of growing our water business within our 2024-2027 strategic plan. Now I give the floor back to the Chairman for some concluding remarks. Manuel Manrique Cecilia: Thank you very much, Pedro and Carlos. Sacyr will celebrate its 40th anniversary in 2026. I sincerely believe that we are at the peak of our trajectory. We have a clear-cut strategy focused on concessions and avoiding risks. We have a healthy balance sheet with a strong cash position and well-structured project debt. We have also eliminated corporate debt. We are ideally positioned to tackle the challenges of transport, hospital and water infrastructure from a public-private partnership perspective. Halfway through the 2024-2027 strategic cycle, I have no doubt that we will successfully complete it, thanks to last year's achievements, which represent the fulfillment of our commitments to shareholders and the market. Our success in securing concessions with 5 new awards to begin with and which, as we have said, will form the basis for this progressive increase in total distributions in the coming years from concessions, together with the multiple growth opportunities that we are bidding for in our strategic markets, and with more than EUR 2.1 billion available to invest between now and 2033. In terms of equity, let's make this clear. Second, cash flow exceeds EBITDA and continues to rise. Thirdly, the achievement of the investment-grade rating, which will enable us to increase our sources of financing while reducing finance costs. And finally, shareholders' remuneration with the first cash dividend payment. I would also like to take this opportunity to thank Sacyr's all 15,000 professionals around the world for their work and engagement over the past year and send them a message of confidence in this company's project. Thanks to each and every one of them, we can report on the milestones achieved in our strategic plan today. In 2026, we shall continue working to fulfill our outstanding commitments, and we are ready to celebrate our 40th anniversary and move forward with even greater strength. We are now available to answer your questions. Alberto Gargoles Gonzalez: Good morning, everybody, and thank you very much for joining us at this financial results presentation of Sacyr. We are going to start with those questions posted via telephone first, and then we are going to tackle the questions coming through the website. [Operator Instructions] Luis Prieto from Kepler Cheuvreux is going to ask the first question. Luis Prieto: I had 2 questions. The first question has to do with Voreantis schedule. I understand that Pedemontana is a requirement for rebalancing purposes. But since the Chairman has conveyed that there is maybe we should have to wait until next year for the transaction to be launched. We have offset some transactions that were launched in the past with a scope different from the ones initially estimated. Could that happen with Voreantis? Well, could that be the case? We are going to answer in a minute. Manuel Manrique Cecilia: Well, regarding Voreantis, I think that it was made quite clear. We did the reversal of 3 key assets. We announced that we have EUR 2.140 billion in equity to invest. We do not need that operation for further investments. And second, we have a pipeline, which is huge. And we believe that it will even improve our vision going forward positively. So this will establish a new strategic plan as well as what will happen with Voreantis. As for the question concerning the scope, the transactions that we engaged in were ones where we adapted ourselves to do whatever was best for the company at each point in time, and that is exactly what we're going to do with Voreantis. Alberto Gargoles Gonzalez: There are no further questions over the phone. We are going to address the questions that were posted through the webcast. Filipe Leite asks whether we can confirm or whether we can give more color on the contract that we have just announced for the Ontario Science Museum, the investment figure and our stake in such a consortium. We are also being asked about our stake in the consortium where we are bidding for concerning managed lanes. And as for equity concerning construction and upfront payments, which are the amounts that we are analyzing for the managed lanes? And fourth, when do you expect to reach the rebalancing of the Pedemontana project, I have to say the financial balance. We will get back to you in a minute. Manuel Manrique Cecilia: Let's see. The contract we have announced over the Toronto Science Museum project entails an investment of EUR 280 million. We are going to go hand-in-hand with Amico and John Laing. As for the managed lanes, we are going to work with Plenary. This is a Quebec fund. And then an Israeli company with a 50% stake in construction and a 30% stake in equity. And we have already been prequalified as far as this project is concerned. Regarding the Pedemontana related question, Filipe, we have a contractual entitlement to the rebalancing. So I have the same concern as the one announced 6 months ago. That to say, we do not have any worry about this. There were regional elections, and that normally puts the schedule off. We continue to engage in meetings with the authorities and the Big Four that has been appointed to this end, but you know that time management in Italy has its peculiarities. This is going to be the third rebalancing process concerning this concession, but we are not worried about it at all. Alberto Gargoles Gonzalez: Thank you, Mr. Chairman. The next question is by Julius Nickelsen from Bank of America. He asked about the Pedemontana project. And he says whether apart from the transaction concerning Voreantis, there is another potential divestment being analyzed such as in Chile. And second, whether we can provide an update about conversations with rating agencies. We will get back to you in a minute. Thank you. Manuel Manrique Cecilia: As for Chile, there's always interest around our assets. However, when there is anything concrete, we are going to make the relevant announcement as we have always done. As for the rating agencies, we have been working with several agencies for quite some time. We were waiting for 2025 results being published in order to keep moving forward. Our goal is, therefore, to keep on engaging in conversations with them or exchanging information with them in order to get a new rating. Alberto Gargoles Gonzalez: We are going to go back to the telephone line because Miguel Gonzslez from JB Capital has a question. Miguel González Toquero: I had 2 questions, 2 quick questions. The first question is the following. You provided an update of dividend evolution and equity committed in concessions. The gap between dividends and equity in 2026 has narrowed down compared to the guidance provided in Q3. Therefore, I would like to know about the FFO final picture, especially after the divestment in Colombia. Do you expect any growth in this respect compared to 2025? And then concerning the pipeline shown on Slide 25. We are talking about the United States here, but could you give us more visibility about the timing or about the budget concerning the most relevant awards all the tenders in Italy, the Route 5 in Chile or the project in Portugal, I believe that you decided to withdraw after the first tender. Could you give us any additional information in this respect? I would appreciate that. Alberto Gargoles Gonzalez: Miguel, we will get back to you briefly. Unknown Executive: Okay. Miguel, I'm going to answer your question concerning the funds of operations. On a like-for-like basis, most of our assets have to do with payment upon availability, but inflation normally results in increased cash flows compared to the prior year. Here, we are also factoring in the assets that we were awarded in 2024 and 2025. Those which are greenfield, of course, do not have a contribution to operating cash flows, not now, but they will in the future. Then we have EUR 200 million coming from Colombian concessions. On a like-for-like basis, of course, we're going to grow. In absolute terms, we had to factor in those EUR 200 million and include the greenfield assets that we have been awarded over the past 2 years, and therefore, we are going to report similar figures. As for the question concerning timings, the 2 managed lane projects in Georgia and Tennessee in the United States were announced before the summer break. Route 5 in Chile is going to announce next month and Route 57 is going to be announced in June. As for Italy, and as the Chairman said, actually, the tender for the Brescia-Padova-Turin motorways should already be available, but actually, we are still waiting. As for the Portugal section of stretch project, it has been put out to tender once again. There were no bidders and therefore, they decided to change the terms and conditions, and we are now waiting for this to be announced in May. We are paying close attention to developments. Alberto Gargoles Gonzalez: We go back to webcast questions. We had 2 questions, one from Victor Acitores. Are we currently analyzing the possibility of approving a new incentive plan tied to share price? And secondly, are we planning to update the evolution of our assets in fiscal 2026? Unknown Executive: Okay, Victor. We shall be presenting a new incentive plan for management members in line with share prices and always in line with the best interest of shareholders, and we shall be doing so in the coming months. Secondly, based on the first half yearly results, we shall review the value of our assets. Alberto Gargoles Gonzalez: The next question is by Julius once again from Bank of America. Could we please confirm whether we are going to update the figures under our plan? Are we going to present a new plan? Or are we going to hold an Investor Day? We will answer shortly. Thank you. Unknown Executive: Well, based on the results expected from this pipeline in Q4 2026, we expect to undertake a new strategic plan. As usual, we will keep you posted about all this and about the timing. Alberto Gargoles Gonzalez: Thank you very much. There are no further questions. Now let me give the floor back to the Chairman. Manuel Manrique Cecilia: Well, if there are no further questions, we thank you once again for your presence, your attendance and interest, and we wish you all fare well until the next presentation. Thank you very much, and have a good afternoon. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Operator: Good day, and thank you for standing by. Welcome to the Treace Medical Concepts Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Trip Taylor, Investor Relations. Trip Taylor: Good morning, everyone, and welcome to our fourth quarter 2025 earnings conference call. Participating from the company today will be John Treace, Chief Executive Officer; and Mark Hair, Chief Financial Officer. John and Mark will discuss our fourth quarter financial results and 2026 outlook. We will then host a question-and-answer session following our prepared remarks. Our press release can be found in the Investor Relations section of our website at investors.treace.com. This call is being recorded and will be archived in the Investors section of our website. Before we begin, we would like to remind you that it is our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events and market trends as well as our estimated results or performance are forward-looking statements. All forward-looking statements are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. All forward-looking statements are based upon currently available information, and Treace Medical assumes no obligation to update these statements. Accordingly, you should not place undue reliance on these statements. Please refer to our SEC filings included on our Form 10-K for 2025 filed before market opened today, February 27, and can be found in the Investor Relations section of our website at investors.treace.com for a detailed presentation of risks. With that, I will now turn the call over to John. John Treace: Thank you, Trip. Good morning, everyone, and thank you for joining us on our fourth quarter 2025 earnings conference call. During 2025, Treace Medical entered a transformational phase, building upon our leadership as recognized bunion experts and evolving from a Lapiplasty-focused company into a comprehensive bunion solutions company. With the recent commercialization of multiple new bunion procedure innovations, we are now positioned to address virtually 100% of surgeons' current technique preferences for all types of bunion correction, offering 5 best-in-class instrumented systems spanning all 4 categories of bunion deformities. We've been highly focused on accelerating our bunion procedure volume growth while also broadening our technology offerings to increase wallet share and expand our serviceable TAM. Our elevated case volume growth in the back half of 2025 reinforces our confidence that we have the right strategies in place to continue to expand our market penetration and restore top line revenue growth later in 2026 and into the future. We also drove steady improvement in adjusted EBITDA and significantly reduced our cash burn for 2025. Before diving deeper into our expectations for 2026, I want to note that dynamics discussed on our last call that pressured 2025, including case volume growth, offset by headwinds related to broader economic conditions and softer consumer sentiment as well as a product mix shift within our expanded portfolio are still present to begin the year. Given these market conditions, we're initiating our outlook for full year 2026 revenue to be in the range of $200 million to $212 million, representing a decline of 6% to 0% compared to full year 2025. We expect revenue declines to continue until our seasonally strongest fourth quarter. We expect fourth quarter revenue growth will largely be driven by accelerating case volumes, the lapping of the mix shift dynamics as well as the contribution from our planned 2026 product launches. We remain focused on continued improvements in profitability and reducing cash burn in 2026. As a reminder of our progress to date, in 2024, we used $50.5 million in cash and reported an $11 million loss in adjusted EBITDA. In 2025, we used $27.3 million of cash, a 46% reduction versus 2024, and we reduced our adjusted EBITDA loss to $3.9 million in 2025, a 64% improvement over the prior year. We took several actions in 2025 to reduce our operating expenses and cash usage. Many of these changes will continue to benefit us throughout 2026. We, therefore, anticipate that we will again reduce our cash burn by approximately 50% in 2026 compared to 2025, and we're not done. We will continue to identify additional opportunities to drive our top line growth and leverage our P&L in 2026. Now I want to focus on our strategies, the progress we made in 2025 and where we expect to deliver in 2026. To start, let me tell you about our strategies to improve our top line performance in 2026 and beyond. First, we will focus on leveraging our large existing customer base to drive adoption of our new 2025 bunion product launches. Second, we'll continue to build upon our leadership position with Lapiplasty technology, adding new technologies that can attract new surgeons. And third, we will expand our product offerings to grow wallet share and tap into new TAM-expanding procedural adjacencies. To start, I want to give you an update on the new bunion technologies we launched during 2025, their strategic importance and the reception they're getting in the marketplace. We believe our 3 new bunion systems effectively double the accessible market that we have today with Lapiplasty. So effectively driving these deep into the marketplace is a very high priority for us. First, our differentiated Nanoplasty and Percuplasty 3D MIS systems expand our reach into the high-volume osteotomy segment, which we estimate represents approximately 70% of the 450,000 annual bunion procedures performed in the U.S. We estimate that only 10% to 15% of metatarsal osteotomies are being performed using MIS approaches today. And we believe this is largely due to the steep learning curves, high variability of outcomes and lack of attention to correcting the third frontal plane component of the deformity, the failure of which to do so has been associated with an increased risk of bunion recurrence. Our new 3D MIS bunion correction systems offer patients procedures that can result in less pain and fast recovery times with minimal visible scars. Importantly, these are procedures that are quick for surgeons to learn and are highly instrumented to enable a controlled correction of all 3 planes of the deformity to minimize risk of recurrence. We believe this expands the appeal of our 3D MIS osteotomy procedures to both surgeons and patients today and could encourage a much larger portion of the 4.4 million U.S. bunion sufferers to seek surgical treatment over time. Next, our SpeedMTP system, which is designed to serve roughly 20% of bunion patients who have arthritic grade toe or MTP joints as well as patients who suffer from isolated MTP joint arthritis. This large patient population makes MTP fusion one of the most common procedures performed by foot and ankle surgeons, making it a strategically important area for Treace to target with better solutions and continue to innovate. With our core Lapiplasty system, we believe we've captured 25% on average of our 3,300 customers' total bunion-related procedure volume. And these 3 new systems are dialed in to target the remaining 75%, and we are laser-focused on penetrating that untapped opportunity. And our strategy is working. Just over 2 quarters into the full launch of these new systems, we're encouraged by the rapid adoption and resulting acceleration we're seeing in our overall bunion-related procedure volumes. As of Q4, over 25% of our surgeon base has already incorporated 1 or more of these 3 new bunion systems into their practice, and our Q4 procedure volume growth increased over the mid-single-digit rates we achieved and reported on in Q3. Next, in addition to our new products, advancing our leadership in Lapiplasty technology and expanding its user base remains at the forefront of our strategy. Lapidus Fusion represents approximately 30% of the estimated 450,000 U.S. annual bunion procedures and is the largest dollar segment of the market where Treace is a recognized category leader. As MIS approaches are gaining in popularity among surgeons and patients, we continue to remain focused on advancing our Lapiplasty platform, making the procedure simpler, faster and minimally invasive as demonstrated by our Micro-Lapiplasty platform, which was launched in 2024. In 2026, we plan to commercialize our next-generation Lapiplasty platform known as Lapiplasty Lightning. Lightning combines next-generation 3D correction instrumentation and SpeedPlate TMT implants, which are built upon our proprietary SpeedPlate hybrid fixation technology. Speed TMT is a high-performance implant designed to appeal to an incremental surgeon audience, those that prefer a single plate fixation construct versus our traditional 2-plate or biplanar approach. Lightning Instrumentation is designed to reduce procedural steps, improve efficiency and provide surgeons with greater accuracy and control of their 3D correction. We expect full availability of our Lightning instrumentation and our Speed TMT implants later in the year. Another way we're appealing to more surgeons with Lapiplasty is by advancing the shift towards personalized surgery, leveraging our IntelliGuide PSI platform. IntelliGuide is industry's first and only preoperative planning and patient-specific cut guide system for correcting bunion and mid-foot deformities. IntelliGuide offers surgeons improved efficiency and precision and is particularly helpful in complex and revisional cases. We believe the combination of Lightning, Speed TMT and IntelliGuide position us well to extend our leadership position and attract more surgeon users to our Lapiplasty platform in 2026 and beyond. Now turning to our third strategy, expanding our offerings to more broadly serve our growing customer base. In 2025, we expanded our SpeedPlate and Sterile instrument portfolios with multiple new offerings. We also entered the biologics market with our CortIFuse flowable cortical fiber graft as well as our line of procedure-specific allograft wedges. These new biologic offerings allow our sales force to more comprehensively service our surgeons' needs in their cases. In 2026, we plan to launch additional offerings to grow our customer wallet share and tap into incremental procedure adjacencies. In the back half of this year, we plan to launch 2 new important products that expand our TAM by an estimated $300 million. First, our SuperBite variable pitch compression screw system. This is a very important addition to our portfolio as it equips our sales force for the first time with the most common form of fixation used in foot and ankle surgery. The SuperBite system features advanced design attributes, making it ideal from both minimally invasive and conventional surgical approaches. Next, we will make our first entry into the mid-foot, hindfoot segment of the market with the launch of our new Speed XM Fusion system. Speed XM leverages our SpeedPlate fixation technology, bringing the benefits of dynamic compression and enhanced stability for fusion of the larger bones of the mid- and hindfoot as well as for flatfoot reconstructive procedures. Speed XM is highly complementary with our SuperBite screw system as the 2 technologies are often used in concert along with biologics to stabilize and fuse these larger bones, thus giving Treace great incremental access to high ASP adjacent procedures that we do not serve today. And of course, with all our current and new product offerings, we continue to provide best-in-class education through our BunionMasters hands-on training programs. These events are designed to support surgeons in confidently integrating our procedures and technologies into their practices. And following these trainings to further enable successful patient outcomes for our surgeons, we provide additional initial case support from our fleet of dedicated clinical specialists and ongoing support from our bunion-focused direct sales team, a team that we plan to expand in 2026 with the addition of more experienced foot and ankle sales professionals. Our confidence in the future is grounded in the success we've achieved in the past as well as the early indications we're seeing, which reinforces our confidence that we have the right strategies in place moving forward. We've expanded our active surgeon base from nearly 1,300 users in 2020 to over 3,300 users in 2025, and these surgeons are using more of our products as they adopt our growing portfolio with best-in-class solutions. Fourth quarter procedure volume growth increased over the mid-single-digit rates achieved in Q3, reflecting the strength and effectiveness of our comprehensive bunion portfolio and strategy. As we look ahead, we believe we're well positioned to accelerate our procedure volume growth rates while also growing our customer wallet share and expanding our TAM as we broaden our footprint in the foot and ankle market. We expect these initiatives, combined with disciplined investments, will continue to drive market share gains, improve profitability and shareholder value. With that, let me now turn the call over to Mark to review our financial performance. Mark? Mark Hair: Thank you, John. Good morning, everyone. Revenue in the fourth quarter was $62.5 million, a decrease of 9% compared to the prior year period. The decline was mainly driven by the shift in revenue mix towards lower-priced products. Gross margin was 80.6% in the fourth quarter of 2025 compared to 80.7% in the fourth quarter of 2024. Total operating expenses were $56.3 million in the fourth quarter of 2025 compared to total operating expenses of $55.7 million in the fourth quarter of 2024. The increase reflects restructuring charges and increased litigation expenses in the quarter compared to prior year. Fourth quarter net loss was $9.4 million or $0.15 per share compared to a net loss of $0.5 million or $0.01 per share in the fourth quarter of 2024. Adjusted EBITDA for the fourth quarter was $6.2 million compared to $11.1 million in the fourth quarter of 2024. Full year 2025 adjusted EBITDA loss was $3.9 million compared to full year 2024 adjusted EBITDA loss of $11.0 million, a 64% improvement over the prior year. Cash, cash equivalents and marketable securities totaled $48.4 million as of December 31, 2025. The company's new credit facility provides an additional $115 million of liquidity, subject to certain conditions. The company used $27.3 million of cash during the full year 2025, a decrease of 46% compared to $50.5 million in 2024. Before concluding, let me turn to our outlook for full year 2026. As John mentioned, we're initiating our full year guidance. We expect full year 2026 revenue to be in the range of $200 million to $212 million, representing a decline of 6% to 0% compared to the full year 2025. We expect revenue declines to continue until our seasonally strongest fourth quarter. Fourth quarter revenue growth will largely be driven by accelerating case volumes, the lapping of the mix shift dynamics as well as contribution from our planned 2026 product launches. Looking closer at the first quarter, similar to prior years, following our seasonally strongest quarter, we anticipate Q1 revenue will step down approximately 27% compared to Q4 2025. Then we expect year-over-year growth rates to improve each quarter thereafter. In addition, the company expects a loss in adjusted EBITDA in the range of $4 million to $6 million for the full year 2026 as compared to a loss of $3.9 million in full year 2025. We also expect a reduction in cash usage of approximately 50% for full year 2026 as compared to full year 2025. Supported by a strong and flexible balance sheet, we believe we are well positioned to continue executing our strategic and growth initiatives for the foreseeable future. With that, I'll turn the call over to the operator to open the line for questions. Operator: [Operator Instructions] our first question comes from Danielle Antalffy with UBS. Danielle Antalffy: We've heard from a number of players over the course of 2025 that the foot and ankle market was seemingly unusually soft. And I followed you guys for a long time. This has been a relatively high-growth market. John, I'd love to hear your thoughts on what's going on in this market. And as far as your guidance goes, the overall market itself, what's reflected from a growth perspective? Do we return back to normal, continued softness here? Anything you can say to that? John Treace: Sure. Danielle, thank you for the question. As we've indicated on past calls, during 2025, our surgeons were reporting deferrals of cases. We believe that made it a softer year and potentially a declining year in overall bunion surgical volume. As you noted, other companies have mentioned the foot and ankle market being soft, particularly in elective foot and ankle procedures in 2025 or even that may have contracted a little bit. Given we've got an increase in our Q4 case volumes versus Q3, I think it really does demonstrate that we're taking share with this new comprehensive bunion portfolio and strategy even in a softer market. When it comes to our outlook for 2026, we're increased -- we're expecting that increase in case volume that's going to be offset by product ASP mix-related headwinds for the first half of the year. That will begin to abate in Q3 as we start to lap the introduction of these lower ASP, higher volume driving 2025 product introductions. Additionally, in Q3, we'll increasingly, as we go into Q4, benefit from the introduction of the new 2026 product launches, these carry a little higher case ASPs, such as our Lapiplasty Lightning and Speed TMT and the combination effect that we get from our Speed XM mid-foot plating and SuperBite screws. So we also have some new sales reps that are going to be ramping up in the back half of the year, and we have some easier comps there. So we feel good about the cadence. We feel good about the new products we're introducing and the impact they're going to have. As far as the market dynamics go, we're kind of contemplating a similar dynamic to what we experienced in 2025. Danielle Antalffy: Okay. Understood. That's helpful. And I'm just curious, as far as the scaling of the biologics portfolio that you talked about, how that will impact operating margins? I know you guys are committed to EBITDA positive, but just curious about any nuances there. Mark Hair: Danielle, this is Mark. Thanks for the question. Yes, we're excited that we continue to expand our product offerings. And so that's just going to be another product in our bag that our sales reps can now provide to surgeons who are looking for those biologic solutions. And so we've got good margins on those. We don't think that it's negatively going to impact us at all, but to provide additional revenue going forward into 2026 as we have this new offering. So I don't think there's anything negative about it at all. It's all upside for us as we have this broader portfolio. Operator: Our next question comes from Ben Haynor with Lake Street Capital Markets. Benjamin Haynor: First off for me on the products expanding the TAM, can you maybe share a little bit more about those, how long they've been in development? Any experience of the folks that have had their hands on them yet? Any additional color there would be helpful. John Treace: Sure, Ben. Thanks for the question. Yes, the SuperBite screws, these have been in development. Typically, our product development time lines are 18 months or so. We've been working with an elite team of minimally invasive surgeons on these as well as our traditional SAB development team. We put a lot of work into it. They're very refined. They have some really nice features that make them very high performance. The ability to put this in our sales reps bag really adds breadth to their line, the ability to control a greater portion of the overall surgical case, and we're excited about this. It's the first time they're going to have one of the most commonly used forms of fixation in the foot and ankle. So it's going to be very synergistic with a lot of the current products they have, additive to the case ASPs. The second product we talked about was the Speed XM. That's our mid-foot plating system. Again, it's been in development for quite some time, very refined, a lot of cadaveric testing. We've had a lot of surgeons put their hands on this, and we're looking forward to rolling it out mid next year. This is for fusing larger bones that are further back in the foot like the talonavicular, the calcaneocuboid, naviculocuneiform, flatfoot reconstruction, triple arthrodesis. These are larger bones more in the back of the foot. These are procedure adjacencies that are often related to the bunion and convenient call points for our sales force. So we're excited that they'll have the ability now to tap into these new incremental high ASP procedures with these 2 complementary technologies. Benjamin Haynor: And you said mid this year or mid next year? John Treace: Coming mid this year. Benjamin Haynor: Okay. Maybe I misheard you. Sorry. And then secondly for me, on the quarter of your surgeons that have tried the new osteotomy solutions. What are the ones that they pick up first? How does it kind of fit into their algorithm? Any additional color would be helpful. John Treace: Sure, sure. And there's 2 platforms there, Ben. We've got the MTP fusion system, which is getting a lot of traction. This is the first dedicated offering that Treace Medical has offered into that large space, that large subsegment of bunion patients that the bunion patient comes in, they have a painful bump, but they actually have arthritis in the big toe joint. That's roughly 20% of the patients, that surgeons see for a bunion. Then there's an entirely other class of patient that fits for that Speed MTP, that MTP fusion that doesn't have a bunion, but has big toe arthritis isolated. So it's one of the most common procedures performed by our surgeons. And now we're playing in that space. The price point is at a premium to the MIS osteotomy products we offer. So we like that, and we're seeing a really good pickup there. Regarding the MIS products, we have 2. And the way we've been hitting the marketplace and sort of segmenting the user base, if surgeons have not tried minimally invasive bunion surgery before, Nanoplasty is a more welcoming and easy step for them because it does not require them to learn how to use a rotary powered cutting burr. They can use their conventional saw. We have excellently designed instrumentation that allows them to control the whole procedure, correct all 3 cardinal planes of the bunion deformity and do it in a comfortable and reproducible fashion. So Nanoplasty serves that customer group predominantly that hasn't engaged in minimally invasive osteotomy surgery. The other group are the surgeons that have engaged in minimally invasive osteotomy surgery and they have some level of proficiency, and that's our Percuplasty. So we go after them with our Percuplasty system. We have superior screw designs that don't require drilling, so it makes it faster to insert. And our jig system has just received very high acclaim from everybody we've put it into their hands. That's allowing them the more controlled instrumented procedure, the ability to reproducibly correct all 3 planes of the bunion and do it in a fast and efficient manner. So you add these technologies to our entire portfolio and what surgeons are seeing is a comprehensive suite of offerings that are best-in-class, whether they need to fuse an MTP joint, do a Lapidus or Lapiplasty or do a minimally invasive osteotomy procedure for their patients. So we're really well equipped. Sales force is in a great position now with all these products on all these fronts, and we're driving it forward and we're driving our case volumes. Operator: Our next question comes from Ryan Zimmerman with BTIG. Ryan Zimmerman: Can you hear me okay? John Treace: We hear you loud and clear, Ryan. Ryan Zimmerman: Great. Maybe with -- starting with the guide, both for Mark and John. When you think about what's embedded in the high end and the low end of the guide, what is the toggle? Or what are the variables that you've kind of embedded in the guidance that get you to the low end, that get you to the high end? How much of that is market dynamics versus maybe product mix shift? If you can kind of deconstruct that a little bit, I think that would be appreciated. Mark Hair: Yes, Ryan, this is Mark. I'll take a first shot at that. We did offer a range this year, and it partly goes to some of these dynamics that John talked about earlier that we saw exiting 2025 that there were some changes in patient dynamics and some -- what we were referring to previously as some macroeconomic headwinds. So there is some uncertainty as we come into this year. So we wanted to make sure that, that range comprehends some of that market uncertainty. So that would probably be towards the lower end of that range to the extent that there isn't some improvement or that some of these dynamics don't improve this year versus last year. So -- or they worsen. I think on the upside is where we continue to have incremental uptake of our new products. Those that we launched last year again, we've talked about case volume increases in both Q3 and Q4. We're anticipating case volume increases throughout 2026 as well year-over-year. So to the extent more surgeons are adopting these new cases -- these new procedures and to the extent there's greater uptake on our new product launches that are coming out. John just talked about SuperBite as well as Speed XM. So these are new product launches that are coming out this year. And to the extent there's greater uptake on those, then there's opportunities to go to the high end of the range. So right now, we feel comfortable at the midpoint of the range. There are some variables in the marketplace and with our product offering. And so that's where we feel comfortable for now. Ryan Zimmerman: Yes. Okay. That's very helpful, Mark. And John, you've added a lot of products over, say, the last 18, 24 months, if you will. Historically, the sales force was a Lapiplasty focused sales force, right? And it was kind of like a tunnel vision. It was that segment of the market. How do you balance the focus of the sales force? And you're adding a lot of these products. There's pushes and pulls on pricing dynamics with those products as a result of that. I'm just curious kind of, is there a risk of dilution in terms of focus in the sales force? And just your general thoughts on kind of how you balance those dynamics with all the products you're adding? John Treace: Yes. Thanks, Ryan. Really insightful question. We've done a lot of work with our sales team for the past over a year now, getting them ready for this, getting them trained. These technologies aren't technologies necessarily they're having to push or force their products and technologies that our customer base is desiring and kind of demanding. So the way we look at it is we keep them focused on that bunion sweet spot. And then as the surgeons have adjacency procedures that they want to serve with our product line, we have them to serve them. And that's why the SuperBite screw line is so important. Speed XM is so important and the next-generation technologies we're bringing out with Lapiplasty are going to be very important as well. But we find that these are the types of products that our sales force's customers are wanting from Treace Medical. Speed XM is a perfect example. They love the SpeedPlate technology, and they're asking us, can you develop this for these other larger bones? And I could use them with your new screws that are coming out. So we're listening to our customers very closely, and we're trying to develop our product line in concert with kind of the path at least resistance for the sales force. Operator: Our next question comes from Rick Wise with Stifel. Frederick Wise: John, you highlighted -- I think your words were something like you can now address 100% of the bunion opportunities or bunion-related opportunities with the broadened pipeline. I'm just curious how you're seeing with what you already have and what you're expecting competitively. How does this -- how is your broader product line, how does the expanding sales force, this repositioning of the company, how is it affecting competitive dynamics? And is this really going to -- I'm not asking it skeptically. I mean, it's got to shake things up a little bit. John Treace: Rick, yes, great question. It's a competitive marketplace, and a lot of people are trying to play in it, a lot of large competitors, small competitors. We just returned from our largest surgeon conference of the year, the ACFAS Conference in Las Vegas, huge attendance. Over 2,000 of our most common foot and ankle surgeons participating there. We had a great booth. All these technologies were on display. We had very high traffic at our booth. I can tell you our cadaver training labs that we held at the meeting were oversubscribed and attended beyond what we expected. So I think there's a lot of appreciation for what Treace Medical brings in terms of being bunion experts and being able to help surgeons navigate through the changing landscape of patient interest and what type of procedures they're going to want to be offering in their practice. So knowing that Treace Medical has this full suite, 5 different categories of best-in-class solutions that can comprehensively serve those surgeons -- patient bunion needs across the spectrum. I think that's a very comfortable position for surgeons to be with Treace Medical. And our reps know the procedures inside and out. We hold their hands. We give the surgeons excellent training. We reinforce the uptake on the products in the OR with our expert clinical specialists to make sure those first cases go smooth and they get great patient outcomes. And then they're taken care of by very focused bunion direct sales force. So again, a lot of enthusiasm for these products, and we think it's going to continue to build. Frederick Wise: And Mark, maybe you could expand on your cash flow outlook comments. Obviously, you've done a great job reducing your rate of cash burn, and you seem to have a lot of optimism you can make a significant dent in cash burn in the year ahead. Better sales will help mix, I'm guessing. But talk us through the initiatives that you're contemplating incrementally for 2026 and why we shouldn't be concerned that this is going to limit the company's ability to -- on the marketing front or sales expansion front to get the sales growth side of the job done. Mark Hair: Rick, we've, for the last several quarters now, talked about our laser focus on profitability improvement and cash management. And -- so we took a lot of steps last year to begin to improve our overall cost structure and our P&L. And a lot of those changes that we made last year will benefit us throughout the full year 2026. So some of those cost reductions, we reported some restructuring charges last year. So that's -- we'll be able to annualize those benefits throughout 2026. We've talked a little bit about a couple of other things that were unique to 2025. We -- as we've launched all of these incremental bunion systems and adjacent products, we really hit a high watermark with regards to our medical education, and we really invested in training all of our existing surgeons, and we reached out and did a lot of additional training to surgeons that are -- that had not been Treace customers. So although we will very much remain focused on medical education and training surgeons, we won't have the same level in 2026 that we did in 2025. So that's going to naturally come down a little bit. We've also talked about the -- some of the natural leverage that comes in our sales force. We've hired a lot of sales reps. And as they come off some of their fixed salaries, there's some natural leverage in the sales organization as well. The other thing is we've talked -- in the last couple of calls, we've talked a little bit about our DTC efforts and activities and investments. And we are not investing as much as we had historically. And one of the main reasons is really what we were doing in earlier days was building brand recognition and brand awareness for both patients and surgeons. But now we've got over -- what we estimate 1/3 of the U.S. surgeons using Treace products last year. So we've got this huge large base of surgeon customers, and so we can leverage down some of that DTC investment that we don't believe will impact our top line growth. The last thing that I'll mention with respect to cash management or cash usage is last year with the introduction of several new bunion systems, we had incremental and higher CapEx or capital expenditures for our instrumentation trays that we own and we depreciate, but we make them available to our sales reps and to the surgeons who perform these new cases. So that was at a higher level last year. And we don't need to have the same level of capital investment in 2026. So not only is the OpEx going to come down, and you'll see some nice leverage there, but even on the CapEx as well. So the combination of all those things is what gives us confidence that we can reduce our cash burn by 50%, which is significant this year on top of the significant reductions that we just experienced last year. Operator: Our next question comes from Richard Newitter with Truist Securities. Richard Newitter: I have 2 questions. Maybe the first one, just a little bigger picture. I appreciate that you see mid-single-digit case volume growth. There's a lot of cross currents with mix shift. And I doubt those are going to go away because you're going to continue to have to evolve the portfolio and the marketplace is going to continue to be increasingly competitive. So the bigger picture question against that backdrop is what's the end goal here? Or how do you see your kind of sustainable longer-term normalized growth rate when you layer in some sense of normalcy on the bigger bag, a more productive sales force with that bigger bag? And is this a mid-single-digit grower sustainably longer term, just given where all the macro headwinds are maybe get some share gains that offset? Is this a high single-digit sustainable grower now? Just trying to get a sense for kind of where you're headed realistically longer term? And then I have a follow-up. Mark Hair: Yes, Rich, this is Mark. Let me begin with that, and John may have some additional color. So we are broadening the portfolio. Some of these items that we've talked about have lower ASPs and yet some of these new products and offerings that we're providing really have strong ASPs as well. Maybe a slight step down to Lapiplasty, but these are strong ASPs, and we'll continue to broaden our portfolio, not only in the bunion space, but the adjacencies that John talked about. So there's going to be some of that dynamic that overall, the ASPs or the revenue per case may come down from where we've been historically. As we think about the foot and ankle market, some of the questions already today, and we've talked about it a little bit, we believe that there were some macro trends in 2025 that may be were different from what we've seen historically. Historically, we'd say that the foot and ankle market is somewhere in the mid-single digits and growth rate year-over-year. That's what we've seen historically. And we believe that with our focus exclusively on foot and ankle and with a primary focus on the bunion that we can and should do at least what the market does and more. And that's because of our product profile, our direct channel sales force that can drive these products, and it's our focus. So we believe that we're uniquely positioned in the marketplace to do what the market is doing broadly and then some. So that's what we would anticipate going forward. Richard Newitter: Okay. And then I'm just curious relative to your original expectations when you made the strategic pivot, if you will, what felt like a strategic pivot to us to the MIS osteotomy versus Lapiplasty. Macro developments aside, how is that strategy playing out relative to kind of competitive conversions or trialing that maybe are coming back? Is everything progressing according to plan, notwithstanding some of the mix and macro kind of externalities? John Treace: Rich, John here. I would say, yes, very positive reception to these new technologies. What we're known for is developing really elegant instrumentation that takes challenging procedures and makes them very straightforward for surgeons. And these minimally invasive ways of doing the bunion, they're hard and surgeons need help, and we're giving them the tools to be able to get trained and put these into their practice quickly. We already had 25% and just 2 quarters into launching these new technologies, 25% of our 3,300 customers have already used one or more of these new technologies, have incorporated them into their practice. And we believe that's going to continue to build throughout the year, larger percentage of our overall surgeon base using these new technologies. And on average, those surgeons embracing more of those 3 new bunion systems as we progress throughout the year. That's what we're laser-focused on, and we're seeing a very positive reception, couldn't have been highlighted more than the reaction we just saw at our largest annual meeting of surgeons where we had very high turnout to get hands-on with these products in the lab, learn from our top faculty how to employ them into their practice, and we're looking forward to picking up a lot of new users as they return home. So I think everything is going as planned. Our MTP Fusion product is tapping into a market we've never played in before, and we're becoming a pretty quickly here, a very large share player in that space. And I think it speaks to the power of our model and our strategy and the ability of our sales team to execute. Operator: Our next question comes from Lilly Lozada with JPMorgan. Lilia-Celine Lozada: I'm hoping we can go back to some of the assumptions underpinning the guide. It sounds like you have to get past these Lapiplasty and mix headwinds and have strong uptake in MIS osteotomy to get back to growth in the fourth quarter. So to what extent does a rebound in the fourth quarter and the guidance for the year rest on meaningful share capture in MIS osteotomy. I appreciate you don't provide specific guidance by product, but any color on what the guide assumes in terms of how successful MIS osteotomy is and how Lapiplasty volumes are trending relatively would be helpful. John Treace: Lilly, it's John. Thanks for the question. I'll take a shot at this, and Mark can maybe chime in as well. We have some assumptions for -- that are built into our guide, both low and high end on uptake on our MIS osteotomy platform, our MTP fusion platform, how Lapiplasty and the new Lapiplasty products such as Speed TMT are going to perform. And then, of course, the new products we're bringing out starting in the middle of the year, the SuperBite screws and Speed XM. So all of those are built in. We have assumptions for them. We believe they're reasonable and achievable, and we're going to progress through the year, and we're trying to be prudent. And to the degree we can do better, we'll do better. But we're sticking to the plan for now and executing on it. Lilia-Celine Lozada: Great. And then just as a follow-up, can you talk about how the rollout of these new products affects how we should be thinking about your strategy penetrating the market deep versus wide. It sounds like there's a cohort of docs that maybe just never gravitated towards Lapiplasty and these new products give you something to offer them. So should we think about new surgeon adds trending higher than in years past? And is that more of a focus now than before? John Treace: Sure. Yes, some of them are -- some of these products are obviously built to bring on new surgeons that have not been users of Lapiplasty in the past. The Lightning instrumentation is going to be new and novel and has a lot of appeal to it. We just had a training on that, an alpha kind of preview training at our ACFAS Conference, very, very great reception from the surgeons that saw there. And the Speed TMT implant, that appeals to a very large surgeon audience that we have not appealed to before with Lapiplasty. Because this group of surgeons like to use one, fixation plate versus two, which has been our traditional. So we think we can appeal to new users there. And I'm sorry, maybe I lost the other part of your question, Lilly, if you don't mind reminding me or Mark can pick it up. Mark Hair: And maybe, Lilly, I'll jump in a little bit. This is Mark. I think our primary strategy has been that we -- to first build a very large customer surgeon base, and we're really proud of the work that we've done. It's taken a number of years, and we've really made great strides in increasing this customer surgeon base over the last 3 or 4 years. Now that we've got this large surgeon base and what John talked about earlier is that we've really only gotten maybe 1/4, 25% of their cases because they're doing other types of cases, we just haven't had an offering. So I think the first opportunity -- strategic opportunity is to add these new products to our existing surgeon base. That's strategy and focus number one. We know that there's many more bunion procedures that we have not been getting historically, and that's the biggest opportunity for us right now. With that said, and John is exactly right, we strongly believe that in addition to that focus on our large surgeon base, there are other surgeons that have just not really spoken to or become Treace customers and it could because of their preferences. In -- MIS is one example. We just haven't been in the MIS osteotomy space, and now we can play there. So it gives us an opportunity to provide those offerings to our large surgeon base and also reach outside of our customer base to bring incremental surgeons. But I don't think this year that we're looking to expand in dramatic form outside of our current surgeon base. We will add new surgeons this year. We've already done so and we'll continue to do so. But I think the bigger opportunity right now is to drive deeper into our existing 3,300-plus customer surgeon base. Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.
Operator: Good morning, everyone, and welcome to Pearson's 2025 Full Year Results. Today's session will consist of a presentation followed by a Q&A. [Operator Instructions] And with that, I'll hand over to Omar. Omar Abbosh: Thank you, Alex. I've been looking forward to seeing you all. Welcome, and thank you for joining. We appreciate you being with us. Let me begin with the three things I want you to take away from today's presentation. First, we continue to be very excited for the future of Pearson, thanks to mega trends driving strong secular demand for exactly what Pearson offers and because of Pearson's unique characteristics and enduring competitive strengths. Second, 2025 was another good year of financial delivery and significant strategic progress. Third, we will continue to make progress on our strategy in 2026 with a financial profile that improves further on 2025. I will outline our business progress before handing over to Sally to provide an overview of our financial results for 2025 and expectations for 2026. And then we'll move to Q&A with Aarti, Tom, Sharon, Vishaal, Anthony alongside Sally and me. For those of you in person, we have a series of product demos focused on our most recent releases that will be available after the main presentation just out there. Let me now tell you why I'm confident for the future of Pearson and why we are positioned to succeed. Two factors provide the foundation for our confidence. The first is that mega trends will continue to drive strong secular demand for exactly what Pearson offers. We've spoken before about the ongoing demographic shifts and the advance of AI. These mega trends are already driving major demand for skilling and the validation of skills. How do I know this? Because we have valuable revenue commitments from 9 of the world's leading technology and services companies for exactly these services. And these trends will continue to reconfigure whole industries, occupations and educational systems. Enterprises will need to upskill workforces at pace to keep up with rapid technology changes and institutions will need to provide alternative skilling pathways for vocational and career and technical education. Pearson as the world's lifelong learning company is perfectly positioned to benefit from this massive wave of human skilling over the next several years. Second, we will succeed due to Pearson's unique characteristics and enduring competitive strengths. I feel the need to elaborate. Over 80% of Pearson's profit comes from assessments and virtual schools. These businesses are driven by human-led services where complex interconnected physical and digital workflows enable large-scale delivery in highly regulated markets. Our services must meet a very high bar for accreditation authorities and regulators, meaning that strength and operational delivery matters. And together, our services act as verification infrastructure for companies, industry associations, states and government agencies. Examples of workflows include physical and biometric security, supply chain with secure custody of assessments materials and incident response, statistical proof of maintaining standards alongside capacity management to enable millions of tests to be taken through our network of 20,000 secure physical facilities. Even in today's AI world, some countries or customers are not ready for digital at any scale. So there will continue to be need for print-based products for the foreseeable future. That means that about 90% of Pearson's profit stream is coming from operationally complex, interconnected hybrid physical and digital services alongside print, all demanding uncompromising quality levels and trust. The remaining 10% approximately comes from -- the remaining 10% about -- of our profits come from primarily digital courseware. For example, in higher ed, here, we're deeply integrated in the critical workflows that decision-makers use to perform their roles. These customer relationships have been nurtured over many years built on a foundation of quality, and that comes with high switching costs. We love seeing the progress that AI labs and others are making in the tools that can benefit learners. And as you know, we're embedding much of their progress directly into our offerings, but our products are not just learning content. They're designed to manage a course end-to-end and are tightly integrated with the learning management and student information systems at the university level as well as the course curriculum and assessments at the individual professor level. These characteristics are very unique and are supported by enduring competitive strengths. Specifically, our unique deeply embedded position in the learning ecosystem gives us petabytes of proprietary data that we use to improve learning experiences and outcomes. We have data from billions of student engagements and submissions and hundreds of thousands of instances of instructive feedback occurring on our platforms every year, and that allows us to build ever more effective products. Pearson holds leading positions across almost all our businesses. This leadership provides scale economics and strong operating leverage at an individual business level and a breadth of offerings that is unmatched globally. The diversity makes the business model robust. And our trust underpins all of these strengths. This has been gained through a long track record of operational excellence in our large-scale services businesses and through our quality IP, expertise in how people learn and how to deliver evidence of learning outcomes with formal education institutions. Trust is valuable and plays to our unique strengths because the closer you are to the teacher and the learner, the more trust you need to operate. And trust in verified skills is even more important in an AI era. Taking a step back, what does this all add up to? The mega trends of demographics and AI will continue to be major demand drivers for skilling and the validation of skills and Pearson as the world's lifelong learning company is perfectly positioned to benefit. Our unique characteristics of trust, infrastructure level quality, operational strength and breadth of services that are embedded deep in the learning ecosystems, alongside our investments in AI-driven innovation delivers strong durable cash flows and profitability. And our deep and enduring competitive advantages provide us a unique platform for future growth. You'll remember that we set out three priorities in 2025, and I'm pleased to say that we successfully delivered on all of them. Thank you to the focus of our people, on our customers and on execution. First, we have again delivered a financial performance in line with expectations with revenue growth increasing 4%, profit up 6% and strong free cash flow, demonstrating the attractiveness of Pearson's business model. Second, we continue to embed AI-based innovation across our products and services, allowing us to deliver more engaging, personalized learning experiences. Importantly, we're seeing continued tangible improvements in both learner engagement and outcomes. And third, we're making great progress on enterprise. Our new go-to-market strategy is delivering results, and we see clear financial momentum with a growing revenue backlog now totaling hundreds of millions of dollars of incremental sales to 2030. This means the enterprise business is on a journey towards delivering meaningful shareholder value, underpinning an acceleration in our growth over the medium term. You'll remember our strategy outline, our why, what and how that we first shared in 2024, and that framework continues to guide us. We're motivated by our purpose to help people realize the life they imagine through learning. We'll show a video at the end of our presentation, which is part of a series highlighting the real-life impact learning has on real people, playing directly into the unique role of Pearson in the world. Next, our what. It remains clear. We're the global leader in assessments and verification. That is our core. And we're implementing our strategy to drive performance in our core businesses, realizing execution synergies while also investing in the faster-growing segments of early careers and enterprise skilling. And finally, our how consists of our internal capital allocation process, prioritizing innovation to deliver better learning outcomes and embedding a high-performance culture top to bottom. Let me share some details on our progress in 2025, starting with driving performance in our core businesses. Here, our progress and execution focus gives us confidence that each business unit is on a clear path to improved growth, benefiting from strengthening our sales muscles and developing our product road maps to be ever more competitive. First, assessment and qualification growth increased in 2025, thanks to our team's clear focus on executing for our customers. Clinical Assessment and our Qualifications business performed strongly, benefiting from digital growth and international expansion. Pearson Professional Assessments secured scope extensions and new awards with enterprises such as Google, ACCA and others that we have won and will communicate in the year ahead, which will contribute to faster future growth. U.S. Student Assessment made progress, unlocking adjacent market growth through our partnership with McGraw Hill, and we expect continued momentum in 2026 with ongoing growth in enterprise, international markets and new product innovation. Second, English Language Learning, Sharon and the team continue to execute strongly with customer wins in key institutional markets, for example, in Latin America and market share gain in PTE, where we maintained our revenue level even while global market volumes declined by about 15%. We will build on the momentum in upskilling enterprise talent with English skills and drive further market share gains contributing to higher growth in 2026. Next, in higher education, we delivered faster growth in 2025 despite the K-12 transition and trading conditions in international markets. We progressed our early career strategy, operationalizing our direct K-12 sales team to take advantage of the fast-growing career readiness opportunity. Our core U.S. Higher Education business performed solidly with continued strength in inclusive access. And at the same time, we see value upside as we know we can do better, especially in channel execution to improve inclusive access growth and accelerating platform convergence and simplification in 2026. Now turning to Enterprise Learning and skills. Vishaal and the team continue to lay the foundations for growth, building our global enterprise sales team, securing a series of long-term meaningful strategic relationships with blue-chip names, and I'm going to say a bit more about that in a few minutes. And then finally, Virtual Learning had a standout year. We're now seeing the benefits of the execution improvements that we told you about this time last year, including our new enrollment portal and targeted marketing investments to capture strong demand. We've enhanced our early careers offering with new industry partnerships, which are now embedded across the entire school network. And we're excited about the potential for this business in 2026 and beyond. We are a leader and gaining share in a market that has strong demand plus opportunities to add capacity to our school network. And we can drive further business unit-specific improvements with execution synergies driving value to Pearson as a whole. We're driving synergies across our business units, supported by AI-enabled cost optimization opportunities and ongoing process improvements while enabling faster product innovation. These synergies are providing additional capacity to invest in the business, supporting future growth. In 2025, we generated about 200 basis points of margin through cost savings. which, of course, we are reinvesting. Expect us to continue to optimize our business, enabling ongoing investment and margin progression within our P&L envelope. Let me give you a little update on our progress across our key synergy areas. First, we've consolidated our suppliers and deepened our relationships with a smaller number of key partners to create customer impact, drive efficiencies and grow our businesses. Our latest partnership with Salesforce provides all of these benefits. We've deepened our sales intelligence capabilities at an optimized cost while supporting Salesforce's own reskilling priorities with our suite of enterprise products. Second, we are improving our operational systems, leveraging new AI technologies to provide better customer service, faster routes to market and improved data capabilities to support our decision-making. Teams using our AI content development tools saw content editing time reduced by at least 40%, translation costs reduced by nearly 1/3 and content alignment costs down by 1/4. Our AI customer services agents handled over 130,000 customer interactions, delivering an approximately 40% reduction in volumes where our agents have been deployed. And we'll unlock further value as we move from these pilot stages to wider internal scale and develop new workflows with agentic technologies. Through our newly established revenue operations function, we now have a single standardized sales pipeline across Pearson and a simplified sales incentive framework, improving forecast visibility and sales disciplines. Now turning to brand. If you went online to look for all the Pearson properties and assets and products, you would have been met with this kind of brand soup. We are creating a more unified Pearson presence, allowing for a simplified and intuitive product portfolio, enabling easier selling and purchasing and, in my opinion, an improved signal-to-noise ratio. You will have seen this in the new Pearson branding that we launched last year as well as through our product portfolio, for instance, Pearson Learn and Pearson Career Ready. Finally, we're making progress on implementing a modern software development approach. These Pearson-wide set of tools and methods maximize the value of our sector-leading product and technology cash spend, which totaled approximately GBP 1 billion last year, which means we're investing in innovation for the future while building on our core competitive strengths. Through our efforts, we're accelerating the rate of innovation across the company, leveraging shared capabilities to embed best-in-class AI-enabled tools and functionality across the business units, supporting their market position. As usage of our AI tools scale among end users, we continue to demonstrate clear benefits, including for educators who are freeing up time to spend on teaching and for students who are actually improving their learning outcomes. Let's now show the breadth of our AI offering in higher education and how we're improving student outcomes. [Presentation] Omar Abbosh: And what this highlights is not just the pace at which we're innovating, but how deeply embedded AI now is in our capabilities to improve outcomes. Let me shift now to sharing our progress on our two medium-term growth vectors, starting with enterprise skilling. When I speak to CEOs, the message is consistent. AI is shortening the half-life of skills, and there is no positive outcome with AI transformation to be achieved without real investment in human learning. Therefore, there's increased urgency around reskilling, closing productivity gaps and preparing for the AI-driven reconfiguration of jobs. The scale of change is moving enterprises away from traditional learning and development approaches with discrete tools that show little or no ROI and towards partners who can co-develop learning experiences and connect skills, data and talent intelligence into a unified ecosystem. The strengths of Pearson play into this opportunity, and we're making good progress unlocking it. Our newly established go-to-market approach has led to 9 important partnerships that you can see on the slide. The common thread across each of these logos is that these enterprises matter in the future of technology. They have large workforces with significant reskilling needs, and they share our conviction about the importance of skills in the AI era. And they chose Pearson because we're the world's lifelong learning company. Let me remind you of the scope of these long-term partnerships and then go on to tell you why these deals matter. First, they commit our partners to being Pearson customers. We've created significant sales opportunities already, such as the integration of our learning products to support Amazon's workforce development, English Language Assessments for TCS, certifications at scale for Google through Pearson Professional Assessments, Credly as a key credentialing partner to Microsoft's new skilling platform and sales skilling through a combination of assessments and personalized content for IBM and Cognizant. And there are clear parts and commitments with each partner to do more. Second, Pearson is also a customer of their engineering skills and services, for instance, through the deployment of AI tools for content generation or the use of Azure and Bedrock capabilities in our AI-enabled products. And third, we're engaging in the joint innovation and go-to-market activity that unlocks new opportunities for instance through complementary solution models and access to industries or geographies. Examples of progress here, including partnering with HCLTech on a skilling initiative for a major U.S. retailer and embedding our enterprise product suite and assessments and learning content in the Deloitte Academy, which is Deloitte's comprehensive skills transformation offer that they offer to their clients globally. Microsoft was a key strategic partnership early on, and we've made significant progress in 2025. We're excited by the innovation alongside them, very excited. We now offer personalized adaptive learning experiences directly in the flow of work. Let's introduce you to communications approach. Please roll the video. [Presentation] Omar Abbosh: We're just at the start of what we can do with our partners as we combine Pearson's proprietary content, data and assessment capabilities with their scale, enterprise selling and reach. Our enterprise business will contribute meaningful shareholder value over the medium term, and we're pleased by the progress so far. I know I have a finance audience in the room. So from a financial perspective, the contracts we signed in 2025 lock in revenues of hundreds of millions of dollars with existing customers, and they add incremental cumulative revenue commitments to Pearson of hundreds of millions of dollars through to 2030, with value being realized in AMQ, ELL and ELS. Now let's turn to our second growth vector, early careers. In an AI-driven economy, concerns are particularly acute around entry-level roles. That makes job-ready and vocationally aligned skills more important than ever. We estimate the early careers market is about a $6 billion opportunity in the U.S. alone. It is fragmented with no clear winner and has been underserved historically, presenting a clear adjacent opportunity for Pearson given our strengths. We had an early presence through our career offerings within virtual schools and relevant IP in higher education and career-ready certifications in Certiport. We're augmenting these areas with significant investment. For example, we improved our channel access through a direct Salesforce to deepen and expand our relationships with U.S. school administrators. And we expanded our capabilities through the acquisition of eDynamic Learning, North America's largest provider of digital career and technical education. So by optimizing our model across these areas, we're driving new growth here and are energized by the progress in unlocking this attractive adjacent market. I now want to shift gears a little and come back briefly to the topic of power metrics. These are a small number of metrics of leading indicators that we want to report to you on a go-forward basis. We chose these metrics because they signal clearly the future health of the business, and we want also Pearson's people to be laser-focused on these as part of their incentives as well. First, our renewals metric. The renewal rate was strong at 96%, reflecting the competitive strength of our businesses. While Pearson Professional Assessment continued to drive near perfect retention, the metric was impacted by New Jersey and U.S. student assessment, although we were successful in another 38 competitive renewals in that business. And our renewals metric will be supported by our second growth metric, which shows the average annual new contract value signed across our core large-scale assessment businesses. In 2025, our metric was GBP 33 million, benefiting from large wins such as Google with Pearson Professional Assessment and our formative assessments contract with McGraw Hill. And given contracts in this space are long term in nature, you should think of this metric as cumulative over a 3- to 5-year period. Lastly, we extended our major customer metric to 49 in 2025, reflecting both new customer wins and expansion within existing relationships, demonstrating our momentum in enterprise. As you can see, we have now made a lot of progress in our business while delivering on our commitments, which will contribute to an even stronger 2026. Our unique business model, continued progress against our strategy, plus our strong focus on execution means that we're guiding to a further improved financial profile in 2026. This builds on our track record of financial progression and meeting market expectations each year since COVID. I'd like to now hand over to the wonderful Sally to break down in more detail our financial performance for '25 and the financial outlook for '26. Sally Kate Johnson: Thanks, Omar, and good morning, everybody. 2025 delivered another year of good financial performance. Sales grew 4% with a 6% increase in underlying profit and margin expansion from 16.9% to 17.2% despite currency headwinds. Adjusted EPS increased 4% to 64.5p, reflecting that solid trading performance and a reduced share count from the share buyback, partially offset by higher interest costs. It's worth noting that EPS grew 9% at constant FX rates. Cash performance continues to be strong with free cash flow conversion of 125%, including the state aid recovery, 98% without. This strong performance, combined with our balance sheet strength, supports a 5% increase in the dividend. We also recently commenced a further GBP 350 million share buyback, demonstrating proactive capital allocation to drive incremental shareholder value. Before we get into the detail, we've updated the slide we shared last year, demonstrating historical financial progression for 2025 data. We have a track record of consistent progress with underlying sales, profit, free cash and return on capital growth. This demonstrates the momentum in the business and underpins our confidence in both our 2026 outlook, which I'll come to in a minute, and our medium-term guidance. But first, a recap on our 2025 sales performance with group underlying growth of 4%. By business unit, Assessments and Qualifications delivered a solid performance with growth accelerating in H2, particularly in Q4 and all sub-business units contributing to that growth of 4%. Virtual Learning delivered a strong performance, particularly in H2 when sales were up 18%. Fall enrollments were up 13%, supported by enhancements to our enrollment platform, improved retention, the rollout of our career academies, targeted marketing and strong underlying market growth. Higher Ed growth improved as expected versus 2024. Our core U.S. Higher Ed business delivered a solid performance with anticipated offsets from K-12 and international, both of which are expected to improve in 2026. English Language Learning continued to grow, driven by institutional, while PTE was flat year-on-year, outperforming a challenging market. And Enterprise Learning and Skills grew 6% with another solid performance from Vocational Qualifications and momentum in Enterprise Solutions, who grew 20% in Q4. Group adjusted operating profit grew 6% on an underlying basis to GBP 614 million. This was driven by operating leverage from sales growth and continued cost savings, partially offset by investment and inflation. FX also impacted the headline movement. Adjusted operating profit margin increased to 17.2%. Again, by business unit, Assessments & Qualifications margins remained at 23% with margin benefits from sales growth offset by investment, inflation and currency movements. Virtual Learning margins increased to 16%, driven by operating leverage on strong sales growth. Higher Ed margins remained flat as sales growth was offset by investment, inflation and currency movements. English Language Learning margins also remained flat with cost savings offset by inflation and currency movements. And Enterprise Learning and Skills margins increased to 10%, driven by margin on sales growth. Statutory profit declined 6%, predominantly due to a noncash one-off impairment relating to our Higher Ed platforms, partially offset by vacant property provision reversals following sublets in 80 Strand and Hoboken. As Omar mentioned, in 2026, we plan to accelerate the conversions of our Higher Ed platforms to streamline and modernize our courseware offering and reduce support costs. A consequence of this is an impairment of GBP 87 million in some of our assets, which is one-off and noncash in nature. This write-off now generates a mechanical circa GBP 15 million per annum profit improvement in Higher Ed on average over the next 6 years. Free cash flow increased by 8% with a conversion of 125% due to the recovery of state aid taxes. Conversion, excluding that state aid recovery was still a strong 98%. Operating cash conversion was 93% with an increase in working capital in the year given high Q4 sales growth and slightly increased investment. Our balance sheet remains strong with a leverage at a comfortable 1.3x at the end of the year, below our medium-term cap of 2x EBITDA, maintaining optionality to make value-enhancing investments and/or shareholder returns. Net debt at the end of the year was GBP 1.1 billion, a GBP 0.2 billion year-on-year increase with free cash flow more than offset by the share buyback and acquisition of eDynamic Learning and dividends. Return on capital increased 80 basis points to 11.3%, more than 250 basis points ahead of post-tax WACC. Turning to guidance for 2026 and beyond. As we've previously guided, in the medium term, you can expect mid-single-digit CAGR underlying sales growth, sustained margin improvement, equaling an average of 40 basis points per annum and strong free cash conversion in the region of 90% to 100% on average across the period. As you've heard from Omar, we have strong confidence in our ability to deliver in 2026. And therefore, we're laying out specific guidance. At a group level, you can expect mid-single-digit sales growth and adjusted operating profit in the range of GBP 640 million to GBP 685 million at FX rates as at the end of 2025. The mechanical improvement driven by that 2025 impairment I discussed earlier is included in this range, and free cash conversion will be 90% to 100%. The effective tax rate will be circa 25% and interest will be circa GBP 80 million following the commencement of our further GBP 350 million share buyback. Included within this guidance is new investment to support our strategy and drive growth, including higher-than-average transformation costs, which are weighted to H1. This investment is more than offset by the margin on sales growth and operational improvements, which drive the group's margin expansion and our GBP 0.01 equaling GBP 5 million FX profit guide still stands. On a business unit basis, A&Q will grow low to mid-single digit, driven by new contracts, products and pricing. Virtual Learning will grow even more strongly than in 2025, given a full year of enrollment growth. Higher Education will grow more than 2025, supported by continued product and platform innovation, pricing and inclusive access in U.S. core as well as improvement in the K-12 channel. English growth will be higher than in 2025 with PTE returning to growth, market share gains and pricing. And Enterprise Learning and Skills growth will be driven by a solid performance in BQ and strategic account growth in Enterprise Solutions. In terms of phasing growth is again H2 weighted, but not as markedly as in 2025. At a business unit level, A&Q will decline in Q1 given the loss of the New Jersey contract and PDRI headwinds, but will then turn to growth in subsequent quarters, supported by new business and recently awarded contracts. Virtual Learning will see strong growth, particularly in H1. English growth will again be Q4 weighted given the seasonality of the business and HE and ELS growth is expected to be relatively steady. Our disciplined capital allocation policy remains the same with a focus on maintaining a strong balance sheet, investing both organically and inorganically, paying a progressive and sustainable dividend and then returning surplus cash to shareholders. The slide you see now illustrates how consistently we've applied this policy over the past 6 years. We continue to invest behind the business with meaningful organic cash investment during the year alongside inorganic investment through the $225 million acquisition of eDynamic Learning. Since 2020, we have returned GBP 1.4 billion to shareholders through share buybacks with a further GBP 350 million program commenced in January, underpinned by another year of strong cash performance in 2025 and our confidence in 2026 and beyond. Going forward, we will continue to apply this disciplined approach. And through our strong cash generation, we'll continue to invest behind opportunities to drive further growth and create long-term value for all our stakeholders. And with that, I'll hand back to Omar. Omar Abbosh: Thank you, Sally. Okay. So let me wrap up with a quick look at our 2026 priorities. These are simply an evolution of what we focused on in 2025. Firstly, once again, we will deliver on our financial targets. Second, we will continue to lead in the application of innovative technologies, including AI across our products and services. And third, we will deliver against our core business and enterprise power metrics. As I said at the beginning, there are three takeaways from today. First, we continue to be very excited about the future of Pearson because of these mega trends driving strong secular demand for exactly what Pearson offers and because of Pearson's unique characteristics and enduring competitive strengths. Second, we successfully met our goals in 2025, demonstrating another good year of financial delivery and significant strategic progress, thanks to our rigorous focus on execution. And finally, you can count on us to do even better in 2026. Now let me say a few words about Sally Johnson. I want to congratulate Sally on her fantastic 26-year career at Pearson and the wonderful contributions she has made throughout her journey and for being a wonderful fantastic partner. I am also going to be very excited to introduce you to Simon Robson, previously Group CFO at Sky in the coming months. Now let us play a little video that I mentioned earlier before Sally and I and the team here take your questions. We're going to hear from Savannah. She is a real Pearson Connections Academy graduate, who outlines in her own words the life she's realizing through learning, which plays directly into the unique role of Pearson in the world. Please roll the video. [Presentation] Omar Abbosh: Neuroscience at NYU, pretty cool. Omar Abbosh: Alex? James Tate: It's James Tate from Goldman Sachs. I've got three questions, please. I guess, firstly, please, could you provide a bit more detail on the moving parts of A&Q growth in 2026? If you didn't have the New Jersey contract loss and PDRI was, say, stable, then would it be fair to assume the division would grow more mid- to high single digits, around 6% rather than the 4% you've broadly guided to? Is that the right way to think about it? And you've also announced a number of contract wins over the last year with major tech companies in professional assessments. Does there still remain a strong pipeline for potential new contracts going forward? Secondly, on EOS, your guidance for 2026, I think, is somewhat vague in terms of you're clearly growing the number of large blue-chip logos you're working with in Enterprise Solutions. Should this not lead to improved revenue growth this year versus '25? Or are there some other dynamics offsetting this that we should be aware of? And thirdly, I guess, Omar, building on your comments about the significant opportunities from generative AI for Pearson, what are the primary risks that you identify? For example, do you see any risk from evolving student learning behaviors impacting demand for Pearson's courseware content in Higher Ed? Omar Abbosh: Great. Thank you. This is just a very light collection there, James. We appreciate that. We appreciate that very much. I'm sure the other analysts are like Damn, and I wanted that question. But anyway, it's good. So I think on the A&Q dynamics and what's going on under the hood. I mean maybe, Sally, like say a little bit about how you think about the numbers, and now particularly James is asking ex PDRI, ex New Jersey, and maybe add a little bit to what you're seeing, the overall landscape of how that business is performing. Sally Kate Johnson: Yes. So I'm going to start and then I'll pass over to Aarti. So low to mid for A&Q in 2026, and you've called out the right pieces. So yes, you can see the impact of New Jersey from a retention point of view. I've called that out because it impacts Q1, and I want you to be ahead of Q1. But then through the rest of the quarters of the year, we bought new contracts online. You heard of Omar calling out the number of them. So we've got a new contracts in Maryville. We've got a new contract in other states. We've got a new contract with Google in Pearson Professional Assessment. And we've got some new contracts that we can't talk to you about yet because we haven't got the contracts signed, but which we've been verbally awarded. Alongside new products that we're bringing online, pricing and all those sorts of things as well. So we've got really good confidence in the A&Q performance for the year. To your point, I haven't done the math on what you say, but quite clearly, without the PBRI piece with the federal funding and without that New Jersey piece, then yes, it would be better than low to mid. Omar Abbosh: Art, do you want to just comment a little bit on how you're thinking about the business shape overall? Arthur Valentine: Yes, absolutely. And good to see you, James. And as Sally said, those two factors are real, particularly in the early part of the year in the course of New Jersey. But contract performance in the two large contract services business, Professional Assessments and School continues to be very strong. We won a competitive bid for Maryland. We won a competitive bid for Wyoming. We renewed close to 40 other competitive bids. We'll see the impact in 2026 of the full year of running the Salesforce and ServiceNow certification programs within the Professional Assessment business. Omar announced the extension of ACCA. That chartered accountants in the U.K. for those not familiar, that starts to show up in '26. In our U.K. and international qualifications business, we're launching the Standards and Testing Agency primary school testing contract in '26. We came online with that in '25, but this is the first full year of implementation. We'll be delivering primary school examinations in 16,500 schools in the U.K. And our clinical assessment business continues to deliver strong digital innovation into the market. That business has performed well over the last few years. I encourage you to stay for the product demos afterwards, and you'll see some examples of more innovation that we're bringing to market, and that gives us confidence in strong performance in that business. So overall, we feel great about A&Q. Omar Abbosh: That's the summary. We feel great about A&Q. On the second question, Sally, I'm going to ask you to say like one word about why our growth guidance was slightly like thin. And then I'm going to ask Vishaal if he's sitting on his hunches having signed 9 deals and he's not building pipeline for the future. But over to you, Sally. Sally Kate Johnson: Yes. So really confident in ELS growth. But I think we know right now, it's one of the smaller divisions. It's not going to be for long because I know how competitive, apart from anything else, Vishaal is. And that just means that a few million pounds can make a couple of percentage points difference. And therefore, it didn't really seem to make sense when we're looking at it quarter-by-quarter to be too specific. But the BQ part of the business, we'll see solid growth. And I talked about that Enterprise Solutions part of the business and that 20% growth in Q4, it's relatively small now. But if it keeps growing at that rate, it's not going to be relatively small for very long. Omar Abbosh: So Vishaal, you're not going to do any more selling and like are we done now with... Vishaal Gupta: Yes. So just to put a little bit more color to Sally's comments. So we have two businesses within ELS. VQ, we continue to be seeing a lot of robustness in that business. So part of that business or a large part of that business is very U.K.-centric, where we have the BTEC brand. We are also winning a lot of new contracts in the vocational space. So that continues to be driving growth. We are also expanding internationally to countries like Uzbekistan, Pakistan, Jordan and so on. And what is most exciting about that business, we also offer what we call as apprenticeship services. So a bunch of customers, we won a contract we announced last year with the British Army, which we are executing to now. We have something going on with NHS and more coming on -- coming up in Middle East that we will announce shortly. So that part of the business is doing relatively well. The other piece, which I'm even more excited about is Enterprise Solutions, where you saw those 9 partnerships that we have signed. So my team is singularly focused on execution as we speak. There are many things that we need to put in place to get all of the revenue in all the way from putting together the right product co-innovation road maps with these partners to having the right go-to-market motions and working with them, and these are very big tech players, as you know, working with them globally across all of the regions that they operate in. So a lot to focus on. But in terms of momentum, we are getting into 2026 with much, much more momentum than we had last year as we got into 2025. Omar Abbosh: Thank you, Vishaal. So James, let me say a couple of things about the AI risk point. I mean, so this one, obviously, we could spend a long time talking about it. I think the market looks and says, "Hey, if I have a digital format product where the product is purely digital and if the user is the buyer, then what happens if someone puts out an AI tool that is free, like what's that going to do to that market? And I think indeed, that is problematic for some people. The thing is Pearson doesn't do that. The only bit of Pearson that you could say like a little bit -- had a bit of that and it was Mondly. Mondly, we pivoted that a year ago to be a pure institutional and enterprise package. It's like where it's going. That's where all our spend and delivery is going. Pearson is actually -- you get a different outcome from AI. What -- when people are generating AI content at a rate of not, and there's an amazing amount of slop landing them in Internet. When you have deep fakes happening on the Internet and you have false identities on the Internet, we're seeing a giant flight to safety. People want trusted authoritative sources. They want verified identities. They want validated skills. I mean, as you know, James, today, it's tough for kids graduating or trying to get a job. They fire off 10,000 CVs with a bot and they're screening resumes at the other end by a bot. You've got bots with the bots. So the construct of how resume thing works is not really working. Companies are more and more saying, "Show me that you have a validated skill." That is what Pearson does. So actually, like I said, the AI thing is a giant tailwind for us. And I think whether we like it or not, and you all are much clever on this than I am. But when investors look -- particularly when it's sort of passive investing happening in bundles and Pearson is like wrapped up in media or wrapped up in EdTech, and we are not that. So I think Laura is next. Next to you, Susie. Unknown Analyst: Three questions, please. First one is on the virtual learning margin. So it has improved significantly year-on-year. I understand it's coming mostly from operating leverage. Is there anything else that's driving the margin expansion? And is it reasonable to assume that it's going to continue expanding at the same pace? Second question is on pricing. So you said you're generating a lot of efficiencies, thanks to AI. I'm curious to hear how are your conversations with clients? Do they expect you to pass on some of these savings? Or is your pricing power very strong, which means that you don't have to give away any of these cost savings that you're realizing? And if you could comment on how is pricing evolving across your business, that would be really helpful. And then lastly, on the Higher Ed business, one of your peers, McGraw Hill is growing very fast. Why do you think they're growing so quickly? And do you think you can bridge the gap to their growth rate? And Sally, all the best for the next step in your career. Omar Abbosh: Thank you, Laura. So on the Virtual Schools margin, I'm going to ask Tom to just say something there about what is it that you think has driven the success so far? And also, what are you thinking is -- how we're thinking about this going forward? Tom Simon: Yes, sure. So I mean, I think from a virtual schools perspective, last year, we obviously saw great growth driven by helping people like Savannah, which was lovely to see in that video. I think fundamentally, the margin characteristics of that business are great. The one thing you have to bear in mind is when you grow as quickly as we did last year, you have some teacher vacancies because you're struggling to recruit teachers. It's obviously kind of hard to recruit teachers in Q4 of the year. So I think you should expect to see sort of continued margin expansion driven by the top line leverage. But just recognize we may need to catch up and think a little bit differently about teacher hiring because fundamentally, I think we are seeing a very different opportunity in that space, which we're excited about. We just need to make sure we transform how we manage the business to support the ongoing demand. Sally Kate Johnson: And there was also that extra marketing spend that we put in to drive that growth as well. That's all covered in that margin movement too. Omar Abbosh: That was fully absorbed, yes. I mean, Laura, on pricing, I mean, I'll say like the headline is no. I mean, so Pearson, as you'd expect, is constantly investing in getting more efficient and more effective and more productive, and we will continue to do that. But that doesn't mean customers run around and say, "Hey, we've got to give us some of that savings." And the reason is very simple, and this is the point that I'm trying to make about the business model that I was talking about with James earlier. Pearson is one of two or three companies in the world that can do what we do because it's very hard to deliver that level of operational excellence in driving and assessing standards. And so that's where our gross margins come from. And so the short answer is no. Now having said that, are we going to be complacent? Of course, not. Some of the RevOps things that I spoke about earlier is actually giving us much more fidelity and visibility into our own selling rates, pricing rates, discounting rates. And we're getting more control of that, which I think will allow us to get a bit more value upside. And Tom and the team did some great work in the IA space a little bit in that space recently, and I expect that to continue. So -- but the short answer is no, we're not having to negotiate prices at the moment. And then on Higher Ed, McGrow Hill, I mean, I love you asking that because, of course, you're pointing to our upside. There's nothing that they're doing that we cannot do. And Pearson is coming from a place where perhaps we were not so well organized a few years ago. And under Tom and the team's leadership, we're in a much better place that business is growing. And I think we should aspire to continue to drive performance because McGraw is a great company. We love them, and we can learn as well. So over here and then over here. Ciaran Donnelly: It's Ciaran Donnelly from Citi. Two on enterprise and then one more. Just on your comments on the backlog in enterprise, could you just give us a sense of what it would have looked like 12 months ago, just to get a sense of how it's grown over the year in the context of the enterprise agreements you've signed? And then I guess, just on those partnerships, I'm just trying to get an understanding of pricing framework. Just in the context, I know there's a debate around AI displacement and unemployment levels. And I guess just in the context of potentially higher unemployment, how that would affect that business if pricing is based on headcount-led metrics? And then just on the medium-term plan and the average 40 basis point margin improvement per annum. Could you give us a sense of what's the contribution from, I guess, operating leverage and cost efficiencies just around your comments in terms of you've reinvested the cost efficiencies you've delivered over the last couple of years? Omar Abbosh: Yes. So if I go back a year ago, Ciaran, in the enterprise business and particularly looking -- I mean, so I'm not talking about vocational qualifications. I'm talking about just the small enterprise solutions thing that as Sally said, small numbers can make a difference. That business had already some partnerships. Other bits of Pearson like Pearson View, for example, would have had relationship with Microsoft and AWS, for example. And so when we looked at that, we were like, okay, how do we ensure that these customers are long-run customers for the business. That's part one. And secondly, how do we ensure meaningful growth upside. And that's what these contracts do. They lock in hundreds of millions of future revenues of pre-existing contracts and put us in a place where those companies want to invest in us and innovating to build the next generation of products, and we added incremental hundreds of millions on top of that, not just with those two, but all the others. And so that is a big difference from where we were a year ago. But like I said, the difference spreads out across ELS and ELL and A&Q because when we set up the enterprise sales team, you'll remember me saying this is Pearson had a lot of what the market in enterprise needed. It just didn't sell to it. So we've created a single sales team to address that enterprise opportunity and Vishaal's team bring all of Pearson, and that's what you're seeing in the outcome there. In terms of the pricing framework and the unemployment question, I'm not going to pretend to have a crystal ball on like the future of employment and AI impact. I think -- I do think there is some hysteria coming out of Silicon Valley because of actually how powerful 5.3 Codex and 4.6 Opus are, et cetera, on things like software engineering. So the software engineers are being very noisy about it, I think, for a good reason. And so that raises a lot of questions. In the past, when you get these sorts of dislocations, you end up with people needing skills, needing new skills. And that's the demand that we're seeing. So actually, the tech companies are coming to us for skilling their people like their sellers on their AI, and they're coming to us to come and skill their customers on their new products because in order to justify the hundreds of billions of CapEx, you need people to use the product. And in order for them to use the products, they need to know how to use the products. And that's what we're being asked to help with. So that's the big drive that we're seeing today. And I think Sally would say, in the past when there were sort of downturns in the economy and so on, Pearson has also had an element of it that is countercyclical and shows up and helps people in those moments. Sally Kate Johnson: On the specific financial question you're asking, though, from a pricing point of view, it's not based on headcount with these partnerships. It's on hard commits and dollars. Omar Abbosh: Yes. I mean, Sally you've excellent point. Sally. I mean so when I say the hundreds of millions, I mean, Sally and I talked about like how are we going to explain this to the market because it's a bit involved because it's across several years and it's across the different business units. But as Sally said, that is legally contracted revenue backlog. That's what that is. And then on the last point that you're asking about the medium-term 40 bps, how we're thinking about that vis-a-vis operating leverage. So Sally? Sally Kate Johnson: I think I've talked before about the kind of the three components, operating leverage on our mid-single-digit sales growth. And then we've talked about tens of millions of pounds of cost savings. Actually, last year, that was the 200 basis points that Omar referred to. So that gives you an idea of the scale that we're talking about. If you do the math on that, you get to a lot more than 40 basis points. And then we're reinvesting part of that back into the business in order to drive that future growth. So I think from a scale perspective, you can take the 200 basis points, you can apply the mid-single digits to the top line. And then the balancing figure to get that to 40 basis points is investment. And you'll see that, that's a significant number because we're driving for future growth. We're innovating with our partners to bring new products to the market, and it's really exciting. Unknown Analyst: So first of all, digging back into A&Q in Q1. So you saw 8% organic in Q4. I think if the whole of the New Jersey loss landed in Q1, that would be something like a 6-point drag. So that would still leave you in positive territory. PDRI was already declining in Q4. So were there one-off benefits helping you in Q4? Or is there something else worse in Q1 to get us down to negative? Also digging into Laura's question on Higher Ed a little bit more, Cengage was 10% up in U.S. Higher Ed and 25% McGraw Hill teens. Both of them say they won share of adoptions. They're also much bigger in Inclusive Access and growing faster in Inclusive Access. So this has been the case for a couple of years now. So what's going to make this turnaround and need to catch up when it isn't really happening so far? And a third question, can you talk about what kind of enrollment growth for fall 2026 you're baking into your thinking on higher education? Omar Abbosh: Yes. I mean, Nick, I love seeing you. I'm so happy you're here, and I'm excited about the day when you don't ask me tons of questions about Higher Ed. But anyway, we will get into that because I mean it like it's 10% of our operating profit with the English part as well. So I mean, the other 80%, 90% is the rest. I just want to remind everyone. But we're going to absolutely answer those things. So on AMQ, was there anything funny going on in Q4, Sally, that gave us a one-off kicker in AMQ that we should be talking about? Sally Kate Johnson: No. I mean, of course, we're not a business where you can just go steady, steady, steady, because it's not a volume play. We've got these large long-term contracts and the revenue recognition is based on when you're delivering against those contracts. And if your exam falls in one quarter rather than another, it can mean that things move around. All that's going on in Q1 is the New Jersey contract and then the comp from PDRI is a tricky comp. In Q2, the comp gets easier for PDRI and then we bring these new contracts online. And then we've got the new contracts that we had in Q4 also helping that growth. So just simple as that. Omar Abbosh: Yes. Thank you. I'm going to say a couple of words about -- my thesis about the Cengage thing. And then Tom, maybe you'll pile on and also talk about enrollment. So I mean, I'm a simple person, Nick. There's only two things that matter. Like do you have a good product and can you sell it? Pearson historically -- and I'm going back years, like perhaps we didn't pay enough attention to those two things well enough in the Higher Ed space. That's why on the product side, we're busy converging our platforms into a single modern tech stack and that Tony and his team are doing a wonderful job on that. So the product, I would say, was lagging, and now it's advancing really quickly. The feature functionality is incredibly rich and professors love our stuff. And some of the underlying tech stack was a bit older and like we're dealing with that. And so that's some of what you've heard about. On the sales side, again, Tom and the team have modernized that, and I actually am very happy with how that performs. But perhaps we were a bit slow on the uptake on inclusive access. So I think we closed out the year at something like 44% of our revenues are in that space. I think the top -- the front run is at 60%. So for me, it's just all upside, like we know what to do. But Tom, if you can comment on that and then please, a little bit on the enrollments as well. Tom Simon: Yes, sure. So I mean, I think the old market share question is a chestnut that we're kind of expecting. It's very simple. We think about adoption market share and so we're not particularly focused on NPI for a couple of reasons. One, it only measures half the market. So you can miss kind of important things like OER and what's happening there. Two, it doesn't really measure what professors are actually doing on an underlying basis in terms of adoptions. So actually, we're focused on adoption share. And last year, we were up. This year, we were flat. And we'll tell you when we're up and we'll tell you when we're down and we'll tell you when we're flat. So we're kind of fairly straightforward there. I think on Inclusive Access, as Omar touched on, there's more we can do. So we've been very focused on being more aggressive with our Inclusive Access strategy for 2026. We're looking forward to seeing how that plays out in the fall. And then I think we've also been fairly candid about some of the product areas of friction in the past, right? So when I think I joined, we had 170 different ways to integrate with an LMS. That's kind of difficult to manage if you're a sales team or if you're a customer support team. And so we've simplified that down to less than 10, and we're continuing to push on things like that. They make a difference to the professor experience, which is why we've had some of those points of friction and challenge with things like inclusive access, but there's been a lot of focus there. And then on enrollments, I think for the year, we're broadly flat. We're expecting it to be up in the first half and slightly down in the second half. So if you put all of that together, that's how we get there. So that's kind of our thinking there. And actually, just to add, I think from a product perspective, when you saw the AI in those demos earlier, that AI is out there in our sellers' hands today and it's winning new business and it's taking market share. And we're incredibly excited about our product lineup because I think the work that Tony and the team have done has been fantastic in terms of really putting leading-edge AI into our products, and that's resonating with faculty and students. And I think what people care most about is that proximity to the faculty and how we're helping students learn and you saw some beautiful statistics there about increases in active reading, learning. With your faculty, that's kind of what -- that's kind of music to your ears. Omar Abbosh: I mean the thing I'm just connecting a couple of dots of some of what you're saying is not long ago, people said, "Oh, EdTech is going to kill companies like Pearson." And then -- and also "OER is going to kill companies like Pearson." Those things flatline for reasons that are not always extremely evident. OER is peer-reviewed high-quality content generated by a professor and put out for free. But it needs to be maintained, aligned to the curriculum, aligned to the assessments. It needs to be integrated with all of the LMSs and SISs, all these things. And so that's too much for a typical professor to just do, so it doesn't happen. And so the institutions -- particularly in this world of AI where a lot of nonsense is getting published, they come back to the trusted authorities and the people that they believe in and trust and that's groups like Pearson. So I think we're in good shape. Anyone else? Unknown Executive: We've got one question on the line. If there's no other questions [indiscernible]. Omar Abbosh: Sure. Operator: [Operator Instructions] First question is from Steve Liechti of Deutsche Numis. Steven Craig Liechti: I've got a couple. Just on A&Q, can you remind us or scale the size of the big client pause that you had in the first half of last year? And remind us, was that in the first quarter or the second quarter? And is that meaningful to sort of the numbers the way that they sort of flow through in the in the quarters? That's the first question. Second question is on Enterprise Learning, I know you referred to it as being small within the mix previously. Can you just give us a rough figure or remind us within that ELS overall revenue of EUR 282 million, what that number is that would be Enterprise Learning, just to help us scale that. And you commented about the 20% growth in the fourth quarter of last year. Just how good is your line of sight to that -- to equate to that 20% through to the current year, i.e., have you got the line of sight to say 20% looks realistic for 2026? Omar Abbosh: Okay. Thank you very much, Steve. I appreciate that. So on A&Q, I think people will remember, we had a bit of a snafu with a Middle Eastern customer around payment terms that ended up causing a pause and then a subsequent reengagement. So do you want to comment on the materiality of that in the quarter? Sally Kate Johnson: Yes. So that contract was still running for most of Q1. It was Q2 when it paused and it went back online in Q3. Omar Abbosh: Okay. So it won't have a relevant flow for Q1, Q2, is what you're? Sally Kate Johnson: It won't for Q1. It won't for Q2. [indiscernible] subsequently. Omar Abbosh: And then on ELS, do we segment out the ES component? Sally Kate Johnson: No, we don't, but it's kind of 10%, 20% would be the way to think about it. Omar Abbosh: There you go, Steve. You've got a clue there. And then in terms of the 20% growth rate, I mean, the -- we've been careful with guiding because what I'm saying -- I think what we're saying to you, Steve, is the future revenues around ES and the other components where the enterprise deals are covering, we see the -- if you like, say, the annual flow of contracts that as previously committed. The exact amount of revenue that you're going to recognize in a given quarter, a little bit depends on the product flow that happens. And so we are not being too direct about that at this point. But -- so I think I'm very proud of what Vishaal and the team have done because they basically built a team that did not exist just over a year ago, engage with these customers and have engaged these deep multiyear, quite profound relationships, which will benefit them and benefit us. But the exact way it flows quarter-to-quarter in terms of revenue growth, we're not probably going to talk about at this point. Operator: We have no further questions on the phone line. So I'd like to hand back to the room. Unknown Analyst: Yes, we've got one question from Alex at AlphaValue. Can you elaborate on the product impairment? How many platforms did you have before the convergence? And how -- and was it related to past acquisitions? Omar Abbosh: Okay. Tony, over to you. Unknown Analyst: Yes. So it's specifically within the Higher Ed segment, and we had 4 courseware platforms, which we're converging down to 1 so that we have better efficiency. And you can see in the video, the AI study tools then work great across the one platform. And then we have a high degree of confidence that we then have the right setup moving forward from a product perspective as well as the way it's played out in the P&L. Omar Abbosh: Perfect. Thank you, Tony. And Alex, thanks for the question. Mr. Shore, does that cover us? Operator: That covers us. Omar Abbosh: Okay. Well, ladies and gentlemen, thank you. Thank you for being with us and giving us your time. We appreciate it. We appreciate your interest in Pearson. Do not miss the chance to go across to the innovation studio and see some of these products and play with them and get a sense of what Pearson is building. I mean I love the chart that we showed about the rate of innovation increases we're releasing more and more products each year. You can expect that of this company going forward. Over to you. Thanks. See you soon.
Operator: Hello, and welcome to the Northwest Natural Holding Company Q4 2025 Earnings Call. My name is Harry, and I'll be your operator. [Operator Instructions] I will now hand over to Nikki Sparley, Director of Investor Relations. Please go ahead. Nikki Sparley: Thank you. Good morning, and welcome to our fourth quarter and full year 2025 earnings call. In addition to the press release, a supplemental presentation is available on our Investor Relations website at ir.northwestnaturalholdings.com. And following this call, a recording will also be available on our website. As a reminder, some things that will be said this morning contain forward-looking statements. They are based on management's assumptions, which may or may not occur. For a complete list of cautionary statements, refer to the language at the end of our press release. Additionally, our risk factors are provided in our 10-Q and 10-K filings. We will also refer to certain non-GAAP financial measures. For additional disclosures about these measures, including reconciliations to comparable GAAP measures, please see the slides that accompany today's call, which are available on the Investor Relations page of our website. Please note, our guidance assumes continued customer growth, average weather conditions and no significant changes in prevailing regulatory policies, mechanisms or assumed outcomes or significant changes in local, state or federal laws, legislation or regulations. We expect to file our 10-K later today. With us today are Justin Palfreyman, President and Chief Executive Officer; and Ray Kaszuba, Senior Vice President and Chief Financial Officer. Justin will provide highlights from 2025 and a look forward, and Ray will walk through our financial results and guidance. After Justin and Ray's prepared remarks, we will host a question-and-answer session. With that, I will turn the call over to Justin. Justin Palfreyman: Thanks, Nikki. Good morning, and welcome, everyone. We are excited to share our results for the year and our expectations for the future. Northwest Natural Holdings began a new chapter in 2025. We delivered record adjusted earnings per share at the top of our guidance range, deployed a record amount of capital to support our customers and reported our strongest organic customer growth in nearly 2 decades. Those results aren't an accident. They were driven by deliberate strategic decisions we have made as a company, reflect our management team's focus on execution and foreshadow the strength of our platform going forward. Over the last few years, we have taken steps to diversify into the water utility business, expand into multiple jurisdictions and add Texas Gas utilities to further enhance our long-term growth prospects. What began as a single utility in the Pacific Northwest has evolved into 3 thriving businesses serving customers across 6 states. Our 2025 performance is a result of these strategic decisions. We've set the stage for growth while fulfilling our mission of delivering safe, reliable and affordable service to our growing customer base. And we're still in the early chapters of our success story. As you know, we are in an age of tremendous energy demand. Natural gas plays a critical role in meeting that need, and we're uniquely positioned to address it. That's why we are excited to announce our new MX3 storage expansion project in the Pacific Northwest, a project that will enhance regional reliability and capacity and one that has the potential to drive our long-term earnings growth target to 5% to 7% once we receive notice to proceed. As our story progresses, we remain focused on disciplined execution and delivering consistent growing earnings and returns for our shareholders. The momentum we've built positions us for even greater success in the future. Moving to our Northwest Natural Gas utility, which now more than ever plays a critical role in energy affordability and reliability across Oregon and Washington. As we noted on our last call, we successfully settled our Oregon rate case in 2025 with new rates effective October 31. In Washington, I'm pleased to report that we've been working collaboratively and productively with parties and have reached settlement in principle, resolving the revenue requirement in the case. We expect to file the multiparty settlement in the coming month. Both cases set Northwest Natural up to recover significant safety and reliability investments in 2026 with a focus on maintaining customer affordability. In fact, on average, Northwest Natural residential customers are paying about the same today for their natural gas service as they did 20 years ago. We are also diligently working on dockets with the Oregon Public Utility Commission to complete rule making for multiyear rate cases. We believe moving to multiyear rate cases will ultimately provide greater clarity and certainty for both customers and utilities. While the rule-making process is taking shape, we filed an alternative rate mechanism to recover certain capital investments made in the interim period. The proposal results in a modest 1.5% increase to customer rates with an effective date of October 31, 2026. Stepping back, we feel very good about our positioning over the next several years. Historically, our earnings trajectory relied on a single large Oregon rate case every few years, which created uneven growth and limited predictability for customers and shareholders. The transition to multiyear rate cases in both Oregon and Washington, combined with the growing earnings profile of our SiEnergy and Water businesses should create a more balanced and linear consolidated earnings profile year-to-year, while maintaining rate affordability and predictability. As I mentioned, we are excited to announce that Northwest Natural intends to expand its gas storage facility at Mist. This project, which we call MX3, is the third major gas storage expansion we've undertaken at Mist since its initial construction in 1989. MX3 will add 4 to 5 Bcf of storage capacity and serve customers across the region. Northwest Natural's gas system is more essential to the region than ever, especially given the heightened focus on reliability and affordability. Our system delivers about 45% more energy than any other Oregon utility, gas or electric over the course of a year. Today, the region's energy system is struggling to reliably meet demand during peak events and the Pacific Northwest Electric grid faces a potential 9 gigawatt capacity shortfall by 2030. That's why our storage capabilities are so important. They are uniquely positioned, expandable even beyond MX3 and offer a cost-effective solution to our region's growing energy challenges. Our customers for the MX3 storage expansion see this clearly. They consist of large investment-grade regional utilities and midstream providers. Once we receive notice to proceed, these customers have agreed to 25-year contracts, underscoring the demand for long-term affordable energy solutions. We are in the development phase of the project with signed customer agreements, the Energy Facility Siting Council permit secured, FERC approval received and engineering, procurement and construction or EPC providers identified. These new storage services will be regulated by FERC and are expected to provide stable returns with customer agreements that specify a fixed 12.5% return on equity and a 50% equity layer. Our Northwest Natural team has deep experience with the geography of the Mist storage field and its depleted gas reservoirs. We expect to work with major EPC contractors who know our operations well. We are working to obtain the remaining permits and early-stage engineering and design work is already authorized and underway. The project is estimated to cost approximately $300 million, and we expect the facility to be in service by the end of 2029. I am very excited about this project and the value it provides to the region. MX3 is not included in our long-term guidance today, which we are reaffirming at 4% to 6%. However, we do expect the project to have a meaningful positive impact on earnings growth and plan to include the project in our guidance when we achieve notice to proceed, which would raise our long-term EPS outlook from 4% to 6% to 5% to 7%. Another important growth engine for Northwest Natural Holdings is SiEnergy, our Texas Gas utility. We closed the SiEnergy acquisition in January 2025. And in June, we supplemented our Texas expansion with the acquisition of Pines. Both utilities have been successfully integrated into our business. Texas is one of the most exciting growth drivers in our portfolio. SiEnergy provided 18% organic customer growth in 2025 and contribute 11% of our consolidated adjusted earnings per share. At the same time, SiEnergy posted a sizable increase to its customer backlog nearing 250,000 future meters. That's more than a 30% increase in customer backlog in a year, a testament to SiEnergy's strong relationships with developers and the expected growth in the Texas housing market for years to come. I'm very pleased with SiEnergy's performance in our first year of ownership. We expect our LDC in Texas to continue to scale rapidly and produce 15% to 20% customer growth each year through 2030. For 2026, we expect SiEnergy to generate between 10% to 15% of our consolidated earnings per share. We are strongly considering filing a general rate case for SiEnergy sometime this year. We will carefully weigh several factors, including customer affordability in our decision. SiEnergy has been supported by exceptionally strong customer growth. And today, their rates are among the lowest of our Texas LDC peers. In 2025, our water and wastewater utility platform achieved a scale that allowed us to drive business efficiencies through standardized processes and centralization and is well positioned for continued growth. The Water segment outperformed our expectations, contributing $0.35 per share or 12% of our consolidated adjusted earnings per share in 2025. Last year, we completed 7 rate cases for our water and wastewater utilities and expect to process another 5 in 2026. We continue to follow a steady regulatory cadence to recover key safety and infrastructure investments while maintaining affordable and predictable customer rates. The water business has a clear runway for growth, supported by organic customer additions, significant greenfield opportunities and a healthy acquisition pipeline. Looking ahead, we expect water to produce between 2% to 3% organic customer growth through 2030 and provide 10% to 15% of consolidated earnings per share in 2026. We expect both SiEnergy and Water to outpace the overall consolidated growth rates of the company in the next 5 years, further diversifying our customer base and footprint. Confidence in our outlook is driven by strong organic opportunities across all 3 of our utilities, including 2% to 3% consolidated organic customer growth and rate base growth of 6% to 8%. These fundamentals are supported by a record $2.6 billion to $2.9 billion of planned capital expenditures through 2030 and underpinned by healthy customer growth and critical safety and reliability spend. Importantly, we believe we can achieve our growth targets while keeping our services affordable for customers and maintaining a strong balance sheet with solid investment-grade ratings. For 2026 specifically, we expect another record year for both capital investment and earnings. At the same time, we are focused on returning capital to shareholders. 2025 was the 70th year in a row of dividend growth for Northwest Natural Holdings. We are 1 of only 3 companies on the New York Stock Exchange with this impressive record. In 2025, our dividend payout ratio moderated, supported by strong earnings growth across the business. As earnings continue to grow, we expect to deliver steady dividend increases, outpacing our trend in recent years as we target a long-term dividend payout ratio of 55% to 65%. In summary, we have built a powerful platform, a strong set of businesses positioned for long-term growth. This marks the start of an important new chapter, and I have never been more confident in our strategy, our team and our future. With that, I will pass it off to Ray for a more detailed update on our financial performance. Raymond Kaszuba: Thank you, Justin, and good morning, everyone. I will start by echoing Justin's sentiment about our strong performance in 2025. This was a year defined by disciplined execution as we delivered record adjusted earnings per share and are creating a strong platform position for long-term growth. For the full year 2025, we reported record adjusted earnings per share of $2.93 compared to $2.33 per share for 2024. Earnings growth was fueled by new rates in Oregon, healthy rate base growth across the business and continued strong organic customer growth. For our Northwest Natural Gas Utility segment, adjusted earnings per share improved $0.45, primarily reflecting new rates in Oregon, partially offset by higher operations and maintenance and depreciation expenses. SiEnergy contributed $0.33 per share for 2025. In our first year of ownership, margin and net income was strong, driving results above our expectations of $0.25 to $0.30 per share. Our Water segment earnings per share increased $0.21 and contributed $0.35 per share to 2025 results, which was also above our expectation of $0.25 to $0.30 per share. The key drivers were new rates at our largest water and wastewater utility in Arizona and additional revenues from an acquisition late in 2024. Finally, the adjusted net loss of our other segment increased $0.39 per share compared to the same period last year, primarily due to higher interest expense at the holding company. For 2025, we generated approximately $270 million in cash provided by operating activities, about 35% above 2024. We invested a record $467 million in our systems related to safety, reliability and technology. Roughly 75% of those capital expenditures were for Northwest Natural Gas with about 15% for SiEnergy and 10% deployed for Water. We invested nearly $340 million for acquisitions. Cash provided by financing activities was $533 million, including $47 million of equity through our ATM program, which was less than we originally expected. On December 31, 2025, we had liquidity of approximately $590 million with significant availability on our lines of credit and cash on hand. Turning to our 2026 guidance. We are initiating 2026 earnings per share guidance of $2.95 to $3.15. Together, we expect SiEnergy and Northwest Natural Water to contribute approximately 25% of consolidated earnings this year. As Justin mentioned, we are reaffirming our long-term earnings per share growth rate of 4% to 6% compounded annually from 2025 adjusted earnings per share through 2030. We are seeing the benefits of our strategy resulting in a more consistent linear year-over-year earnings trajectory. Our long-term growth target is supported by multiple durable drivers, including healthy consolidated rate base growth of 6% to 8%, including significant investment at Northwest Natural Gas and substantial customer growth from SiEnergy of 15% to 20% and strong 2% to 3% organic customer growth at Northwest Natural Water. Resulting in a robust consolidated organic customer growth rate of 2% to 3%. Our guidance is grounded in projects we have clear line of sight into. For 2026, we anticipate consolidated capital expenditures of approximately $500 million to $550 million in 2026. Our 5-year CapEx plan has between $2.6 billion and $2.9 billion in investment through 2030, with about 65% related to Northwest Natural Gas Company, approximately 25% related to SiEnergy and the remaining 10% related to Northwest Natural Water. As Justin mentioned, we are not including the impact of MX3 gas storage expansion project in our guidance today. Including MX3, our expected long-term EPS growth rate is projected to increase to 5% to 7%. Once approved, the project is expected to cost approximately $300 million. MX3 is expected to be earnings accretive and credit positive, improving cash flow quality through long-duration contracted revenue streams. Related to our financing, our balance sheet and funding strategy support our growth. We are committed to maintaining strong investment-grade credit ratings across our rated businesses long term. For 2026, we expect to support our CapEx program through strong cash from operations, incremental net long-term debt of approximately $150 million after considering modest maturities of $160 million and issuing equity off our ATM in the range of $40 million to $50 million. Over the 5-year planning horizon, capital expenditures will be funded largely through operating cash flows, along with a balanced mix of long-term debt and equity. Through 2030, we expect to meet our equity needs through our ATM program. We also remain committed to returning capital to shareholders. With continued earnings growth, we expect dividend growth to be at a higher pace than shareholders have seen recently, while moderating our payout ratio to 55% to 65% over the next several years. With record adjusted earnings in 2025 and multiple sustainable growth drivers expected to result in a strong 2026 and beyond, we are excited about the future. With that, we will open up the line for questions. Operator: [Operator Instructions] Our first question will be from the line of Chris Ellinghaus with Siebert Williams Shank. Christopher Ellinghaus: Congratulations on a great year. Given what you've said about potentially raising the guidance or the growth range, where did you guys see yourselves within the existing range that Mist moves the needle that much? Justin Palfreyman: So thanks for the question, Chris. This is Justin. Without MX3, we are very comfortable with our 4% to 6% long-term EPS growth guidance. With the project, once that achieves notice to proceed, we expect that we will increase that to the 5% to 7% that we just described. And we're very comfortable with our current range with everything else that we've got in our plan. Christopher Ellinghaus: Okay. What is -- what do you -- when do you expect the notice to proceed? And what is the -- any hang-ups that might delay that? Justin Palfreyman: Yes. So we expect notice to proceed by the end of next year. And we have a lot of milestones that we've achieved with this project already, including our Oregon permit, the Energy Facility Siting Council permit. We've got that completed. We have FERC approval in place. We've got our customer agreements executed, and we are finalizing our EPC contracts. So that's one item that we still need to finalize, and then we are also finalizing some local permits before we achieve notice to proceed. Christopher Ellinghaus: Okay. So Si seems to be maybe ahead of the curve, certainly what I was kind of expecting on a pro forma basis. How much ahead do you see it relative to what your expectations were? And are you at a level at this point where maybe the '26 case is not as critical? Justin Palfreyman: So we've been really pleased with the growth that we've seen at SiEnergy despite a slowdown in the housing market in Texas, we had incredible growth this year. We also had record additions to our backlog, which bodes well for the long-term future growth at SiEnergy. I would say we're really pleased with what we're seeing. It's probably exceeded our expectations. However, we have not gone in for a rate case yet, and there's still some remaining items that we want to see on an execution standpoint. So we are contemplating a rate case this year and studying that heavily right now. But I can say that overall, the growth has been strong. It's been a few years since they've been in for a rate case, and there are certain elements of the rate case that we are evaluating that could be more beneficial down the road as well, including using the GRIP mechanism in Texas. Christopher Ellinghaus: If I recall correctly, Texas passed legislation that's constructive, would that bypass GRIP? Or would you stick with that sort of older mechanism? Justin Palfreyman: We're evaluating that now, Chris. But I would expect that when we do go in for a rate case that we would look at the GRIP mechanism. The HB 4384, which I think you're referring to, has been helpful from an earnings perspective, and that is reflected a little bit in our results even in 2025. But I would expect that because of the way the mechanism works for GRIP, that's likely what we would be looking at in a future rate case. Christopher Ellinghaus: Okay. So given the mechanism that you filed for in Oregon, -- your guidance suggests -- I guess, it's kind of silly to look at growth versus 2025, but your guidance suggests considerably lower growth, right? So are you anticipating receipt of that mechanism within the guidance? Justin Palfreyman: Yes. We are expecting receipt of that, the rate mechanism here in Oregon as part of that guidance. It is a relatively modest increase to rates, about 1.5%, and that is effectively just to recover on some capital investments that we are making in this interim period while we're working through the multiyear rate planning and -- so it's actually, we think, beneficial to have this modest incremental increase in the interim so that we avoid a scenario in the future where you have a larger rate shock for customers. Christopher Ellinghaus: Sure. One last question. What's the next step for water? You've always had a robust M&A pipeline. Is it expanding regionally? Or is it just continuing to do tuck-ins in your existing service areas? What are your thoughts on what water is up to? Justin Palfreyman: Yes. We're always looking opportunistically at acquisition opportunities that really add long-term shareholder value and would drive more incremental growth. That being said, we are really happy with the platform that we have built. We are in 6 states now with our water business, and we have some great service territories that have a lot of organic growth embedded in them. So we're very focused on executing, both investing in the business, ensuring timely recovery on those investments and then also looking at expansion. So we're expanding our CCNs or our regulated service areas in a number of our jurisdictions across the water business. And we are focused on greenfield growth as well. So in Texas, in particular, where we've seen incredible growth with our SiEnergy business. Our Water platform is a lot smaller in Texas. So we're trying to find ways to combine our business development efforts down there to achieve greater greenfield growth in the future. And then we always look at tuck-in acquisitions. It's probably a little less of a focus for us right now, given some of the other opportunities that we see to drive shareholder value in the near term and some of the growth that we're excited about in our existing service territories. Christopher Ellinghaus: Okay. One more short question. So mortgage rates have come down a decent amount over the last 12 months. Have you seen some alleviation of the headwinds against house or new customers, housing development expansion in Texas over the course of 12 months? Justin Palfreyman: I would say that we saw a slowdown roughly around the middle of 2025 in new housing starts and completions. It does seem that the more recent moderation in interest rates and perhaps other factors has had a little bit of an uptick back the other way, which we think is positive. But it's pretty early to tell here in 2026 where that's going. Certainly, a reduction in mortgage rates is helpful. The Texas economy more generally continues to benefit from a lot of growth in terms of industrial and commercial activity in the state, companies relocating there, announcing new manufacturing facilities, and that drives residential growth as well. So we are very optimistic long term about the growth in the Texas market. And I think any reduction in interest rates is just going to be a tailwind around that. Operator: The next question will be from the line of Alex Kania with BTIG. Alexis Kania: I have a follow-up question on MX3 or actually 2 questions on MX3. First is just for the perspective of thinking about the earnings profile associated with that project, it sounds like it's a FERC-regulated project. Would you be able to get AFDC over the course of construction? And the second question related to that is just funding plan. kind of whenever the notice proceed happens, you add the roughly $300 million of CapEx. Would you still be able to fund any incremental equity needs through the ATM in that instance? Or would you need to think of alternatives there? Raymond Kaszuba: Yes. So first on the funding plan. In terms of the profile, because we are still working to [indiscernible] and cross some keys with our EPC contractors, we're not providing the actual cash flow profile at this point. But you are correct that we, we would be able to fund any equity through normal issuances under our ATM. And then to your first question, yes, we would also receive AFUDC during the construction period. Alexis Kania: Great. And just so I heard the previous question right. So the idea of the target would be -- notice to proceed would be -- you're targeting by the end of next year, end of '27, right? Justin Palfreyman: Correct. Operator: [Operator Instructions] The next question will be from the line of Selman Akyol with Stifel. Selman Akyol: Just a real quick one for me. So very pleased to see the storage expansion. But I'm just kind of curious, maybe you can talk about other opportunities that you may be seeing like that and one in particular, just thinking about are you having any conversations, anyone approaching you on sort of behind-the-meter opportunities? Justin Palfreyman: Yes. Thanks, Selman. The opportunities that bit missed, they are long term in nature and fairly exciting in that we do have other reservoirs that can be developed for additional gas storage beyond MX3. They all have their own characteristics and cost profile and whatnot with them. But it is something that we keep an eye on. We do believe there is strong customer demand for this. So MX3, all of the capacity is spoken for with our existing customers there. And just what you're seeing in the broader energy constraints in the Pacific Northwest region with one major interstate pipe serving the region, gas storage is uniquely valuable here. So I do think there will be opportunities over the long term. It's very premature to comment on any specifics there. In terms of behind-the-meter opportunities, it is something we've been approached by numerous customers looking for access to really consistent, reliable energy in order to cite data centers and other types of facilities here. We do evaluate that on a case-by-case basis. If there is a storage potential use case there, but there's nothing that we have today to announce on that front. Operator: That will conclude our Q&A. I'd like to hand the call back to Justin Palfreyman for closing remarks. Justin Palfreyman: Thank you. So thanks, everybody, for joining us this morning. We really appreciate the questions and your interest in Northwest Natural Holdings. We're really proud of what we achieved in 2025 and even more excited about the momentum we're carrying into 2026. As you've heard today, we're entering this next chapter with a focus on our strategy, execution and continuing to grow our utility business. Please don't hesitate to reach out to Nikki with any further questions, and thank you for participating today. Operator: This concludes the Northwest Natural Holding Company Q4 2025 Earnings Call. Thank you all for joining. You may now disconnect your lines.
Operator: Thank you for standing by. At this time, I would like to welcome everyone to the Energy Fuels Annual Earnings Conference Call and Webcast. [Operator Instructions] I would now like to turn the conference over to Mark Chalmers, CEO of Energy Fuels. Sir, the floor is yours. Mark Chalmers: Okay. Well, thank you, Morgan. And again, my name is Mark Chalmers, CEO of Energy Fuels. Thank you for joining the call today to discuss our financial and operational results for year ending December 31, 2025. 2025 was truly a breakout year for Energy Fuels. We achieved numerous operational ramp-up growth milestones, and we believe set the stage for significant future cash flow generation, market differentiation and competitive advantages in the critical materials space. We also believe that we are showing the market that we have the financial, technical, commercial capabilities to execute our aggressive plans. I'm just going to touch on a few highlights. In short, we exceeded guidance on all fronts in 2025. Not many in the uranium space can say that. And we even upgraded our guidance during the course of the year, and we beat that guidance. We mined -- newly mined ore over 1.7 million pounds of uranium, and we processed over 1 million pounds of finished U3O8. And it's important to note that there's a bit of a lead lag between when we mine and we process. So really, the processing has to catch up with the amount of uranium we mine. And we also started ramping up our sales volumes. Looking to 2026, we plan to materially increase uranium mining production and sales. We made remarkable progress on our rare earth segment, including pilot production of dysprosium and soon to be terbium oxides and announced plans to expand our commercial heavy production in mid-2027. Our NdPr and Dy products have been qualified for use by major automobile manufacturers and some of that product has gone into electric vehicles and hybrid vehicles as we speak. We received all government approvals for the development of our Donald joint venture project in Australia. We completed feasibility studies for the Phase 2 expansion of the rare earth processing at our mill in Utah and the Vara Mada project, which was formerly called Toliara Critical Minerals Project and demonstrated that the combined net present value of those 2 projects could be in the order of $3.7 billion. We significantly bolstered our balance sheet by completing an upsized $700 million convertible note at a 0.75% coupon rate back in October. And at the end of the year, we had nearly $1 billion of working capital, and the company has never been stronger financially. In short, 2025 was an extremely productive year. And really, Energy Fuels has solidified its position as the largest and lowest cost U.S. uranium producer and emerging large-scale, low-cost rare earth and critical mineral producer. So joining me today on this call and presenting will be Ross Bhappu, our President; Nate Bennett, our CFO; and also Curtis Moore, our Senior VP of Marketing, Corporate Development; and Nathan Longenecker, our Senior VP and General Counsel. Following the presentation, our conference call will have replays that will be available on our website. And as always, there will be time for questions at the end of the presentation. So let's get going. So I know every time I do a conference call, I start off with this slide and comment how beautiful it is down in San Juan County. And again, I love it. So -- but as I said from the beginning and as I said for multiple calls, we're building a globally significant critical materials company and are continuing to make great strides. Slide 2, I may be making some forward-looking statements, and those are included on Page 2. So again, when you look at our company, our company based in the U.S. has built a very significant critical mineral company on the foundation of our core uranium business. Uranium, we are the leading producer of uranium in the United States. The rare earths, which also contain uranium that can be processed at the White Mesa Mill and the heavy mineral sands will provide us a source of rare earth feeds that we can process at the mill, and they all have a common denominator, which is they contain natural uranium that, again, we can recover at the White Mesa Mill, and that is a significant differentiator. This slide. And this slide is getting pretty busy. I don't think anybody can say that Energy Fuels is not an asset-rich company. And I think that would be a real understatement. And so when you look at the world and you look at the number of uranium and vanadium deposits that we have in the Western U.S., several of them are producing, several of them are permitted, and we're ramping up our production of our uranium assets. And then in addition to that, when you look at the heavy mineral sands projects that we have, both Donald, Vara Mada and Bahia in Brazil, Madagascar and Australia, it's getting to be quite an impressive list. And I think when you look at the past few years when we were acquiring projects around the world, it couldn't be better timing. In addition, look at the proposed assets with the acquisition of ASM in Australia. That's we have a scheme document that we're executing as we speak. We hope to close by June of 2026. But also in addition to these mining properties and deposits that we've secured would have the Korean metal plant in South Korea, the Dubbo Project, which is another source of feed in New South Wales, Australia and also potentially a metals plant in the United States, which we call the AMP. So the list is getting long. And what's really exciting is when people ask us how we're going to fund this, we've been able to demonstrate in 2025, the great strides that we've made along that path, and we hope to have more updates in this year on how we're going to continue to move forward with this very aggressive strategy that is well funded. So this next slide just sort of highlights how we can take the uranium ores that we have that are currently producing or will be producing in the not-too-distant future, how we can process those through the White Mesa Mill and come up with uranium and vanadium and potentially medical isotopes. Well, then on the other hand, when we secure the monazite that we will get from these heavy mineral sands projects and including from Chemours in Florida and Georgia, we can stop producing uranium and we can start producing rare earths in the current mill, which we call Phase 1, and that is a dual facility can do uranium or the rare earths. But when you go over to the far right and you see this list of the end products, we have the capability of commercially producing at least 10 critical materials or minerals, and that can expand based on the markets that are available to us at the time that we need to produce things. So it's a very impressive list, and I've said this many times, that many companies in the critical minerals space are dependent on one element. And Energy Fuels is not. And we've seen the advantages of that when you look at -- if you have a high uranium market or low uranium market, same thing on vanadium, rare earths and/or some of the titanium zircon markets. They can fluctuate quite materially. So 2025 was absolutely a breakout year, and I'll provide some of the highlights. We are producing more uranium than any U.S. company today in the United States. And it's interesting because even a year or 2 ago, people thought we were getting out of the uranium business. And guess what, we haven't. And we're actually beating everybody in the United States and a number of companies around the world that are trying to restart their uranium production. Uranium mining, and we've been focused in '25 and '26, mainly on conventional production from the La Sal Complex and the Pinyon Plain Mine, we produced over 1.7 million pounds, as I previously mentioned, at an average grade at Pinyon of 1.6% and those grades are continuing. The White Mesa Mill produced about 1 million pounds or processed 1 million pounds of finished product, and that was really driven on the amount of time the mill ran. And we really went through a processing run in Q4 of 2025, and we expect to continue that processing through Q2 of 2026 or longer. And we can produce about 250,000 pounds per month on average. But in December alone, we produced 350,000 pounds of uranium. So it really shows the capability of the White Mesa Mill depending on when it's running and what feeds we have. When you look at the uranium inventories, at the end of December, we had over 2 million pounds of total inventories. And a lot of that was made up of uranium contained in raw ore and raw materials that will be processed this year or later but including over 800,000 pounds of finished uranium and over 100,000 pounds of work-in-progress. So what does this all mean in terms of cost? It means that our costs are dropping materially, and we still are on course to have production costs. And actually, the current production costs at Pinyon Plain are in that $23 to $30 a pound. We're seeing our cost of goods sold decreasing from $53 a pound to currently at the end of 2025, we're $43 a pound. And as Pinyon Plain ore is processed and mined, those costs will continue to drop. So we currently have 6 long-term contracts. We added a couple of contracts late last year. And those contracts combined equal about 50% of our uranium production capabilities. So we are definitely not over-contracted, but we definitely have enough contracts to give us a base load, which is required. You cannot run a company with just no contracts and trying to depend on the spot market. So we're really excited about where we are there. In '25, we sold 650,000 pounds at an average price of $74.20 per pound. We're seeing stronger fundamentals when it comes to uranium prices, long-term prices. and the growth of uranium demand looking out to the future. So this will be the last slide I'll talk about at the moment before I turn it over to Ross. The White Mesa Mill is truly a remarkable asset. We've taken a uranium-vanadium project and turned it into a critical mineral hub. And we see that as a very unique accomplishment over the last few years. It is the only operating conventional uranium mill in the United States. It is the largest uranium processing facility in the United States, fully licensed, permitted producing licensed capacity of 8 million pounds, and we have the operational and expertise to both process the uranium, the rare earths and the rare earths. It is the only facility that can process what we call alternate feeds. It is the largest primary vanadium production facility, and we're getting a lot of additional inbounds now on our vanadium production capabilities, and it is the only facility in the U.S. with the ability to process monazite, and that is a material differentiator. So now I would like to turn it over to my good colleague, Ross, to talk further about the company's activities. Ross Bhappu: Great. Thank you, Mark. Look, as Mark said, the White Mesa Mill, it's the jewel in the crown of our portfolio. It's the only operating conventional mill for processing uranium, but it's also got the capability of processing commercial quantities of monazite producing meaningful amounts of NdPr. We can -- we have a current capacity of 1,000 tonnes per annum of NdPr, but we can also process samarium concentrates, samarium plus concentrate, so the heavies. We've demonstrated the use of our NdPr in various applications. Most importantly, it's been qualified and validated. It's even in some operating electric vehicles and hybrid electric vehicles coming out of Asia. So it's an exciting aspect of our business. Late last year, we reported that we produced 29 kilograms of dysprosium oxide, and that's been validated by rare earth permanent magnet manufacturers as well. Next month, we plan to produce our first kilogram of terbium oxide. And then following that, we plan to produce pilot circuits for both samarium, europium as well as gadolinium oxides. Europium as well as gadolinium oxides. So we're doing some incredible things at the White Mesa Mill, and it's a credit to our incredible team that we have on the ground there. This year, we're working on our Phase 1 expansion, and that's going to allow us to produce commercial quantities of both mid and heavy REE oxides. That again includes dysprosium, terbium, samarium, europium and gadolinium. We also could possibly produce yttrium. We're planning to install equipment this year that will allow us to produce and process MREC material, mixed rare earth carbonates. So as you can see, we have not only an incredible facility there, but we have an incredible team of scientists and engineers that are allowing us to do some truly groundbreaking work at the mill. Just a few weeks ago, we released the feasibility study of our Phase 2 expansion at the mill. This is separate from the Phase 1 expansion that I was talking about just a minute ago. This Phase 2 expansion is going to allow us to process up to 50,000 tonnes of additional monazite. That will allow us a capacity of 5,500 roughly tonnes per annum of NdPr plus approximately 50 tonnes per annum of terbium and another 165 tonnes per annum of dysprosium. Phase 2 is going to allow for a dedicated rare earth circuit that will be separate from uranium, so we can simultaneously produce both uranium and rare earth minerals. And we've already applied for our permits for this expansion, and we're hoping to get those permits sometime next year with planned commissioning in late 2028 or early 2029. Just some highlights. It's a pretty impressive feasibility study. The results of the feasibility study include about a $1.9 billion NPV. That equates to almost $8 per share. We have a 33% IRR on the project. We'll generate over $300 million a year of EBITDA over the first 15 years. And all that's being done with a CapEx of only $410 million. With the inclusion of a feedstock of our monazite from the Vara Mada project, that feed will result in NdPr costs of under $30 per kilogram, truly revolutionary and making us competitive anywhere in the world, including China. One of the interesting things that we are seeing is the trend in rare earth oxide prices. This slide shows the oxide prices for NdPr for dysprosium and for terbium. These are the non-Chinese prices. And it's interesting that there's a slight premium for the prices outside of China for NdPr. But when you look at the Dy and Tb prices, there's over a 400% premium to the Chinese prices. At our projected Phase 2 volumes and at these prices, we will generate almost $1.2 billion per year of annual revenue. So truly remarkable for our company. As Mark mentioned, we've got a proposed acquisition of Australian Strategic Materials, ASM, In January, we announced this acquisition, and we're making good progress. Again, as Mark mentioned, we're hoping to close on that acquisition in June. It's a great acquisition for our shareholders, for our customers and for National Security. For our shareholders, it provides enhanced margin capture. It's accretive on an NAV per share basis. It accelerates our ambition to become a mines to metal and alloys producer, and it positions us to capitalize on reshoring of U.S. magnet manufacturing with a strong customer base. For our customers, it significantly expands our product capabilities. We'll be the lowest cost producer and have ability to deliver oxides, metals or alloys depending on customer needs. The company has a proven track record and an ability to meet Western demand, and it's already got a number of top-tier customers acquiring or treating their metals and alloys. From a national security perspective, we'll be able to deliver ex-China supply chain. We'll have unmatched technical capabilities in solvent extraction and metal and alloy making and the vertical integration allows us and supports supply chain resilience with U.S. -- with 100% U.S. controlled supplies. It's also an additional source of rare earth feedstock from our Dubbo project in Australia, as Mark mentioned earlier. So this next slide kind of shows how it all fits together. With the ASM acquisition, we create a near-term mine to metals and alloy supply chain. We now have 4 owned or controlled mining assets, including the Donald Project and the Dubbo Project, both in Australia, the Bahia project in Brazil and of course, our Vara Mada Project in Madagascar. All of these supply high-quality rare earth feed to the White Mesa Mill in Blanding, Utah and all of the rare earth oxides from the mill will supply feed for either the existing Korean Metals Plant that we'll be acquiring from ASM or to our newly planned American Metals Plant where we will produce metals and alloys here in the United States. As you can see, we're truly a global rare earth supplier that's 100% U.S. controlled. I'd like to get a little more detail now on the Korean Metals Plant that we're acquiring. This slide provides a pretty good summary of what the capabilities are at that facility. It's located in the Ochang Foreign Investment Zone in South Korea, and it has a current capacity of 1,300 tonnes per annum of neodymium iron ore and alloy plus NdPr metal. Today, it has 4 furnaces and 1 strip casting machine, but we've got a Phase 2 plant expansion that will include 18 furnaces and 2 strip casters. That will give us about 3,600 tonnes per annum of neodymium iron boron alloy manufacturing capability. We're planning to expand our product mix by producing heavy rare earth metals and alloys, including Dy metal and Tb metal in the future. And then for even going beyond that, we have a Phase III plant expansion, which takes us to 30 furnaces with 3 strip casters, and that gets us to a capacity of 5,600 tonnes per year of neodymium iron boron alloy. Our AMP facility will replicate what we have in Korea, and it will give us the ability to produce all these metals right here in the United States. We currently have sales and offtake partnerships with Vacuumschmelze (VAC) with Neo Performance Materials and with Noveon. So you can see that the relationships are with the very top-tier producers of magnets, and we're very, very happy to be acquiring this asset. The Donald project is our shovel-ready project. It's the first mine that will supply heavy and light rare earth minerals to our White Mesa Mill. It's in Australia. We are getting very close to making a final investment decision, perhaps as early as the end of March. This project provides exceptional sources of heavy rare earth oxides, and it will provide feedstock to White Mesa by 2027 -- late 2027 or perhaps early 2028. The attractiveness of the Donald project is the very high levels of dysprosium, terbium and samarium. It's also in a great jurisdiction. The project is fully permitted. And as I said, it's shovel-ready. I think most people are aware this project is in a joint venture with Astron. We are earning a 49% interest in the project. But importantly, we're going to receive 100% of the rare earth offtake. Projects received conditional support from the government of Australia through Export Finance Australia and total funding required for the project is about USD 340 million. The final slide I'm going to talk about is Vara Mada, which we used to call Toliara. It's our heavy mineral sands and rare earth project in Madagascar. In January, we released the feasibility study results, and it's truly one of the largest and highest-grade heavy mineral sands and rare earth projects in the world. It will produce titanium products that include rutile, ilmenite as well as zircon, and it will produce high-quality monazite that gets fed to the White Mesa Mill. Again, very attractive project economics. It's got a $1.8 billion NPV, a 25% IRR, CapEx of just under $800 million and EBITDA generation of about $500 million per year. The mine has a 38-year life, but there's additional resources there that we haven't put in the reserve category. It's got the potential to go well over 100 years. So it's truly a world-class project, and we're currently working now to convert our MOU to an investment agreement so that we can advance that project. With that, I'm going to turn it over to Nathan Bennett, and he'll talk about our financials for the year. Nathan Bennett: Thank you, Ross, and good morning, everyone. I'll start with our balance sheet and liquidity, followed by a discussion of our financial performance for the fiscal year '25. So we ended the year in a very strong financial position as we prepare to develop our long-term projects, finishing with $1.4 billion in total assets. Our working capital was $927 million, which includes $862 million of combined cash and marketable securities with the majority of our marketable securities being excess cash invested in highly liquid interest-bearing securities. This also reflects the $621 million in net proceeds received from the convertible note offering completed at the beginning of the fourth quarter. This liquidity and profile provides substantial flexibility to fund ongoing operations, advance our strategic projects and remain opportunistic as market conditions evolve. Now turning over to the income statement. For the year, we reported a net loss of $86 million or $0.38 per share compared to a net loss of $47 million or $0.28 per share in fiscal 2024. Now this year-over-year increase in net loss was anticipated and primarily reflects higher ongoing costs with the expansion of our global operations following the acquisition of Base Resources in the fourth quarter of 2024 as well as continued investment in our core projects. Specifically, we incurred approximately $15 million higher ongoing SG&A expenses, largely driven by our expanded workforce to support the execution of our global strategy. In addition, exploration and development expenses included an increase of $9 million as we advanced priority projects across our portfolio, including the Juniper Zone at Pinyon Plain, La Sal, Bahia and delineation drilling at Nichols Ranch. It also included an increase of $7 million in noncash write-downs related to changes in tax laws and exploration projects that we're no longer pursuing. Finally, market conditions also impacted the results. The average month in uranium spot prices were approximately 13.8% lower in 2025 compared to 2024, which reduced our revenue per pound and our gross margin percentage, which was 31% in 2025. We did increase uranium sales year-over-year by 200,000 pounds to 650,000 pounds, which was an $11.8 million increase in uranium revenue year-over-year. Now as we continue to mine and process ore at the mill, and increased uranium sales throughout 2026, we expect our gross margin to increase to 50% and above as our finished inventory weighted average cost continues to decrease from $43 per pound to the low 30s and as uranium prices continue to strengthen during 2026. Now turning to the next slide. I will briefly touch on our $700 million convertible note offering that was highly successful being oversubscribed by more than 7x and closed at the beginning of the fourth quarter. Now without going through all the details of the terms, I just wanted to mention that overall, the offering places us in a strong financial position to fund our expansions of the White Mesa Mill and our Donald project joint venture and doing it with very low-cost debt. Now with that, I'll turn it back over to Mark, who will discuss our 2025 and 2026 guidance. Mark Chalmers: All right. Thanks, Nate. Look, as I've mentioned earlier, we're really excited that we exceeded guidance for mined uranium, processed uranium and sales of uranium in 2025. And I think it would be very rare for a uranium company to do that. And really, it's because we have experience of producing uranium. It was a transition year for us because we were ramping up back into commercial uranium production, and that kind of leads us into our guidance for 2026. And you can see that our projected guidance for mined uranium is increasing materially from 2 million to a low of 2 million to 2.5 million pounds. And I know that for a lot of time, I've been telling people that our first goal is to get to 2 million pounds of production and then go and increase from there. The processed uranium also increasing materially from 1.5 million pounds to 2.5 million pounds. And that really is just a function of how long we run the White Mesa Mill. I talked about the mill produces about 250,000 pounds per month. So you can see that if we ran for, say, 10 months, we would get to the 2.5 million pounds. And I also highlighted that we did 350,000 pounds in December of 2025. And then on sales pounds, we'll have the ability -- well, we certainly have the ability with the process and finished goods to cover all our contracts and also figure out where we're going to find home for those residual pounds, but we can also keep them in inventory. We can also sell them or go into other long-term contracts. So it is materially changing. Our cost of goods sold is going to decrease as we ramp up the production, and we still are focused on basically using our uranium business to fund a lot of the company's expenditures going forward over the next several years while we build out this world significant critical mineral company. So before we go to questions, I just want to talk a bit about CEO transition. And I just want -- and I'm going to tag team this with Ross. So Ross, you just jump in wherever, but I want to just tell people that, that succession plan is proceeding as expected. We've had this in place over the last couple of years. Ross is anticipated to become the President -- well, he's the President, current President. He's worked with us for 7 months and to become CEO in April, and I will be retiring. But I plan to stay around as a consultant exclusively to help Ross, and I'm excited about that. I'll never really -- I mean, I may be shifting from a full-time role to a consulting role, but I'm not retiring as a professional because I still want to give more, but I also want to spend more time in Australia in the coming years. So Ross, I don't know if you want to add anything. Ross Bhappu: Yes. Look, I just want to express my gratitude to Mark. He's -- when I look at where this company has come from over the last, well, 10 years, but really over the last couple of years, you think about it being a single product, single jurisdiction sort of company to now very much a global company with over a $5 billion market cap. It's a tremendous credit to Mark and his leadership that we've been able to grow. And we've been able to do it without taking on debt, and we've been able to do it with limited resources to grow this company into a truly world-class company with amazing assets. But the other part of it is the team. Mark has been incredibly successful at putting a team together that has been able to execute to this stage. So it's an exciting company, exciting time, but it's a tremendous credit to Mark and his leadership in getting us to where we are today. So thank you, Mark. Look forward to continuing to work with you. Mark Chalmers: Yes. Thank you, Ross. And we are building that team out even further. I mean, with our office here in Denver, Lakewood, in Australia, in Perth and some of these operations around the world, we're able to attract some remarkable people to grow with the company. And I can say this that we have an aggressive strategy that we're not slowing down. We're not slowing down. There are not enough hours in the day. People are calling us. People are watching us. I was at the BMO conference in Florida earlier this week. And it is amazing how many people are watching Energy Fuels, and they see the progress we're making. So anyways, I'll stop on that note and open it up for questions. Operator: [Operator Instructions] Your first question comes from Brian Lee with Goldman Sachs. Brian Lee: I guess, first off, Mark, we'll miss your leadership, Ross, looking forward to working with you closely going forward. But as you think about the projects and having put them kind of in position to ramp up here over the next few years, kudos to you guys for all the work through this point. I guess the question I had would just be around the time lines. Has anything shifted on your heavy mineral sands projects? I know looking through the decks and you guys have some of the most detailed decks out there, it looks like some of the time lines may have shifted out a little bit. I don't know if that's a more updated view or if that's something that it sounds like you may have expressed earlier this month in an updated corporate deck. But can you just kind of talk about what's happening with the project time lines for the heavy mineral sands projects and if there's any significant drivers of the updated views on kind of maybe pushing out the time lines a smidge? Mark Chalmers: Yes. Look, the Donald Project is our shovel-ready project. I mean, really, the focus there is coming to a final investment decision on that. We're very, very buoyant that the timing of a shovel-ready project like Donald with the -- particularly the heavies in addition to the lights is really optimal, and it's very important for not just the company, but for the United States of America and the world in general. So yes, it's shifted a little bit, but we're very confident that we're very close to making a decision there. We still got to look at sort of the final numbers and looking at homes for the product that is produced there. Vara Mada, we're still making significant progress with the government. We've had meetings even this week with the Madagascar government. We've been working with the communities and kind of rebranding that project. But we're really taking maybe a little slower in the fact that we want to make sure that, that project has all the -- certainly the permits, but also the social license to operate because it's an exceptional extraordinary project. But we couldn't be more excited about it because it's a game changer in the whole rare earth business. Bahia, we're making progress there with -- coming up with a resource there. And then you got Dubbo now another one in the queue. So Ross, I don't know if you want to add anything to that. Ross Bhappu: No. Look, I completely agree with what Mark has said. I think Vara Mada maybe slowed down by a quarter with the change in government, but this government, we've met with, as Mark said, this week, and they are -- they seem to be very supportive and recognize the value that a project like that brings to the country. So yes, no, I think we're progressing pretty well on all fronts there, Brian. Brian Lee: Okay. That's great. I appreciate the color. And then I guess in terms of timing, Donald, like you said, is shovel-ready. It doesn't sound like anything is really shifting out there. So is the time line still for FID here in the early part of '26 and then deliveries in late '27. Any kind of updated thoughts around the time line for getting volume out of that project? Mark Chalmers: Yes, that's still the time line. And as we said, it's a very important first major step for us in the rare earth space. And to put it into context that the expected heavies from the Donald project is equivalent to about 25% of the U.S. requirements, and that's the first phase. And the second phase could be up to 50% of the heavies required for the United States. So yes, we're on that time line. We've been doing things behind the scenes to make sure that we can maintain that time line. But we've got to just look at the final numbers and make a decision at Board level on how we proceed. Brian Lee: Okay. Great. Last one for me, and I'll pass it on. Mark, you mentioned you've obviously got a very unique asset, and you just alluded to the fact that you could represent a significant percentage of the heavies for the U.S. With Project Vault having been officially announced recently, what have your discussions with your government contacts? How have they evolved? Sort of where do you sit in the positioning of potentially having some sort of government support or offtake given that heavies exposure in your asset mix? Mark Chalmers: Look, everyone in the critical minerals space is spending a lot of time in D.C. and -- including Energy Fuels, I can't go into too much detail. But I can say one thing. When people look at the number of assets that we've acquired and how we're advancing, it's getting noticed by everyone, everyone around the world, end users, upstream, downstream, midstream and with the Australian government and the U.S. government. So I mean, I think that the differentiator for us is the quantum and scale of what we put together. I mean, I think a lot of people are used to small little fragments in the business, and we don't have fragments. When you look at the potential acquisition of ASM with up through alloys and you look at the multiple projects, it's just -- it's a good look for the right reasons. Let's leave it at that. And Ross, I don't know if you have anything to add. Ross Bhappu: No, I think -- well, I would just say that I think -- yes, we -- the attraction for us is that we have a real facility. We have the White Mesa Mill that you can go out, you can see. We have bags of NdPr that are sitting there. We have monazite on the ground there. We are for real. And I think that's caught the attention of a lot of people. And so we're hoping that we'll continue to progress in that area. But no -- nothing definitive on that end yet, Brian. Mark Chalmers: Yes. One other comment, Brian, but it's not just the rare earths. People are looking at our uranium production and our vanadium production. So there really isn't anybody else that they can compare to that has this multi-element Really, everything we're doing is in the wheelhouse of the U.S. government and these OEMs and stuff in terms of how to re-shore some of these elements and final products. So yes, we're in a good spot, I think. Operator: Your next question comes from Anthony Taglieri with Canaccord Genuity. Anthony Taglieri: Maybe starting at White Mesa. Given your uranium production guidance of 1.5 million to 2.5 million pounds, what factors sort of drive the potential high end of that range, maybe producing for 10 months versus the low end, around 6 months? And if you process uranium for 10 months in 2026, would you still switch over back to uranium in Q1 '27? Or could this be pushed back a bit? Mark Chalmers: Yes. The -- it's really a function of the run time of the mill. And we also have to be mining fast, too, because the mill is very hungry. When we're doing a uranium run, we really don't want to switch the mill on and off very much because once it gets to equilibrium, it perpetuates, and you get the efficiencies of just continuous operations. So I mean, one of the things that we've -- and we've talked about the Phase 1 -- we have what we call Phase 1b and Phase 1c that will allow us to commercially produce both the lights and heavies in 2027. So we've always given ourselves some flexibility that we can shift the mill to rare earth run if need be. And we're trying to -- well, we are showing the world that we have that flexibility. So I would say it's really a function of the critical mass and maximizing the economics of running longer if required. So we're just giving ourselves some maneuvering room there in that regard. Anthony Taglieri: Okay. Great. Understood. Maybe switching gears a bit. So with your '26 uranium sales guidance, there's obviously some room there for some spot sales. We all know where spot prices are right now, around $87, $88 a pound. Are we at levels where you guys would consider selling more into the spot market? Or do you want to see prices reach a certain threshold before you do that? Could the decision to sell more or less on the spot market be tied to a potential strategic uranium reserve? We talked about Project Vault earlier. Maybe some color there would be great. Mark Chalmers: Yes. I mean we certainly don't want to sell a significant amount of uranium at low prices on the spot, and we really haven't. I mean if the prices go low, we're a buyer. Prices go high, that helps us with our contract pricing because of the formulas in 5 out of the 6 contracts that we have. And so we always want to try to time spot sales when it makes the most sense. So we have sold a bit under $80, like $77, $70, a little bit here and there, but we're always targeting higher prices. So right now, I still believe that the true replacement value on a pound of uranium is still in excess of where the spot is right now, and we always keep that in mind if we do make a sale. But I also think that companies need to show they're building the revenue and they're moving towards profitability. And so we're not just going to not sell uranium just because we're not happy with the price. If we've got a margin on it and we do have a material margin, when you look at our production cost, we want to keep growing our revenue, our profitability and reducing the burn as we build out the rest of our strategy. So -- and we're in a unique position with the ability to use this uranium business to provide a material bridge for the next few years. Ross Bhappu: Yes. I would just add, when you look at the long-term supply and demand fundamentals, you can't help but be pretty bullish on uranium. And so we're trying to maintain good optionality between our spot and our term contracts that give us that optionality to play it if it does go stronger like we think it will. Operator: Your next question comes from Heiko Ihle with H.C. Wainwright. Heiko Ihle: Mark, congratulations on your retirement and on that same token, Ross, congratulations on your appointment here. Mark has done a wonderful job with the firm. Ross, I actually just looked this morning, and we initiated coverage of the company on June 29, 2015, with a $6.30 price target. So that's 10.5 years ago. Mark Chalmers: We've come a long way, fantastic. Heiko Ihle: Shows you where we've come. I was a little bit hesitant to ask this question on a public call, but I just can't help myself. The firm has changed so much since then. And presumably, with the near-term appointment of you, some changes will be in the air. And I assume that most of these changes are going to be minor given how well the old company "has done." But do you want to just give us a touch of color on your expectations for the company going forward, maybe things that are not as obvious in press releases or in guidance or anything along the lines of that you think you're going to bring your expertise and maybe change things around just a touch? Mark Chalmers: I'm letting Ross answer that question. Ross Bhappu: Yes, it's a great question. And look, when you look at our growth plans, they're pretty ambitious. We're going to have 4 major construction projects going on simultaneously. So I think the key is we're going to have some significant additions to the team that are around execution in multiple geographies. So it's really setting the company up for execution success with some very diverse geographically and commodity projects. So it's all about execution going forward and ensuring that we have the right additions to the team. Heiko Ihle: Fair. And then just on guidance, and you sort of hinted at this in the prepared remarks. You're building off of a good year. But I mean, the 2.5 million pounds, can you go through some of the factors that could get you all the way to 2.5 million? You mentioned earlier in the prepared remarks that it's obviously dependent on the mill. But besides that, anything that we should be looking out for in our models, please? Mark Chalmers: Look, I think it's -- we're getting Pinyon Plain into more of a routine when it comes to the mining rate. So we're very confident that we can be in that range or even beat it potentially. And the same thing is happening at La Sal. We've got miners and trained a lot of miners because one of our impediments was getting miners that know how to mine conventionally. So -- but at the same time, we'll have Whirlwind. We're planning to do more work to get it back up and into production. Actually, first time, it's never been in production in 2026, it'd be in 2027. The same thing with Energy Queen. We're still doing drilling and looking at when to start up Nichols Ranch in Wyoming. So it's really with the conventional mining, it's really about having more work areas, more miners, and we can ramp up accordingly. So it's pretty low risk for us right now when it comes to getting there. And also what you're seeing, Heiko, is that we're mining more than we typically plan to either process or sell. So we plan to be building inventories that are quite material. And those inventories, particularly the unprocessed uranium, can be turned into finished goods pretty quickly with the mill restart or if the mill is running at the time. So we have a lot of flexibility that others won't have, and we plan to use that to its fullest. Operator: Your next question comes from Noel Parks with Tuohy Brothers Investment Research. Noel Parks: I just had a couple of things. The additional oxides you're going to be pursuing in Phase 1 that you announced last night, is it -- is that essentially sort of the Phase 1c that you've been mentioning late last year? Mark Chalmers: Yes. I mean one of the things that we're doing with our Phase 1, which is the existing constructed and operable rare earth SX circuit is we're adding what we call 1b. And I know it gets a little confusing because we got a lot of Phase 1s and 2s and -- but we've got Phase Ibs and cs. So the Phase 1b is to allow us to take the SM+, which is samarium plus is really heavy concentrate and go ahead and separate out the Dy, Tb, and some of these other rare earths as well. And so we see that as a real differentiator to have a commercial plant in the United States and have it quicker, faster than others. The 1c really kind of emerged last year, mid-late last year, and it is really focused on being able to take IMREC. And that is sort of an intermediate product that could come from either other cracked and leached monazite, but it also could come from potentially ionic clays or other sources, which will allow us to maximize the usage of that Phase 1 infrastructure for the rare earths, both for lights and heavies with 1b for the heavy separation and 1c for an IMREC. So it's really giving significant flexibility quicker, faster. And when we talk to people, whether it's the OEMs or government agencies, they want fast. And 1b, 1c is something that we see as fast and quick. Now looking to Phase 2, which should be approved in '27 and going into construction '27 with the FID decision, that will be scaled up about 5x greater and will be the more permanent facility, even though we're planning to continue to have that 1b and 1c for the long haul. Noel Parks: Great. And I just wanted to ask about the progress with -- or toward closing of ASM. And any updates you can give on that? And I was wondering, do you need specific South Korean regulatory approval for the plant there? And also -- I mean, for the sale of the plant there. And also, just wondering if you have any ballpark on the capital requirements for the future phases of the Korea plant. Mark Chalmers: I'll answer some of it, but also have Ross jump in. We have a scheme document that we're executing that was signed by ASM. And again, we're planning to close June of this year. We have to get the FIRB approval, which is Foreign Investment Review Board in Australia. We had to do the same thing for Base Resources. So the good news is we've gone through the scheme process recently in Australia. We still got to get shareholder vote. We've got to get all the various other approvals in the jurisdictions that they have assets in. So we're advancing that. Ross, do you want to add on things like capital or approvals? Ross Bhappu: So yes, I should have mentioned this Phase 2 is already funded for ASM. So that's adding the 18 different additional furnaces and the additional strip caster. So that is already budgeted and funded. Yes. And then going forward, if we do Phase 3, we don't have numbers around that just yet, but they're relatively modest numbers. I think the key time line, as Mark mentioned, is really getting the FIRB approval and the scheme document approved by the shareholders in Australia. So it's something we've done recently with the base acquisition, and I think we're pretty familiar with the process there. Operator: Your next question comes from Joseph Reagor with ROTH Capital Partners. Joseph Reagor: I think most of them might have already been answered, but a couple of small things. I guess on the uranium sales guidance, what's the breakdown there between existing contracts and spot sales for this year? And then if you guys can give any color on what we should expect for pricing either over the remaining, call it, 3.5 million pounds you have under contract or just for 2026 for those contract pounds? Mark Chalmers: Yes. Look, at this one, I'm going to flip to Curtis because he's on the call here, and he's in charge of our uranium sales. But go ahead, Curtis. Curtis Moore: Sure. Glad to hear from you. So we have -- this year, I believe the number was about 650,000 to 880,000 pounds of total contract sales of which we've already done some here in Q1. So that's the number. And that range, we offered some flex on those contracts. These were some of our first contracts that we signed back in 2022 that -- where we had to offer some flex in order to get those contracts in place. But keeping in mind as well as those contracts enable us to get the Pinyon Plain Mine going, which, of course, is the largest, lowest cost mine in the United States today. So yes, the rest would theoretically be on spot, midterm, maybe there's -- sold on the forward price curve or something like that this year. And again, we're not going to -- if the price drops, as Mark said, we're probably going to be buyers of uranium to help replenish inventories. But I'd say we're likely to be price-sensitive sellers. Joseph Reagor: Okay. And can you give any color on what the contract pricing is kind of set around either for this year or if you are more comfortable just over the remainder of the book? Curtis Moore: Yes. We haven't put any guidance out on that. If you look at our contract pricing from the last couple of years, that's a pretty good indication of where the prices are for our first sort of tranche of contracts. We have 3 contracts, 3 were signed kind of in early to mid-2022. And we got a little better pricing on those contracts than what was reported at the time, but they weren't high-priced contracts. And the base and the fixed price component on those contracts, they're hybrid contracts, it has been escalating with inflation. But then we've signed 3 more contracts here in the last 18 months or so, which obviously has some higher prices. And so we still have those 2022 contracts that we're delivering into this year. But we also have -- I believe it's one of the more recent contracts that has deliveries this year. So I think you're going to probably hopefully see our contract pricing increase throughout the year, though Q1 is likely to have a little lower because that's when we had, again, one of our other 2022 contracts come into place. And so we made a delivery there, but that one will be done for the year. So you'll see Q1 come out, but then it will probably start going up pretty significantly after that. Mark Chalmers: But I will say this, it will be in the $70s plus, okay? And depending on how uranium prices are, it can go into the $80s. So -- but it's not in the $60s, Joe. A lot of people have $60s, and we're not in the $60s. Joseph Reagor: Okay. That's very helpful. And then -- you guys also provided updated reserves and resources with the K. It looks like numbers went up a little bit. Can you kind of talk through what some of the gains were from? Was there some just stuff that came into resource because of higher pricing or any other revisions? I know Pinyon was a big part of it, but just overall. Mark Chalmers: Yes. I don't have my geologists here. He's in transit on a plane, I think. But looking on Pinyon, when you look at Pinyon originally, and that's -- at least right now, that's the one that's generating cash flow. The original estimate on the -- what we call the upper zone main zone was like 1.6 million pounds in this most recent estimate, they increased that two, threefold greater on the main zone. And it's really hard. And what's interesting is that main zone that the SLR did the estimate on was the most drilled-out zone I've ever seen in my entire career, and they were off by an order of 2 or 3 or greater. So it's hard to really get what I can say -- I believe is accurate estimates, particularly in the Juniper zone. But -- so what we're seeing is we saw the substantial increase in the main zone, substantial grade. The grade was almost double. So that was one of the reasons that it was off so much as the grade was higher. And in the Juniper, we have an area in the Juniper, which is 600 feet, and we're currently mining the top 200 feet, which is above that. So there's 800 feet of total area to mine. And I see a lot of exploration potential in the Juniper Zone. We already know that we have some very, very high-grade intercepts in the Juniper Zone, but it doesn't have a lot of drilling, particularly 200, 300 feet below the Juniper Zone. It's very open ended. So it's going to be kind of work in progress. I've worked at a couple of mines over my career that had 1 year of resource or reserve, and it just went and went and went. We know that Pinyon Plain isn't going to go for 20 years, but I'm still very optimistic it's going to go for a number of years and going to really materially keep our costs very low because of the grades. Operator: Your next question comes from Matthew Key with Texas Capital. Matthew Key: I wanted to drill down a little bit on the 2026 guide on mined U3O8. I was wondering if you could provide maybe an asset breakdown on that total, particularly as it relates to Pinyon Plain. Should we be expecting a similar run rate in 2026 that we saw in late 2025? Obviously, that mix would be important just as we kind of model out costs. So just trying to get a sense of the breakdown there. Mark Chalmers: Yes. Look, we're pretty comfortable with Pinyon Plain on its own will do at least 2 million pounds plus just as Pinyon Plain. And so the residual of that would be made up from the La Sal Complex, which is currently 2 mines. And so we do have another mine at La Sal that we're looking at refurbishing and startup, and then we have the Whirlwind mine. So the bulk of the pounds are coming from Pinyon Plain. But it's also interesting to note that the La Sal Complex, right now, all we're doing is recovering the uranium. We're not recovering the vanadium. And the vanadium is about 5x the grade of the uranium. And if the price of vanadium keeps going up, we may start talking about recovering the vanadium and getting another byproduct that drives our costs down even further on the La Sal Complex in our uranium vanadium mine. So what I think you can see is that we're comfortable with that range with probably Pinyon being around 2 million plus and the La Sal Complex topping that up. And then you can see that with Energy Queen, Whirlwind and even Nichols Ranch, you can see we're -- it's really quite possible we can get up towards 3 million pounds if we elect to. And again, this is 3 million pounds with limited capital. We don't need a lot of capital. We need basically working capital to get there. But you could also -- if the price of vanadium starts continues to increase, you could see us getting a credit for vanadium production as well, which can drive costs down a lot because it's significant when the price is up. Matthew Key: Got it. No, that's super helpful. And I just wanted to talk a little bit about the medium-term projects there as well. What market signals would you need to see to make that go-ahead decision on Nichols Ranch and Whirlwind? Would you say it's likely those assets come online sometime in 2027? And if you could just remind me just at a high level, the CapEx requirements to kind of bring online those medium-term uranium projects. Mark Chalmers: Yes. I think it's very high probability in 2027 that Whirlwind comes on as well, Energy Queen and really depending on uranium prices, Nichols Ranch. So I mean, the capital cost, I mean, if you look at Whirlwind and you look at Energy Queen, I mean, it's like $5 million, $10 million each. It's very, very small. When you look at Nichols Ranch, it's really about putting in the well fields and you're probably talking $25 million or something and thereabouts for Nichols Ranch. And most of that capital is going into the well fields, which is really the mining process, okay? So you put that -- those wells in and then you extract the uranium. So between all 3 of them, it's really small compared to others. And -- but I do think very high probability that a couple more conventional mines come on and Nichols Ranch, I think, is a very good probability it could come on in 2027. Operator: This concludes the question-and-answer session. I will now turn the conference back over to Mark Chalmers for any closing remarks. Mark Chalmers: No, thank you, everyone, who are listening in and asked questions. I think in closing, we've -- and I've always said this that we've had an aggressive but not reckless strategy. We want to keep a strong balance sheet. We need good people to advance the strategy. We're working on that. And we're really getting a lot of attention globally. And it's really been a pleasure to be a part of this over the last 10 years. I plan to continue to be available to work with Ross and the others because I've spent a fair amount of time with a lot of these assets over the years. But I'm really excited and there's more to come. There is so much going on. I don't want investors to think like we've reached some peak because we're still driving this company to become a $10 billion-plus company. And I'm just looking forward to not working 7 days a week and having a little bit more time to have more fun, to go skiing, to spend time with my grandkids and family and friends, which over the last 10 years has been a little bit short of supply. So Ross, do you want to say anything else to that or... Ross Bhappu: Well, again, I'd just reiterate that Mark is going to be on a 2-year contract going forward, and I fully intend to utilize his expertise. He brings such an incredible wealth of knowledge. But look, the company is set up for just incredible success, incredible continued growth. To Mark's point, we have a lot of exciting things on our plate right now. And yes, excited for the future of this company. Mark Chalmers: Thank you everybody. Operator: This concludes today's call. Thank you for attending. You may now disconnect and have a wonderful rest of your day.
Operator: Hello, everyone, and thank you for joining the PharmaMar Full Year Results 2025. My name is Gabriel, and I will be coordinating your call today. [Operator Instructions] I will now hand over to your host, José Luis Moreno, Head of Capital Markets and Investor Relations. Please go ahead. José Martinez-Losa: Thank you, Gabriel, and good morning to everyone, and thank you for joining us for today's PharmaMar Earnings Conference Call to discuss our 2025 Financial Results. On the call with me today are María Luisa de Francia, Chief Financial Officer; Luis Mora, Managing Director of PharmaMar; and Pascal Besman, the Senior Vice President of Strategic Development. After our comments, we'll open the floor for your questions. And before we begin, please note that certain statements made during this call may constitute forward-looking statements, and these statements are based on current expectations, and actual results might differ materially from those projected. A full safe harbor statement is available in the corporate presentation on our website and together with the press release and the results report issued this morning. We undertake no obligation to update these statements, except as required by the applicable law. All right. Well, I'm pleased to say that 2025 was a very strong year for the company with clear progress, both strategically and financially. Strategically, a key milestone in 2025 was the U.S. approval of Zepzelca as first-line maintenance therapy in October. And this, of course, represents an important step for patients and a meaningful catalyst for the business. Financially, we delivered very strong -- very solid performance. Revenues grew 27% year-on-year, reflecting strong execution and the increased scale of our business. Our top line growth translated into a significant step in profitability with EBITDA up by roughly 5x versus '24 and net income up 187% year-on-year. Importantly, we achieved these results ahead of the expected European approval for Zepzelca, which is granted, it should provide an additional tailwind to revenues and further reinforce our growth trajectory. And with that, I will hand over to María Luisa to walk you through the financials in more detail. And then Luis Mora will update you on our development plans for the years ahead. María Luisa? María de Francia Caballero: Thank you, José Luis. Good morning, and thank you all for joining us in the 2025 results conference call. Regarding the financial statements for the year just ended, we would like to highlight the following points. First, a substantial increase in revenue from all of the company's sources of income, sales plus 20%, royalties plus 4% and licensing revenues 66%. We expect this trend to continue in 2026 with growth in sales due to the potential approval of Zepzelca for Europe and also growth in royalties due to the approval of Zepzelca as a first-line maintenance treatment last October, which will increase sales for our partners in the U.S. in 2026. Another point is the maintenance of R&D expenditure at the same level as last year and in line with our expectations for next year with the projects we are involved in, which Luis Mora will detail below. We had also a slight increase in operating expenses, for example, in commercial expenses, where activities have been carried out to prepare for the eventual launch of Zepzelca in Europe in 2026. This increase has been -- this increase in expenses -- in operating expenses has been partially netted out by the European grants obtained its first the Sylentis project. All the above has led to EBITDA of EUR 68 million, approximately 5x that of the previous year, as José said before, and to a net profit of EUR 75 million. Finally, and also noteworthy is the generation of operating cash flow amounting to EUR 53 million. This has enabled us to close the year with cash and financial investment of EUR 168 million, while debt remains at similar levels to 2024. This financial situation enabled us to continue with our ongoing projects without any pressure as Luis Mora is going to explain right now, and I pass the floor to Luis Mora. Luis Capitán: Okay. Thank you, María Luisa. 2025 has been a great year for PharmaMar with significant milestones achieved for both patients and the company. We obtained the approval in the United States and Switzerland for Zepzelca in first-line maintenance non-small cell lung cancer. The compound was licensed to Merck for Japan and both the pivotal trials, LAGOON and SaLuDo trials continued successful according to schedule. We also submitted the registration dossier for Zepzelca in Europe for first-line maintenance non-small cell lung cancer and the compounds P54 and PM534 are continuing day-to-day development. The total revenue as María Luisa described it has grown by 27%. I would like to highlight the growth of Zepzelca in Switzerland and especially in France under the early use model with a 31% increase. This clearly demonstrates that Zepzelca is changing the treatment paradigm for the patients. I also want to highlight to increase Yondelis raw material sales to our partners with a 20% growth compared with '24 as well as the growth in Yondelis royalties in the U.S.A., which have more than doubled compared with 2024. This means that Yondelis continues to grow, being considered a standard treatment for soft tissue sarcoma. In Europe, where there are already 6 approved generic version of Yondelis, the unit sales have grown by approximately 4% compared with '24. This help us to introduce in the future lurbinectedin in leiomyosarcoma in first-line treatment. Regarding Zepzelca in the United States, the royalties have decreased by 12% compared with '24 for 2 reasons. One is the exchange rate Euro-U.S. dollar, which has had a negative impact 7.5% and another to enter a new competitor into the market. However, in this last quarter, we have seen a significant change that we expect that will continue to grow in 2026 with the approval of [indiscernible] in first-line small cell lung cancer maintenance therapy. Finally, looking ahead to the next 12 months, important milestones are on the horizon that will be transformative for the company. The European registration dossier for Zepzelca for first-line maintenance non-small cell lung cancer is currently under evaluation by EMA, and we expect the opinion likely in the first quarter of this year. If this is the case and given the European Commission time lines, we could begin marketing the product in some European countries in the second half of this year. In fact, our entire marketing, sales, market access, medical affairs, logistics team is working intensively on this. We expect it to grow in commercial expenditure in 30% over the next [ 2 ] years. The LAGOON trial for second-line treatment non-small cell lung cancer is expected the top line results in the second half of this year. If the results are positive in either arm where Zepzelca is administrated either as a single agent or in combination with irinotecan. It will lead to another registration dossier likely in the second half of this year for the second line, and this is the objective of the company to any patient with small cell lung cancer will have the opportunity to take lurbinectedin in first on the second line. The SaLuDo trial, which compares Zepzelca plus high-dose doxorubicin, Zepzelca plus low-dose doxorubicin against doxorubicin alone is expected to complete enrollment in the first half of this year ahead of the schedule. We expect the results in the first half of '27, and if positive, they will lead another registration dossier in 2027 with potential approval in '28. The other 2 products we have in the clinical development pipeline, PM54 has already reached the recommended dose in both infusion regimens included in the separated Phase I trials, and we expect it to show the data in the next ESMO Congress in Madrid in October as we have observed very manageable safety and promising efficacy. This encourages us to begin a very ambitious plan in 2026 with expansion as a single agent for different tumor types as well as initiating combination trial with another chemotherapy agent and immunotherapy. In fact, the FDA already approved the new IND for this combination trial with immunotherapy at the end of 2025. Similarly, PM534 is in dose escalation in 2 different Phase I trials with 2 different institution regimens, and we expect to begin expanding 1 of 2 regimens in different tumor types in the second half of this year. In summary, '25, we executed as planned and '26 will be a transformative year for the company with significant milestones, both commercially and in the development for our compounds. Now I pass across to [indiscernible] Thank you. José Martinez-Losa: Thank you, Luis. And well, with this, we conclude our speech today, and we open the floor to questions. Gabriel? Operator: [Operator Instructions] Our first question is from Joseph Hedden from Rx Securities. Joseph Hedden: It's been the first quarter since Zepzelca's label was expanded for first-line use. So 90 million sales in the U.S. Can you just tell us how that compares to your internal expectations? And perhaps any feedback that you've received from U.S. docs or any kind of usage metrics other than the sales that you may have? Pascal Besman: All right Joe, Pascal here. We're not going to tell you what our projections are and Jazz doesn't give you what their projections are. So unfortunately, not much that I can help you with. And in terms of inventory levels that you're asking, that's not something that we make public other than if there was a situation where there was a problem with inventory, then we would feel that would be material. But obviously, we were expecting to see an uptake after the October FDA approval in the first-line maintenance setting. That happened with a 13% quarter-over-quarter bump, which we're pleased to see. And we expect, personally, we as PharmaMar expect that to continue, as Jazz indicated on their call earlier in the week. Joseph Hedden: Okay. Fair enough. And then perhaps if I could have one on Yondelis. It was interesting to see that U.S. sales climbing again there after the NCCN inclusion. Do you expect that trend to continue through this year of having a much better year with royalties coming from J&J sales there? Luis Capitán: Yes. We expect that continues to grow if you compare '26 with '25. In fact, from the inclusion in NCCN guidelines, the combination of Yondelis plus doxorubicin in first-line leiomyosarcoma, the use of Yondelis is increasing dramatically, and we expect that to continue to grow in 2026. Joseph Hedden: Okay. And then perhaps if you could just reconfirm your expectations for generic entry for Yondelis in the U.S.? Luis Capitán: I don't know. This is not -- remember, it's J&J territory, it's not PharmaMar territory, then we don't know where they will potentially enter the generics. So we don't know. I can advise you not -- in principle, not in 2026. Operator: Our next question is from [ Rowan Ropali ] from Santander. Unknown Analyst: Can you hear me? Luis Capitán: Yes. Unknown Analyst: Okay. Perfect. So I have a few questions. The first one is on the potential approval of Zepzelca in the first-line maintenance setting in Europe. Are there any updates on the pricing negotiation process that we should be aware of? And have you already initiated discussions with the relevant national authorities in key European markets? The second one was concerning the M&A and in-licensing. How is the process progressing at this stage? So should we expect any concrete developments or announcements this year? And that would be everything. Luis Capitán: Okay. Thank you very much. As I said in my speech minutes ago, we expected accordingly the calendar from the EMA opinion at the end of this quarter for first-line small cell lung cancer maintenance therapy. That is we expected. And then accordingly, the European Commission time lines, they have 2 months after the EMA opinion to send us the authorization for commercialization in this territory. This is the time line. Regarding the pricing, the procedure in all the European countries, you can start the submission dossier for pricing and not before the EMA opinion because at the end of the day, you negotiate the pricing and reimbursement from one particular label. And the label is included in the EMA opinion, then you can negotiate before you have this label, okay? But in fact, this is all the PharmaMar team regarding this matter as working more than 1 year ago. Then in order to be ready, the dossier for submission immediately after the EMA opinion. And regarding the licensing here, okay, we can't disclose the [indiscernible] and the process. We have some options in the table. And when we will arrive some type of agreement, we will disclose. Operator: We will now move on to text questions. So I will hand over to the management team. Please go ahead. José Martinez-Losa: Thank you. Now we have some written questions that we received. And we can start with these ones about Zepzelca. The first one says, now that the FDA has approved lurbinectedin as a first-line maintenance therapy for small cell lung cancer, could we expect significant increase in U.S. royalties by 2026? Luis Capitán: Yes, that is what we expected in the second line, you compare with the first-line maintenance therapy. First of all, the number of cycles in the IMforte trial, if we compare with the basket trial, is quite a double and it's about 30% of the patients potentially in this disease. Then we expect the royalties will be growing across 2026. José Martinez-Losa: We have another question about some regulatory issues also regarding with Zepzelca. Could you please confirm whether IMforte has been officially approved in Uruguay and Ecuador as mentioned by [ Adrian ]. Luis Capitán: Yes, Uruguay was approved in the last quarter 2025 and Ecuador in this year, January. José Martinez-Losa: We have another question also in regulatory issues. As the dossier for IMforte being submitted in the Japanese authorities for approval? Luis Capitán: Well, I want to remember it's not about territory. We license the drug to Merck, and this is the Merck task. And when Merck decide to disclosed or not, this process is a Merck decision. It's not PharmaMar decision. José Martinez-Losa: Okay. More about pricing. When do you anticipate receiving reimbursement for IMforte in Switzerland? Luis Capitán: Well, we are in the negotiation process actively. This is a normal process. We expected in the middle of the year, finalize this process in order to have the price and reimbursement for first-line maintenance therapy. But I want to remind you that from the commercial point of view, we are already selling in first line, but we're waiting for final pricing and reimbursement. José Martinez-Losa: So in that regard, there's another question of the same person that he asked about if you could say anything about the pricing that we have in Switzerland for [indiscernible]. Luis Capitán: No, it's in the negotiation process. You can't disclose that. José Martinez-Losa: Okay. All right. We have other questions about other molecules in the pipeline, PM54. So the FDA has approved IND for the new Phase I/II of PM54 with immunotherapy since the trial targets multiple tumor indications, could we expect to include several immunotherapies as well? Luis Capitán: Well, we are in the decision process when we will start the trial, we will announce. We have several options like in the synergistic effect is already demonstrated with this type of compounds. We have several options, and we will start the trial, we will disclose, okay? Could be atezolizumab, pembrolizumab, durvalumab, et cetera, et cetera. José Martinez-Losa: In this regard, there are also questions about what's the time frame when we could start. You've mentioned that we'll start this year. What can we expect about starting point and endpoint? Luis Capitán: Yes, we are already prepared every seeing the protocol. We already contacted with the centers to start the trial, and we expected to start the trial in the first half of this year. José Martinez-Losa: All right. We have a question about Sylentis. And if you could provide any update on SYL1801 and specifically, is the Phase Ib trial expected to start surely. Luis Capitán: Well, when the SYL1801 was disclosed the data, the team are still analyzing the data. They have worked so hard in the preclinical setting in order to be focused in the next trials in some subtype of DCC. And when we will start the trial, we will announce. We are working on that. José Martinez-Losa: Thank you. We're receiving more questions. Here's another one. R&D investment decreased from EUR 103 million to EUR 95 million this year. Does this reflect a natural tailing of late-stage trial costs? Or is a strategic decision to be more selective in early-stage compounds like PM534, PM54? Luis Capitán: No, this is a normal one. When you have several Phase III ongoing or you finalize the Phase III, the investment in R&D are down, in fact, given the Phase III ongoing. But according to María Luisa's speech, we expect the similar numbers in 2023 than 2025, but this is the major reason. José Martinez-Losa: Okay. We have another one about Zepzelca. With the FDA approval of Zepzelca in combination with atezolizumab, how does management expect this change in treatment paradigm to impact the long-term peak sales estimates compared to the previous second-line monotherapy use? Pascal Besman: Well, to echo what Luis said recently, maybe I'll add a little bit more. Out of 100 patients who are diagnosed with extensive stage small cell lung cancer, about 95% are treated in first-line induction. About 75% have been seen to be treated in first-line maintenance, about 50% to 60% in second line. So right away, you can see by having the first-line maintenance label, there are more patients in the pool. In addition, as Luis also mentioned, the number of cycles that are seen on a mean or median basis is about double from 4 to 8, moving from second line to first line. And a third key point is to consider market share between atezolizumab and durvalumab, which are both approved insofar that these 2 drugs are widely seen as Coke and Pepsi, especially in small cell interchangeable duopoly. And therefore, if atezo plus lurbinectedin is better than atezo, it's seen that atezo lurbinectedin is better than durva. In addition to that, in terms of market share potential, atezolizumab has a version that's been approved in the U.S., U.K. and Europe and Switzerland of a subcutaneous, whereas durvalumab does not and will not have one. So with all that said and with the caveat that we're not making predictions that Jazz hasn't themselves made, we expect sales to be improved starting this year as they were in the last quarter after the first -- the approval in October. José Martinez-Losa: Thank you, Pascal. We have received -- talking about Jazz, we have received some other questions about the patent situation in the U.S. and we cannot answer these questions. I guess these are more questions for our partner, Jazz, who's doing a great job in the U.S. The final question here says the company spent EUR 34 million on share buybacks in '25. Given the cash position, how is management balancing further buybacks against potential M&A or licensing opportunities to diversify the oncology portfolio? I'll take this one. We do not -- I mean, from the company, we do not see either doing one or another. I mean the fact that we're doing share buybacks program does not mean that we cannot consider, as Luis has mentioned now, in-license deals or any other deals. So we could do both, and we're happy to look at everything. Talking about share buybacks, if we're going to do further buybacks, as you know, we decide that on a yearly basis, same as the dividend policy. I mean, from our perspective, from the company perspective, our first priority is investment in R&D. And once we've covered all that and we have room for more stuff like dividend increase or the share buyback, then we decide on the year. But again, the fact that we do additional share buybacks, if we do it or whatever, does not mean that we're not going to consider in-license agreements or M&A or any other deal. And I think these are all questions that we received in written. So in summary, just to wrap up, our 2025 results demonstrate robust growth driven by rising Zepzelca revenues and a meaningful advance across our clinical development portfolio. And in addition, we expect a strong flow of important news in the near term. And with this, we conclude our call today, and we would like to thank you all for joining us and Gabriel. Operator: Thank you. This concludes today's PharmaMar Full Year Results 2025. Thank you for joining. You may now disconnect your lines.
Daniel Waid Marshall: Good evening. I'm Daniel Marshall, Senior Manager of Communications and Ownership. I'm joined by Jason Kelly, our Co-Founder and CEO; and Steve Coen, our CFO. Thanks, as always, for joining us. We're looking forward to updating you on our progress. As a reminder, during the presentation today, we will be making forward-looking statements, which involve risks and uncertainties. Please refer to our filings with the SEC to learn more about these risks and uncertainties, including our most recent 10-K. Today, in addition to updating you on the quarter results, we're going to provide insight into the autonomous lab, how we believe it will transform biotechnology and how we plan to commercialize autonomous labs going forward. As usual, we'll end with a Q&A session, and I'll take questions from analysts, investors and the public. You can submit those questions to us in advance via X, #ginkgoresults or through e-mail, investors@ginkgobioworks.com. All right. Over to you, Jason. Jason Kelly: All right. Thanks, Daniel. So Q4 was really a breakout quarter for us in sort of defining and really leading in the category of autonomous labs. And so you're going to hear a lot from me about that in the future. But I want to start by saying our mission remains to make biology easier to engineer. But in 2026, the technological focus for the company and really the business focus is going to drill down on investing to win in this category of autonomous labs. And this is really a part of what I see as an emerging movement around robotics and AI and autonomy that's coming to a lot of sectors in the economy. And I think we happen to be in a sweet spot in bringing that into really a high-value area around laboratory research that there's an increasing amount of excitement about, and I intend to win that. All right. So how are we going to do it in '26? So first, we want to focus our investment in our platform into that area primarily. And I'll talk in a minute, but we mentioned in our recent earnings announcement just now that we'll be divesting our Biosecurity business. That allows me to focus Ginkgo's investment and our dollars really into autonomous labs and bring in other new investors to invest alongside us into Biosecurity. So that's focused in investment. Second, internal to the company, we want to demonstrate the capabilities of our large autonomous lab here in Boston. And the way we're going to do that is we're going to start to systematically decommission our lab benches, our walk-up automation, our work cells, the way that we've traditionally done our R&D services over the last 10 years and move more and more of that work on to a single large autonomous lab that's software controlled here in Boston. And the reason I want to do that is that serves as a demonstration to the Mercks and the Takedas and the Pfizers and all the folks who have huge investments in traditional manual laboratories that it is possible to take open-ended research and run it through a large autonomous laboratory system. And so I think that's really fundamentally the most important work we're doing this year. And then finally, I want to book sales of autonomous labs. So you're going to hear in one of our big announcements from last quarter that we did a $47 million deal with Pacific Northwest National Labs. So I want to sell autonomous labs to National labs like that DOE deal, but I also want to sell them to biopharma. I want to sell them to research universities. And so that sort of bookings and landing new deals is the other thing we want to do in 2026 in this direction. I do want to take a minute and talk about that Biosecurity divestiture. So you might remember, over the last 5 years, we've invested a ton of energy into this space. This really came about starting during COVID, because we honestly just saw a need. COVID was sort of a global scale biological disaster, and we felt we should lean in and help where we could. The niche that we found in that moment was doing really monitoring for -- so not diagnostic testing, but rather monitoring testing in order to reopen congregate areas and in particular, reopening schools here in the United States. So I'm really proud of this is a decent sized business for us. But really importantly, we helped open 5,000 schools nationwide. And this is one of these like really political topics. And I think what's neat about technologies, you can sometimes find a third way between and one end at the time, which was hey, we really should be closing the school, [ standard ] for teachers. We care about spreading disease. And then on the other side, hey, this is hurting kids, and we need to open the schools and everyone should just go back and whatever comes comes. And there was a third way, which was why don't we open the schools and have persistent monitoring so that if an outbreak starts to happen in a school, you can send 2 or 3 kids home and stop it. And that's exactly what we want to build at a nationwide level and what's continued after COVID in our monitoring at airports that we do in partnership with the CDC, looking for viruses in the wastewater of planes and other inputs, both here and internationally in places like Doha and Qatar, at the airport there. And so that sort of identify it, put it out, put that fire out before it spreads is something that's needed nationally and globally for the U.S. to be secure. The other thing that's been happened in that period of time, you might have noticed, companies like Anduril, Palantir, Shyam Sankar, our Board Chair, is the CTO of Palantir. This sort of defense tech sector really exploded over the last 5 years. And so there's been increasing interest from pure-play investors in the defense space who want to see next-generation sort of biodefense primes. So again, these are companies that would be focused on serving the government and others on biodefense needs directly. That's very exciting because it means there's lots of new capital interested in that. But to my point earlier, where I want Ginkgo to focus very clearly in 2026 is on autonomous labs. And so one of the great things that happened was we got a lot of inbound from these types of investors, and we saw an opportunity to say, all right, why don't we share in the upside of biosecurity by taking that business unit in the company, spinning it off, taking it private, bringing in investment from some of these great investors. Ginkgo will still hold a minority position in that. So we get a piece of the upside of what we've built, but the investment needed to build that biosecurity prime doesn't need to come from the $430 million, as I'll mention in a second that we had on our books at the end of the year. We can focus that into autonomous Labs. So I think this is a win-win all around. I also think bringing in these types of great folks that we have coming into the private entity are really going to open doors with the defense sector and so on and having it be a sole branded biodefense company, it's the right time. So I'm super excited about this. I think it's -- I want to give again credit to the biosecurity team at Ginkgo, who did absolutely amazing work through Ginkgo -- sorry, through COVID and now has a real opportunity here, I think, to build a generational business coming up in the defense sector. Okay. Last point I want to make before I hand it to Steve. So again, I think tremendous work over the last 2 years. We sorted 2 things at the same time. We dramatically cut back spending as we saw sort of a downturn in the biotech sector and a lot of our customers pulled back on outsourced large R&D projects, which was really our bread and butter here at the company over the years. Because of that, we drew down on our spending and pretty substantially. So in fiscal year '24, we were at $383 million and just last year, $171 million. So a 55% reduction in our annual cash burn. That sets us up very nicely. You're going to hear from Steve on our target for cash burn for this year, even with the investment, our focused investment in autonomous labs and moving that investment in biosecurity into a separate private entity, we're actually able to do better than what we spent in '25. But that, I think for investors is important to understand where we're at from a cash position and how we've done a really nice job getting cash spending under control as we continue to make investments and get in the right place at the right time with autonomous labs. All right. So I'm going to hand it to Steve to dive in a little more on the financials. Steven Coen: Thanks, Jason. I'll start with the Cell Engineering business. Cell Engineering revenue was $26 million in the fourth quarter of 2025, down 26% compared to the fourth quarter of 2024. In the fourth quarter of 2025, we supported a total of 109 revenue-generating programs. This represents a 4% decrease year-over-year, primarily attributed to ongoing program rationalization as part of our restructuring activities. Turning to the next slide. On a full year basis, Cell Engineering revenue was $133 million in 2025 as compared to $174 million in 2024. As previously disclosed, revenue in the first quarter of 2025 includes $7.5 million of noncash revenue from a release of deferred revenue relating to the mutual termination of the BiomEdit agreement. In the third quarter of 2024, Cell Engineering revenue included $45 million of noncash revenue from a release of deferred revenue relating to the mutual termination of the Motif FoodWorks agreement. Excluding these impacts, Cell Engineering revenue was $125 million in 2025 and $129 million in 2024. This decrease was primarily driven by customer program rationalization related to the restructuring, as all discussed previously. The Biosecurity business generated $7 million of revenue in the fourth quarter of 2025 and $37 million of revenue in the full year 2025. It is important to note that our net loss includes a number of noncash and other nonrecurring items as detailed more fully in our financial statements. Because of these noncash and other nonrecurring items, we believe adjusted EBITDA is a more indicative measure of our profitability. A full reconciliation between segment operating loss, adjusted EBITDA and GAAP net loss can be found in the appendix. Cell Engineering R&D expense decreased 44% from $50 million in the fourth quarter of 2024 to $28 million in the fourth quarter of 2025. For the full year 2025, Cell Engineering R&D expense decreased 42% from $272 million in 2024 to $159 million in 2025. As reported last quarter, the full year 2025 period, R&D expenses included a $21 million shortfall obligation related to our multiyear strategic cloud and AI partnership with Google Cloud. In October 2025, we amended and reset the annual commitments for future years and settled the shortfall obligation for $14 million. Resetting the commitment reduced our future minimum commitments by more than $100 million, compared to the original terms and extended the commitment term from 3 to 6 years. Cell Engineering G&A expense decreased 40% from $20 million in the fourth quarter of 2024 to $12 million in the fourth quarter of 2025. For the full year, Cell Engineering R&D -- I'm sorry, G&A expense decreased 51% from $115 million in 2024 to $56 million in 2025. These decreases were all driven by our restructuring efforts. Cell Engineering segment operating loss was $17 million in the fourth quarter of 2025 compared to a loss of $38 million in the 2024 period. For the full year 2025, Cell Engineering segment operating loss was $96 million compared to a loss of $219 million in 2024. The lower loss was directly related to our restructuring efforts, while partially impacted by the matters previously mentioned. The Biosecurity segment operating loss improved 60% in the fourth quarter of 2025 compared to the 2024 period. And the Biosecurity segment operating loss improved 38% in the full year 2025 compared to 2024. Moving further down the page, you'll note that total adjusted EBITDA in the fourth quarter of 2025 was negative $36 million, which was down from negative $57 million in the fourth quarter of 2024. Total adjusted EBITDA for the full year 2025 was negative $167 million, which was down from negative $293 million in 2024. Again, the period-over-period declines can be attributed to our restructuring efforts, while partially impacted by the matters previously mentioned. Turning to the next slide. We show adjusted EBITDA at the segment level to show the relative profitability of our segments. The principal differences between segment operating loss and total adjusted EBITDA relates to the carrying cost of excess lease space, which was $54 million in 2025, and this carrying cost was $15 million in Q4. The cost represents the base rent and other charges related to leased space, which we are not occupying net of sublease income. This is a cash operating cost that is not related to driving revenue right now and can be potentially mitigated through subleasing. And finally, turning to cash burn. Cash burn in the fourth quarter of 2025 was $47 million, down from $55 million in the fourth quarter of 2024, a 15% decrease. Cash burn for the full year 2025 was $171 million, down from $383 million in 2024, a 55% decrease. Cash burn does not include the proceeds from the ATM issuances or certain cash restrictions. The significant decrease in cash burn was a direct result of the restructuring. Turning to guidance. In terms of the outlook for 2026, as Jason has mentioned and we will go into further, 2026 is about continuing to be cost efficient while investing in our AI robotics and software to bring autonomous labs to our bioscience customers, including the build-out of our frontier autonomous lab in Boston. We have turned the page on our pure focus on restructuring actions for the last 2 years to focus this year not only on cost efficiency, but on investing in what we see as our opportunities while continuing to provide our customers the advanced services they have come to expect. We will also close our transaction for the Biosecurity business as announced and disclosed. For these reasons, in 2026, we will not be providing revenue guidance as we believe cash burn best reflects our continuing services and tools and further investments in autonomous labs. For 2026, our overall expected cash burn guidance is to be in the range of $125 million to $150 million. This range reflects a firm balance amongst cost efficiency, continuing services and tools and the further investments we are making. In conclusion, we are pleased with the continued improvements in cash burn and cost reductions in 2025 and are excited for what will come in 2026. And with that, I'll hand it back over to you, Jason. Jason Kelly: Thanks, Steve. Okay. So before I jump into my section, I want to spend a minute talking a little bit more about what Steve was talking about there at the end in terms of our guidance for the year, how we're going to be guiding on cash burn rather than on revenues and sort of why we're doing that. And so this is in line with my theme for this earnings call, which is Ginkgo's focus. So one thing is we want to be focusing on investing in the right things. And so we're -- I believe, again, it's important for our investors in Ginkgo to understand what we're doing with our cash supply, how fast that's being spent down, what we're spending it on. And again, the highlight here is we are spending it very deliberately on autonomous Labs, and we're doing it in a controlled way. We're hopefully spending substantially less than we spent in the last year and our relative position there to our cash file, it looks pretty good. So from my standpoint, we have a solid margin of safety as we're investing to lead in this area of autonomous labs going forward. But the second thing we need to keep focus is our attention within the company. And so the majority of our revenue today does come from our R&D services. We love serving those customers. I'm hopeful we grow those services. But as I mentioned earlier, the focus of the team in 2026 is not on hitting a short-term revenue target around a service run on top of our autonomous lab to make sure we hit a target or trying to predict exactly what that revenue is going to be over the next 12 months. What I want their focus to be on is decommissioning all of the different labs here at Ginkgo and moving that work onto our autonomous lab so that we can show all of our customers that this works, that autonomous labs can be a true replacement for the humongous spending they have across their manual laboratories in both biotech and academic science. That's the main event. And I felt that, again, continuing a focus on revenue targets and things like that was going to take people's eye off the ball. And I also think it sort of takes away from a long-term orientation, which I think is going to be critical for Ginkgo. So that's why we made that decision. Happy to talk more about that in questions or otherwise, but just so you know where it's coming from. All right. Okay. So as I said, our mission is to make biology easier to engineer. We had 3 really amazing things happened last quarter. So I was going to run through them. So first, we had an announcement of a project we've been working on for the last 6 months with OpenAI. This is their blog post about it, where we talked about connecting GPT-5 as sort of an AI scientist, so doing the work of a scientist designing experiments, except they would submit those experiments to our autonomous lab here in Boston. The lab would conduct the work, send that data back to GPT-5, and then over the course of 6 rounds of doing that, we were able to beat state-of-the-art on a pretty complicated sort of scientific -- experimental scientific challenge in cell-free protein synthesis by 40%. What I think is cool about this is, number one, the sort of views on this X post where they announced Codex on the same day, about equal to what they saw with Codex, right? So I think there is really a lot of excitement right now in how reasoning models can enter the physical world, all right? I'm going to talk in a minute about that in the area of transportation where like Waymo's have brought them into the physical world. But I think we really stand to be the ones to bring AI into the physical world of the lab. We are absolutely in the pole position on that. So I'll talk more about that in a second. Second, we were -- I had the absolute privilege to do a press conference with the Department of Energy Secretary, Wright up at Pacific Northwest National Labs in Washington, where we announced in December that the first 18 robots that we were installing for PNNL as part of the Genesis project. This is a new project out of the White House to bring AI into science and AI into the national labs in particular. But alongside that ribbon cutting and the Secretary got to sign one of our system, you can see him signing it there. We also announced a new $47 million contract with the Department of Energy to build a 97 robot, 97 RAC autonomous lab at that same site in PNNL in the future. So really exciting, and I think this showcases that autonomous labs are of interest to the federal government, which is the other big pool of research spending. So a place like the NIH is spending $40 billion a year on lab work, frankly. And that's pretty close to what you're seeing in the pharma companies as well. So those are your sort of big pools of spending. And so I think it's important to see it coming from the federal government as well as from pharma companies. Last but not least, we had SLAS. This is the Society for Laboratory Automation and Screening Conference. I was just at the conference center. It's about 5 minutes away from here, very fortunately for us at Ginkgo. So we hosted tours of Nebula, our now more than 50 rack RAC lab set up here in Boston. We had 590 people come through, and it was very eye-opening to see what a difference it made for people to see a lab like this actually doing real science during the day, right, like people coming in and just seeing what our scientists were doing with it. It was eye-opening for them. And so I think this makes it more and more clear to me that we're making the right choice with this focus in '26 on really driving the further expansion of the system. We're going to go from 50 RACs to 100 RACs by H1. That's the sort of stuff I want you to be following. How quickly are we able to expand that? How quickly are we able to add more of our work onto that system because that's exactly what our pharma and national lab and university research leaders are going to be looking at to see if they want to buy a system like this. Okay. All right. So now I'm going to do a deep dive into autonomous labs because, again, I think this is really our focus, certainly in '26, and I think the technological foundation for the company over the next decade. So I'm going to talk about [indiscernible], what is an autonomous lab? Why is it going to transform biotechnology? Secondly, what does it look like very specifically? Like what do you need to have the lab be able to do in order to deliver biotech R&D? And then finally, how are we going to bring it to market? And the 2 ways we're doing that is, one, we'll build one for you like we did at PNNL. Two, the beautiful lab that you just saw pictures of, we're able to run that sort of in a cloud service model through our R&D services and new services we're adding coming up. All right. Okay. So here's the analogy I like to give. I talked -- give a talk at SLAS, and I [ did talked to ] this with a lot of people. I think it's a good one, all right? So I'm going to start in the transportation industry to help explain what I consider autonomy to be. So if you look at this chart, on the y-axis, you have the amount of automation, all right? And then on the x-axis, you have the flexibility of the request from a user to that automation that it's willing to tolerate. So in transportation, if you have a low amount of request flexibility and a high amount of automation, that's a subway, right? You sit down in the back of a subway and it just takes you away, right? You're not having to do anything. It is fully automated. But you better want to go to one of the stops on that subway line because it's not going to take you to your house or the grocery store or just wherever you want to go, it's on rails, all right? So it's very inflexible. Now low automation, high amount of request flexibility. That's a car, right? You put your hands on the wheel, your feet on the pedals and you can drive it straight to your front door or to that grocery store, right? And those 2 poles is basically what the transportation industry has looked like for the last 100 years. Forward slide, unless you've been in San Francisco over the last 4 or 5 years and you see these driving around. So this is a Waymo. You sit in the back seat, just like sitting on a subway seat, you do absolutely nothing. It takes you away, except unlike the subway, it will take you right to your house, right to that grocery store. So it has the flexibility of a car, but the automation of a subway. And that's such a surprising thing that we're giving it a new word. We're calling it autonomy, all right? And I think you will see this replicate. When you're seeing all this interest in like humanoid robotics and all this like, there's a huge amount of investment going into it right now. What we're trying -- what's happening on a broad investor level is the industrial revolution was essentially the application of automation and systematization to all of the tasks that were like low flexibility required, like back to the loom, right? Everything that wasn't that required a lot of flexibility, we kept manual. And what's happening now is the AI models are getting good enough, the software is getting good enough to allow automation to be applied to flexible things, and we're going to see how far we can push that. And the more you can push into flexibility, the bigger the opportunity there is for robotics. And so we're going to drive that change in labs. Now last point, this is the kicker. If you were to look at the split between miles traveled on trains and subways versus cars and trucks in the United States anyway, it's 99% cars and trucks. because you need that flexibility to go places, right? It's a requirement. It's not like we didn't know about rails. They just did not tolerate the flexibility needed. All right. So let's look in the lab. Low amount of flexibility, high amount of automation, so up where that subway was on the last slide. We do have that actually. We call it automation work cell. And you can buy this from companies like [ Hirose Bio ] and Biosero and Thermo Fisher. And basically, you tell them what protocol you want and they build you a work cell that will run that protocol for you. And it's great. It's totally end-to-end. There's not a person in the middle. It's fully automated. It's at top of that chart, but you better be asking for the same protocol that you asked it to do yesterday because it cannot handle variety in the request from the scientists that are using it. Drop down that automation line and go over on request flexibility. So not automated, but very, very flexible. That is the lab bench. And we've had it for 100-plus years. It lets you do whatever experiment you want and the scientists, the human scientist in the middle is what's providing the flexibility, all right? And that's what the system has looked like. We've had work cell automation for 40-plus years now that we've been kind of those 2 poles for the last 40 years. And much like research -- or sorry, much like transportation, I had a couple of heads of R&D and 2 pharma companies over my house during SLAS for dinner. And I asked the question, what's your spend between work cells and lab benches? And they said, actually, 99% on the lab benches. But let's call it more than 95% of the research budget is going to the lab bench. And it's for the same reason that 99% goes to the cars and trucks. You need the flexibility to do science. And you can tell this if you walk around at Merck or Pfizer, Takeda and you walk the hallways, you will not see robots. You will see lab bench after lab bench with benchtop equipment on top of it and scientists basically being the human glue that connects all that different equipment and manages to do liquid handling by hand with pipettes and all the things that they do. That is the overwhelming majority of research spending and pharma is doing, again, $40 billion to $60 billion of not development, but research spending every year through that platform. All right? What are we trying to build? We're trying to build that Waymo. What Ginkgo believes we have when it comes to our RAC hardware and then very importantly, the software that runs it is an autonomous lab. It is the flexibility of the lab bench, but the automation of the work cell. And that is, we believe, fundamentally different. It's a much bigger market than the work cell market. The work cell market, again, just like the subway is very limited in terms of the amount of research dollars flowing to it. And so we want to go right at that autonomous lab market. The key technical question, the next slide is how do you get both high automation and high flexibility without having those human hands in the lab, right? And so that's the next thing I want to talk about. What do we actually have to pull off technically to make this a reality? What are people so impressed with when they come visit our lab here in Boston and see what we've built. All right. Also, I don't know if you've noticed, if you follow me on LinkedIn, you've seen I've become a bit of an influencer lately. So this is what it looks like if you're standing at a lab bench, doing your work by hand. And the real major activities is, number one, you're serving as a manual liquid handler. In other words, you are moving small volumes very precisely between different liquid containers to set up an experiment with the right materials in it. Second, you're moving samples, in other words, that liquid you just set up in a plastic tube or whatever it might be in to different devices across the lab. So you are moving samples as the protocol demands across maybe 3, maybe 10 different devices depending on the complexity of the protocol you're doing. And then finally, every time that sample ends up on a device, all those devices, these are all like complicated long-tail scientific devices. They have some settings that you need to set in order to have it do the thing you want it to do. And so you, as a scientist are the one putting those settings in, and you're either doing that with a touchscreen or with sort of third-party software. Okay. All right. So to replace traditional labs, an autonomous lab has to do those same things I just said, that's 1, 2 and 3, reliable liquid handling, material transport and parameterized control of the device. But very importantly, if you think about what one of those labs at Takeda or Merck looks like, in one floor with a bunch of benches and maybe 20 or 30 scientists using it, you're going to have more than 50 devices around that lab that those scientists are making use of, different ones, different days, different ones as part of different protocols. So you've got to be able to put at least 50 devices into one big setup. The other thing that those scientists are doing, when they -- the first scientist gets in the lab in the morning, they do not close the door behind them, lock it and put up a sign that says "lab in use". No one else can come in, right? It's busy. Lab is busy. But on a work cell, like one of those subway system automations that we have in the lab, that's exactly how it works. Once it's in use, you cannot interject yourself into that process and submit a new job. But in the manual lab, absolutely 10, 20, 30 scientists are all walking around that lab, basically sharing the equipment and avoiding each other's usage of the equipment. So if I'm using something in the morning, you'll use it in the afternoon. But other than that constraint, they have access to all that equipment and they can use it in parallel. And then finally, it's very easy to use the lab bench. You don't have to write software programs and things like that. I won't have as much time to talk about it today. But in the coming earnings call, I'll do a little bit of a deeper dive on our software. But one of the things we're really benefiting from is all this investment in coding agents, things like Codex, from OpenAI and Claude code are now allowing human language to turn into pretty complicated software. We want to turn scientific intent into work that runs on automation without scientists needing to code. I think that is going to be very doable, thankfully. And that's number six. It needs to feel like when I go in the lab every day to do my work, I don't have to sit down and write code. You shouldn't have to do that for the autonomous lab. This is really a difficult set of challenges. Work cells today, do those first 3. They deliver liquids. We have liquid handler automation, companies like Hamilton and Tecan have been around for 25 years or great -- more. They're great. Second, reliable material transport can be done with arms. And third, parameterized control is doable. 4, 5 and 6 are not delivered well by traditional lab automation today, but we do have it working at Ginkgo. All right. The first thing to understand about how to deliver 4, 5 and 6 is that a work cell, in other words, that subway is designed around a protocol. So the first thing one of those companies will ask if you're going to build -- they're going to build an automation system for you is, what's your protocol? Are you doing high-throughput screening? That's one of the most common ones, antibody developability, protein production? What is it you're doing, right? And you say, "Oh, I'm doing this, these are the steps. This is the equipment I need, and this is the throughput". And then they'll design a subway that delivers you to that stop. Autonomous labs are not designed around your workflow, but they're rather designed around the equipment because this is exactly what happens when you're setting up a new manual lab at Takeda or Merck. If you're the person in charge of that lab, you're that kind of group leader, you ask your scientists, what equipment will they need to do their work over the next 5 years in that lab. They don't know for sure what protocols they're going to do, but depending on the type of work they're doing, mammalian work, bacterial work, cancers, whatever, they're going to use different types of equipment. So we oriented the design of our robotics hardware, not around a protocol, but around the device. And so this -- here, you can see our RAC automation carts. Inside each cart is a device. In this case, that's a centerfuge, a 6-axis industrial robotic arm and a piece of MagneMotion track. And that track allows you to deliver a sample between connected RACs. So each one of those RACs, their little tracks connect to each other and you can send samples around and deliver them. If you go to the next slide, we can show a video here of samples moving through our autonomous lab here in Boston. And this is actually -- interestingly, this is one of the protocols from OpenAI, right? And so what you can see as this runs is, we have the sample getting put on to the track. That's a 384 well plate in each well of that plate is a set of conditions that were designed by GPT-5. The plates travel on that MagneMotion track. And in this case, they're delivered to that centrifuge, right? And so the centrifuge is going to spin down that sample. So it just happens to be the first step in this protocol. Now it's going to one of those liquid handling devices. So this is what's called an acoustic liquid handler. It moves liquids with sounds. So one of the things that's great about this is it actually can handle smaller volumes at a greater precision than a scientist could do by hand. So we can move nanoliters of liquids around. As a scientist using a pipette by hand, you're kind of limited to microliters in terms of your ability to be accurate. Now we're going to be adding, in this case, DNA to each one of those wells. So the project we did with OpenAI, a piece of DNA was being added to what's called a cell-free mix of reagents. And the idea is that cell-free mix turns that piece of DNA code into a protein. And the protein level is what we're trying to optimize with OpenAI. We're trying to see, could you change the conditions such that you got higher protein production than any scientist had shown before in the literature. So once that DNA got added, we now shake it up, make sure it's well mixed. And then it's going to end up onto an analytical device in order to basically run the reaction and then measure the levels of protein that are coming out of that particular -- of each well in that 384 well plate. And so to give you a sense for the OpenAI project, each time we did a round with the model, we ran 100 of these 384 well plates, collected all that data, gave it back to the model and then the model was able to design the next round of experiments, okay? So that's what it looks like for a sample to move through the system. At the beginning of that video, you would have seen a quick picture of sort of the data coming in, like the particular designs from OpenAI and then the scheduler. That schedule on that one was just running the one protocol. This is what the scheduler looks like when our people -- scientists at Ginkgo have submitted 30 protocols to the system. And so what you're looking at is each row in this is a different device on the system. And then the X-axis is time. So that orange bar in this case is like now, all right? And what is great is we can basically predict the future, right? We know the system knows exactly what piece of equipment is going to be used for what protocol and each protocol is a different color on this chart. What piece of equipment is going to be used for each protocol in the future. And what the scheduler does is if you showed up at Ginkgo as a scientist and you submitted a new job into this into the -- our autonomous lab, you would say, okay, I'm using the centrifuge for 5 minutes. And then I can wait any -- up to 2 hours before I need to end up on the echo and [indiscernible] you would specify with time windows your protocol. The scheduler will check, could you fit in? And this is very analogous to one of those scientists walking around the manual lab asking their benchmates, Hey, when are you going to be done with the PCR machine? How long -- is it okay if I run the HPLC overnight, here something, do you need to get on it, right? Like having conversations about the availability of equipment, except in this case, it's all computer-controlled and computer scheduled, so we can essentially schedule it perfectly. And so as you add more protocols in, there's a complicated algorithm to handle all this. We are the only people in the world as far as I know that are doing anything close to this scale of variable protocols on a single automated system. And that was pretty well confirmed by wide open eyes during the SLAS tour when I was able to show this off to people. Okay. So we go to the next slide. This is just a different color. So each of those protocols, you can see being submitted by a different user at Ginkgo as well. So that's, I think, actually really interesting where we have not just like a large number of protocols, but also a large number of unique users submitting those protocols. That's also very unique in the world. When you have those work cells, there's an automation engineer or 2 who are sort of in charge of it and everything funnels through them. In the case of our autonomous lab here in Boston, we have tens of scientists submitting protocols every day, different protocols from yesterday that are all scheduled simultaneously. Okay. So hopefully, that next slide, hope that gives you a picture of how we've checked off the sort of 4, 5 and 6 on that list in terms of many pieces of equipment, all in one setup being run simultaneously in parallel, easy enough to use by scientists who aren't automation engineers. Just note that system that's now 50-plus RACs and Ginkgo started off as, I think, 7 or 8. It's very expandable. In fact, on the next slide, after we finished up at SLAS, we were able to bring over the RAC carts that we had at the conference, it was, I think, 7 or 8 and install them all in a day on the system. So the ability to really grow this system is, I think, again, unique when compared to traditional sort of subway style automation. All right. So what's the value prop to customers? There's 3 things, I think, that the -- like a large biopharma or a national lab would get excited about. First, save overhead costs by closing your traditional labs. This is one of the things I'm most excited to do this year with our CRO or kind of research services that we run on -- across all our labs at Ginkgo. As I move more and more of that work onto the autonomous lab, I can shrink the footprint of my labs, which saves me in EHS costs, saves me in rent, saves me in all these different things that you have to carry when you're running these labs. Second, it increases the research productivity of your researchers. So right now, a lot of their ideas are ultimately bottlenecked by the amount of time they have to spend in the lab. We want to really open that up and get much more data per research dollar out of your scientists. And then finally, like we did with OpenAI, you can have AI scientists run what are kind of in the industry called lab-in-a-loop experiments, where the AI model is designing experiments, they're running on the autonomous lab and data is going back. And so we're seeing a lot more interest in that from pharma companies as well. All right. Okay. So the last section I want to talk about is how are we going to sell these autonomous labs, and there's sort of 2 ways we're going to do it. One, we will place a system like we did Pacific Northwest National Labs. We will place it at a customer site. We'll sell CapEx. We'll sell basically service fees, both for the software and for our maintenance of the equipment. And in the future, I could see us even selling things like reagents and consumables and things like that to the users of our system that are sort of automation specific. Additionally, we have this big autonomous lab in Boston that we can offer services on top of. All right. And so what's like the overall market potential? This is back to that 1% on the subways, 99% in the cars. The overwhelming majority of research spending, that $40 billion to $60 billion in pharma, the $40 billion plus in -- from the government and so on, that's all funneling through ventures today. And that's before we also -- the other big industry we haven't talked about at all is sort of diagnostics, and I also see opportunities there as well. So all of that bench labs spending, I think, ultimately has the opportunity to funnel through our platform if our autonomous lab is able to replace the bench. The way we're going to get there is we're going to start by commercializing in 2 ways: First, build those autonomous labs for customers; second, run the cloud lab. All right. So cloud lab services. Two of them are ones you've already heard about. So our Solution services. This is where Ginkgo scientists use our autonomous Lab to deliver a research outcome to a customer. So our deals with Novo Nordisk and Bayer Crop Science and Merck and Pfizer and all these people over the years where Ginkgo scientists use Ginkgo's labs to deliver a research outcome. We get a royalty, we get milestones. We can structure these in different ways. We do a lot of work with the government in R&D grants and things like that through our Solutions business. Second, in data points, customer scientists use our autonomous lab. The design what they want to run on it. This is run like a traditional CRO. There's no royalties. There's no milestones. We send them a huge amount of data back usually to their ML team, and they use that to train bio AI models for protein design or RNA design or whatever they might be doing. The third, and I'll have more about this in future earnings calls, but we'll be announcing this soon, is our cloud lab offering. And so what we're going to have here is customer scientists outsourcing small amounts of lab work directly to our autonomous lab. So think like a $50 order or a $200 order where the actual experiment will get run on the cloud lab and data will go back to the scientist. And I think this is a great way for scientists who are curious about what it's like to engage with autonomous labs to sort of try it before they buy. And there's lots of things to try there, different ways to bring it to market. You'll hear from us coming up on that. I'm really excited about it. Just to say, we're not new to the Solutions business. We've done 250 partnerships in the last 10 years. We're continuing to sign these every quarter. We're doing a lot of business with the government and large pharma are really the 2 areas where we see the most of this, but also agriculture. Industrial biotech has been a lot harder since 2022, basically. But ag, pharma and government still will sign up for Solutions deals. The other area that's grown really well for us over the last year, and I want to give a shout out to the Datapoints team at Ginkgo is we've been growing this business where we run our robotics to generate big data sets against the designs of customers. And this is a business that got started 1.5 years ago. We've now worked with 10 of the top 20, I think, or 30 top pharma customers just in the first year we launched this thing. So people are really excited about it. It's a good fit. We've actually released a bunch of public data sets. If you go to the Datapoints website, you can download some of the largest data sets for drug seek and for antibody developability and things like that. Next slide. I think that we've also done a really nice job being a community builder here. We've launched a developability competition. We have a virtual cell pharmacology initiative where we do free data generation as part of building up a big public data set. So really, I think if you're interested in this area, if you're doing bio AI, definitely check out data points, come to some of our events. The last point I'll mention about us running the CRO labs is that our scientists using our big autonomous lab in Boston is a little bit like the Waymo engineer 5 years ago going through Palo Alto, sitting in the driver seat with their fingers like this, right next to the steering wheel, like ready to grab it if the car turns into a mailbox or something. They are the first ones to push lab autonomy to the frontier, right? When you saw those 30 protocols running on a system there, we were the first people to do that, right? And so things break. And that allows us to very quickly speed our development cycle on the autonomous lab compared to companies that really just focus on robotics or on software or things like that because we are doing wet lab research on our own infrastructure, we are learning really fast about what works and doesn't and very importantly, about how to onboard scientists into autonomous labs. Like that is a cultural change, right? And so it involves technical tools to make that easier and faster so that they can still get their very important work done, but they can run it overnight. One of the things that our scientists have really enjoyed doing. If you watch like the ramp of protocols getting on to Nebula, our big autonomous lab here, it spikes in the afternoon and then people whose experiments run overnight and they come in the morning to data, which it's been a while since I've been at the lab, but that's sort of the dream is to show up in the morning with a coffee to a fresh data set. So I do think scientists get really excited about this as we bring the barriers down. But again, Ginkgo's team gets to be the guinea pigs so that our customers of the autonomous lab end up being able to see what's possible and also have a lot of that debugged in advance. I'll talk a minute about our OpenAI project. If you're sitting in the back of a Waymo, an autonomous car, you tell it where to go. Once you close the door and get out or get out and close the door, Waymo's AI takes over and it tells the autonomous car where to go. So what the autonomous car is solving is the problem of replacing the manual driving, not the directing. Same idea here. When we're solving the autonomous lab problem at Ginkgo, what we're solving is the manual lab work. not the directing of what lab work to do. And that could be done by scientists as is done every day at Ginkgo, as you saw all those protocols on the scheduler, but you can also try to have those experiments run by AI scientists. And so our project with GPT-5, like I was mentioning, we were doing 100 of these 384 well plates. We're giving that data back to the model. It was interpreting the data and then sending in new designs. We have a great archive paper on this, if you Google, if you look at the OpenAI blog post, you can find it. We learned a number of things about this. I think we did some really smart stuff with OpenAI here. I'll just give you one quick vignette. So the model is designing the parameters of the experiment, but we don't let it just run anything. We had what's called a pydantic model, which was basically a software-defined set of rules, and we have open source this, you can download it, where GPT-5 submitted designs into that, and it had to pass a series of tests for us to be willing to run it. And if it didn't, we would tell, it failed and it would redesign until it met the test. So simple things, 384 well plate submit 384 wells. The volume of the well is this much liquid, do not exceed that amount of liquid or else it's going to spill everywhere, right? But more complicated things, do your experiment and quadruplicate because we want to publish a paper about this and scientists are going to want to see replication. Include a set of standard controls, experiment to experiment, so we can fairly compare how you're doing over time. So we put those rules in. But then within the experimental wells, like the rest of the plate, as long as it put the right amount of volume, it could do whatever it wanted. And so across 500 plates in the experiment, we had only 2 that we thought were just total nonsensical designs. And one of them was a problem with our pydantic model where GPT-5 designed negative volumes of certain reagents to try to squeeze more reagents in, under the volume limit. Obviously, you can't do negative volumes. So we added that to the model and it learned not to do that. So really, I think this is the first demonstration of really more open-ended experimental work, beating state-of-the-art. There's definitely really great ways to take this work in the future that we're going to continue following up on. OpenAI basically used us as a cloud lab, right? They paid us to do the data generation and their model was able to send and receive commands and data back from our autonomous lab in Boston. All right. I'm going to sort of end on this next one or nearly. Ginkgo is the right company to bring autonomous labs to market at scale. I deeply believe this. This is now apparent to me, in particular, over the last quarter. We have our cash burn under control. That's why we wanted to guide to that and keep the team and have investors understand how much we plan to invest in this. We have extensive practical experience automating lab work. This is what we have been doing the last decade plus at Ginkgo. We know what is hard. We know what it takes to move bench work on to liquid handlers to what are the little tips and tricks associated with each benchtop device when you run it at high throughput and high capacity. All of that information is getting embedded into models and our software to make this really just work magically for scientists as they move to the autonomous lab. I think we're the only ones to do it, and it is a dead mission fit for making biology easier to engineer. I'm convinced that the #1 problem in that space right now is the lab work. We are just not able to try enough genetic designs to get good at genetic engineering. That's not Ginkgo. That's the whole industry. Next slide. do you want to mention because I'm sure some folks don't tuning in are scientists or potential customers and so on. A lot of times, we also hear from scientists, hey, should I be worried about this? Obviously, part of my job is working at the lab and generating this data. I really like this old advertisement from 1951, IBM, and it talks about how the mechanical calculator or electronic calculator, I should say, is going to have to do the work of 150 extra engineers at your company. And what I love about this is, if you're not familiar with that device, [ you're ] the younger folks or whatever on this call, and that is a slide rule. So this is back when computation was done manually. And this device, this predates general purpose computers. This was literally just a device that like added and subtracted and divided the basic arithmetic was going to do the work of 150 engineers, and you might say that device will replace 150 engineers. Now of course, you fast forward 70 years, and there are 100x more engineers than there were back in 1951. And that's because the return on investment on what is in the head of people who understand engineering increased dramatically on the other side of the automation of the manual work of computation. And if you go to the next slide, I very much believe that will be the case for the manual work of laboratories. What is -- it is insanity that we take people who are PhD caliber, understand all the biology, like all the ins and outs of these ridiculously complicated biological systems. They have to understand human biology, 18 other things. And while they're at it, they have to be extremely careful laboratory technicians in order to move liquids and do this work with great fidelity to even be able to try and test and hypothesize their experiments. We need to divide those 2 things just like computation did back in the 1950s. And if you do that, I assure you, you will get many, many more genetic engineers, many, many more scientists than we have today when our ROI is limited by the manual work at the bench. And we just got to do it, and Ginkgo is going to do it. So please put down your pipettes and join us if you're interested. All right. So next slide. That's my e-mail up there. As always, feel free to e-mail if you're excited about this stuff. I appreciate the time today and happy to take questions. Daniel Waid Marshall: Thanks, Jason. As usual, I'll start with a question from the public and remind the analysts on the line that if you'd like to ask a question, please raise their hands on Zoom, and I'll call on you and open up your line. Thanks, everyone. Thanks, everybody. All right. Let's get started. So the first question that we have is from BBAGGUE, and this is on X. With the planned expansion of RACs capacity from roughly 50 to 100 units at the Boston facility, could you help us understand how this increased capacity is expected to translate into 2026 revenue? Specifically, what portion of that contribution do you anticipate will be recurring in nature, for example, software, operations, consumables versus project-based services? Jason Kelly: Yes, I can take that. So for starters, the RAC expansion in part is to, again, be able to move -- we have extensive labs here where there's a variety of different levels of automation. There's sort of walk-up automation where a person is going up to like a liquid handler, the liquid handler does some automated work, then you take that sample somewhere else in the lab. Work cell automation, which is that subway I was talking about and then benches for some of our lab work, we're still at the bench, right? And so we want to take all that work and basically shift it on to Nebula onto that big 100 RAC system in the coming year. So that's sort of the point of it. Now on top of that system, we'll do those services, right? So we'll have our data point service, our upcoming cloud lab service and then our Solution service. So I can speak to sort of the repeatability of those services. The way Solutions deals work, those are usually multiyear R&D deals. So there's some reproducibility like across a deal, like we do a big program for ARPA-H, our long-standing partnership with Bayer Crop Science that's been going on for 5 or 6 years. So you have some repeatability inside a contract. But each time we do a new contract, that is hunting for a new project. Datapoints is a bit different. We are starting to see now, as I mentioned in the call, we're in 10 of the top -- again, I think it's 20 or 30 pharma companies where we have -- that is becoming more repeat business as we're able to basically build trust with those partners that we can serve as that outsourced data generation for their teams. The cloud lab one, we'll see. I mean that's a new experiment where I want to go after that smaller batch work from scientists at the bench. I think if you look at more narrowband CROs, the folks that like build DNA, express proteins, these sorts of things, I think you do see a lot of repeat business once someone has confidence with a vendor. We're obviously trying to do more flexible work, and that will be a new experience. We'll see how it goes. But I'm hopeful that would also look like repeat business on the platform. So of the 3, I think Solutions is the one where you're really off hunting each time to add new research partnerships, but the other 2 are a bit more repeat business. And then just to mention it, that's all on the side of using our system in Boston, which what you asked about. But of course, we're also selling our system. So like we sell that system to a PNML or a pharma company or whomever. When our robotics go in, there's an initial spend on CapEx, but then we have a service and software license that's ongoing over time that is also repeat, more like a SaaS business. And then if you were to -- if we had like sort of specialized reagents, some high throughput things, as the system was used, that would also be repeat business as well. But the initial CapEx will be onetime. Daniel Waid Marshall: Thanks, Jason. Our next question is from Brendan at TD. He actually has 2 questions. And so I'll start with the first one. The first one is, how should we think about U.S. onshoring of manufacturing as a potential tailwind to RACs revenue growth? And what do you think Ginkgo will need to do to maximize share of this trend over the next couple of years? Jason Kelly: Yes. So on the manufacturing side, we have been seeing interest for -- on the sort of manufacturing QC, right? So again, what our systems are doing [ in a ] typical manufacturing environment, you're going to be doing production in larger tanks. The RACs are really about integrating laboratory benchtop equipment. Now you do have a bunch of laboratory benchtop equipment in manufacturing plants, and it's used to do quality control across batches, sometimes associated with even kind of like semi diagnostics work associated with following up on patients over time in a lot of these drugs. So there's actually a decent amount of lab work tied to post clinical sort of like once a drug is on the market, that does keep going in a repeated way. I think our sweet spot there would be being able to handle many different QC protocols on one big system, right? So again, the strength is complicated protocols, multistep, but today, you may be doing at the lab bench. You often have folks at those research centers that are part of the kind of manufacturing team and so on, not sort of open-ended research PhD scientists. And so being able to do sort of like the latest type of assay or something that -- being able to deploy that out as a QC step, I think the RACs open up the door for that. So we are talking to some customers about putting our automation into manufacturing sites. So I think there may be a little bit of tailwind there. We'll see. Daniel Waid Marshall: Cool. Next question is, how is Ginkgo's Datapoints offering being received among customers? Are there any material tailwinds that you expect for this part of the business over the next 12 months? Jason Kelly: Yes, really well. I think we're kind of finding the sweet spot in providing -- so like what's going -- I guess I'll just make this quick point on the AI side, right? So there's sort of 2 halves to how AI is impacting the biotech industry. One is what I just spent a lot of time on the call talking about, which is reasoning models and coding models, the same sort of models that everybody is using in basically any information technology space are going to impact the ability for scientists to use autonomous labs and robotics in the lab. That's all being made easier by reasoning models. Separate from that, there are bio AI models. And the most famous one of these is AlphaFold that Google came out with, which was a model trained on not human language, not human reasoning, but rather biological language and in particular, in that case, like amino acid sequences from proteins and the structure of those proteins. So there's a lot of work going on in that area. And in order to build those bio AI models, you need to generate very large data sets with sort of a variety in that case, say, of proteins and their structures, but there's many other things in functional genomics, antibody developability, other areas where pharma companies are asking us to make those big data sets for their ML teams. That side of the house has gotten tailwinds. There was a lot of -- if you're at the JPMorgan conference this year, folks like [ Chai Bio ] announced their partnership with Lilly and [indiscernible]. There's a whole bunch of companies in the start-up side who are starting to partner with the large pharmas because they have great bio AI models. And the reason they have great bio AI models is they have proprietary data. It's not just how smart they are at the modeling, it's that they've been generating these large data sets. So that's sort of opening people's eyes up and I think creating a little bit of a wave there. And we're definitely the right, I'd say, the leader in providing data sets to again to the large pharma, large biotechs, ML teams that are all ready to go for training and everything else. We can do the robot half and the data cleanup half and they can focus on the biological modeling. So it's been good, I would say. Yes, I'm excited about it for this year. Daniel Waid Marshall: All right. Next question is from at [indiscernible]. This is on X. The question is about basically not just the utilization of racks, but the manufacturing and deployment of racks. And so the question is, similar to how Tesla used the giga press to dramatically improve manufacturing efficiency. Is Ginkgo exploring any specific strategies, technologies or methods to significantly enhance the production efficiency and scalability of RACs? Jason Kelly: Yes, it is something we are starting to think about. I mean, mainly because those things take time to put in place. We did make some good decisions. So over the last 4 years or so, I guess, since we acquired Zymergen where this technology started. We actually did do a like a generational upgrade to the hardware of the RACs and made them, and that design change was not really about, in fact, our old RACs that we had back in the day Zymergen needs are -- the new ones are compatible, but the system has many less components. And that was all done for design for manufacturability for exactly this reason. We make them today in San Jose. We do final assembly in our -- through a partner, and then we do final assembly and integration with the third-party equipment at our site in Emeryville, California. As we were to scale up and selling more and more of these, I think you will see us invest in like basically larger partners to repeat that manufacturing process. But even as we have it now, we can actually scale pretty decently on this. So it's something I think we want to plan ahead for, but it's not the immediate problem we have. Daniel Waid Marshall: All right. I think that that's all that we have for tonight. So of course, if anyone has any questions in general, they can always e-mail us at investors@ginkgobioworks.com. Jason also put his personal e-mail up there earlier, so you can message him. And yes, thank you, and have a great night, and I hope everyone has a great quarter. Jason Kelly: Thanks, everybody.
Operator: Good morning, everyone, and welcome to Grupo Televisa's Fourth Quarter and Full Year 2025 Conference Call. Before we begin, I would like to draw your attention to the press release, which explains the use of forward-looking statements and applies to everything we discuss in today's call and in the earnings release. I will now turn the call over to Mr. Alfonso de Angoitia, Co-Chief Executive Officer of Grupo Televisa. Please go ahead, sir. Alfonso de Angoitia Noriega: Thank you, operator. Good morning, everyone, and thank you for joining us. With me today are Francisco Valim, CEO of Cable and Sky and Carlos Phillips, CFO of Grupo Televisa. Last year was marked by several milestones, both at Grupo Televisa and TelevisaUnivision, which Bernardo and I are confident will allow us to keep creating value for our shareholders. At Grupo Televisa, let me touch on four major achievements. First, our strategy to focus on attracting and retaining value customers in cable allowed us to grow our Internet subscriber base by around 47,000 in 2025. This marks a full year turning point after losing Internet subscribers, both in 2023 and 2024, mainly driven by a strategy decision not to retain low-value subscribers. Second, we keep executing on the implementation of OpEx efficiencies and the integration between Izzi and Sky to extract further synergies. This contributed to expanding our 2025 consolidated operating segment income margin of 39.1%, by 200 basis points, driven by a year-on-year OpEx reduction of 8.3%. Third, we kept a disciplined CapEx deployment approach to focus on free cash flow generation. In 2025, we invested MXN 12.2 billion in CapEx, which is equivalent to 20.7% of sales. This CapEx is intended to deliver higher returns over the investment and has allowed us not only to have close to 1.4 million gross adds during the year, but also to upgrade 4.5 million homes to FTTH technology. This basically means that we ended 2025 with around 9 million homes or approximately 45% of our total footprint passed with FTTH technology. Valim will elaborate on our plan to keep upgrading our network later during the call. And fourth, in 2025, we generated around MXN 5.9 billion in free cash flow, allowing us to prepay bank loan due in 2026, with a principal amount of around MXN 2.7 billion. This debt repayment comes on top of the $220 million principal amount of our senior notes already paid on March 18. Additionally, at the end of 2025, Grupo Televisa's leverage ratio of 2x EBITDA compared to 2.5x at the end of last year, mainly driven by our free cash flow generation. And at TelevisaUnivision, I will mention three key milestones. First, 2025 was a breakthrough year for our direct-to-consumer business, as ViX delivered record revenue since it was launched, achieving profitability in every quarter and expanded operating margins throughout the year. For the full year, our DTC business represented nearly 1/4 of the total company revenue, driven by robust advertising growth from our free tier and the continued expansion of our premium subscription offerings. Moreover, our DTC business is now a significant contributor to our adjusted EBITDA, accounting for approximately 20%, driven by its industry-leading margins. Second, the efficiency plan to reduce gross operating expenses at the TelevisaUnivision by around $400 million in 2025, delivered outstanding results. During the year, our total operating expenses declined by around 8% year-on-year for total operating expenses of around $3.2 billion. This shows a disciplined execution of our cost savings initiative. This OpEx reductions have been fully realized in our 2025 results. And third, looking at TelevisaUnivision's leverage and debt profile the company ended the year at 5.6x EBITDA, an improvement from 5.9x at the end of 2024, driven by growth. Moreover, in 2025, TelevisaUnivision successfully refinanced $2.3 billion of debt, which extended its credit facilities and eliminated all near-term maturities. Deleveraging remains a core strategic priority for TelevisaUnivision. Having said that, let me turn the call over to Valim, as he will discuss the operating and financial performance of our consolidated assets. Francisco Valim Filho: Thank you, Alfonso. Good morning, everyone. In 2025, consolidated revenue reached MXN 58.9 billion, representing a year-on-year decline of 5.5%, mainly driven by lower revenue at Sky. Operating segment income reached MXN 23 billion, equivalent to a slight decrease of only 0.6% year-on-year. Turning to our fourth quarter results. Consolidated revenue reached MXN 14.5 billion, representing a year-on-year decrease of 4.5%, while operating segment income reached MXN 5.9 billion, equivalent to a year-on-year expansion of 6.1%, driven by the efficiency measures that we have been implementing since the integration of Sky. Now let me walk you through the operating financial performance of our cable operations. We ended December with a network of 20 million homes after passing around 59,000 new homes during the quarter or over 118,000 new homes during the year. During the quarter, we continued to execute our strategy to focus on value customers rather than volume, while working on customer retention and satisfaction. This contributed to achieving a monthly churn rate below our historical averages of 2% for the third consecutive quarter. Our broadband gross adds remained solid, allowing us to deliver 25,000 net adds during the fourth quarter compared to net adds of around 22,000 in the third quarter and 6,000 in the second quarter and the disconnection of about 6,000 in the first quarter of 2025. In video, we also experienced stronger gross adds than in the first three quarters of the year and managed to reduce churn. Therefore, we lost about 31,000 video subscribers during the fourth quarter compared to 43,000 disconnections in the third quarter and 53,000 cancellations in the second quarter and a loss of 73,000 video subscribers in the first quarter of 2025. Moreover, we expect these improving trends to continue going forward, influenced by our multiyear partnership with Formula 1 to provide line coverage of all Grand Prix via Sky Sports channels available through Izzi and Sky, beginning in the fourth quarter of last year and through the 2028 season. Moving to mobile. Our net adds of 95,000 subscribers during the quarter showed sustained momentum as they were mostly in line with the 94,000 net adds in the third quarter. Our innovative MVNO services are already making our bundles more competitive, allowing us to increase the share of wallet of our existing customers and helping us to reduce significantly the churn of our existing customers. During the quarter, net revenue from our residential operations of MXN 10.6 billion, which accounted for around 90% of total cable revenue decreased by only 0.6% year-on-year. This marked the best quarter of the last 2 years at our residential operations from a revenue growth performance standpoint and compares well to a decline of 1.8% in 2025. On a sequential basis, net revenue from our residential operations remained stable, potentially signaling a gradual recovery. During the quarter, net revenue from our enterprise operations of MXN 1.2 billion, which accounted for around 10% of our cable revenue fell by 4.2% year-on-year. Due to the timing of revenue recognition of an important contract signing in the fourth quarter of 2025 and because of tough comps. Moving on to Sky's operating and financial performance. During the fourth quarter, we lost 304,000 revenue-generating units, mostly coming from prepaid subscribers that had not been recharging their services. In addition, beginning in the second quarter, we started to charge an installation fee of MXN 1,250 to all new satellite pay-TV subscribers to increase the return on investments on this service. This translated into a slowdown of video gross additions for Sky that has been steady over the last three quarters. Sky's fourth quarter revenue of MXN 2.8 billion declined by 16.8% year-on-year, mainly driven by a lower subscriber base. To sum up, segment revenue of MXN 14.5 billion fell by 4.5% year-on-year, while operating segment income of MXN 5.9 billion increased by 6.1%, making it the best quarter of the year driven by efficiency measures that we have been implementing and synergies from the ongoing integration between Izzi and Sky. Our operating segment income margin of 40.9% expanded by 410 basis points year-on-year. Regarding CapEx deployment, our total investment of MXN 4.6 billion accounted for 31.8% of sales in the fourth quarter. During the year, our CapEx deployment of MXN 12 billion, equivalent to $645 million, or 20.7% of sales. The main reason behind having a higher total investment relative to our 2025 CapEx budget of around $600 million was the strong-than-expected Mexican pesos, particularly during the second half of the year and the fact that around 50% of our CapEx budget is in local currency. Finally, operating cash flow for Cable and Sky, which is equivalent to EBITDA minus CapEx was MXN 1.3 billion in the fourth quarter, representing 9.1% of sales. For 2026, our CapEx to sales ratio should be close to 25% as we plan to upgrade 6 million homes to fiber-to-the-home technology, increase our subscriber base and support growth. This basically means that we expect to end 2026 with 75% of our total footprint passed with FTTH technology. Alfonso de Angoitia Noriega: Thank you, Valim. You're doing a great job. Now let me walk you through TelevisaUnivision's 2025 results released on Tuesday morning. As expected, the company's full year revenue fell by 5% year-on-year to $4.8 billion, while adjusted EBITDA of $1.6 billion, increased by 2%. Excluding political advertising and FX volatility, adjusted EBITDA increased by a healthy 7% year-on-year, underscoring the scalability of a profitable DTC business and the sustained impact of the cost reduction initiatives launched at the end of 2024. Turning to the fourth quarter. Revenues of $1.3 billion declined by 2% year-on-year, while adjusted EBITDA of $396 million fell by 12%. Excluding political advertising, total revenue grew by 1% year-on-year, while adjusted EBITDA decreased by 5%, despite continued DTC profitability and continued cost management. Moving on to the details of our revenue performance. During the quarter, consolidated advertising revenue was flat year-on-year. In the U.S., advertising revenue was 11% lower as continued growth in ViX and higher pricing were more than offset by declines in linear advertising due to secular softness and political spending relative to the prior year due to the absence of U.S. presidential election cycle. Excluding political advertising, advertising revenue in the U.S. fell by 3%. In Mexico, advertising revenue increased by 15% year-on-year, driven by the strong ViX growth and a resilient linear business, including private sector advertising. In local currency, advertising revenue in Mexico grew by 6%. During the quarter, consolidated subscription and licensing revenue decreased by 4% year-on-year. Continued growth in ViX across both the United States and Mexico along with higher U.S. linear subscription and licensing revenue, including benefits from our new Hulu agreement and higher content licensing, more than offset the loss of Fubo, the temporary YouTube TV carriage dispute and ongoing net subscriber declines. However, these increases were more than offset by lower linear subscription revenue in Mexico due to the renewal cycle with Izzi Sky and the cancellation of another distribution company, which we have already lapped. Moving on to the balance sheet. TelevisaUnivision ended 2025 with $440 million in cash, an increase of 33% compared to the previous year. Total CapEx investments were $119 million for the full year or a year-on-year increase of 4%. We expect CapEx deployment to remain at similar levels in 2026. Speaking about the 2026 World Cup, it represents a great opportunity both for Grupo Televisa and TelevisaUnivision, and we are approaching it with a fully integrated strategy across broadcast, streaming, digital and social. Our goal is to deliver comprehensive coverage with flawless execution, while maximizing the commercial impact across platforms. In Mexico, ViX will become the official home of the World Cup, making ViX the exclusive streaming destination for all 104 matches available at a preferential price for customers of Izzi and Sky. ViX premium annual subscribers will get access included while ViX's monthly subscribers and the customers of Izzi and Sky will have the option to add on World Cup coverage. Finally, considering several opportunities in the telecom sector in Mexico that we're currently exploring, our Board of Directors approved suspending the payment of our regular dividend in 2026. This will be presented for approval at our Annual Shareholders' Meeting. To wrap up, Bernardo and I are confident that our focus on value customers, efficiencies and ongoing integration between Izzi and Sky at Grupo Televisa and further integration and operational optimization at TelevisaUnivision now that our DTC business represents over 20% of consolidated revenue and adjusted EBITDA, will allow us to create greater value for our shareholders in 2026. Now we're ready to take your questions. Elsa, could you please provide instructions for the Q&A? Operator: [Operator Instructions] The first question today comes from Marcelo Santos with JPMorgan. Marcelo Santos: I have two. The first is for Valim. Could you please walk us through the fiber plan, how many homes with fiber-to-the-home do you have today? I mean, is this goal -- what is the goal exactly, if you could repeat? And is it for the end of 2026? So just wanted to get a bit more color on this plan. And the second question is about the competitive environment. How has been like the room to increase prices? Could you make some comments on how the market is going? Alfonso de Angoitia Noriega: Thank you, Marcelo. Valim, please. Francisco Valim Filho: Thank you, Marcelo. So I think that the fiber deployment is we're already at 9 million homes with fiber today, and planning to get to 15 million, 16 million by the end of 2026. So that would mean 75% of our existing network would be fiber-based. So that is on plan and on target. Regarding the competitive environment in Mexico, I think it's important to emphasize that we have been increasing ARPU consistently over the last several quarters. So it's due to price increases, mostly is due to more products to more -- to our existing customers and better and better services. So that's what we decide. We see that our alternative players, their flat or declining ARPU as opposed to ours, which is increasing constantly. And that's the route we are taking, not so much on price increases, but enable to sell more to the existing clients. And so the competitive environment in Mexico has been very stable over the last 2, 3 years, basically. And what we have been doing also consistently is focusing on high-value clients that will churn less and value our services and be able to acquire more services from us. That's the strategy moving forward. Alfonso de Angoitia Noriega: Pretty much a rational competitive environment. Marcelo Santos: Great. Just a follow-up on the first answer. When you mentioned the 9 million today and to 15 million to 16 million, this is really like fiber-to-the-home where there's no cable involved anymore, like it's fiber box in the home? Or is it like more fiber to the curb, but there is still a cable. Alfonso de Angoitia Noriega: No. Marcelo, fiber is still a cable. It's just a different cable. Marcelo Santos: HFC, sorry. Alfonso de Angoitia Noriega: Yes, I understand what you're saying. And just couldn't a point the joke. So it's just, yes, we will have fiber to the home on 15 million, 16 million homes by the end of the year. So if acquired, actually, nowadays, when the network is deployed, there are no deployments in HRC. So we still have a percentage of our deployments are in HRC because we are not with the full coverage. But as we grow our subscriber -- our fiber network, every new subscriber goes into fiber, and we migrate them as conditions are needed into fiber. So in a few years, all of our clients will not only be under a fiber network infrastructure, but also be connected to our fiber network. Operator: The next question comes from Matthew Harrigan with Benchmark. Matthew Harrigan: You're kind of almost uniquely exposed to AI positively on the telecom side, given all the repetitive processes and consumer-facing kind of customer journey experiences. And then on the media side with your JV, I think you're -- I know you're obviously the largest volume producer of Spanish programming in the world, and you may even be #1 overall. You had a lot of dislocation in the U.S. media names a few weeks ago on account of 20. And I was just curious, what's your broad perspective on how AI affects you both on the blocking and tackling side on telecom and then on the creative side on TelevisaUnivision, both with respect to your in-house content creation being even faster and more short form and then more competition you might face on people and companies aren't nearly as well funded as you. Alfonso de Angoitia Noriega: Thank you, Matthew. A very interesting question. I'll answer the media side and then Valim can take the telecom side. On the media side, we're experimenting with AI and production through AI. It's a very important tool. So in terms of script driving in terms of production itself, it is very useful. So we're experimenting especially. We launched last year our micronovelas on the short form. We produced -- we started producing last year this type of content. This year, we will produce more than 300 micronovela. And some of them are produced 100% with AI. So we're moving in that direction, moving I mean, using AI more and more, which will become a very efficient way of producing content. Francisco Valim Filho: In telecom, AI is mostly useful in how we handle our customer and how we operate our network. And as we speak, we are in very challenging and deep changes into the organization, making sure we have AI all over, meaning from the network usage to the client interface. So in the next few months, we're seeing significant impacts on how we interact with customers focusing on basically 100% AI. So 2026 will be the year we'll flip from a typical call center kind of a thing to full AI, everything AI in terms of customer relationship. So this is the year that will go from a typical telephone to an AI-based telecom operator. Matthew Harrigan: Great. It feels like even with some pretty straightforward kind of enterprise AI applications, you're in a great place without being too fans on the value LM models. Francisco Valim Filho: And sorry, just to complement on that, we are operating with the large guys, which is the typical Oracle, Salesforce, AWS kind of guys. So we have a clear path and we're working with the right guys to be able to achieve it. Operator: The next question comes from Ernesto Gonzalez with Morgan Stanley. Ernesto Gonzalez: It's on the opportunities you're exploring in Mexico Telecom. Just wanted to see if you can comment a little bit on whether these opportunities are in the fixed market or on the mobile market or any additional color you can give? And on the residential or your operations in Mexico, operating segment income was really strong in the fourth quarter. How sustainable is this margin level? Alfonso de Angoitia Noriega: Well, yes, we are actively exploring opportunities in the telecommunications sector. But unfortunately, we cannot comment on specifics or at this point, share more information. Hopefully, we can get those to materialize. There's no guarantee, of course, that they will we'll be in touch as those -- as we make progress as to those. And as to your second question, Valim? Francisco Valim Filho: We keep on optimizing our operations like we were just discussing a few moments ago, try to make sure our systems are more AI-oriented in order to make our processes more efficient, not only from a customer facing perspective, in other words, the clients see and understand that we are closer to them and providing better service, but also the flip side to that discussion is that it would allow us to have a lower cost base. All in all in the service of our clients. So yes, we keep on pursuing increasing operating cash flow. Operator: The next question comes from Alejandro Azar with GBM. Alejandro Azar Wabi: Third one is on your comment, Valim, of the 25% CapEx to sales for 2026. Is that on the telecom service or it's telecom enterprise or it's the full telecom enterprise satellite? Should we think 25% of consolidated Televisa? And my second question is also on -- relative to Sky. With the rate of the connections that we have had in the last couple of years. And if this continue, it becomes really tough for Televisa at the consolidated level, at least on the EBITDA side to show growth. I'm just wondering if you guys can give us more color of how you see Sky going forward, if there is a level where you see these connections or your total clients might normalize? Francisco Valim Filho: Okay. That's a great question. I think that the CapEx discussion is up to 25%. It comprises everything. Izzi Sky and Bestel, our B2B, our DTH and our cable fiber business. So that comprises it all. With regards to Sky, I think there is just misperception of what Sky really is. used to be a great business, all over the world, DTH represented a great business. But in all markets, what has happened is with the advancement of the networks, the FIC networks, Obviously, the connections are better and a lot of the streaming are also competing with that. So you see Internet plus the first streaming that doesn't allow much room for a DTH platform to keep on growing. So our plan is basically to make sure that we have the lowest possible cost at the Sky, meaning it's revenues minus variable cost, programming costs, minus the satellite and conditional access. Other than that, it's a cash flow generating business. So we don't expect it to stop or to normalize or level at any point. And I don't think that's something that people have seen anywhere else given the conditions that I have just described. So as you segregate that segment, Sky and its direct costs, which is -- which are the only costs that they basically have. And so everything else is our B2B and our B2C business. So I think that's the way you should approach this market as opposed to this is an overall thing and our revenue was declining. Yes, our DTH revenue is declining as expected. And what we did is streamline the DTH business. So keeps on generating cash and will be generating cash for the foreseeable future. And we have a business that is long lasting, which is our direct-to-consumer and B2B businesses. Alejandro Azar Wabi: One more, if I may, and this is just to remind us all, when do you have to pay the transaction of Sky? Alfonso de Angoitia Noriega: It's 2027 or 2028. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Angoitia for any closing remarks. Alfonso de Angoitia Noriega: Well, thank you very much for participating. Give us a call if you have any additional questions. Have a great weekend. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Compass, Inc. 2025 Q4 Earnings Call. [Operator Instructions] I would now like to turn our call over to Soham Bhonsle, Head of Investor Relations. Please go ahead. Soham Bhonsle: Thank you very much, operator, and good afternoon, everybody, and thank you for joining the Compass Fourth Quarter 2025 Earnings Call. Joining us today will be Robert Reffkin, our Founder and CEO; and Scott Wahlers, our Chief Financial Officer. In discussing our company's performance, we will refer to some non-GAAP measures. You can find the reconciliation of these non-GAAP measures to the most directly comparable GAAP measures in our fourth quarter 2025 earnings release posted on our Investor Relations website. Any discussion regarding organic revenue, organic OpEx, organic transactions or organic GTV excludes activity from businesses we acquired since October 1, 2024. We will make forward-looking statements that are based on our current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include our guidance for the first quarter of 2026, the recently closed Anywhere transaction and full year 2026 and beyond, including comments related to our expectations for operational achievements. Our actual results may differ materially from these statements. You can find more information about risks, uncertainties and other factors that could affect our results in the most recent annual report on Form 10-K filed with the SEC and available on our Investor Relations website. You should not place undue reliance on any forward-looking statements. All information in this presentation is as of today's date, February 26. We expressly disclaim any obligation to update this information. I will now turn the call over to Robert Reffkin. Robert? Robert Reffkin: Good afternoon, and thank you for joining us for our fourth quarter conference call. I am thrilled to speak with you today for the first time as CEO and Chairman of our newly combined company, which serves 340,000 real estate professionals and over 2,000 franchise broker owners across 120 countries and territories. On today's call, I will be discussing 5 topics. First, I will provide a quick recap of our record Q4 and 2025 results. Second, I'll discuss the historic Rocket Redfin partnership we just announced and how it significantly expands home seller choice and provides extraordinary value to our real estate professionals. Third, I'll touch on our 4 sustainable financial advantages. fourth, an update on our integration and cost synergy efforts. And I'll end by touching on AI and why I believe it will become a structural tailwind for our business. Starting with our Q4 results. In Q4, Compass delivered record fourth quarter revenue of $1.7 billion, delivered record fourth quarter adjusted EBITDA of $58 million. Both our revenue and adjusted EBITDA came in above the high end of our guide. We also delivered record fourth quarter adjusted EBITDA margin, delivered the best organic principal agent recruiting quarter for Q4 as we added 830 principal agents. The Compass platform hit a Q4 record of 20 average weekly sessions per agent. We grew our Q4 title and escrow revenue to record levels. We grew our mortgage JV earnings to record Q4 levels. And lastly, we grew our title and escrow attach in our legacy markets to all-time highs in Q4. 2025 was also a record year for Compass as we generated approximately $7 billion in revenue, surpassing our prior peak of $6.4 billion in 2021 when the housing market was approximately 50% above current levels of annualized home sales. We generated adjusted EBITDA of $293 million, which was the highest ever in our history, and we produced operating cash flow of $217 million, which is also an all-time high for the company. None of these results would have been possible without each and every member of the Compass team. I want to sincerely thank the entire team for their maniacal execution and unwavering hard work in what has been, by any objective measure, one of the toughest housing markets in a generation. Now let me touch on the unprecedented step we took today to ensure home seller choice through our partnership with Rocket Redfin. At Compass, we firmly believe that home sellers deserve the right to freely market their home when, where and how they want. We also believe that home sellers should also have the right to publicly market their listings without negative insights such as days on market and price drop history, amongst others. Currently, however, the Zillow ban forces home sellers to give them their listings within 24 hours of publicly marketing a property even if they don't want to be on Zillow and places negative insights such as days on market and price drop history on all listings. This is just wrong. Home sellers should have the freedom to publicly market their home wherever and however they want without the fear of being banned off a platform. The Rocket Redfin partnership we announced today stands up for home seller choice as it provides homeowners the flexibility in how they introduce their homes to the market and does not subject homeowners to any negative insights for listings off Zillow. There are 4 highly accretive pillars to this partnership. First, our agents will have the opportunity to receive 1.2 million high-intent leads from redfin.com and Rocket Mortgage over the course of our 3-year strategic alliance. The partnership is also structured in a way to provide us with an increase in lead flow in each of the 3 years with potential upside in year 3, depending on conversion rates. Second, our unique inventory will be on redfin.com, with all leads on these listings routed directly to our listing agents across all of our brands, including but not limited to, @properties, Better Homes and Gardens Real Estate, CENTURY 21, Christie's International Real Estate, Coldwell Banker, Compass, Corcoran, ERA and Sotheby's International Realty. This will supercharge the amount of unique inventory publicly marketed on redfin.com in our brokerage websites because more homeowners will choose to become sellers. For example, homeowners who are reluctant to put their homes for sale for fear of negative insights or due to the time of the year, before the fall market in the winter, over the summer, will now have access to 60 million monthly active users without the risk of days on market or price drop history. And their coming to listings will be prioritized on Redfin. This will bring more inventory to the market because it eliminates the artificial barrier that home sellers have to list their home, such as days on market price drop history. Keep in mind, only 4 million people buy homes a year. So 60 million consumers reflects 15x the amount of buyers that are buying a year. Third, with this partnership, we are reclaiming the digital yard sign for our agents and our brokerage brands as our agents' name and their brokerage affiliation will be prominently displayed on each unique listing. This benefit cannot be understated as it will significantly expand consumer awareness of our agents and our 9 brokerage brands. Fourth, we believe the partnership will make home buying more affordable by increasing the amount of inventory on the market that otherwise would not be there and by offering homebuyers 1 percentage point off their mortgage rate in year 1 or of the 6,000 in lender-paid credits through Rocket Mortgage. Now I would like to discuss the 4 sustainable financial advantages we are focused on going forward, including a higher-than-industry revenue per transaction, a leading cost to serve position in the industry, an expanding LTV per agent; and lastly, lower customer acquisition costs. Starting with our higher-than-industry revenue per transaction. We expect to achieve this by becoming the leader in delivering value-added services for real estate professionals through platform-driven attach as opposed to just the traditional channels used by other brokerages. This includes current services such as title and escrow, mortgage, home insurance, home warranty and moving services, but also potential future services we may consider such as solar, home security and other agent services such as property marketing, business spend, digital ads, property videos, 3D renderings, real estate, sign production, open house brochures, photography and more. With an incremental TAM of more than $150 billion from these value-added services, Compass' potential revenue per transaction could be multiples above the industry average, creating a sustainable financial advantage relative to our competitors. Our second sustainable financial advantage will be to have the lowest cost to serve position in the industry. Since 2021, we have already reduced our cost to serve per transaction at Compass by over 30%, driven by platform improvements, process optimization, offshoring and AI. However, with anywhere, we see significant opportunity to lower our cost to serve further as we, one, build a best-in-class centralized services operation that will be the most efficient in the industry; two, offshore more back-end operations; and three, leverage AI to automate workflows and expand self-service tools on the platform. As early proof of how AI can help lower our combined cost to serve in the 5 short months since we rolled out an enterprise-wide AI learning effort at Compass, the team has already identified potential annualized efficiencies in the vicinity of $20 million, 2% of our Compass OpEx, which should allow us to limit OpEx growth as the business grows. At Anywhere, approximately 2/3 of all documents in their brokerage business are already processed through AI-driven automation. Anywhere's AI-based document assignment engine already operates at 89% accuracy and we'll continue to learn from the largest transaction data set in the industry. Furthermore, Anywhere is also extending their capabilities through agentic AI, including automation of wire claims to accelerate resolution and help agents get paid faster, which lowers cost, but also improves the agent experience. By doing all of the above and ultimately establishing the lowest cost to serve position in the industry, we believe we will be able to drive better brokerage incremental margins than in the past, which should serve us well, particularly as industry volumes begin to normalize. Our third sustainable financial advantage will be our expanding LTV per agent. as we bring more than 340,000 of our real estate professionals onto one connected platform. By connecting our franchise broker owners and real estate professionals through one seamless platform, we will scale our best-in-class listing tools, coaching, innovative marketing programs and AI capabilities to help grow their business and help them make more money by better serving their clients. As we scale our offerings in a tech-forward manner, we believe we'll be able to drive better agent and franchise retention, higher agent and franchise productivity, higher attach on value-added services, improved agent outcomes and lower recruiting costs. Our fourth sustainable financial advantage will be our declining cost of customer acquisition as we execute on our strategy to become the #1 destination for buyers to find real estate professionals and homes for sale. As awareness around our unique inventory grows via the Rocket Redfin partnership, we believe more and more homebuyers will seek out our agents listings and our agents for their advice. This will lower our customer acquisition cost as our share of voice in the market increases and should provide our agents with incremental business opportunities. So bringing it all together, by combining our 4 sustainable financial advantages with what will continue to be a maniacal focus on OpEx and cost synergies, we believe we will build a more durable business model where adjusted EBITDA grows faster than revenue growth in the future. Now let me provide an update on our integration efforts and cost synergy targets. First, on integration. I want to start by saying how pleased I am by how well both our management teams are working together. Since close, we've made great progress by deploying best practices in integration, including establishing a transformation office that will be the single control tower to ensure we are achieving our targets, setting a clear road map to create a more efficient organization across each of our business units and quickly creating clarity around the organization spans and layers. Additionally, in the 6.5 weeks since closing the transaction, I've had the opportunity to spend time with countless employees, franchise broker owners, real estate professionals across all of anywhere 6 brands in many, many markets. Two themes have emerged from my conversations. First, there is broad-based excitement to be a part of the transformation our companies are going through. And second, the agents and broker owners are really excited to get access to the technology platform. This excitement is bearing itself out in the numbers as well as Anywhere's GCI retention rate in its top 2 quartile of agents, representing 91% of Anywhere's own broker GCI over the trailing 12-month period, hit the highest level ever recorded in the month of January. Now shifting over to our cost synergies. On our Q3 earnings call back in November, we stated a target of realizing $150 million in synergies in the first year and $300 million in net cost synergies over 3 years. I'm pleased to say that since close, just the 6.5 weeks since close, we have actioned approximately $175 million in cost synergies. Based on the pace at which the team is moving as well as their ability to collaborate and share data, I am making a CEO commitment to action $250 million of cost synergies in the first year. Additionally, as we spent more time working together as a collective team, we have increased confidence in our cost synergy opportunity. As such, I'm now making a CEO commitment to action $400 million in net cost synergies over 3 years. I look forward to updating you on our progress against our improved goals in the coming quarters. Now I want to end by talking about the 3 components of our business that not only protect us from the threats of AI, but strengthen our business in the context of AI. The first is our proprietary data. The second is trust. I want to be clear. Compass isn't in the business of brokering information. It's in the business of brokering trust. And we believe trust will become even more valuable in a world with AI. And third is the positive network effects driven by our 340,000 agents, which strengthens our platform. Starting with proprietary data. We all know that AI is less of a threat for companies with proprietary data. And we all know that the Zillow ban and approximately 40% of MLSs have restricted rules that force brokerages to make their proprietary data public. With the Rocket Redfin partnership and the efforts I expect Compass and Rocket to take, I'm confident that MLSs and Zillow will no longer be in a position to force brokerages to make their proprietary data public. We currently already have more than 20,000 MAKE ME SELL listings that are only available at Compass. And with the Rocket Redfin partnership, we believe we will have a large number of Coming Soon in Private Exclusive listings that will help grow our proprietary data. Our second pillar is trust. Compass is not a traditional SaaS company as we operate in the high trust advisory business. This distinction is significant. AI can replicate software features, but we don't believe it can replicate trusted human judgment in a highly emotional, high stakes, high-ticket transaction. Buying a home is not like any other purchase. It's one of the most significant and complicated transactions in people's lives. Buying a home is also much more than just searching for a property. A buyer seeks out a real estate professional because they know they will need the expertise and emotional support when negotiating and navigating the purchase of a home. They seek out a real estate professional, not just for information that is already available online, but for information on what's going to happen in the future, such as when the neighbor, a few doors over might be ready for the next move because their kids just graduated college. They seek out a professional to serve as the last line of defense during a walk-through at the closing. When the agent they are working with spots uneven floors or smells a wet basement and helps them negotiate a seller credit. I've been reading the same AI reports as everyone else. the reports that are addressing what could happen in a potential future for real estate. The quick summary is my AI agent will sell my house to your AI agent. They will do the best job and no one else is needed in the transaction process. In our 13 years with Compass, I've seen a lot of things. I remember in the beginning, the biggest pain points for people were fake rental listings. We started off in the rental space. You would see a listing, it was fake. You reach out to the agent, they will tell you they can show you the listing and then last minute, switch it up and say, listing is gone, but I have something else to show you. AI will do that on steroids. The writers in some of these reports assume that real estate is clean and fair and that everyone is playing nice. But in real life, you have thousands of fake AI agents generating fake listings to bay you. Hundreds of fake AI agents will give AI agents false lowball bids to try and get them to price drop. Fake AI agents will list fake listings to try and change comp prices to get higher prices. It's going to get wild. I think the value of Compass will skyrocket in that world. The only solution will be closed networks of trust. People think Compass' core is brokering information. It's not. It's brokering trust. And in the very near future, unless you have a great agent that is real, transacting with agents that are network deems trustworthy, you will not be able to transact safely. The MLS data will be corrupted. Open sites will be filled with noise. Private listings and private networks with real people will be the only trusted source. I just don't see a meaningful amount of buyers letting a bot negotiate with the seller's agent. If that were the case, then you would already be seeing people buying homes based off this estimate. You see people selling homes based off this estimate, and they're not doing that. Real estate is highly personal and the value of a home isn't solely determined based on the generic data and facts about the home. The value is driven by a buyer's and seller's personal connection to the home. In this world, Compass' value proposition will strengthen as we build a highly trusted environment for buyers, sellers and agents to own and manage their data with uncompromising privacy. And so for the same reasons that Internet did not replace agents that actually increased consumers' use of them over the past 20 years, we believe that the winners of the future will not be the companies that simply have AI, but those that use it to amplify trusted agents at scale like Compass. Our third and final pillar is positive network effects of our 340,000 real estate professionals that strengthens our platform. This network serves as a large continuous positive feedback loop for our platform. We believe as agentic AI becomes more common, the platforms with the most domain experts actively training and interacting with the system will win. Our agents are encoding real-world localized transactional logic into our platform every single day, creating a network effect that cannot be replicated by horizontal AI tools or legacy brokerages. At Compass, we are using AI to eliminate friction, allowing our agents to focus on winning and closing clients and by fully integrating it into the agent workflow to maximize productivity. By giving 340,000 real estate professionals countless hours back every week, allowing them to focus on winning listings, advising clients and closing deals, we are going to help them to close more transactions. When evaluating Compass through this lens, we believe we possess the exact pillars to thrive in the world of agentic AI. With that, I will now hand it over to Scott. Scott Wahlers: Thanks, Robert. Q4 was a landmark quarter for Compass, setting all-time Q4 records, both financially and operationally. Revenue reached $1.7 billion, a 23% increase year-over-year, beating the high end of our guidance. Even on an organic basis, excluding M&A, we grew 11.3%. For the 19th consecutive quarter, every quarter since our IPO, Compass outperformed the market, including during Q4 with organic transactions up 5.6% versus a 1% market increase. Quarterly principal agent retention was a solid 96.8%. During the quarter, we added 830 principal agents, which was a fourth quarter record despite not being able to recruit any of the Anywhere agents due to the pending merger during Q4. Note that because Anywhere does not have the same agent count methodology for principal agents as Compass does, we do not intend to provide principal agent count starting in Q1, but we will continue to provide total agent counts. Gross transaction value was $65.6 billion in the fourth quarter, an increase of 21.6% from a year ago, reflecting a 19.7% increase in total transactions, combined with an increase in average selling price of about 2%. The increase in our average selling price was closer to 5% on an organic basis. However, our acquisitions over the past year primarily operate in markets with lower average selling prices compared to our organic average selling price, which brings down the overall average. Our commissions and other related expense as a percentage of revenue was 81.5% for the quarter compared to Q4 of last year at 82.5% or an improvement of over 100 basis points year-over-year, primarily driven by the impact of our January 2025 acquisition of Christie's International Real Estate, which has more favorable margins. Excluding M&A, our commissions and other related expense as a percentage of revenue improved 13 basis points for the quarter versus a year ago. This is due to a positive impact from higher-margin new development and title revenue, partially offset by about 10 basis points attributable to the impact of geo mix on the brokerage business. Our total non-GAAP operating expenses were $259 million in Q4, an increase from $224 million of OpEx in the year ago period, which was largely driven by M&A, including the OpEx we assumed from the January 2025 acquisition of Christie's International Real Estate and a number of other brokerage and title companies we acquired this year. Excluding the impact of M&A, our non-GAAP OpEx was up only about 1%. I'd like to also point out that even on a full year basis, when excluding the additional OpEx assumed from M&A, our organic OpEx was only up 1% over 2024. We have demonstrated discipline to manage organic OpEx growth to within 3% to 4% annually. And this past year, we greatly exceeded that goal. Adjusted EBITDA was $58.3 million, a strong improvement of 249% from adjusted EBITDA of $16.7 million a year ago. Adjusted EBITDA exceeded the high end of our original guidance range by 19% and also represented a record level of adjusted EBITDA for any fourth quarter period. Adjusted EBITDA benefited from the higher revenue, better gross margins and a continued strong discipline on operating expenses. During the fourth quarter, we incurred $10.6 million of transaction expenses related to the announced merger with Anywhere, primarily legal fees and investment banking fees, which is shown in the Anywhere merger transaction and integration expense line on the P&L and is excluded from our non-GAAP operating expenses for purposes of calculating adjusted EBITDA. You'll see the expenses on this line jump in Q1 as we recognize the expenses in connection with the closing of the transaction and additional expenses throughout 2026 as we drive our integration efforts, which I'll touch on a little later. Stock-based compensation expense in the quarter was $57.5 million and in line with our guidance. As a reminder, during our Q1 results last year, we explained that our stock-based compensation levels would be elevated during the second, third and fourth quarters of 2025 due to a change in our methodology for granting employee equity and the accounting rules related to that change. These higher-priced awards will start to vest out at the end of Q1, and you'll begin to see a step down beginning in Q2 of 2026 on the base Compass business. This decline is expected to be partially offset with some levels of incremental expense coming through from the Anywhere employee base. We'll provide more details next quarter as we finalize this impact. But as you consider your models, you should expect that stock-based compensation on a consolidated basis will not exceed $50 million in any future quarter beginning in Q2 of this year. That said, as part of the change of control severance provisions for some of the former Anywhere executives, there will be an incremental onetime charge for stock-based compensation recorded in Q1. GAAP net loss was $42.6 million in Q4 compared to GAAP net loss of $40.5 million a year ago. However, excluding the $10.6 million in deal-related expenses from the Anywhere transaction, GAAP net loss would have been $32 million, an $8.5 million improvement compared to the year ago period. Our basic weighted average share count for the fourth quarter was 572 million, which was in line with our prior guidance. As for cash, we generated $42.2 million in free cash flow in the fourth quarter, which represented the eighth consecutive quarter of positive free cash flow generation. We ended the fourth quarter with $199 million of cash and cash equivalents on the balance sheet. On January 7, 2026, we completed the issuance of $1 billion in convertible notes at a highly attractive coupon of just 0.25 percentage point, which was used to pay off Anywhere's revolver of $500 million at the closing. Using the 0.25% coupon on the convertible debt to pay off Anywhere's revolver at higher interest rates provided for immediate annualized cash interest savings of $25 million. The convertible debt offering has a conversion price of $15.98 per share and was structured with a cap call derivative instrument to protect shareholders from dilution up to a conversion price of $23.68 per share. After considering the cost of the capped call and the related issuance costs, the net proceeds received on the fundraise were $880 million. We have moved aggressively on synergies. In just 7 weeks, we have already actioned $175 million of our cost synergy target. The heavy lifting of headcount and vendor consolidation is already underway. Some of the remaining synergies will involve deeper operational integration, which naturally takes longer to execute. However, the progress to date in such a short period of time following the close of the transaction certainly derisks our ability to attain our full cost synergy goals and provides early proof points on what we can deliver together as a combined company. It is important to distinguish between actions taken and the timing of the realization of these actions in the financial statements and where the benefit will be realized in the financial statements. On the timing point, some of these actions taken to date had an immediate effect such as day 1 personnel reductions. Other actions have terms ranging over the next 3, 6 or 9 months as the case of certain personnel reductions with associated retention periods or vendor contracts with varying end dates. And some new operating leases that we entered into to consolidate space or move to smaller square footage don't take effect until the fourth quarter of this year or early 2027. Additionally, because these actions were completed at various points throughout the first quarter, including this week, there will only be a modest benefit to Q1. To help with your models on the bookends, you could plan for $5 million of realization in Q1 of 2026 and $44 million of realization in Q4 of 2026 with some level of quarterly increases between those 2 data points. The $44 million to be realized in Q4 of 2026 represents 25% of the $175 million already actioned. In the aggregate, this would result in about $100 million realized in 2026. These cost synergies will be realized either as reduced operating expenses in the P&L or reduced capitalization to the balance sheet. In either case, they will benefit free cash flow. Historically, Anywhere has capitalized a large amount of technology labor to its balance sheet, approximately $80 million in 2025. And as part of our cost synergy work, a significant portion of the projects that have been subject to capitalization in the past will be cut as we shift the technology focus to the Compass platform. Therefore, of the roughly $100 million in synergies to be realized in 2026 that I just referenced, I'd assume slightly more than half will be reflected as reduced CapEx in 2026 and the remaining will be reflected as reduced OpEx in 2026. Since our cost synergies were just actioned in the last 6.5 weeks, these are still directional estimates. But next quarter, I'll be able to provide you a better distribution of how the synergies will be reflected in our financials. As a last point on this topic, note that there will be cost to achieve these action synergies during Q1 and in future quarters, which will include in the merger transaction and integration line in the P&L, which will be excluded from adjusted EBITDA but will impact cash flow. For modeling purposes as a placeholder, you could assume up to 50% of action synergies for an estimate of the costs to achieve. Turning to financial guidance for Q1, which now includes the impact of the Anywhere transaction. For the first quarter of 2026, we expect consolidated revenue, including the revenue from the Anywhere transaction in the range of $2.55 billion to $2.75 billion. While Q1 is the seasonally lightest quarter, we've observed softness in specific markets in January and particularly February due to the extreme winter weather and record snowfall across most of the country. Per NAR, January existing home sales in the U.S. of 3.9 million units were down 4.4% from last January, with Winter Storm Fern being a callout in their release as many closings were delayed. This is also supported by MBA's data point that mortgage purchase applications fell 14% in the final week of January and the first week of February as much of the country was snowed in. Furthermore, Q1 is our toughest year-over-year comparison in 2026 as we grew total revenue by 29% and organic revenue grew by 15% in Q1 of last year. To be clear, we believe these are short-term weather-driven timing issues. The structural health of the housing market remains sound. With mortgage rates at 3-year lows, stable financial markets and positive year-over-year inventory growth, we are optimistic heading into the spring selling season. For Q1 revenue guidance, keep in mind that while the revenue from the Anywhere transaction is included in Q1, the first 8 days of the quarter are excluded as we closed the transaction on January 9. We expect consolidated adjusted EBITDA to be in the range of $15 million to $35 million. Since Q1 is the first quarter that will include Anywhere's results, I'll provide some color on the contributions to the adjusted EBITDA line. However, we're quickly integrating this transaction. So going forward, we won't be providing guidance for actual results on a separate company basis. Breaking down the consolidated adjusted EBITDA guide for Q1, essentially all of the contribution is expected to come from Compass, whereas the contribution to the adjusted EBITDA guidance in Q1 from the Anywhere entities is negative. If you further unpack the Anywhere portion of the adjusted EBITDA guide, there are a few items that you should take into consideration. First, consistent with Anywhere's public comments on its Q3 2025 earnings, Anywhere saw an elevated level of expense related to its employees' long-term incentive plan, or LTIP. Anywhere's LTIP is comprised of cash settled RSUs, which require mark-to-market accounting through its P&L. The run-up in Anywhere's stock price, especially at the time of September 22 announcement of the transaction, drove higher operating expenses in its Q3 period. Anywhere's continued stock appreciation through the January 9, 2026, closing date will also drive higher OpEx from the LTIP in Q1 as these awards continue to vest in future periods. Second, Anywhere disclosed during its Q3 earnings release that it experienced a significant spike in health care benefit costs in Q3 and that higher level of expense continued through Q4 and is expected to be the new baseline in 2026. Third, as a result of the purchase accounting for the Anywhere transaction, we're required to reset the straight-line rent calculations of the Anywhere office leases for GAAP accounting purposes over the remaining lease periods following January 9, which has the effect of increasing the amount of GAAP rent expense we'll recognize post acquisition by about $4 million to $5 million per quarter going forward or $16 million to $20 million on the full year. While this doesn't change the cash commitments of the office leases, it's a normal purchase accounting adjustment that increases GAAP rent expense. When you add up the expenses for these 3 items, the LTIP, the health care costs and the GAAP rent item compared to the Q1 period of last year, it amounts to an incremental expense in the range of $15 million to $20 million in the first quarter guide for the Anywhere component or $17.5 million at the midpoint. So adjusting for these items, our adjusted EBITDA guidance for Q1 would have been $32.5 million to $47.5 million. We expect our weighted average share count for the first quarter to be between 720 million to 730 million shares. This includes the impact of the 167 million shares that we issued in January for the Anywhere transaction. For OpEx, while we are not providing a specific range for the full year at this time as we're completing the purchase accounting process, to provide some direction for your models, be sure to consider in your baseline the standard inflation assumption we use of 3% to 4% on both the historical Compass and Anywhere OpEx an incremental $20 million of annualized OpEx from the wraparound effect of midyear 2025 M&A and also the $16 million to $20 million increase that I referenced earlier in GAAP operating lease expenses as a result of the purchase accounting reset. Of course, these items will be offset by the net cost synergies that we realized in year. We'll provide additional updates on OpEx next quarter after we finalize our purchase accounting for the transaction. Finally, a few thoughts on cash balances and debt levels. As you think about cash levels, note that Compass ended the year with $199 million of cash. And as a frame of reference, Anywhere's cash as of year-end was $139 million. Additionally, January cash activity reflects $880 million of net proceeds from the convertible debt issuance, partially offset by $500 million used to repay Anywhere's revolver and approximately $175 million of day 1 transaction cash outflows. Note that transaction costs and the cash used for cost to achieve will run through the operating cash flow line. Additionally, payments for Anywhere's annual employee bonus and LTIP programs are scheduled for payout in the first quarter and will also come through the operating cash flow line. As a result, we will report materially negative free cash flow in Q1. We will return to free cash flow positive in future quarters, excluding the impact of any onetime items for the transaction and the cost to achieve our cost synergies. And finally, regarding debt levels. We now have long-term debt of $3.15 billion, which includes the $1 billion of newly issued convertible debt plus $2.15 billion of Anywhere's 4 tranches of notes that we assumed as part of the closing of the transaction. We don't expect to prepay any of the debt in advance of at least April of 2027 due to the nature of the call provisions on the 2 tranches of debt with the highest interest rates. For clarity, when I refer to the $3.15 billion of debt, I'm specifically excluding the securitization facilities for Anywhere's Cartus business and Compass' Concierge activity as these securitization facilities are more operational in nature. Also, as a reminder, in November 2025, we replaced our revolving credit facility with a new facility that originally had a capacity of $250 million. That capacity automatically increased to $0.5 billion at the time of the closing of the Anywhere transaction in January and remains fully undrawn at this time. I would now like to turn the call over to the operator to begin Q&A. Operator: [Operator Instructions] Your first question comes from the line of Dae Lee with JPMorgan. Your question comes from Jason Helfstein with Oppenheimer. Jason Helfstein: Thanks for all the disclosure. definitely taking some time to unpack this, but appreciate kind of all of it. So when we have talked to folks who've been kind of bearish on your exclusive strategy, the pushback has been well, if Zillow can get all of the other brokerages to work with them exclusively, doesn't that like tilt the scale. And clearly, you're getting -- it seems like Redfin to partner with you, that would kind of now move that point. So maybe elaborate on -- I guess, is there anything that you see now that could be an impediment to kind of the 3-phase marketing strategy working now you're partnering with Redfin. And then I guess, just how should we think about the economics for Redfin as part of this transaction? Is there anything you can share or not transaction but agreement? Robert Reffkin: Absolutely. So on your first question, on things that can get in the way of the exclusive strategy. Look, the exclusive strategy, as you know very well, is just homeowner choice. So if you're asking, are things getting in the way of homeowners' choice or can they permanently get in the way of homeowners' choice? I don't think so. And the -- choice versus control -- homeowners' choice versus platform control, homeowners' choice will win. Because it's the seller's home. It's not a platform's home. It's the seller's home. And so what we're doing is we're competing on giving as many options as possible to the seller. So they can market their home when, where and how they feel. Since the last launch, we launched undisclosed address. As you know, the portal ban bans the listing address on and won't put it on that portal's site if it markets outside of the portal for more than 24 hours. So our agents came to us, and they said, hey, why don't you let me undisclose address? Because if they don't know, if that portal doesn't know the address, they can't ban it. And so that's just one of many, many, many, things that are coming through the pipeline, where we will just continue to give sellers more choice. And no seller wants less choices. They want more choices. The feedback on this isn't just great for not have being banned by the dominant portal in the industry, it's also great because it allows sellers the privacy when they want to get public exposure but without the risk. And there are people that want public exposure, let's say, you're getting divorced you don't want your kids to know and you're moving and you want to publicly market home, but you don't want to dress there. So there's so many different reasons that this provides -- that more choices provide value. In terms of the economics, I tell you this way. I've already had through this call, maybe it looks like over 5 agents reach out to me asking if they can talk about coming to Compass because of the leads. We have 1.2 million Rocket Mortgage Redfin leads that will come to our agents as part of this, all the agents in our network of brands that makes it something that agents want to stay for, value for want to come for, your broker owners, your franchise affiliates and makes them see value and wants to common stay and continue their franchise agreements. In addition to those leads, it gives our -- we have -- this is an exclusive partnership. So our listing agents will be able to go to you, the seller and say, "Jason, you have a very special home." But you say you want $3 million for it. I think it's probably worth $2.7 billion. If you list with anyone else and you're wrong, you're going to have a price drop that's going to hurt the value of your home. You may have extended days on market. But we have a partnership with Redfin, where I can publicly market your listing to 60 million buyers. No days on market, no negative insights. This changes everything. This is historic. This will change the way people sell and buy homes because -- and it will give all of our agents and our network of brands, a huge advantage when they're pitching or in the living room with the seller trying to get the business. And so I think we'll be -- the number of listings will grow as a result, bringing new inventory to this company and to the market. Then you have the buyer increase going directly to the listing agents. For all of these, which is a huge value add to -- this is a huge value add for the agents. And again, lastly, the listings will be prioritized on Redfin. So this is something that shows the listing agents that we are fighting for them to have more choices. We are fighting for them and the sellers to have more options. And while others are banning and fining them for not giving up their content to them, we're advocating for them. And so this is a moment where we are fighting for agents to be able to not be banned and fined by dominant platforms and be able to market and meet their fiduciary duty to their sellers. In terms of financial, we're not sharing that at this time. We probably will in one of the upcoming quarters, but you can do your math and what you think the 1.2 million leads would equal. Operator: Your next question comes from the line of Dae Lee with JPMorgan. Dae Lee: Sorry, I dropped earlier getting disconnected. First one on that topic. So I agree that real estate is personal and emotional. But as we think about consumers getting more transparency and self-serve tools, like how do you think about helping your agents communicate their value proposition of that personal and emotional element. And do you feel like you can give them a differentiated AI-enabled value that can convince consumers to pay those rates and keep the per transaction economics resilient? And then secondly, maybe for Scott, for the combined entity, how should we think about the commission as a percent of revenue on a blended basis in 2026? And for -- on a normalized basis, what kind of free cash flow conversion should we expect? Robert Reffkin: First on AI and value, look I'd say a couple of things. Technology -- the Internet would have -- a lot of the things that we were seeing now would have happened, they have said for the last 20 years about the Internet. And over the last 20 years, people are using [indiscernible] more than they were 20 years ago. Just go look at a year after year after year. It's higher than it's ever been. Now why is that? I think it goes a little bit to the theme I was putting -- I was saying on the earlier on the call, which is the Internet led to a bunch of fake accounts, fake listings, fake postings and a lot of garbage. We think about fake news. News was a lot more credible before than today. And now today, for me, I go to Bloomberg, I can trust it. So trust in the era of more technology, more AI, you're just going to have less trust and more fake stuff in our industry with AI, it won't just be fake accounts, fake listing, fake take offers. We fake documentation, fake reviews, fake negotiations, fake identities, fake videos. And it's really going to be all over the place. And that's where agents come in. They shift -- they deal with all the noise and they make sure that what you see is real and what you see is accurate and that your time is well valued and for a transaction that is literally the most expensive transaction you're going to make, whether you buy or sell to pay for certainty, certainty has a price, right? And confidence has a price. Emotional confidence to know that you're not going to be taking advantage of because you have very advocate in front of you, but there's a price for that. And I think that price will -- I'm very confident that people continue to pay for the value of the real estate professional. I call it AI for AI, not -- well, artificial intelligence to empower agent intelligence. We have AI throughout our platform. And we're going to -- and these -- the current environment will let us build faster, build more, build cheaper and to integrate AI in more exciting ways in the future than we have in the past. So this is only going to, I think, help. Real estate isn't a transaction. It's a process. Technology can eliminate an event, a transaction, but not a process. You got to need to find the person and build a relationship, let's call a seller, you get to meet them in person. You have to explain why work with me, why work with my firm, what can I provide what tools I have or programs I have you're going to stage it, you're going to do deep cleaning, cosmetic repair, flooring, roofing, AI can't do that. You're going to schedule appointments, you're going to take photos. You are going to decide which photo is the best photo and yes, you're going to use AI to decide which photo is the best photo, but your judgment is going to be on top of it and judgment will be more valuable than before because of all the noise in the system. Scott Wahlers: Yes. Dae, I'll take your question on the gross margin. Obviously, we don't have a gross margin line on the P&L, but we talk about gross margin in a shorthand way to recognize the remaining difference after subtracting commissions from revenue. So on that basis, on a consolidated level, you can absolutely expect gross margin to go up in the future. as a result of the franchise business and the title business coming in from Anywhere that doesn't have any direct commission expense related to it. But even if you tease out just the brokerage business, margins will also go up as the margins for the anywhere owned brokerage or better than the gross margins on the Compass side. One way to estimate get an estimate of what that could look like is if you look at the pro forma financials that were included in the 8-K we filed when we announced the transaction. You'll see some estimates there. I'd also note that going forward, we will be providing segment disclosures on the combined business and breaking out the owned brokerage from the franchise business. And then separately, the integrated services businesses, which will include title and the Cartus Relocation facility. So you'll have a lot better information on that next quarter. It's a little bit too early for me to give you those exact numbers now as we're still bringing that information together. And then on the cash flow, look, 70% to 80% conversion from EBITDA to free cash flow is probably still a good rule of thumb. We've generally been a little bit on the high end of that range, and it might be more to the lower end of that range because the one thing you need to consider now going forward is interest expense, which will drive that shift. The one call out though is, as I said in the prepared remarks, there's a lot of expenses that will be going out this quarter in particular Q1 and for the full year, directly related to this transaction. And so we're going to be negative free cash flow for the first quarter. And that will -- so you have to kind of look at it on a normalized basis after backing out the $175 million I talked about for transaction expenses and the cost to achieve the synergies. But on a go-forward basis, I think that 70% to 80% adjusted for interest is probably a reasonable flow-through effect. Operator: Your next question comes from the line of Alec Brondolo with Wells Fargo. Alec Brondolo: I really appreciate the question. Maybe Robert, one for you. I think that there's 2 ways that you could have taken the projects with strategy. Obviously, you settled on the strategy of kind of syndicating the prime exclusive to Redfin not get in exchange for lead, I think another direction you could have taken the strategy would have been to syndicate the time it closes on the compass.com exclusively and try to build traffic into the O&O real estate portal and then develop leaf over time that way. Can you maybe just help us understand why you went with kind of this deal over the one that was proposed. Robert Reffkin: Yes. Thanks for asking. Look, we -- in Compass International Holdings, we have 9 incredible sites, all that would connect to our -- that we're building to connect into our listing platform that has everything from first contact to cash and close for our real estate professionals and their buyers and sellers, all the key buy-side flows, all the key work, key sell-side flows. And so yes, we're still building that and investing in that. And those sites, I expect to get more and more traffic over time. But during the life of this 3-year agreement, I think this is a great opportunity to partner with one of the best companies in our space. And I think the Rocket Redfin partner shows that another large participant in the industry agrees with our position on home seller choice as it relates to everything that's happening in the market, it will be nice to be -- to have a company of its size and scale, advocating for home seller choice alongside us. So we won't be the only one out there. There's other big brokerages, but it will be nice to have someone really with the resources of a Rocket behind us, advocating all the necessary and important ways. So I think that's -- that can't be overstated because the primary barrier to all this, this time next year, we should have 200,000 listings that are on our sites that are publicly on our sites that are where anyone can search it that are not on other sites and to bring the consumer to us. And so that's -- it's just that simple. And in 2018, 90% of our listings, before Clear Cooperation, 90% of them started off as publicly searchable listings on our site as Coming Soons and for on average, 11 days is bringing the consumer to our site to search as any normal company would, if you weren't being restricted by a nongovernmental entities like NAR. Within NAR came out with a rule the Clear Cooperation rule that said any public marketing of a listing after 24 hours, you must put an MLS. So we were no longer able to have the natural advantage of having these listings on our site. So now with Compass International Holdings these 9 incredible brands. We have over 700,000 listings, I believe, together. So it's 90% of that, that's over 0.5 million. Those listings should, without restrictions, if you just take what the world was like in 2018, if you eliminate the Clear Cooperation rule, which is only being enforced in 40% of markets now, 60% of them are letting -- are giving you the choice in the MLSs. And if you eliminate the Zillow ban, which bans anyone that advertise off of Zillow, again, imagine if Google bans everyone that advertised off Google, what would the world say. But if we eliminate those 2 things, then we will be able to have hundreds of thousands of listings on our sites, and that's the most important thing for having the independence of the consumer traffic and the demand of the consumer traffic that we can give to both our sellers and our agents. And so we try to do that alone. We're continuing to try and we'll advocate. But I don't see a scenario where the MLSs will continue to enforce these restrictive rules with Redfin, with Rocket on our side. Because it's -- one, for 2 reasons. One, because we now have more resources; two, because they're going to lose they're moral narrative. They're moral narrative. These listings are hidden. These are hidden listings for transparency, fair housing, double -- these companies double in deals and all that stuff. Go hold on, when we're giving our public Coming Soon listings to you, let's just take a market like CRMLS in L.A. or in Dallas NTREIS or in Seattle, Northwest MLS, let's just take all 3 of those markets. We're going to give our public listings to Rocket Redfin, publicly searchable with 60 million people. And in each of those markets, what's going to happen is that MLS is going to send our agents a fine for up to $5,000. $5,000. And I'm going to look at that piece favor and the agents can say, can you help me? And yes, we will help them. But what are you going to tell the public then is that -- are you telling me that you're fining the agent $5,000 for marketing the listing publicly search by 60 million people on Redfin sites that you're doing that to protect for housing. Are you doing that to protect transparency? Are you doing that to ensure that we're not doubling deals? Or are you doing this not to protect transparency, but protect your own business model, right? So that's -- it's going to expose that. And so I just -- again, that would plus the resources. I think the era of MLS is finding agents for marketing outside the MLS and forcing agents to give their sellers the marketing option of one single thing, the uncompetitive marketing option of one size fall market option of one single thing, the MLS versus the dozens of things that would have happened in the free market to help the seller market their home freely. I think that's over. And so then that really leaves the dominant portal. And I think we'll see in the weeks and months ahead how we address that. Operator: Your next question comes from the line of Ryan McKeveny with Zelman. Ryan McKeveny: Congrats on the results. So on the strategic alliance with Rocket Redfin, I guess first question actually is partially about Anywhere, but ties to the alliance. So what's the status of integration of Private Exclusives or Coming Soon from the Anywhere side of things, whether company-owned or franchised into kind of the existing Compass platform? Is that already integrated? If not, what's the time line for that? And then similarly, what should we think about the time line for either the Coming Soons that will show up on Redfin versus Private Exclusives showing up on Redfin? And will that initially be kind of Compass, what I'll call, Compass stand-alone? Or will that be across the Anywhere business as well? Robert Reffkin: So we're launching our technology to all the owned brokerages in the -- in our network of brands in July. And so that's when they will be able to share all of the inventory and access it in all the different ways that Compass has been able to do before. We're launching for the franchise broker owners in January. We have ways to accelerate. And I believe we will be able to give an option towards the end of next month for anyone to be able to create Coming Soons or Private Exclusives in the platform. And again, that will be ready at the next month. And then they will have the option to have it go on to Redfin. I would expect the vast majority, 95-plus percent of our Coming Soons and Private Exclusives to go on to Redfin. But that's -- it's up for the seller and the agent to do because we believe in choice, but there really is no reason not to get that incremental exposure. Ryan McKeveny: Got it. That makes sense. And I guess on the comments about embedding Rocket Mortgage into the Compass International Holdings platform, I guess, what does this mean for like guaranteed rate affinity OriginPoint side of the business? Any thoughts or anything we should know about on that side of things? Robert Reffkin: Yes. The way I think about it is guaranteed rate is -- they're our partner, our in-person partner. They're in our offices. While the way I think about it is that guaranteed -- then Rocket Mortgage is our digital partner. So guaranteed rate, they have incredible LOs, local partner in the offices and relationships at the sales meetings versus a digital partner on our site. But ultimately, what we're doing is we're expanding mortgage options for homebuyers with this partnership. Operator: Your next question comes from the line of Benjamin Black with Deutsche Bank. Jeffrey Seiner: This is Jeff on for Ben. Maybe just as a quick follow-up on the alliance and the option for home sellers after their Coming Soon goes on Redfin. Are you looking to do that nationally and across? Or are you going to be focusing on the 60% of like MLSs where they're already sort of okay with it? And -- or maybe just some color there on how -- if that will be more regional or what the options are for sellers? Robert Reffkin: Yes. Well, thank you for asking. I am incredibly excited in Northwest MLS with our dear friend, Justin Haag, the CEO, to publicly give listings to Redfin where Redfin is headquartered. And again, when we get a fine, when our individual agents gets a fine for doing what was in their client's best interest at their clients' request, we'll share that with Rocket. We'll say Rocket, we want to give these listings that would help the seller, help the agent, help you, Rocket, help redfin.com. And when those moments happen, I think we'll be able to respond accordingly. And again, I just -- I don't think that these -- I believe this is my personal view, I think this alliance is -- marks the end of the restrictions that MLSs have had on agents and sellers on how they market homes because when they're restricting the agent and home seller, they're going to be restricting Rocket. Operator: Your next question comes from the line of Michael Ng with Goldman Sachs. Michael Ng: First, Robert, I was wondering if you could talk a little bit about the listing agent referral program and how that would play out in success? Does that translate into market share gains, who ends up ultimately kind of footing the referral fee? Does that come out of the buy-side agents pocket? And does that show up in the commission rate? And then second, as a follow-up on the Compass Rocket partnership. That's great to see. Is the relationship exclusive? Or could other brokerages that want to pursue a Coming Soon or Private Exclusive strategy also strike a similar partnership with Rocket? Robert Reffkin: I'll start with the second question. The relationship is exclusive. On the first question, the new listing agent referral program we launched, this is -- it gives agents the choice to get to be the only person to get the buyer inquiry on their listing, which some agents want, but also gives the choice for them to have someone else get it if they don't -- if they either aren't getting it in enough time or if they're on vacation, the dream of the second version is something like this, you're a listing agent, you get it aside, if you don't pick up the phone because in a certain amount of time, how much time, 10 minutes, 5 minutes, 15 minutes, anywhere in that range, you can choose that it will go to either someone on your team, someone in the company, a preselected number of buyer as you like working with. And you can choose a different time and a different group of people, depending on if you're on vacation, if it's late at night, if it's after 5:00 on Fridays, where you're working with your family at State night, we're trying to give as much flexibility as possible for people to say, when they want their inquiry and when they don't and how they would frame them who they would give it to you. And to honor those listing agents who do give it to you others that would there be a 10% referral fee given back to them by those buyer agents. And then there's -- Compass has the traditional referral fee as well. Operator: Your next question comes from the line of Matt Bouley with Barclays. Elizabeth Langan: You have Elizabeth Langan on for Matt today. You gave helpful color on the cost synergy side, but I was wondering if you could touch specifically on the revenue synergy side, just generally how you're thinking about the potential for the combined company as a whole? And then if you had any details or comments around how you're thinking about the future of the title or the franchise business as well? Scott Wahlers: Yes. We're really kind of focused, as you can tell from our comments and our trajectory on the cost synergies. We're focusing most heavily right now on the cost synergies, less so on the revenue. I think that will come over time. But like one item that I'd call out on the revenue synergies that comes across on the title side is really the scale of having the 2 title entities together. So between what Compass does on title, what the Anywhere side does on title, we're in the $450 million to $500 million of title revenue here. It's quite large and upwards of about 40 different service areas throughout the country. And so there's areas where Compass Brokerage had brokerage operations before, but we didn't have any local title operations to attach title onto that brokerage transaction. Now with the different service areas we're picking up through the Anywhere transaction, we do. And vice versa, there's areas where anywhere our brokerage operations, Compass has title that can be used. So that will effectively provide some lift on title. But that's one example of some of the opportunities out there that at this point in time, we're really kind of focused heads down on the cost synergies, which is going to give us great lift to free cash flow generation and the ability for us to start to pay down that debt. Operator: And with that, I will now turn the call back over to Compass' Founder and CEO, Robert Reffkin, to close this out. Robert? Robert Reffkin: Thank you, everyone, for joining our call today. I just want to end by thanking all of our employees, all of our agents for all their incredible hard work. And together, we really did something special. We delivered the strongest fourth quarter in our history, the strongest year in our history, and I look forward to building upon our strong momentum in 2026 together with the Anywhere team. And with that, have a great rest of your day. Operator: That concludes our call today. You may now disconnect.
Operator: Greetings, and welcome to the MSC Income Fund Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Zach Vaughan. Please go ahead. Zach Vaughan: Thank you, operator, and good morning, everyone. Thank you for joining us for MSC Income Fund's Fourth Quarter 2025 Earnings Conference Call. Joining me with prepared comments are Dwayne Hyzak, Chief Executive Officer; David Magdol, President and Chief Investment Officer; Nick Meserve, Managing Director and Head of the Private Credit Investment Group; and Cory Gilbert, Chief Financial Officer. MSC Income Fund issued a press release yesterday afternoon that details the fund's fourth quarter and full year financial and operating results. Document is available on the Investor Relations section of the fund's website at mscincomefund.com. A replay of today's call will be available beginning an hour after the completion of the call and will remain available until March 6. The Information on how to access the replay was included in yesterday's earnings release. We also advise you that this conference call is being broadcast live to the Internet and can be accessed on the fund's home page. Please note that information reported on this call speaks only as of today, February 27, 2026, and therefore, you are advised that time-sensitive information may no longer be accurate at the time of any replay listening or transcript reading. Today's call may contain forward-looking statements. Any of these forward-looking statements can be identified by the use of words such as anticipates, believes, expects, intends, will, should, may or similar expressions. Statements are based on management's estimates, assumptions and projections as of the date of this call, and there are no guarantees of future performance. Actual results may differ materially from the results expressed or implied in these statements as a result of risks, uncertainties and other factors, including, but not limited to, the factors set forth in the fund's filings with the Securities and Exchange Commission, which can be found on the fund's website or at sec.gov. MSC Income Fund assumes no obligation to update any of these statements unless required by law. During today's call, management will discuss non-GAAP financial measures, including adjusted net investment income, or ANII. ANII is net investment income, or NII, as determined in accordance with U.S. generally accepted accounting principles, or GAAP, excluding the impact of the capital gains incentive fee. MSC Income Fund believes presenting ANII and the related per share amount is useful and appropriate supplemental disclosure for analyzing the fund's financial performance since the calculation of the capital gains incentive fee is based on realized gains and losses and unrealized fair value appreciation and depreciation, none of which are included in NII. Please refer to yesterday's press release for a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures. Two additional key performance indicators that management will be discussing on this call are net asset value or NAV and return on equity, or ROE. NAV is defined as total assets minus total liabilities and is also reported on a per share basis. MSC Income Fund defines ROE as the net increase in net assets resulting from operations divided by average quarterly NAV. As a reminder, the fund effectuated a 2-for-1 reverse stock split on December 16, 2024. All per share amounts, share data related information discussed on this call today reflect the effect of the reverse stock split. Please note that certain information discussed on this call, including information related to portfolio companies, was derived from third-party sources and has not been independently verified. Now I'll turn the call over to MSC Income Fund's CEO, Dwayne Hyzak. Dwayne Hyzak: Thanks, Zach. Good morning, everyone, and thank you for joining us. We appreciate your participation on this morning's call. We hope that everyone is doing well. On today's call, we provide you with the fund's key quarterly updates while also providing a few updates on the fund's performance for the full year. Following our comments, we'll be happy to take your questions. We're very pleased with the fund's performance in the fourth quarter which resulted in a return on equity of 16.3%, favorable adjusted net investment income per share and a significant increase in the fair value of the fund's investments including the benefits of net realized gains in both the fund's private loan and lower middle market portfolios, which resulted in a significant increase in NAV per share. The fund also produced favorable investment activity in the fourth quarter which generated meaningful growth of its investment portfolio. After the fund's positive performance in the first 3 quarters of 2025, the fund's strong performance in the fourth quarter resulted in an ROE of 12.5% for the full year and pretax adjusted NII per share in excess of the fund's total dividends paid. Based upon the quality of the fund's existing investment portfolio, combined with the fund's expanded regulatory leverage capacity, which became effective at the end of January 2026 and which provides the fund significant capacity to add additional debt to fund the future growth of its investment portfolio and the current attractive pipeline of new private loan investment opportunities, we remain excited about the future expectations for the fund. We're also confident that the fund's sole focus on its private loan strategy with respect to new portfolio company investments and the growth of recurring interest income from such debt investments, together with the fund's contractual future base management fee reductions as the fund's lower middle market investments decreased as a percentage of its total investment portfolio which strengthened the fund's ability to deliver attractive recurring dividends and favorable total returns to the fund shareholders in the future. Fund generated adjusted net investment income, or ANII, which is NII, excluding the impact of the capital gains incentive fee of $0.34 per share in the quarter or $0.37 per share on a pretax ANII basis. These results, combined with our positive outlook for the future, resulted in our most recent dividend announcements, which I will discuss in more detail later. The fund finished the quarter with NAV per share of $15.85, a $0.31 increase from the prior quarter, we continue to be pleased with the performance of the fund's investment portfolio, including both the private loan and lower middle market portfolios. Before I will discuss our financial results in more detail. Consistent with our guidance last quarter, the fund's private loan investment activity in the fourth quarter returned to our expected normal level of quarterly activity and resulted in a net increase in private loan investments of $57 million. The fund remains highly focused on executing new investment opportunities that are consistent with its historical private loan investments as we work to grow the fund's investment portfolio. Consistent with my comments last quarter, we're pleased that the fund successfully exited 2 private loan portfolio equity investments in the fourth quarter with these activities resulting in total realized gains of $16 million (sic) [ $15.9 million ] or $0.34 per share both at meaningful premiums to the fund's third quarter fair values. Fund is also focused on maximizing the benefits from its legacy lower middle market investment portfolio and recycling this existing capital into private loan investments as investments are exited or repaid. Part of these activities, the fund fully exited its investments in one high-performing lower middle market portfolio company, Mystic Logistics in the fourth quarter, resulting in a $6 million realized gain. We also continue to see significant interest from potential buyers in several of the fund's lower middle market portfolio companies, which we expect will lead to additional favorable realizations over the next few quarters. Fund also continues to benefit from attractive follow-on investments in existing lower middle market portfolio companies, which we believe are beneficial to both current investment income and future value creation. Nick and David will cover the fund's investment activity in more detail. Based upon the fund's results for the quarter and its future outlook, earlier this week, the fund's Board of Directors declared a regular quarterly dividend of $0.35 per share and a supplemental dividend of $0.01 per share, both of which are payable on May 1, 2026, to shareholders of record as of March 31, 2026. Going forward, the fund expects to continue to maintain a dividend policy that provides for its total quarterly dividends, which are expected to include a regular quarterly dividend and a supplemental dividend to be set at a level generally consistent with the fund's pretax ANII per share. Based upon the total dividends payable on May 1 and the current stock price, the fund is currently providing its shareholders a dividend yield at 11.5%. As we look forward to the fund's near-term investment activities, as of today, I would characterize the private loan investment pipeline as above average. We're excited about the current pipeline of new investment opportunities and follow-on investment opportunities in existing portfolio companies, and we remain confident in our ability to generate attractive new private loan investment opportunities and grow the fund's investment portfolio over the next several quarters. My last few comments are reminders of the continued support the fund has received from Main Street Capital Corporation. Main Street's wholly owned subsidiary was appointed the sole advisor to the fund in October 2020. Main Street has purchased over $27 million of the fund's common stock. In conjunction with the fund's equity offering in January 2025, Main Street entered into an open market share purchase plan to purchase up to $20 million of the fund's shares for a 12-month period beginning in March 2025 at times when the fund shares are trading at predetermined levels below the fund's NAV per share with the terms of such plan being identical to the fund's open market share repurchase plan to purchase up to $65 million of the fund shares and with any open market share purchases being split by the fund and Main Street on a pro rata basis. Through today, Main Street has purchased over $5 million and the fund has repurchased over $18 million under these plans. We believe Main Street's significant equity ownership in the fund and its participation in the post-listing share purchase plan demonstrates Main Street's commitment to the future success of the fund and reinforces Main Street's confidence in the strength and quality of the fund's investment portfolio and investment strategy. With that, I'll turn the call over to Nick. Nicholas Meserve: Thanks, Dwayne, and good morning, everyone. As Dwayne highlighted in his remarks, we are pleased with the performance of the fund's private loan investment portfolio in the fourth quarter, which represents the largest portion of the fund's investment portfolio in which, as a reminder, is now the fund's sole focus with respect to new portfolio company investments. The overall operating performance for most of the fund's private loan portfolio companies continue to be positive, contributed the fund's favorable fourth quarter financial results. As we previously noted, over the past few years, the fund has seen softness in certain private loan portfolio companies within the consumer space. We have been and are working on maximizing recoveries on those specific investments over the next few years. One of the favorable realized exits in the fourth quarter that Dwayne mentioned was a previously restructured portfolio company with consumer exposure. Due to the significant efforts and successes of that portfolio company's management team, the hard work of our team and the patience to work through a difficult situation, we ended up with a positive outcome. We expect and hope to have similar outcomes on several previously restructured investments in the future. Fund also benefited from a realized gain of $13.5 million from the exit of one of its equity investments in a private loan portfolio company in the fourth quarter, which illustrates the opportunity that can be available in the future from these equity co-investments. Given the current economic uncertainty that exists across certain parts of the economy, we are diligently working to stay in front of the fund's portfolio companies to understand their exposures to changing environments. To date, based upon these ever-evolving discussions, we are comfortable with the future outlook for the portfolio. At quarter end, 92% of the private loan portfolio was comprised of secured debt investments over 99% of which were first lien and 96% of which were floating rate loans. Portfolio had an attractive weighted average yield of 10.7%, which was down 130 basis points from the end of 2024 primarily as a result of decreases in the SOFR rates for these floating rate debt investments. But we're also starting to see the tighter spreads on new investments start to bring down the portfolio average. During the fourth quarter, the fund invested $101 million in the private loan portfolio, which after aggregate investment activity, resulted a net increase of $57 million. Fund ended the fourth quarter investments in 81 private loan portfolio companies totaling $809 million of fair value and representing 61% of the fund's total investment portfolio at fair value. As Dwayne mentioned, our private loan pipeline is above average, continue to see increasing private equity activity, and that is delivering both good new origination levels and replenishing the pipeline. With that, I'll turn the call over to David. David Magdol: Thanks, Nick, and good morning, everyone. In addition to the private loan portfolio that Nick just covered, the fund also maintains a portfolio of legacy lower middle market investments. As a reminder, these are combined debt and equity investments in smaller privately held companies, whereby the fund partner directly with the company's existing business owners and management team through co-investments with Main Street Capital Corporation utilizing the customized one-stop debt and equity financing solutions provided in Main Street's lower middle market investment strategy. After the listing of the fund shares on New York Stock Exchange in January of 2025, the fund no longer makes investments in new lower middle market portfolio companies but continues to participate in follow-on investments in its existing lower middle market portfolio companies. We are pleased to report that the overall operating performance for most of the fund's lower middle market portfolio companies continues to be positive, which contributed to the attractive fourth quarter financial results. These contributions included both strong dividend income and continued fair value appreciation. During the fourth quarter, the fund completed $23 million in total lower middle market follow-on investments which after aggregate investment activity resulted in a net increase in the lower middle market portfolio of $15 million. At quarter end, the Lower Middle Market portfolio had investments in 55 portfolio companies totaling $488 million of fair value and representing 36% of the fund's total investment portfolio. The lower middle market portfolio at fair value was comprised of 53% debt investments and 47% equity investments. 99% of these debt investments were first-lien loans and they had an attractive weighted average yield of over 12%. The fund had equity ownership positions in all of its lower middle market portfolio companies, representing an 8% average ownership position. We expect these investments will continue to provide significant benefits in the future, including the opportunity for continued dividend income, fair value appreciation and eventually meaningful realized gains upon the future exit of these lower middle market investments. As Dwayne mentioned, we continue to see significant interest from potential buyers in several of the funds lower middle market portfolio companies, which we expect will lead to favorable realizations and additional fair value appreciation over the next few quarters. A great recent example of the benefits of these portfolio companies can provide is the recent exit of the fund's investment in Mystic Logistics in the fourth quarter. This exit resulted in a realized gain of $6 million. Also notable is the fact that Mystic Logistics paid total dividends to the fund of $5.5 million over the life of the investment. Turning to the fund's total investment portfolio as of December 31, the fund continued to maintain a highly diversified portfolio with investments in 144 portfolio companies spanning across numerous industries and end markets. The fund's largest portfolio companies represented less than 4% of the total investment portfolio at fair value at quarter end and less than 4% of total investment income for the year ended December 31, with most of the portfolio investments representing less than 1% of the fund's income and assets. With that, I'll turn the call over to Cory. Cory Gilbert: Thank you, David, and thank you to everyone who has joined us today. Fund's total investment income for the fourth quarter was $34.9 million, an increase of $1.5 million or 4.4% from the fourth quarter of 2024 and a decrease of $0.5 million or 1.3% from the third quarter. Fourth quarter included income considered less consistent or nonrecurring in nature of $1.9 million as we've previously discussed these nonrecurring items vary quarter-to-quarter and can include dividend income from equity investments and interest and fee income from accelerated prepayment repricing and other activity related to debt investments. For the fourth quarter, these items were $0.9 million higher than the average of the prior 4 quarters, $1.1 million higher than the fourth quarter of 2024 and $0.6 million higher than the third quarter. Dividend income for the fourth quarter increased by $2.6 million from a year ago and by $1.7 million from the third quarter. The increase in dividend income from both the prior year and third quarter was primarily due to an increase in dividends from lower middle market equity investments and included $1.2 million of nonrecurring items. As we previously discussed, dividend income will fluctuate quarter-to-quarter based on the underlying performance, cash flows and capital allocation activities of the fund's portfolio companies and certain nonrecurring items. Interest income for the fourth quarter decreased by $0.8 million from a year ago and by $1.3 million from the third quarter. The decrease in interest income from both the prior year and the third quarter was principally attributable to a decrease in interest rates primarily resulting from decreases in benchmark index rates on floating rate debt investments and an increased negative impact from investments on nonaccrual status, partially offset by the growth of the investment portfolio. Fee income for the fourth quarter decreased by $0.3 million from a year ago and by $0.9 million from the third quarter. The decrease in fee income from both the prior year and the third quarter was primarily due to the refinancing and prepayment of debt investments. Fund's expenses, net of waivers for the fourth quarter increased by $1.3 million from the prior year and by $2.2 million from the third quarter. These increases were primarily driven by a $2.8 million capital gains incentive fee accrued in the fourth quarter of 2025. This accrual was partially offset by a $1.2 million decrease in interest expense and a $0.4 million decrease in base management fee from the prior year and a $0.5 million decrease in general and administrative expenses and a $0.3 million decrease in interest expense from the third quarter. The capital gains incentive fee accrual is primarily the result of the significant net fair value appreciation of the fund's investments since the listing and was recognized during the fourth quarter of 2025. However, this amount is not currently payable and is not expected to be payable in the near future, if ever. The decrease in interest expense from a year ago was largely driven by a decreased weighted average interest rate on the credit facilities due to a decrease in the applicable spreads resulting from amendments of the credit facilities since the fourth quarter of 2024 and decreases in floating benchmark index rates. The decrease in interest expense from the third quarter is primarily driven by a decreased weighted average interest rate in the credit facilities due to decreases in floating benchmark index rates. The fund's expense ratio calculated as the ratio of total noninterest operating expenses, excluding incentive fees, as a percentage of the fund's average total assets was 1.8% on an annualized basis for the fourth quarter, a decrease from 2.1% in the prior year and a decrease from 2% in the third quarter. The fund's NII, excluding the impact of the capital gains incentive fee and NII related taxes in the fourth quarter was $17.2 million or $0.37 per share increasing from $14.2 million or $0.35 per share from the prior year. During the quarter, the fund recorded a net increase in the fair value of its investments of $17.2 million representing the impact of $16.6 million of net realized gains and a $0.5 million of net unrealized appreciation. The net fair value increase was attributable to increases of $12 million in the lower middle market portfolio and $8.1 million in the private loan portfolio partially offset by a decrease of $3.1 million in the residual middle market portfolio. Overall, the fund's operating results for the fourth quarter resulted in a net increase in net assets of $30 million and NAV per share of $15.85, a $0.31 increase from the third quarter and $0.32 above the fund's public offering price per share in its public offering and listing on the New York Stock Exchange in January 2025. As of year-end, the fund had investments on nonaccrual status, comprising 1% of the total investment portfolio at fair value and 3.9% at cost. As of year-end, the fund's regulatory asset coverage ratio was 2.22 and its net debt to NAV ratio was 0.79. As Dwayne mentioned, the fund's focus remains on achieving a fully invested portfolio through its expanded regulatory leverage capacity, which became effective on January 29, 2026. With that, I will now turn the call back to the operator so we can take any questions. Operator: [Operator Instructions] Our first question is from Brian McKenna with Citizens. Brian Mckenna: Great. So it was good to see a strong quarter of originations and then just kind of the growth in the overall investment portfolio. Sorry if I missed this, but I'm just trying to figure out how should the decline in interest income quarter-on-quarter was from lower base rates and then why we didn't see really any meaningful offsets there from growth in this portfolio? I'm assuming it's timing related, but any thoughts there would be helpful. Dwayne Hyzak: Sure, Brian. Thanks for the question. I'd say to the second part, it is timing. I think a lot of the investment activity was back ended. It was in the second half of the quarter. So that's why you don't see as much of a benefit there. You did see some decline from rates. And I'd say that, that was about just over $0.5 million was the decline from a SOFR movement standpoint inside the quarter. Brian Mckenna: Okay. Got it. That's helpful. And then just given the commentary on the main call around the outlook for the lower middle market portfolio, and what will likely need some additional markup in realization events across that portfolio. It would seem like some of this is going to flow through to MSIS as well, similar to 3Q or 4Q. So given this dynamic and then the upside that's created and net assets from that along with a low level of leverage today, is there an opportunity to lean in further on the buyback just so you start accreting even more NAV? Dwayne Hyzak: Yes. I'd say, Brian, when you look at the benefit or the impact to MSC Income Fund will be the same as Main, obviously, just a different allocation. Historically, Main Street had about 80% of lower middle market investments and MSC Income Fund had 20%. That's assuming they had liquidity at the time. But in general, somewhere in that area code would be the sharing between Main Street and MSC Income Fund on historical lower middle market investments. I think when you look at those proceeds, I think we'll just have to continue to look at what's the best use of that capital. Is it to provide a buyback or some other similar activity for the shareholders? Is it to pay out more dividends? Or is it to retain that capital if we can do so on a tax cost-efficient basis, retain that capital and grow the portfolio. So we haven't had those significant realizations come through yet. But if we see that type of activity, those will be the 3 things we have to weigh and determine what's the best path for the fund and for the shareholders. Operator: Our next question is from Robert Dodd with Raymond James. Robert Dodd: Several have answered on the prior call, but I do have one here. On the mix, right, I mean, you're a 36% lower middle market at the end of December. Obviously, Mystic exited. Sounds like you're expecting several more realizations from the lower middle market portfolio so there will be some fair value appreciation probably there. And on the other hand, growth in the private loan portfolio as well. I'm going to pull out a crystal ball fast. What do you think the odds are that you get down close to, say, 20% lower middle market by the end of this year or even the end of next year because that's where the fee trigger changes for the base management fee. So do you -- with the expectations of realizations in the moment, do you think it is actually going to shift the mix significantly over the next, say, 12 to 24 months? Dwayne Hyzak: Sure, Robert. Thanks for the question. I'd say, similar to some of our comments in the past, I think the movement from where we are today with 36% lower middle market to being at or below 20%, that's going to take an extended period of time, and that's going to be the case for a couple of reasons. One, we think this is a huge positive for the investment portfolio. It's a very, very diversified portfolio. So there's no individual name on the lower middle market side that I would say is significant. I think the largest thing we have from memory is about 3.5%. So even if you exit that, you'd have to have several of those exit, obviously, trying to drop 16%, 17%. You'd have to have 5 or 6 of them exit if they were all the same size, but that's the largest. So you've got a very diversified portfolio. So as you exit these investments, it's just going to take time. I think when you look at the other factor and Mystic is a good example, if you go back and look at the press release, that was issued for the Mystic transaction. We did realize the exit in Mystic. But in that situation, it was a merger with a larger kind of complementary business. So as a result, the funds stayed in that investment for a part of its investment, both debt and equity, basically moved up the capital structure from a larger equity investment relative to total investment to something that was more first lien senior secured debt and a smaller equity investment. But that -- the -- some of those proceeds stayed invested in that business, which is now called UBM or United business Mail, I think, is the UBM stands for. So you'll have some of that. So sometimes, when we exit our lower middle market companies, it's not a 100% full exit. You could have some rollover continuation in the new business. So again, like we said in the past, it's going to be a while. I'd say the biggest catalyst for bringing that percentage down is going to be less about the excess of the lower middle market investments. It's going to be more about the growth of the portfolio first through the additional debt capacity that the fund has. And then after that, any other ability that we have to grow the portfolio. So the example would be XYZ company, say it's 3%, that gets proceeds, but then you take those proceeds. And to Brian's point from earlier, if you retain them as opposed to paying them out and use that retained capital to grow the business, that should get you closer to 20% percentage over time as opposed to paying that out and not growing the portfolio. So those would be the ways that we would look at that transition. Operator: Our next question is from Kenneth Lee with RBC Capital Markets. Kenneth Lee: Just one in terms of the portfolio leverage there. Wondering if you could just share any updated outlook you might have just given the originations pipeline, given the current environment and the opportunities you're seeing now that you've gone past the regulatory limits there? Dwayne Hyzak: Sure, Ken. Thanks for the question, and thanks for joining us. Yes, I'd say we have the expanded regulatory leverage. We received that just with the passage of time, that happened at the end of January. So in conjunction with that, we obviously have to go get the -- just one thing to have the capacity, but you also have to have access to it. So I'd say we've been actively working to get additional liquidity. Obviously, we haven't announced anything yet, but I think we feel good about where we sit in terms of the fund's ability to gain additional debt capacity, both secured and unsecured. We just have to go execute to it. But I think we feel good about leverage. We feel good about liquidity. We just got to have the -- have those activities get finalized and get executed. Kenneth Lee: Got you. Very helpful there. And just in terms of the private loan side in terms of some of the more recent deals you've been seeing some of the more recent investments there. Wondering if you could talk a little bit more about some of the spreads you're seeing and then what are your expectations around that go forward. Dwayne Hyzak: Sure. I'll give super high level, and then I'll let Nick add on additional color. I'd say here more recently in the last quarter or 2. I think that our view and my view is that spreads have started to stabilized. They are less than they were 12 or 18 months ago. But overall, I think the spreads has stabilized, I think that's likely because of some of the uncertainty in the marketplace. I think bigger factor is just the overall increase in private equity activity as a whole would be my view. But Nick, you give your views or additional color? Nicholas Meserve: Yes. Since beginning of the third quarter, we've seen spreads kind of stabilize in that 5% to 5.50% range. I think what we have also seen is I'd say the outliers of maybe a deal at S+ 600 or 650, we're seeing less and less of those. And so we really see a tighter band of pricing kind of in that 5% to 5.75% range on the wide end. On the smaller end of deals that we focus on, we have not seen a lot of crossover to 4.75%. I think from a cost of capital perspective in the industry. Once you dip below that, it gets tougher. And so I think we'll hopefully see that continue into 2026 and like we would expect kind of a flattish year on spreads in that 5%, 5.50% range. Operator: Our next question is from Arren Cyganovich with Truist Financial. Arren Cyganovich: I was wondering if you could just provide a little detail on how the underlying portfolio companies are doing in general, what you're seeing in terms of revenue EBITDA growth trends you're seeing for the portfolio overall? Dwayne Hyzak: Yes, Arren, thanks for the question. I'd say we -- in both the lower middle market and the private credit, I would say we're seeing consistent good performance, nothing significant one direction or other in terms of significant outperformance or underperformance, Obviously, having a big diverse portfolio. You're always going to have some companies that are outperforming and others that are not performing in the way that we would want them to or where we expected them to. But overall, I wouldn't say there's been anything that is a significant change over the last couple of quarters in either direction. David, Nick, if you guys have a different view or anything you want to add? Unknown Executive: Nothing there. Arren Cyganovich: And then on the LMM portfolio kind of coming down over time, is -- can you remind me if what's the plan long term? Is there always going to be some element of LMM? I mean I see that as personally view the LMM portfolio is a net positive given the history you've had in terms of equity realizations with a lot of those investments? Dwayne Hyzak: Yes. Arren, I'd say the plan there is that eventually -- I just don't know when eventually is, could be 10, 15, 20 years, eventually lower middle market as it sits today, will eventually get to a very, very small amount and eventually 0. And the reason I say that is because the Fund's strategy after the listing at the end of January of 2025 is that it will not make any new lower middle market investments. It will continue to support and participate in any add-on or follow-on investments in existing companies just like we talked about related to Mystic and UBM. We have also had a number of companies in the fourth quarter and first quarter that have had follow-on investment opportunities, and the fund is going to participate in those on a pro rata basis with Main Street. So because of that, it's going to take a long time. But eventually, even though we have a permanent holding period ability on our side at MSC Income Fund at Main Street. Our partners typically don't. They're individuals, they're going to age out. They're going to want to retire. In certain situations, their management team might be able to buy them out and give them full liquidity. But most situations, that likely results in a transaction where the company is sold to a third party in most situations. So that's going to be the driver. It's just going to take a long time. I think longer term, we view that as a positive for the Fund. The Fund's goal is to produce a very consistent well-covered dividend covered by recurring interest income. So as you have investments in the lower middle market that have a mix of debt and equity as they get repaid, exited and we take those proceeds and deploy them into first lien senior secured private loan investment opportunities. One, you're moving up the capital structure from a risk standpoint, you're also generating more consistent contractual, predictable income. So we think that's consistent with the fund's plan, and that is our expectation or our intent. Longer term, and this is -- do not have anything planned here. But longer term, Main Street is always looking for different avenues or opportunities to create value from an investment standpoint. There's nothing that Main Street is doing today. But if Main Street is a platform decides to enter into a new strategy that we think is attractive for Main Street, then we would offer that to MSC Income Fund. We have to have an agreement with the MSC Income Fund Board. But if it was attractive to Main Street, I would bet that it's -- there's a good chance it's attractive to MSC Income Fund as long as it's supportive with the fund's goal, as I said earlier, with producing a very consistent, well-covered kind of highly predictable dividend. So I think you could see something else change. But longer term, as we sit here today, it's more status quo and it's just going to take a while for the lower middle market portfolio to roll off. Operator: Our next question is from Doug Harter with UBS. Douglas Harter: Mindful of your prior answer about needing to get the leverage facilities. Can you just remind us what the target leverage is? Nicholas Meserve: Sure. Cory Gilbert: Thanks for your question. Yes, our target leverage under the new expanded regulatory leverage range is going to be 1.15 to 1.25 debt to equity. Douglas Harter: Got it. And do you expect that to change as kind of as the mix shifts away from lower middle market? Just how should we think about the inherent leverage of the 2 strategies. Dwayne Hyzak: Yes. I would say, as we see it today, I would not expect it to change. I think we always want to have some reasonable amount of flexibility and liquidity. So I think if you start going above that, just from our perspective, from my perspective, I think it starts getting tight. So I think that 1.15 to 1.25 is probably a pretty good range. I think as you have the portfolio migrate from lower middle market to private loan, that's when you probably move up inside of that range. But as we sit here today, I would not expect us to go above that range. Operator: Our next question is from Mickey Schleien with Ladenburg Thalman. Mickey Schleien: Dwayne, your software allocation at about 7%, it's not particularly high, but it is meaningful. So I'd love to hear what your thesis is on the impact of AI on these companies? And how have you been underwriting investments in those companies over the last couple of years? Dwayne Hyzak: Sure, Mickey. Thanks for the question, and thanks for joining us. As you said, the fund's exposure to software is very limited kind of that mid-single digit type percentage. Inside of that, and you probably heard us say this before, just given your longer-term history with Main Street over the years. We, as a platform, are very much value-based or value-focused investors. So software, particularly high-growth software. You think about some of the stuff you hear about in the industry, ARR type loans or loans where you expect a bunch of growth before the loan can be serviced from a debt service standpoint. Those are things that just don't fit our profile. They never have, and they don't today. So that's why when we look at our exposure here, even though we've got kind of a mid-single-digit type percentage exposed to software, we think those software names are pretty well protected. Obviously, they and we are talking about their exposures to AI. But as we sit here today, we're not there's nothing there that we're overly concerned about. And Nick, if you want to add any additional color there, any different takes on it. Nicholas Meserve: As Dwayne said, we just didn't really focused. We haven't historically focused on, I'd say, high growth in the software space, and we won't do that going forward, so I think our exposure, we do have there is a little less exposed or we're a little insulated from some of the AI boom is there's just less growth there. I think we focus a little more on infrastructure software versus pure growth SaaS software. Mickey Schleien: So when you refer to infrastructure software, are you referring to sort of enterprise-level software that's really ingrained into the portfolio companies' operations? Nicholas Meserve: To that degree, I think a lot of times, it will be a different moat they might have or it's more of a niche software for a very specific industry. Those I think would be less impacted by AI as you go forward. But eventually, will have an impact, but I think that's what we focus historically. Operator: This concludes our question-and-answer session. I would now like to hand the floor back to management for any closing remarks. Dwayne Hyzak: We just want to thank everyone again for joining us this morning. We appreciate the continued support of the fund shareholders and we look forward to our next update call in May after the release of our results for the first quarter. Thank you. Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you again for your participation.
Chek Tan: Good afternoon, ladies and gentlemen, and welcome to CIMB Group's financial results briefing for the fourth quarter of 2025. Our host is CIMB Group CEO, Novan Amirudin; and Group CFO, Khairul Rifaie. My name is Steven from the CIMB IR team. You should have received the analyst presentation and financial statements by now from the Investor Relations e-mail. Otherwise, you may find the documents in the IR section of our website at www.cimb.com. Before we begin, please be informed that this briefing is being recorded. [Operator Instructions] At this juncture, I would like to hand over the briefing to Novan and Khairul. Novan, over to you. Muhammad Amirudin: Thank you very much, Steven. Thank you very much all for joining our presentation this afternoon. So it's been a very resilient year despite all the challenges that we saw on the FX side, given the ringgit appreciated vis-a-vis other ASEAN currencies, the persistent rate cuts that we saw in all markets that we operate as well as the various macroeconomic headwinds. We completed 2025, which is the first year of our Forward 30 execution by delivering record net profit of MYR 7.9 billion and which translated to an 11.3% ROE. I will now go into the drivers behind this record performance. First and foremost, our noninterest income, NII, if you focus on the table on the left-hand side, the NII has 2 components. One is our NIMs and secondly is our asset growth. The first point, NII was flat despite all the persistent rate cuts, and we attribute this to our successful cash strategy, which focused on reducing our cost of funds, which then cushioned our NIM compression to 8 basis points year-on-year. Now alongside that, assets then grew for us on a constant currency basis by 6.1%. So these 2 factors basically assisted in our flat NIM despite the persistent rate cuts. NOII saw a year of growth. Year-on-year, it grew 3.1%. But the main call out here is our client franchise business derived from NOII, which grew 4.8% faster than the growth in NOII. This is a testament to our successful cross-sell strategy, which focus on client franchise business as opposed to just trading income. Moving on to our operating expenses. Thanks to our capability strategy, this led to disciplined cost control and our cost-to-income ratio at 47.3%. As you can see, OpEx grew 2% year-on-year with a flat personnel costs, but we continued investments in technology. We invested MYR 1.7 billion in 2025, which is about 7.8% of our income, which is within the guidance of 8% to 9% that I provided earlier in the year. With regards to asset quality, this is the best ever GIL that CIMB Group has achieved. So our GIL improved from 2.1% last year to 1.7%. Our credit cost remained stable at about 30 basis points, and our coverage ratio remained above 100%, closing at 103.2%. All these contributed to our net profit growth on a constant currency basis of about 5.3%. So we grew from MYR 7.7 billion to MYR 7.9 billion. With regards to capital, we've optimized CET1 to 14.3%. And as a result of the record financial performance, we then decided to share our record performance with our shareholders also via a record dividend payout. We paid out MYR 0.471. And if you recall the last quarter, we were the first Malaysian company to announce a MYR 2 billion capital return program. This MYR 0.471 include the first tranche of that. So with all those drivers coming together, that gave us a ROE of 11.3%, which is 10 basis points higher than the 11.2% we achieved last year. So if we look at 2025 in review, based on all the guidance that we provided to you at the start of the year, we have largely met all our guidance. Cost-to-income ratio was very close. We guided less than 47%. We achieved 47.3% from the 2% increase in OpEx. A recap of our Forward30 strategy, which is our 6-year plan until 2030. This anchors on our purpose of advancing customers and society. And how are we executing Forward30 is what I'd like to call the 4 Cs. The first C is capital, and this is important for us to always look at how to reallocate capital to grow. The second C is cash, about building a very strong deposit franchise business to optimize our cost of funds. Our third C is cross-sell, and this is to increase returns and increase ROE. And our fourth C is capabilities and capabilities is all about becoming simpler, better, faster to the group. Now how do we perform on each of the 4 Cs throughout the year, which led to our strong financial performance. The first C on capital, if you look at the table on the top left-hand side, given the challenges that we saw in Indonesia and Thailand last year, we then reallocated more capital towards Malaysia, which was a lot more stable and saw a lot more tailwinds relative to the other ASEAN markets. So RWA allocation to Malaysia increased to 56% and therefore, profit before tax also increased to 61% with a stronger ROE of 12.1% for Malaysia. Correspondingly, you would see that the RWA allocation in Indonesia and Thailand reduced, which then also led to a reduction in the PBT contribution to the overall group. Singapore remained a very strong market for us, 18% ROE in 2025, and we maintained our RWA allocation there with a slightly higher contribution in profit before tax. I've always mentioned Thailand is a market that we are restructuring. That work is ongoing. It's seeing a lot of progress, and we will be updating you about our Thailand progress in the not-too-distant future. Now sharing our strong performance with our key stakeholders. As I mentioned earlier, this is the year where we've paid the highest dividend amount of MYR 0.471. And you can see on the table on the bottom left-hand side how that has grown over time. We announced our MYR 2 billion capital return program until the end of 2027. All permanent workforce in Malaysia are earning above the Malaysian living wage. And we committed earlier this year a MYR 200 million investment in the communities that we serve until 2030. This is 13% higher than our commitment in the previous cycle. The second C on cash. As a result of the focus on deposits and the focus on building a strong deposit franchise, we saw a reduction in our cost of funds by 21 basis points year-on-year, coming from a 5.4% increase in deposits on a constant currency basis, which improved our loan-to-deposit ratio. This helped cushion the persistent rate cuts that we saw in all markets. So NIM compressed by about 8 basis points year-on-year. But what is encouraging is what we saw in the fourth quarter last year, which we are continuing to see in January this year, where the NIM compression is starting to bottom out, as you can see on the chart on the right-hand side. We always believe that to build a strong cash franchise, it is a byproduct of having very good cash management services and offerings to our customers. In the third quarter of 2025, we launched the OCTO Biz app for non-retail businesses. This is the OCTO equivalent, but for businesses. With the launch of OCTO Biz, all our front-end customer-facing applications, whether it is Touch n' Go, OCTO or Octo Biz are now all next-generation ready. We also work with the government and we've invested in the BUDI 95 program towards the third quarter of last year. We were involved from the front-end side via Touch n' Go all the way to the back-end side, where we invested in a system that tracks the fuel subsidies that's given to each Malaysian, and we also manage the cash management side from the government to the petrol companies. In December last year, we also announced our blockchain [indiscernible]. We have committed that our next CIMB bond offering will be in tokenized format. We've been admitted into the Bank Negara Digital Asset Innovation Hub with regards to blockchain -- just a few days ago, we announced our partnership with one of our key partners [indiscernible] Financial with regards to participating in their digital platform for cash management and treasury solutions. Our third C, cross-sell. This is something that you saw the growth in the client franchise outgrowing our growth in NOII last year. We remain as the #1 investment banking house, whether on the bond side as well as investment banking as a whole across Malaysia, Indonesia, Singapore and Thailand with respect to deal volume advice to our clients. Our fees and commission grew 3.2% year-on-year. Our treasury client sales, which is the business that we generate from our customers on the treasury side grew 7.2% year-on-year. Wealth grew 9.2% on the back of a 3% increase in our wealth customers. Our fourth C, which is capabilities, there is a relentless focus in CIMB Group to become simpler, better and faster. This is contributing to what you are seeing in the table at the bottom, where operating expenses have remained relatively flat with a 2% growth coming from a flat personnel costs over income, but still continued investments in technology, which was within our guidance. There is -- and then we are focusing on our -- getting simpler, better, faster by setting up the SBF Lab within CIMB Group. This is where we encourage all businesses and enablers to come up with processes to improve your processes further. If something used to take 12 steps, why not 6 is something that used to have 6 [indiscernible], why not 2. Last year, we saw 30 over projects coming up from a bottom-up basis from the relevant businesses to our SBF Lab to make things simpler, better and faster. We also invested MYR 100 million in upskilling our people when it comes to AI last year, and there's an increasing usage of AI throughout our organization, whether is it coming from transaction monitoring, whether it's coming from client onboarding and more recently into our front-end customers, providing them with the tools and data to serve our customers better. So with that, I'll now hand it over to Khairul to go through his observations. Khairul, over to you. Khairulanwar Bin Rifaie: Thank you, Novan, and good afternoon, everyone. So I'll go straight into the numbers with first Slide. Now you have gone through this, but I'll provide a bit more color on these numbers on Slide 10. Firstly, if you look at our underlying performance, that has been robust. We had a seasonally weaker 4Q 2025, typically in the fourth quarter. As you can see on a constant currency basis, if you compare this quarter to last year fourth quarter, on a constant currency basis, our total income grew by 3.8% with our net profit growing at 8.3%. Similarly, the underlying robust performance was recorded on a year-on-year basis. If you look at total income, that grew by 4.2% with net profit growing at 5.2%. As Novan mentioned, our NIMs are bottoming out and is providing a lot of stability. The year-on-year contraction of 8 basis points is well within our guidance of contraction. But you look at the Q-on-Q performance that's underpinned by Malaysia NIMs expanding by 4 basis points Q-on-Q after the contraction that we had during the third quarter of 5 basis points given during that period of third quarter of the policy rate cut. On our expenses, you can see what -- not mentioned in terms of it being well contained, growing only at 2% year-on-year. But if you look at it from a historical perspective as well, that has only grown by 3.1% on a 4-year CAGR basis. So that cost control has been ongoing and will continue going forward. On the next slide, if I break it down further to some of the business segments on PBT. So just very briefly before we go into the business segment P&L later on, on consumer banking, the year-on-year performance was slightly down flattish, but underlying that, if you look at NOI, that grew well at 14%, but this was offset by the prior year where we had a slightly higher overlay write-back in 2024. On a Q-on-Q basis, that's down because in the third quarter, we had some lumpy NPL sale in Malaysia. On wholesale banking, we had a very strong year, especially on T&M, driving that year-on-year growth. In addition to that, we had some higher write-back coming through in Malaysia. Q-on-Q, there was a very exceptional third quarter performance on trading. So normalization of that impacted the PBT on a Q-on-Q basis. In addition to that, if you recall, we had quite a sizable recovery coming through in Malaysia on the oil and gas sector in the third quarter. We did have a similar write-back in the fourth quarter in Indonesia, but that was smaller compared to the Malaysia write-back in the third quarter. On Commercial Banking, we did some preemptive macro overlays. So that impacted the year-on-year performance in addition to some NIM compression coming through. Q-on-Q, that was relatively flat with strong NOI being offset by higher costs. CDA and group funding are slightly lower on a year-on-year basis. This is coming from higher OpEx and also slightly higher provisioning from Philippines. But within that, Touch n' Go Digital has recorded a strong profitable trajectory coming from a small base. Q-on-Q OpEx accruals that we recorded in the third quarter and the absence of that or the normalization of that in the fourth quarter has driven the PBT growth. Moving on to the country performance. If you look at on Slide 12, a very good strong year-on-year profit growth in Malaysia. That's driven by NII growth with stable NIMs year-on-year with asset growth coming through. Q-on-Q, it is slightly down, a normalization of the trading and FX. And also we had the lumpy NPL sales coming through in Malaysia in the third quarter, which was not repeated in the fourth quarter. Singapore, top line was driving that good growth on PBT with the top line growing at 6.9%, both on NOI and also NII. In the fourth quarter, however, we did have a low -- so in the fourth quarter, we had lower provisions driving the strong growth in terms of PBT. Indonesia, overall, it was challenging from a macro perspective. So that impacted our NIMs in the first half, which then, of course, impacted our year-on-year growth on PBT. On the fourth quarter, we had lower NOI coming from the normalization of the trading and FX from a very exceptional third quarter in addition to the absence of an NPL sale, which we recorded during the third quarter. Thailand, somewhat similar to Indonesia, where the backdrop was challenging. So growth was weak and also we had some NIM pressure from the persistent rate cut in Thailand. So that impacted our PBT performance on a year-on-year basis. Q-on-Q, we also recorded a lower NOI compared to the third quarter. On Slide 13, a breakdown of our P&L firstly, NII. So overall, we had a very good quarterly NII momentum sequentially. You can see on a constant currency basis, we grew well, close to 4% Q-on-Q, and that's driven by that NIM expansion, in particular, coming through from Malaysia. So 2 drivers coming through from Malaysia on that NIM expansion. Number one, despite us -- the first point, despite us having that typical seasonal pressure on which both on retail and also wholesale. This is more than offset by our deposit rates coming off -- coming from the policy rate cut from the third quarter. So the full impact of that positive impact in the fourth quarter helped us drive that NIM expansion Q-on-Q. Similarly, in Thailand and Singapore as well, that NIM expansion is really about how we managed to optimize our lower cost of funds. Indonesia, on the other hand, recorded a NIM contraction. We had some lumpy income coming through during the third quarter. But in addition to that, we had a 75 basis points policy rate cut in the third quarter. So the full impact of that -- the full negative impact of that coming through in the fourth quarter. On a year-on-year basis, on constant currency, NII grew by 3.2%. If you look at the NIM contraction, it's really driven mainly by 2 countries, which is Indonesia and also Thailand. Indonesia contracted NIMs by 12 basis points. And this is given the very tight liquidity and competitive environment in the first half of the year. That slowly improved during the second half. The liquidity environment in the fourth quarter was good. So we did see that liquidity improvement coming through. But however, because of the tough first half, that drove the NIM contraction and also all the policy rate cuts that we had in Indonesia. And that is similar as well to Thailand. Also in Singapore, where we had a NIM contraction of 18 basis points, where SORA moved by about 160, 170 basis points down throughout the year. Malaysia is positive. flat NIM is positive given where the rate cut came through in July. This is through the active balance sheet and liability management on both rate and also balances. We managed to reduce our expensive wholesale funding by about MYR 5 billion compared to the start of the year. Moving on to NII on Slide 14. 4Q is really a normalization of what was a really exceptional third quarter. You can see the top left graph where there is a normalization on -- firstly, on fee income and others. We had a couple of NPL sales coming through in Malaysia and also in the third quarter, which wasn't repeated. That amounted to about MYR 170 million in the third quarter, which was not repeated in the fourth quarter. Trading was also very strong in the third quarter. But you can see compared to -- on the right-hand side, the client franchise drop is not as significant as the drop in trading, which dropped by 48% Q-on-Q. On a year-on-year basis, both trading and FX and also fee and other income grew more or less at the same level at the fees side, Singapore bank assurance really driving the fees [indiscernible] on a year-on-year basis was relatively flat at about MYR 170 million, so that was relatively flattish. Trading and FX that what -- not mentioned is really driven by the client franchise business growing client franchise sales are growing at 7.2% year-on-year. On Slide 15, operating expenses, I think I said earlier, this remains well under control. The quarterly movement is mainly due to the seasonal impact, firstly, on personnel costs. If you recall, we accrued a larger bonus during the third quarter because of the strong top line performance during the third quarter. So the movement is really a normalization of that. Marketing and admin in general, this is a typical fourth quarter seasonal catch-up that we do as the activities ramp up during the fourth quarter. Similarly, in terms of technology, we did some accelerated depreciation of charges given the investments that we are making in technology. On the overall year-on-year numbers, like what Novan highlighted on P-cost and technology costs on establishment, we did some tactical cost savings during the start of the year given the view that we were having some headwinds on the macro backdrop, we did some tactical cost savings. Marketing did increase year-on-year given our focus on improving our group spending and also some of the partnership costs in Philippines are picking up. Admin in general, if you exclude some of the one-off that happened in 2024 is really on an underlying basis, that was a relatively low growth compared to the reported number that you see at 15.2%. Asset quality on Slide 16, this remains strong. So on the total provisions on a Q-on-Q basis, that is slightly lower. Recoveries is lower given the bigger recovery that we had in the third quarter on the Malaysia [indiscernible]. In the fourth quarter, there was quite a significant one coming through in Indonesia, but it was lower than third quarter. On the non-retail side, that came down slightly. And that is really driven by the underlying improving on the non-retail side, but we also had some Singapore overlay write-back on a portfolio basis on the non-retail segment. On the retail segment, there is some underlying improvement in Indonesia and Malaysia on the ECL number itself. We also had some MEF refresh coming through in Malaysia, which then resulted in the number coming down lower. On a year-on-year basis, the higher recoveries year-on-year is mainly driven by Malaysia and Indonesia. On the nonretail side, it's really driven -- the slight increase is really driven. If you recall, we did some overlays related to macro uncertainties in the second quarter and also in the third quarter. So that drove the number a bit higher on a year-on-year basis. If you exclude that additional overlay that we did on the non-retail side, on an underlying basis, that is actually relatively stable. On the retail side, that has gone up slightly. Overlays again impacting some of the variances. Last year, we had a bigger -- last year meaning 2024, we had a bigger write-back in terms of overlay on the retail side that has come off lower and that drove the number higher. So if you exclude those noises on overlay, on an underlying basis, Malaysia and Indonesia year-on-year is slightly lower, also partly driving that slightly lower number is the model deployment. If you recall, I mentioned in Indonesia and Malaysia, we deployed some models and that resulted in some of the ECL coming in a bit lower on a year-on-year basis. So overall, you can see the numbers in terms of the ratios are all trajecting well throughout the year. We are maintaining our loan loss coverage well above that 100% level. Slide 17 is a new slide. This is to show our breakdown on our total asset growth as a total -- our business franchise. And this is where we want to also break down the drivers of growth on the debt and securities level. So there has been -- this is a better reflection of our overall business and not just showing our loan segment. So here, you can see on a constant currency basis that what Novan mentioned, our asset is growing at 6.1% and our debt securities growing at 9.2%, driven by Singapore and also Malaysia. On loans, if you look at it on a constant currency basis, growing at 3.1%. What we mentioned during the third quarter where we see momentum picking up, you can really see that coming through in the fourth quarter in wholesale banking. The momentum picked up as well and strongly. Within that number of 2.9%, Malaysia wholesale on a Q-on-Q basis grew by 5.8% Q-on-Q. Consumer Banking on a Q-on-Q basis continued its growth trajectory overall recording at 2.2% year-on-year growth, Malaysia being slightly higher than that 2.2%. Commercial Banking on a year-on-year basis, relatively flattish. But within that, Singapore is growing at 14% year-on-year on a local currency basis. So if you look at it from a perspective of country, Malaysia growing at 3.6% with consumer growing higher at 3.7%. Indonesia, the main driver of that growth is corporate banking and also the auto segment. In Singapore, consumer and commercial are both growing at 14% year-on-year. Thailand is actually negative across all segments. On deposit, on Slide 19, the CASA ratio is relatively stable. If you look at it from a year-on-year perspective, we did do some optimization on the campaign rates in Thailand and Singapore during the quarter, and that drove the CASA number down lower on a Q-on-Q basis. But on the other hand, you saw earlier the NIMs in Thailand and also Singapore expanded. But the second point here, you can see in terms of the CASA ratio, despite that coming off for Singapore and Thailand, the CASA ratio has remained relatively stable on a Q-on-Q basis. Another driver of the CASA coming down is on the wholesale banking due to some year-end seasonality and some of the [indiscernible] CASA on the wholesale side. Dividend payouts on Slide 20, Novan has gone through this. Just to highlight one more point in terms of the dividend yield, that's at 5.7%. Slide 21, our capital ratios on CET1 has remained fairly stable at above the 40% mid level, 40% of CET ratio level. Our liquidity ratios on the right-hand side remains very refresh. On the segment PBT on Slide 22, Consumer Banking. So you can see here on a line-by-line basis that contraction is really coming through on the operating income because of that lumpy sale on NPLs that we recorded during the third quarter. We did, however, have some offset to that with lower provisions given the MEF refresh that we did for Malaysia. On a year-on-year basis, on the operating income on the NOII side, this is actually driving a good growth of 14%, where there's the offset is actually on the NII side, which was weaker on a year-on-year basis. Provisions was higher that I mentioned because we had a bigger overlay write-back in 2024. If you exclude that, on an underlying basis, provisions actually fell in Indonesia and also Malaysia. Slide 23. Q-on-Q, Commercial banking is relatively flattish. We did record a good NOII growth during the quarter of about 9% for the business on a year-on-year basis, it is impacted by our conservative proactive provisioning in terms of the macro overlays. So it is higher on a year-on-year basis, but the business also recorded some NIM contraction. If you look at the loan side, Malaysia driving that growth higher, but Malaysia is growing by 3.4%. So the reported number is impacted by the currency translation. If you look at CASA, it's also growing very well for Malaysia and Singapore, driving that total deposit growth of 2% with Malaysia CASA growing close to 7% and Singapore CASA growing close to 15%. On Slide 24, wholesale banking normalization of an exceptional third quarter in terms of our trading and FX treasury end markets. You can see that being reflected with the lower operating income. In addition to that, there was a higher write-back coming through from Malaysia in the third quarter. So a smaller write-back coming through in Indonesia in the fourth quarter impacted the provisions being higher as well. Year-on-year, very good strong performance on PBT, and this is driven by some of the provisions being lower in Indonesia and also Malaysia. Slide 25, digital assets and group funding. On a Q-on-Q basis, the growth is really coming through from a normalization of OpEx where we accrued some of those bonuses -- higher bonuses in the third quarter. On a year-on-year basis, slightly lower because of the higher OpEx and also higher provision from Philippines. If you look at Touch n' Go, that is growing very well and on a very good profitable trajectory. If you look at some of the indicators, the growth of number of registered users is very strong at 11% now ending the year at 32.3 million. If you compare that to the third quarter, the growth is also strong, and that has remained the trajectory for many years. So in the third quarter, that number of users was 31.4 million. In Philippines, in terms of customers that grew strongly, close to 20%. However, on the loan side, we are bringing it down slightly with a slight negative growth of 1.3% year-on-year as we recalibrate the strategy [indiscernible] Forward30. Lastly, on Islamic on Slide 26, it is impacted during the quarter performance on the normalization of the NOI. So that is slightly lower. On a year-on-year basis, a very good growth driven by the asset growth and stable NIMs. Provisions as well was lower. So you can see in terms of the financing growth, it continues to outpace the conventional growth and growing at 6.4% and the Islamic deposits also tracking similarly on the financing side. So that's the end of the financials. Thank you, and I pass the presentation back to Novan for the closing. Muhammad Amirudin: Okay. Thank you, Khairul. So how do we see 2026? I think FX will continue to be a headwind. Malaysia ringgit vis-a-vis all the other asset currencies, we feel that will be a headwind for us. However, we are not allowing that noise to distract us, so the team continues to be extremely focused on doing what we do best and to execute the 4 Cs. And therefore, our target ROE for 2026 will be in the 11% to 11.5% range, and we are on track to achieve our 12% to 13% ROE in 2027 which we guided earlier to be our midterm checkpoint for Forward30. So what is driving the 11% to 11.5% ROE guidance? We are looking at an asset growth on a constant currency basis of 5% to 7%, our cost-to-income ratio to be below 47%, credit costs to be 25 to 35 basis points and our CET1 ratio to be at least equal to or above 14%. So with that, I will now end our presentation and take any questions that you have. Chek Tan: Thank you, Novan and Khairul. We will now begin the Q&A session. [Operator Instructions]. We have the first question, it's Yong Hong. Yong Hong Tan: Just 3 questions from me. Thanks for the 2026 guidance. But if you are targeting ROE to be broadly the same level as 2025, what are the levers to get to 12% for 2027? And if earnings-wise, if that is lower than your expectations, any other levers that we can pull to get to that 12% level in 2027? That is my first question. Muhammad Amirudin: Okay. Thank you, Yong Hong. So the journey to 2027, we have a number of levers. First, with regards to our capital allocation itself, which you will see a lot more focus on the Malaysia business. You saw earlier on Page 6, the Malaysia ROE has increased from 11% to 12.1%. We're going to be focusing to grow a lot more in Malaysia vis-a-vis the other markets, which is namely Indonesia and Thailand. So you're going to see a lot more capital reallocation from Thailand, to some extent, Indonesia, a lot more into Malaysia, which is generating above 12% ROE. Our focus in Singapore will remain the same, if not slightly higher, where ROE is now at 18%. So think of capital reallocation from Thailand, Indonesia, into Malaysia and Singapore. So that's the first lever. And then within each of these countries, there's going to be a lot more relentless focus on noninterest income. The focus on the wealth business, focus on our wholesale business with Singapore as a wealth and treasury hub, focus on transaction banking, which will facilitate our cash business, all that will grow NOII, treasury client sales that you saw a very strong growth this year versus previous years. So a lot more client franchise NOII, which will also boost our ROE. We're going to continue that discipline on cost that you have seen. You have seen over the last many years, OpEx growth is roughly about 3% CAGR. Last year was 2%. We're going to continue with that discipline on cost. We're going to continue with the discipline on asset quality. You saw GIL at the lowest ever for CIMB, credit costs to remain contained. And then on the capital side, we announced the capital return program up to end of '27. We're going to execute that. So I think when we put all these levers together, we are confident of achieving the 2027 ROE guidance. Yong Hong Tan: Just following up on your capital to get to that ROE, can we maybe have the thinking that the capital return will be earlier, if not so [indiscernible] that will give us a better base to get to the ROE target in 2027. Is that the right way to think about that? Muhammad Amirudin: Yes. I mean we always proactively think of capital. Capital, we see -- we value the capital from our shareholders a lot. And therefore, we're always proactively thinking about how to return it faster. I mean this is excess capital that we have committed anyway. You saw what we did in the last quarter where market was not expecting us to do a special dividend, but we chose to do a special dividend earlier ahead of time. You saw how we executed this over the last 2 years where we had excess capital and we've done that as special dividend. So we are going to continue executing this like how we've executed in the past. But at the end of the day, it's a balance of many factors that we need to take into account, and we will continue to be vigilant about it. Yong Hong Tan: Maybe on margins, I mean I missed that earlier. Is there any guidance on margins for this year? Khairulanwar Bin Rifaie: Yes. So, Yong Hong, yes, so in terms of the margin guidance, right, for the group, we are looking at plus/minus 5 basis points. So relatively stable, plus/minus. Within that, I think more importantly, if you look at Malaysia, we are looking at Malaysia to be stable to slightly spending, right? Niaga has given their guidance is a plus/minus 10 basis points to 3.9% to 4.1%. Where we see potentially some further weakening is Singapore, right? Singapore, but I think it will be less than what we recorded in 2025 as what you saw in SORA even though weakening has stabilized compared to what we recorded in '25. So there should be some weakening of that. But I think where the offset to this is really Malaysia, where we are looking at stable to slightly spending because in terms of our rate outlook in Malaysia, right, we are expecting rates to be stable versus the negative impact that we had in 2025. So that's number one. But number two, to the point on our cash strategy, that will continue to gain traction going into 2026, and that will help our margin trajectory. And lastly, we continuously optimize the higher cost of funding, wholesale funding that we did. So we managed to do that already for the last couple of years. We'll continue doing that again in 2026. So just as a number, last year in 2025, we reduced our wholesale funding by about MYR 5 billion on an endpoint to endpoint. So we'll continue to try and optimize the expensive funding in 2026 as well. So that will help that margins in Malaysia to be stable to slightly expanding. So overall, just to recap, at the group level, we are looking at plus/minus 5% -- 5 basis points. Yong Hong Tan: Yes. Sorry, just one small follow-up. What are the scenario where you see margin expanding by 5 basis points, and what are the scenario that you see margins coming down by 5 basis points? Khairulanwar Bin Rifaie: Yes. So I think the main lever is because I think 2 parts, which is our biggest -- 2 biggest markets. So one is Malaysia. The other is Indonesia. So if you look at Indonesia, the range is plus/minus 10 basis points. We have seen liquidity environment improving in Indonesia over the second half, and that has been sustained in the fourth quarter. Similarly, in the first -- so far, that liquidity environment has been stable. But I think we still have a long way to go to the end of the year. So that liquidity has to be there. Competition has to be fairly rational for us to get to the upper end of that range where Niaga has guided. So that's number one. Number two, our biggest market will be the biggest driver, which is Malaysia. And so far, liquidity has improved slightly if you look at it from this year, starting of the year. So the continuation of that maybe could give us some slight upside to margins in Malaysia. So that will drive that upper end of our guidance. Muhammad Amirudin: The next question comes from Harsh. Harsh Modi: Can you hear me? Muhammad Amirudin: Yes. Harsh Modi: Just one question. I understand your payout was in line with guidance. But how do we think about your guidance on regular moving over the next couple of years? Special, I understand as you have guided for a number, you've already started paying and you'll do it as you can release. So that's on -- as it comes through, you'll do. But special is 55% the number we should plan for over the next 2, 3 years or even that number can increase meaningfully over next few years? Khairulanwar Bin Rifaie: Yes. So I think, yes, so in terms of our dividend payout of 55%, we've been sustaining that for the last 3 to 4 years. And looking at the growth trajectory and giving that stability to the market, I think we need that number to be a sustainable number -- a really sustainable number. And that sustainable number is really driven by all the entities within our group and how we extract that capital to the holding level. And we believe based on our trajectory, right, this is the sustainable number of 55%. We will -- we do continue reviewing this number. And if you look at our guidance, it is stable at the 55% level, given how we have optimized all the capital levels in all the entities. Harsh Modi: Right. So basically, unless and until there is any release of capital, be it Thailand, be it Basel norms or what have you or maybe higher payout from Niaga, it is not likely that we will end up getting -- so above and beyond your MYR 2 billion commitment and 55%, we should not pencil in anything else. Khairulanwar Bin Rifaie: Yes. I mean, yes, so. So based on today's view and outlook on growth and what excess capital we can expect from all the various levers that we have, both Malaysia and outside Malaysia, this is the level that we are comfortable with in terms of 55% and also the capital return that we have committed up until the end of 2027. Harsh Modi: Khairul, if I just want to double-click on that. If -- let's say, assuming that the about MYR 1.3 billion, MYR 1.4 billion remaining on special out of MYR 2 billion, that comes out from, let's say, optimizing capital elsewhere and narrowing the gap between group and bank to an extent. Is 55% enough to optimize your ROAs -- to optimize your returns, ROEs in particular? Or you can push up to 60%, 65% over a couple of years? Khairulanwar Bin Rifaie: So the basis of this 55% is more or less with the current sort of projection of CET1 and outlook, right? So we are maintaining a stable capital ratio broadly across all our entities, including GH with this 55% payout. And on top of that, that capital return that we have committed. If we want to optimize further, right, it depends on many, many other levers. And if we can optimize our CET1 further, that's where there could be a potential higher dividend payout firstly for all our entities that hopefully, that can translate to a higher payout at GH as well -- group holdings as well. Chek Tan: We do not have any further questions at this time. [Operator Instructions] We have one coming from Tushar from Nomura. Tushar Mohata: The first question is on Indonesia and Niaga. Given the developments in Indonesia and the increased scrutiny on free float and the discussion that Indonesian stocks might need to increase free float to 15%. What would be your considerations in deciding whether to sell in the market or do a dividend in [indiscernible] like how it had happened in 2016, I believe, when the previous round of free float increase was required? Muhammad Amirudin: Thank you, Tushar, for your question. So at this point in time, yes, there's a top of the 15%. There is no policy in terms of how we will get there at the moment. I think the indication is over a period of time. From our perspective, all options are on the table. If there's a requirement to then increase our stake, then we will consider all options, whether is it a re-IPO in the market or whether is it a DIS, I mean, it all goes back to which one gives us the best value. I mean the reason I mentioned the word pre-IPO is because today, Niaga 7% free float, the liquidity is thin. The trading doesn't reflect the true value of the business, which is achieving a 13-odd percent ROE. So therefore, if we were to ever want to consider increasing stake by selling some stock, then it needs to be via a full marketing process. But at the end of the day, all options are on the table for us, and we will execute the one that extracts the best value. Tushar Mohata: Okay. And just want to understand the minimum CET1 required by end of 2026, which you are targeting at greater than 14%. I understand that the structure of CIMB is a bit different where dividends are paid out of group holdings level. So group holdings CET1 is more important. But is it fair to say that group holdings, this kind of structure versus all of your peers where bank level CET1 is more important, you need to maintain a higher group holdings level CET1 versus others where bank level CET1 can be lower? Khairulanwar Bin Rifaie: The answer is no. So it's similar. It's the same, right? So whatever capital levels because we are covered by Malaysia Central Bank. So whatever capital level that's required at CIMB Bank, CIMB Islamic, CIMB Investment Bank, similar to CIMB Group Holdings. So it's not more that is required at the holding level. Chek Tan: [Operator Instructions] Next question comes from Benjamin from UBS. Benjamin Tan: I just have one quick question. Just you mentioned that the stronger ringgit has been a headwind to the performance at CIMB. Just wanted to get some rough sensitivity, like, let's say, if the ringgit were to strengthen another 5% or whatever number you have in mind, what is the downside to the ROE guidance that you have, that would be very helpful or like if Malaysian ringgit were to depreciate versus a basket of currencies regionally, what would be the impact on your earnings and your ROE. Khairulanwar Bin Rifaie: Yes. I think the sensitivity is relatively mechanical, right, given the contribution of Niaga and our overseas operations. Niaga is actually is the one that is impacting us the most with the PBT contribution of that 22%, right? To a lesser extent, a very small component in terms of U.S. dollar, but it's not material driver, but that's not material. But the main one is actually Indonesia and to a certain extent, Singapore as well, right? But if you look at how we have managed that, which was very challenging in 2025 still within that 11% to 11.5% ROE, right? And that is a reflection of our diversified business with Malaysia performing very well in terms of the ROE, as mentioned on a year-on-year basis. Of course, we are susceptible to that sensitivity that you mentioned, but we are going to be very agile to still focus on meeting our guidance of 11% to 11.5%. Muhammad Amirudin: Yes. So I think my answer is actually there's no impact. We're not speculating on FX. We'll focus on executing and doing what we do best. So yes, as FX move, it then impacts our numbers, and we will see how that impacts our numbers. And therefore, we will be agile and we will pivot our strategies accordingly. So whatever it is to make sure that we achieve what we have guided the market. Chek Tan: I think there are no further questions at this point in time. Andrew San from Macquarie, are you there? Andrew San: Happy Friday. Just a question on your guidance. I noticed that in terms of when you put down asset growth guidance instead of loan guidance or is there something more to be read into that? Muhammad Amirudin: Sorry, can you repeat that? I think you broke up. Andrew San: So in terms of the guidance that you mentioned, the asset -- sorry, asset growth guidance that you put down, yes, in terms of what you put down, it's 5% to 7%. Is there any difference with loan growth guidance? Can I just translate that loan growth guidance? Yes. Okay. Muhammad Amirudin: Sure. So the reason why we put asset growth is that's how we operate our business. From our capital and deposits that we have, we then mobilize it into either loans or either through securities. And we are a large universal bank and also a strong investment bank. When we advise our customers to raise financing, it's the financing that makes most sense for them. If a loan makes more sense, we extend a loan. If a bond makes more sense, then we advise them on a bond, but we can also use our balance sheet to underwrite part of the bond. If an equity makes more sense, then we advise them to raise equity. So that's why we are focused on an asset growth guidance rather than just too narrowly focusing on loan growth per se. But with regards to our own internal numbers, as part of this 5% to 7% asset growth, loan growth is a subset of that. If I were to look at Malaysia, which is our largest market, we are looking at growing loans at about 4% to 5%, which is in line with the GDP, and it would differ across all markets. But at the end of the day, our business plan is around an asset growth strategy. Andrew San: Sorry, can you remind me what the loan growth guidance is for Indonesia and Thailand as well? Khairulanwar Bin Rifaie: Yes. Indonesia is 3% to 5%, right? Singapore will be in the higher single digit, and that's driven mostly by SME and also consumer. In Thailand, we're expecting the market environment to still remain fairly challenging. So in Thailand, it will likely be a negative growth. This is on loans specifically. But again, I just want to reiterate, we are looking at it more from an asset growth in totality for all the countries as well. Muhammad Amirudin: [indiscernible] so therefore, when we make NII, the cash that get deployed either through loans or through securities, we still make NII from that, just that the bonds that allow us to trade in as well. So that's why we're going on an asset growth basis. I just want to understand that. Andrew San: Okay. I understand. And just a follow-up on the Malaysian loan growth of 4% to 5%. Can you help me understand? I mean, the GDP growth has been strong, and we should be seeing GDP growth in the high 4%, if not 5% in terms of forecast for this year. And at the same time, you're focusing growth more on Malaysia going forward. Why is loan growth only at 4% to 5% for Malaysia? Muhammad Amirudin: So yes, we're a big universal bank, which includes a large investment bank. Our clients in Malaysia, they raise financing either through loans or through the capital markets, which is the bond market. I mean the Malaysian bond market grew a lot more compared to the loan market last year, and we are the #1 player in the bond market. So from our perspective, it's all about what makes sense most for our customers. If it's a lot more efficient for them to raise bonds, and we did a lot of bonds for our top clients last year, then we will advise them to raise bonds, but we will then underwrite part of the bonds and that goes on our balance sheet. So that's why we focus on asset growth. So I would like to take your focus away from just loan growth alone because that's not how we operate our business, unlike maybe some of our peers. But look, at the end of the day, if it makes more sense for our customers to do loans, then you will see the loan growth number grow a lot more. But I don't want to be too fixated on the loan growth number. Andrew San: Okay. And just a follow-up on that again. Then how should we think about NOI as a percentage of total income or NOI growth for this year then? Khairulanwar Bin Rifaie: Yes. So I think for this year, right, if you look at from a numbers perspective, where we ended the year in terms of proportion at 31.7%, right, given our focus on 2 things. One is our cross-sell, so on the client franchise component. But secondly, also on the bond side, that also create a lot of opportunity on NOI, we do expect NOI to grow stronger than NII. And that is somewhere slightly higher than the mid-single digits of level for NOI. So that proportion, we do -- we are targeting that to expand further in 2026. Andrew San: Okay. So expecting NOI to grow stronger than NII. And that's also including the fact that you might have a higher base in terms of bond sales from 2025. Muhammad Amirudin: Yes. But that's not the main reason, yes. I mean our NOI growth, as I presented earlier, the client franchise grew faster than NII itself. In fact, if you look at the earlier Page 14, last year, our client franchise of trading and FX is actually higher than our trading income. So yes, there won't be trading gains. We will take trading gains as they come, but the focus is on client franchise business, where we make treasury client sales, where we make fees and commissions from either our banking products or investment banking advisory -- so the contribution of NOI will come from both, but I would say a lot more on the client franchise side. Chek Tan: Just one more, I think, from Jin Han. Jin Han Chin: I have just a couple of questions on Singapore. I may have missed it, but could we get the in-house view on where SORA rates are going and what's underpinning expectations for 2026 as well as a little bit more color on credit costs for Singapore. If you could share any numbers would be great. Khairulanwar Bin Rifaie: Yes. So I'll take the credit cost numbers first for Singapore. I will share a specific number, but in terms of directionally, right? So in 2025, we recorded quite a significant net write-back in Singapore. Going into 2026, we still expect the credit cost for Singapore to be relatively flattish, meaning not write-back position, but a very, very small credit cost as there are some pipelines of further recoveries coming through in 2026. So a very small credit cost number. Yes. On the point on SORA, right, we have some views on where it will go. We're looking at around 50 basis points further lower or so. Chek Tan: I think we are -- there are no further questions at this point in time. Okay. Since there are no further questions, I'd like to pass the line back to Novan for his closing remarks. Muhammad Amirudin: Thank you very much for your time on the Friday afternoon to join our presentation. For those that are fasting, I just want to wish you [Foreign Language] and see you all again soon. Thank you very much. Chek Tan: Ladies and gentlemen, that concludes our briefing for today. Thank you for joining us, and wish you a good evening ahead.
Gabrielle McCaig: Good morning, and welcome, everyone, to Via's Fourth Quarter 2025 Earnings Call. I'm Gabby McCaig, Via's Chief Corporate Communications Officer and Head of Investor Relations. With me today are Daniel Ramot, Via's Co-Founder and CEO; and Clara Fain, Via's Chief Financial Officer. During today's call, Daniel will review our fourth quarter 2025 business update before handing it off to Clara to discuss financial results and our guidance for the full year 2026. Daniel will end with some additional comments before opening it up to Q&A. In addition to prepared remarks on this call, additional information can be found in our investor presentation, press release and SEC filings on our Investor Relations website at investors.ridewithvia.com. Before we get started today, we wanted to draw your attention to the safe harbor statement included in our press release and investor presentation. Items we discuss today will include forward-looking statements about topics, including, but not limited to, our future financial performance, projections and management's plans and objectives for future operations. Actual results may differ materially from those presented in the forward-looking statements and are subject to risks and uncertainties described more fully in our SEC filings, including our annual report on Form 10-K. Any forward-looking statements that we make on this call are based on our assumptions as of today, February 27, 2026. Unless required by law, we undertake no obligation to update or revise these statements as a result of new information or future events. We would also like to point out that our discussion today will include certain non-GAAP financial measures in addition to, not as a substitute for, financial measures calculated in accordance with generally accepted accounting principles. Definitions of these non-GAAP financial measures, along with reconciliations of non-GAAP to GAAP financial measures are provided in our press release and our investor presentation. And without further ado, I'll now hand it over to Daniel. Daniel Ramot: Thanks, Gabby, and thank you, everyone, for joining us today. We're delighted to report that Via delivered another exceptional quarter, exceeding expectations on both top and bottom line performance. In Q4, our revenue grew 30% year-over-year to $119 million. This was the eighth consecutive quarter with year-over-year platform revenue growth at or above 30%, highlighting Via's ability to consistently deliver rapid, durable growth. Q4 was the strongest quarter in company history for net new platform revenue. This outstanding result was driven by our relentless focus on product innovation and our ability to deliver to our customers not only the most cutting-edge technology in the market, but also the solution that best matches their needs. The number of customers on our platform grew sharply in Q4 to 821. We saw strong organic customer growth of 9% year-over-year, and we added 94 new customers through our acquisition of Downtowner, an important expansion of our platform and exciting opportunity for future growth. We also remain highly focused on maintaining our progress towards profitability. In Q4, we had the narrowest loss in Via's history at negative 6% of adjusted EBITDA margin. 2025 was an outstanding year for Via. Not only did we take the company public and acquire Downtowner, we also achieved rapid and consistent growth throughout the year and continue to invest in our product and team to support durable growth in the years to come. In 2025, we grew platform revenue 31% year-over-year to $434 million. Adjusted EBITDA improved year-over-year by 8 points to negative 8%. In Q4, we continue to win new customers at a rapid rate. We are seeing strong growth in the number of large customers who adopt our platform across the U.S. and globally, in part driven by an acceleration in the number of cities and transit agencies selecting Via to manage their entire transit network. As has been consistently the case throughout Via's history, we saw exceptional retention and growth from our existing customers. For the past year, Via's net revenue retention was 119%. We also recorded the highest gross revenue retention in Via's history, 98%, beating the previous record set just a quarter earlier in Q3 2025. Our incredibly low churn is the result of the meaningful impact in ROI we deliver to our customers and the consistency with which we do so. Sarasota County, Florida has been a Via customer since 2021 when we partnered with the county to launch a new microtransit system. At the time, the county trimmed 15 underutilized bus routes and used those savings to fund the microtransit service. For the same annual budget, Sarasota was able to significantly expand the reach of their public transit network, shorten passenger wait times by 4x and reduce cost per ride by 50%. Further savings of $700,000 annually were achieved by leveraging the microtransit system to serve transportation disadvantaged riders, a service that was previously provided by a separate fleet. Breaking down operational silos is a key advantage that Via platform provides to our customers. This success led to Via being awarded a paratransit software and services contract, representing a 6.3x expansion of our contract. We can now leverage our unified platform to integrate the microtransit and paratransit services and drive even greater savings for the county. I wanted to share another case study that demonstrates the outstanding ROI that our customers can achieve when they adopt our platform. An agency in Missouri was able to reduce cost per ride by more than 50% from $75 to $30 when integrating paratransit and microtransit through our platform. This translates into $2 million of savings per year for the agency. One of our key goals for the IPO was to gain the ability to leverage our public company stature and balance sheet to strategically acquire assets that broaden our platform and global reach. We're very pleased that in Q4, just 3 months after the IPO, we made our first such acquisition. We have been following Downtowner and its founders for many years and have been impressed with their execution and product. We also recognize a strong cultural fit between our teams, which is a critical consideration for every acquisition we evaluate. Over more than a decade, Downtowner built a specialized business focused on efficient public transit solutions for Destination Cities. The Downtowner team developed innovative tools, deep expertise and proprietary data to manage the complex geography and weather conditions, seasonal demand patterns and local commuting needs of these unique environments. In acquiring Downtowner, we gained direct access to these tools, expertise and data, which we can now leverage to expand our platform. We also gained 94 new customers. We believe that many of Downtowner's customers have additional transit technology needs that are well served by Via's platform. The average ARR per Downtowner customer is significantly lower than Via's current ARR per customer, providing an exciting opportunity for growth within the Downtowner customer base. We believe that in the current market conditions, targeted and selective acquisitions such as Downtowner represent an attractive opportunity and sound capital allocation strategy for Via. Product innovation is a key driver of our growth. In 2025, our product development accelerated meaningfully. Our team of 400 engineers, product managers and data scientists released more than 50 new products and major features during the course of the year. A key driver of product acceleration was our use of AI to increase the efficiency of our engineering and product teams. The faster rate of product innovation has allowed us to increase the pace at which we expand our product portfolio and broaden our platform, an increase that is already having a measurable impact on our business. Our pipeline grew more than 50% year-over-year in 2025. While we have always used machine learning to power algorithms, we are now embedding AI across our platform, automating key workflows, improving the learning and decision-making of our algorithms and leveraging Via's proprietary data to generate deep insights and proactive recommendations for our customers. We are setting the industry standard when it comes to developing AI for government, providing solutions that meet the exceptionally high bar for accuracy, reliability and security that is necessary when powering critical public services. We know there's a lot of talk about AI. We wanted to go beyond talk and show you some of the AI products we're rolling out to our customers. As you'll see, the proprietary data we've amassed over more than a decade is a critical foundation underlying many of these products. First, let's take a look at our tool for automating the design of transit networks. Using AI, we leverage publicly available demographic data alongside Via's travel demand, rider mode choice and other proprietary data to generate an optimal bus network. Once we've established the optimal bus network, the AI can turn its attention to the microtransit component of the system. You can see the AI in action as it evaluates a large number of potential zone designs before converging to the optimal microtransit zones. This is a powerful new planning tool that has the potential to revolutionize how transit networks are planned. We have also embedded AI into our operations software, where it monitors the system's operations to proactively generate insights and recommendations. Here, we see insights generated by the built-in agent based on ridership demand data. Each insight leads to an AI-powered recommendation. Planners can rapidly visualize the data in forming the recommendation and take immediate action. In this case, expanding the microtransit zone to cover a whole foods that is driving a lot of ridership. Once the zone change is made, it goes live immediately, allowing riders to travel directly to the whole foods. The same tool also continuously evaluates system safety. Here, we see another AI-generated insight, identifying an unsafe virtual bus stop. With a click, the planner can access satellite footage to review the location. In this case, the planner determines the stop is indeed unsafe and easily removes it from the system. Dispatchers often need to deal with unexpected disruptions. Our AI agent can assist them, transforming potentially challenging and stressful real-time decisions into a human-AI collaborative process that is well informed and seamless. In this example, the dispatcher needs to secure a new ride for a passenger whose vehicle is broken down. The AI agent helps the dispatcher quickly understand how assigning the passenger to a new vehicle will impact other passengers already on that vehicle. The AI agent then facilitates the assignment selected by the dispatcher. Our target market is unique and very few companies that sell into this market and have been able to achieve meaningful scale. As the category leader and thanks to the proven impact that our platform has delivered to cities, we've been able to develop strong relationships with mayors, city managers and other key municipal decision makers. This is evident in the outstanding bipartisan group of mayors who are the inaugural members of our newly launched Mayors Council. The goal of the council is to support transit innovation in the U.S. and facilitate adoption of modern transit technology and innovative transit approaches by mayors across the country. We are confident that the support of mayors on the council will prove instrumental to accelerating adoption of smart transit solutions in cities throughout the U.S. Our market is massive, and we have only begun to penetrate it. Based on a report we commissioned from a major consulting firm, our serviceable addressable market is estimated to be $82 billion. Today, we capture a little over 1% of this market. Across this massive global market, there is an enormous gap between the antiquated technology that government organizations have historically relied on and the cutting-edge software we have developed. This gap is rapidly expanding, in large part, thanks to AI. We believe that transforming this market represents a generational opportunity. It is also a market with a unique set of challenges. While our customers are mission-driven and motivated to provide high-quality service to their constituents, they are burdened by cumbersome procurement and regulatory constraints. They also have many complex and bespoke technical requirements that are essential to their operations. We've spent over a decade developing a deep understanding of these customers. One of our most important early insights was that our customers need so much more than better software. They need better solutions. We learned that the standard seat-based SaaS model will not drive durable growth or achieve meaningful scale when the customers are local governments. That is why we have, from the very beginning, been steadfast in our approach. We must provide our customers not only cutting-edge software, but a complete solution. To do this, we adopted a novel innovative approach to our market. We built an end-to-end platform of software and services. Our platform comprises the world's most advanced AI-powered software for public transit systems. It also incorporates a broad range of technology-enabled services, many of which are provided through a curated ecosystem of third-party providers that we assembled over the years, and it is priced based on usage, not seats. As Via grew, we often faced skepticism about our model. Wouldn't it have been so much simpler to just sell software. But we made what I believe has proven to be a prescient decision to look beyond the traditional software model. Our platform approach enabled us to grow rapidly and become the undisputed leader in our category. Our scale affords us a tremendous data advantage over existing players and potential newcomers to the space. And the services we provide ensure that our platform is tightly linked to the physical world, which we believe will ensure that Via emerges as a long-term beneficiary of AI. One powerful case study for how our platform can leverage AI is our use of autonomous vehicles. By incorporating AVs as a service into our platform, as we've done with Waymo and Chandler, Arizona, we will be able to drive increased margins in our operations and deliver savings for our customers as the cost of AVs declines. Perhaps most interestingly, as we work closely with local government organizations around the world, we've seen how badly they need smart AI-powered solutions in virtually every aspect of their internal operations. We've spent the past decade establishing Via as a company that can deliver complex solutions that really work for the public sector. In the process, we've built strong relationships with mayors and senior city officials the world over. Today, with AI dramatically speeding up product and software development, we're exceptionally well positioned to build on these relationships and partner with mayors and city managers to build AI-powered solutions that extend well beyond public transit. This new initiative is Via AI Labs. Just launched out of stealth, it's already clear that we have a huge opportunity to help cities use AI to solve some of their most pressing challenges efficiently and scalably. As we look forward to 2026, we couldn't be more bullish about the opportunity to leverage our engineering team and category leadership in public transit to meaningfully expand the range of solutions we provide to local governments and help drive efficiency across multiple areas of municipal government. And with that, I'll pass it over to Clara to review the financial highlights for the quarter and the year. Clara Fain: Thank you, Daniel. We are very pleased to wrap up our first year as a public company with another remarkable quarter. Q4 net new revenue was the strongest in the company's history, and we exceeded our revenue and adjusted EBITDA guidance, showcasing our commitment to consistent execution and durable growth as we continue to capture the massive opportunity ahead of us. Now let's dive into the results. In Q4 2025, our annual run rate revenue, which is defined as our quarterly revenue multiplied by 4, was $476 million, representing a year-over-year increase of 30%. This marks our eighth consecutive quarter of 30% plus year-over-year revenue growth for our platform. Our growth continues to be fueled by exceptional strength in the United States with platform revenue up 39% year-over-year in the U.S. In Q4 2025, the number of customers leveraging our platform was 821, representing a year-over-year increase of 23%. Our year-over-year organic growth was 9%, in line with our historical range of 8% to 12%. In addition, we acquired Downtowner, our first acquisition as a public company in late December. This added 94 customers to the platform. In Q4 2025, excluding Downtowner, revenue per customer was the highest in Via's history as more customers than ever expanded their usage and adopted multiple products on our platform. We ended the quarter with 94 customers with annual run rate revenue over $1 million, a 31% year-over-year growth. In 2025, we generated 97% of revenue through recurring fees for access to the platform. Our contracts are typically multiyear, 2 to 3 years on average with additional option years. Our contracting unit is typically the vehicle, whether the contract is software or software and services, we offer bundled price per vehicle per month or per vehicle per hour. This allows our customers to easily scale their usage of the platform. Upfront or onetime revenue is very limited, representing less than 3% of total revenue in 2025 and often consists of software implementation, consulting, hardware or advertising fees. As an example, a customer in Texas contracted for $3.4 million over 3 years. The customer selected our microtransit software and tech-enabled services, including fleet, drivers and call center. The contract includes approximately 22,000 vehicle hours per year at a rate of $50 per hour. This brings the annual contract value of the contract to $1.1 million of annual recurring fees. An annual inflation escalator of 3% is automatically applied in the second and third years of the contract. The contract also included $15,000 of upfront software implementation fees recognized over the life of the contract. We are continuing to benefit from flywheel effects in multiple states such as Ohio and Illinois, where the success of existing customers drives referenceability and allows us to rapidly grow revenue without a corresponding increase in sales and marketing investment. In Ohio, we have seen an 1,800% increase in revenue per sales head with S&M decreasing over time. We ended 2025 with 19 states in flywheel, representing a 73% growth year-over-year. Now let's dig into our margins and expenses, which we're presenting on an adjusted basis. As of Q4 2025, we spent 13% of our revenue on sales and marketing compared to 15% in Q4 2024. Over time, we expect to continue to invest efficiently in S&M to capture our market opportunity. We also spent 15% of revenue on G&A, which was consistent year-over-year. Our G&A expenses went up quarter-over-quarter, driven by a onetime step-up of expenses related to our transition from private to public company, professional services, legal and infrastructure costs as well as increased auto and D&O insurance costs, which both renewed at higher rates. Our research and development efforts are our #1 area of investment. As of Q4 2025, R&D expenses represented 18% of revenue compared to 21% in Q4 2024. Our engineering team continues to gain efficiency by extensively leveraging the most advanced AI coding tools. And it is worth noting that our R&D spend as a percentage of revenue declined meaningfully in 2025 despite the weakness of the U.S. dollar versus the Israeli shekel, the currency of our largest R&D center. We wrapped up Q4 2025 with negative 6% adjusted EBITDA margin, our lowest loss on record compared to negative 10% in Q4 2024 and negative $0.5 million of operating cash flows, driven by improved financial performance and favorable timing of customer collections. Over the past few years, we have been able to drive significant operating leverage while generating rapid revenue growth. We strongly believe that we can continue to execute at the same level in 2026. Now let's turn to 2026 guidance and our long-term plans. For the first quarter of 2026, we expect revenue to be between $123.3 million and $123.8 million, representing 25% to 25.5% year-over-year growth. We expect adjusted EBITDA margin to be between negative 5.9% and negative 5.5% with adjusted EBITDA between negative $7.25 million and negative $6.75 million. For the full year 2026, we expect revenue to be between $542.9 million and $545.1 million, representing 25% to 25.5% year-over-year growth. We expect adjusted EBITDA margin to be between negative 2.3% and negative 1.4% compared to negative 8% in 2025, with adjusted EBITDA between negative $12.5 million and negative $7.5 million. Additionally, we expect to deliver our first quarter of profitability in Q4 2026 with positive adjusted EBITDA, which will be a major milestone for Via and an important step on our path to delivering great returns to our shareholders. Finally, we wanted to reiterate our commitment to our long-term financial goals to achieve 20% to 25% in adjusted EBITDA margin. Now I'll pass it back to Daniel for some concluding remarks. Daniel Ramot: Thank you, Clara. I just wanted to reiterate again how pleased we are with this quarter and the full 2025 year performance. 2025 was a banner year for Via, capped by milestones like our IPO, continued 30% plus growth and an incredible velocity of impactful product development. However, we are still in the early days of transforming the massive and hugely important public transit market, not to mention the opportunity to enable local government efficiency more broadly. And I'm confident in our ability to continue to deliver strong performance in the coming years. With that, I wanted to thank you all again and turn it back to the operator so we can take some questions. Operator: [Operator Instructions] Your first question comes from John DiFucci with Guggenheim Securities. John DiFucci: Since it's one question, I was -- I'll let someone else ask the AI question. So I'm going to go on to something here, something else. Listen, we've done a ton of work on Via. And by the way, this looks really good. So nice job on this quarter and the guide. And we've done a ton of work here on the space lately and realize there's a lot out there that you can do because your customers are public, and so they -- all that stuff is public, you just have to find it. It just takes a lot of work. We also realize in doing this, there's a lot of FUD out there that when taken out of context can be somewhat misleading. So we -- like we see Via as a software-led solutions company. Although there's some stuff out there, I think, with some investors wondering how much services comes into that. We think it's really important as Daniel did a good job explaining that today in your prepared remarks. But I think there's one large customer out there with contracts that are services. That customer, I think, also buys software from you. But I'm just curious, is this somewhat of an anomaly that is services-only contracts that aren't coupled with software? Or is it more common to see in your business? Daniel Ramot: John, thanks for the feedback and the question. You're absolutely right. That specific contract that I believe you're referring to is an anomaly, and it's an outcome of a very specific set of circumstances. Generally, we don't see anything like that in the market across the U.S. or Europe or any of our other markets. We're very focused on selling, as you said, software-enabled solutions. And as I tried to explain in my prepared remarks, as you commented, we think it's absolutely critical to the business model and other companies that have attempted to do it a different way, come in with your standard SaaS model or just insist on selling software. I don't think have been able to scale in any meaningful way. And so this is just -- in our view, this is the way to conquer this market. It's a huge market. And I think with AI coming in, some of this is looking even better than it was before as far as resilience and the opportunity, frankly, to leverage AI to deliver even better results to our customers. John DiFucci: And I think that the unique circumstances around that contract, I think we're fully aware of, and anyone that wants -- we have all that information that's out there. Nice job. Daniel Ramot: And thank you also for all the work that you did on that. That report was excellent and really enjoyed reading it. Operator: Your next question comes from Adam Hotchkiss with Goldman Sachs. Adam Hotchkiss: I guess, Daniel, to start, as you enter '26 and think about the '26 guide, how should we think about what the RFP pipeline looks like in public transit? What are the mix of deals available out there this year versus what you did in '25? And then maybe, Clara, what are the puts and takes around margins from a mix perspective, particularly on the gross margin front? Daniel Ramot: Adam, thanks. What we're seeing as far as RFPs coming out of the public transit systems, agency, cities and so forth, if I take a step back and look more broadly, it's pretty consistent year-over-year. For us, what's interesting is that the number of these opportunities today that we're able to go after versus a year ago, feels much larger because of the expansion of the solutions that we're able to provide, the scale that we're at, frankly, the IPO, I think, has really helped as well. And so we're just seeing -- of the RFPs that are coming out of the opportunities that become available, if I try to estimate what percentage of those can we go after at this stage in early '26 versus, say, early '25, it feels like a significantly larger percentage, and you're seeing that in that pipeline number that we disclosed. So you're seeing both more opportunities and then they tend to be larger opportunities just as far as you're asking about the mix. We're increasingly seeing opportunities to take over entire transit networks that we're today feel very well positioned to go after and are winning. So that's the good sign. So I think we feel very bullish about that pipeline of opportunities coming into 2026. Clara Fain: On the gross margin question, as you saw, the gross margin was consistent quarter-over-quarter, slightly up. The breakdown of the mix of customers buying services was also consistent with about 20% of our customers buying services as well as software. In the long term, we're reiterating our commitment to our 50% target. As Daniel mentioned, the services we provide are core to the business, and they're actually particularly important in the context of AI. We've discussed before that we have multiple levers to get to 50%. But we've also discovered that we have some new levers which are coming faster than expected, Adam, and one of them is AVs. Drivers represent a large chunk of our COGS, about 50%. And that alone could drive a paradigm shift that we're not really factoring into our assumptions. So all the levers are very much in place, and they will contribute over time to gross margin improvement. And in the short term, we believe that gross margin will be consistent with what we've been saying. Operator: Your next question comes from Josh Baer with Morgan Stanley. Josh Baer: Congrats on a strong quarter. I wanted to ask one on the AI moats that you have, but actually not on the data sets and the technology, which I think should be really clear to everyone, and you did a great job demoing that and explaining some of your proprietary data sets. So I want to approach that from a different angle that's sort of unique, I think, to Via and your end market around go-to-market. What do you have -- like how would you characterize your go-to-market moat selling into this government customer base? Maybe a couple of ways to answer like what would it take for a new entrant to effectively sell to government transportation agencies and cities? And you talk about the years of work and investment building up your current go-to-market. Daniel Ramot: Josh, thanks for the question. I totally agree. There are multiple moats from an AI perspective that we believe we have. You mentioned some of them. I think the go-to-market is probably one of the less appreciated ones. This is a very -- there are very few companies that sell certainly at any scale into this market. It's not just the government market. I think I would just kind of go one level deeper and classify it as the local government, specifically in this case, focused on transit and public transportation. And access to that market is very challenging for a number of reasons. The regulatory requirements, the process itself is tough to get through and requires a huge amount of investment. And then in the end, there's a huge element of trust and relationship and understanding the decision-makers, knowing them. We've invested over a decade in doing that. If you were to come out to the U.S. conference, mayors with us and see the relationships that we've built with mayors across the country, that's not a -- it didn't happen to us. We created this through many, many years of investment and delivering solutions to them. And I actually think our business model factors into that as well. I think if we were just selling software, we would be another software vendor that they have across a list of -- a very, very long list of software vendors by being focused on solutions, by providing them sort of wrapping that go-to-market with consulting, with engineers that support them, with people on the ground to help with the deployment, just creates a huge level of understanding between our company and these customers that then allows us to accelerate our delivery and our go-to-market. Operator: Your next question comes from Patrick Walravens with Citizens. Patrick Walravens: Daniel, I'm particularly interested on how you're using intelligence internally and where you see that going. And I'm sure everyone would love to hear your thoughts on Block announced last night that they're laying off 40% of their employees as they're leveraging intelligence across their country -- company. I mean I just wonder what your reaction is to that. Daniel Ramot: Thanks, Pat. That's a really interesting question. We're using -- so there's the obvious stuff. We're seeing incredible gains in efficiency and engineering. I think that's very clear. And I do think that's a paradigm shift in how our teams are working, the rate at which we're able to deliver new product. It's opening up enormous opportunities for us. And we're trying to use these tools, and I think they have been quite successful across the company. So whether it's sort of back-office operations, we've talked about before the way we respond to RFPs. These are extremely complex, I'd say, somewhat convoluted processes that often require hundreds of pages of responses very, very formal and structured. And so the ability to deploy AI to support us in that process, for example, has led to some really nice gains. So across the company, we're trying to deploy these. On the question of how does that affect headcount, I guess it depends what kind of market you are. Our feeling is that in our market, we are just scratching the surface as far as the number of customers that we're able to get to. We're just above 1%. But also within those customers, what we could offer them that at least for me, any gain in productivity that we can achieve, I would like to turn into selling more stuff to more customers faster rather than trying to use that to cut the team in any dramatic way. I guess if you're in a different market and you don't have that opportunity, then maybe that's the right calculus for you. For us, any centimeter -- percent of gain that we can get, we're just going to deliver more value to our customers and I think accelerate our penetration of this market that -- it's not easy to get into this market as I described before. So that's the opportunity that we're trying to pursue rather than necessarily using that to cut our team. Operator: Your next question comes from Brian Peterson with Raymond James. Brian Peterson: Congrats on the results. So Clara, I wanted to understand on Downtowner, how we should be thinking about the financial contributions for 2026. And as we think about M&A opportunities, how does that pipeline look for the next couple of years? Clara Fain: Brian, thanks for the kind words and for the question. The Downtowner acquisition was not about the revenue contribution. We acquired them to penetrate the Destination Cities market and add 94 customers. And those customers are quite small today, but they have the potential to adopt the entire Via platform. So we're pretty bullish on that and the opportunity there and that we're very excited about. On your general question about M&A, we're particularly excited about the M&A opportunities ahead of us. There's a dislocation in the market, and our industry is not immune to that. And so we're going to continue to be very disciplined, but we're seeing lots of opportunities in the market at attractive prices. Operator: Your next question comes from Brad Zelnick with Deutsche Bank. Brad Zelnick: I guess just with a number of new wins in the quarter, can you tell us how regional network effects played a part in winning new business in what sounded like a strong U.S.-led quarter? And also, how are things progressing internationally? Clara Fain: Brad, thanks for the question. We were really pleased with the flywheel effect that we're seeing. I think we're sharing two new examples in the earnings today with Ohio and Illinois. And you can see we're seeing an acceleration of revenue at a much faster pace in those flywheel markets. So we have about 19 states that we consider flywheel today in the U.S. So we're getting started. And as we continue to concur more states, we should see accelerations in those markets as well. So we're pretty excited about it. And I would say this is playing out the referenceability and the flywheel effect are playing out as expected. And you can also derive that in our S&M as a percentage of revenue, which has been continuing to come down despite having a record quarter from a net new revenue perspective. You pointed out that the growth has been fueled by the U.S. The U.S. was up 39% this quarter year-over-year. So we're continuing to see really strong results in the U.S. And our pipeline is definitely reinforced up more than 50% year-over-year, reinforced by that strength in the U.S. market. Daniel Ramot: Brad, I can comment on Europe. Europe is a complex picture, a very interesting and complex one. We have some markets that are strong like the U.K. and then other markets where we're facing some headwinds like in Germany. To try to understand what's happening in Germany, maybe I'll describe the following. We first entered the market, which is typical the same as we did in the U.S. and other places with microtransit. As microtransit is adopted, what we're trying to then transition into is a state where the more and more of our platform is being adopted by those customers. So planning and then eventually that they're acquiring our entire platform. And that is for us to get to that next stage of growth, if you will, that's the transition that's required. In Germany, we were very successful in introducing microtransit. That next phase where adoption of our entire platform is becoming ubiquitous from a change perspective, a regulatory perspective, with the European structure is just proving to take longer than we would have liked, certainly and longer than it took in the U.S. So in Germany, we're just at this interim phase. We're still selling microtransit. We're trying to get to that next level of being able to sell the entire platform. And that really requires -- for that to happen, it requires our customers to change their network to reduce certain fixed routes, replace them with microtransit, combine services that have previously been siloed. That is just -- with the regulatory environment in Europe, it is just proving to be a longer process. I think it's inevitable. We're confident that it is going to happen. It just may take a little bit longer for us to break through and then hopefully see that acceleration come up again. Operator: Your next question comes from Alex Zukin with Wolfe Research. Aleksandr Zukin: Congrats on a solid report. Maybe for Daniel and Clara for both of you, I think you both mentioned opportunities, specifically both on the new product side with some of the AI-powered software that you're introducing. And Clara, you mentioned some opportunities with the autonomous vehicle adoption that should be pretty gross margin accretive, I think maybe a little bit even sooner than what we had in our models. And I'm curious kind of how we should think about that playing out for the coming year. Obviously, we have the guidance. If you could comment on kind of where the investments are for the coming year over and above what we kind of had in our model. And how we should think about gross margin progression, particularly through the year as we look at the guidance based on those products coming to market. Clara Fain: Alex, thanks for the question. And I think you're right to point out that there are some potential step function changes to gross margin from organic efforts around AI and autonomous vehicles. The timing of those is quite interesting to think through. I would say in the very short term, we believe that gross margin will be consistent with what we're seeing, but has the potential to have step function improvement from these levers. And these levers definitely include AI products at scale where we're seeing really nice opportunities as well as the acceleration of the AV rollout with some of our AV partners. And again, we're feeling increasingly confident that, that will happen. In the future that may not be in the next quarter or 2, but it's not too distant either. Operator: Your next question comes from Michael Turrin with Wells Fargo. Michael Turrin: You mentioned starting the year with record pipeline. You're also guiding for very stable growth throughout this year. So I was just hoping you could give us a bit more context around what drives the consistent growth profile you're expecting throughout the year, the visibility you have into what you're guiding for? And then also, how should we think about timing in this market around converting pipeline to bookings and revenue? I'm just aiming to tease a bit more around the durability of the growth profile you're expecting for investors here. Clara Fain: Thanks, Michael. That's actually an insightful question. I'm glad you asked the question. It's worth remembering the model that we're in. We are selling long-term contracts that are multiyear with committed budgets and volume kickers to our customers, meaning that as we sit today, we have over 95% visibility in our revenue guidance for the next 12 months. Meaning that most of the revenue is coming from deals that are already live, contracted or won and about to be contracted. So we have really high visibility into the guidance that we've shared. Now looking forward, we are -- the pipeline is an interesting leading indicator where we're seeing an increasing pipeline of over 50% starting this year. It takes on average 9 to 10 months from a deal to get from opportunity creation to close. So that pipeline on average should convert throughout the year, but really towards the second half of the year, and it's really a good indicator for the demand that we're seeing for 2027. That's how we think about it internally. Obviously, it's on us to execute on the pipeline with the existent win rates to be able to deliver the durability of the growth, but the leading indicator is there. Operator: Your next question comes from Jonathan Ho with William Blair. Jonathan Ho: Congratulations on the strong quarter. I just wanted to understand a little bit more about AI Labs and the opportunity that you see sort of with that launch. And what sort of drove the decision? Like what are customers specifically focused on achieving with AI? Daniel Ramot: Thanks, Jonathan. Really appreciate the question. It's been -- for a very long time, we've been thinking that the access that we have to our customers at the highest levels of municipal decision-making is pretty unique and something that we should be able to leverage to diversify and grow into other areas. The challenge has always been that there's so much to do in our own space in transit, so many new products to build, solutions to develop that we've never quite had the bandwidth to do that and go into these other areas, and we want to remain very focused. What we're seeing with AI and this acceleration in our ability to build product very, very quickly is that all of a sudden, we have a way in a scalable way, not just one-off things that we then can't scale to build solutions that extend beyond transit. And we are hearing from our customers in many conversations that in addition to transit, they're saying to us, if you could do what you did for us in transit in the way we -- I mean, I'll just throw out a couple of examples, the way that we process small business applications, how we deal with sanitation, that would be transformational. And no one else is really doing that for us and no one understands these needs. These are conversations anywhere from mayors to city managers, city council members, but all the way down to staff. And so we've seen these opportunities. I think what's unique about this period is that we have the ability to go after them in a way that I think can be very successful and scalable. And so that's what we're trying to do. Operator: Your next question comes from Scott Berg with Needham & Company. Scott Berg: Congrats on a really nice quarter. I wanted to focus on the gross retention metric at 98% that you said was your best ever, certainly would be one of the best in my coverage universe today. But did you do anything different in 2025 to help power those results? And how do we think about your assumptions around gross retention into your '26 guidance? Clara Fain: Thanks, Scott. Thanks for the question. We've been executing at very high levels of gross revenue retention forever. So part of it is the mission criticality of the platform. But I think this quarter, we reached a record high gross revenue retention, particularly because our customers are benefiting from the entire platform. So as we sell more products to our customers, we are seeing an increasing gross revenue retention with these customers, and it just increases the strength of the platform. So as we think about why we're getting to these levels of retention, I think it definitely comes back to the ubiquity of the platform and our ability to sell more products to these customers and having them benefit from them as we continue to scale. Operator: This concludes the question-and-answer session and we will conclude today's conference call. Thank you for joining. You may now disconnect.
Operator: Hello, everyone, and welcome to YPF Fourth Quarter 2025 and Full Year 2025 Earnings Webcast Presentation. Please note that this call is being recorded. [Operator Instructions] I'd now like to hand the call over to Margarita Chun, YPF's IR Manager. Please go ahead. Margarita Chun: Good morning, ladies and gentlemen. This is Margarita Chun, YPF's IR Manager. Thank you for joining us today in our full year and fourth quarter 2025 earnings call. Before we begin, please consider our cautionary statement on Slide 2. Our remarks today and answers to your questions may include forward-looking statements. which are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by these remarks. Our financial figures are stated in accordance with IFRS, but during the presentation, we might discuss some non-IFRS measures such as adjusted EBITDA. Today's presentation will be conducted by our Chairman and CEO, Mr. Horacio Marin; our Finance VP, Mr. Pedro Kearney; and our Strategy, New Businesses and Controlling VP, Mr. Maximiliano Westen. During the presentation, we will go through the main aspects and events that shape the annual and Q4 results as well as our updated guidance for 2026. And finally, we will open the floor for Q&A session together with our management team. I will now turn the call over to Horacio. Please go ahead. Horacio Marin: Thank you, Margarita, and good morning. I would like to begin by highlighting that 2025 was a transformational and landmark year for the company. First, we delivered exceptional operating performance, consistently beating our own records across all business segments. Second, we almost completed our exit program from mature fields and secure Tier 1 shale blocks in Vaca Muerta. Third, we have taken significant steps forward in the development of the LNG project. Now, let me translate all these milestones into numbers. During 2025, despite the volatile price environment, we achieved a record-high EBITDA of $5 billion. This is the highest EBITDA in the last 10 years and stands as the third largest in the company history, underscoring our resilience and operational discipline despite the 15% contraction in Brent prices. This outstanding outcome was driven by record shale oil production, growing by 42% in December 2025 on an interannual basis. We produced 204,000 barrels per day, exceeding by far the target of 190,000 barrels per day set at the beginning of the year. Progress on the VMOS project was also remarkable, with completion stage above 50% and the first oil delivery anticipated by early 2027. Moreover, the strategic combination of shale oil ramp-up and exit from mature fields allowed us to reduce by 44% our lifting costs in Q4 2025 compared to last year. Including the recent conventional divestment, such as Manantiales Behr and Tierra del Fuego blocks, our lifting cost would have been below $8 per BOE. This consolidate a structural cost reduction, bringing us closer to becoming a pure share player. In 2025, our Vaca Muerta shale reserves significantly expanded by 32%. It now accounts for 88% of our total peak oil reserves, and we increased the reserve replacement ratio to 3.2x and the reserve life to 9 years. Moreover, when looking the full potential of our shale acreage in the long term, including the recent M&A transaction, YPF holds a total well inventory in Vaca Muerta of 16,500 at a 100 stake and 10,300 at ownership. In parallel, we achieved a strong operational efficiency in our midstream and downstream segments. We reached a record-high refinery utilization rate of almost 100% in Q4, growing by 10% internally. This excellence, together with higher efficiency through disciplined cost management and proactive pricing policy, resulted in outstanding adjusted EBITDA margin of $22.6 per barrel. Furthermore, 2025 was a highly active year for YPF with respect to M&A. We executed a significant acquisition, securing 3 world-class blocks in Vaca Muerta, Sierra Chata, La Escalonada, and Rinco de la Ceniza. More recently, in early 2026, we further reinforced our portfolio by swapping assets with Pluspetrol to fully own 3 wet gas block, key for the Argentina LNG project. We also acquired part of Equinor asset in Vaca Muerta in partnership with Vista Energy. For YPF, Vista Energy represent far more than a strategic partner. It's a trusted ally with a shared determination to accelerate Vaca Muerta development. At the same time, we enhanced our portfolio efficiency through targeted investments, including our 50% stake in Profertil and the conventional Manantiales Behr field. These transactions are expected to generate nearly $1 billion in proceeds, for which around $750 million will be collected during December 2025 and 2026. This, in that sense, it fortifies our balance sheet and provides financial flexibility to focus on our core growth business. Turning to Argentina LNG project, I'm proud to highlight the strong commitment of our international founding partners, ENI and XRG. Together with YPF, we formalized this month the foundational structure of the project. Our fully integrated project is supported by one of the most competitive LNG breakeven prices worldwide, positioning YPF as a future leadership in the global LNG market. Finally, in terms of financing during 2025, we successfully raised $3.7 billion of new funding. This proves the company ability to secure multiple financing sources to comply our ambition plan. The company closed the year with a net leverage ratio of 1.9x. All of these outstanding metrics demonstrate the successful execution of our 4x4 Plan. We are committed to becoming a leading shale integrating company and a significant shale exporter in the coming years. Let me walk through the main aspects of a full year and Q4 2025 financial results. Annual revenues totalized $18.4 billion, reflecting a modest decline of 4% compared to the previous year. This was primarily driven by a significant 15% contraction in Brent. This impact was largely mitigated by higher shale production and record-high processing levels. Similarly, Q4 revenues followed the same trend, decreasing 4% year-on-year, while Brent dropped by 15% in the same period. adjusted EBITDA increased by 8% in 2025, with EBITDA margin growing from 24% in 2024 to 27% in 2025. A clear evidence of our ability to drive value in a lower pricing environment. Q4 was outstanding as adjusted EBITDA was nearly $1.3 billion, reaching an impressive 53% internal growth. This remarkable achievement was due to the outstanding performance of our shale operation, which contribute over 70% of our total production mix, coupled with successful execution of our exit program from conventional mature field. As a result, we achieved a substantial reduction in our total upstream lifting costs. Moreover, our midstream and downstream segment also delivered record-breaking operational results, further reinforcing the strength of integration of our business model. A key factor behind this achievement has been the technological transformation that the company started in 2025. To achieve exceptional results, we must change traditional way of working. In that sense, since December 2024, we now rated 7 real-time intelligence centers to provide 24/7 support of both the upstream and downstream operations. Integrating AI with expertise of our technical team, this center optimize decision-making in upstream, refining, and commercial processes. These impressive operational and financial results were achieved through the disciplined execution of our $4.5 billion investment plan, of which approximately 75% was strategically allocated to unconventional operations. In that regard, let me point out that CapEx for 2025 ended around 10% below our original estimate, mostly driven by further operational improvements and lower costs in dollar terms. Finally, we achieved a strong financial performance in Q4, with free cash flow returning to positive territory at $261 million. This improvement was primarily driven by the partial proceeds from the sale of our 50% stake in Profiltein, collecting $200 million, complemented by our solid operational performance. As a result, our net leverage ratio improved to 1.9x, down from 2.1x record in Q3. Finally, I would like to reconfirm that the safety of our workers is our top priority in the development of the activities of the company. During 2025, we delivered substantial progress in our safety indicator, we achieved a frequency rate of 0.09 accidents per million hours worked. This was driven by our integrated safety culture model, along with preventive action, training, and risk control activities. Let me mention that YPF upholds world-class safety standard across all the operations. In the upstream segment, by the end of 2025, YPF record a lost time injury rate of 0.15 per million hours worked, significantly lower than the international benchmark of 0.24 in 2024, as reported by the International Association of Oil and Gas Producers. In the downstream segment, YPF record an exceptional lost time injury rate of 0.06 per million hours worked in 2025, positioning us among the top performers in Solomon's refinery benchmark. I would like to extend my sincere appreciation to all our employees for their strong commitment and steady dedication. We reaffirm our strong commitment to continue improving our safety standards. Now turn the call to Pedro to analyze in detail our 2025 financial results. Pedro Kearney: Thank you, Horacio, and good morning to you all. Now, let me walk through the primary drivers behind the changes in our EBITDA, liquidity position, and free cash flow in 2025 compared to last year. In 2025, adjusted EBITDA increased by $356 million. This achievement was driven by the strategic shift in our production and cost matrix in the upstream business, enhanced by further operational efficiencies, collectively contributing around $900 million. Additionally, records in our refinery protection levels, strict cost discipline, and higher refining crack spreads in our midstream and downstream business contributed to an additional $220 million to our EBITDA growth. At 2024 international price levels, our pro forma adjusted EBITDA would have reached approximately $5.8 billion. The market pricing environment in 2025 shift downwards. The 15% decline reflected in Brent prices resulted in a negative impact of around $800 million, pushing our 2025 adjusted EBITDA to $5 billion. Switching to cash flow, we reported, as expected, a negative free cash flow of $1.8 billion in 2025, primarily due to exceptional and non-recurring effects. This included approximately $550 million related to the acquisition of premier Tier 1 acreage in Vaca Muerta, net of partial proceeds from the divestment of non-core assets, roughly $530 million in one-off exit costs from mature fields, and approximately $160 million in contributions to the infrastructure projects Vaca Muerta Sur, Southern Energy LNG and Oldelval Duplicar, as well as prepayments of dollarized costs for 2026 as part of our proactive hedging strategy. Adjusting for these extraordinary items, free cash flow for the year would have been negative $500 million, largely explained by the negative EBITDA of about $350 million from conventional mature fields, most of which, although formerly part of YPF's asset portfolio, were strategically exited during the year. From a financing perspective, 2025 was a strong year for the company, as we fully met our financial plan by raising $3.7 billion, one of the largest debt financing secured in recent years. This goal was possible through a combination of cross-border trade-related loans and highly competitive issuances in both local and international capital markets at very attractive financing costs. In the international capital markets, we demonstrated our strong market access and credibility by raising $1.6 billion. Early in the year, we issued $1.1 billion through the 2034 bond. In October, we re-tapped our 2031 bond, adding $500 million. More recently, just last month, we re-tapped our 2034 bond, adding $550 million at a yield of 8.1%, the lowest rate secured by the company in international capital markets in the last 9 years. These proceeds were strategically allocated to prepaid at $325 million for the AB loan with CAF, originally executed in 2023, and to fund the partial acquisition of Equinor assets from Vista Energy. On the local capital market front, during 2025, we issued a total of 10 series of local bonds amounting to $1.4 billion, with an average tenure of 2 and a half years and a highly attractive average interest rate of 6.5%. The depth and quality of these issuances underscore the strong demand for YPF securities in the domestic market. Regarding financial and trade-related loans from relationship banks, I would like to highlight the $700 million export-backed loan closed in the fourth quarter. This transaction marked the successful reopening of the syndicated corporate cross-border loan market in Argentina. As of today, we have disbursed only $50 million from this facility, leaving a substantial undrawn commitment of $650 million available before April 2026. Looking ahead to 2026, the company faces maturities totaling approximately $2.1 billion, primarily comprised of $1 billion in local bonds, around $300 million in international bond amortizations, and the remaining in trade-related and financial loans amortizations. Thanks to our robust financial position, supported by diversified funding sources and nearly fully available bank credit lines, YPF is exceptionally well-prepared to meet its debt obligations over the next 12 months. From a liquidity standpoint, by year-end, our cash and short-term investment totaled roughly $1.2 billion. The positive free cash flow of the fourth quarter, combined with increased EBITDA, allow us to close in 2025 with a net leverage ratio of 1.9x. I am now turning to Max to go through some details of our operational performance. Maximiliano Westen: Thank you, Pedro, and good morning to everyone. Let me start by taking a closer look at our upstream performance. During 2025, we achieved sound production growth of 35% in our shale oil output, delivering 165,000 barrels per day. This impressive expansion accelerated in the fourth quarter, with shale oil output averaging 196,000 barrels per day. By December, we surpassed a major milestone, producing over 200,000 barrels per day and exceeding our year-end target by roughly 7%. The outstanding performance of our shale operations more than offset the anticipated decline in conventional oil production, which averaged 90,000 barrels per day in 2025, dropping 32% compared to 2024. The reduction was even more pronounced in the fourth quarter, averaging 68,000 barrels per day, excluding the recently divested assets, primarily the Tierra del Fuego and Manantiales Behr blocks, our pro forma conventional production would have averaged around 35,000 barrels per day by December. Consequently, the combined strategy of divesting conventional fields and scaling up our sale operations, generating significant savings in our average lifting costs, declining 26% to $11.6 per BOE in 2025. During the fourth quarter, lifting costs dropped 44% inter annually to $9.6 per BOE. On a pro forma basis, excluding the recently divested conventional assets, our lifting cost would have been below $8 per BOE. Swimming into our shale oil hub blocks, we maintained best-in-class costs at $4.4 per BOE, virtually unchanged from last year, driven, among other factors, by the implementation of the real-time intelligence center in Neuquen. Turning to natural gas, production averaged 36.2 million cubic meters per day in 2025, reflecting a modest 3% decline versus 2024. This was mainly due to our strategic exit from mature fields, partially offset by a strong 14% increase in shale gas production in 2025. As expected, the fourth quarter was lower sequentially, influenced by seasonality and the continued progress of our divestment strategy. I would like to expand my comments on YPF's leading position in Vaca Muerta by presenting a benchmark analysis conducted by Rystad Energy, a renowned consulting firm specialized in the energy sector. In 2025, YPF's 4 oil blocks in Vaca Muerta delivered the most efficient lifting costs among the leading operators within this shale formation, reaching $4.4 per BOE. Vaca Muerta's total average lifting cost was $5.9 per BOE, and excluding YPF, would have amounted to $6 per BOE. YPF's lifting cost is lower than the Permian Basin, which averaged $4.9 per BOE. This remarkable efficiency underscores 3 key points. First, although still in early stage of development, Vaca Muerta demonstrates exceptional productivity, closing the gap with operational metrics observed in Permian. Second, the YPF asset premium, world-class quality. And third, the efficiency program implemented by YPF in recent years that allowed the company to further reduce its operating costs. Moreover, it is worth highlighting the outstanding quality of Vaca Muerta's source rock, a geological advantage that positions the play among the most competitive and conventional resources globally. The shale oil EUR levels in Vaca Muerta, at its current stage of development, more than double the average of the shale play in the U.S., accumulating roughly 1 million barrels. YPF's shale oil core hub, including La Angostura Sur block, averages a EUR between 1.2 million and 1.5 million barrels. This indicates, first, that Vaca Muerta is a world-class asset with a unique potential that could translate into further competitiveness towards full-scale development. Second, that YPF holds the best acreage within Vaca Muerta with the highest productivity. Regarding well cost, YPF also stands as the most efficient player on the basin, roughly 10% below Vaca Muerta's average. Moreover, YPF achieved the fastest drilling speed in Vaca Muerta. Since 2021, YPF's growth in this area has significantly outperformed its peers. Let me add that last October, YPF reached a record of 540 meters per day in Barril Grande block, adjacent to La Angostura Sur. The well was drilled in 11 days with a lateral length exceeding 3,000 meters. Finally, it is worth noting that even at its current stage, Vaca Muerta's breakeven price remains highly competitive, slightly above Permian's. YPF holds Tier 1 assets that are as competitive as Permian fields, featuring similar breakeven price of approximately $40 per barrel, when assuming 10% cost of capital. This is because YPF's higher well costs are effectively offset by superior productivity and lower lifting costs. Zooming into our hydrocarbon reserves, total P1 reserves under the SEC criteria grew by 17% in 2025. This expansion was mainly driven by a substantial 32% expansion in our Vaca Muerta shale reserves, which now represent 88% of our total proved reserves, partially offset by our divestment program from conventional reserves. In 2025, proved reserve additions totaled 467 million BOE, largely supported by the continuous expansions, discoveries, and improved recovery of our unconventional operations, particularly in La Angostura Sur, La Amarga Chica, Bandurria Sur, and La Calera blocks. These additions were partially offset by higher total hydrocarbon production of 192 million BOEs, downward revision of 58 million BOEs. mainly due to the changes in project strategy and drilling schedules, as well as 29 million BOE reduction explained by M&A transactions. It is worth highlighting that P1 developed reserves increased by 4% in 2025, driven mainly by development activities, new extensions, and discoveries mentioned exceeding annual production levels. Meanwhile, proved undeveloped reserves grew by 34% as new additions offset the volumes developed in the drilling of new wells. Giving the strong ramp-up in shale hydrocarbon production in 2025 and the continued development of our shale reserves, the reserve replacement ratio increased to 3.2x with a reserve life of 9 years. For total P1 reserves, the ratio stood at 2x with a reserve life of 6.7 years. Notably, when excluding conventional assets under our divestment program, the pro forma ratio for our total P1 reserves improved to 2.7x with our reserves life of 8 years. Now, let me share the progress achieved in the exit program from conventional mature fields. To date, 45 blocks out of 48 involved in the Phase 1 of Andes Program have been completed. This considers the reversion of 18 blocks to the provinces in total, including the agreement for 7 blocks with the province of Tierra del Fuego, completed in January this year. Regarding the 16 blocks under phase two of Andes Program, this year, we signed the sale of Manantiales Behr, which we will discuss in more detail later, in 2 blocks in the Malargue cluster. We expect to complete the divestment of the remaining blocks throughout the year. Now, I would like to present an overview on the main M&A transactions executed during 2025 and expected activity for 2026. In 2025, the company completed a series of significant acquisitions, securing 3 world-class blocks for a combined investment of roughly $850 million. Additionally, we acquired the remaining 50% stake in Refinor, among other minor transactions, optimizing fuel supply logistics in the north end of the country. In terms of asset sales in 2025, we also made progress, selling 49% stake in Aguada del Chanar Block and divesting conventional mature fields in YPF Brazil, among other minor transactions. Moving to 2026, let me start highlighting two key acquisitions that we have recently executed to reinforce our leading position in Vaca Muerta. First, in January 2026, we signed a non-cash asset swap agreement with Pluspetrol in Vaca Muerta. YPF transferred to Pluspetrol a 20% stake out of its 45% working interest in two recently acquired blocks from TotalEnergies, La Escalonada and Rincón de la Ceniza. In exchange, Pluspetrol transferred to YPF a 50% stake in three strategic wet gas blocks, key for the development of Argentina LNG project: Meseta Buena Esperanza, Aguada Villanueva, and Las Tacanas. Second, early this month, we acquired a portion of Equinor's assets in Vaca Muerta, increasing our existing ownership in three blocks for nearly $170 million. We added 4.9% stake in Bandurria Sur, one of our core hub blocks, resulting in a total participation of nearly 45%. We added 15% stake in both Bajo del Toro and Bajo del Toro Norte blocks, elevating our working interest in each to 65%. In terms of sales of assets, it is worth mentioning two other relevant transactions executed in the last months. First, last December, we successfully completed the sale of our 50% stake in Profertil for $635 million with attractive valuation. Second, last week, we executed the sale of Manantiales Behr conventional field, the first performing block under the Andes 2 Program, for approximately $410 million and an earn-out of $40 million. Looking ahead, YPF has publicly announced its plan to divest its 70% interest in Metrogas. This transaction is expected to generate significant proceeds during 2026, strengthening YPF's balance sheet and providing the flexibility to advance with our core growth strategy. Now, let me share the progress achieved in terms of operational excellence and technological innovation across our upstream and downstream segments. In the upstream business, particularly within our shale operations during 2025, drilling speed averaged 324 meters per day, while fracking speed averaged 262 stages per set per month, reflecting consecutive record-setting performances. Last January, we further improved those metrics by reaching 378 meters per day and 282 stages per set per month in drilling and fracking speeds, respectively. And if we compare against January 2023, we recorded an incredible growth of 66% and 61%. In addition, on the back of the continuous operational performance, during 2025, we managed to expand our activity efficiently by increasing 26% the oil wells tied in, reaching 250 oil wells on a growth basis, most of them operated by YPF. In the downstream business in 2025, the efficiency program was at the forefront of our decisions and allowed us to reach outstanding results. We inaugurated five real-time intelligence centers to provide operational support 24/7, highlighting the last real-time operations room inaugurated in December in La Plata Refinery, which serves as an integrated central hub for detecting operational deviations, replacing the previous model that monitors each industrial unit independently. In the fourth quarter of 2025, La Plata Refinery was awarded as the Refinery of the Year in Latin America. This is the first time that our refinery won an international award in its 100-year anniversary. The industrial complex also achieved the first quartile performance in multiple Solomon benchmarking KPIs. As a result, in the fourth quarter 2025, we reached record-high processing levels that resulted in a surplus of gasoline and mid-distillates production, enabling YPF to export refined products to neighboring countries and substitute imports. Turning to our midstream and downstream performance in 2025, our processing levels averaged 320,000 barrels per day, marking a 6% internal growth with a strong refinery utilization rate of 95%. In the fourth quarter, as just mentioned, we set a new 15-year record by processing 335,000 barrels per day, achieving a utilization rate of 99%. Last month, we beat our own record again, reaching 352,000 barrels per day, representing a utilization rate of 104%. Turning to domestic sales of gasoline and diesel, dispatch volumes remained robust throughout the year and the fourth quarter, growing internally 3% and 5% respectively, driven by increased demand across all commercial segments. We remained a solid 56% market share, consistent with our historic leadership in the sector, which increases up to 60% when including gasoline and diesel produced by YPF and dispatched through third-party gas stations. In terms of prices, during 2025, local fuel prices remained broadly aligned with international prices, with an average annual discount of only 3%. Moreover, last month, our local fuel prices stood 1% above import parities. Lastly, our midstream and downstream adjusted EBITDA margin remained strong at $17.2 per barrel in 2025. Notably, during the fourth quarter, our margin jumped to $22.6 per barrel on the back of our record processing levels, coupled with higher diesel crack spreads and lower costs. I am now turning back to Horacio for Argentina LNG 2026 guidance and final remarks. Horacio Marin: Thank you, Max. Before we move on to our 2026 guidance, I would like to share updates on the Argentina LNG project. The first phase, known as the Southern Energy or SESA Tolling phase, where YPF holds an equity stake of 25%, aims a total LNG capacity of around 6 million tons per year. In 2025, the project secured FID for the 20-year available charter agreement, covering two floating LNG and will require the construction of a 100% dedicated gas pipeline. Total CapEx will be around $2 billion. It will be partially financed through a project finance structure similar to VMOS financing. Regarding procurement status, main packages for the onshore and offshore infrastructure have already been awarded. The project is expected to start operating between 2027 and 2028. The Argentina LNG phase consider development, design, construction, and operation on a fully integrated LNG condensate and NGL project. It focuses on [ Wenca ] gas block of Vaca Muerta. The infrastructure involved includes a liquefaction capacity of 12 million tons per year through two floating LNG and dedicated gas pipeline. It also consider a dedicated oil pipeline for condensate, wide-grade pipeline for NGLs, and onshore facilities, including fractionation, storage, and port facility. Once operational, the project cash flow will be anchored by long-term offtake agreement with investment-grade counterparties, including the sponsors of the project. The foundational sponsor of the project are YPF, ENI and XRG, an energy investment platform wholly owned by ADNOC. The partnership structure was formalized this month through the signing of a joint development agreement by the three parties. The CapEx of the project, excluding the upstream investment, is estimated to be around $20 billion, including the financial costs. Project leverage is expected to be around 70% of the total cost, consistent with precedent LNG transaction. The project is intended to be financed through non-recourse financing with multiple sources of funding, including ECAs, development banks, and commercial banks as potential anchors. The FID is targeted for 2026. Commercial operation for the first floating LNG unit is expected by 2030, and the second unit by 2031. During 2026, we evaluate the possibility to expand the project for an additional capacity of 7 million tons per year through a third floating LNG vessel, which FID will take place in 2027 or 2028 and COD by 2032. Finally, let me highlight that Argentina LNG holds one of the lowest breakeven price among the leading pre-FID projects globally, as reported by Rystad Energy. This advantage is reinforced by the efficient monetization of natural gas, condensate, and NGLs. In summary, Argentina LNG emerges as a reliable, robust, and flexible alternative worldwide, with all the ingredients to succeed: strong business rationale, coupled with outstanding economics, and a strong support for multiple stakeholders, including the sponsors and the off takers. Finally, I would like to share our updated 2026 outlook. Let's start by addressing our shale oil production plan. For this year, we are targeting production of roughly 215,000 barrels per day, consistent with what we announced in our last Investor Day. This represent more than double 2023 output. Moreover, our year exit rate is expected to be around 250,000 barrels of shale oil per day. In terms of adjusted EBITDA, we estimate a range of $5.8 billion and $6.2 billion based on an average Brent of $63 per barrel. This substantial increase, achieved despite declining international prices, is driven by our strategic shift in the production mix of our upstream operation and continuing efficiency program across the company. We continue to focus on our most profitable shale oil assets while successfully disposing large scale of conventional fields. Compared to 2023, this reflect an increase between 40% and 50%, reaching record high adjusted EBITDA since the beginning of YPF. Switching to our CapEx 2026, we plan to invest between $5.5 billion and $5.8 billion, consistent with our strategy plan disclosed during the Investor Day. Nearly 70% of these funds will be allocated in our shale operation. Regarding the free cash flow, we estimate a neutral to slightly negative position for 2026, as our increased estimated EBITDA and significant proceeds from the M&A transaction previously described will be offset by our CapEx plan, tax payment, and equity contribution to infrastructure projects. As a result, our net levered ratio will push down to the range of 1.6 and 1.7x, below the net levered ratio of 1.9x record as of December of 2025. Before turning to the Q&A section, I would like to once again tell you that I am especially proud to be working in YPF, and all of YPF employee of their commitment and their effort, without whom the remarkable results achieved in 2025 would have been not possible. We are very focused in transforming YPF as one of the best energy companies worldwide, and we continue driving our 4x4 Plan during 2026 with even more passion and conviction. With this, we'll conclude our presentation and open for floor questions. Operator: [Operator Instructions] Your first question comes from the line of Daniel Guardiola of BTG. Daniel Guardiola: I have a couple of questions from my end. One is on production. I saw you just shared a very impressive exit rate for 2026 of 250,000 for shale oil. I wanted to know if you could please provide us with the expected quarterly pace behind these targets, and perhaps more importantly, what are the key operational or infrastructure bottlenecks that could prevent you from achieving these exit rates? That would be my first question on production. My second question is on well productivity. I wanted to know if you can share with us how many years of Tier 1 drilling inventory you guys have at the current development pace that you have? Once you eventually transition or migrate into Q2 acreage, what would be the expected impact on EURs, IP30s, and eventually on IRR? Those would be my two questions. Horacio Marin: This is Horacio. Thank you very much for the questions. The first one about the production. You have to expect during the half of the year that we'll be delivering between 200,000 and 210,000 barrels a day. Not a big increase at all. Why that? Because of the evacuation. That's why YPF was one of the pusher of VMOS, because we need more evacuation for deliver more production. Also, we have a very good numbers in the new ones, in the last, what is La Angostura Sur, and the plant will be finished by the middle of the year. After that, you will see an incremental, a big incremental that we see this year, and we are going to have, at the end, the 250,000 barrels per day. And next year, you will see more incremental, we are talking next year about that, okay? The second one about the merchant acquisition, I have no know if I'm going to answer your question word by word. Well productivity. Okay, the well productivity, if you see in the presentation, we take data from Rystad that compare the benchmark between all the Argentine companies, we see the well productivity for Argentina, the number one in almost all the benchmark is YPF. If you want to see there, you can see their numbers. In the drilling part, you will see that our cost from them is $4,000 per meter. We are very close, our number. What you don't have there, and you will see now, is that we make a very, I would say, very good bidding process, very pushing with the big, big numbers for the international oil service company. We wait after the bidding, or we finish in December, we have reducing unit cost by more than 20% for those tools. During this year, you will see in the first quarter, we have to see reduction in our CapEx per well. Operator: Your next question comes from the line of Bruno Montanari from Morgan Stanley. Bruno Montanari: I have a few questions on my end. First, on the free cash flow generation, can you help us understand, the profile of cash flows throughout the quarters? I'm trying to get a sense of, if there is any concentration, on CapEx or the contributions with Argentina LNG, that could, perhaps make a more concentration of cash burn in any particular quarter, or if there is any particular quarter where there could be positive free cash generation because of the collections from the divestments? That's the first question. The second question, quick one. On your free cash flow outlook for the year, do you consider the sale of Metrogas or only the transactions that are already closed? If I could add a third one, can you comment on what your current drilling completion cost is for the shale hub? Horacio Marin: Thank you, Bruno, for your question. Number 3, I think I just answered before, okay? I pass there, okay. With number -- with the -- you talk about the LNG. The LNG, we've no big investment this year. We are focused this year for the FID of the 12 million ton per year. I mean, it's not the material for any of the companies this year. It's, you don't have to expect a big investment in LNG for 2026. Regarding CapEx, and you say any contribution, I think it will be, we are going to increase. At the end of the year, we have to increase to between 4 to 5 rigs. In the second part of the year, you will see more CapEx. That's why we see that our guidance for this year is more CapEx than previous this year, even though we are increasing a lot our efficiency in all aspects of the company. Regarding what you want to see -- the other you say about Metrogas, yes, we are now in the strip. We are in the finishing with the government that we will get the extension. After the extension, that is very near. I don't know, it's in a month or so. You will see that we are going to sell this year Metrogas. You ask also about how we get the cash flow positive, so I pass to Pedro, that he has all the figures in his mind, okay? Pedro, your turn. Pedro Kearney: Bruno. Just to put this annual free cash flow position for 2026, let me highlight, assuming that we are going to get an annual EBITDA of $6 billion. Assuming -- can you hear me correctly? Bruno Montanari: Yes. Yes, that's good. Pedro Kearney: Okay, great. How are the math behind this neutral to slightly negative free cash flow position that we are forecasting for 2026? Assuming an EBITDA of approximately $6 billion, a CapEx of $5.7 billion, then interest payment of approximately $800 million, taxes of approximately $200 million, and the contributions to the infrastructure project, as you mentioned, should range on a $300 million, including VMOS, SESA, and a potential also expansion on the other system. That puts you -- and adding some extra costs from material fields and working capital, that puts you in a negative free cash flow position of between $1.2 billion to $1 billion. That will be offset by the collections from the M&A. I'm talking about the whole year, the M&A activity that we started at the beginning of the year, and we expect to continue along the year with the Metrogas sale, as Horacio mentioned. That puts you in a neutral free cash flow position, assuming that the remaining M&A activity, in particular the Metrogas sale, will take place during the year. Operator: Question comes from the line of Guilherme Martins of Goldman Sachs. Guilherme Costa Martins: I have a couple of ones from my side. The first one is on the ongoing investment of conventional assets under this project, right? I understand the company plans to be 100% exposed to shale oil. Could you please provide an update on when should we see this milestone being achieved? How should we think in terms of evolution of conventional production for the next two quarters? My second question is regarding lifting costs. I understand there was some non-recurring events in 4Q, some maintenance in shale that impacted the number for the quarter. How should we think in terms of evolution of lifting costs for the next two quarters as well? Horacio Marin: First question, I didn't understand the question. That's why let me ask in Spanish. [Foreign Language] Okay, okay. I would say personal goal. My personal goal is at the end of the year, not to have any production of conventionals, okay? But, so far, we have very few. We have only in Mendoza, but also we are looking to try to get out very quickly. We have only gas in the north of Argentina, that is not operating part of that, and it's always positive cash out there. That is not marginal, but we want to be pure shale company. Now you will see that it will be during this year, the lifting cost is going down, not only because we are out of conventional, but also because we are improving the production of shale, and also because we are focused a lot in productivity. We think that we will have, at the end of the year, in order of total cost of YPF in order of $7 per barrel. I don't know if it's okay what I answer for your question? Are you seeing that I need to go further? Guilherme Costa Martins: No, thanks so much. Operator: Your next question comes from the line of Andres Cardona of Citigroup. Andres Cardona: I have a couple of questions. The first one is in the reserves report. If you could help us to understand how many drilling locations are certified there, if you could put in the context of the total drilling inventory that the company has. The second one is, the review now includes upstream on the benefits. How does this change your, like, desire to develop projects that maybe were on hold because of the economy? This is a matter of the CapEx capacity that you may need to keep those projects on hold for the need to long-term development. Horacio Marin: Okay. First question. In the presentation, you saw [ 16,300 ] location. That is gross, and it's 10, it's gross, and it's 10,000, the net. The one that you have in the reserve, would be the official in for the SEC, is 5% of the location that you already mentioned. We have plenty of reserves. Now are no reserves for the SEC, for the rule, because it's a rule, not the physical way of calculating the reserve. You will see year by year, that as we are developing, that the P1 is, might be increasing a lot comparing with any company because we have a portfolio that is very huge for Vaca Muerta. In the part of RIGI, from my point of view, I think it's a very, very good decision as a government for all the industry, that it will help for sure to develop the full Vaca Muerta for all the industry. We think that it's a positive decision, and we are analyzing, and we are now because of the RIGI, we are looking at how to develop all Vaca Muerta for YPF in the best way for making value for shareholders. That is the reason why next year in April, we are going to go to New York to explain the full development of YPF from 2026 forward. Okay? Operator: Our next question comes from the line of Nicolas Barros of Bank of America. Nicolas Barros: So just one question here from our side, on your LNG project, right? Given the recent news flow, what are your expectations on bringing a new partner to join the project? Horacio Marin: Now, you know that we have a binding signature between our founder partners, that what they are is ENI, XRG from -- and from the subsidy from ADNOC and YPF. We are analyzing the interest of a 4 partner in this moment, but it's not like it's necessary, the 4 partner, to develop the project. With the 3, we can develop all the projects for the 12 million tons per year size. Okay? That is the answer. Operator: Your next question comes from the line of George Gasztowtt of Latin Securities. George Gasztowtt: I was wondering on the refining side, how you're seeing the refining margin coming so far this year after an impressive quarter. I know that local prices at the pump and global fuel prices have remained attractive, but obviously, Brent has firmed up towards the sort of latter half of the quarter. Are you seeing your cracks hold or starting to compress? Horacio Marin: We have an excellent price policy that we are following, I don't know, it's all around the world also, that we can see all the price of any pump of any gas station in real time. If the spread change, okay, if they reduce, I have to reduce the price. If they increase, I have to increase. If the price of oil go up, I have to go up. If they go down, I have to go down. That is how we manage the price in YPF. The second one is with RIGI attention? George Gasztowtt: No. That's it. Operator: The next question comes from the line of Matias Cattaruzzi of Adcap Securities. Matias Cattaruzzi: First, can you break down the upcoming LNG and infrastructure commitments for 2027 and '28? And then I have another question about sensitivities. But if you want to reply first..... Horacio Marin: Another question or not? On the second question. Matias Cattaruzzi: Okay, the second question is, with Brent at $70 per barrel and fair break-evens at $45, for YPF, what would be the elasticity going forward? Do we take into account the investor day that YPF did? If the production plan can change if these prices maintain over time? Horacio Marin: Okay. The LNG this year, I say, is not material, okay? Really, I prefer to say not material because I have a commitment with all the partners now. I have not to say what is not public, okay? It's not material for any of the 3 companies. For '28, if we get the FID, what is our goal? Our goal during this year, it will be more important, it will be more material, that we will explain in really next year, I don't know, it's April or March in New York. I will explain in detail, very good detail, so there you can get all the numbers, okay? Our goal for all the 3 partners today is to get the FID this year. We have to start after to building all the infrastructure for the LNG to be in 4 years, everything done, okay? The second one, you say the, our break even $45. What is our specific brand? I don't understand what you mean. Matias Cattaruzzi: [indiscernible]. Horacio Marin: Okay, if this break even to $45, we, I think we are going to have another war. There will be no LNG in the life. It would be -- I think it's another war. I don't expect that, but if that happen, this year, why we accelerate going out from the conventional, the more, I would say, more conventional, no, the marginal field, is we prepare for. If the analyst was right that the price was going to be down this year, we prepare not to have problem for the CapEx for this year, are going up, because after this couple of years, YPF will be so strong that you will see in the future. But if Go to $45, for sure, even our pre-break-even price is $45 this year, we have no problem. For next year, we have to change because, even though we are profitable, we don't have the capital unless you give the capital for us. For sure, we will change. Okay? Matias Cattaruzzi: Okay. And if it goes to $70, $75, do you plan on accelerating CapEx or? Horacio Marin: This -- today, this year, no, because we have to finish VMOS, we have to increase the evacuation, okay? As soon as we have the evacuation, if we can accelerate, it's my goal to be as quickly as possible. Remember that I want to be out of YPF in '31. So I have to deliver everything to YPF till '31. That is my goal. Operator: We don't have any further questions. I'd now like to hand the call back to Horacio Marin for final remarks. Horacio Marin: Okay. Thank you very much for all your questions. Thank you very much for all this year to be cooperative and ask questions that are good and challenging for us. I can tell you that I see the figures of the company in more detail than you can see, almost in all the figures, and I see this company is doing very well. Our thing is now the strength of the current YPF is amazing. I will see to make big value for all the shareholders, is our goal for all our team. We are very proud every day working in YPF, delivering our 4x4, and we are very exciting and very proud, all of us, that we are delivering what we say at the beginning of 2024. For you, that they are analysts and for all the investors, that we are going to work very hard to make Argentina exporting more than $30 billion in 2031, and deliver a lot of value for all shareholders of YPF. Thank you very much. Operator: Thank you for attending today's call. You may now disconnect. Goodbye.
Operator: Greetings, and welcome to TeraWulf Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. John Larkin, Senior Vice President, Director of Investor Relations. Thank you. You may begin. John Larkin: Thank you, operator. Good afternoon, and welcome to TeraWulf's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Chairman and CEO, Paul Prager; CTO, Nazar Khan; and CFO, Patrick Fleury. Before we begin, please note that our remarks today may include forward-looking statements. These statements are subject to risks and uncertainties, and actual results may differ materially. Words such as anticipate, expect, believe, intend, estimate, project, could, should, will and similar expressions are intended to identify forward-looking statements. For a discussion of these risks, please refer to our filings with the SEC available at sec.gov and in the Investor Relations section of our website. We will also reference certain non-GAAP financial measures. Reconciliations to the most comparable GAAP measures are available in our earnings release and filings. With that, I'll turn the call over to our Chairman and CEO, Paul Prager. Paul Prager: Thank you, John, and good afternoon, everyone. 2025 was a defining year for TeraWulf. We said we would transition this company into a scaled power-backed AI infrastructure platform, and we did. Our strategy is simple and disciplined, control energy advantaged sites, engineer infrastructure around power and contract long-term credit-backed AI capacity. Everything we did in 2025 supports that strategy. First, we acquired 100% of Beowulf Electricity & Data, eliminating related party complexity and fully integrating power generation expertise into our platform. In today's market, power is the gating factor. If you don't control power, you don't control your destiny. We do. Second, we secured long-duration site control at Cayuga, up to 400 megawatts at a retired coal facility with real grid infrastructure already in place, brownfield, power backed, scalable. That's our model. Third, we signed a 450-megawatt lease with Fluidstack supported by Google's credit. That was a platform-defining deal. It validated our model, our execution capability and ability to contract at scale. With Google's warrants, it will be our largest shareholder. That alignment speaks for itself. Fourth, we replicated the model in Texas through the Abernathy joint venture, proving portability across power markets. And fifth, we executed the WULF Compute and Flash Compute financings. These transactions demonstrated that contracted credit-enhanced AI infrastructure supports scalable and repeatable capital structure. Operationally, we delivered WULF Den and CB1, began recording HPC revenue and have now delivered CB2A for Core42. We are building, delivering and contracting simultaneously. And since year-end, we added approximately 1.5 gigawatts of additional power back capacity in Kentucky and Maryland. Now let's talk about what actually differentiates us, power and execution. The AI build-out is not constrained by GPUs. It is constrained by power, interconnection, transmission and increasingly new generation. That's why Morgantown matters. Morgantown is not just another data center site. It is a former coal generation facility in the Washington, D.C., Northern Virginia corridor, one of the most power-constrained data center markets in the world. Our Phase 1 vision includes approximately 500 megawatts of new dispatchable generation, 250 megawatts of battery storage and 500 megawatts of data center load, followed by a similar Phase 2. Critically, the site is being engineered to operate as a net generator to the state. We are not just consuming capacity. We are adding it in constrained markets that is the only sustainable model at scale. This industry is moving towards integrated bring your own generation campuses. We are well ahead of that curve because we are fundamentally a power company that builds and operates digital infrastructure, not the other way around. We know how to permit generation. We know how to build generation. We know how to operate generation. We understand grid behavior, and we know how to integrate generation, storage and compute in a way that works for customers and regulators. There are very few teams that can do that credibly and at speed. We are premier among them. Turning to Kentucky. Demand is extremely strong. We are engaged with every major hyperscaler and several large AI compute platforms. A data room is open, diligence is active. Conversations are robust and substantive. This week, we met directly with Governor, Beshear and state leadership. The alignment at the state and local level is clear and constructive. Kentucky understands the economic and strategic import of power backed AI infrastructure. This is 480 megawatts, a campus with immediate power availability, expansion potential and strong state support. We are excited and highly confident in the long-term value of this asset. While we execute on the platform, we are consistently evaluating a constant pipeline of additional opportunities. We review hundreds of sites and most do not meet our standards. We are disciplined around 4 key elements; power control and durability, scalability in 250 to 500-megawatt phases, signed credit-backed contracts, we do not speculate. And fourth, capital efficiency. We turn sites away all the time. But when we do find one that meets these criteria, we move decisively. Importantly, we already control the sites necessary to deliver our targeted 250 to 500 megawatts of contracted capacity annually through the end of the decade. The runway is in place. Growth from here is execution. Finally, we are building the team to match the ambition of the platform. We recently added a senior data center construction lead for Meta and have strengthened origination, project management, commissioning and cybersecurity capabilities. This business is one in the trenches of engineering detail, construction discipline and operational rigor. We are staffed accordingly. So in summary, the strategy is clear. The sites are secured. The capital is in place. Customer demand is strong. The team is built. Now it is about disciplined delivery, turning contracted megawatts into energized capacity and durable recurring cash flow. With that, I'll turn it over to Nazar. Nazar Khan: Thank you, Paul. Let me start with delivery and risk compression. WULF Den and CB1 were delivered in the third quarter and generated revenue throughout the fourth quarter. CB2A is operational and CB2B is expected to be fully online in March. By the end of the first quarter, all Core42 capacity will be energized and revenue producing. Following contract execution, Core42 requested incremental fit-out enhancements. We adjusted sequencing accordingly. The monthly recurring charge was revised, no penalties were triggered and revenue commencement remains aligned with the customer's deployment schedule. Turning to the Fluidstack buildings. CB3 is expected to deliver in mid-May. After signing, the tenant finalized certain design optimizations, which we incorporated without changing building footprint or lease economics. The associated revenue timing impact has been incorporated into the financial model. Importantly, CB4 and CB5 were designed collaboratively with the tenant from inception. These buildings reflect a fully standardized, repeatable design and represent the majority of contracted WULF compute capacity. Several structural improvements materially reduce execution risk. First, electrical redundancy has been optimized and standardized. Second, trade stacking and sequencing have been refined to minimize rework. Third, long lead equipment was procured after final design alignment. And fourth, mechanical and electrical systems now follow a repeatable installation model. Execution risk declines as design standardizes and CB4 and CV5 reflect a mature optimized build. Both buildings remain on schedule with targeted lease commencement dates of third quarter and fourth quarter of 2026, respectively. Through design optimization, we increased critical IT capacity from 162 megawatts to 168 megawatts per building without impacting the base construction budget. That incremental 12 megawatts across the campus is expected to generate approximately $200 million of additional lease revenue over the initial term. Finally, Abernathy, our joint venture remains aligned with its fourth quarter 2026 lease commencement and continues progressing under fixed EPC structure, which further limits construction cost variability. Execution requires managing scope, timing and cost in real time. We have incorporated adjustments transparently and remain focused on disciplined delivery. Large-scale AI infrastructure requires active management of scope, schedule and cost. We have incorporated refinements transparently, preserved economics, increased capacity and maintain budget integrity. Execution remains disciplined and on track. With that, I'll turn it over to Patrick. Patrick Fleury: Thank you, Nazar. The second half of 2025 was transformational for the company. We secured over $12.8 billion of HPC lease agreements, executed $6.5 billion of debt and equity-linked financing and materially strengthened our balance sheet liquidity while carefully managing and minimizing dilution. Let's begin at a high level before diving into the financial details. We are a business in transition and executing on rapid growth. The 2025 results still reflect a meaningful contribution from Bitcoin mining and its inherent volatility, including commodity pricing and complex network difficulty dynamics. Over time, that volatility will decline as long-term credit-enhanced HPC revenues become the dominant driver of results. Importantly, while mining introduces revenue volatility, its flexible load profile has been strategically valuable at Lake Mariner, supporting demand response participation and power cost management. Mining is not a long-term growth focus, but it has enabled the transition. The 2025 results of operations reflect that transition in motion and the balance sheet reflects that we have the capital structure to execute. In the fourth quarter of 2025, revenue was $35.8 million, down from $50.6 million in 3Q '25, primarily driven by lower Bitcoin production. Importantly, HPC lease revenue increased to $9.7 million in Q4, up 35% from $7.2 million in Q3. For the full year, revenue increased 20% to $168.5 million from $140.1 million in 2024, with digital asset revenue of $151.6 million and HPC lease revenue of $16.9 million. We commenced HPC leasing in July 2025 and have energized 18 megawatts of critical IT capacity as of year-end. As additional buildings come online, revenue mix will continue shifting towards stable contracted HPC revenue. Cost of revenue, exclusive of depreciation increased 10% from $17.1 million in Q3 to $18.9 million in Q4. Demand response proceeds recorded as a reduction in cost of revenue decreased [Technical Difficulty] million in Q3. For the full year, [Technical Difficulty] million in 2024, primarily due to higher realized power prices. Demand response proceeds also increased year-over-year from $8.6 million in 2024 to $17.7 million in 2025. Operating expenses increased as we scaled the platform to support HPC deployment. Quarter-over-quarter operating expenses rose to $8.8 million from $4.5 million. Full year operating expenses increased to $19.7 million in 2025 from $7.6 million in 2024, reflecting staffing and operational readiness. For context, TeraWulf finished 2024 with under 100 full-time employees and will exit 2026 with close to 300 full-time employees. Let me address the HPC leasing segment profitability as presented in Note 19 of our 10-K. The as-reported annual segment profit margin is approximately 42% versus our long-term guidance of approximately 85%. That difference is driven by 3 factors; first, $1.2 million of tenant fit-out revenue and associated costs during 2025. PFO carries a modest margin as provided for under the HPC leasing. Second, $4.1 million of development and pre-revenue operating costs; and third, partial period revenue contribution as buildings [ ramps ]. Adjusting for those factors yields approximately 77% segment profit margin in 2025, which is consistent with ramp expectations and converging towards our 85% steady-state margin guidance as utilization stabilizes. SG&A expense also increased as we scaled the platform to support HPC deployment. Quarter-over-quarter, SG&A expense rose to $66.6 million from $16.7 million. Full year SG&A expense for 2025 totaled $147.8 million from $70.6 million in 2024. After adjusting for stock-based compensation, SG&A increased from $39.7 million in 2024 to $94.5 million in 2025. This increase is primarily attributable to an incremental $47.5 million of new hires, strategic growth performance and milestone-based employee compensation in 2025, reflecting the notable scale of execution achieved during calendar 2025. Adjusting for this item results in total SG&A of approximately $47 million in 2025, in line with our prior guidance of $50 million to $55 million. Depreciation increased to $88.6 million in 2025 from $59.8 million in 2024, reflecting infrastructure placed into service and accelerated depreciation of $19.6 million associated with certain mining assets transitioning to HPC use. Interest expense in Q4 was $62.4 million compared to $9.8 million in Q3, and we recognized interest income of $31.5 million in Q4 compared to $4.1 million in Q3. Annual interest expense for 2025 and 2024 was $80.2 million and $19.8 million, and we recognized interest income of $39 million and $3.9 million, respectively. The increases in net interest expense were expected following our capital raises at TeraWulf and WULF Compute in the second half of 2025. Actual cash interest paid during Q4 and calendar year 2025 was $6.9 million and $13.9 million, respectively. Change in fair value of warrant and derivative liabilities in 2025 was a loss of $429.8 million, primarily related to the Google warrant. This is a noncash loss and therefore, does not affect our liquidity. Equity and net loss of investee net of tax for 2025 was $4.1 million, which represents TeraWulf's 50.1% share of the net loss of the Abernathy Joint Venture, which was formed in October 2025 and has not yet commenced operations. Our GAAP net loss in 2025 was $661.4 million compared to a net loss of $72.4 million in 2024, with the increase primarily driven by noncash fair value adjustments related to the Google warrant and noncash depreciation. Our non-GAAP adjusted EBITDA in 2025 was negative $23.1 million, down from positive $60.4 million in 2024. As a reminder, these results are inclusive of significant increases in SG&A and operating expenses over the past 12 months as we invest heavily in our HPC business. Turning to the balance sheet and liquidity. As of December 31, 2025, cash and restricted cash totaled $3.7 billion. Total assets amounted to $6.6 billion, with total liabilities of $6.4 billion. Regarding liquidity, as detailed in our fiscal year-end 2025 investor presentation on the slide titled Capital Structure. As of January 31, 2026, the HoldCo parent entity had approximately $500 million of available cash or approximately $300 million pro forma for the Kentucky acquisition announced on February 2. Regarding project level capital positions and construction progress, both WULF compute and Abernathy are fully funded through substantial completion with long-term fixed rate financing, eliminating construction funding uncertainty and reducing reliance on near-term capital markets access. Importantly, we do not anticipate the need for additional equity to fund our currently contracted development. As of January 31, 2026, WULF Compute had approximately $3 billion of gross cash or $2.6 billion net of debt service reserve and interest-earning construction accounts, with $850 million of CapEx spend complete and $2.38 billion remaining. That leaves approximately $200 million of cash cushion, which is incremental to the substantial contingency embedded in the financing structure. As Nazar noted, schedule adjustments resulted in approximately $16 million less projected revenue in years 2025 through 2026. However, design optimization has increased capacity from 162 to 168 critical megawatts across CV4 and CV5, generating approximately $200 million of incremental revenue over the initial lease term. The net effect improves projected cash flows and reduces expected debt and maturity by approximately $45 million versus prior projections. Finally, with regard to the Abernathy JV, as of January 31, 2026, the JV had approximately $1.5 billion of gross cash or $1.2 billion net of debt service reserve, interest during construction, letter of credit and HoldCo LockBox accounts, with $268 million of CapEx spend complete and $1.1 billion remaining. That leaves approximately $70 million of cash cushion at Flash Compute with a further $100 million liquidity reserve at the parent JV, supported by a $1.35 billion lump sum EPC contract with [indiscernible]. With respect to Kentucky, we have proposals in hand for secured loan facilities to fund pre-lease development to preserve HoldCo parent liquidity. Demand for near-term power remains strong, and we are targeting 480 megawatts online in the second half of 2027. We do not build on speculation. In summary, 2025 reflects a business transitioning from volatile Bitcoin mining revenue to stable contracted HPC revenue. Mining has strategically supported that transition. Contracted HPC revenue is ramping, liquidity and contingency are strong. With that, operator, we are ready to take questions. Operator: [Operator Instructions] Our first question comes from Mike Grondahl with Northland Securities. Mike Grondahl: First, I just wanted to start with Kentucky. That site sounds like the reception has been strong. Could you give us a few more details on the site and what an ideal customer or lease would look like there? Paul Prager: Mike, this is Paul Prager. It's a fantastic site. This was the site of a former smelter. It's at a transmission super highway. Multiple utilities can service the property. What was most compelling about it, was its central location and the immediate availability of power in scale. Demand for the site is extremely strong. Our data room is open. Every major hyperscaler and several large AI compute platforms are doing diligence. The conversations to date have been substantive with some written term sheets already coming over the desk. Earlier this week, I was down in Kentucky. I met with Governor, Beshear and state leadership. The alignment at the state and local level is clear, very constructive, very, very, very pro-business. The importance of this project for the local community, particularly the public schools, which Kentuckians are super proud of is massive. We held a community info session 2 nights ago. We had a job fair yesterday. We filled the auditorium and then some. We're extremely excited and confident in the long-term value of the asset. As Patrick has said from day 1, we're all focused on the best financial credits to be our long-term customers. I think we've operated that way in the past, and that's the message going forward. I think you'll see a world-class credit as our next customer for what we're hoping to be a 10- to 15-year deal. I think we'll see that deal happen pretty soon. I don't want to give you a drop dead date, but we're in very, very active and substantive discussions. Mike Grondahl: Great. And then secondly, the Maryland site, seems like a lot of potential up to 1-plus gigawatts, but a little bit more complex. And kind of playing into what you guys have talked about, bring your own power, how does that play into some of TeraWulf's strengths? Paul Prager: Sure. Just to be clear, Chesapeake Data, it's about the power and load differentiation. It's a gig site with certainly a gig data center load capability, 500 megawatts of battery storage capability. It's a former coal generation campus. It's in the Northern Virginia corridor, which means prices are exceedingly competitive. It's designed to be a net contributor to the Maryland grid. It's very well supported by Governor Moore and MDE. Again, both Maryland and Kentucky, by the way, have very sophisticated brownfield programs, which make it really easy for a guy like us who's been around the block and owned and operated coal-fired power plants shutting down, mitigated them, did everything the right way. These 2 states have very, very progressive programs on how we do that at commercial feasibility. Listen, the market is moving to bring your own generation. We said that a year ago. In December, Alphabet bought Intersect for almost $5 billion. In January, Microsoft raised dedicated generation as part of their 5-point infrastructure strategy. President Trump in January floated the notion that PJM emergency auctions needed to incentivize new generation. New generation projects would go to the top of the queue for interconnect. And then just the other night, in the State of the Union, the President stated data centers need to build and fund their own generation. So that's where the world is going. We have a real and growing power shortfall. Morgan Stanley says potentially 47 gigawatts, 2025 to '28. The hyperscalers are openly stating that power is the binding constraint. Look at anything recent public commentary by Colette Kress, NVIDIA's CFO, Sundar, Alphabet's CEO; certainly Jens Huang, NVIDIA's CEO. I mean it's all about we need power. So delivering generation alongside that load solves the problem. We could bring incremental megawatts to the grid or the system, dispatchable generation using CCGTs, not just bridging power. And we have a history of partnering with grid operators to solve reliability and adequacy challenges. What's our core competency? We've been talking about this. This is the only team out there. For 25 years, we have been developing, building, renovating, rescuing generation, 6 gigs of power generation experience on this team together on this team, it's been over 25 years. We have deep expertise in siting, interconnection, generation development. And that's why we could go and take on a project like Morgantown and have the support that we can from both the local and state communities as we pursue this. We're really excited about Morgantown. It's a big job, but it fits into our schedule. And again, we've told the world we're 250 to 500 incremental megawatts of data center load every year, and this fits right in. Operator: Our next question comes from Tim Horan with Oppenheimer. Timothy Horan: Do you think the pricing and terms and conditions in Kentucky can be materially better than what you've done in the past? And the construction schedule seems pretty ambitious. Do you have the labor and all the equipment you think you'll need and, I guess, the permits to get it done? Paul Prager: So I think I'll go first and maybe Nazar, you can go second. In terms of the labor, yes, Kentucky is a fantastic -- it's just a fantastic place. You have not only the construction expertise and the trades expertise, but you got people that really want to work. We brought on for that job Fluor, which I consider to be a world-class contract party. We've dealt with them in the power space for a long time. They have relationships along in our C-suite for many, many years at every level. We are already ahead of the curve in sort of procurement. We have a proven design that our hyperscaler customers really like. And we think because it's immediate available power, we don't think -- we know because we've got this very robust conversation going on right now with folks that want to come in and be our customers there for competitive pricing. Naz? Nazar Khan: Yes. And just to add to what Paul said. As Paul said, we brought in a Fluor on the EPC side. So we're already hitting the ground running with respect to the overall development of the project. And so the time lines that you see for the second half of '27 are reflective of ongoing and meaningful discussions already with the EPC. So that's -- so we feel pretty good about the overall time line. The other big component is gathering the labor that's going to support the project as well. And so there have been efforts already underway for both the mechanical, electrical and civil scopes to get the requisite labor to support the project as well. So that date is informed by quite a bit of discussion that we've had with Fluor, who's our EPC as well as the work that we've done on site since the acquisition. In terms of just the overall economics, I think we've said these on prior calls, we really think about these projects on an unlevered yield basis. And so if you look at where we've been historically, we think we'll be in that ZIP code or maybe better over time. But again, as we think about the overall economics of the project, we're always kind of zeroing in on what's the unlevered yield that we're developing at and pushing to kind of maintain and continue to increase that as well. Operator: Our next question comes from Chris Brendler with Rosenblatt Securities. Christopher Brendler: Congratulations on the progress here. I wanted to ask on couple of -- on the power side. First, I noticed that the PUE across all these sites is right in line with the initial deals at 1.25. And you mentioned in the slides that that's best-in-class. And my understanding was there were certain aspects of like Mariner and Cayuga that drove that 1.25, but maybe I'm mistaken, it seems like it's standard for TeraWulf to operate at that incredible efficiency. Can you just give us a little color there on why you're able to sort of runcurles around your competitors when it comes from a PUE standpoint? Nazar Khan: Sure. Chris, it's Nazar here. So there's a couple of factors in that. As you noted, one is just the geographic location. And again, as we are more in the northern half of the country versus southern half of the country, there are benefits that we have from an ambient conditions perspective with respect to the design and being able to meet that peak PUE. You'll see the Abernathy site is at 1.4 PUE, again, which is reflective of just the geographic location. In addition to that, we have invested heavily kind of on the cooling side as well. And so we're giving ourselves extra room on the design that we have on cooling as well to maintain that lower PUE. So in general, as we think about where we are for generally kind of in the northern half of the country where we have these off seasons during kind of the winter and the spring and where the summer isn't sustained heat, we think we can kind of maintain that 1.25 PUE. Christopher Brendler: Okay. Was there also a redundancy aspect to it? Are you still not using big diesel generators in these sites? Nazar Khan: That's correct. And again, that gets back to these brownfield sites. So typically, you're seeing us play at brownfield industrial sites. And the way to think about it is when the smelter was there, there was a significant investment to design and build a smelter at that site. The last thing that Century wanted was a single point of failure on power coming into the site, no different than a data center, right? So there's 5 different lines coming into that site, which provides a considerable amount of kind of redundancy. So when we look at sites like that, we see that there are multiple independent pathways for the delivery of power, which obviate the need for on-site kind of backup generation. So again, Morgantown, similar. It used to be a former coal-fired power plant, that 1.5 gigawatt coal-fired power plant did not want to have a single point of failure and getting power out. We're utilizing that same system now to kind of bring power back in. So the big benefit with these industrial -- former industrial brownfield sites is that usually, they have that built-in redundancy that data centers want as well. Paul Prager: I just wanted to thank for that question regarding PUE because we put a page in the deck called critical IT capacity, the metric that matters. And what we're going to be trying to do and really sort of ensure the Street and our retail shareholders understand gross megawatts measure scale, but it's critical IT megawatts that measure monetized execution. And we think of TeraWulf as an execution story. So we're really going to be reporting more in the context of critical IT as opposed to just gross megawatt capacity. We think it's far... Christopher Brendler: Great. One more quick question is the 0.5 gig of battery power sort of caught my eye. Can you just give us a little color on why and what that means? Nazar Khan: So as we're adding these large loads and if you see in the statements that we've made, we want the site to be overall a net supplier of energy back to the grid and to the state. So having that battery storage allows the load at the site to operate in a way [Audio Gap] really impacting peak demand. And so it's kind of a critical peak demand shaver, which we think, again, provides -- makes the loads that are there assets back to the grid rather than burn it. So we think the right composition is about 0.5 megawatt of storage per megawatt of load. And so that's why you see in each of the phases at Morgantown for every megawatt of load, there's about 0.5 megawatt of battery storage. Christopher Brendler: That's great. Congrats on 2025 transformational year, looking forward to 2026. Operator: Our next question comes from Nick Giles with B. Riley. Nick Giles: Guys, I want to congratulate you for the progress across all fronts. Maybe just following up on that last one, you mentioned the battery storage, and there just appears to be some different moving parts at Chesapeake. So can you just give us a sense for how CapEx could differ from Mariner and what you're doing to really derisk that development? Nazar Khan: Sure. So when we think about -- as we think about the composition of Morgantown, as you noted, there's a few different legs here versus what we're doing at Lake Mariner or other sites. On the data center side, we're in that $8 million to $10 million per megawatt range for CapEx. And so that's what we've done at Lake Mariner, at Abernathy. And as we look to contract Kentucky, we're in that same range. In Morgantown, now, we're adding 2 incremental legs. One is the power generation side and the second is the battery storage. On the power gen side, we're in that -- we're going to be somewhere in the $2 million to $3 million per megawatt range for the fully delivered power plant. Part of that will be time. Part of that will be the type of turbines that we are deploying, and we're working on a number of different alternatives for that site as we speak. But that will be around $2 million to $3 million per megawatt for that capacity. And there's about another million or so kind of dollars per megawatt on the critical IT load. So kind of the battery storage is usually kind of priced in a megawatt hour basis. But when we translate it back to just kind of the overall load, that's around another $1 million. And so when we think about what we're offering back to our customer, it's the data center that they're already paying for in other deals that we have, that $8 million to $10 million per megawatt range. In addition to that, now it's the components on the generation side, the $2 million to $3 million per megawatt on the dispatchable gas-fired generation and then another $1 million or so on the battery storage. So all in around $13 million to $14 million per megawatt on a fully loaded basis. What that does kind of embedded within that, we will be seeking to kind of charge that full cost back in the capacity payment back to the underlying customer. So they'll effectively now be long the value of the generation as well as long the capacity in the data center. With the grid connectivity, we will have now kind of the ability to both bring the power in from the grid as well as generate more than enough power to offset that load kind of going out. And so on a net basis, we think over time, the net cost of power that the tenant will realize will be meaningfully lower than just a grid solution only. So kind of on the ins and outs, again, there'll be kind of paying a capacity payment for all of the CapEx, both on the gen side as well as the data center. But they'll be belong kind of the value of that gen -- the value of that energy, and that will be offset by whatever they pay for the power coming in. So net-net-net, we think it's a very strong position. It gives the tenant, a, a quicker path to scale up in scale, that gigawatt is a large amount. And b, we think over time, their net cost of power will be meaningfully lower than a solution that's relying on the grid only. Nick Giles: Nazar, I really appreciate all that detail. I'm sure others will have follow-ups. I just wanted to squeeze one in on the regulatory side, I think you still need approvals from FERC at Morgantown. Can you just walk us through what the timing looks like there and how we should think about what you ultimately need to get across the finish line from a third-party perspective? Nazar Khan: Yes. It's pretty pro forma approval process that we've done countless times. It happens anytime you transfer an existing power facility to another party. We're certainly -- they tend to look for things like are you monopoly in the area, stuff like that. We are not. We consider this to be just pretty routine. We would expect FERC approval within 3 to 6 months. Operator: Our next question is from Stephen Glagola with KBW. Stephen Glagola: Could you update us on any remaining zoning requirements or state and local approvals needed to move forward with the Hawesville data center campus? That's one. And then two, separately, while Cayuga has already received zoning approval, are there any additional permitting or regulatory steps still outstanding for that site? Paul Prager: We'll go backwards. I'll start with Cayuga. And in Cayuga, we had our first informal session with the planning Board a couple of nights ago. It went very well. They were engaged. They asked good questions. And so that process is one where we go ahead and finalize our application. That will take another month or so. They then meet on it, they review it. We come to an agreement together on what that permit should look like. They'll be solving for certain conditions like are you drawing water from the lake? What will noise levels be in the midst of operation? What are you doing for the site in terms of beautification, things like that. These are all reasonable things. It's what we do. It's what any company in redeveloping a former power plant or industrial complex does. The Cayuga process, as you know, first was -- had to go through zoning board of approval to ensure that it was consistent with the definition required to achieve a permit. It did win the day on that. And so we're just ordinary course routine working together with the planning board of the town to move forward. With respect to Kentucky, Naz? Nazar Khan: Yes. So on Kentucky, Stephen, from a permit perspective, we have to obtain the requisite building permits. That being said, we had a town hall this week in Hawesville. We had a workforce session for potential employees. And so the entire Judge Executive, Economic Development Director in Hawesville are all kind of fully on board and very eager to kind of get us going. As Paul mentioned earlier, it's an extremely supportive environment. And so while we don't have the permits in hand, everyone is fully aware of what we're doing. We briefed them on both the scope, size and scale of the buildings that we're bringing. Importantly, as a part of what we're doing at Hawesville, we're also decommissioning and taking down the old aluminum smelter. So there's a big cleanup that's happening at the site as well, which the town is very eager to have happened. So we got to do all that, but that's, I think, going to come in time. We're expecting -- as soon as we can get this lease signed up, we'll be in a position to kind of submit all those things. We have previewed a number of those things, and we're hopeful that it should be a pretty smooth process to kind of get approvals around that. Paul Prager: Just 2 more things. One is with respect to both of these projects, there's not just one permit you get. There's a principal notion of a permit for a facility. But all along the way, you have -- whether it's a specific demolition permit or a building permit for a particular structure, you need to get local permit. The second thing I just wanted to mention about Cayuga, which is kind of interesting, as the state has become really a popular place for people, and they look forward to doing more data centers there, they are starting to come with this notion of what about power. The beautiful thing about the Cayuga site is it was a former power site. It can be again. We have the ability both in terms of the landlord's huge site, which is 400 acres. We have the ability to sort of bring in our own power generation if that was ever something important to state or local constituents. So Cayuga is, I think, really a much better site than just any other one in terms of that part of the world because of its ability to house a power plant on it, if it's needed. Operator: Our next question is from Darren Aftahi with ROTH. Darren Aftahi: First one, if I may. Could you kind of characterize the -- maybe competitive process at Hawesville, maybe comparing that to like Mariner? And are we talking about one entity taking the 384, is it going to be multiple entities? And then I've got a follow-up. Paul Prager: I'll start maybe just by giving you -- in the environment that we were contracting for Lake Mariner, I think we were very confident we had a really special site. But I think the hyperscalers were on the growth curve in terms of education. They were on the growth curve in terms of figuring out design. When we started Lake Mariner, I think people were not as rock solid in their design notions or in terms of how they would fill out their customers' ledger. So I think we're in a very different environment now. We're in an environment where the hyperscalers are -- I mean, this is [Audio Gap] I've been in over the course of the last 45 years. I mean you've got Meta is very aggressive. Google's got a great program. Amazon's got a great program. Microsoft come back into the market. They're extremely competitive. You've got some of the neos that are really seeking larger and larger facilities. So we're in a much more competitive environment where the customers actually have much more definition to what it is they want. The second thing is when we started out with Lake Mariner, we had already built some buildings a little bit. And so we had to sort of work with our customers, for instance, in WULF Den and CB1 and 2 on sort of figuring out the design elements that they wanted even in CB3. Whereas 4 and 5, we built those buildings from the ground up with the customer, which made the whole procurement and build process that much more efficient. So I would tell you, we have a much more committed and sophisticated customer right now who knows the design needs that he or she wants, and we're in a much more competitive environment. So we're pretty excited about -- that was -- what the beautiful thing about Kentucky is its immediate availability has just enabled a very robust dialogue for us in terms of filling out our customers. But Naz, do you want to add something? Nazar Khan: Yes. The only thing to add, Darren, is we're targeting 1, maybe 2 customers for the entire site. Darren Aftahi: That's helpful. And then just as a follow-up. I mean, so you've given -- you've kind of raised your bogey and given this 250 to 500 range. I guess what are the 1 or 2 deterministic factors that kind of drive that range? And given your background in power as a team, I mean, is there any reason we could think maybe there's upside to that range? I'm just trying to get an understanding of what that context really means. Nazar Khan: I can start here, and then Paul, you can jump in. The 250 to 500 is a very kind of calibrated range that we're giving you. It factors in the operational and just deployment capabilities. Again, this is getting hundreds of people on site across multiple trades. It's a procurement process around equipment and ensuring that we're not the last buyer, but we have quite a bit of room between what we need and where the market has availability. And then from a financing perspective, it's what the company can bear from an accretive perspective. So when we talk about 250 to 500 megawatts per year, that's $2.5 billion to $5 billion of incremental capital per year that we are guiding the market that we're going to spend every year for the next few years. And so when we talk about the 250 to 500 really is a calibrated guidance around all of the various facets that are required to properly execute and deliver upon capacity. So that's where we are. That's what we see is available. 1.5 years or so ago, we were guiding at 100 to 150. As we've been able to now deploy capacity and understand the needs of customers, we've upped that guidance to 250 to 500. We remain very confident that every year for the next few years, we will continue to sign up another 250 to 500 megawatts of critical IT load with customers, deliver that 12 to 18 months hence and do that year-over-year and continue to kind of grow shareholder value as we're doing that. Paul Prager: Yes. I would want to add a few things. Number one is we selected Fluor to be our contractor in Kentucky. Why? Because we think they're the most skilled contractors in the country. They're particularly good on the front-end projects so that the execution side goes flawlessly. I think as we move forward, the notion of the selection of Fluor was scalable growth so that we could work with them on additional projects on a national level. The second thing is we're all about execution. Again, whether it's on the development side or the execution side, we could talk as much about our pipeline as you want. We could talk as much about all the projects that we're reviewing before we decide to make a move. But at the end of the day, if we don't deliver for our customers, we are out of business and we have failed our investors. So we need to be conservative here because we're still on the -- we're still a nascent business. I mean we've seen changes in the design of our facilities just between CB2A, B, 3, then 4 and 5. And so I think as we're learning and growing in partnership with our customers and now our leading contractor in Kentucky, we will continue to enhance our execution capabilities -- and if there is an opportunity to grow beyond what we've said is 250 to 500 incremental critical IT load, then we will. But for right now, we have to keep our eye on the ball. The table is full of lots of cookies and cakes and candies, but we have to stay focused on the meat and potatoes and deliver for our customers. Operator: Our next question comes from Brett Knoblauch with Cantor Fitzgerald. Brett Knoblauch: Paul, I guess you have multiple attractive sites that you could theoretically kind of go and lease out now. I guess in talking to prospective customers, is there a reason why they would want maybe the Kentucky site over Lake Cayuga or maybe the mega campus that you're building in Maryland? And has in your mind, what maybe site is next up for grabs changed? Has kind of Kentucky jumped to the top of the list? Paul Prager: Listen, I -- so first off, the answer is the demand is so significant. I think that a party would be happy to take everything off the table at any one time. But it's about time to power. And that's why Kentucky has become so important to the customers that we're in discussion with. The ability to have that kind of scale within this short period of time or [ albeit ] promptly, if you will, just makes it one of the most exciting sites in the country. The one thing that we've been pushing, Brett, is we like regional diversity. We think hyperscaler customers are getting focused on that, too. We think they've seen now, they've experienced what happens now first in Ohio and then now down in ERCOT. When you get everybody all in one place, it's a question of security, but it's also a question of what can the grid really handle. And so I think having regional diversity is something that our customers find compelling. And that's a good reason for them to really focus on Kentucky, that and the immediacy of its power. Brett Knoblauch: Awesome. And then I think in the prepared remarks, you said that Kentucky could potentially expand beyond the 480. I guess to what extent have you guys looked into that? And how much do you think it could expand beyond 480? Paul Prager: I think, listen, we've talked to our power suppliers there. We understand the grid there. I think that -- and again, I was just with the governor a couple of days ago, and he's really terrific. He runs DGA. He is very commercial. He's very pro-business for the state. I think that we will have opportunities to expand our footprint both in the generation side and on the customer side in Kentucky. But again, I have to stay focused, right? My job is execution. I've got to deliver these facilities to our customers, and we're doing that at Lake Mariner. And Kentucky is going to be a very prompt bid. We've already issued a limited notice to proceed to floor just because our customers really want to get onto that property. So we're doing everything we can to facilitate that. Just going to really focus on execute. Operator: Our next question comes from Michael Donovan with Compass Point. Michael Donovan: To follow up on what you're talking about, Paul, on sizing and design plans. For Maryland and Kentucky phase build-outs, what is the target critical IT megawatt per building or hall you're thinking about today? Should we think about repeatable modules similar to Fluidstack? And what drives that sizing decision? Nazar Khan: Yes. This is Nazar here. So in the Fluidstack context, that 168 megawatts of critical IT load is the base design that we worked closely with them on developing. You've seen that number pop up subsequently with other of our peers as well. But in that context, that's kind of the base design. That puts you a little over kind of 200 megawatts of gross capacity. And so in general, as we're having discussions with various customers, we typically look at that 200-megawatt gross, 160-megawatt net as kind of a building block that we're building off of. And so the design that we're working on with Fluor really kind of incorporate that, again, roughly 200 megawatts plus or minus gross, 160 megawatts plus or minus net critical IT megawatts as the base building block from which we're kind of deploying that. And so when we talked about Kentucky, for example, in that 380 of net, that's a couple of those buildings would kind of consume that capacity. Operator: Our next question is from John Todaro with Needham & Company. John Todaro: First one is more high-level political regulatory. It sounds like really good conversations with the governors in Kentucky and Maryland. Just wondering though more at a broader level, how you are viewing some of the pushback at the state level to data center builds. Just any commentary there, whether sort of the media articles might be overblown or if there is some risk there. Nazar Khan: So it all requires, I would say, thoughtful and careful engagement. How you bring your load on is critical to how you're perceived and what impacts you have. And so if you have been listening to us for the last few years when we talk about Bitcoin mining, we've said from the beginning, there's a way to do Bitcoin mining that's accretive and an asset back to the grid, and there's a way to do it where you're not. And so we have been very engaging with. I mean, for example, in Kentucky, we spent a tremendous amount of time with the energy supplier there, Big Rivers and have developed a very close and strong working relationship with them, where we are kind of aware of the challenges they have on committing to supporting a large load. And if it's there, it's great. And when it's gone, it's not so great. That's a, and so kind of ensuring that our interests are aligned with them and they have clear visibility on where we are. And then b, just in terms of the overall load profile and when you're consuming power and what happens at those kind of peak demand hours. And so we've been very, again, thoughtful in thinking through how does our load and where we're locating these loads tie back to what's happening in the grid around it and how do we ensure that, again, that our loads can be overall assets and kind of beneficial back to the grid and to the local communities versus just kind of coming in and being burdens. And so I think the articles, the news is news and kind of it comes out, how it comes out. But we pride ourselves in trying to be very thoughtful around the issues that we think are pertinent and properly addressing them. And so hopefully, over time, you'll see even in Kentucky, based upon how we're structuring things with the local utility down there, that it hopefully becomes a model for how things should be done an example of how data centers should be integrated back to grids. John Todaro: Great. And then second one is just on kind of where we are in the headcount growth for Kentucky and Maryland and just, I guess, how you frame up some of the G&A guardrails around there. Nazar Khan: So we are in the early stages on both. We have kind of ramped up the Kentucky team to half a dozen or so folks over time, including the on-site personnel, that's going to be over 100 people for Kentucky by itself. Each of our sites, we are targeting somewhere in that 100 to 120 people range for fully loaded staffing once the site is fully operational. And we're probably a couple of people in Maryland right now. As was noted earlier, we're pending kind of FERC approval to take over the site. There's existing generation at the site, and so we're ramping that team up to kind of support the operations as well. So I'd say we're in a couple of dozen people between the 2 sites now, but that's quickly increasing. And again, we should be hitting towards the end of the year, early next year, we should be hitting pretty sizable numbers in Kentucky, and we'll kind of be in that 100 people range at Kentucky by this time next year, I would guess. Paul Prager: We've also, of course, added at the corporate level so that we can manage the much larger portfolio and stay on top of everything from procurement. And so it's legal, it's accounting, it's IT. It's everything that you need at the corporate level to manage projects of this scale. Operator: Our final question is from Martin Toner with ATB Cormark. Martin Toner: When do you think Phase 1 of Morgantown might be able to be turned on? Nazar Khan: We're working through that as we speak. So at Morgantown, in addition to the 3 legs we mentioned earlier, just kind of run the load, the data center, the gas gen and the battery storage. There's also a remediation that goes along with that. We were with the MDE just this afternoon and kind of scoping that out. And so once we get definition around the timing and scope of that remediation plan, that will then kind of feed into just the timing. If you look at what we said kind of in the deck, we've kind of positioned this as kind of end of '28, kind of in '29 and beyond. So generally, that's where we are. But over the next, I'd say, couple of quarters here, we'll have greater definition to provide around the specific timing of Morgantown. Paul Prager: Coming at it from 10,000 feet, State of Maryland had some challenges because they've shut down a lot of their great generation. They weren't really as pro generation as -- or as prescient to what would happen as a lot of other states, which have been very, very supportive like Pennsylvania next door. So the governor has really changed policy. We've received written commitments for expedited permitting for our site. So I don't think this is going to be business as usual. I think they're really keen to have us come there, create jobs, both at the county level and the state level. The reception has been amazing, but they have literally given us sort of an office to work with to expedite all sorts of permitting from the repowering to the remediation. Operator: We have reached the end of the question-and-answer session, and this concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.
Operator: Hello, everyone. Thank you for joining us, and welcome to the Pembina Pipeline Corporation Q4 2025 Results Digital Conference Call. [Operator Instructions] I will now hand the call over to Dan Tucunel, Vice President of Capital Markets. Please go ahead. Dan Tucunel: Thank you, Jade. Good morning, everyone. Welcome to Pembina's conference call and webcast to review highlights from the fourth quarter of 2025. On the call today, we have Scott Burrows, President and CEO; and Cameron Goldade, Chief Financial Officer, along with other members of Pembina's leadership team. I would like to remind you that some of the comments made today may be forward-looking in nature and are based on Pembina's current expectations, estimates, judgments and projections. Forward-looking statements we may express or imply today are subject to risks and uncertainties, which could cause actual results to differ materially from expectations. Further, some of the information provided refers to non-GAAP measures. To learn more about these forward-looking statements and non-GAAP measures, please see the company's management discussion and analysis dated February 26, 2026, for the period ended December 31, 2025, as well as the press release Pembina issued yesterday, which are all available online at pembina.com and on both SEDAR+ and EDGAR. I will now turn things over to Scott. J. Burrows: Thanks, Dan. Yesterday, we reported our fourth quarter results, which included earnings of $489 million, adjusted EBITDA of approximately $1.075 billion and adjusted cash flow from operating activities of $731 million or $1.26 per share. For the full year, we delivered earnings of $1.694 billion and adjusted EBITDA of $4.289 billion. We achieved record annual volumes across our Pipelines and Facilities divisions, which represented a 3% increase over 2024. Full year results also included adjusted cash flow from operating activities of $2.854 billion or $4.91 per share. Each year, I'm always proud to look back and reflect on our team's many accomplishments. 2025 was no exception. In addition to solid financial and operating results, we also advanced strategic projects and strengthened our long-term competitive positioning. I'm particularly proud that Pembina continues to deliver on its promises, including providing safe and reliable operations, meeting its financial targets, constructing major projects on time and on budget and continuing to execute its strategy with an improved risk profile. Several notable achievements in 2025 and early 2026 stand out. Safety is a core value and the foundation of Pembina's operations and culture. While the journey never ends, I am pleased with our strong safety and environmental performance that exceeded our internal 2025 targets, highlighted by improved performance across key indicators relative to our 3-year averages. We advanced construction of several growth projects, including the RFS IV propane-plus fractionator at the Redwater Complex, the Wapiti natural gas processing expansion and the K3 cogeneration facility. All 3 projects are trending on time and on or under budget. The Wapiti expansion and K3 cogen are currently in the commissioning phase and are expected to be in service in the next few weeks, and we look forward to the RFS IV expansion coming online during the second quarter. Additionally, under previously announced funding agreements, PGI in collaboration with certain producer customers expects to place approximately $725 million of new infrastructure into service throughout 2026, all supported by long-term take-or-pay agreements. approximately $725 million of new infrastructure into service throughout 2026, all supported by long-term take-or-pay agreements. We supported our long-term resilience through extensive recontracting across the business. These contracting successes support continued utilization of our assets, help ensure our stable cash flow stream and create the foundation for future opportunities. In 2025, we renewed existing contracts and executed incremental new contracts totaling over 200,000 barrels per day of conventional pipeline transportation capacity. This includes successfully recontracting substantially all available for renewal on the Peace Pipeline system under contracts expiring in 2025 and 2026. We look forward to providing further contracting updates throughout 2026. As part of the toll review at Alliance Pipeline, we significantly extended Alliance's long-term contractual profile as shippers elected a new 10-year toll option on approximately 96% of available capacity. And we contracted the remaining capacity available on the 100,000 barrels per day Nipisi pipeline, which was reactivated in 2023 to serve the growing Clearwater heavy oil play. Having fully contracted Nipisi, we are now focused on opportunities to increase egress capacity to respond to strong customer demand for incremental services. In response to growing demand for condensate and NGL transportation, we progressed development of conventional pipeline expansions to reliably and cost effectively meet rising transportation demands from growing production in the Western Canadian Sedimentary Basin. In late 2025, Pembina announced that it is proceeding with its Fox Creek-to-Namao Expansion of the Peace Pipeline system, which will add approximately 70,000 barrels per day of market delivery capacity to the Peace Pipeline system. And yesterday, we announced 2 additional expansions of our Northeast BC pipelines, the Birch-to-Taylor Expansion and the Taylor-to-Gordondale Expansion. In total, these 3 expansions represent $625 million of investment to ensure Pembina's continued ability to service growing volumes in Northeast British Columbia and Alberta. We took steps to significantly enhance our propane export capabilities through a new 30,000 barrel per day LPG export agreement with AltaGas at its West Coast terminals and the sanctioning of the Prince Rupert terminal optimization project. Through these 2 initiatives, Pembina ensured access to 50,000 barrels per day of highly competitive propane export capacity to premium priced markets, including Asia for Pembina and our customers' propane. On the Cedar LNG project, we advanced construction of a floating LNG vessel to over 35% complete and significantly progressed the onshore construction activities. Further, Pembina met its commitment to investors by completing the remarketing of our 1.5 million tons of annual Cedar LNG capacity by signing long-term agreements with PETRONAS, a global LNG industry leader and Ovintiv, one of the largest liquids-rich natural gas producers in Canada. In addition to increasing Pembina's expected financial contribution from the project, these agreements further validate the Cedar LNG project and highlight the strong demand for global export capacity given the clear advantages of Canadian West Coast LNG, including competitively priced feedstock and advantaged shipping distance to Asian markets. Finally, Pembina and its partner, Kineticor made significant progress on the development of the Greenlight Electricity Center, securing the required power grid allocation for the proposed third-party innovation center, which was subsequently assigned to a potential customer of Greenlight and completed a land sale agreement with the customer. We also ensured the availability and delivery timing of 2 turbines to support the approximately 700 -- 900-megawatt first phase of Greenlight. Greenlight represents an extension of Pembina's existing value chain and an opportunity to enhance growth by investing in long-term contracted infrastructure with an investment-grade counterparty while diversifying its customer base and would create incremental demand for natural gas and associated liquids production within Western Canada. Pembina and Kineticor continue to progress various work streams, including finalizing a commercial agreement with the customer, engineering, procurement and regulatory activities and expect to make a final investment decision in the first half of 2026. It was a busy and productive year for the Pembina team, and I look forward to building upon our momentum from 2025 as we strive for even greater success in 2026. We are planning to hold a webcast and conference call on April 7, where Pembina's officer team will provide a general business update and long-term outlook. Additional details will be communicated in the coming weeks. I will now turn things over to Cam to discuss in more detail the financial highlights for the fourth quarter and full year. Cameron Goldade: Thanks, Scott. As Scott noted, Pembina reported fourth quarter adjusted EBITDA of $1.075 billion. This was a $179 million or 14% decrease over the same period in the prior year, which primarily reflects a $118 million lower contribution from marketing and new ventures, the impact of a new toll structure and revenue sharing mechanism on the Alliance Pipeline and a $37 million period-specific capital recovery that impacted 2024 with no similar impact in 2025. These factors were partially offset by volume growth and solid performance across the Pipelines and Facilities divisions. Looking at quarter-over-quarter results by division, the major factors impacting the quarter in Pipelines included higher volumes on the Peace Pipeline system, lower operating expense on the Cochin pipeline, lower revenue on the Canadian portion of the Alliance Pipeline as a result of reduced long-term firm tolls and impacts from the new revenue sharing mechanism under previously announced settlement, offset by higher demand on seasonal contracts, lower revenue on certain pipeline assets due to period-specific impacts of capital recoveries recognized in the fourth quarter of 2024 and lower interruptible volumes on the Cochin pipeline due to narrower condensate price differentials. In Facilities, factors impacting the fourth quarter included lower revenue related to period-specific impacts of capital recoveries recognized in the fourth quarter of 2024 on certain PGI assets and higher operating expenses as well as higher contribution for PGI assets, primarily due to higher volumes and the impact of the acquisition of a 50% working interest in Whitecap's Kaybob Complex during the fourth quarter of 2024. In Marketing and New Ventures, fourth quarter results reflected the net impact of narrower NGL frac spreads, partially offset by realized gains on NGL-based derivatives and lower realized gains on crude oil-based derivatives due to lower volumes and narrower price spreads. Finally, in the Corporate segment, fourth quarter results were lower than prior period due to higher long-term incentive costs, partially offset by lower noncompensation-related expenses. Earnings in the fourth quarter were $489 million. This represents a 15% decrease over the same period in the prior year. In addition to the factors impacting adjusted EBITDA, the decrease in earnings in the fourth quarter was primarily due to the net impact of higher depreciation and amortization expense in pipelines, lower other expenses recognized in the share of profit from PGI as 2024 included costs related to asset disposals, higher share of profit from Greenlight due to a gain on sale of land to a third-party potential customer and various unrealized gains and losses on derivatives, a gain recognized by Pembina on a sale of land to a third-party potential customer of Greenlight, combined with lower net finance costs and lower acquisition and integration costs, offset by higher restructuring costs, and finally, lower income tax expense. Total volumes in the Pipelines and Facilities divisions were 3.7 million barrels of oil equivalent per day in the fourth quarter. This represents an increase of 1% over the same period in the prior year. Higher fourth quarter Pipelines volumes were driven primarily by higher interruptible and contracted volumes on the Peace Pipeline system, an increase in volumes on AEGS as the fourth quarter in 2024 was impacted by third-party outages, an increase in contracted volumes on the Nipisi pipeline, lower interruptible volumes on the Cochin pipeline due to narrower condensate price differentials and the sale of the North segment of the Western Pipeline in the third quarter of 2025. Higher fourth quarter Facilities volumes were driven primarily by the acquisition of Whitecap's Kaybob complex in the fourth quarter of 2024, higher volumes at the Dawson assets due to higher natural gas prices, higher volumes at the Duvernay Complex and a decrease in Aux Sable volumes due to lower ethane extraction. The fourth quarter contributed to solid full year results that included earnings of $1.694 billion, adjusted EBITDA of $4.289 billion, cash flow from operating activities of $3.301 billion or $5.68 per share and adjusted cash flow from operating activities of $2.854 billion or $4.91 per share. During the fourth quarter, Pembina announced a 2026 adjusted EBITDA guidance range of $4.125 billion to $4.425 billion. The midpoint of the 2026 guidance range represents 2023 to 2026 fee-based adjusted EBITDA per share compound annual growth of approximately 5%, positioning Pembina to deliver on the target we originally provided at our 2024 Investor Day. Based on Pembina's existing strong financial position, the 2026 year-end proportionately consolidated debt to adjusted EBITDA ratio is expected to be approximately 3.7 to 4.0x. Excluding debt related to the construction of the Cedar LNG facility, which is expected to enter service in late 2028, this ratio would be approximately 3.4 to 3.7x. With 2026 serving as the peak investment year for Cedar LNG, 2026 is also expected to represent the peak year for Pembina's proportionally consolidated debt to adjusted EBITDA ratio. With incremental cash flow from projects entering service and a significant ramp down in Cedar LNG spending post 2026, Pembina's leverage is expected to return to the lower end of its target range of 3.5 to 4.25x. I'll now turn things back to Scott. J. Burrows: Thanks, Cam. Doing what we said we would do is core to Pembina's leadership team, and I believe our 2025 accomplishments and our longer track record as a company speak to that. We continue to focus on providing safe, reliable, responsible and cost-effective energy infrastructure solutions. I believe we are uniquely positioned to capture incremental new volumes in the growing Western Canadian Sedimentary Basin and connect our customers to high-value global markets while unlocking new opportunities beyond our strong legacy business. Our entire organization is focused on ensuring the long-term resilience of our business and providing investors with visibility to attractive growth throughout the end of the decade and beyond. Thank you for joining us this morning. Please go ahead and open up the line for questions. Operator: [Operator Instructions] Your first question comes from Aaron MacNeil of TD Cowen. Aaron MacNeil: I'm hoping you can sort of give a bit more detail on the decision not to pursue the full Taylor-to-Gordondale Expansion. And I realize this could very well be my own misinterpretation, but my impression was that this would likely go ahead once the permits were in place. So either way, I guess I'm just wondering, has anything in terms of your outlook changed? Are you opting for maybe a lower risk approach? Has ARC's decision to remove the second phase of Attachie sort of caused you to pause this a bit? Or is it the commodity outlook? Or maybe I'm just overthinking it, and this was always the strategy. So just any insights there would be helpful. Jaret Sprott: Aaron, it's Jaret. Thanks for the question, and I think it's a really good one. So like we said in our press release, we've got 3 projects on the go on the pipeline -- conventional pipeline side, our Fox Creek-to-Namao, which we talked about there a few quarters ago, our Birch-to-Taylor and then our Taylor-to-Gordondale kind of like, we'll call it Phase 1. All of this capital, 100% is being driven by really Canada unlocking our egress constraints. We have our oil constraints being alleviated, which is driving more demand for condensate. Our condensate import pipelines are fairly tapped, ours and third party. So that's going to drive a lot of condensate domestic growth. And then obviously, with that condensate comes natural gas and that egress constraint is also being lifted with LNG Canada being ramped up, Cedar coming online, other projects, et cetera. So that's really driving the need for condensate and NGLs. And I know you know that, but I think it's important to ground ourselves that a lot of that growth is coming from, obviously, the Montney, but specifically up in that neighborhood of, I'll call it, north of Taylor BC up into that north of Fort St. John, Fort Nelson geographic area, a lot of it is coming from there. That really drives to the Birch-to-Taylor project, if you think about it that way. So first off, I want to say that, that project, the collaboration and the consolidation of the industry, the indigenous communities and our partners, the BC government and the BC regulator, that was a tremendous outcome for us getting all of our hurdles in place and behind us collectively. That project really is allowing us, number one, it's going to grow our condensate and natural gas liquids, specifically C3+ capacity. It's really to meet their needs, the growth demand that I talked about for all those other reasons. I think also, Aaron, sanctioning that project now and bringing that online kind of the end of '27 into '28, it really -- it shows the -- we've been really good at project execution. We pride ourselves on our safety record. We pride ourselves on working with local communities and subcontractors, et cetera. And I think really getting focused on making this project a cost focus and a safety-focused project versus a schedule-driven project because we all know our customers can drill significantly faster than we can build long linear assets. So that's kind of Birch-to-Taylor. Now I'll get into actually your question. So like you said, February 10, we did receive our federal permit for Taylor-to-Gordondale. And I really think about Taylor-to-Gordondale as growth in the Montney in 2 other specific regions geographically. I'm going to call it the Dawson Creek area. So southeast of Taylor, we're seeing a lot of growth in the Montney in that neighborhood. And you're seeing -- it's the condensate and the C3+ once again. And then on the Alberta side of the border, you're seeing a lot of growth in the Montney in what some refer to as the Peace River Arch in and around that Gordondale and up to the western side of the Alberta border. Ultimately, that -- getting that permit was also a tremendous amount of work. We did have some, I would say, objectives, commercial objectives, but I think our team persevered and got that. We will need that project full stop one day. The condensate, and it's in the near future due to all the exact same demand. The condensate is growing in that area, the C3+ is growing in that area. But what I will say is one of the things about Pembina is not only our ability to build projects on time and on budget. We also our flexibility of our infrastructure and our people. Our people really took a step back and work collaboratively with operations, our engineering hydraulics teams, and they came up with a little bit more of a capital-light solution. All of this capital we required for the full build-out, but a capital-light solution, which really is a prudent deployment of capital, which Cam gives me a high five for all the time. And it still allows us to meet our customer needs and meet their egress demand, almost like as they grow, it's almost on demand, we can go out and build this. So hopefully, that provides you a little bit of color. We don't see this due to overall certain customers talking about production profiles and condensate is growing, natural gas is going to come with it. Pembina's ability to grow with our customers is, I think, better than anyone else in the basin. Aaron MacNeil: That's a lot more detail than I was expecting. I can -- maybe second question. I can appreciate that marketing fundamentals have been challenging year-to-date, but we've seen Canadian gas prices decrease in the last few weeks. Liquids pricing is on balance up since you released the guidance, which should sort of improve the frac spread and other marketing strategies. So I guess I'm just wondering if you'd characterize your previously disclosed marketing outlook is maybe a bit better on the margin now than you previously thought as we get sort of closer to that annual recontracting window? Chris Scherman: Yes. Aaron, thanks. It's Chris Scherman. I think we've all seen significant volatility to start the year. Obviously, we're only 60 days in. And you just referenced it, we're happy to see the price outlook for the remainder of the year improve, especially sort of over the last week. And I think all in all, things are actually looking positive for us for the remainder of the year. I'd highlight the first 45 days of the year. We definitely saw some headwinds on U.S. frac spread, primarily as a result of U.S. weather, which drove up Chicago gas prices. But given those U.S. frac spread headwinds to start the year, combined with the improved outlook for the remainder of the year, right now, we're still looking to be slightly ahead of the midpoint on our marketing guidance for the full year. I'd highlight there's still a lot of year left to go. I'd also highlight that given those headwinds earlier in the year, we can probably expect a little bit of a reshaping of the profile through the full year, but we're optimistic and sort of remain on plan for the full year. Jaret Sprott: Aaron, I'll just -- maybe -- it's Jaret here. Just on the flip side of that, obviously, with really high Chicago gas prices, that puts pressure on our frac spread business. But it also -- the AECO to Chicago spread drives fee-based business to offset some of that noise. And then obviously, I think Cam might talk to it, but we're seeing some fairly strong fluctuations in FX just over the last 60 days, et cetera. Operator: Your next question comes from Jeremy Tonet from JPMorgan Securities. Jeremy Tonet: Just wanted to go to the Tourmaline contract extension, if I could. And just wondering how that looks -- how that shakes out economics versus prior. Just wondering with the market right now, how it's developing, does it look similar on a same-store basis there? Or how are things evolving? Jaret Sprott: Jeremy, it's Jaret. So first off, really pleased to extend our partnership with Tourmaline. They're obviously one of our largest customers and one of the largest producers in Western Canada. And it always kind of -- it warms my heart to see that the Cutbank Complex, which is Pembina's original acquisition in the gas processing back in '09 that we're continuing to see flat production, growing production in and around that area. So with respect to tolls, we won't get into the details on that. But obviously, I'll break it down into a couple. Pipe and frac tolls, you'll see those consistent with the rest of our business. It wouldn't be specific to this customer in this area. And then on the PGI side of our business, the gas economics and the overall netbacks in and around this area, they are strong because of the liquids production that comes out of it that supports the overall netback for our customers. So in this area, you don't have to see a lot of toll erosion in order to meet the customers' needs on the processing side. With that said, although we're extremely excited to extend this partnership, you recall in Q3, we recorded a small write-down with respect to one of our processing contracts that didn't get extended in a different geographical area of the Deep Basin. So -- but with that said, since that date of that press release and talking about that expiry, our teams who are focused on filling our assets every day have essentially recovered 60% of that value, and we'll continue to backfill that portion of the business. Also, Jeremy, that has been fully baked into our -- the recontracting and the Q3 announcement that has fully been baked into our 2026 guidance and our overall long-range plan. Jeremy Tonet: Okay. Great. Great to hear on that recovery there. I was just wondering if we could step back a little bit, take a higher view of the basin, kind of picking up with the current commodity price outlook and how that, I guess, impacts the driller activity expectations for your customers. We've seen volatility out there. Just wondering what's the latest conversations you're having with customers, ARC and others and how you expect, I guess, activity to change over time? J. Burrows: Yes, Jeremy, it's Scott here. I would just caution that, like Chris said, it's the increase in commodity price has happened pretty rapidly here. And let's break that down. I mean it's really been on the crude oil price. I mean, we still have seen a ton of volatility in AECO and AECO and Station 2 today are kind of where we started the year, if not slightly below. Propane has kind of remained flattish. So it's very commodity specific, and the crude oil run-up here has just happened very shortly. So I would say this short-term run-up, I don't know that it's been sustained enough to say that producers have changed their activity from the start of the year. There's also been a fair bit of M&A to end last year. And I think as people work through closing those transactions, hopefully, over the next couple of weeks or months here, we'll see kind of revised drilling plans. This comment is not specific to the recent M&A because, obviously, you can't talk about that. But historically, what I would say over the last 2 years, as we've seen some of the consolidation happen, we've actually seen an acceleration of volumes most people don't buy another company to keep production flat or decline it. Typically, we've seen growth. So we're excited to see what could come out of some of the consolidation, but I can't speak specifically to that just yet. Jaret Sprott: Maybe just further to that, when I break it down into the different geological formations, I'll start with like in the old school Drayton Valley area, we're also seeing these prices even at $60, we're seeing a tremendous amount of drilling. And even as you talk about the South Duvernay, et cetera, our system out in that area, obviously, is seeing strong volumes. If you move up into kind of that Peace River Arch area again that I talked about, you are seeing a lot of companies talk about Charlie Lake oil. That's continuing to grow and Pembina has oil assets in the area to capture those volumes into the Edmonton market. If you go kind of north, back up our Clearwater area, the Nipisi pipeline, based on all of the connections we have today and the pumps we have in place, you're seeing the upstream customers really talk about the recovery factors increasing the drilling results, how economic they are. You can continue to see Nipisi capture more and more of those volumes, and we're working on -- I talked about the optimization we did at Taylor-to-Gordondale. Our teams are driving some really cool cheap expansions on the Clearwater -- for the Clearwater customers on the Nipisi pipeline. And then when you think about the Montney, I think I touched on it, but our customers, they have so much land across so many geographical areas and Pembina's system obviously expands a significant geographical area. Our customers, if they're having some challenges or they're maxed out on capacity in one area or constrained by natural gas egress in an area, they can always redeploy capital. Like I said, the oil sands needs condensate. The import pipelines are fairly full. It has to come from somewhere and our customers, the Alberta innovation or the Western Canadian Energy innovation, it will unlock this condensate. And I think our system is pretty primed to capture it. So things are in good shape. Operator: Your next call comes from Theresa Chen from Barclays. Theresa Chen: Now that Dow has provided a revised time line for Path2Zero with Phase 1 expected by year-end '29 and Phase 2 by year-end '30. Could you provide an update on the different options you're evaluating at this point and infrastructure investment necessary to supply the 50,000 barrels per day of ethane for your commitment? Chris Scherman: Thanks for the question. It's Chris. So obviously, we're very pleased to see the project moving ahead in line with really our expectations. As we've touched on Dow before and you're referencing, the minor delay in the project has allowed us to reevaluate how best to serve the customer here, what the most efficient capital-efficient infrastructure options are to serve the customers' needs. We will be out this year clarifying that. That work continues. We keep pointing down that path. So we look forward to making FID on these additional infrastructure this year, but we can't provide any more detail today on the call. Obviously, Dow, a valued partner to us, congratulate them on the progress they made on the project, and we look forward to getting more details out to the market and progressing. Theresa Chen: Understood. And turning to Greenlight, given the progress there, the grid allocation, land sale and turbine availability, what are the key next steps and decision points from here? What is the expected time line for contracting FID and in-service thereafter? Chris Scherman: You bet. So Chris again. Obviously, we've made significant progress since forming that JV. You referenced it, right, in 2025. We secured the 907 megawatts of AESO allocation, which we subsequently assigned to our potential customer, entered into agreements on turbines, locked those up, got where we needed to be in the queue for those, closed our land sale to set our customer up for success. both on the base project as well as a bunch of growth. So as we're looking forward now, we're targeting an FID in Q2. We're positive on that time line and really focused on 3 work streams between now and then. Number one, commercial. So we continue to work through negotiations with our potential customer. We're in the middle of those negotiations. So obviously, limited details on that at this point. But I'd say they're going as expected. Time lines are going as expected, and we have confidence we're going to reach a midstream-like long-term contract to underpin this commercially. Secondly, regulatory, we're making great progress. We don't view this as a high-risk work stream for the project, and we're not part of the discussions between the customer and the government, but we understand those are going really well. There's more information that's come out on the levy and the rest of it, which is, I think, positive and in line with expectations. And then finally, third work stream engineering. So we're working through our FEED. We've got top-tier global engineering partners in that. That's progressing well, all pointed towards Q2 FID targets. So Scott spoke about it in his opening remarks, but I think things are going as we hoped on this. We think the project remains a tremendous on-strategy extension of our business, and we're excited to get it across the line here in Q2. Operator: Your next question comes from Sam Burwell from Jefferies. George Burwell: I wanted to see if you could give an update on the Alliance short-haul expansion project. I think back in 3Q, you talked about running an open season during the first quarter of this year. So curious if there's any update on the progress you're making there? Jaret Sprott: Jaret here. So we continue to see strong demand in the Alberta Industrial Heartland area for natural gas to progress other industries. There's still a few days left in the quarter, and you should expect to see an announcement fairly shortly. George Burwell: Okay. Great. And I guess just like one quick clarification on the Tourmaline deal. Was all of that renewals of existing business effectively? Or is there anything incremental on the transport side or the frac side? Jaret Sprott: No, it was all -- essentially all of it was renewal, same volumes. Operator: Your next question comes from Robert Hope from Scotiabank. Robert Hope: Just want to maybe dive a little bit deeper into the timing of the April 7 presentation. Is there anything specific driving that? Do you think you'll have some incremental clarity on some of the projects that you're progressing? Or is it April 7 just to kind of make it a stand-alone event rather than giving we'll call it, longer-term guidance today? Cameron Goldade: Robert, it's Cam here. Yes, really, I mean, honestly, a couple of factors. One, we recognize there's a window here for market participants that works better or worse. And so as we get into March, we start to interfere with potentially other commitments. But I think probably more presently, things are moving fast, obviously, with certain of our key growth opportunities. And so our objective when we release the long-term guidance is to give you and our investors as much granularity and as much concreteness to that buildup as possible. And so I think our objective this time around, whereas in 2024, we generally gave a growth outlook and some pieces, which would support that. we're really trying to provide the market with a really robust buildup to that. And so we'd love to be in a position to have obviously the most certainty possible around that buildup. And that's the biggest factor that aligns with the sort of post Q1 timing. Robert Hope: I appreciate that. And then you've touched on most of the kind of, we'll call it, the $4 billion bucket of potential projects, but PGI infrastructure was one that was highlighted as an opportunity set that you're advancing. Can you maybe expand a little bit further what opportunities you could see as the next phase of growth for PGI? Jaret Sprott: Rob, Jaret here. Yes, you know what, PGI is going to continue to grow their business. We obviously step one with respect to that business is filling white space. So some of the announcements we made with the infrastructure build-out we're doing with Whitecap in and around the Lator area, that's really all designed to, one is fill existing white space at some plants in and around that area, but also then to grow the liquids volumes on to Pembina's Peace Pipeline system and the NGLs into Fort Saskatchewan and Pembina's Redwater facilities. After that, we're looking at continuing to build out organically. There are opportunities out there that we're evaluating. So probably more to come on that. And then lastly, there's always the inorganic stuff. I think PGI out of any one of the gas processing businesses in Western Canada has been ahead of its time with respect to creativity. And being on the board with KKR, we continue to encourage and press the team on to come back to us with more and more of those creative ideas. So that's kind of how we see the business there. Operator: Your next question comes from Spiro Dounis from Citi. Spiro Dounis: First, let me congratulate you all on your silver medal in hockey, hard fought. Sorry if that's too soon. Going to the questions, I'll keep them above the belt here. Maybe just going to contract renewals. Scott, you mentioned over 200,000 barrels a day contracted last year and more to come in 2026. So maybe could you provide a broader commercial update on what you're expecting this year? Is it similar to 2025? And any reason we can expect different outcomes, either positive or negative? J. Burrows: Yes. Thanks for the question, and I'll ignore the comment. Maybe next quarter, we can talk about it. But yes, I think we did try to highlight it, obviously, a very, very successful 2025. We feel like we started off the year strong, as Jaret mentioned, both with the Tourmaline recontracting, but as well as the success on Alliance and Nipisi. And so in terms of specifically to 2026, again, we're not going to get into specific contract profiles. It's obviously a competitive dynamic. But what I will say is that we would expect to have a little more granularity on this on our April 7 update and talk a little bit about more where we're at year-to-date and what our expectations are. So good question, but I don't want to front run our April 7 update. Spiro Dounis: Yes. I totally respect that. Second question, maybe just going back to Taylor-to-Gordondale. Just curious how you're thinking about the cadence and the timing for the remaining expansion phases, how you think you're going to break it up? And I ask because it looks like the CapEx guidance is unchanged here. And so do the remaining phases FID in '26? It sounds like it could be after that. Jaret Sprott: Yes, great question. I also put your comments behind me while I answer your question. Yes, so the short haul or the Phase 1, pardon me, the short-hauls Alliance Phase 1, that's fully baked into our 2026 capital guidance right now. And with respect to FID timing, obviously, it will be shortly in the future. You'll probably hear a little bit more on April 7 with respect to that. But it's really -- we have some flexibility now to go and be very focused on project execution on this Phase 1 and Phase 2 will be coming really as we start to fill up these next phases. And like I said earlier to my question to Aaron -- or answer to Aaron was really, it's almost like an on-demand ability for us to grow with our customers. And then also, we'll be we have ordered our pipe, and we have ordered obviously, some of the aboveground equipment like pumps and all that stuff. So that's all part of the process and for the full build-out. So we will just deploy that capital as required. Operator: Your next question comes from Praneeth Satish from Wells Fargo. Praneeth Satish: Maybe just turning to Greenlight. So I understand the commercial details, they're still being finalized. But can you provide any high-level guardrails on maybe the minimum IRR that you'd look to achieve here? And also whether this would be a take-or-pay or cost of service like contract? And then as a follow-up, I guess, if you were to FID greenlight, considering it's got an in-service date pushing into the next decade, would this influence your long-term EBITDA CAGR guidance that you plan to give in April? And I guess, how far out do you think you could reasonably guide if you get this project? Chris Scherman: It's Chris. I'll take the first part on greenlight and then maybe turn it over to Cam to talk about guidance. As I mentioned, we're in the middle of negotiations. So unfortunately, Cam provide limited guidance. But what I can say is it's a long-term contract. It's a long-term contract with midstream-like attributes. It looks a lot like our core business, and we're really pleased with the fact that we've been able to do that. I think when it comes down to it, if you think about it on a build multiple basis, it's going to look a lot like other Pembina greenfield projects that we've been doing under long-term contracts with ancillary benefits down the road as we think about integrating gas supply and the other components into it, looking to drive that down over time, consistent with how we've pursued other projects in our core business. J. Burrows: Yes. I'd just add a little bit of color. Obviously, we have a partner on the file and therefore, a private equity partner and therefore, would need to project finance the project, which when you stack those 2 things up, you can assume that there would be a low-risk EBITDA profile in order to support a project finance. Cameron Goldade: And Praneeth, it's Cam. I'll just pick up on one thing that Chris said around the structure. And that is want to reiterate and make sure everyone understands that while the project in its own right is a really interesting project. One of the things that really sells it for us or really gets us excited about it is the integration with the rest of our business. And so you've heard us talk about it, and I think we'll be in a position to talk more about it or more succinctly about it as we get to our April 7 presentation. But in summary, I mean, there's a ton of integration potential around the Alberta Industrial Heartland. And I think the so what of that is it really starts to take a greenfield-like return profile and really turn it into a brownfield-like return profile ultimately for Pembina. And so that's what gets us really excited about that, and you couple that with a low-risk contract structure. Growth outlook, obviously, as we've said before, once these types of opportunities get built and certainly has been the precedent on the southern side of the border, they tend to cluster. And I think as we walked our Board through yesterday, we have a ton of advantage in terms of our Alberta industrial Heartland position, everything that comes along with that. And so getting the first one in the ground gives us a huge advantage in terms of building a business out of this. Praneeth Satish: Got you. That's very helpful. And then you kind of touched on this, but I guess with the Nipisi pipeline, running full. Can you walk us through, I guess, some of the next phases of potential expansion, what that might look like? Is that -- it sounds like you're adding incremental capacity through additional pump stations, if I heard correctly, so at a low CapEx cost. But I guess how much more of that can you do? And yes, and how should we think about the likely commercial structure here? Is this kind of fee-based or cost of service, some of the expansions that you're looking at? J. Burrows: Thanks. So as Jaret touched on, and he can provide a little bit more color, we are going through some debottlenecks, which can add, as you pointed out, some very reasonable both from a return and from a time-to-market debottlenecks. I think the bigger picture here longer term is we have an opportunity to expand portions of that pipe to add significant capacity. And so we're right now doing the engineering and continuing to advance the engineering on what that might look like and are having commercial discussions. So we kind of have a 2-phased approach. We have the early debottlenecks and then we have a larger potential winning of the pipe. Jaret or Chris, anything there you guys want to add? Jaret Sprott: I would just add that when we say right now that -- so commercially, we're contractually full for the base asset, but we do have a third party that's going to be making connection in the next few months that will get us to physically being full on a physical basis. And then the debottleneck projects I talked about will give us about 20% to 30% incremental torque on that asset. And that truly is through drag-reducing agent that we use every day on our Cochin pipeline. We're very familiar with how that works, and we'll try to work in installing that and then just some minor horsepower upgrades to get that capacity. J. Burrows: Cameron? Cameron Goldade: It's Cam. I just want to -- yes. I just want to chime in one more piece here. And I think it's worth noting that the history on this asset is something that we're quite proud of and I think speaks to our business and our commercial attitude overall, which is, obviously, this asset was in a different form of service with a different customer pre-2021, and it was underpinned by a long-term contract at this point. We obviously took out a service because we thought that was the right thing to do in light of the options. And as we sit here today, the EBITDA that this pipe will generate in 2026 is materially above what it did in the former service under the foundational contracts like to the tune of 50%. So -- and we see significant growth opportunity on top of that. So we're really pleased with our approach to that. And I think it speaks to both the diversity and the optionality in our business. Operator: Your next question comes from Maurice Choy from RBC Capital Markets. Maurice Choy: Just wanted to start with your capacity to do these projects. You sanctioned a few more projects today. It sounds like you've got at least to Dow and Greenlight projects to come later this year. How would you characterize your remaining investment capacity for the remainder of, say, this decade that you can actually self-fund before your debt-to-EBITDA perhaps moves meaningfully closer to your [ $4.25 billion ] limit? Cameron Goldade: Yes. Great question, Maurice. It's Cam here. So I'd say I'd go back to some things we said in the past, which is our track record and our intention has been that we obviously seek to fund capital with cash flow after dividends. And at our level that we're at today, we can think about that as roughly plus or minus about $1.5 billion a year in any given year for round numbers. And I would say, obviously, this year, we've talked about how it's the peak year for Cedar. We are running a slight free cash flow deficit in 2026. But as we look forward to 2027 and beyond, we begin to generate meaningful free cash flow, again based on our currently sanctioned project opportunity profile. As we think about larger opportunities and if you want to think about what might come on top of it, like let's dream for a moment around Greenlight and that becoming a reality and multiple opportunities on top of that. I think that's where we start to like the structure that we have today, which is obviously a partner, and we have that in other parts of our business. We like the opportunities within our business and honestly, look at various financing opportunities, which will enable us. But when you do the really simple math around deploying $1.5 billion at historical return multiples that Pembina has done, you can pretty clearly get to a mid-single-digit growth number for Pembina into a very long term. And so we like that. We have that investment capacity. And not only just the financial capacity, I think we have the execution capacity. Clearly, we have a really solid track record of executing projects on time and on budget, and we're applying that to projects in our core business as well as some of these ones which are on the face of it new for us maybe, but realistically very similar to what we've done in the past in many other ways and taking a similar strategy. So we're managing the risk from that perspective. Maurice Choy: Understood. And if I could just finish up by following up on the 3 streams you discussed on the Greenlight project. I accept that these things are complex, does involve a lot of work. But is there anything material here that is out of your control or your counterparty's control that you see may derail this FID or even the timing of it? J. Burrows: Okay. I'll chime in, and Chris, feel free to add anything. But I think to answer that question, I mean, we are obviously in control of our project and the negotiations with our customer, but we don't control our customers' ultimate decision to FID their innovation center. So there's 2 pieces to this to the puzzle. And I think that's potentially what you're getting at. So there's obviously our piece and then there's the innovation center piece, and that's not obviously within our control. Operator: Your next call comes from Robert Catellier from CIBC Capital Markets. Robert Catellier: Just a quick one here on the new pipeline. I'm just curious on the commercial impetus to use a cost of service agreement on the Birch-to-Taylor Expansion. J. Burrows: That's just the legacy of that pipeline. That's how that pipeline has been underpinned for 10 years as soon as since we put it into service. So that's just been the initial contracting, and that's how that pipeline is structured. Robert Catellier: Okay. And then I just wanted to turn to LNG and some maybe longer-dated questions here. As you're aware, there's been some media reports about the owners of LNG Canada potentially monetizing their stakes in Phase 1 to -- or partially monetizing in order to fund a Phase 2. And given Pembina had a history of developing export options, I'm just curious on your view or interest in participating in an existing operating LNG facility other than the one you're building. The second part of that is, if you look ahead and the possibility of a Cedar LNG Phase 2, I'm wondering if there's enough pipeline capacity for Coastal GasLink as is or if it expands to be able to support a Cedar LNG Phase 2 down the road? J. Burrows: Yes. I think on your first question, our understanding from media reports is that it's simply a financing to help fund Phase 2. So that's not something that we're currently participating in. We don't want to be a passive investor in something. So nothing to see from a Pembina perspective on the rumors of a sell-down. And then on the second part of the question, I mean, we have positioned Cedar to potentially take incremental gas, whether it's the Cedar Link pipeline or a few of the other onshore facilities. And so we would love to do a Cedar 2. But as you pointed out, it's solely dependent on gas supply. And what I would say is right now, our partners at LNG Canada, I think, are pretty focused on getting Phase 1 up and running and engineering Phase 2. So I think until they're through some of those decisions, we won't have a line of sight to that. But we stand ready, willing and able if that's a possibility. Operator: Your next question comes from Benjamin Pham from BMO. Benjamin Pham: Just on the topic of the value chain extensions and opportunities. I mean Pembina has been pretty good at that part of it. You added gas and LNG and then now power. My question specifically on the power side, is that from your advantage now, is that more getting your feet wet through the DC Greenlight opportunity to do a couple of cogens? Or is there a much more broader potentially per scaled growth allocation that Pembina is looking at? Chris Scherman: It's Chris. Well, here's what I'd say. I'd say we definitely see the potential for significant growth in the gas-to-power space, in particular, to power data centers. We think that the Alberta market and the Alberta is ripe for growth in that space, and we think we're really well positioned with our current project with our partners. And so for us, it is one of the growth pathways that we're pursuing, frankly, and see an opportunity to grow into. We're not looking to grow into the merchant power space. That's not a space we're going to go to. You mentioned cogens, I mean, cogens, integrated cogens associated with existing infrastructure and deals are certainly in play. But as far as the meaningful growth pathway, it's really that behind the meter gas to power to support innovation center growth, which we see a lot of potential. Jaret Sprott: And I'll just add to that, Ben. If you think about -- I mentioned earlier in the call that gas egress is obviously one of the biggest constraints for Canadians to produce condensate and get it up to the oil sands. A full build-out of Cedar is roughly -- pardon me, a full build-out of Greenlight is roughly 75% of the same gas consumption that Cedar would be. So obviously, driving that for our customers, allowing them to fill our value chain in other areas is pretty key for Pembina. Benjamin Pham: Okay. Got it. And then the value chain side of things, what's Pembina's current view on the oil side of things, whether it's organic or inorganic? J. Burrows: Well, I think from our perspective, we remain bullish on oil growth. As Jaret mentioned a few times in his comments, we're excited about all the potential debottlenecks on the Enbridge system and on TMX for a couple of reasons. That's obviously going to drive growth in the oil sands, which should have a pull on condensate, which should be good for our overall system. In terms of Pembina's specific investments as it relates to oil, right now, our -- I'd say our 2 main focuses would be on the Nipisi pipeline, which we've talked to at length today. And then as Jaret also mentioned earlier, the Charlie Lake oil play on our conventional system. So that's really where we're focused from a direct oil exposure, but we are excited and bullish on oil growth in the oil sands and therefore, condensate. Operator: Your next question comes from the line of Sumantra Banerjee from UBS. Sumantra Banerjee: Just a quick general one on capital allocation. I know you discussed your comments on leverage and the previous question on investment capacity before. But I just wanted to ask if you had any more color you could add on 2026 capital allocation priorities. Cameron Goldade: Yes, it's Cam here. I guess I'll just reiterate that for 2026, we're really focused on project execution. And so obviously, we are sustaining a free cash flow deficit in 2026. So barring a material change in our business performance, free cash flow is going to be directed towards capital execution in 2026. Outside of that, we expect to continue. We've had a long track record of a growing dividend, and so anticipate to continue to deliver that in line with our historical trend in 2026 and beyond that. And outside of that, it continues to be just execution all around. Obviously, we continue to reassess things should market fundamentals change drastically. But as we see the world right now, it's sort of steady as she goes in the way we've laid it out in our guidance. Operator: Your next question comes from Patrick Kenny from NBCM. Patrick Kenny: I was just wondering if we can get an update on the Yellowhead extraction opportunity, assuming that the pipeline starts construction here in a few months. Curious what the timing could look like for your extraction opportunity. And then you talked about how tight the condensate market is, but I guess with Redwater 4 coming online so I just wanted to get an update on how you're thinking about a Redwater 5 based on C3+ fundamentals. Chris Scherman: Pat, it's Chris. I'll take the Yellowhead question and then turn over to Jaret. So continue to progress Yellowhead, remain excited about that project. expect something this year, frankly, as far as an announcement if we can keep everything on track and get to where we want to get it. Jaret Sprott: And Pat, with respect to RFS V, I'll just point out, RFS IV is not on yet, but I'm just kidding. It really will come down to incremental frac capacity, either be it regional or in the Fort Saskatchewan area. Pembina, obviously, we believe we have a great product for our customers today. We have unit train capacity. We have ample storage. We have high reliability and availability. And we do -- RFS IV is being executed at a -- on a dollar per barrel basis, significantly better than any other frac expansions in Western Canada right now. With all that said, NGL frac capacity is really going to grow with new gas egress. So as we get more and more light and see that LNG Canada Phase 2 or other projects becoming real and in service, that's really -- because that gas demand has to find a home, then the NGLs will get extracted. So I kind of always think of it as frac capacity will continue to grow with gas stress constraints getting unlocked. But we are in a tremendous position to be building V. Patrick Kenny: Okay. Great. And then maybe for Scott, just high level here as it relates to the grand bargain MOU. Obviously, we're waiting for clarity on carbon policy this spring. I was just curious your thoughts on what industry would need to see in order to support projects like Pathways or even your Alberta carbon grid. Just overall, what needs to happen to support that next major wave of oil sands growth? J. Burrows: Well, I think when we just highlighted a couple of times today, we have what I'll say is some very economic and fast-to-market expansions up to 700,000 barrels. I mean those numbers have been floating around slightly higher, slightly lower on TMX and Enbridge. And to me, that feels like the first wave that's going to be unlocked, and we're pretty excited about that. It's great to see the governments coming together and working in a more constructive manner. I think we're pretty optimistic about what could come out of that. Specifically as it relates to carbon price, I think just as we've highlighted over the last several years, certainty and regulatory certainty will be a huge impact on whether some of these carbon activities go ahead or not. One of the things that we've talked a lot about -- we haven't talked about our ACG project for a while, but that's not because we haven't been working on it in the background and we continue to progress it. But it's hard to contract it when you don't know what the carbon price is. And I think as we get more clarity on long-term carbon price, that will allow companies to make the decisions that they are going to make around capturing carbon or not. So I'm pleased to see that we're making some progress and optimistic as we move towards April that the governments are going to come together and come up with a plan that works for everybody. Operator: At this time, there are no further questions. I will now turn the call back to Scott Burrows, CEO, for closing remarks. J. Burrows: Thank you for all the questions today and the interest in Pembina. I'd be remiss after talking about all the accomplishments in 2025, if I didn't thank all of our hard-working staff and contractors and communities that we work with. So thank you, everyone. And I think you heard on the call today, we're pretty excited and optimistic about 2026 and beyond. Have a good rest of your day. Operator: This concludes today's call. Thank you for attending. You may now disconnect.