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Operator: Good morning. My name is Gabriel, and I will be your conference operator. [Operator Instructions] This is FHipo's Fourth Quarter 2025 Conference Call. [Operator Instructions] FHipo released its earnings report on Thursday, February 26, after market closed. If you did not receive the report, please contact FHipo's IR department directly, and they will e-mail to you. Please note that this call is for investors and analysts only. Questions from the media will not be taken nor should the call be reported on. Any forward-looking statements made during this conference call are based on information that is currently available. Please refer to the disclaimer in the earnings release for guidance on this matter. We are joined by Daniel Braatz, Chief Executive Officer; Ignacio Gutierrez, Chief Financial Officer; and Jesus Gomez, Chief Operating Officer. I would now like to hand the call over to Daniel Braatz. Daniel, please go ahead. Daniel Michael Zamudio: Thank you, and good morning. Thank you for joining us today. Let me walk you through our fourth quarter and full year of 2025. Throughout the year, we maintained a disciplined management of the company, focused on strengthening our balance sheet and optimizing our capital structure, aiming at generating long-term sustainable value for our investors. In the 4Q, we maintained our commitment to delivering profitability. Throughout its history, FHipo has shown solid financial performance, consistently delivering distributions. As of the fourth quarter of 2025, we have distributed more than MXN 7,300 million to our investors on a cumulative basis since 2014, reflecting our long-standing focus on value creation and capital discipline. FHipo maintained a strong capitalization profile. As of the 4Q of 2025, FHipo reported a capitalization ratio of 60% and a debt-to-equity ratio of 0.7x on our balance sheet. In recent years, we have successfully executed a disciplined deleveraging strategy, focused on strengthening our balance sheet and better position the company to pursue attractive market opportunities when conditions get favorable. Our financial margin stood at 54% in the quarter. And on a cumulative basis for 2025, FHipo obtained a financial margin of 54.5%, highlighting the company's operating efficiency. On January 20, 2026, we completed the full early amortization of the RMBS CDVITOT 14U collateralized by INFONAVIT denominated in VSM or Veces Salario Minimo. The execution of the cleanup call was based on portfolio balances as of December 2025. And finally, as of the date of this report, the CDVITOT 13U, 14U and 15U issuances that have been fully amortized throughout the execution of the cleanup calls, significantly reducing the balance of the INFONAVIT mortgages denominated in VSM in our total portfolio. Moving on to Slide 5. We highlight FHipo's consistent track record of generating value to our investors through stable distributions. As I mentioned before, up to the 4Q of 2025, our annualized yield per CBFI stands at 10.9% based on an estimated quarterly distribution of MXN 0.35 per share or per CBFI, subject to the current distribution policy. We have also distributed over MXN 7,300 million to our investors since FHipo was created back in 2014. That is equivalent to MXN 19.68 per CBFI, demonstrating our investor-focused approach and our ability to translate disciplined financial performance into consistent returns for our shareholders. As we move into Slide 6, we take a closer look at FHipo's solid capitalization profile, supported by a disciplined financial strategy management. As of the fourth Q of last year, our debt-to-equity ratio considering both on and off-balance financings was 0.3x and considering on balance financing stood at 0.7x. This result was supported by a balance sheet optimization strategy, which reduced our leverage significantly since 2019 and enhanced our ability to capitalize on market opportunities under favorable conditions. On Slide 7, we continue focusing our strategy on assets with an attractive risk-adjusted profile. Our portfolio collateralization profile remains very strong with an average loan-to-value of 77% at origination and today, an estimated loan-to-value of 28.6% based on current market value. Moving on to Slide 8. As of the 4Q, our nonperforming loan ratio based on the accumulated balances of the total portfolio at origination stood at only 3%, reflecting the historical credit performance of the company. Finally, on Slide 9, FHipo affirms its commitment to sustainability and ESG best practices. Our objective is to generate long-term positive impact beyond financial returns. We have provided more than 100,000 loans, of which women borrowers account for 31% of our overall portfolio, while 46% of our workforce are women, underscoring our commitment to inclusion and gender equality. On governance, our Nomination, Audit and Practices committees are fully independent, and more than half of our technical committee members are independent as well, reinforcing strong oversight and transparency. On the environmental front, approximately 70% of INFONAVIT borrowers have utilized the green mortgage program benefit, supporting energy efficiency home improvements. And internally, we have introduced initiatives to reduce paper, plastic and water consumption. Together, these actions demonstrate FHipo's commitment to responsible and sustainable value creation. Now I will turn the call over to our CFO, Ignacio Gutierrez, who will walk you through our leverage strategy. Ignacio Gutiérrez Sainz: Thank you, Daniel, and good morning, everyone. I will walk you through our funding structure and leverage strategy. FHipo has further reinforced its balance sheet by executing a disciplined deleverage strategy over the past years. As of the fourth quarter of 2025, our total debt-to-equity ratio, including both on and off-balance financing stood at 1.3x. And on a stand-alone basis, our on-balance leverage ratio was 0.7x. This financial discipline strengthens our position and provides us with greater resilience in evolving market conditions. Our diversified funding structure allows us to maintain solid liquidity levels while preserving the flexibility to allocate capital efficiently and focus on long-term value creation. On Slide 12, we will go through the detailed breakdown of our consolidated funding structure as of the fourth quarter of 2025. Our funding sources are well diversified across securitizations, bank facilities and capital market instruments with competitive rates and spreads. As shown on the breakdown, over 90% of our outstanding financings have a legal maturity exceeding 20 years, providing long-term funding stability and mitigating refinancing risks. Given our current capital structure, FHipo maintains additional leverage capacity of approximately MXN 16.8 billion or 1.8x debt to equity in comparison with the target leverage limit of 2.5x. This position gives us flexibility to act prudently and selectively as opportunities arise. Now with this, I'll turn the call over to our COO, Jesus Gomez, who will walk you through the portfolio breakdown before we discuss the financials. José de Jesús Gómez Dorantes: Thank you, Ignacio. Good morning, everyone. Thank you for joining us today. Let's move on to Slide 14 to take a closer look at the breakdown of our mortgage portfolio as of the end of fourth quarter 2025. FHipo's consolidated portfolio comprised 43,849 loans as of December 31, 2025, with an outstanding balance of MXN 16.8 billion, an average loan-to-value at origination of 77% and an average payment-to-income ratio of 24.4%. At the end of the quarter, 92% of the portfolio is performing. Our portfolio remains diversified across several origination programs, including INFONAVIT Total, INFONAVIT Mas Credito, Fovissste and the digital mortgage platforms portfolio, which as of the end of the fourth quarter 2025 represents 20% of the total consolidated portfolio. In over 10 years, we have continuously adjusted our origination and asset acquisition strategy to improve the credit quality of the assets we acquire. Moving on to Slide 15. FHipo's portfolio remains geographically diversified across all 32 Mexican states. Nuevo Leon, Estado de Mexico and Jalisco continue to represent the largest concentrations together accounting for approximately 28.8% of the total portfolio balance. In terms of our partnerships and origination programs, here is the breakdown of our portfolio. INFONAVIT Mas Credito program accounts for 51.7% of the total portfolio equivalent to MXN 8.7 billion. The digital mortgage platforms portfolio accounts for 19.2%, equivalent to MXN 3.2 billion. The INFONAVIT Total pesos program represents 14.3% of the total portfolio, equivalent to MXN 2.4 billion. Fovissste's portfolio accounted for 12.1% of the portfolio equivalent to MXN 2.0 billion. And finally, the INFONAVIT Total VSM denominated loans reached only 2.7% of the portfolio for MXN 0.4 billion, significantly it reduces the balances of INFONAVIT mortgage denominators in VSMs after the cleanup call of the CDVITOT transactions that Daniel mentioned before. This distribution reflects our strategy to prioritize origination programs that offer strong risk-adjusted returns while maintaining a diversified portfolio aligned with market demand. FHipo is well positioned to participate in future growth opportunities while maintaining a strong focus on profitability. I will now return the call back to Ignacio Gutierrez, our CFO, to discuss FHipo's financial results for the fourth quarter of 2025. Ignacio Gutiérrez Sainz: Thank you, Jesus. On Slide 17, our consolidated nonperforming loan ratio stood at 8% at the end of the quarter. As of the end of the fourth quarter of 2025, we continue to maintain a solid reserve and allowance for loan losses with an expected loss coverage of 1.3x and an NPL coverage of 0.53x. If we move to Slide 19 for our financials for the quarter. The total net interest income for the fourth quarter of 2025 was MXN 321.6 million, reflecting an increase compared to the fourth quarter of 2024. The interest expense totaled MXN 148 million, representing a slight decrease compared to the MXN 153.9 million reported in the fourth quarter of 2024, primarily as a result of the decline in interest rates over the past 12 months. Our financial margin stood at MXN 173.5 million, representing 54% of the total interest income, an increase of 3 percentage points compared to the 50.9% in the fourth quarter of 2024. The allowance for loan losses recorded in the fourth quarter of 2025 was MXN 44.9 million, reflecting the underlying credit performance of the portfolio during the quarter and its expected loss. The valuation of receivable benefits from securitization transactions showed a net loss of MXN 8.2 million in fair value during this quarter. This result is mainly explained by the performance of the portfolio and collateral of such trust certificates during the quarter and a net effect derived from the total early amortization of the CDVITOT 14U trust certificates. The total expenses incurred during the fourth quarter of 2025, which include the portfolio servicing and operational services as well as other expenses amounted to MXN 108 million. As a result, the net profit for the quarter amounted to MXN 19.5 million. With this, the estimated distribution for the fourth quarter of 2025, subject to the current distribution policy, as Daniel mentioned, is of MXN 0.356 per CBFI, which considering the average price for CBFI as of the fourth quarter of 2025 and the days of lapse in the fourth quarter results in an annualized yield of 10.9%. With this, I'll now hand the call back to our CEO, Daniel Braatz, for some closing remarks before we move to the Q&A session. Daniel Michael Zamudio: Thank you, Ignacio. As we close 2025, FHipo's business model continues to demonstrate resilience and adaptability. During the year, we sustained a strong financial position and maintain a healthy capitalization profile. Our focus remains on driving profitability and strengthening our capital structure and managing risk responsibly. Through 2026, we will continue evaluating new opportunities aligned with our strategic objectives while enhancing the overall quality of our portfolio. We believe the initiatives undertaken so far have strengthened our position for the future, enabling us to capitalize on future market conditions. Our objective remains clear to deliver stable and sustainable returns to our holders while maintaining the disciplined approach that has defined FHipo since inception. At the same time, we will continue advancing our ESG initiatives and creating long-term value for all stakeholders, including the communities we serve. Thank you for your continued trust. I'll now hand the call back to the operator to open the Q&A. Operator: [Operator Instructions] Our first question comes from the line of Martin Lara. [Operator Instructions]. Martín Lara: This is Martin Lara from Miranda Global Research. I have 2 questions. Could you please share your expectations for this year in terms of loan portfolio, including potential acquisitions of other portfolios or other financial companies? That's the first one. And the second one is that your capitalization ratio is very high at 60%. How do you see this indicator going forward? Daniel Michael Zamudio: Thank you for your questions. In regards of the capitalization, as you know, we've been trying to stronghold our balance sheet in order to take advantage of future leverage opportunities that obviously will reduce the cap ratio that we are holding at the moment. We're working in a couple of financing facilities that will help us lever a little bit more our equity. And the use of proceeds for those financings goes towards your first question, which is we're going to be using part of those proceeds and liquidity that we are holding at the moment to tackle some opportunities in terms of acquisition of new originators and also portfolio on mortgages and real estate-backed loans. Martín Lara: Okay. And your -- I have a follow-up. Your financial margin was very strong. It expanded nearly 4 percentage points year-on-year. What can we expect in the future? Daniel Michael Zamudio: I would say that we need to expect the financial margin to keep at that level. It will depend a lot, as you know, on the interest rate curve that Mexico will be running. As of today, we have a small portion exposed to floating rates. But as we keep performing throughout the year and depending on what Banxico does, I think that could increase a little bit more. But to be in the safe side, I would say that you should target that between the 50% and 54% of financial margin is a target for the company in 2026. Martín Lara: Okay. But more towards 54% instead of 50%? Daniel Michael Zamudio: I would say that, yes, more towards the 53.3%. Operator: We would like to take this moment to thank you for joining FHipo's Fourth Quarter 2025 Results Conference Call. We have not received any further questions at this point. So that concludes our question-and-answer session. Thank you. I would now like to hand the call back over to Daniel Braatz for some closing remarks. Daniel Michael Zamudio: Thank you all for joining us today. Please don't hesitate to reach out to us if you have any more questions or concerns. We appreciate your interest in FHipo and look forward to speaking with you soon. Operator: That concludes today's call. You may now disconnect.
Operator: Ladies and gentlemen, thank you for standing by. I'd like to welcome you to Fibra UNO's Fourth Quarter 2025 Results Conference Call on the 27th of February 2026. [Operator Instructions]. So without further ado, I'd like to pass the line to the CEO, Fibra Mr. Andre El-Mann. Please go ahead, sir. André Arazi: Thank you, Luis. Thank you, everybody, for your interest in our call regarding the fourth quarter of 2025. I would like to begin that we are very excited again to release these numbers for you of the fourth quarter of 2025, which has been a very busy year for us at FUNO. This is the first report after the drop-down of our industrial portfolio. I would like you to bear in mind that we need to consider -- we are considering only a few days of the complete revenues in this new structure, in this particular quarter. Nevertheless, we make sure that everything goes as planned, as we will be able to report a complete quarter this very first quarter of 2026 in the next few weeks. That would allow us to reveal that all the efforts made last year will pay back, and our shareholders will be able to see the positive impact that the carve-out of our industrial portfolio will have on the future of the company. I would like to express our excitement on the numbers released yesterday that show a consolidated company with assets close to $25 billion. These are the big numbers, but we are also taking care of the little numbers. 95.5%, our historic high of occupancy level across the board. NOI margin growing by more or less 300 bps and looking good for this year. A healthy growth above inflation on all the significant lines of the balance. I would like to remember you about last year's achievements. We made the liability management of the company, having renewed close to $800 million at the beginning of the year of the U.S. bonds -- U.S. dollar bonds. We renewed also MXN 12 billion of the Mexican peso bonds. We made the repayment of close to MXN 10 billion of short-term bilateral revolving lines of credit, with the issuance of an unsecured line long term. We made the exchange of our bonds across the curve to complete the transfers of debt to Fibra Next. We finalized the internalization process and we expect savings in the order of $400 million to $500 million this year. We did the carve-out of our industrial portfolio. First, with the IPO of Fibra Next in which we raised close to $430 million. Then we made a follow-on equity offering of Fibra Next close to $400 million. We did the exchange of the bonds. And then finally, at the very end of last year, we finally made the drop-down of the industrial portfolio of UNO into Next. All of this done last year, during which we managed to maintain and excel in our metrics, mainly total income, total NOI, total FFO, total dividend yield, all of them improving in a healthy way. And also, we improved at the end of the year in an overall NOI margin. I would like to thank all the team here at Fibra UNO because none of this would have been possible. We made last year very difficult choices and very strong efforts in order to get where we are today. I was sure -- I will make sure to be reporting the first quarter this year, which will be much clearer of all the efforts that we did last year and will reflect on the balance and the performance of the company and of course, of our subsidiary company, Fibra Next. Thank you for your attention. I would like to pass the mic to Jorge to go in depth with the numbers. Jorge, please. Jorge Pigeon Solórzano: Thank you very much, Andrea, and thanks, everybody, for joining our call. As usual, I'll start with the MD&A for the quarter. Fibra UNO's total revenue increased by MXN 348 million or 4.6% compared to the previous quarter, primarily driven by a 50 basis point increase in the total portfolio occupancy, inflation-driven increases on active contracts, rent increases and on lease renewals and this was offset by the peso-dollar exchange rate appreciation and the effect that this has on our U.S. dollar-denominated rents. In terms of occupancy, our operating portfolio stood, as Andre mentioned, 95.5%, which is a 50 basis points increase compared to the previous quarter. If we look at the retail portfolio, we recorded an occupancy of 93.7%, 10 basis points above the previous quarter. The office portfolio recorded 82.9% occupancy, 10 basis points below the previous quarter. The other portfolio recorded 99.3% occupancy remaining stable versus the previous quarter. The industrial portfolio, 97.7%, which is 30 basis points above the previous quarter. And the in-service portfolio recorded 87.7%, which is 330 basis points above the previous quarter. In terms of operating expenses, property taxes and insurance, total operating expenses increased by MXN 97.1 million or 9.8% versus the third quarter of 2025. This is mainly due to increases in the cost of some of our supplies and services that are above inflation. As you know, we've mentioned this before, a lot of our expenses are linked to service providers that have high degree of correlation with the minimum wage. And this has kept some of those expenses higher. In terms of property taxes, fees increased by 6.1% or 3% above the previous quarter, mainly due to consolidation of Fibra Next. Insurance expenses increased by MXN 10 million or 7.6% versus the previous quarter, again, due to the consolidation of Fibra Next. In terms of net operating income, our NOI increased by MXN 498.3 million or 8.9% versus the third quarter of '25 to reach the amount of MXN 6.079 billion. NOI margin calculated over rental revenue was 85.1% and 77.2% compared to total revenues. In terms of interest expense and interest income, the net interest expense line increased by $51.9 million or 1.8% compared to the third quarter of 2025. This was mainly due to Fibra Next debt consolidation and the interest related to this consolidation. And as Andre mentioned, this was not a complete quarter. So we'll see the complete effect on our financials in the first quarter of 2026. This increase was offset by interest rate reduction in pesos and the effect that this had on our variable rate debt. The appreciation of the exchange rate, which went from MXN 18.38 to MXN 17.97 quarter-over-quarter and obviously, the effect that this has on our interest expense line during the quarter, a decrease in the interest capitalization and the impact of the pricing of our derivative financial instruments. The bottom line on our funds from operation as a result of the above, FFO controlled by FUNO increased by MXN 157.4 million or 6.6% compared to the third quarter of '25, reaching MXN 2.55 billion. Adjusted FFO recorded an increase of MXN 121.1 million or 5% compared to the third quarter of 2025, reaching MXN 2.55 billion. A slight difference against FFO is due to the update in the cost of a property that was sold in the third quarter of 2025. FFO and AFFO per CBFI calculation during the fourth quarter of '25, we put circulation, 5.3 million CBFIs corresponding to the ECP (sic) [ EPC]. And with that, we closed the quarter with MXN 3.810 billion CBFIs outstanding. The FFO and AFFO per average CBFI were MXN 0.6690 and MXN 0.6712, respectively, variations of 6.5% and 4.9% compared to the third quarter of 2025. In terms of the quarterly distribution, we reached MXN 2.55 billion or MXN 0.67 per CBFI with a quarterly AFFO payout of 99.8% and a payout of 94% compared to the annual AFFO. Moving on to the balance sheet. In terms of accounts receivable, we totaled MXN 2.131 billion, a decrease of MXN 260 million or 10.9% from the previous quarter. Reflecting the organic growth related to the consolidation of Fibra Next as well as an improvement in collections that we had in the quarter. Investment properties, the value of our investment properties, including financial assets and investments in associates increased by MXN 32 billion or 9.3% compared to the third quarter of '25. This obviously, as you can see, reflects the consolidation of Fibra Next on the balance sheet as of December 31, 2025, CapEx invested in our portfolio and fair value adjustment of our investment properties. In terms of total debt, we finished the fourth quarter of '25 with MXN 152 billion compared to the MXN 147 billion we had the previous quarter. The variation is primarily due to the consolidation of Fibra Next, which included additional debt, the valuation of the maturity effect of financial instruments and the exchange rate effect appreciation that I mentioned before. In terms of total equity, equity increased by MXN 55 billion, almost MXN 56 billion or almost 30%, 29%, including controlling and noncontrolling interest. As you know, this is obviously the effect of the consolidation of Fibra Next, which is one of the things that we wanted to achieve, and we finally have completed that in the previous quarter. This capital includes the consolidation of the Jupiter portfolio, the second part of Jupiter portfolio. Net income generated from quarterly results, the derivatives valuation, shareholders' distribution related to the third quarter results and the employee compensation plan. Moving to the operating results in terms of leasing spreads. Leasing spreads, we had increases of 16.4% or 1,240 basis points in the industrial segment, 8.2% or 820 basis points in the retail segment and 500 basis points in the office segment. If we look at dollar-denominated leasing spreads, we saw 13.9% or 1,390 basis points for the industrial segment, 460 basis points or 4.6% in the retail segment, and we saw negative 320 basis points in the office segment. As you know, this is something that we are very pleased with and something that we have come to expect in terms of what's happened in the office portfolio. In terms of constant property performance, the rental price per square meter for constant properties increased by 5.3% compared to the weighted annual inflation of 3.6%. So we had 170 basis points growth despite a depreciation of the peso about 13%. If we had not seen that this appreciation, we probably would have been closer to about 8.4% constant property performance. So again, very pleased with the performance that we saw in this area. In terms of the NOI at the property level, we saw for the fourth quarter, an increase of 2.9%. It can be divided in Fashion Mall segment NOI decreased by 2.5% Regional segment decreased by 3.5%, stand-alone segment decreased by 3.6%. The decrease is mainly due to extraordinary income recorded in the third quarter of '25, which is obviously a one-off in [ comparison ] to the fourth quarter of '25. The office segment NOI increased 5.2%. And the others segment decreased by 1.2%. The industrial segment NOI increased by 11.2%. And with this, we finalize the MD&A. Now Luis, if we can open the floor for Q&A. Operator: [Operator Instructions]. Our first question is from Igor Machado from Goldman Sachs. Igor Machado: My question here is on leverage as we have seen a relevant leverage process for FUNO in the last quarters. So I just want to better understand here how does management view the leverage target for the end of 2026? And what is the long-term strategy for maintaining this improved ratios? That's it. Jorge Pigeon Solórzano: Well, as you know, part of the -- there were many drivers for the carve-out of the industrial portfolio and the capitalization and the consolidation, let's say, of that industrial portfolio Fibra UNO. One of them is the deleveraging effect that we have by adding roughly $2.3 billion of new equity, which is a combination of the value of the Jupiter portfolios as well as the equity we raised from the market. Ideally, we feel comfortable, obviously, below 40%, and we feel comfortable having an investment-grade credit rating, which is where we are today, both stable outlooks from Moody's and Fitch. And the trajectory that we have for the company will delever it even further based on a couple of events. One is, as you know, this business is inflation indexed. So that will have a deleveraging effect over time. And then the other one is that Next will continue to grow, and we expect that to come with additional equity issuances further down the road, and that equity is going to be consolidated into Fibra UNO. So that's going to delever the company even further. So at this point, we don't have additional deleveraging strategy, so to speak. And we would like to maintain our investment-grade credit rating going forward. So the metrics that we need to be in that world is what we're going to aim to maintain. So let's say, LTV below 40% is where we feel comfortable around 35% to 40%, say, the sweet spot. Operator: Our next question is from Mario Simplicio from Morgan Stanley. Mario Sergio Simplicio: I have my question is, well, in 2025, you achieved a lot of milestones of your long-term strategy and you have the internalization, we have Fibra Next. And I wonder what are the next targets that you're aiming for, let's say now '26 and for the future years? Like how is the long-term strategy for Fibra UNO now that it has already achieved so many milestones? André Arazi: Thank you for the question. We have many, many plans for the future. And I hope that we, first of all, will reduce the gap between the NAV and the price of the share. Once we do that, all of our opportunities will open wise, and we will act on it. Operator: Our next question is from Diego from Citi. Unknown Analyst: I have one on my side regarding CapEx. In the fourth quarter, the CapEx reached MXN 2 billion. And how this level of investment support FUNO's growth pipeline, including expansions and asset stabilization? And additionally, what you guys expect for CapEx in 2026? Jorge Pigeon Solórzano: I think that the MXN 2 billion is a good number for CapEx for the company, let's say, on a normal operating year on the normal status of what we have been doing, which is keeping up or trying to keep up with the demand for new space that we have from our tenants is a reasonable number to expect again for 2026. And obviously, as you know, this does not include any new developments or anything of that nature. Some minor expansions at some of our properties, but not large scale development. For that, I think that's what we need to open the doors for additional capital for the company. Operator: Our next question is from Pablo Mulas from GBM. Pablo Mulas: You already answered my question. Operator: Our next question is from Gordon Lee from BTG. Gordon Lee: Just a quick question. I was wondering whether you have an estimate or even just a ballpark figure of what the total operating expenses that we saw this quarter that were associated with either the next transactions or the internalization transactions that should be nonrecurring on an ongoing basis, just to get a sense of a more sort of stabilized EBITDA margin for, let's say, the new FUNO. Jorge Pigeon Solórzano: Not yet. I don't think we we run that number. I'll get back to you on that we'll work on it and get back to you. Gordon Lee: Okay. Perfect. Just a ballpark is fine. Operator: Our next question is from Anton from GBM. Unknown Analyst: Just a quick one. I mean, as everyone mentioned, you reached a lot of milestones for FUNO, mostly focused on the industrial side. So I was wondering what are your plans for the retail and office and the other segments? Do you expect to do any acquisitions there? Or what's the overall strategy? Jorge Pigeon Solórzano: Well, more than the strategy, let me tell you what we think about what's going on in the retail sector. If you see our logistics portfolio, it's at 98% occupancy and the rents in the Mexico City market have continued to grow. There is very strong demand for logistics assets. Why? Because the companies that demand that logistics, which is basically consumer-driven in Mexico, are -- have been doing well and expect to continue to do well, and there's growth -- a lot of growth coming in that sector. So that means that there's going to be demand for new shopping malls, new stores, new Walmart and so on and so forth down the road. And obviously, we want to be able to capture those opportunities. Opportunities we have been seeing them the last years, and we've had to let those opportunities pass at Fibra UNO because with the deep gap that we have to our NAV, it's -- this is a capital-intensive business. We want to close that gap in order to be able to issue equity. And then as Andre mentioned earlier, that will open up a lot of opportunities for us for acquisitions and for developments, et cetera. So we see a very strong and attractive retail market in Mexico. Operator: [Operator Instructions]. Okay. We have a question from Felipe Barragan from JPMorgan. Felipe Barragan Sanchez: I have a question on an update on the office segment. Just want to hear your thoughts on the trends and what's going on in that segment. Unknown Executive: Actually, as you have seen on the -- our report, we have been increasing the occupancy that we have there. And I think that it's not just us, it's just a tendency already on the market. Obviously, we are above the average of the market in terms of occupancy. But I think the trend is that the offices are getting occupied. And probably we are at 83% occupancy. Once we hit the 85%, we will be seeing increasing the rent levels that we have as of today that has been almost flat in the last 2 or 3 years. Operator: Our next question is from David Soto from Scotiabank. David Soto Soto: Just a quick one and a follow-up on the retail side. Should we expect variable rents to start contributing to your portfolio anytime soon? André Arazi: They are already contributing. We have a very interesting mass of contracts that we changed. If you remember, I've been saying that in the past that we changed our contracts, some of the contracts for a dual rent, one fixed rent, which was lower than the previous rent that the tenant was paying and/or our percentage of their sales, which has been paying off in the last couple of years. But right now, given that we finished the -- for example, the luxury Avenue in La Isla Cancun, we have been receiving the fruits of that, and we have been receiving already percentage of rent. If you add to that, that we exchange many of the regular contracts of regular shopping malls from fixed rent -- pure fixed rent to fixed rent plus a percentage of the sales, whichever becomes higher. So we have been already receiving that in our portfolio. And given that we exchange many of the contracts, we think that we will continue to be receiving those percentages in the near future. Operator: We'll give it a few more moments for any further questions. Okay. It looks like we have no further questions. I will now hand it to the Fibra UNO team for the concluding remarks. André Arazi: Thank you very much. Thank you, everybody, for your interest in our call, and I hope to hear from you in the next call about the first quarter of 2026 in the future. Thank you very much. Operator: That concludes the call for today. We'll now be closing all the lines. Thank you, and have a nice day.
Operator: My name is Kate, and I will be your conference operator today. At this time, I would like to welcome you to the Grindr Fourth Quarter 2025 Earnings Call. [Operator Instructions] At this time, I would like to turn the call over to Tolu Adeofe, Director of Investor Relations. Tolu Adeofe: Thank you, moderator. Hello, and welcome to the Grindr Earnings Call for the Fourth Quarter and Full Year 2025. Today's call will be led by Grindr's CEO, George Arison; and CFO, John North. They'll make a few brief remarks, and then we'll open it up for questions. Please note, Grindr released its shareholder letter this afternoon, and this is available on the SEC's website and Grindr's Investor page at investors.grindr.com. Before we begin, I will remind everyone that during this call, we may discuss our outlook and future performance. These forward-looking statements may be preceded by words such as we expect, we believe, we anticipate or similar such statements. These statements are subject to risks and uncertainties, and our actual results could differ materially from the views expressed today. Some of these risks have been set forth in our earnings release and our periodic reports filed with the SEC. During today's call, we will also present both GAAP and non-GAAP financial measures. Additional disclosures regarding non-GAAP measures, including a reconciliation of GAAP to non-GAAP measures, are included in the earnings release we issued today, which has been posted on the Investor Relations page of Grindr's website and in Grindr's filings with the SEC. With that, I'll turn it over to George. George Arison: Good afternoon, everyone, and thank you for joining us today. 2025 was an exceptional year for Grindr. Revenue grew 28% year-over-year to $440 million, and we delivered roughly $196 million of adjusted EBITDA, meaning we achieved more EBITDA than our revenue just 3 years ago. We accomplished that while materially improving the product and platform and while rapidly terraforming Grindr into an AI-native organization. With such a fantastic year, I'd point to 3 highlights. First, the core business stayed strong. We expanded the product in ways that deepen engagement and clarified intent, including the global expansion of Right Now and launches like For You, Chat Summaries and A-List. We strengthened XTRA and Unlimited and expanded monetization through ad formats like Rewarded Video. Second, we made real progress on AI, not as a feature, but as an operating advantage. In Q4, AI agents drove between 60% and 70% of our new code and our engineers are reporting roughly a 1.5x productivity improvement per person. We're now able to ship faster with higher quality without the company getting heavier and slower. Third, we took steps to drive revenue growth in a way that matches what we've built. Over the last several years, we've added a lot of new value to XTRA and Unlimited, significantly expanding what users get from both tiers. To make sure we're capturing the right economics and return, in August, we began rolling out new pricing for XTRA and unlimited. Results have been encouraging, and we are continuing to roll out these changes globally through the first half of 2026. Looking ahead, our framing for 2026 is to raise the baseline. Our best execution periods during 2025 with high output, high urgency, high quality will become our default operating mode. And from that baseline, we intend to push even higher. Therefore, this year, we are concentrating on 4 priorities: first, premium AI experiences [indiscernible] and Edge. This AI native premium tier is built for power users who want the most capable version of Grindr that today's technology enables us to build. We'll continue refining the experience and testing price points through the year. Second, durable core growth, that means improving onboarding, translation and localization, [indiscernible] personalization and intent clarity through AI and beginning to strengthen the user experience in lower density and international markets. Third, operational rigor through Grindr [indiscernible], clearer ownership, higher productivity, faster decision-making, greater leverage for our management layer and AI embedded into everyday workflows across functions. Fourth, deliberate investment for durability and upside. We are leaning into reinvestment in our team, our platform foundations and ecosystem health. That same posture applies beyond subscriptions, we will continue building [ Grindr Health ] anchored by Woodwork and we will keep strengthening our ads platform with increased focus on direct advertising and brand partnerships. Up to this point, these remarks were read by AI using a proprietary voice model trained on my voice by one of our [ Gayborhood ] expansion teams. We did that deliberately as a small demonstration of how deeply AI is becoming embedded in both our product and our operations. Our continued focus as a management team is to execute against the strategy that creates significant long-term shareholder value by building exceptional experiences for our users while driving sustained growth in revenue and profitability. At both the management and the Board level, we are committed to demonstrating this through our actions and to continue doing all we can to earn our investors long-term trust and support. Thank you to the Grindr team for delivering through another ambitious year and to our users for their continued willingness to come to Grindr for their Gayborhood. With that, I'll turn it over to John to review the financials and guidance. John North: Thank you, George, and hello, everyone. I'll start by summing up the year and then dive into the fourth quarter. Grindr delivered outstanding results in 2025. Revenue grew 28% year-over-year to $440 million, and adjusted EBITDA was $196 million, representing a 44% margin. For the full year, we reported net income of $103 million compared with a loss in 2024 that reflected a noncash warrant liability revaluation. In the fourth quarter, revenue was $126 million, up 29% year-over-year. Direct revenue was $103 million and indirect revenue was $23 million for the quarter. Revenue exceeded our increased full year guidance provided in November due to continued strength from our subscription and add-on offerings as well as strong performance in our TPA business, which benefited from strong demand from both our partners and growing international markets. Adjusted EBITDA for the quarter was $56 million, a 44% margin, and net income was $29 million. We demonstrated operating leverage in the fourth quarter. Operating expenses, excluding cost of revenue, were $63 million. As a percent of revenue, those expenses declined to 50% from 54% in the prior year, which supported operating income for the quarter of $31 million or 25% of revenue. For the full year, operating expenses, excluding cost of revenue, were $201 million, declining 2% to 46% of revenue versus 48% in 2024. Operating income for 2025 was $126 million or 29% of revenue. We finished the year in a strong liquidity position. Cash and cash equivalents were approximately $87 million at year-end and total gross debt was roughly $396 million. We generated $133 million in free cash flow in 2025, which we utilized for both investment and growth initiatives and our share buyback program. Today, we announced a 3-year $400 million expansion of our share repurchase authorization and extended the program by 3 years to March 2029. This step reinforces our conviction in the strategy and our optimism of what's ahead for Grindr. In 2025, we repurchased 25.1 million shares against the original $500 million authorization for approximately $450 million. The balance of approximately $50 million will roll into the increased and extended program announced today, giving us total repurchase availability of up to $450 million. When we launched the initial 2-year $500 million authorization a year ago, a key objective was to offset the dilution we expected from the cash exercise of Grindr post the de-SPAC warrants. We moved through most of that authorization quickly, clearing the warrant overhang, eliminating nearly all of the associated dilution and doing so without increasing our aggregate debt. This expanded authorization gives us flexibility to buy shares when appropriate and in doing so, return capital to shareholders. Going forward, we expect our pace to be materially more measured. And because the business continues to execute at a high level with strong cash generation and real durability, we can return substantial capital to shareholders and keep investing aggressively in the long-term road map that will compound growth and profitability over time. Before I discuss our outlook, I'll briefly expand on user metrics and our updated MAU disclosure. Average MAU for 2025 was $15 million. Average paying users were approximately 1.26 million and ARPU was $24.25. As we discussed in November, we will be providing average MAU on an annual basis rather than quarterly going forward. This change better reflects the way we manage our business, focusing on delivering value and a great experience to our reliable funnel of free users and enhancing the features we provide to our paying users and aligns our disclosures with many of our public consumer Internet peers. We'll continue to provide quarterly visibility on leading engagement indicators. Finally, we have introduced our outlook for 2026. We expect to continue growing the business while scaling investments in longer-term initiatives, including premiumization, AI and the Gayborhood. For full year 2026, we expect revenue of greater than $528 million and adjusted EBITDA of greater than $217 million. As we have consistently discussed, we guide to what we have clear line of sight to. George noted some of our early initiatives like Edge and Woodwork are not yet included in our outlook as the pace of revenue growth is not yet predictable, though the investments and expense are factored into our adjusted EBITDA for the year. We will continue to invest carefully with discipline and to protect our ability to generate strong cash flow. Additionally, while we do not provide guidance on a quarterly basis, we currently expect our revenue growth rate and adjusted EBITDA margin in Q1 to pace well ahead of our annual results, reflecting early year revenue momentum and the timing of our planned 2026 investments, respectively. As noted in the past, we do not manage our business for quarter-to-quarter performance, but for long-term durable and sustainable growth and profitability. In closing, 2025 was another great year of strong growth, outstanding margins and durable free cash flow generation. In addition to our highly cash-generative business model, we have a healthy balance sheet that gives us the flexibility to invest and return capital. And with that, operator, please open the line to questions. Operator: [Operator Instructions] Your first question comes from Andrew Marok with Raymond James. Andrew Marok: Thanks to AI, George, for the remarks. If we could start with 2026, I guess, what you've seen so far in terms of things like retention and churn impacts from your pricing actions that you've done to your base plans at this point and kind of some of the assumptions underpinning Edge into the '26 outlook? And then I have a follow-up. George Arison: Sure. I can start with that, and then John can chime in if he wants to add anything. So with regards to 2026 and pricing changes, we were very happy with the results of the test that we ran in 2025, starting in about August on pricing. The user base accepted the price changes very well. I think that speaks to the fact that we have added an incredible amount of value to both XTRA and Unlimited over the last 3 to 4 years. A lot of new features and products were added to those tiers, but we never charged for those, right? So I think users like the features and the offering that is there. And so now having to pay a little bit more for all that extra value that had been generated over the last 3 years was not a significant challenge, and I think has been really well received. So we don't expect to have any significant impact on conversion from the price changes that we made. And we will be rolling out the price changes throughout the first half of the year across the globe. It's live with a lot of users already, but not live at 100%, and that's something we expect to happen in H1. With regard to Edge, we started Edge in -- the products that are in Edge have been in testing for a while, but as a tier, it went live in Q4 of last year in Australia. The feedback on that was extremely positive. Frankly, demand was higher than we had anticipated in a pretty significant way, which told us that there's a lot of value in what we're creating and potentially, we were not pricing it appropriately for the amount of value that we were generating. To get a better sense of the price points, given that we've never done anything of that nature before. We've never offered a product of that much value in the past. We felt that it was important to do tests outside of Australia as well. And so we launched tests in certain U.S. and other global markets where we have a significant number of users who are paying customers. Those tests are ongoing today, and that's some of the information that got out into the public which was inevitable when you start doing price tests like this, it will attract attention. We would expect testing to continue through H1 and probably in Q3 as well. Edge is being really built as the core foundation of growth in 2027. If we go global with Edge outside of testing in 2026, it will be upside. It's not assumed at all in our guidance for the year. Andrew Marok: Great. Really clear there. And then maybe in a different direction, following the break of the proposed takeout offer a couple of months ago, you were left with 2 major shareholders, one of whom has been selling down a stake pretty significantly. I guess can you give us any color as to your expectations for how the situation plays out and how you're approaching the governance situation in the meantime? George Arison: Thanks for the question. I appreciate where the question is coming from, and I understand that -- this is an important issue for a lot of shareholders. We ourselves get this question from folks pretty regularly and also appreciate that in light of last fall, there is more interest in that. As I believe everybody knows, James has stepped down from the Board, and the Board does continue to view this issue as quite important, and that's something that they've always thought about. I think one of the things that came out from last fall is that everybody is in alignment that Grindr remaining a public company is the best thing to do. That's true for Ray as our largest shareholder. That's true for the remainder of the Board, and that's true for management as well. I think the other thing that came out last fall that was very positive is that Michael Gearon, our Lead Independent Director, was willing to step into that role when James stepped down. Michael is among the most successful entrepreneurs in the world, period. And so to have him be in that role is extremely valuable to me. He's been a great mentor, and I've learned a ton from him in the 3.5 years we've been working together and very much looking forward to continuing to work with him in that role. Since going public, Grindr has had an independent Board, and our Board is very committed to remaining independent and to continue to be stronger. That's not something new that got started just in the fall. It's been going on for a long time. We have been adding new directors. We added Chad Cohen as a Director in May. I think it was a very positive addition to us given his financial expertise and roles twice as the CFO of a public company. And we are in the process of interviewing candidates for Board membership now. We've interviewed over a dozen very serious and credible candidates so far with support from 2 different search firms, and we will continue that process for the next several weeks as we get ready for the shareholder meeting this summer, and I think there will be an update on that at the shareholder meeting. And then lastly, what I'd say is that I have a very positive relationship with Ray. Ray has been a very good shareholder to Grindr. What Ray, James and Michael did when they rescue this company from China ownership was massive, and it really saved the product and saved it for the community, and I think that's really valuable. And in the 4 years that I've known Ray, we've had a very positive and strong working relationship. He is a very entrepreneurial investor in that he very much likes to think about the long term and is very optimistic about the future and what the company can do, whether it's in -- as a business overall or within products that we're launching and is pretty deep in knowing what we're doing and what the road map is, which I think is really positive. So we've had a very good working relationship. I've learned a lot from him as well. Obviously, he has expertise in areas that I don't know as much about like capital markets. And so I've very much enjoyed working with him. I think he's a very strong shareholder, and I believe he'll continue to be a very committed shareholder for the long term, who is very dedicated to this business. And there was -- you could speak to that from the fact that last year, even though he owns so much of the company, he bought even more ownership in the business by putting in nearly $200 million into the company at the time. So I think we are in a very strong position from the governance standpoint, and the Board will continue to be very focused on ensuring that we are run as an independent company, which is something that's very important to me and to the Board. Operator: Your next question comes from Nathan Feather with Morgan Stanley. Nathaniel Feather: Congrats on the results here. I guess first, I'm thinking about the at least 20% revenue growth guidance you gave, can you help us think through the primary contributors that are included within that, whether it's the price increase or other kind of factors? And then second, really interesting to hear the positive receptivity to the Edge tier. Can you provide some more information on within that, what are the early subscribers saying is the primary value they're getting. There's a lot of different features. So trying to help kind of contextualize what are the things that people are really circling as these are things that are really improving my experience. John North: Nathan, good to hear from you and really appreciate you picking up coverage earlier this week. So thank you for that. I'll take the guidance question, and then maybe I can turn it over to George for the second question. When we think about guidance, our philosophy has been pretty consistent from the beginning, which is what do we have line of sight to and how do we think about the business over the long term. We're not going to take a quarterly approach to managing the business. We're going to be long term and thoughtful in how we talk about what our outlook is. And that's reflected in the guidance for '26. It's what we have line of sight to. And I think the 20% revenue growth, to your point, is still a great growth rate. It's primarily focused off of the product enhancements that we've been making over the last 18 to 24 months and then the fact that we hadn't really taken a price increase since 2018, if you can believe it. And so as George mentioned earlier, we implemented those pricing changes just right at the end of last year. And those are going to continue to work their way through the first 2 quarters of this year. And that's our expectation in terms of where the majority of the revenue growth is going to come, along with continued growth in our advertising business, which was up 37% last year and making sure that we also enhance the quality of that business, both through better advertising, things like rewarded ads and then also through direct advertising. So those are the primary drivers as we think about it. To the extent there are expansion opportunities, Edge gets pulled forward, things of that nature, we don't have line of sight to that now. It's not included in the guidance. And if and when that happens, it would hopefully lead to upside. George Arison: And with regards to Edge, thanks for the question. B, looking forward to seeing you on Monday at the conference. And Edge is something that I'm super excited about because, honestly, I came up with it thinking through like what the opportunity is, and the team has done a really awesome job at making it happen. And also is awesome because it's built on technology that wasn't in existence 4 years ago. One of my thesis about taking this role and coming to Grindr was AI would become a game changer in how technology is being built. And Grindr was very uniquely positioned to be able to be an AI-first company, and AI-first product because we have so much data. Like AI is good theoretically, but if you don't have the data, it can't really do very much. And we do have a ton of data that we can utilize. So the things that we're trying to solve with Edge are twofold. One is that people end up having many, many conversations inside Grindr, which don't go very far, partly because new conversations take over, right? So because we're an open architecture platform, people can talk to anybody and people have many, many conversations at once. Power users, in particular, have even more conversations, but an average user sends 50 messages a day. So you have many people that you're talking to all the time. That's really magical, and that's where a lot of the excitement of Grindr comes from. But one of the negatives of that is that some of the great conversation you might be having get kind of pushed down and lost in the inbox. And the thing we've been kind of thinking about over the years is how do we avoid that from happening? How do we help the user have a better sense of, hey, these are the conversations that I'm having, and I want to maintain them and maybe they go somewhere beyond just the conversation over the long term. That's especially true for users who travel a lot because you might be having conversations in many different places. And then you're in New York, you have a bunch of conversations in New York, then those get lost when you go back to, say, Chicago and are having conversations in Chicago. What we've built within Edge is a product called A-List, which takes your entire chat history and builds on top of it a set of summaries of the richest and the best conversation that you've had with people that the AI believes are your best matches. And then you can go to your A-List and see those conversations and brings together those conversations. It brings together the summary, it tells you what you told them, what that person told you and why that's interesting. What are the important information that you shared about each other, whether it's your name or other relevant information, et cetera. It brings together the other person's photos as well. So you can see all the photos that he has shared with you or anything that you've shared with him. And that feature is a killer feature. The users really, frankly, love it. And I might remember in my head, the day when we, as a team described it for the first time about 2 years ago and to go have it go from like just a concept in a conversation to hear it's live and is as awesome as it is, I think, is fantastic. So that's the first piece of what we're trying to solve. The second piece that we're trying to solve is discovery. Grindr does not have a lot of information about its users on its profile. That's, again, part of the magic of Grindr. Privacy is very important to users. And so we don't require you to say a lot about you. But there is a limitation to that in that you don't actually oftentimes know, is this the right person for me to be reaching out to or not. And what we are doing with Edge is for people who want to be a part of this, obviously, it's all by person's choice. We don't force people into our AI functionality. Only people choose to be part of the AI functionality. Is this true? The user who is subscribing to Edge will be able to see Grindr derived information about the other user. So if I'm looking at somebody's profile and I'm an Edge subscriber, I will know things about that user's behavior patterns that are useful for me to know in deciding whether I should reach out to him or not. And I think that's extremely valuable and people are really loving that experience. And tied to that is the second piece, which is discovery. In almost every location in the world, the number of gay people in a given geography is actually quite limited because we're about, what, 5% of population, maybe 6%, and that's not that many people. When you take half the population is male and then 5% of that is gay. Maybe in New York, that's an exception where you do have a critical density, but everywhere else, density is lacking. And so through a feature we call Discover, we're able to identify and surface people to you that are the right matches for you, meaning we believe you will like them based on everything we know about you and everything we know about them, but you otherwise might not find. And that's less contained by geography where Grindr is very geography focused. It's like I'm here and here's my greater Army by geography, it's broader in nature. And that allows people to find new people that they otherwise might not connect with. But because it is based on all this information that we possess, it's actually a very positive recommendation and because it's transparent because of insights, there's actually a desire on the person's part to engage in a conversation and take a risk on a longer distance because there's so much alignment of interest. So that's what Edge is doing. I think it's a really incredible set of products because it's truly AI [indiscernible] Grindr for people. I've been using it since about September when it got put on my phone. And it's really an incredible user experience. It also is very magical because as a product guy, knowing we can do this, you now know that every other company is going to build products like this over time, meaning legacy products. And the legacy products are going to become even better with AI as a result. And so kind of thinking through that is really cool. One last thing I'd say is we are starting this out at the premium tier, obviously. But over time, elements of what we are building with Edge will be available to everybody because we want the entirety of Grindr experience to be AI [indiscernible] and to be really amazing. The free user experience and 91.5% of our users or 92% of our users don't pay for Grindr at all. And we do want to keep a really robust experience for them. And that's something that we will continue to do in the future as well. Operator: Your next question comes from Eric Sheridan with Goldman Sachs. Eric Sheridan: And maybe building on that last answer, George, the first part would be just how your philosophy might change over time with respect to striking the right balance in terms of tiering the products and the platform. So you're continuing to grow the user base and also continuing to sort of evolve the user funnel more broadly described on the platform? And then the second part of the question would be, what have you learned about marketing as a potential stimulant for either accelerating the path towards higher tiers or more monetization for the platform more broadly or just user acquisition or traffic more broadly? George Arison: Thanks, Eric. Let me start with the first one. So historically, Grindr has had a very, very strong tier, very robust free tier. There are 2 things that make, I think, it particularly robust compared to most other products of our kind. One is unlimited messaging, the fact that you can message anybody and continue having those conversations in an unlimited way. It's not like we tell you can only see 10 messages at a time or 20 messages at a time. It's completely free. The result is people send 50 messages a day on average, and that's more messages than you see on WhatsApp a day, right? And messaging is just one portion of Grindr. And the second part is discovery, the fact that you see this group of people and you can start a conversation with anybody. And as you move around the city, the grid changes because different people come close to you and you can see them. That robustness, we obviously want to maintain and we want to keep. What we've done since probably 2020, so both during my time here and before, is start to slowly introduce some paywalls across the experience whether it's in filtering or in visibility or in other areas that drive more people to convert to become paying users. And that has served us well. It has allowed us to put a lot more value into the extreme unlimited tiers, and we are seeing the benefits of that now because people very much value those tiers and are willing to pay slightly more for them in light of all the extra value that we put into them over the last few years. We could continue doing that, and that's a path that a lot of other companies have taken as well in continuing to monetize by putting in more and more paywalls along the way, which would end up pushing more and more people to become paying customers. But as we discussed at Investor Day back in June of 2024, the alternative way of monetizing is to actually start offering more premium features which a smaller subset of people will really value and want to pay for. And that would then eliminate the need for you to put in paywalls that are new and force more people to become converts to paying customers. And we believe that for Grindr, given the magical nature of the free user experience and keeping it very robust, that latter way of doing things might be a better approach. And so what we're going to be focusing on in 2026 and 2027 is that AI-driven premiumization, where we will be offering new features and new products to a smaller subset of users, initially power users and then slightly broader that we believe will really serve them very well and they will be willing to pay for. That will be the driver of our revenue growth this year, next year and so forth. And then we'll be able to take some of that growth and be able to push it back to the free user to ensure that the free experience ends up being really awesome and actually starts to improve. And so one of the things that we're doing this year is actually unwinding some of the paywalls that have been put in place over the years and reducing some of the ad triggers that have been put in place as well as a giveback to the free user experience to make that experience even better than it is right now. And that's something that we believe we can continue to do as we premiumize the product. I think if you look back at last year's data from November, you'll see that younger users, 18 to 29 had a much lower payer rate. But that's okay because they can use the free product very successfully. And then as they age, they become more likely to pay because they want those added features at the more older age level. With regards to marketing, I oftentimes say that Grindr became successful in spite of its marketing rather than because of it. We, frankly, we're not really focused on marketing at all and not really paying attention to it. When I got here, I felt that marketing was a huge opportunity, and we need to really lean into it. Even though we have amazing brand awareness, 95% brand awareness in the United States, but that doesn't mean that everyone loves us and marketing's goal should be partly to have the product be loved. And what we are really doing with our marketing efforts is creating an experience that -- or creating experiences in real world and digitally that will get people to appreciate us as a business and as a product and love us more. And so what you saw last year a lot with things like the Gay Sheep campaign or the Christina Aguilera campaign are these really cultural shaping magical moments that speak to the power that Grindr has on society in terms of cultural impact. We have an audience that is very much a trendsetter. And when they start doing something, a lot of our people follow, and we very much like to lean into that with our marketing efforts. And I think the marketing change that we've seen through our new brand approach has been really fantastic and the users really love it. And we just got a little bit of data from a survey we did where like love for brand actually has increased in a significant way over the last 2 years, and we're very happy about that among [ gay men ], the kind of the core audience. We do believe there's a lot of opportunity with brand building internationally because our brand is not as known in many countries as it is in the United States. And so that is an area that we have not historically leaned into, but we will be spending more of an effort on. You saw this a little bit last year with us launching our social media channels in Spanish. We now have an agency supporting our communications work in Latin America, where we are doing a lot more comms work than we had done in the past, and we'll be leaning into that. And so we are starting to take a little bit more of a global footprint on marketing. And I do believe that over time, though that's not going to be immediate, we will see positive results in terms of user growth from more and more people knowing that we exist and then using us, right? Because what we do know is that when people know us about us in certain countries like Brazil or Philippines or India, they use us and they really like us. But a lot of people still don't know us, and they can't use us if they don't know us, right? Operator: Your next question comes from Andrew Boone with Citizens. Andrew Boone: I wanted to ask about Woodwork. Can you guys just help us understand how that fits into the monetization playbook for 2026 and then out years? And then understood you're moving away from the MAU metric, but we've seen 2 quarters of slowing growth. Is there anything that we should be thinking about or you want to highlight as we think about MAU growth on a go-forward basis as you do move to the annual disclosure? George Arison: Totally. So let me start with Woodwork. Thanks for asking the question. Woodwork is not at all in our guidance for 2026 from the revenue perspective. It is in there from a cost perspective, but costs on it are fairly modest. There's a small team that is working on that. But because we mostly partner with third parties for how it operates, there is not a lot to kind of cover in terms of costs other than the team. What I've said about Woodwork is everyone should think of it as a start-up inside Grindr. And it's a 10-month old start-up. We launched it in the spring of last year. In that time period, it has served thousands of users and thousands of patients, has launched more than one product. So it started out with ED. Now it offers more than ED medications, and we believe there's opportunity to offer several other treatments over time as well, such as hair care, which we don't yet offer and to really go through a test-and-learn process of like how do you go from 0 to 1. Well, now it's gone to 1 because it's able to go after more scaling, but it still is a start-up. And I joked, I think, at the Board meeting was if it were a stand-alone company and was in Silicon Valley, it'd be one of the hottest companies in Silicon Valley, given how much scale it's achieved in a very short amount of time with minimal spend. But it is still a start-up. And so we don't want to put the pressure of a public company on that team. We want them to operate like a start-up with deep start-up rigor as well as hard corners that start-up companies are run with. And so that's kind of how we are envisioning Woodwork. But we do believe that over time, Woodwork can be a very valuable growth lever for us as well as an anchor for the broader health offering that we are working on and developing. And concurrently with that, it also makes the overall offering from Grindr better, right? Because there's a lot of synergy between I subscribe to Grindr and I subscribe to, say, ED medications from Woodwork. And we are seeing a lot of positive synergy when we are offering those 2 things together. So that's kind of, I think, what I'll say about Woodwork. We're going to continue to maintain the view that giving information about that beyond that probably is not in the best interest of that product being successful. With regards to MAU, to start with, the quarterly MAU is not how we think about our business. That is just not generally what we use in day-to-day management and how we operate. MAU has grown very nicely for a long time at Grindr purely throughout of MAU. Last year, unadjusted MAU growth was 5.2%. I think I've said this before, and I'll explain again for those who haven't heard me, but we did start to much more aggressively remove unwanted accounts from Grindr than we had done in the past in 2025. And the result was that we removed about 350,000 more accounts out of MAU in 2025 than we would have done in 2024 had we not put in place all the new tools that we developed and implemented in 2025 for unwanted account removal. And so at the request from analysts and investors, we also did share an adjusted MAU growth number, meaning what would MAU growth have been like had we not removed these unwanted accounts, and that was 6.1%. So quite similar to what MAU growth would have been in the past years. The only difference really is the fact that we did have this pretty significant adjustment from the more aggressive MAU removal. I do believe that we're going to continue to remove unwanted accounts quite aggressively. And so I think the amount of raw MAU growth that we saw in 2025 is how we should think about MAU growth for 2026 as well. Now we do believe that there's a ton of opportunity for MAU growth beyond what we already do, especially internationally with all the users or all the potential users who don't know about Grindr, but could as well as the fact that there are very positive things happening in certain countries as far as acceptance in India, for example. And so over time, you will have more and more people being willing to use Grindr. And so we are thinking about what types of things we want to be doing internationally. That has been an area that we see as a big opportunity, but it's not one that we've gone after so far, purely out of focus. You can only focus on so many things, and that's not been one that we've been focused on yet, but it will become a bigger part of our focus in '26 and '27. And then the other piece that I think there's an opportunity with [ MAU ] is older cohort retention and reengagement. As you saw from the data we released in November, we have a very strong younger user base, 18 to 29, but we become a little bit weaker at the kind of 45-plus cohort. And we believe that getting those users to reengage with us is an opportunity, especially in countries like the U.S. and the U.K., and that is also something that we are working on as well. But both of those things are going to take a long time to have an impact. And so I wouldn't kind of look to, hey, in one quarter, that's going to have an impact. Operator: Your next question comes from Logan Whalley with TD Cohen. Logan Whalley: Yes, Logan on for John Blackledge here. Two questions. I guess, first, as you improve app functionality and then undertake big projects like you mentioned rewriting the code base, -- how do you weigh investment behind engineer headcount versus, say, investment behind AI tooling to make your current engineers more productive? And then secondly, as part of your '26 guidance, you called out in the letter you called out unwinding paywall dynamics and ad triggers. Could you just talk about that in a little more detail, like what exactly that looks like for app users? George Arison: Sure. Yes. Thank you for that question. The first one is one of my favorite questions. And I think every Grindr employee would certify that George has been pushing them on this point for a lot longer than almost every other executive in tech. I said at a conference in the fall of 2024 that there will be a time that when there are synthetic employees working alongside humans inside companies. And I got a lot of flat for that. But I think no one denies that, that's going to happen anymore. Synthetic AI agents or employees are going to be a fundamental part of our work on a go-forward basis. and we are seeing the impact of that now. At Grindr, we have been at the very, very forefront of adoption of AI in our day-to-day work, especially in engineering. And I'm pretty confident in saying that we're probably in the top 5 percentile of companies in tech in terms of how quickly we're adopting to that and how quickly we're terraforming to being an AI-native organization inside the company. The result of that is that in Q4, somewhere between 60% and 70% of the code that Grindr engineers produced was written by AI rather than by human beings. That number is higher in January and it's going to continue to be higher for the long time. And I believe that there's going to be a time when almost all the code that we produce will be written by AI agents. That does not mean that engineers don't matter. Engineers actually matter even more now and awesome engineers matter even more because the really great engineers are able to take advantage of these tools even more than anybody else's, making themselves even more valuable because they can do so much more, right? The concept of a 10x engineer is now becoming 100x engineer because one 10x engineer can do 4, 5, 6, 7, 10x engineers' worth of work as a result of what the coding agents and AI-based synthetics are able to do for him or her when they are writing code. And the way code is being written completely changes, right? I have some engineers who write me and know things like before I would come in and I would have a new project and I would think about I'm going to assign work for it. I want to give this much to this person and this to this person and would take each of these 2 individuals 6 weeks to write the code that they were going to be working on for that particular project, and I would spend a lot of time helping them be more successful plus writing my own code and then bringing it all together. Now I sit down with an agent, I started talking to it about what it is that I'm working on. I send it off to have them do the work. And within 2 days, that whole thing is done, right? So the speed by which we're going to be producing code is increasing rapidly. Internally, we've seen about a 1.5x increase in productivity per engineer. That's self-reported data. So kind of it is pretty awesome. And we're going to continue to lean into that at Grindr, not just inside engineering, but everywhere else. That does not mean we don't need more people. We are very -- our operational leverage is extremely high, $2.75 million in revenue per head, which I think is awesome. We only have 160 U.S.-based employees. Our EBITDA per employee is also very high. And we're going to continue to be best-in-class in that, but we do need more people, and we do want to continue scaling our [indiscernible] team while maintaining an extremely high talent bar. And so that's very much one of the big focus areas for us for this year, as I spoke about in our shareholder letter, kind of pushing that grinder mode that we'll be talking a lot about both internally and publicly as the year progresses. As far as the unwinding is concerned, one of the things that historically has been true for us is that when we do launch a paywall or we do add, they are global, right? We do them everywhere, all the same. And one of the things that we are learning is that maybe that's not ideal. Certain ad triggers might not matter in some parts of the country or some parts of the world, but really do matter to users in other places. Certain paywalls might not matter to people in certain parts of the world, but really do matter to them in other places based on geography, based on density, based on the type of users we have in those locations. And so some of the unwinding that we're going to be doing on ad triggers and on paywalls will actually be geographic in nature as well as user-focused in nature, meaning understanding the user, what type of category of a user does that person fall into and whether those triggers should be in place for them or not. And we believe that will end up having a better user experience as well as better long-term retention of users based on that segmentation. Operator: There are no more questions at this time. I'd now like to turn the call over to George for closing remarks. George Arison: Well, thank you, everybody, for joining. Hopefully, this video version of the call was worth it and helpful for folks, and we'll aim to do that again in May. Looking forward to seeing you then.
Operator: Thank you, for standing by. This is the conference operator. Welcome to the Endeavour Silver Fourth Quarter and Year-end 2025 Financial Results Conference Call. [Operator Instructions] The conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Allison Pettit, Vice President, Investor Relations. Please go ahead. Allison Pettit: Thank you, operator, and good morning, everyone. Before we get started, I ask that you view our MD&A for cautionary language regarding forward-looking statements and the risk factors pertaining to these statements. Our MD&A and financial statements are available on our website at edrsilver.com. On today's call, we have Dan Dickson, Endeavour Silver's CEO; Elizabeth Senez, our CFO, and Don Gray, Endeavour's COO. Following Dan's formal remarks, we will open the call for questions. And now over to Dan. Dan Dickson: Thank you, Allison, and welcome, everyone. Before reviewing our 2025 results, I'd like to provide a brief update on Terronera. Operations were temporarily impacted by recent security events in Mexico and Jalisco's Code Red mandate, which requires civilians to shelter in place. To comply with the mandate, the uncertainty surrounding the event and to ensure the safety of our people, we paused Terronera's operations Sunday evening. Operations resumed Wednesday, February 25, once supply routes were confirmed to be secure. We will continue to monitor developments closely and the safety of our employees and contractors remain our top priority. With that, I'd like to briefly touch on the current silver and gold market. Over the past year, we've seen exceptional gains in renewed investor interest in precious metals, driven by inflationary pressures, global economic uncertainty and ongoing political tensions. Silver and gold continue to be viewed as a safe haven assets with silver also benefiting from rising industrial demand especially in the green energy and technology spaces. This momentum has continued into 2026 as gold trades well above $5,000 and silver is elevated above $90, reflecting ongoing confidence and reinforcing the importance of our strategic initiatives and our commitment to delivering value for our shareholders. We are extremely well positioned to benefit from the current silver prices and believe there is substantial runway remaining in this cycle. Moving over to the specifics of the company. 2025 was a transformational year for Endeavour Silver. We took a major step forward with the acquisition of Kolpa in May, Terronera achieving commercial production in October and agreed to the sale of the Bolanitos Mine, which closed in January. In December, we raised $350 million through convertible debt offering, strengthen our balance sheet and positioning ourselves to advance the Pitarrilla development asset. These milestones lay a solid foundation for performance and sustained growth as we look ahead to the future and position ourselves as a stronger company within the industry. In 2025, Endeavour produced 11 million ounces of silver equivalent metal, including base metal production from Kolpa making a 48% increase compared to 2024. In Q4, Endeavour produced 2 million ounces of silver and 14,000 ounces of gold, totaling just shy of 4 million silver equivalent ounces. This represents a 146% increase compared to Q4 of 2025 due to the addition of Kolpa, Terronera and the higher grades at Bolanitos. Excluding Kolpa and Terronera, this was a 27% increase compared to the same period last year. In 2025, the company reported record revenue of $468 million up 115% compared to 2024 with cost of sales of $385 million, mine operating earnings of $83 million and mine operating cash flow before taxes of $156 million. Mine operating cash flow before working capital changes rose by 116%, while cash costs increased to $19 per ounce of payable silver primarily driven by the substantial changes in our production profile. In Q4, Endeavour recognized adjusted net earnings of $4.8 million or an adjusted earnings of $0.02 per share. Due to realized losses from derivative contracts and higher financing costs in relation to the early repayment of the debt facility. Direct operating costs per ton increased by 8% this year, primarily driven by elevated costs at Terronera during its initial quarter of production. Looking ahead, we anticipate a substantial reduction in these costs as we transition from diesel to liquefied natural gas in Q2 of 2026, complete the demobilization of our construction team, benefit from workforce and logistics optimization plans implemented in January and maintain a throughput at 2,000 tonnes per day through 2026. Kolpa will also see an improved cost efficiency as its plant expands 2,500 tonnes per day here in Q1. For clarity, our direct operating cost per ton include direct input costs associated with mining, milling and site level G&A. Our definition of direct cost per ton includes royalties, mining duties and the purchase of third-party material. Changes in the metal prices have a meaningful impact on our direct cost per ton. For example, for every dollar increase in silver, our cost per ton rise by about $0.90 of Terronera, $0.50 at Kolpa and $3.80 per ton at Guanacevi, mainly due to the higher royalties, duties and third-party purchase costs. All-in sustaining costs net of byproduct credits were elevated this quarter with higher royalties duties, third-party ore purchases, elevated corporate G&A and the addition of Terronera. Terronera incurred higher costs due to higher sustaining capital expenses during the first quarter of operations. Terronera's all-in sustaining costs includes capital expenditures of $16.3 million for the quarter which worked out to approximately $48 all-in sustaining cost per ounce. And this includes onetime investments related to new mining operations. These costs are expected to decrease as we move through 2026. The elevated corporate G&A was impacted by the divestiture of Bolanitos, the appreciation of deferred share units and the integration of all our new operations. As of December 31, 2025, the company's cash position stood at $215 million, providing us with the financial strength and flexibility to advance our strategic initiatives. This robust foundation allows us to remain nimble and responsive to new opportunities while staying focused on driving progress at Pitarrilla, where we continue to invest in exploration, technical studies and the economic evaluation. As we move through 2026, our attention remains focused on several operational investment priorities across our main operations and projects, each serving as a catalyst for our continued success and growth in 2026. At Terronera, our primary focus is disciplined execution as we transition into higher grade zones in the second half of the year. We are seeing gradual improvements towards designed operating parameters, including nameplate throughput, recoveries and mine output. Grades are aligning with plan and operations are beginning to establish a consistent rhythm rather than the volatility of a typical ramp-up. As we eliminate ramp-up or start-up costs, we expect direct cost per ton to improve through the year. Secondly, at Kolpa, we are actively advancing our expansion initiative, increasing capacity from 2,000 tonnes per day to 2,500. We anticipate achieving this milestone in the coming weeks, which will enhance our throughput and support our growth objective. Additionally, we remain focused on delivering a resource estimate later this year. At Pitarrilla, the company's next major development project and one of the world's largest undeveloped silver deposits, our commitment remains very strong with a planned $68 million investment in 2026. This includes the completion of an NI 43-101 feasibility study targeted for completion in Q3 2026, along with early works such as commencement of the construction camp, continued ramp advancement through the manto and procurement of long lead equipment to support the basic and detailed engineering. We are positioning the project to have a well-informed construction decision in early 2027, supporting our strategic strategy of significant organic growth. 2025 marked a defining chapter in our story. As we continue on this exciting path, I want to extend our gratitude to our valued shareholders and stakeholders for your confidence and partnership. We remain committed to creating lasting value, driving operational excellence and building a premier senior silver company. Thank you for your continued support and engagement. And with that, I'm happy to open this to questions. Operator, please proceed to our Q&A session. Operator: [Operator Instructions] The first question comes from Wayne Lam with TD Securities. Wayne Lam: I'm just wondering, just on the updates operations like Terronera. Can you discuss the mill availability and what happened with the electrical interruptions? If I recall, you guys also had an electrical issue in late September, which kind of resulted in the delay to commercial production. So just wondering exactly what's going on there? And have you seen an improvement on those issues? Have those been resolved in the first 2 months of this year? Dan Dickson: Yes. Thanks for the question, Wayne. I mean the quick answer is yes, we have seen a lot of improvement in January and February. We've done very well from a throughput standpoint. As you recall, back in September, we had resistors that we had to replace early October, and it took 6, 7 days for those to come in as they are onetime items. And we had a lot of electrical disruptions just because we're on diesel gen sets. We were at max power and we had to make some adjustments in Q4 to that, and we're getting lots of starts and stops. So losing maybe 1 hour or 2 hours on various days that really impacted. Starting and stopping impacts recoveries, obviously impacts throughput. We've seen that kind of stabilize late December and obviously through January and February. The most important part to those temporary diesel gen sets is we have received our permits to operate our LNG plant. So we are allowed to vaporize our liquefied natural gas into natural gas and ultimately electricity. We are completing that connection point here in Q1. The provider of the liquefied natural gas has obtained their permit to transport, and they're waiting on a storage permit on site that we're going to look at here over the next or we expect to receive over the next couple of weeks. So our expectation is that we'll be on our LNG plant in Q2. Obviously, it does a significant thing for our stability of electrical continuity, but also from a cost standpoint. Going from diesel gen sets into the LNG plant takes us from $0.33 per megawatt hour to $0.17, almost $8 a ton at this point. So we're excited to get on that for a number of reasons. Obviously, reliability and cost being the first -- the main two. Wayne Lam: Okay. Great. And then maybe just on the grade profile at Terronera. You guys had previously guided the 122 grams per tonne silver and 2.5 grams per tonne gold through the first 6 months of operation. But the guidance for this year implies that you'll average 120 grams per tonne through the entirety of 2026. I know you guys had talked about some mining of the lower-grade stock works driving that. But -- just wondering if you might have any guidance on grades in terms of a split in H1 versus the prior 122 grams per tonne and where we should think about that with the higher grades you're projecting into H2? And then just are the lower grades entirely being driven by that lowering of the cutoff? Or is there some attribution as well to greater dilution or lower reconciliation versus the block model? Dan Dickson: Yes. I think the first couple of questions. block model reconciliation has been relatively strong, better as we move forward, and we've got deeper into the mine plan. We do have lower silver grades and ultimately gold grades because of some of that stock work. But right now, that software isn't a significant amount. And as we're -- as you know, in the back half of the year, we get into the main shoot of Terronera, and that's the goal. That's where our highest grade points are, and that's where our biggest splits are. As far as the breakdown between H1 and H2, I don't have that rate in front of me, but it is a gradual increase of Q1, Q2, Q3 to Q4. Each quarter gets better as we bring more and more of that shoot in -- for those that are listening, we made the decision about almost a year ago now, maybe 9 months ago, that we would go into a lower grade part of the ore body as we start with initial production. Obviously, because we didn't want to end up having ounces of silver and gold into our tailings dam, ultimately as we go through kind of your regular start-up issues and building up our recovery. So this was by design, Wayne. Again, it's lining up relatively well to plan. We're slightly lower because we are taking that stockwork. It's very difficult to speak to that stockwork. and the impact overall. But as we go through the year, we'll bring more and more into the plan and more of the high-grade stuff and hopefully go back to that stockwork later on. Wayne Lam: Okay. And maybe just as a follow-up to that, the mine plan in the early years of operation is in the realm of 230 to, let's call it, 280 grams per tonne silver, like when would we expect that type of material to be mined and processed through the mill. Is that more of a '27 thing? Dan Dickson: Exactly, 2027. Wayne Lam: Okay. Okay, good. Maybe just last one for me. Just on the guided capital spend this year. There's been quite a bit of spend budgeted at Terronera, particularly towards additional mine development, which is driving your higher ASIC. Just wondering if that reflects a catch-up on development that was anticipated to have been completed through the initial construction period. And if that drops off substantially as we progress through the year. Or would you see your development meter still as relatively behind where you'd like to be through the early stages of the operation? Dan Dickson: Yes. We're a little bit behind, but not relatively behind. You'll see that in our guidance that we put out in January, we had a $56 million capital budget for Terronera. And then similarly, I think we spent almost $17 million in Q4 at Terronera, which we define as sustaining capital. Obviously, moving from commercial production into -- from construction into commercial production, we have had some capital programs slosh into Q4 and ultimately Q1, Q2. As we move forward through Terronera, we expect that to come down. There are onetime activities that are included in this CapEx. For example, as we already talked about, the LNG plant and the completion of that. We're waiting on a CONAGUA permit for waste dump 2 that's going to reduce our trucking capacity, and we would have some development around waste dump 2. We expect that. We have a backfill plant that we're currently leasing we're going to buy that. So there's a number of onetime items in our sustaining CapEx that you could argue is related to the actual build of Terronera. Obviously, we're taking that through sustaining CapEx. We don't want to play with numbers and start calling certain things growth or sustaining. So at this point, it is what it is, but do you expect that to come down as we move through 2026 and ultimately 2027, we expect to be at a regular sustaining CapEx break. Operator: The next question comes from Heiko Ihle with HC Wainwright. Heiko Ihle: So Terronera commercial production, obviously, was October 1. So we'll be in March 1st here in the very near future. So it's 5 months later, you want to just maybe provide the audience here with a little bit of color on how things went since then, maybe things that went better if things that went worse? Any sort of bottlenecks in supply chains or at site or just things that came a little bit different from your expectations, again, not necessarily just worse. But also, I assume some things went substantially better than you thought. Dan Dickson: Do you mean over the course of the construction period or just over operations in the last 5 months, Heiko? Heiko Ihle: Operations over the last 5 months. Dan Dickson: Yes. I mean, to be honest, I mean, it's our first time doing an initial build. Our first mine that we brought into commercial production. Obviously, there's things have gone extremely well, things that we wish could be better. I mean I think that's normal through a ramp-up phase that is 2 steps forward, 1 step back. It's through all of our past experiences and Don's experiences. There's things that we felt like we can improve on maybe from an initial start-up and ramp-up, better knowledge almost of going to the initial plan. Everybody has different ideas and it's sticking to the original plan. And then from that, starting with the variables are trying different reagents at different times, putting various options through it. Because of the terrain around Terronera, the topography at all, it's very mountainous, we don't have a lot of flexibility with laydown yards. So we only have about 80,000 tons, even less than that right now, a stockpile that sits near the plant. So what comes out of the mine kind of gets fed right into the plant. So we're continually learning about the ore body trying to find what's best from a recovery standpoint. But again, January, February, we've seen very good throughput up until Sunday night. We obviously shut down for a couple of days. But again, going forward, we expect that to be very good and it's the gradual ramp-up of recoveries. We've been running lower silver grades, as Wayne kind of pointed out, and those will improve through we go the year, and we expect recoveries to improve with that. I think our team has been phenomenal at finding flexible ideas using plans B and C to get to where we need to get to. But now we want to get into the rhythm and kind of be steady state and get into normal course operations. We look forward to that. Heiko Ihle: Fair enough. And then just like, I guess, a little bit more touchy-feely, as silver is at $94 right now. I mean assuming silver prices stay here or maybe even go up a little bit more, is there an impact a quantifiable impact of where you mine across your asset base? And what you internally are envisioning a mining costs like direct costs for labor and [indiscernible] activity across your asset base? Dan Dickson: It's a very broad question of with $94 first off, it's a phenomenal environment, and we expect cash flow to be very significant. There's a big impact to us at Guanacevi because we pay a significant royalty at Guanacevi 16% to Minera Frisco that owns the main concessions of that. Further with there, we toll ore, I think in Q4, we did close to 20% of our throughput was toll ore. That's going to continue. Obviously, there's a lot of family run operations. The government built in 1981, that Guanacevi plant, and we're required to take up to 10%. And quite frankly, it extends the life of our mine. We get good margins on some of that tolled ore. It's just expensive to buy. And then flip side of that, Special Mining Duty, which is an EBITDA tax, and that's included in our cost per ton in our direct cost per ton. So with higher prices, and we kind of put this in our guidance news release, it's going to drive our direct cost per ton. Again, for our audience, we have a direct operating cost per ton, which is mining, milling and our indirect costs and then our direct costs include royalties, duties and purchased ore. Those last 3 items go up with higher prices. It's great. We still have great margins, but it means rising cost per ton. We get a lot of questions of wire costs rising. For the cost that we can control, we've been through our negotiations with our unions out of Mexico, and our general increase is about 6%, which is a bit higher than our budgeted number of 5%. It was all included in guidance. Of course, we're going to start seeing pressure on our inputs. I think that's just natural at these prices. It's our job as management to work through that. That's all included in our guidance numbers. I think it's imperative at Kolpa and Terronera, we have a lot smaller royalties there, so it's easier to contain those costs. But of course, as we evaluate projects going forward, we're looking at these higher prices and what's the impact long term on costs. I don't know if that fully answers your question, Heiko. But again, in our guidance news release, we kind of touch on that in depth a it. Heiko Ihle: Yes. Yes. No, you did. You got exactly where I wanted to go with this. Operator: Next question comes from Soundarya Iyer with B.Riley. Soundarya Iyer: Congratulations on the quarter. My question is more on this derivative hedge. I mean, there is a good amount of detail in the MD&A. But could you help me understand the remaining notional exposure and the cash settlement cadence over the next 12 months? And how -- what about the risk management strategy in order to manage this strength in precious metals? Dan Dickson: I'm happy to talk about that. I mean, it's an important part right now on our balance sheet that we -- under the project loan facility that we borrowed to build the Terronera mine. We borrowed $135 million from 2 lenders. When we went into that facility agreement back in 2022, we were required to hedge 68,000 ounces of gold, and we locked that gold price and in March of 2024 at $2,325. Today or at December 31, we had about 50,000 ounces of that gold hedge remaining. That gold hedge is going to unwind through 2026 and into 2027. I think we're through it in Q2 of 2027. Ultimately, on our balance sheet, you can see that we do a mark-to-market adjustment that holds that difference, that liability sits on our balance sheet. We recognize that loss on that derivative liability through the income statement in the year. So a very significant amount, and we try to adjust it for adjusted earnings purposes. Again, we, as a company, have a policy that we would not like to hedge our silver, we have a small hedge in place from a collar again from that project loan facility. But we have a policy to try to remain unhedged. And of course, from a silver standpoint, if you're make an investment in the silver company, you believe silver price likely going higher. We want to give that upside, and we feel like there's a lot of upside there in silver. So we hedged the gold, which was a byproduct. And again, we're through that mid-2027. Soundarya Iyer: Just one more on this Mexican peso appreciation, which was again a headwind on the cost this year, right? Any hedging or risk management strategy to cover that for 2026? And is there any sensitivity at what exchange rate does this currency that impact meaningfully margins or costs? Elizabeth Senez: Soundarya, this is Elizabeth. I'll take that question on the foreign exchange. So as you see, we do have some Mexican peso hedges in place. And I believe at the end of 2025, they were around 19 pesos to the dollar remaining. We don't have very many left. And with lower prices, we haven't put many on recently. It's hard to hedge at 17 pesos to the U.S. dollar. But we are taking opportunities to hedge where it is appropriate for the Mexican peso. One of the advantages with adding Kolpa to our portfolio is that we have reduced our percentage exposure to the peso as well. And the sol -- the Peruvian sol is more steady for us. So we do have that diversification as well. Operator: The next question comes from Cosmos Chiu with CIBC. Cosmos Chiu: Maybe my first question is -- sorry, also on Terronera. But just I'm trying to kind of quantify it. Terronera costs were fairly high in Q4, $50, $65, $70 an ounce. And Dan, you talked about onetime costs, LNG plants and stuff. But in 2026, you're guiding to 28% to 29%. And so I'm just trying to understand how it can drop in 2026. Is it going to be more back-end weighted? You're going to have some quarters that might be over $29, some quarters below $29 an ounce or -- because if you have another [ quarter of $65 ], it'd be hard to average out to $28 to $29 for the full year. Dan Dickson: Well, the good news is $65 was in Q4 of 2025. Our guidance is only for 2026. We don't expect Q1 to be as elevated as it was in Q4. We've got some severance costs of moving off from various construction people in January, but we do expect that cost to decrease over the year. So Q1 will be higher than Q2. Q2 will be higher than Q3. Q3 and Q4, we have higher grades coming in. So on a per ounce basis, that cost per ton or that cost per ounce can improve, the cost per ton won't become as drastic. I would point out that Q4 has the onetime expenditures of $16 million, not necessarily onetime CapEx expense of $16 million, $17 million in Q4. That includes onetime initial CapEx that flowed into Q4. We have that in Q1. We'll have less of that in Q2. Q3, Q4, we should get pretty flattened out sustaining CapEx. That is going to be the biggest driver of our cost per ounce increase at all-in sustaining costs. Similarly, our cost per ton as we get more rhythm at site, we expect that to come in a move from LNG plant to the -- temporary diesel gen sets to the LNG plant that's cost improvement. So there's a number of things that are going to come through cost that are going to come through the year. So we've been saying out to the market and to analysts, look, Q1 is our first quarter of production. It's not indicative of what the future is going to hold at Terronera. And again, we expect Q1 to be better. We expect Q2 to be better than Q1, and I think that's going to come through. Cosmos Chiu: Great. And maybe broader scale, can we talk a bit about Mexico, Jalisco, certainly some volatility in the area. Has it resulted or necessitated any change in security protocols on site of Terronera? Has it necessitate any kind of changes to systems in place to make sure that it's kind of in response to the situation. And then on top of that, can you talk about supplies on site, consumables on site? Have you stocked up in light of what's happening in terms of fuel, in terms of consumables, in terms of spare parts, how should we look at it? Dan Dickson: No, it was a very fair question [indiscernible] what we saw this past week. Obviously, unexpected, I think that was something we've never experienced in Mexico. Our biggest concern, obviously, first and foremost, is for our people and with Jalisco going to Code Red, shutting down Sunday night. The major thing about coming back from an operations is the supply lines out of Puerto Vallarta up to site. So we're about an hour and [ 15 ] 1.5 hours drive from Puerto Vallarata to site. Because of the topography of Terronera, we don't have a lot of storage space. We have about 1 week supply of food for the camp, 2 to 3 days supply of water. We had delivery of water on Monday that helped. Obviously, we're very concerned about diesel and transporting that. Going forward, I don't suspect we'll change our security around the Terronera mine. It will continue as in. We have to look at our protocols on shipments. So shipments coming up, shipments coming out, our concentrate shipments. We already have security protocols around all the shipments going out. Some of the shipments coming up. I think we'll just have to look at that, maybe beef it up a little bit. We don't expect a dramatic increase in security costs at this time. Of course, we have to monitor what this impact will have across the region if there becomes instability with all these groups in Mexico. As of right now, we don't have a huge change, just an increase of presence around our transportation lines. Cosmos Chiu: Great. And then maybe one last question, more of an accounting question. With Bolanitos, the sale closing in Q1, is there any kind of accounting nuances or impact that we should be aware of for Q1? Is there going to be some type of onetime gain or loss? And then can you talk about Mexican taxes as well? My understanding is that Mexico cash taxes are higher in the second -- in the first half or even in Q1. Is that what's happening here? And with the Terronera construction costs, the CapEx, does that help you offset some of those Mexican taxes? Dan Dickson: Yes. Hold on, can we just clarify your second question about Bolanitos taxes? You said something around timing at end of the year. Cosmos Chiu: Yes, overall, just more Guanacevi, sorry. So I guess, number one, Bolanitos, the deal is closing or closed in Q1. Is there any accounting sort of nuances or entries or impact that we should be aware of? Just, you know, overall Mexico taxes, how we should look at it in terms of quarterly. Sorry, Elizabeth. Elizabeth Senez: Yes, this is Elizabeth -- I'll take that question. Yes, the Bolanitos sale closed January 15. And we will be recognizing that during our Q1 financials, obviously. And we are anticipating, as you saw, we sold it for approximately $50 million. For accounting, there's different adjustments to that, depending on the value of the shares that we acquired as a result. And then we were carrying it for around $25 million at the end of the year. So we are anticipating an accounting gain on that in Q1. And that math can be done using our year-end financial statements. Your question about Mexico taxes. Guanacevi is paying Mexico taxes and pays installments regularly on those Mexico income profit taxes there. Terronera, as you commented, does have construction costs, which are recognized as tax losses. And as it starts to make taxable profits, those losses will offset those taxable profits during 2026. And then depending on how the silver price goes, drives how quickly those losses will be utilized, and then when we will start paying income taxes in cash in Mexico for Terronera. Cosmos Chiu: Great. So there's no big true up in Mexico, Mexican cash taxes in the first half of 2026, where I see that somewhere else in other companies, but I guess not here. Dan Dickson: No. On our sale of Bolanitos, we have historical losses that are designed or we can use that we won't have to pay a tax on our Bolanitos debt. Elizabeth Senez: AT this point, that's our anticipation, yes. Operator: The next question comes from Alex Terentiew with National Bank. Alexander Terentiew: I guess I was a bit slow with my fingers, a lot of questions already asked. But nonetheless, one question still for me here on Kolpa. So can you just clarify for me then. As it comes to that mine with permitting and getting 2,500 tons per day, are you waiting for additional permits? Because I thought 2,500 tons per day is kind of the ultimate expansion rate that you want to get at. But based on your commentary guidance, it sounds like you're going to get there a lot sooner. So I just want to make sure I'm clear on the expectations there. Dan Dickson: Yes. We are getting there a lot sooner. I think it's a testament to the team that we acquired when we bought Kolpa. They're very confident people. In December, they received the construction permit to build out the Kolpa plant, which is really a expansion, the crushing facility, new crusher, ball mill to go to 2,500 tons per day, then there's some additional flot cells that need to be done. It, of course, expanding the mine underground. They received that construction permit. They're almost through that. We expect to be testing the ball mill relatively shortly, so let's say March. In our guidance, we did have 2,400 tons per day throughput for the average for the year. We've been running just over 2,300 tons per day over the last couple weeks. There has been a lot of rain in that area, and we've battling how much rain there's been here in Q1, so it slowed us down a little bit from a production standpoint. The construction standpoint, like I say, we've been very impressed with how it's gone. From the construction standpoint, we can operate it, but we do have to get an operating permit, which generally comes a month to two months, maybe three months after the construction phase is done. But we are allowed to test that circuit and go through that. Again, hopefully in Q2, we're approaching 2,500 tons per day. The underground mine will be running around 2,300 tons per day. As we've talked about before, with the underground mine, it's opening up more faces, more employees, staff. You're not going to get a lot of economies of scale from the underground portion of it. The additional tons for the first half of the year will come from a lower grade pit that's within the area, and we'll try to fill that with some contractor ore as well. So we are ahead upon the above ground surface. There's still some work to be done underground, but we are in very good shape right now. Alexander Terentiew: Okay. Great to hear. And then just one last question on Pitarrilla. A lot is happening there this year. Can you remind any of permitting time lines or kind of what you're doing to advance that this year? And what news we maybe could expect whether later this year or early next year on the permitting for that project? Dan Dickson: Yes. I'll give a quick overview, and I might pass it over to Donald Gray, our COO. I mean, obviously, we're spending $68 million at Pitarrilla. We really believe in the project. We like everything we've seen, thus far. What makes Pitarrilla kind of special is the volumes that you can get out in such a tight space. There's a manto that's got 7 million to 8 million tonnes of what would be ore once that feasibility study is complete and then 3 feeder structures that come up and through it. And we've been working on a mine plan, and that mine plan is going to dictate the scale of the plant. Now the plant has already been permitted. Underground mining has already been permitted. We're waiting on a tailings storage facility permit. It's going to be a dry stack tailings. We've been working on the site. We've been working on the engineering. We've been going back and forth with the state level SEMARNAT on how to submit this and how to submit it most efficiently. I think right now, our projection is that we're aiming for Q1 2027 permit to receive that tailings storage facility permit. But beyond that, there's additional permitting that's required, such as CFP for power but that's something that we can work through during our construction timeline, as we did with Terronera. Of course, we will need temporary power source during the construction. It's a question of when we can bring on power sources at the end of that. Don, I don't know if we want to get in too much more detail of it, but there's a lot of permits that we've gone after. We've spent the past 12 months working on that permit to make sure we're getting ahead of where we effectively were when we started building Terronera. Don, do you have any color you want to add? Donald Gray: Just that I think the permitting schedule really lines up well with the, with the project work that we need to do to finish the feasibility, get into the basic engineering, get the, like we mentioned in the press release, the long lead items or the major pieces of equipment on order so we can do the detail engineering and then head into construction. I think what you'll see is really -- the engineering will be quite advanced by the time we go into construction, and we'll have a good idea on where the costs are and that kind of thing. Dan Dickson: I think the main gating item is [indiscernible] from a construction standpoint is that last permit. So we'll be in very good shape. We feel when we can get that permit. Operator: This concludes the question-and-answer session. I would like to turn the conference back over to Dan Dickson for any closing remarks. Please go ahead. Dan Dickson: Well, thank you, operator, and thanks, everyone, for attending our Q4 financial earnings call. Again, 2026 will be a big year for Endeavour. We're excited with what we can do with Terronera and getting that operation into a steady-state full rhythm by midyear. What Kolpa is going to do for us and ultimately advancing Pitarrilla to take us to where we need to go, and that's, again, our goal is to become a premier senior silver producer. Thanks a lot, and have a good day. Operator: This brings to an end today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.
Operator: Good morning, everyone, and welcome to Grupo Televisa's Fourth Quarter and Full Year 2025 Conference Call. Before we begin, I would like to draw your attention to the press release, which explains the use of forward-looking statements and applies to everything we discuss in today's call and in the earnings release. I will now turn the call over to Mr. Alfonso de Angoitia, Co-Chief Executive Officer of Grupo Televisa. Please go ahead, sir. Alfonso de Angoitia Noriega: Thank you, operator. Good morning, everyone, and thank you for joining us. With me today are Francisco Valim, CEO of Cable and Sky and Carlos Phillips, CFO of Grupo Televisa. Last year was marked by several milestones, both at Grupo Televisa and TelevisaUnivision, which Bernardo and I are confident will allow us to keep creating value for our shareholders. At Grupo Televisa, let me touch on four major achievements. First, our strategy to focus on attracting and retaining value customers in cable allowed us to grow our Internet subscriber base by around 47,000 in 2025. This marks a full year turning point after losing Internet subscribers, both in 2023 and 2024, mainly driven by a strategy decision not to retain low-value subscribers. Second, we keep executing on the implementation of OpEx efficiencies and the integration between Izzi and Sky to extract further synergies. This contributed to expanding our 2025 consolidated operating segment income margin of 39.1%, by 200 basis points, driven by a year-on-year OpEx reduction of 8.3%. Third, we kept a disciplined CapEx deployment approach to focus on free cash flow generation. In 2025, we invested MXN 12.2 billion in CapEx, which is equivalent to 20.7% of sales. This CapEx is intended to deliver higher returns over the investment and has allowed us not only to have close to 1.4 million gross adds during the year, but also to upgrade 4.5 million homes to FTTH technology. This basically means that we ended 2025 with around 9 million homes or approximately 45% of our total footprint passed with FTTH technology. Valim will elaborate on our plan to keep upgrading our network later during the call. And fourth, in 2025, we generated around MXN 5.9 billion in free cash flow, allowing us to prepay bank loan due in 2026, with a principal amount of around MXN 2.7 billion. This debt repayment comes on top of the $220 million principal amount of our senior notes already paid on March 18. Additionally, at the end of 2025, Grupo Televisa's leverage ratio of 2x EBITDA compared to 2.5x at the end of last year, mainly driven by our free cash flow generation. And at TelevisaUnivision, I will mention three key milestones. First, 2025 was a breakthrough year for our direct-to-consumer business, as ViX delivered record revenue since it was launched, achieving profitability in every quarter and expanded operating margins throughout the year. For the full year, our DTC business represented nearly 1/4 of the total company revenue, driven by robust advertising growth from our free tier and the continued expansion of our premium subscription offerings. Moreover, our DTC business is now a significant contributor to our adjusted EBITDA, accounting for approximately 20%, driven by its industry-leading margins. Second, the efficiency plan to reduce gross operating expenses at the TelevisaUnivision by around $400 million in 2025, delivered outstanding results. During the year, our total operating expenses declined by around 8% year-on-year for total operating expenses of around $3.2 billion. This shows a disciplined execution of our cost savings initiative. This OpEx reductions have been fully realized in our 2025 results. And third, looking at TelevisaUnivision's leverage and debt profile the company ended the year at 5.6x EBITDA, an improvement from 5.9x at the end of 2024, driven by growth. Moreover, in 2025, TelevisaUnivision successfully refinanced $2.3 billion of debt, which extended its credit facilities and eliminated all near-term maturities. Deleveraging remains a core strategic priority for TelevisaUnivision. Having said that, let me turn the call over to Valim, as he will discuss the operating and financial performance of our consolidated assets. Francisco Valim Filho: Thank you, Alfonso. Good morning, everyone. In 2025, consolidated revenue reached MXN 58.9 billion, representing a year-on-year decline of 5.5%, mainly driven by lower revenue at Sky. Operating segment income reached MXN 23 billion, equivalent to a slight decrease of only 0.6% year-on-year. Turning to our fourth quarter results. Consolidated revenue reached MXN 14.5 billion, representing a year-on-year decrease of 4.5%, while operating segment income reached MXN 5.9 billion, equivalent to a year-on-year expansion of 6.1%, driven by the efficiency measures that we have been implementing since the integration of Sky. Now let me walk you through the operating financial performance of our cable operations. We ended December with a network of 20 million homes after passing around 59,000 new homes during the quarter or over 118,000 new homes during the year. During the quarter, we continued to execute our strategy to focus on value customers rather than volume, while working on customer retention and satisfaction. This contributed to achieving a monthly churn rate below our historical averages of 2% for the third consecutive quarter. Our broadband gross adds remained solid, allowing us to deliver 25,000 net adds during the fourth quarter compared to net adds of around 22,000 in the third quarter and 6,000 in the second quarter and the disconnection of about 6,000 in the first quarter of 2025. In video, we also experienced stronger gross adds than in the first three quarters of the year and managed to reduce churn. Therefore, we lost about 31,000 video subscribers during the fourth quarter compared to 43,000 disconnections in the third quarter and 53,000 cancellations in the second quarter and a loss of 73,000 video subscribers in the first quarter of 2025. Moreover, we expect these improving trends to continue going forward, influenced by our multiyear partnership with Formula 1 to provide line coverage of all Grand Prix via Sky Sports channels available through Izzi and Sky, beginning in the fourth quarter of last year and through the 2028 season. Moving to mobile. Our net adds of 95,000 subscribers during the quarter showed sustained momentum as they were mostly in line with the 94,000 net adds in the third quarter. Our innovative MVNO services are already making our bundles more competitive, allowing us to increase the share of wallet of our existing customers and helping us to reduce significantly the churn of our existing customers. During the quarter, net revenue from our residential operations of MXN 10.6 billion, which accounted for around 90% of total cable revenue decreased by only 0.6% year-on-year. This marked the best quarter of the last 2 years at our residential operations from a revenue growth performance standpoint and compares well to a decline of 1.8% in 2025. On a sequential basis, net revenue from our residential operations remained stable, potentially signaling a gradual recovery. During the quarter, net revenue from our enterprise operations of MXN 1.2 billion, which accounted for around 10% of our cable revenue fell by 4.2% year-on-year. Due to the timing of revenue recognition of an important contract signing in the fourth quarter of 2025 and because of tough comps. Moving on to Sky's operating and financial performance. During the fourth quarter, we lost 304,000 revenue-generating units, mostly coming from prepaid subscribers that had not been recharging their services. In addition, beginning in the second quarter, we started to charge an installation fee of MXN 1,250 to all new satellite pay-TV subscribers to increase the return on investments on this service. This translated into a slowdown of video gross additions for Sky that has been steady over the last three quarters. Sky's fourth quarter revenue of MXN 2.8 billion declined by 16.8% year-on-year, mainly driven by a lower subscriber base. To sum up, segment revenue of MXN 14.5 billion fell by 4.5% year-on-year, while operating segment income of MXN 5.9 billion increased by 6.1%, making it the best quarter of the year driven by efficiency measures that we have been implementing and synergies from the ongoing integration between Izzi and Sky. Our operating segment income margin of 40.9% expanded by 410 basis points year-on-year. Regarding CapEx deployment, our total investment of MXN 4.6 billion accounted for 31.8% of sales in the fourth quarter. During the year, our CapEx deployment of MXN 12 billion, equivalent to $645 million, or 20.7% of sales. The main reason behind having a higher total investment relative to our 2025 CapEx budget of around $600 million was the strong-than-expected Mexican pesos, particularly during the second half of the year and the fact that around 50% of our CapEx budget is in local currency. Finally, operating cash flow for Cable and Sky, which is equivalent to EBITDA minus CapEx was MXN 1.3 billion in the fourth quarter, representing 9.1% of sales. For 2026, our CapEx to sales ratio should be close to 25% as we plan to upgrade 6 million homes to fiber-to-the-home technology, increase our subscriber base and support growth. This basically means that we expect to end 2026 with 75% of our total footprint passed with FTTH technology. Alfonso de Angoitia Noriega: Thank you, Valim. You're doing a great job. Now let me walk you through TelevisaUnivision's 2025 results released on Tuesday morning. As expected, the company's full year revenue fell by 5% year-on-year to $4.8 billion, while adjusted EBITDA of $1.6 billion, increased by 2%. Excluding political advertising and FX volatility, adjusted EBITDA increased by a healthy 7% year-on-year, underscoring the scalability of a profitable DTC business and the sustained impact of the cost reduction initiatives launched at the end of 2024. Turning to the fourth quarter. Revenues of $1.3 billion declined by 2% year-on-year, while adjusted EBITDA of $396 million fell by 12%. Excluding political advertising, total revenue grew by 1% year-on-year, while adjusted EBITDA decreased by 5%, despite continued DTC profitability and continued cost management. Moving on to the details of our revenue performance. During the quarter, consolidated advertising revenue was flat year-on-year. In the U.S., advertising revenue was 11% lower as continued growth in ViX and higher pricing were more than offset by declines in linear advertising due to secular softness and political spending relative to the prior year due to the absence of U.S. presidential election cycle. Excluding political advertising, advertising revenue in the U.S. fell by 3%. In Mexico, advertising revenue increased by 15% year-on-year, driven by the strong ViX growth and a resilient linear business, including private sector advertising. In local currency, advertising revenue in Mexico grew by 6%. During the quarter, consolidated subscription and licensing revenue decreased by 4% year-on-year. Continued growth in ViX across both the United States and Mexico along with higher U.S. linear subscription and licensing revenue, including benefits from our new Hulu agreement and higher content licensing, more than offset the loss of Fubo, the temporary YouTube TV carriage dispute and ongoing net subscriber declines. However, these increases were more than offset by lower linear subscription revenue in Mexico due to the renewal cycle with Izzi Sky and the cancellation of another distribution company, which we have already lapped. Moving on to the balance sheet. TelevisaUnivision ended 2025 with $440 million in cash, an increase of 33% compared to the previous year. Total CapEx investments were $119 million for the full year or a year-on-year increase of 4%. We expect CapEx deployment to remain at similar levels in 2026. Speaking about the 2026 World Cup, it represents a great opportunity both for Grupo Televisa and TelevisaUnivision, and we are approaching it with a fully integrated strategy across broadcast, streaming, digital and social. Our goal is to deliver comprehensive coverage with flawless execution, while maximizing the commercial impact across platforms. In Mexico, ViX will become the official home of the World Cup, making ViX the exclusive streaming destination for all 104 matches available at a preferential price for customers of Izzi and Sky. ViX premium annual subscribers will get access included while ViX's monthly subscribers and the customers of Izzi and Sky will have the option to add on World Cup coverage. Finally, considering several opportunities in the telecom sector in Mexico that we're currently exploring, our Board of Directors approved suspending the payment of our regular dividend in 2026. This will be presented for approval at our Annual Shareholders' Meeting. To wrap up, Bernardo and I are confident that our focus on value customers, efficiencies and ongoing integration between Izzi and Sky at Grupo Televisa and further integration and operational optimization at TelevisaUnivision now that our DTC business represents over 20% of consolidated revenue and adjusted EBITDA, will allow us to create greater value for our shareholders in 2026. Now we're ready to take your questions. Elsa, could you please provide instructions for the Q&A? Operator: [Operator Instructions] The first question today comes from Marcelo Santos with JPMorgan. Marcelo Santos: I have two. The first is for Valim. Could you please walk us through the fiber plan, how many homes with fiber-to-the-home do you have today? I mean, is this goal -- what is the goal exactly, if you could repeat? And is it for the end of 2026? So just wanted to get a bit more color on this plan. And the second question is about the competitive environment. How has been like the room to increase prices? Could you make some comments on how the market is going? Alfonso de Angoitia Noriega: Thank you, Marcelo. Valim, please. Francisco Valim Filho: Thank you, Marcelo. So I think that the fiber deployment is we're already at 9 million homes with fiber today, and planning to get to 15 million, 16 million by the end of 2026. So that would mean 75% of our existing network would be fiber-based. So that is on plan and on target. Regarding the competitive environment in Mexico, I think it's important to emphasize that we have been increasing ARPU consistently over the last several quarters. So it's due to price increases, mostly is due to more products to more -- to our existing customers and better and better services. So that's what we decide. We see that our alternative players, their flat or declining ARPU as opposed to ours, which is increasing constantly. And that's the route we are taking, not so much on price increases, but enable to sell more to the existing clients. And so the competitive environment in Mexico has been very stable over the last 2, 3 years, basically. And what we have been doing also consistently is focusing on high-value clients that will churn less and value our services and be able to acquire more services from us. That's the strategy moving forward. Alfonso de Angoitia Noriega: Pretty much a rational competitive environment. Marcelo Santos: Great. Just a follow-up on the first answer. When you mentioned the 9 million today and to 15 million to 16 million, this is really like fiber-to-the-home where there's no cable involved anymore, like it's fiber box in the home? Or is it like more fiber to the curb, but there is still a cable. Alfonso de Angoitia Noriega: No. Marcelo, fiber is still a cable. It's just a different cable. Marcelo Santos: HFC, sorry. Alfonso de Angoitia Noriega: Yes, I understand what you're saying. And just couldn't a point the joke. So it's just, yes, we will have fiber to the home on 15 million, 16 million homes by the end of the year. So if acquired, actually, nowadays, when the network is deployed, there are no deployments in HRC. So we still have a percentage of our deployments are in HRC because we are not with the full coverage. But as we grow our subscriber -- our fiber network, every new subscriber goes into fiber, and we migrate them as conditions are needed into fiber. So in a few years, all of our clients will not only be under a fiber network infrastructure, but also be connected to our fiber network. Operator: The next question comes from Matthew Harrigan with Benchmark. Matthew Harrigan: You're kind of almost uniquely exposed to AI positively on the telecom side, given all the repetitive processes and consumer-facing kind of customer journey experiences. And then on the media side with your JV, I think you're -- I know you're obviously the largest volume producer of Spanish programming in the world, and you may even be #1 overall. You had a lot of dislocation in the U.S. media names a few weeks ago on account of 20. And I was just curious, what's your broad perspective on how AI affects you both on the blocking and tackling side on telecom and then on the creative side on TelevisaUnivision, both with respect to your in-house content creation being even faster and more short form and then more competition you might face on people and companies aren't nearly as well funded as you. Alfonso de Angoitia Noriega: Thank you, Matthew. A very interesting question. I'll answer the media side and then Valim can take the telecom side. On the media side, we're experimenting with AI and production through AI. It's a very important tool. So in terms of script driving in terms of production itself, it is very useful. So we're experimenting especially. We launched last year our micronovelas on the short form. We produced -- we started producing last year this type of content. This year, we will produce more than 300 micronovela. And some of them are produced 100% with AI. So we're moving in that direction, moving I mean, using AI more and more, which will become a very efficient way of producing content. Francisco Valim Filho: In telecom, AI is mostly useful in how we handle our customer and how we operate our network. And as we speak, we are in very challenging and deep changes into the organization, making sure we have AI all over, meaning from the network usage to the client interface. So in the next few months, we're seeing significant impacts on how we interact with customers focusing on basically 100% AI. So 2026 will be the year we'll flip from a typical call center kind of a thing to full AI, everything AI in terms of customer relationship. So this is the year that will go from a typical telephone to an AI-based telecom operator. Matthew Harrigan: Great. It feels like even with some pretty straightforward kind of enterprise AI applications, you're in a great place without being too fans on the value LM models. Francisco Valim Filho: And sorry, just to complement on that, we are operating with the large guys, which is the typical Oracle, Salesforce, AWS kind of guys. So we have a clear path and we're working with the right guys to be able to achieve it. Operator: The next question comes from Ernesto Gonzalez with Morgan Stanley. Ernesto Gonzalez: It's on the opportunities you're exploring in Mexico Telecom. Just wanted to see if you can comment a little bit on whether these opportunities are in the fixed market or on the mobile market or any additional color you can give? And on the residential or your operations in Mexico, operating segment income was really strong in the fourth quarter. How sustainable is this margin level? Alfonso de Angoitia Noriega: Well, yes, we are actively exploring opportunities in the telecommunications sector. But unfortunately, we cannot comment on specifics or at this point, share more information. Hopefully, we can get those to materialize. There's no guarantee, of course, that they will we'll be in touch as those -- as we make progress as to those. And as to your second question, Valim? Francisco Valim Filho: We keep on optimizing our operations like we were just discussing a few moments ago, try to make sure our systems are more AI-oriented in order to make our processes more efficient, not only from a customer facing perspective, in other words, the clients see and understand that we are closer to them and providing better service, but also the flip side to that discussion is that it would allow us to have a lower cost base. All in all in the service of our clients. So yes, we keep on pursuing increasing operating cash flow. Operator: The next question comes from Alejandro Azar with GBM. Alejandro Azar Wabi: Third one is on your comment, Valim, of the 25% CapEx to sales for 2026. Is that on the telecom service or it's telecom enterprise or it's the full telecom enterprise satellite? Should we think 25% of consolidated Televisa? And my second question is also on -- relative to Sky. With the rate of the connections that we have had in the last couple of years. And if this continue, it becomes really tough for Televisa at the consolidated level, at least on the EBITDA side to show growth. I'm just wondering if you guys can give us more color of how you see Sky going forward, if there is a level where you see these connections or your total clients might normalize? Francisco Valim Filho: Okay. That's a great question. I think that the CapEx discussion is up to 25%. It comprises everything. Izzi Sky and Bestel, our B2B, our DTH and our cable fiber business. So that comprises it all. With regards to Sky, I think there is just misperception of what Sky really is. used to be a great business, all over the world, DTH represented a great business. But in all markets, what has happened is with the advancement of the networks, the FIC networks, Obviously, the connections are better and a lot of the streaming are also competing with that. So you see Internet plus the first streaming that doesn't allow much room for a DTH platform to keep on growing. So our plan is basically to make sure that we have the lowest possible cost at the Sky, meaning it's revenues minus variable cost, programming costs, minus the satellite and conditional access. Other than that, it's a cash flow generating business. So we don't expect it to stop or to normalize or level at any point. And I don't think that's something that people have seen anywhere else given the conditions that I have just described. So as you segregate that segment, Sky and its direct costs, which is -- which are the only costs that they basically have. And so everything else is our B2B and our B2C business. So I think that's the way you should approach this market as opposed to this is an overall thing and our revenue was declining. Yes, our DTH revenue is declining as expected. And what we did is streamline the DTH business. So keeps on generating cash and will be generating cash for the foreseeable future. And we have a business that is long lasting, which is our direct-to-consumer and B2B businesses. Alejandro Azar Wabi: One more, if I may, and this is just to remind us all, when do you have to pay the transaction of Sky? Alfonso de Angoitia Noriega: It's 2027 or 2028. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Angoitia for any closing remarks. Alfonso de Angoitia Noriega: Well, thank you very much for participating. Give us a call if you have any additional questions. Have a great weekend. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Bernd Pomrehn: Good morning, everyone, and welcome to Holcim's Full Year 2025 Results Presentation. My name is Bernd Pomrehn, Head of Investor Relations, and I'm pleased to be joined by our CEO, Miljan Gutovic; and our CFO, Steffen Kindler. After their presentations, as usually, you will have the opportunity to ask questions. If you join us on this sunny day, Friday in Zurich, then just raise your hand, and we will hand you a microphone when it's your turn. And our colleague from Chorus Call will now instruct you how to ask your questions via the webcast. Sandra, please. Operator: [Operator Instructions] The conference is being recorded. [Operator Instructions]. Bernd Pomrehn: And with this short intro, I directly hand it over to Miljan. Miljan, please. Miljan Gutovic: Thank you, Bernd. Good morning to all of you, and a warm welcome to Holcim's 2025 Full Year Results Analyst and Investors Conference. Steffen and I are pleased to be presenting our earnings to you today. And of course, there will be a time afterwards for your questions. We delivered strong profitable growth in 2025 with an acceleration in the fourth quarter as we achieved all our targets. As you can see, we accelerated the growth of our recurring EBIT in Q4. It was up 12.2%, taking us to a 10.3% for the year, exceeding our guidance. Our industry-leading margin increased by further 80 basis points to 18.3%. Margin expansion was driven by our high-value strategy, which includes scaling up our sustainable offering as well as continuously exercising strong cost discipline while enhancing operational efficiency. We generated CHF 2.2 billion in free cash flow with a cash conversion of 54%. Due to our excellent results and the confidence in the outlook, our Board of Directors has proposed a dividend of CHF 1.7. That represents a payout ratio of 53%. With these excellent results, we are setting guidance for '26 that is fully aligned with our midterm targets, and I'll take you through the guidance in details at the end of this presentation. Now let's turn to the region highlights. Very proud to report excellent results in Europe. Europe for Holcim continues to deliver strong margin expansion, which is driven by our high-value strategy as we are scaling our sustainable offering and accelerating initiatives in decarbonization and circular construction. In terms of the outlook, very positive on Europe. We expect strong activity in infrastructure. For instance, take, for example, Switzerland, we already communicated that we are supplying our products and solutions to Gotthard Tunnel. Now we have landed another big tunnel Axenstrasse, and we will start delivering soon. Also in residential building permits have increased across the whole Europe in recent months, even in the big markets like Germany and France. Let's look now in more detail on how we have made sustainability a driver of profitable growth in Europe. By scaling our sustainable offering, accelerating, decarbonization and circular construction as well as investments in value-accretive M&A, we have achieved a consistent multiyear margin expansion of 430 basis points between 2020 and 2025. That is a period that includes COVID crisis, high energy crisis, challenging economical cycles, market condition and also significant volatility in carbon price. Leading in decarbonization, we are using innovative formulations and alternative fuels to continue to expand our margins, so too with recycling of construction and demolition materials into the new building solutions. During this period, we have also created excellent value through our disciplined M&A approach, closing 66 acquisitions at very good prices, which were on average just around 5.3x EV EBITDA at signing, including synergies. These acquisitions are increasingly focused on expanding less carbon-intensive high-value building solutions from foundation and flooring to walling and roofing. All of this demonstrates our agility, our resilience based on our proven business model. I'm sure that we will get on to discussions on the EU ETS in our Q&A. So let me say a few words on this topic. The European Commission already announced its work program in 2025. So this is not new. This included a review of ETS to provide clarity for the post-2030 period with a proposal expected in Q3 this year. I would like to emphasize that we do not expect any major changes in short term before 2030. Holcim, of course, welcomes the work that EU Commission is doing to provide clarity for the post 2030 period, including for topics important -- that are important to decarbonization of our industry. If there are any changes to EU ETS allowances in the mid- to long term, this will simply provide more time to build effective business cases and partnerships to evolve the carbon management value chain, including transportation and storage as well as decreasing our costs. Once again, this slide shows that Holcim has made sustainability a driver of profitable growth regardless of the CO2 price. And more importantly, we have the strategic agility to adapt to different scenarios in our decarbonization road map with levers that expand our margins independent of the carbon price. Strong cost discipline and operational excellence are part of Holcim's DNA. Next, in LatAm, we delivered double-digit net sales growth for the full year with recurring EBIT margin above 30%, even after absorbing the integration costs of our newly acquired businesses. Disensa, the largest construction materials retail franchise in the region continues to grow strongly. We opened 460 new stores to take us to total 2,360. We expect the strong performance in LatAm to continue with 1.8 million new homes and the start of the next wave of infrastructure projects to accelerate growth in Mexico as well as significant demand in residential, but also in infrastructure to boost Argentina and Central America. Asia, Middle East and Africa delivered outstanding double-digit increase in recurring EBIT in '25 and really outstanding margin expansion of 220 basis points. We saw strong growth in North Africa, driven by public spending and also very, very good momentum in residential market. For this year, as a whole, we expect the strong demand in North Africa to continue with public and infrastructure projects in Egypt, Morocco and Algeria. We also see Australia as another bright spot where our team has secured important precast contracts for roads and tunnels. With that, I would like to hand it over to Steffen to talk through the financials in more detail. Steffen? Steffen Kindler: Thank you, Miljan, and a warm welcome to you all also from my side. It's a pleasure to be with you today for the full year results. Turning first to the net sales bridge. You can see that organic growth was the main contributor to a 3% rise in local currency as we achieved our 2025 guidance. While there was a contribution from acquisitions, we also divested Nigeria in the fourth quarter, which is categorized as a large transaction. The foreign exchange effect on sales was negative CHF 810 million or 5%. Just a note on our guidance that you may have picked up from the presentation and press release as a technical simplification and a move to the more common terminology of organic growth, we will be guiding on organic growth for 2026. OG for 2026 is expected to be very similar to the LC definition used so far. For the full year, on the next chart, EBIT, on the full year, we delivered 10.3% growth in recurring EBIT in local currency, excluding large M&A. Now you know why we go back to OG, and even 12.2% organic growth, significantly exceeding our 6% to 10% targeted range for the year. Despite foreign exchange headwinds of CHF 200 million or 7%, we managed to grow our absolute EBIT in Swiss francs by 1.4%. Next, let's look at the progression of our recurring EBIT and recurring EBIT margin over the last 4 years. This graph here shows that we have been consistently expanded both our recurring EBIT margin and our recurring EBIT, now well above CHF 2.8 billion. As Michael said earlier, our margin expansion is driven by our high-value strategy as we scale up our sustainable offering while keeping a strong focus on cost discipline and operational excellence. We saw strong recurring EBIT contributions from all the regions, around CHF 1.5 billion in Europe and more than CHF 900 million in each of LatAm and EMEA. Europe delivered strong EBIT growth with margin expansion of 140 basis points. Net sales growth was double digit in Latin America, and we maintained a recurring EBIT margin of above 30%. In Asia, Middle East and Africa, there was double-digit growth in recurring EBIT at 14.1%. The strong performance overall shows the benefits of our regional diversification playing out well. Our deeply embedded performance culture and disciplined financial management ultimately drives the growth of our earnings per share or EPS, which is up 5% in Swiss francs from 2024. This shows that we pay equal attention to operational performance and financial discipline. And as you see here also on the lines below EBIT, obviously. You can see that by all measures of the bottom line, we are producing superior profitable growth. Next, you can see the development of our free cash flow in 2025, which exceeded our target of around CHF 2 billion -- in the last 5 to 6 years, Holcim reliably delivered superior free cash flow with cash conversion rates consistently above 50%. This is driven by strong EBITDA, our focus on working capital, financing costs, other cash relevant items and last but not least, a very disciplined approach to CapEx, prioritizing those projects with the highest returns. On this chart, you see our net debt leverage ratio, which closed 2025 at a comfortable 0.9x. This will provide Holcim with sufficient financial flexibility and the ability to navigate all economic cycles while continuing to invest in profitable growth through CapEx and M&A and to offer attractive shareholder returns. We remain committed to a healthy balance sheet and net leverage below 1.5x over the long term, a reiteration to what we said at the Capital Markets Day. Holcim is investing for growth while delivering steadily increasing ROIC. Our return on invested capital continues to tick up year-on-year, reaching 11.2% in 2025. And following our strong value creation for shareholders in 2025, the Board of Directors has proposed a dividend per share of CHF 1.7 to be proposed to our AGM. This will be paid out of foreign capital contribution reserves of more than CHF 7 billion, which amount to 17% of our market capitalization, and these are not subject to Swiss withholding tax. This represents a payout ratio of 53% and very important, a post-tax dividend yield of 2.4% after tax. This next slide is a bit of a reminder of our growth-focused capital allocation out to the year 2030, which we frequently discuss in smaller group meetings with our investors. The execution of our NextGen Growth 2030 strategy will provide Holcim with a total capital deployment capacity of up to CHF 22 billion until 2030. In order to ignite further growth, we will deploy this capital strategically, focusing on growth as well as shareholder returns. We remain committed to a progressive dividend and returning substantial value to our shareholders. We will return a total of CHF 7 billion until 2030, corresponding to a payout ratio of approximately 50% or higher per year. An additional CHF 4 billion to CHF 6 billion from proceeds of larger divestments or available debt capacity can be used for large strategic M&A or to opportunistically execute share buybacks. We believe that our growth-focused capital allocation will further accelerate profitable growth while delivering attractive returns to shareholders. And with that, I'll close, and I'd like to hand it back over to Miljan. Miljan Gutovic: Thank you, Steffen. So for NextGen Growth 2030, as you have seen, we are delivering superior performance and margin expansion focused on 5 pillars. We are scaling up our sustainable offering powered by our premium brands. We are accelerating initiatives for decarbonization and circular construction, driving profitable growth. A key part of NextGen Growth 2030 is expanding our high-value building solutions. With our impeccable track record of value-accretive M&A, we are focusing on the most attractive markets. And all of this, this is all driven by our deeply embedded performance culture, which we are proud to have at Holcim. Let's look more closely at some of these priorities. Customer demand for our premium brands, ECOPact and ECOPlanet continues to grow. These are being used at scale in large projects like the CityWave in Italy, which was built with ECOPact made from ECOPlanet that is even more sustainable because we use calcine clay and Mohammed Tower in Morocco, which was built with our ECOPlanet low-carbon cement and our insulation form Airium. We're also seeing a strong growth in ECOCycle, our circular technology that is being used to recycle construction and demolition materials and put it back into our products. A recent project completed using ECOPact and ECOCycle was this housing project on the outskirts of Paris in France, which consists of 220 social housing units. This is the first and first in the world, 100% recycled concrete building in which all the components used, cement, concrete, even water are 100% recycled. Overall, this concrete with ECOCycle saved more than 6,000 tons of primary materials. It is a demonstration of what we can achieve by partnering with forward-looking cities to evolve building standards and building norms. We are advancing circular construction to build cities from cities and also to drive profitable growth. In 2025, we made 3 acquisitions, and we also invested organically to grow our circular construction hubs. We are establishing them in all the major metropolitan areas in which we operate to a total of 109. Over the same period, we grew our net sales from circular construction to close to CHF 500 million. And as you can see, we are well on the way to hit CHF 800 million by 2030. Organic investments make up an important part of our growth-focused capital allocation, and Steffen also mentioned this. And in 2025, our capital expenditure amounted to around CHF 400 million. You can see some recent examples on this slide across different geographies. They give you some idea of our priorities, grinding investment, calcined-clay production or expanding our building solutions in Australia. You will see in our press release that we have signed an agreement with Air Liquide to deepen our collaboration on one of our flagship projects, GO4ZERO for carbon capture and storage in Obourg, Belgium. We are in full execution of the first phase of this upgrade, which will make Obourg a really state-of-the-art plant, not only in Holcim World, but globally. And all these growth investments have a very attractive returns and a very attractive paybacks. Next, M&A. We closed 21 value-accretive transactions in 2025, of which 18 were acquisitions and 3 were divestments. We made 9 acquisitions in Building Materials and also 9 acquisitions in Building Solutions. We also have closed divestments of Jordan, Nigeria, and we sold our Karbala plant in Iraq. Just a reminder that we signed in October an agreement to buy Xella, a growth platform in a highly attractive European walling market. It brings us sustainable and energy-efficient solutions powered by the premium brands that are really great fit to Holcim's existing product portfolio. It will also help us to accelerate the expansion of Holcim's high-value building solutions, which is in line with our next-gen growth strategy. This transaction is subject to customary conditions and approvals and is expected to close in H2 this year. In December, we also signed the agreement to acquire a majority stake in Pacasmayo. The company is a leading producer of building materials in Peru, and this transaction will probably close, of course, subject to all the regulatory approvals in H1 this year. Finally, a note on our deeply embedded performance culture. You can see on this slide, statistics, but our results are not down to statistics. Our results are thanks to our people that work at Holcim. We want Holcim to be the best workplace where talent is nurtured, where performance is awarded and where innovation is encouraged. Our commitment to this vision has been reflected in Holcim being recognized as a global top employer by the Top Employers Institute. And through Holcim University, which is our in-house business school, we are providing our people with really best-in-class trainings. With our focus on accountability and also empowerment through Holcim spirit, our more than 45,000 of employees are delivering value across all economical cycles and across all market conditions. And now to the outlook. Well, net sales and recurring EBIT growth fully in line with our NextGen Growth 2030 targets. Net sales, 3% to 5%. And as mentioned by Steffen, we are moving to organic growth. Also EBIT, 8% to 10% organic EBIT growth. We are committing to further increase of recurring EBIT margin. We estimate cash flow to be around CHF 2 billion. And of course, we will continue to invest in circular construction with 20-plus percent volume growth in 2026. Bernd, you can now open it for questions. Bernd Pomrehn: Thank you so much, Miljan. Thank you so much, Steffen. With this, we're starting our Q&A session. The first question is coming in from Martin Husler, who is joining us here in Zurich. Please wait until you get the microphone, please. Martin Huesler: I have 2 questions. Maybe first, coming back to the ETS rumor scheme, and thanks for your elaboration so far. But maybe how much have you already invested, let's say, for example, in CCUS projects, which might stand at risk if CO2 prices came down below EUR 50 over the next couple of years. So just an indication on what's here at stake? And what would it mean if you start to delay CCUS projects for your CapEx for the next couple of years? That's the first question. Miljan Gutovic: Okay. Thank you, Martin, and thank you for your question. So on ETS, the answer is negligible investment so far. I mean, we are -- for instance, in Obourg, we are building a brand-new plant, but we would do that without CCS. This will be the state-of-the-art plant best-in-class when it comes to cost efficiency and also when it comes to the sustainability KPIs. We talk here about a few million across the projects. So investments so far, negligible. If the projects are delayed, and I did discuss on what happens after 2030, I think if there is a delay, we will have more time to find more cost competitive solutions for these projects. I'll give you a perfect example. 3 years ago, most of these carbon capture projects were based on offshore storage, means we take -- capture CO2, we take it somewhere in the sea. Now the momentum, especially in the last year, 1.5 years, has accelerated to move from offshore to onshore. So the cost advantage is enormous. So even if nothing happens on EU ETS, CO2 prices continue to go up, I might delay a project 6 to 12 months in order to move from offshore to onshore storage because cost advantage, as I said, is enormous. So when it comes to the CCUS projects, what we do at Holcim, and this is DNA, it's the discipline regardless, cost discipline on pricing, on cost and cost discipline on M&A and also CapEx projects. Martin Huesler: And then a second question because you faced some integration costs you mentioned for Latin America, for example. Now thinking about the acquisitions that you announced, Pacasmayo, Xella, et cetera, which roughly add 10% to group sales on an annual base. How much as a ballpark number, how much EBIT contribution could that be? I mean, could EBIT also be impacted by integration costs, just 10% on sales? How much is this roughly on EBIT? Miljan Gutovic: I'll start and then maybe Steffen can continue. So these 2 acquisitions in LatAm, they were different than Pacasmayo, let's say. Pacasmayo will run as a stand-alone company. So integration costs, they will -- there are always integration costs. Are we synchronizing ERP system? We will definitely invest in safety -- health and safety because this is the core of what we do, but I would expect negligible impact. And the same applies for Xella. On Xella, I think I would even like to spend more to accelerate this cross-selling between us to invest, for instance, in additional sales force so we can move faster on specification selling. So I would not expect significant impact on these 2 deals and the integration costs. Steffen Kindler: You're completely right, Miljan. Just to give you a feeling the scope in for these large acquisitions, Xella, Pacasmayo and Alkern for this year is going to be in the range of CHF 120 million to CHF 150 million on EBIT level. But the difference to a smaller acquisition -- in a small acquisition, you often need to go in and change a lot of things to bring it up to Holcim standard from safety to IT to accounting. Here, we're acquiring very mature companies. And so the initial cost to bring them to our standards is much, much lower. We can basically use almost everything they have. And then we change the accounting standards to completely communicate with ours. But the cost and the effort we have to do is much lower. Bernd Pomrehn: Next question comes from Lothar Lubinetzki from Octavian. Lothar Lubinetzki: Let me follow up on the CO2 issue. What is more important for your margin progression, price or mix? And with regard to price, what is the current premium you're getting for ECOPact ECOPlanet in Europe and LatAm? Miljan Gutovic: So everything is important. Don't get me wrong. But on the -- what is the -- what's driving our margin expansion is our whole high-value strategy, where pricing is important to offset the cost inflation, but margin expansion is coming from sustainable offering. I'll come to that later. It's coming from our incentives -- initiatives in decarbonization and circular construction. And you saw the slide on Europe, 66 acquisitions in the last 5 years at multiples of 5.3 after synergies. And so all of this is driving margin expansion. Now on sustainable offering. This is something that I'm really proud of the way we handle the whole launch of these products and where we are today. We do have a modest price premium on ECOPact, ECOPlanet, and this could be between low to mid-single digits. Probably in some countries, we are closer to 5%. In some countries, we are between 1% and 2%. But as I said this before, these products, we have a cost upside. Thanks to Holcim's innovation, our production know-how, our formulation know-how on these products, we are reducing cost. We are replacing expensive raw materials with less expensive. For instance, you saw that we are now scaling up calcined clay production even in LatAm. This is exactly the point. By doing this, we will be replacing clinker with calcined clay. Calcined clay has lower CO2, but also has a lower cost. So the story was about Europe. But a few weeks ago, I had a privilege to visit Egypt. I mean, country -- emerging market where the team took me to a project, National Grand Museum of Cairo, quite impressive, the whole development. And what was specified -- architects specified ECOPlanet. They demanded low-carbon cement and concrete solutions on these products. And this is a project in Egypt, not in Zurich or Hamburg or London. So potential for these products is increasing. And we are seeing more and more demand even in the developing markets. Another great example that you find might -- we published this actually 2 quarters, Ecuador. By far, I think it's the biggest residential development complex in the whole Latin America, houses for 180,000 people, all done with ECOPlanet and ECOPact. Lothar Lubinetzki: And in terms of recycling CDM, I think you reached 8 million tons this year. Is there anybody else in the industry who is even getting close to that number? Miljan Gutovic: So just to clarify, this market is big. What we're currently seeing that this market is fragmented. So there are many players. For us, where our advantage is, we are focusing on metropolitan cities, big cities from Zurich to London to Paris, Lyon, where we have a strong Holcim footprint. Buying these companies or building recycling hubs from scratch, we have excellent synergies. That's why we are faster than the others. I'm being modest. Bernd Pomrehn: Thank you, Lothar. One more question from the room. It's Remo Rosenau from Helvetische Bank. Remo Rosenau: What kind of price increases did you already announce in Europe ahead of all these certificate discussions? And when should they take effect? Steffen Kindler: It varies by region, so probably the most important regions. Miljan Gutovic: So we talk about Europe -- Remo, thank you for the question. I know the pricing question always comes at some stage. First of all, very pleased with the pricing dynamic in Europe this year. We had an excellent exit price in December. And I think from what I have seen, and I have spent a lot of time with my dear colleagues at the back on pricing topic, we do have a very healthy momentum. I maybe too early to say, but it depends from market to market. Maybe we are talking about mid-single digits. Remo Rosenau: In percentage points. Miljan Gutovic: Yes. We will stick before or after all of this. Remo Rosenau: Well, that's the question, how much of that will stick because the announcement is one thing and then the reality is the other one. And this is the slow season. So it only comes really -- I mean, the proof of the pudding will be in March, April, right? Miljan Gutovic: Once again, depending from market to market, we are already seeing something -- some contracts have been secured. I am optimistic and positive that we will get there. Remo Rosenau: We stay tuned. Bernd Pomrehn: Thank you, Remo. We are now switching to questions from the webcast. The first one is Julian Radlinger from UBS. Julian Radlinger: So a couple for me. So first of all, the -- so you're guiding to 8% to 10% organic EBIT growth, which is higher than what you guided to last year. And last year, you delivered, I think, 12%. So I'm not going to ask whether or not you think you could do even better than 10%. But if that were to happen, what would the drivers for that be? What's likely to be different in 2026 versus 2025 in your mind in terms of demand, volumes, price or costs? And then secondly, and I'm really sorry to ask this, but I think a lot of investors right now are really nervous about this topic, obviously. In a scenario in which something really draconian were to happen to this whole ETS mechanism. Let's just hypothetically say it actually -- they actually push the whole thing to the [right] or they cap CO2 prices on a very low level. What do you think happens to cement pricing dynamics in Europe or the level of competition? How would you -- what would you -- how would you think about that? Miljan Gutovic: Julian, thank you for your question. I'll go to the second, and maybe you can answer the first one. We already addressed it on the guidance. So first of all, Europe slide is there, Julian, you can see what we have done in the last 5 years. And this is across some really challenging market conditions. We had COVID. We had -- remember in 2022, we had high energy prices going 300%, 500% overnight and so on. Pricing was disciplined in Europe, and that helped us offset all these costs. So I do not perceive any significant impact, on the pricing dynamic will remain positive and healthy. There is more discipline. And Holcim, this is where we differentiate. We will continue with our pillars of our high-value strategy, sustainable offering, decarbonization, circular construction, M&A and so on to continue with margin expansion. So regarding just one on these big projects that I would like -- there are derisking mechanisms already in place in some countries that can help us mitigate the CO2 price volatility. So these projects on carbon capture can go ahead. Steffen Kindler: Look, we simply narrowed the guidance, right, from 6% to 10% to 8% to 10%, which is a sign of our confidence that we're really going to sit again at the upper end of that frame that we gave at the Capital Markets Day. So you should interpret that as a sign of confidence. Last year, we had above 12%. And again, we're aiming for the upper end of this guidance. Now what drives it? Leverage through a bit volume, as Miljan described before, operating leverage. And we're still on the journey to reduce our corporate costs, as you know, and to readapt to the regional footprint also after the spin-off. We have positive price over cost. We have good contribution from our JVs, a bit offset through the Nigeria divestment. So -- and I would also say the margin progress and the EBIT growth progress is probably a bit back-end loaded given the volume recovery pattern. But it's a sign of confidence, I would say, that we narrowed this guidance to the upper end. Miljan Gutovic: Maybe one I mentioned in the presentation, Switzerland. So we are a Swiss company, proud to be a Swiss company. The amount of infrastructure projects we have in Switzerland today is significantly higher than versus 3 years ago. I mentioned Gotthard, okay, but this new one, Axenstrasse connecting Schwyz and Uri. This is a new project that will go on for years and where Holcim has secured the contract to supply. Also, once again, I would like to reiterate, residential sector was hardest hit in the last few years. For the first time, we are seeing bottoming down. Maybe it will not go skyrocketing, but we are seeing positive signs in this market segment where we took the hardest hit. Bernd Pomrehn: The next one on the line is Ben Rada Martin from Goldman Sachs. Benjamin Rada Martin: My first is on the 2026 free cash flow guidance. Your comments around, I guess, expecting CHF 2 billion in '26 versus the CHF 2.15 billion you did in 2025 despite some really strong earnings growth in terms of EBIT. Can you talk through, I guess, what would bring you down towards the CHF 2 billion mark? Is it CapEx, tax, any working capital impacts, just so we can understand some of the key buckets? And then the second would just be on carbon capture. It's worth noting some headlines around potentially a Belgium project moving beyond 2030. Would you be able to touch on how you see the other project time lines within the next few years? And how much you expect to be online before the end of the decade? Miljan Gutovic: Thank you for your question, and thank you for joining us. I'll go with the second question, and then Steffen can address the first on cash flow. So this morning, Air Liquide has made the announcement that we entered into partnership for the second phase of this project, Obourg, carbon capture. So as you can imagine, we have been dealing with the media recently a lot. Nothing to do with us. Phase 1 is progressing well. I had the opportunity to bring our Board members to see how the state-of-the-art project will look like when it's commissioned in H1 next year. Very happy with the development on that front. Once we complete commissioning in H1 next year, we will start working on Phase 2, which is with carbon capture with Air Liquide. Steffen Kindler: Ben, good to talk to you. On the cash flow guidance, look, over the last couple of years, also before the spin-off, Holcim has always delivered an above 50% cash conversion. And we've always had a very conservative cash flow guidance. Now why is that? Because cash flow is a time frame number, but it's also a snapshot number at the end of the year, depending on the fall of certain payments at the end of December or the beginning of January. This is why we give ourselves some flexibility here with this number. But you shouldn't read a message that we're reducing cash flow or that the strength of our cash conversion is weakening at any degree. It's just we give ourselves some flexibility in order not to be pushed into unsustainable measures at the year-end. That's it. Bernd Pomrehn: And the next one on the line is Luis Prieto from Kepler Cheuvreux. Luis Prieto: A couple of them for me. The first one is I would like to come back again for a moment to the European Commission's overhaul of the EU ETS. The significant amount of noise around the subject has taken the CO2 price down, if I'm not mistaken, by almost 25% over the last 6 weeks. Could you provide us with a rough idea of what is the minimum price for the average project in your CCUS pipeline to be economically viable just to understand a bit better. And second one is from a conceptual perspective only, what could be a reasonable assumption for medium-term volume growth in Europe if the German infrastructure, defense investments, residential recovery and data center themes pan out as expected? In other words, if all these things fire on all cylinders? Miljan Gutovic: Thank you for your question. On the volume -- I'll start with the volumes just to shake it up a little bit. On the volumes, we do not comment on the volumes, but I would say that construction activity can increase mid-single digit if all of this happens. On the ETS, well, the price can be even EUR 50, EUR 60 if you have derisking mechanisms in place. For instance, Germany has CFD, which is a carbon contract for difference, where they are helping the companies to offset the CO2 price volatility. So if we have that in place, then these projects can go ahead regardless of the CO2 cost. However, for us to be comfortable has to be EUR 100-plus per tonne. Bernd Pomrehn: The next one on the line is Elodie Rall from JPMorgan. Elodie Rall: So first of all, on LatAm to change a bit from Europe. We've seen margin down 320 bps. I think you mentioned impact from integration of recent acquisitions. What kind of margin direction should we expect there for '26? Do you think we can get that back as soon as this year? Second question is on FX. Sorry, but could you give us your expectations for FX on top line and EBIT? And last question is on your view on capacity consolidation in Europe, if there is any update on this? I mean you were talking previously about further consolidation likely to happen by 2030. So has anything changed in particular with the potential for ETS reform? Miljan Gutovic: Thank you for the question. On the capacity consolidation, we are not seeing any significant changes. I still believe that we might -- even this year, we might see some opportunities. As I said last time, we are interested. However, there are markets where we will not be able to participate. But overall, if there is a possibility, definitely, we would be interested in capacity consolidation. For us, I said this also in the past, there could be a possibility that in the next few years, some of our existing clinker producing plants will be converted to produce something else, for instance, calcined clay. And the teams are working on this, and we already have a few of these projects underway. On LatAm, I think I am expecting margin expansion this year. I will not put the number, but all the signs -- positive signs are in place all the way from Mexico to Argentina. We are seeing a positive strong momentum in some of the countries in Central America. So I am expecting margin expansion in LatAm. Steffen Kindler: FX? Elodie, first of all, we expect headwinds to normalize from FX at around -- number one, first, I have to say, I don't have the crystal ball, okay? This is a disclaimer. And then after that, we expect headwinds to normalize as of the second quarter. The first quarter will still be a bit challenging. But if you have to put my best guess for this year, you have an FX headwind on sales of around 3% and an FX headwind on profit of around 4% to 5% with big disclaimer marks all around this information, okay? Bernd Pomrehn: The next one in the line is Arnaud Lehmann from Bank of America. Arnaud Lehmann: I have 3 questions, if I may. Just a follow-up on Latin America and Mexico, in particular, there's been a bit of unrest. Can you confirm that there wasn't any major disruption to your operations so far? And if you don't mind commenting a bit more on the volume outlook and pricing outlook for Mexico for 2026? That's my first question. My second is on North Africa. I believe the momentum was pretty good in Morocco, Egypt, et cetera. Can you -- do you see a continuation of the positive volumes momentum in '26? And lastly, you end 2025 with a very strong balance sheet. The share price has been a bit more volatile and obviously has come back down a little bit recently. Do you see opportunities for buyback? Miljan Gutovic: I'll go on LatAm, Mexico and North Africa, and you address share buyback. Mexico, we are monitoring situation. There have been unrest in 20 out of 32 states in Mexico. Today, we still have some tension in 4 states, but Holcim operations have not been affected. And in -- other than these 4 states, most of the states are back to normal. On the whole Mexico volumes and trends, so as I said, last year, probably we were expecting these big infrastructure projects to start earlier, they started late in Q3 and they continued in Q4. So I expect good momentum on infrastructure projects this year. And I already mentioned, it's on the slide that the first wave of social housing projects, 180,000 homes out of 1.8 million has started. So I'm optimistic about Mexico. On the North Africa, really, really strong momentum in '25. I am very happy what I'm seeing this year, what we have in the pipeline. You mentioned Morocco and Egypt. I would like to add Algeria. These countries -- these 3 countries' margins are now even higher than what we have in Latin America. Momentum is strong. Probably, we are expecting even better year than '25 in these markets. Steffen Kindler: Share buyback. Maybe I'll take a little step back to answer your question. So we announced the deals of Xella and Pacasmayo, which we will close in 2026. So the cash out will be in this year. We announced the dividend. And then there are some smaller portions that we do. We do bolt-ons again and so on and so on. So we will end up with a debt leverage of below 1.5 again, as we announced at our Capital Markets Day, we're going to move a bit closer to that number in 2026. Now also, as we've shown on our chart before, capital allocation until the year 2030, we have a clear priority of the dividend, the M&A, the CapEx, and we always said that share buyback is something we do with -- in exceptional opportunistic cases with excess cash. But if you look at what I said before, we still have so many opportunities to do M&A on top also of Xella and Pacasmayo. There are still a lot of interesting opportunities out there for us in 2026 that you might hear as we go through the year. So that we -- for this year, we don't announce a share buyback. But as we also said in our capital allocation in a year where we don't have so many opportunities to drive very good returns with M&A, then we might also revert to a share buyback as a means to deploy our cash. Bernd Pomrehn: The next one on the line is Ephrem Ravi from Citi. Ephrem Ravi: Again, only 2 questions left. Firstly, the Asia, Middle East and Africa, obviously seeing some of the strongest EBIT growth in local currency of all your regions. But it feels to me from the commentary that's almost entirely North Africa and maybe a little bit of Australia. So is it possible to unpack that region a little bit more in terms of what proportion of the growth in EBIT is coming from Morocco, Algeria and Egypt and maybe even Australia compared to Bangladesh, Philippines, et cetera, which is probably breakeven and obviously, Huaxin, we can look from public figures. Second question on the -- back to carbon, I'm sorry for that. Is there any opportunity for you with lower carbon prices, i.e., can you sort of sell some credits before prices come down in the future if the rate of allowances given is going to be higher than expected in the future? And secondly, are you looking at hedging mechanisms on carbon? Because obviously, you could hedge currency and energy, but I haven't heard much about hedging carbon cost in the future because I suppose it was all seen as a one-way trade-off. But now that it's more volatile and range bound, is that something that you would be considering? Miljan Gutovic: I'll tackle EMEA and you tackle the second one. Ephrem, thank you for your question. Yes, EMEA outstanding margin expansion, very good growth and most of it is coming from North Africa, Australia and GCC. We didn't mention it's a small position, but UAE is booming. Our position in Philippines, Bangladesh, it's relatively small. Philippines, if I can say one market where there are really challenging market conditions, that's Philippines and -- but relatively small position in the grand scheme, so it's not impacting. As I said, most of the margin, most of the contribution comes from North Africa, GCC and Australia. Having said that, Australia in H1 last year was a little bit softer, but we have seen a very good momentum in starting Q3 and continuing in Q4. Steffen Kindler: Carbon, Ephrem, we do not usually comment on that of what positions we take or don't take. It's highly sensitive. But we can be opportunistic in certain cases. We can look out into the future. We can make estimations that in certain years, the allowances we have will not cover our needs and then we might take positions at low markets. But be aware, what is very important to understand, we always view this as an industrial company. We never view this from a point of view of a trader who is trying to make a benefit on the carbon trades. We deal with the CO2 market like a raw material, okay, and not as a tool to make an additional gain with hedge positions. I think this is very important to understand. Miljan Gutovic: So my view is even simpler. If I have CHF 1 million to invest, would I go and buy CO2 credits or would I invest in the circular hub or decarbonization initiative? Definitely. I would invest in a project where I can reduce the CO2. So we are -- as you said, we are not in the trading business. Bernd Pomrehn: Doing something good for shareholders and the planet. We've got a couple of written questions. The first one is from Pujarini Ghosh from Bernstein. She's asking, have you seen any change to the demand or willingness to pay a slight premium for your decarbonized products because of the ETS noise? Miljan Gutovic: The answer is no and not only in Europe, but outside Europe as well. Bernd Pomrehn: Very simple. And the second question from Puja is, could you split the LatAm margin decline between what is driven by acquisition integration costs and how much could be operating leverage and underlying business impact? Steffen Kindler: Look, a couple of drivers here. Number one, we said that there were some onboarding costs for acquisitions. There was a big mix effect also, some countries that are very high profitability were a bit softer. Then we went through a bit of a slump in volumes also in 2025 in the second quarter, especially. And naturally, it takes a few months until you adapt your fixed cost structures. And then lastly, we did a lot of maintenance, as I said, in the third quarter. So all of these things, as Miljan said before, we were quite positive that this is behind us. And for the full year 2026, we plan a very nice margin progression back to the levels of where we've been before. We're not guiding margin on one region specifically, but you can expect that the margin will come back up because there's nothing fundamentally -- there's nothing fundamentally that drove this where we are today. It was a couple of instances. Bernd Pomrehn: Then we've got 3 questions from Paul Rogers from Exane BNP Paribas. The first one, are you now happy with your portfolio in Latin America? Or are there still either new countries to enter or bigger gaps to fill? Miljan Gutovic: I would simply -- last one was Peru. Peru now with Pacasmayo, we are gaining market leadership, and that would be it. LatAm story will be on bolt-ons, especially on Building Solutions side and the full, full acceleration in increasing number of sales points, number of Disensa stores. Bernd Pomrehn: Second question from Paul is how much debt capacity is left for larger M&A this year after Xella and Pacasmayo? Steffen Kindler: Yes. Paul, same question I gave to Arnaud before. We're going to close the deals on Xella. We're going to close the deal on Pacasmayo. We're going to pay a dividend. That leaves us at the end of the year roughly below 1.5. This is a long-term commitment. Now what we can do in order to maintain our credit rating, we can go up to -- up to 2 for a certain period of time. So there is a lot of debt capacity still left for us if we find it opportunistic to do other M&A. So financing will not hold us back. Bernd Pomrehn: And let me ask a third question. I think more or less we tackled this one. It's again update on Obourg modernization and CCS. Are there other big capital projects proceeding to plan? Miljan Gutovic: All in all, I mentioned already Phase 1 commissioned in H1, really state-of-the-art plant. And I hope that once we are up and running, I will be able to send invitation for you to come and see the plant with the latest technology advances in cement industry. Bernd Pomrehn: Perfect. The next set of questions came also in by e-mail from Ebrahim Homani from CIC. Latin America, we already also tackled that one, I think, more or less. Is it possible again to reach the 2024 level in Latin America in the future? Yes. Very simple. Then the second question, weather conditions are currently bad in Europe since the beginning of the year. Not today in Zurich, but what's the impact on the expected organic growth for this year? Miljan Gutovic: Look, Q1 is the smallest quarter in the year. January and February are the smallest months in the year. I say I cannot control the weather. But for me, what's important in January and February, Remo, this is what we discuss pricing momentum. So in the meetings these days, when it comes to activity, we only talk about pricing momentum. So even January was cold, February was wet, but this is only start of the year. Bernd Pomrehn: Perfect. The next question came in from Harry Goad from Berenberg. Do you expect to see positive organic volume growth in France and Germany this year? Miljan Gutovic: To be highly conservative, I would say flattish. I would not commit to growth. Bernd Pomrehn: I think we demonstrated last year that we can achieve growing EBIT even in weak volume environments. Miljan Gutovic: Well, the slide on Europe is suggesting activity was going down and the margin expansion was going up. Bernd Pomrehn: Somewhat related question from Stefano Donati from BlackRock. In your guidance, what volume assumptions are you using for Europe? And how much of the German infrastructure stimulus is in them? Steffen Kindler: [indiscernible] flat probably on 2 very large countries. And then up in Eastern Europe, I would say we have a low to mid-single-digit volume guidance in Europe positively. Miljan Gutovic: I would -- on infrastructure in Germany, I would not expect anything in H1. We might see some positive signs in Q3, but I would not bet on anything big from German infrastructure spend. Bernd Pomrehn: Perfect. Then we are switching again to live questions from the webcast. The next one in the line is Harry Dow from Rothschild. Harry? Harry Dow: Just I think 2 questions left for me. I think, firstly, on the cost picture for 2026. I maybe you could take us through some of the assumptions around the raw materials, energy, employee sort of wage inflation sort of thinking about maybe in Europe? And then also just back on Northern Africa, I just wondering how much sort of spare capacity there is left in some of those markets for further volume growth? Or is it more sort of around pricing gains beyond sort of this year? Miljan Gutovic: What was the second question? Can you please repeat the second question? I didn't hear it well. Harry Dow: Yes. It was just on North Africa, again, coming back on that. I just wondered how much spare capacity there was in that market for more sort of volume growth from here in terms of... Miljan Gutovic: I'll go to North Africa, you tackled the cost topic. So North Africa, there is an excess capacity in all of these countries, especially in Algeria, but these countries are also export hubs. I mean, Algeria, currently, we are producing products to export to Europe, West Africa and also North America. Similar situation is with Egypt. There is a capacity if local demand is increasing, then exports will start reducing. Steffen Kindler: On cost, look, I would say energy, low single-digit impact, but we're always guiding carefully on energy. And then what nonvolume-related costs we're definitely going to go down this year. I said this before. We are still working on the fine-tuning of organization, which we do all the time. It's an ongoing topic at Holcim. We never have a big restructuring program or give it any name, but we're always working down on our structure. So this will continue here. We see positive impacts. Distribution, hard to say, maybe a bit up by also low to mid-single digit. And then most importantly, I think what we said before and for you to take into account, there will be positive price over cost. So this is for us, it's the main topic. There will be positive price over cost, and there will be margin progress. Bernd Pomrehn: Perfect. The next one on the line is Isaac Ocio from On Field Investment Research. Isaac Ocio: So first one, I have 2. The first one would be, so in Asia, what additional EBITDA could you expect from Huaxin in China after they acquired Nigeria? And second question, so in Europe and Mexico, we're seeing mid- to high single-digit price increases successfully sticking. CEMEX announced 10% hoping to get mid-single digit in Mexico, and it looks like we could see some better volumes on top of that. So given the relatively limited cost inflation on the energy side, how much potential do you see for organic EBIT growth to really exceed the high end of your guide as the price costs expand? Miljan Gutovic: Thank you for the question. Look, we probably go a little granular if we want to now break the Nigeria impact into Huaxin. I don't know, maybe 10% more conservatively -- 10% more contribution from Huaxin. And then Mexico, how much potential for organic growth? Well, double digit. Bernd Pomrehn: And the last question today in the line is an add-on question from Julian Radlinger from UBS. Julian Radlinger: I just wanted to ask, so judging from the slides, it looks like the ECOPlant mix has kept growing about 1% per half year through '25, but ECOPact has stayed at 31% of ready-mix sales since last summer. And obviously, as you explained, the increasing mix of these products has been a consistent price and margin driver for you guys. So how -- I know you have targets for that for 2030, but how should we think about that going forward? Is that -- are both of those products going to keep increasing? Miljan Gutovic: Julian, very simply, it's not a linear relationship. For instance, I believe ECOPlanet will accelerate now because we are seeing a huge momentum in countries like Egypt, Morocco, all the way to Mexico and Argentina. So probably the ECOPlanet will start increasing over proportionally versus ECOPact. And ECOPact, this is more in mature market. We are seeing a growing demand across all markets, but at a slower rate. Anyhow, we do have a commitment by 2030. We are sticking to this commitment. I would say that probably ECOPlanet will be above that. Bernd Pomrehn: Perfect. Thank you, Julian. So with this, we are finished. Thank you so much for joining us today. If there are any further questions, obviously, the Investor Relations team is more than happy to support you. Everyone who is joining us in Zurich today, we are happy to invite you for a small lunch and the analysts which were not able to join us today and investors, we hope to see you soon in the coming weeks when we are going on roadshow. And with this, I hand it back to Miljan for some closing remarks. Miljan Gutovic: Thank you. Thank you all for joining us. Really a pleasure this morning to present these outstanding results. I can assure you that we are at the full speed. Our performance culture delivered and will continue to deliver outstanding results. This performance culture, if I can use one word, that word is discipline. We will continue to exercise strong cost discipline, pricing discipline, discipline when it comes to M&A, discipline when it comes to CapEx projects. And I'm looking for another successful year in 2026. One big thank you to all Holcim employees, 45,000 of them for your outstanding efforts.
Chek Tan: Good afternoon, ladies and gentlemen, and welcome to CIMB Group's financial results briefing for the fourth quarter of 2025. Our host is CIMB Group CEO, Novan Amirudin; and Group CFO, Khairul Rifaie. My name is Steven from the CIMB IR team. You should have received the analyst presentation and financial statements by now from the Investor Relations e-mail. Otherwise, you may find the documents in the IR section of our website at www.cimb.com. Before we begin, please be informed that this briefing is being recorded. [Operator Instructions] At this juncture, I would like to hand over the briefing to Novan and Khairul. Novan, over to you. Muhammad Amirudin: Thank you very much, Steven. Thank you very much all for joining our presentation this afternoon. So it's been a very resilient year despite all the challenges that we saw on the FX side, given the ringgit appreciated vis-a-vis other ASEAN currencies, the persistent rate cuts that we saw in all markets that we operate as well as the various macroeconomic headwinds. We completed 2025, which is the first year of our Forward 30 execution by delivering record net profit of MYR 7.9 billion and which translated to an 11.3% ROE. I will now go into the drivers behind this record performance. First and foremost, our noninterest income, NII, if you focus on the table on the left-hand side, the NII has 2 components. One is our NIMs and secondly is our asset growth. The first point, NII was flat despite all the persistent rate cuts, and we attribute this to our successful cash strategy, which focused on reducing our cost of funds, which then cushioned our NIM compression to 8 basis points year-on-year. Now alongside that, assets then grew for us on a constant currency basis by 6.1%. So these 2 factors basically assisted in our flat NIM despite the persistent rate cuts. NOII saw a year of growth. Year-on-year, it grew 3.1%. But the main call out here is our client franchise business derived from NOII, which grew 4.8% faster than the growth in NOII. This is a testament to our successful cross-sell strategy, which focus on client franchise business as opposed to just trading income. Moving on to our operating expenses. Thanks to our capability strategy, this led to disciplined cost control and our cost-to-income ratio at 47.3%. As you can see, OpEx grew 2% year-on-year with a flat personnel costs, but we continued investments in technology. We invested MYR 1.7 billion in 2025, which is about 7.8% of our income, which is within the guidance of 8% to 9% that I provided earlier in the year. With regards to asset quality, this is the best ever GIL that CIMB Group has achieved. So our GIL improved from 2.1% last year to 1.7%. Our credit cost remained stable at about 30 basis points, and our coverage ratio remained above 100%, closing at 103.2%. All these contributed to our net profit growth on a constant currency basis of about 5.3%. So we grew from MYR 7.7 billion to MYR 7.9 billion. With regards to capital, we've optimized CET1 to 14.3%. And as a result of the record financial performance, we then decided to share our record performance with our shareholders also via a record dividend payout. We paid out MYR 0.471. And if you recall the last quarter, we were the first Malaysian company to announce a MYR 2 billion capital return program. This MYR 0.471 include the first tranche of that. So with all those drivers coming together, that gave us a ROE of 11.3%, which is 10 basis points higher than the 11.2% we achieved last year. So if we look at 2025 in review, based on all the guidance that we provided to you at the start of the year, we have largely met all our guidance. Cost-to-income ratio was very close. We guided less than 47%. We achieved 47.3% from the 2% increase in OpEx. A recap of our Forward30 strategy, which is our 6-year plan until 2030. This anchors on our purpose of advancing customers and society. And how are we executing Forward30 is what I'd like to call the 4 Cs. The first C is capital, and this is important for us to always look at how to reallocate capital to grow. The second C is cash, about building a very strong deposit franchise business to optimize our cost of funds. Our third C is cross-sell, and this is to increase returns and increase ROE. And our fourth C is capabilities and capabilities is all about becoming simpler, better, faster to the group. Now how do we perform on each of the 4 Cs throughout the year, which led to our strong financial performance. The first C on capital, if you look at the table on the top left-hand side, given the challenges that we saw in Indonesia and Thailand last year, we then reallocated more capital towards Malaysia, which was a lot more stable and saw a lot more tailwinds relative to the other ASEAN markets. So RWA allocation to Malaysia increased to 56% and therefore, profit before tax also increased to 61% with a stronger ROE of 12.1% for Malaysia. Correspondingly, you would see that the RWA allocation in Indonesia and Thailand reduced, which then also led to a reduction in the PBT contribution to the overall group. Singapore remained a very strong market for us, 18% ROE in 2025, and we maintained our RWA allocation there with a slightly higher contribution in profit before tax. I've always mentioned Thailand is a market that we are restructuring. That work is ongoing. It's seeing a lot of progress, and we will be updating you about our Thailand progress in the not-too-distant future. Now sharing our strong performance with our key stakeholders. As I mentioned earlier, this is the year where we've paid the highest dividend amount of MYR 0.471. And you can see on the table on the bottom left-hand side how that has grown over time. We announced our MYR 2 billion capital return program until the end of 2027. All permanent workforce in Malaysia are earning above the Malaysian living wage. And we committed earlier this year a MYR 200 million investment in the communities that we serve until 2030. This is 13% higher than our commitment in the previous cycle. The second C on cash. As a result of the focus on deposits and the focus on building a strong deposit franchise, we saw a reduction in our cost of funds by 21 basis points year-on-year, coming from a 5.4% increase in deposits on a constant currency basis, which improved our loan-to-deposit ratio. This helped cushion the persistent rate cuts that we saw in all markets. So NIM compressed by about 8 basis points year-on-year. But what is encouraging is what we saw in the fourth quarter last year, which we are continuing to see in January this year, where the NIM compression is starting to bottom out, as you can see on the chart on the right-hand side. We always believe that to build a strong cash franchise, it is a byproduct of having very good cash management services and offerings to our customers. In the third quarter of 2025, we launched the OCTO Biz app for non-retail businesses. This is the OCTO equivalent, but for businesses. With the launch of OCTO Biz, all our front-end customer-facing applications, whether it is Touch n' Go, OCTO or Octo Biz are now all next-generation ready. We also work with the government and we've invested in the BUDI 95 program towards the third quarter of last year. We were involved from the front-end side via Touch n' Go all the way to the back-end side, where we invested in a system that tracks the fuel subsidies that's given to each Malaysian, and we also manage the cash management side from the government to the petrol companies. In December last year, we also announced our blockchain [indiscernible]. We have committed that our next CIMB bond offering will be in tokenized format. We've been admitted into the Bank Negara Digital Asset Innovation Hub with regards to blockchain -- just a few days ago, we announced our partnership with one of our key partners [indiscernible] Financial with regards to participating in their digital platform for cash management and treasury solutions. Our third C, cross-sell. This is something that you saw the growth in the client franchise outgrowing our growth in NOII last year. We remain as the #1 investment banking house, whether on the bond side as well as investment banking as a whole across Malaysia, Indonesia, Singapore and Thailand with respect to deal volume advice to our clients. Our fees and commission grew 3.2% year-on-year. Our treasury client sales, which is the business that we generate from our customers on the treasury side grew 7.2% year-on-year. Wealth grew 9.2% on the back of a 3% increase in our wealth customers. Our fourth C, which is capabilities, there is a relentless focus in CIMB Group to become simpler, better and faster. This is contributing to what you are seeing in the table at the bottom, where operating expenses have remained relatively flat with a 2% growth coming from a flat personnel costs over income, but still continued investments in technology, which was within our guidance. There is -- and then we are focusing on our -- getting simpler, better, faster by setting up the SBF Lab within CIMB Group. This is where we encourage all businesses and enablers to come up with processes to improve your processes further. If something used to take 12 steps, why not 6 is something that used to have 6 [indiscernible], why not 2. Last year, we saw 30 over projects coming up from a bottom-up basis from the relevant businesses to our SBF Lab to make things simpler, better and faster. We also invested MYR 100 million in upskilling our people when it comes to AI last year, and there's an increasing usage of AI throughout our organization, whether is it coming from transaction monitoring, whether it's coming from client onboarding and more recently into our front-end customers, providing them with the tools and data to serve our customers better. So with that, I'll now hand it over to Khairul to go through his observations. Khairul, over to you. Khairulanwar Bin Rifaie: Thank you, Novan, and good afternoon, everyone. So I'll go straight into the numbers with first Slide. Now you have gone through this, but I'll provide a bit more color on these numbers on Slide 10. Firstly, if you look at our underlying performance, that has been robust. We had a seasonally weaker 4Q 2025, typically in the fourth quarter. As you can see on a constant currency basis, if you compare this quarter to last year fourth quarter, on a constant currency basis, our total income grew by 3.8% with our net profit growing at 8.3%. Similarly, the underlying robust performance was recorded on a year-on-year basis. If you look at total income, that grew by 4.2% with net profit growing at 5.2%. As Novan mentioned, our NIMs are bottoming out and is providing a lot of stability. The year-on-year contraction of 8 basis points is well within our guidance of contraction. But you look at the Q-on-Q performance that's underpinned by Malaysia NIMs expanding by 4 basis points Q-on-Q after the contraction that we had during the third quarter of 5 basis points given during that period of third quarter of the policy rate cut. On our expenses, you can see what -- not mentioned in terms of it being well contained, growing only at 2% year-on-year. But if you look at it from a historical perspective as well, that has only grown by 3.1% on a 4-year CAGR basis. So that cost control has been ongoing and will continue going forward. On the next slide, if I break it down further to some of the business segments on PBT. So just very briefly before we go into the business segment P&L later on, on consumer banking, the year-on-year performance was slightly down flattish, but underlying that, if you look at NOI, that grew well at 14%, but this was offset by the prior year where we had a slightly higher overlay write-back in 2024. On a Q-on-Q basis, that's down because in the third quarter, we had some lumpy NPL sale in Malaysia. On wholesale banking, we had a very strong year, especially on T&M, driving that year-on-year growth. In addition to that, we had some higher write-back coming through in Malaysia. Q-on-Q, there was a very exceptional third quarter performance on trading. So normalization of that impacted the PBT on a Q-on-Q basis. In addition to that, if you recall, we had quite a sizable recovery coming through in Malaysia on the oil and gas sector in the third quarter. We did have a similar write-back in the fourth quarter in Indonesia, but that was smaller compared to the Malaysia write-back in the third quarter. On Commercial Banking, we did some preemptive macro overlays. So that impacted the year-on-year performance in addition to some NIM compression coming through. Q-on-Q, that was relatively flat with strong NOI being offset by higher costs. CDA and group funding are slightly lower on a year-on-year basis. This is coming from higher OpEx and also slightly higher provisioning from Philippines. But within that, Touch n' Go Digital has recorded a strong profitable trajectory coming from a small base. Q-on-Q OpEx accruals that we recorded in the third quarter and the absence of that or the normalization of that in the fourth quarter has driven the PBT growth. Moving on to the country performance. If you look at on Slide 12, a very good strong year-on-year profit growth in Malaysia. That's driven by NII growth with stable NIMs year-on-year with asset growth coming through. Q-on-Q, it is slightly down, a normalization of the trading and FX. And also we had the lumpy NPL sales coming through in Malaysia in the third quarter, which was not repeated in the fourth quarter. Singapore, top line was driving that good growth on PBT with the top line growing at 6.9%, both on NOI and also NII. In the fourth quarter, however, we did have a low -- so in the fourth quarter, we had lower provisions driving the strong growth in terms of PBT. Indonesia, overall, it was challenging from a macro perspective. So that impacted our NIMs in the first half, which then, of course, impacted our year-on-year growth on PBT. On the fourth quarter, we had lower NOI coming from the normalization of the trading and FX from a very exceptional third quarter in addition to the absence of an NPL sale, which we recorded during the third quarter. Thailand, somewhat similar to Indonesia, where the backdrop was challenging. So growth was weak and also we had some NIM pressure from the persistent rate cut in Thailand. So that impacted our PBT performance on a year-on-year basis. Q-on-Q, we also recorded a lower NOI compared to the third quarter. On Slide 13, a breakdown of our P&L firstly, NII. So overall, we had a very good quarterly NII momentum sequentially. You can see on a constant currency basis, we grew well, close to 4% Q-on-Q, and that's driven by that NIM expansion, in particular, coming through from Malaysia. So 2 drivers coming through from Malaysia on that NIM expansion. Number one, despite us -- the first point, despite us having that typical seasonal pressure on which both on retail and also wholesale. This is more than offset by our deposit rates coming off -- coming from the policy rate cut from the third quarter. So the full impact of that positive impact in the fourth quarter helped us drive that NIM expansion Q-on-Q. Similarly, in Thailand and Singapore as well, that NIM expansion is really about how we managed to optimize our lower cost of funds. Indonesia, on the other hand, recorded a NIM contraction. We had some lumpy income coming through during the third quarter. But in addition to that, we had a 75 basis points policy rate cut in the third quarter. So the full impact of that -- the full negative impact of that coming through in the fourth quarter. On a year-on-year basis, on constant currency, NII grew by 3.2%. If you look at the NIM contraction, it's really driven mainly by 2 countries, which is Indonesia and also Thailand. Indonesia contracted NIMs by 12 basis points. And this is given the very tight liquidity and competitive environment in the first half of the year. That slowly improved during the second half. The liquidity environment in the fourth quarter was good. So we did see that liquidity improvement coming through. But however, because of the tough first half, that drove the NIM contraction and also all the policy rate cuts that we had in Indonesia. And that is similar as well to Thailand. Also in Singapore, where we had a NIM contraction of 18 basis points, where SORA moved by about 160, 170 basis points down throughout the year. Malaysia is positive. flat NIM is positive given where the rate cut came through in July. This is through the active balance sheet and liability management on both rate and also balances. We managed to reduce our expensive wholesale funding by about MYR 5 billion compared to the start of the year. Moving on to NII on Slide 14. 4Q is really a normalization of what was a really exceptional third quarter. You can see the top left graph where there is a normalization on -- firstly, on fee income and others. We had a couple of NPL sales coming through in Malaysia and also in the third quarter, which wasn't repeated. That amounted to about MYR 170 million in the third quarter, which was not repeated in the fourth quarter. Trading was also very strong in the third quarter. But you can see compared to -- on the right-hand side, the client franchise drop is not as significant as the drop in trading, which dropped by 48% Q-on-Q. On a year-on-year basis, both trading and FX and also fee and other income grew more or less at the same level at the fees side, Singapore bank assurance really driving the fees [indiscernible] on a year-on-year basis was relatively flat at about MYR 170 million, so that was relatively flattish. Trading and FX that what -- not mentioned is really driven by the client franchise business growing client franchise sales are growing at 7.2% year-on-year. On Slide 15, operating expenses, I think I said earlier, this remains well under control. The quarterly movement is mainly due to the seasonal impact, firstly, on personnel costs. If you recall, we accrued a larger bonus during the third quarter because of the strong top line performance during the third quarter. So the movement is really a normalization of that. Marketing and admin in general, this is a typical fourth quarter seasonal catch-up that we do as the activities ramp up during the fourth quarter. Similarly, in terms of technology, we did some accelerated depreciation of charges given the investments that we are making in technology. On the overall year-on-year numbers, like what Novan highlighted on P-cost and technology costs on establishment, we did some tactical cost savings during the start of the year given the view that we were having some headwinds on the macro backdrop, we did some tactical cost savings. Marketing did increase year-on-year given our focus on improving our group spending and also some of the partnership costs in Philippines are picking up. Admin in general, if you exclude some of the one-off that happened in 2024 is really on an underlying basis, that was a relatively low growth compared to the reported number that you see at 15.2%. Asset quality on Slide 16, this remains strong. So on the total provisions on a Q-on-Q basis, that is slightly lower. Recoveries is lower given the bigger recovery that we had in the third quarter on the Malaysia [indiscernible]. In the fourth quarter, there was quite a significant one coming through in Indonesia, but it was lower than third quarter. On the non-retail side, that came down slightly. And that is really driven by the underlying improving on the non-retail side, but we also had some Singapore overlay write-back on a portfolio basis on the non-retail segment. On the retail segment, there is some underlying improvement in Indonesia and Malaysia on the ECL number itself. We also had some MEF refresh coming through in Malaysia, which then resulted in the number coming down lower. On a year-on-year basis, the higher recoveries year-on-year is mainly driven by Malaysia and Indonesia. On the nonretail side, it's really driven -- the slight increase is really driven. If you recall, we did some overlays related to macro uncertainties in the second quarter and also in the third quarter. So that drove the number a bit higher on a year-on-year basis. If you exclude that additional overlay that we did on the non-retail side, on an underlying basis, that is actually relatively stable. On the retail side, that has gone up slightly. Overlays again impacting some of the variances. Last year, we had a bigger -- last year meaning 2024, we had a bigger write-back in terms of overlay on the retail side that has come off lower and that drove the number higher. So if you exclude those noises on overlay, on an underlying basis, Malaysia and Indonesia year-on-year is slightly lower, also partly driving that slightly lower number is the model deployment. If you recall, I mentioned in Indonesia and Malaysia, we deployed some models and that resulted in some of the ECL coming in a bit lower on a year-on-year basis. So overall, you can see the numbers in terms of the ratios are all trajecting well throughout the year. We are maintaining our loan loss coverage well above that 100% level. Slide 17 is a new slide. This is to show our breakdown on our total asset growth as a total -- our business franchise. And this is where we want to also break down the drivers of growth on the debt and securities level. So there has been -- this is a better reflection of our overall business and not just showing our loan segment. So here, you can see on a constant currency basis that what Novan mentioned, our asset is growing at 6.1% and our debt securities growing at 9.2%, driven by Singapore and also Malaysia. On loans, if you look at it on a constant currency basis, growing at 3.1%. What we mentioned during the third quarter where we see momentum picking up, you can really see that coming through in the fourth quarter in wholesale banking. The momentum picked up as well and strongly. Within that number of 2.9%, Malaysia wholesale on a Q-on-Q basis grew by 5.8% Q-on-Q. Consumer Banking on a Q-on-Q basis continued its growth trajectory overall recording at 2.2% year-on-year growth, Malaysia being slightly higher than that 2.2%. Commercial Banking on a year-on-year basis, relatively flattish. But within that, Singapore is growing at 14% year-on-year on a local currency basis. So if you look at it from a perspective of country, Malaysia growing at 3.6% with consumer growing higher at 3.7%. Indonesia, the main driver of that growth is corporate banking and also the auto segment. In Singapore, consumer and commercial are both growing at 14% year-on-year. Thailand is actually negative across all segments. On deposit, on Slide 19, the CASA ratio is relatively stable. If you look at it from a year-on-year perspective, we did do some optimization on the campaign rates in Thailand and Singapore during the quarter, and that drove the CASA number down lower on a Q-on-Q basis. But on the other hand, you saw earlier the NIMs in Thailand and also Singapore expanded. But the second point here, you can see in terms of the CASA ratio, despite that coming off for Singapore and Thailand, the CASA ratio has remained relatively stable on a Q-on-Q basis. Another driver of the CASA coming down is on the wholesale banking due to some year-end seasonality and some of the [indiscernible] CASA on the wholesale side. Dividend payouts on Slide 20, Novan has gone through this. Just to highlight one more point in terms of the dividend yield, that's at 5.7%. Slide 21, our capital ratios on CET1 has remained fairly stable at above the 40% mid level, 40% of CET ratio level. Our liquidity ratios on the right-hand side remains very refresh. On the segment PBT on Slide 22, Consumer Banking. So you can see here on a line-by-line basis that contraction is really coming through on the operating income because of that lumpy sale on NPLs that we recorded during the third quarter. We did, however, have some offset to that with lower provisions given the MEF refresh that we did for Malaysia. On a year-on-year basis, on the operating income on the NOII side, this is actually driving a good growth of 14%, where there's the offset is actually on the NII side, which was weaker on a year-on-year basis. Provisions was higher that I mentioned because we had a bigger overlay write-back in 2024. If you exclude that, on an underlying basis, provisions actually fell in Indonesia and also Malaysia. Slide 23. Q-on-Q, Commercial banking is relatively flattish. We did record a good NOII growth during the quarter of about 9% for the business on a year-on-year basis, it is impacted by our conservative proactive provisioning in terms of the macro overlays. So it is higher on a year-on-year basis, but the business also recorded some NIM contraction. If you look at the loan side, Malaysia driving that growth higher, but Malaysia is growing by 3.4%. So the reported number is impacted by the currency translation. If you look at CASA, it's also growing very well for Malaysia and Singapore, driving that total deposit growth of 2% with Malaysia CASA growing close to 7% and Singapore CASA growing close to 15%. On Slide 24, wholesale banking normalization of an exceptional third quarter in terms of our trading and FX treasury end markets. You can see that being reflected with the lower operating income. In addition to that, there was a higher write-back coming through from Malaysia in the third quarter. So a smaller write-back coming through in Indonesia in the fourth quarter impacted the provisions being higher as well. Year-on-year, very good strong performance on PBT, and this is driven by some of the provisions being lower in Indonesia and also Malaysia. Slide 25, digital assets and group funding. On a Q-on-Q basis, the growth is really coming through from a normalization of OpEx where we accrued some of those bonuses -- higher bonuses in the third quarter. On a year-on-year basis, slightly lower because of the higher OpEx and also higher provision from Philippines. If you look at Touch n' Go, that is growing very well and on a very good profitable trajectory. If you look at some of the indicators, the growth of number of registered users is very strong at 11% now ending the year at 32.3 million. If you compare that to the third quarter, the growth is also strong, and that has remained the trajectory for many years. So in the third quarter, that number of users was 31.4 million. In Philippines, in terms of customers that grew strongly, close to 20%. However, on the loan side, we are bringing it down slightly with a slight negative growth of 1.3% year-on-year as we recalibrate the strategy [indiscernible] Forward30. Lastly, on Islamic on Slide 26, it is impacted during the quarter performance on the normalization of the NOI. So that is slightly lower. On a year-on-year basis, a very good growth driven by the asset growth and stable NIMs. Provisions as well was lower. So you can see in terms of the financing growth, it continues to outpace the conventional growth and growing at 6.4% and the Islamic deposits also tracking similarly on the financing side. So that's the end of the financials. Thank you, and I pass the presentation back to Novan for the closing. Muhammad Amirudin: Okay. Thank you, Khairul. So how do we see 2026? I think FX will continue to be a headwind. Malaysia ringgit vis-a-vis all the other asset currencies, we feel that will be a headwind for us. However, we are not allowing that noise to distract us, so the team continues to be extremely focused on doing what we do best and to execute the 4 Cs. And therefore, our target ROE for 2026 will be in the 11% to 11.5% range, and we are on track to achieve our 12% to 13% ROE in 2027 which we guided earlier to be our midterm checkpoint for Forward30. So what is driving the 11% to 11.5% ROE guidance? We are looking at an asset growth on a constant currency basis of 5% to 7%, our cost-to-income ratio to be below 47%, credit costs to be 25 to 35 basis points and our CET1 ratio to be at least equal to or above 14%. So with that, I will now end our presentation and take any questions that you have. Chek Tan: Thank you, Novan and Khairul. We will now begin the Q&A session. [Operator Instructions]. We have the first question, it's Yong Hong. Yong Hong Tan: Just 3 questions from me. Thanks for the 2026 guidance. But if you are targeting ROE to be broadly the same level as 2025, what are the levers to get to 12% for 2027? And if earnings-wise, if that is lower than your expectations, any other levers that we can pull to get to that 12% level in 2027? That is my first question. Muhammad Amirudin: Okay. Thank you, Yong Hong. So the journey to 2027, we have a number of levers. First, with regards to our capital allocation itself, which you will see a lot more focus on the Malaysia business. You saw earlier on Page 6, the Malaysia ROE has increased from 11% to 12.1%. We're going to be focusing to grow a lot more in Malaysia vis-a-vis the other markets, which is namely Indonesia and Thailand. So you're going to see a lot more capital reallocation from Thailand, to some extent, Indonesia, a lot more into Malaysia, which is generating above 12% ROE. Our focus in Singapore will remain the same, if not slightly higher, where ROE is now at 18%. So think of capital reallocation from Thailand, Indonesia, into Malaysia and Singapore. So that's the first lever. And then within each of these countries, there's going to be a lot more relentless focus on noninterest income. The focus on the wealth business, focus on our wholesale business with Singapore as a wealth and treasury hub, focus on transaction banking, which will facilitate our cash business, all that will grow NOII, treasury client sales that you saw a very strong growth this year versus previous years. So a lot more client franchise NOII, which will also boost our ROE. We're going to continue that discipline on cost that you have seen. You have seen over the last many years, OpEx growth is roughly about 3% CAGR. Last year was 2%. We're going to continue with that discipline on cost. We're going to continue with the discipline on asset quality. You saw GIL at the lowest ever for CIMB, credit costs to remain contained. And then on the capital side, we announced the capital return program up to end of '27. We're going to execute that. So I think when we put all these levers together, we are confident of achieving the 2027 ROE guidance. Yong Hong Tan: Just following up on your capital to get to that ROE, can we maybe have the thinking that the capital return will be earlier, if not so [indiscernible] that will give us a better base to get to the ROE target in 2027. Is that the right way to think about that? Muhammad Amirudin: Yes. I mean we always proactively think of capital. Capital, we see -- we value the capital from our shareholders a lot. And therefore, we're always proactively thinking about how to return it faster. I mean this is excess capital that we have committed anyway. You saw what we did in the last quarter where market was not expecting us to do a special dividend, but we chose to do a special dividend earlier ahead of time. You saw how we executed this over the last 2 years where we had excess capital and we've done that as special dividend. So we are going to continue executing this like how we've executed in the past. But at the end of the day, it's a balance of many factors that we need to take into account, and we will continue to be vigilant about it. Yong Hong Tan: Maybe on margins, I mean I missed that earlier. Is there any guidance on margins for this year? Khairulanwar Bin Rifaie: Yes. So, Yong Hong, yes, so in terms of the margin guidance, right, for the group, we are looking at plus/minus 5 basis points. So relatively stable, plus/minus. Within that, I think more importantly, if you look at Malaysia, we are looking at Malaysia to be stable to slightly spending, right? Niaga has given their guidance is a plus/minus 10 basis points to 3.9% to 4.1%. Where we see potentially some further weakening is Singapore, right? Singapore, but I think it will be less than what we recorded in 2025 as what you saw in SORA even though weakening has stabilized compared to what we recorded in '25. So there should be some weakening of that. But I think where the offset to this is really Malaysia, where we are looking at stable to slightly spending because in terms of our rate outlook in Malaysia, right, we are expecting rates to be stable versus the negative impact that we had in 2025. So that's number one. But number two, to the point on our cash strategy, that will continue to gain traction going into 2026, and that will help our margin trajectory. And lastly, we continuously optimize the higher cost of funding, wholesale funding that we did. So we managed to do that already for the last couple of years. We'll continue doing that again in 2026. So just as a number, last year in 2025, we reduced our wholesale funding by about MYR 5 billion on an endpoint to endpoint. So we'll continue to try and optimize the expensive funding in 2026 as well. So that will help that margins in Malaysia to be stable to slightly expanding. So overall, just to recap, at the group level, we are looking at plus/minus 5% -- 5 basis points. Yong Hong Tan: Yes. Sorry, just one small follow-up. What are the scenario where you see margin expanding by 5 basis points, and what are the scenario that you see margins coming down by 5 basis points? Khairulanwar Bin Rifaie: Yes. So I think the main lever is because I think 2 parts, which is our biggest -- 2 biggest markets. So one is Malaysia. The other is Indonesia. So if you look at Indonesia, the range is plus/minus 10 basis points. We have seen liquidity environment improving in Indonesia over the second half, and that has been sustained in the fourth quarter. Similarly, in the first -- so far, that liquidity environment has been stable. But I think we still have a long way to go to the end of the year. So that liquidity has to be there. Competition has to be fairly rational for us to get to the upper end of that range where Niaga has guided. So that's number one. Number two, our biggest market will be the biggest driver, which is Malaysia. And so far, liquidity has improved slightly if you look at it from this year, starting of the year. So the continuation of that maybe could give us some slight upside to margins in Malaysia. So that will drive that upper end of our guidance. Muhammad Amirudin: The next question comes from Harsh. Harsh Modi: Can you hear me? Muhammad Amirudin: Yes. Harsh Modi: Just one question. I understand your payout was in line with guidance. But how do we think about your guidance on regular moving over the next couple of years? Special, I understand as you have guided for a number, you've already started paying and you'll do it as you can release. So that's on -- as it comes through, you'll do. But special is 55% the number we should plan for over the next 2, 3 years or even that number can increase meaningfully over next few years? Khairulanwar Bin Rifaie: Yes. So I think, yes, so in terms of our dividend payout of 55%, we've been sustaining that for the last 3 to 4 years. And looking at the growth trajectory and giving that stability to the market, I think we need that number to be a sustainable number -- a really sustainable number. And that sustainable number is really driven by all the entities within our group and how we extract that capital to the holding level. And we believe based on our trajectory, right, this is the sustainable number of 55%. We will -- we do continue reviewing this number. And if you look at our guidance, it is stable at the 55% level, given how we have optimized all the capital levels in all the entities. Harsh Modi: Right. So basically, unless and until there is any release of capital, be it Thailand, be it Basel norms or what have you or maybe higher payout from Niaga, it is not likely that we will end up getting -- so above and beyond your MYR 2 billion commitment and 55%, we should not pencil in anything else. Khairulanwar Bin Rifaie: Yes. I mean, yes, so. So based on today's view and outlook on growth and what excess capital we can expect from all the various levers that we have, both Malaysia and outside Malaysia, this is the level that we are comfortable with in terms of 55% and also the capital return that we have committed up until the end of 2027. Harsh Modi: Khairul, if I just want to double-click on that. If -- let's say, assuming that the about MYR 1.3 billion, MYR 1.4 billion remaining on special out of MYR 2 billion, that comes out from, let's say, optimizing capital elsewhere and narrowing the gap between group and bank to an extent. Is 55% enough to optimize your ROAs -- to optimize your returns, ROEs in particular? Or you can push up to 60%, 65% over a couple of years? Khairulanwar Bin Rifaie: So the basis of this 55% is more or less with the current sort of projection of CET1 and outlook, right? So we are maintaining a stable capital ratio broadly across all our entities, including GH with this 55% payout. And on top of that, that capital return that we have committed. If we want to optimize further, right, it depends on many, many other levers. And if we can optimize our CET1 further, that's where there could be a potential higher dividend payout firstly for all our entities that hopefully, that can translate to a higher payout at GH as well -- group holdings as well. Chek Tan: We do not have any further questions at this time. [Operator Instructions] We have one coming from Tushar from Nomura. Tushar Mohata: The first question is on Indonesia and Niaga. Given the developments in Indonesia and the increased scrutiny on free float and the discussion that Indonesian stocks might need to increase free float to 15%. What would be your considerations in deciding whether to sell in the market or do a dividend in [indiscernible] like how it had happened in 2016, I believe, when the previous round of free float increase was required? Muhammad Amirudin: Thank you, Tushar, for your question. So at this point in time, yes, there's a top of the 15%. There is no policy in terms of how we will get there at the moment. I think the indication is over a period of time. From our perspective, all options are on the table. If there's a requirement to then increase our stake, then we will consider all options, whether is it a re-IPO in the market or whether is it a DIS, I mean, it all goes back to which one gives us the best value. I mean the reason I mentioned the word pre-IPO is because today, Niaga 7% free float, the liquidity is thin. The trading doesn't reflect the true value of the business, which is achieving a 13-odd percent ROE. So therefore, if we were to ever want to consider increasing stake by selling some stock, then it needs to be via a full marketing process. But at the end of the day, all options are on the table for us, and we will execute the one that extracts the best value. Tushar Mohata: Okay. And just want to understand the minimum CET1 required by end of 2026, which you are targeting at greater than 14%. I understand that the structure of CIMB is a bit different where dividends are paid out of group holdings level. So group holdings CET1 is more important. But is it fair to say that group holdings, this kind of structure versus all of your peers where bank level CET1 is more important, you need to maintain a higher group holdings level CET1 versus others where bank level CET1 can be lower? Khairulanwar Bin Rifaie: The answer is no. So it's similar. It's the same, right? So whatever capital levels because we are covered by Malaysia Central Bank. So whatever capital level that's required at CIMB Bank, CIMB Islamic, CIMB Investment Bank, similar to CIMB Group Holdings. So it's not more that is required at the holding level. Chek Tan: [Operator Instructions] Next question comes from Benjamin from UBS. Benjamin Tan: I just have one quick question. Just you mentioned that the stronger ringgit has been a headwind to the performance at CIMB. Just wanted to get some rough sensitivity, like, let's say, if the ringgit were to strengthen another 5% or whatever number you have in mind, what is the downside to the ROE guidance that you have, that would be very helpful or like if Malaysian ringgit were to depreciate versus a basket of currencies regionally, what would be the impact on your earnings and your ROE. Khairulanwar Bin Rifaie: Yes. I think the sensitivity is relatively mechanical, right, given the contribution of Niaga and our overseas operations. Niaga is actually is the one that is impacting us the most with the PBT contribution of that 22%, right? To a lesser extent, a very small component in terms of U.S. dollar, but it's not material driver, but that's not material. But the main one is actually Indonesia and to a certain extent, Singapore as well, right? But if you look at how we have managed that, which was very challenging in 2025 still within that 11% to 11.5% ROE, right? And that is a reflection of our diversified business with Malaysia performing very well in terms of the ROE, as mentioned on a year-on-year basis. Of course, we are susceptible to that sensitivity that you mentioned, but we are going to be very agile to still focus on meeting our guidance of 11% to 11.5%. Muhammad Amirudin: Yes. So I think my answer is actually there's no impact. We're not speculating on FX. We'll focus on executing and doing what we do best. So yes, as FX move, it then impacts our numbers, and we will see how that impacts our numbers. And therefore, we will be agile and we will pivot our strategies accordingly. So whatever it is to make sure that we achieve what we have guided the market. Chek Tan: I think there are no further questions at this point in time. Andrew San from Macquarie, are you there? Andrew San: Happy Friday. Just a question on your guidance. I noticed that in terms of when you put down asset growth guidance instead of loan guidance or is there something more to be read into that? Muhammad Amirudin: Sorry, can you repeat that? I think you broke up. Andrew San: So in terms of the guidance that you mentioned, the asset -- sorry, asset growth guidance that you put down, yes, in terms of what you put down, it's 5% to 7%. Is there any difference with loan growth guidance? Can I just translate that loan growth guidance? Yes. Okay. Muhammad Amirudin: Sure. So the reason why we put asset growth is that's how we operate our business. From our capital and deposits that we have, we then mobilize it into either loans or either through securities. And we are a large universal bank and also a strong investment bank. When we advise our customers to raise financing, it's the financing that makes most sense for them. If a loan makes more sense, we extend a loan. If a bond makes more sense, then we advise them on a bond, but we can also use our balance sheet to underwrite part of the bond. If an equity makes more sense, then we advise them to raise equity. So that's why we are focused on an asset growth guidance rather than just too narrowly focusing on loan growth per se. But with regards to our own internal numbers, as part of this 5% to 7% asset growth, loan growth is a subset of that. If I were to look at Malaysia, which is our largest market, we are looking at growing loans at about 4% to 5%, which is in line with the GDP, and it would differ across all markets. But at the end of the day, our business plan is around an asset growth strategy. Andrew San: Sorry, can you remind me what the loan growth guidance is for Indonesia and Thailand as well? Khairulanwar Bin Rifaie: Yes. Indonesia is 3% to 5%, right? Singapore will be in the higher single digit, and that's driven mostly by SME and also consumer. In Thailand, we're expecting the market environment to still remain fairly challenging. So in Thailand, it will likely be a negative growth. This is on loans specifically. But again, I just want to reiterate, we are looking at it more from an asset growth in totality for all the countries as well. Muhammad Amirudin: [indiscernible] so therefore, when we make NII, the cash that get deployed either through loans or through securities, we still make NII from that, just that the bonds that allow us to trade in as well. So that's why we're going on an asset growth basis. I just want to understand that. Andrew San: Okay. I understand. And just a follow-up on the Malaysian loan growth of 4% to 5%. Can you help me understand? I mean, the GDP growth has been strong, and we should be seeing GDP growth in the high 4%, if not 5% in terms of forecast for this year. And at the same time, you're focusing growth more on Malaysia going forward. Why is loan growth only at 4% to 5% for Malaysia? Muhammad Amirudin: So yes, we're a big universal bank, which includes a large investment bank. Our clients in Malaysia, they raise financing either through loans or through the capital markets, which is the bond market. I mean the Malaysian bond market grew a lot more compared to the loan market last year, and we are the #1 player in the bond market. So from our perspective, it's all about what makes sense most for our customers. If it's a lot more efficient for them to raise bonds, and we did a lot of bonds for our top clients last year, then we will advise them to raise bonds, but we will then underwrite part of the bonds and that goes on our balance sheet. So that's why we focus on asset growth. So I would like to take your focus away from just loan growth alone because that's not how we operate our business, unlike maybe some of our peers. But look, at the end of the day, if it makes more sense for our customers to do loans, then you will see the loan growth number grow a lot more. But I don't want to be too fixated on the loan growth number. Andrew San: Okay. And just a follow-up on that again. Then how should we think about NOI as a percentage of total income or NOI growth for this year then? Khairulanwar Bin Rifaie: Yes. So I think for this year, right, if you look at from a numbers perspective, where we ended the year in terms of proportion at 31.7%, right, given our focus on 2 things. One is our cross-sell, so on the client franchise component. But secondly, also on the bond side, that also create a lot of opportunity on NOI, we do expect NOI to grow stronger than NII. And that is somewhere slightly higher than the mid-single digits of level for NOI. So that proportion, we do -- we are targeting that to expand further in 2026. Andrew San: Okay. So expecting NOI to grow stronger than NII. And that's also including the fact that you might have a higher base in terms of bond sales from 2025. Muhammad Amirudin: Yes. But that's not the main reason, yes. I mean our NOI growth, as I presented earlier, the client franchise grew faster than NII itself. In fact, if you look at the earlier Page 14, last year, our client franchise of trading and FX is actually higher than our trading income. So yes, there won't be trading gains. We will take trading gains as they come, but the focus is on client franchise business, where we make treasury client sales, where we make fees and commissions from either our banking products or investment banking advisory -- so the contribution of NOI will come from both, but I would say a lot more on the client franchise side. Chek Tan: Just one more, I think, from Jin Han. Jin Han Chin: I have just a couple of questions on Singapore. I may have missed it, but could we get the in-house view on where SORA rates are going and what's underpinning expectations for 2026 as well as a little bit more color on credit costs for Singapore. If you could share any numbers would be great. Khairulanwar Bin Rifaie: Yes. So I'll take the credit cost numbers first for Singapore. I will share a specific number, but in terms of directionally, right? So in 2025, we recorded quite a significant net write-back in Singapore. Going into 2026, we still expect the credit cost for Singapore to be relatively flattish, meaning not write-back position, but a very, very small credit cost as there are some pipelines of further recoveries coming through in 2026. So a very small credit cost number. Yes. On the point on SORA, right, we have some views on where it will go. We're looking at around 50 basis points further lower or so. Chek Tan: I think we are -- there are no further questions at this point in time. Okay. Since there are no further questions, I'd like to pass the line back to Novan for his closing remarks. Muhammad Amirudin: Thank you very much for your time on the Friday afternoon to join our presentation. For those that are fasting, I just want to wish you [Foreign Language] and see you all again soon. Thank you very much. Chek Tan: Ladies and gentlemen, that concludes our briefing for today. Thank you for joining us, and wish you a good evening ahead.
Operator: Welcome to the Hertz Global Holdings Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] I would like to remind you that this morning's call is being recorded by the company. I would now like to turn the call over to our host, Johann Rawlinson, Vice President of Investor Relations. Please go ahead. Johann Rawlinson: Good morning, everyone, and thank you for joining us. By now, you should have our earnings press release and associated financial information and these can be accessed through the Investor Relations section of our website. I want to remind you that certain statements made on this call contain forward-looking information. Forward-looking statements are not a guarantee of performance, and by their nature, are subject to inherent risks and uncertainties. Actual results may differ materially. Any forward-looking information relayed on this call speaks only as of today's date, and the company undertakes no obligation to update that information to reflect changed circumstances. Additional information concerning these statements including factors that could cause our actual results to differ is contained in our earnings press release and in the Risk Factors and Forward-Looking Statement section in the filings we make with the Securities and Exchange Commission. Our filings are available on the SEC's website and the Investor Relations section of the Hertz website. Today, we'll use certain non-GAAP financial measures which are reconciled with GAAP numbers in our earnings press release available on our website. We believe that these non-GAAP measures provide additional useful information about our operations, allowing better evaluation of our profitability and performance. Unless otherwise noted, our discussion today focuses on our global business. On the call this morning, we have Gil West, our Chief Executive Officer, who will discuss strategy, operational highlights and our fleet. Our Chief Commercial Officer, Sandeep Dube, will share insights into our commercial strategy followed by Scott Haralson, our Chief Financial Officer, who will discuss our financial performance. I'll now turn the call over to Gil. Wayne West: Thanks, Johann. Good morning, everyone, and thank you for joining us. I want to start by thanking the Hertz team, their focus, discipline and resilience, especially those serving our customers in the field was evident throughout the year but particularly during the fourth quarter holiday travel season, which is historically one of our most operationally intensive periods. Together, they executed consistently against our goals and made real progress, building momentum for the year ahead. 2025 marked the first full year operating under the back-to-basic strategy, guided by our North Star metrics, we brought greater discipline to fleet management, revenue optimization, rigorous cost control and improving the customer experience. The work is far from finished, but the progress we made this year materially strengthened the foundation of our business for the long term. In 2025, we achieved a full year adjusted EBITDA improvement of more than $1 billion year-over-year. We drove sequential improvements in revenue, RPU and RPD and improved utilization by sweating our assets and drove DPU down in line with our North Star target. We brought DOE per transaction day down despite lower volumes. We also completed our fleet rotation and successfully secured our model year '26 buys at our target prices and volumes. That allowed us to begin selling model year '25 through our enhanced retail channels, continue our short hold strategy, introduce a more optimized mix of car classes and achieve our lowest average fleet age in almost a decade. And we delivered a nearly 50% improvement in customer satisfaction. As we turn to the fourth quarter, typically challenging seasonal environment was amplified by a number of external headwinds that were primarily isolated to the quarter from government shutdown, coupled with FAA cancellations, multiple technology vendor outages and unfavorable residual value environment to elevated recall volumes. Taken together, these created outsized pressure of well over $100 million on our business and kept us from hitting some of our targets. But even within that environment, we made progress. In the fourth quarter, adjusted EBITDA improved $150 million year-over-year, but our strongest result this quarter was revenue. In fact, it was our strongest revenue result in nearly 2 years. If you remember, we entered 2025 with revenue down double digits year-over-year. And by the end of the fourth quarter, we were nearly flat revenue with a 3% smaller fleet, significant accomplishment, driven by our ability to sequentially improve RPU and RPD and sustained utilization and transaction days, all with a smaller fleet. We also saw a more stable industry pricing backdrop throughout the quarter, which is especially noteworthy given the very polarizing peak and off-peak dynamic that plays out during this period every year. This is evidence that both our commercial investments in pricing and demand generation are paying off and that the industry setup is more positive than in prior periods. While DPU, as I mentioned, was in line with our North Star target for the year, in the fourth quarter, it moved above our North Star target due to a revised Black Book residual value forecast and lower-than-expected whole sale prices from heavy OEM and rental car company deflating during the car market seasonal low period. While we monitor multiple market trend sources, we have historically indexed heavily on Black Book forecast, which tends to be more seasonally volatile. As of the end of the year, it was down nearly 5% year-over-year, resulting in a $60 million noncash charge to depreciation. By contrast, Manheim average rental vehicle prices in December were up 2.85% year-over-year. And as we look ahead, updated projections from our partners at Cox Automotive show that their Manheim used vehicle value index is expected to end the year roughly 2% higher than in December 2025. While our forecast is not predicated on such a positive outlook, our internal analysis is encouraging and we've seen early signs of recovery in Q1 in line with these Manheim values, which in January were up 2.4% year-over-year. On the cost side, we brought adjusted DOE per transaction day down 6% year-on-year. This moved us closer to our North Star target in the low 30s. Recall volumes peaked in mid-November and December, taking over 20,000 cars out of service, which is almost 3x higher than the normal rate. This resulted in us having to carry more fleet than we had planned and limited our performance, which had ripple effects across the business, impacting our fleet utilization, particularly for our rideshare business. We have strategically managed through this by redeploying available fleet where it would have the most impact. And as a vast majority of these recalls lack available fixes and restrict us from renting and selling vehicles. We are actively working with our OEM partners to find solutions to minimize fleet downtime. Recall volumes have moderated slightly throughout the first quarter but remain elevated. With this in mind, we're staying disciplined in our capacity planning to ensure our rentable fleet stays well utilized and inside of demand. It's clear Q4 presented real challenges, but the decisions we made throughout 2025 held up under pressure and reinforced that our strategy is the right one. Today, Hertz stands on a meaningfully stronger foundation than it did a year ago. A healthier fleet, improved unit economics, a more disciplined operating model, a better customer experience. And what I want to be clear about is this, the improvements we're seeing in the business are structural, they're permanent. The headwinds we faced and continue to navigate are transitory. That difference matters, and it's what gives me confidence in the trajectory ahead. That confidence is already being validated as 2026 is off to a good start. Q1 trends in both revenue and RPD are positive year-over-year, a particularly encouraging sign given that this is typically a seasonal trough period for the industry. This means we're entering the upcoming peak period from a position of strength. Looking ahead to the rest of the year, we remain focused on accelerating revenue, RPD and RPU growth while staying disciplined on cost, putting core rental business firmly on the path to profitability. While rent-a-car remains our core business today, this transformation is about becoming more than a single line of business. We're executing with discipline in the business that powers us now, but we're intentionally building the capabilities that will power what's next. We're laying the groundwork for a diversified value-creating platform that will unlock value beyond the core. The Hertz platform spans rent-a-car, service, fleet and mobility. It's still early days. And while the areas of our platform sit at different maturity levels, each presents meaningful upside, both near and long term. In rent-a-car, we'll maintain steady momentum in our mature airport locations by driving pricing, utilization, demand generation and asset management. We still -- we see real near-term upside from growth in our off-airport locations in areas like insurance replacement local commercial agreements and small business. We're also sharpening our focus to unlock additional value in our franchise footprint while piloting new offerings in service. We see a particularly strong runway in fleet through Hertz car sales and in mobility, where the long-term opportunity has the potential to become as, if not more meaningful than our core rent-a-car business. We're transforming Hertz car sales into a truly omnichannel experience, meeting customers where they are online, in person through rent to buy and delivery right to their door. The opportunity here is significant. We are a used car factory with a building customer base, and we're building the shopping experience to match, one that can ultimately rival the largest used car dealers in the country. We have a constant supply of preowned vehicles and sales volume that already puts us in the top 5 used car dealerships in the country. Our improved website has a wide variety of vehicles for sale and intuitive interface, enhanced imagery and more detailed descriptions to help customers shop more confidently. We already have scale in shifting our primary sales channel to retail as a major unlock. We also have established key partnerships with Cox Automotive, Amazon and Palantir that gives us the capability to scale this business profitably, Hertz car sales value proposition has never been more compelling as new cars are increasingly out of reach for many buyers with prices topping $50,000 on average. With our shorthold strategy, we deliver best bang for the buck as consumers can get a nearly new car for around half the cost. This is an important differentiator as we head into spring, typically a peak buying season, which will be bolstered this year by record high tax returns. Now to mobility. Hertz owns and manages fleets at scale with core strengths and fleet ownership, large-scale operations, world-class maintenance and vehicle fleet financing. Along our physical infrastructure, operating capacity and leadership experience, this business is evolving to meet the mobility needs of tomorrow, whether driver led or autonomous. Our journey in mobility began in ride share by renting cars to Uber and Lyft drivers. Today, we operate the largest rideshare rental fleet in the world. And it has become one of our highest growth potential businesses with double-digit revenue opportunities. And in the background, we're developing and testing new approaches in this space with strategic partners. While it's difficult to quantify the full growth potential of our Mobility business at this stage, the opportunity undoubtedly is significant. For context, Uber's CEO has described autonomous vehicles as potentially a multitrillion dollar market. We're building the capabilities now to ensure Hertz is positioned to play a significant role in that ecosystem. Today, our rental car business remains the largest consumer of our time and operational focus. But as we scale the broader platform across rent-a-car, service, fleet and mobility, the mix will evolve. Rental will become one part of a more diversified value-creating enterprise. With that, I'll turn it over to Sandeep. Sandeep Dube: Thanks, Gil, and good morning, everyone. I want to jump right into the headlines on revenue this morning. The fourth quarter, the industry's typical trough period with volatile seasonal demand, represented Hertz's strongest year-over-year revenue result since Q1 2024. After adjusting for Q4 2024's onetime loyalty gains, in Q4 2025, we drove year-over-year revenue growth with the primary driver being RPD which was nearly flat on a year-over-year basis. Most importantly, RPD for the airports in the Americas, our largest segment, was positive year-over-year for the quarter. We achieved this meaningful sequential improvement despite several headwinds, including a lower car class mix, the extended government shutdown and elevated recalls. In Q4, we achieved a difficult feat by improving both year-over-year pricing and days sequentially, primarily driven by Hertz's commercial strategies. Our revenue metrics showed good sequential progression. Q4 2025 adjusted revenue was sequentially 4 points better, going from down 4% to about flat. RPD mirrored the same sequential improvement on a loyalty adjusted basis as well. The driving factors of these improvements were the same as detailed in our Q3 earnings call. Let's dive deeper into the details a bit. First, driving a better customer experience. Our Net Promoter grew by nearly 50% year-over-year and it is driving better organic demand for our brands. Second, generating greater durable demand from higher-margin channels. Direct website demand is showing strong growth. Our corporate business is gaining ground. We are now driving consistent growth in our off-airport business, and our mobility business is growing revenue double digits. Third, improving our pricing tactics and strategies. We are on a multiphase approach to bring more sophistication in the way we drive demand with a focus on driving positive RPD for comparable asset class. Mid-quarter in Q4, we executed a totally new pricing metrics and we saw immediate results from that change in driving positive RPD. Our next situation is going into test mode in a few weeks. I expect phase improvements in the sophistication of our pricing approach. Fourth, better monetization of our higher RPU assets. This was achieved by improved asset deployment, having the right vehicle at the right location, ensuring that higher RPU assets are effectively monetized. Fifth, better value-added product sales. We drove better sales of our value-added products through improved operational performance and pricing sophistication. Lastly, local level profitability and optimization. We continue to manage our business at a more granular level of profitability. These commercial strategies and tactics primarily drove the positive momentum in Q4 2025. Most importantly, these foundational changes raised the baseline productivity of our revenue and RPD production, and we expect these gains to largely persist irrespective of the macroeconomic environment. And just a reminder, we are still in the early innings of a transformation of our commercial strategies, and we expect more foundational improvements in the coming quarters. If you step back even further, the takeaway here is the sequential improvement through 2025 as a result of our back to basic strategy. We started 2025 down double digits year-over-year on revenue and down mid-single digits year-over-year on RPD. This narrowed to near parity on both metrics by the end of the year, and they have both turned positive in the early part of 2026. We also delivered improvements in utilization across our total fleet in each of the quarters in 2025, including Q4, where we were able to offset the impact of higher rate of recalls and delivered an improvement of 200 basis points year-over-year. Total fleet includes all vehicles irrespective of operating status, whether in service, out of service or in our car sales inventory. Looking [indiscernible] we are delivering clear results and building momentum for the year ahead. 2026 is off to a strong start as the strength we saw at the end of December for the holidays carried forward into the new year. In January, we are seeing year-on-year positive revenue and unit revenue growth, mostly driven by a couple of percentage points increase in global RPD, reflecting pricing growth in both our Americas and our International segments. February is trending even more positively and March looks to continue on that trajectory. As a result, we expect Q1 2026 revenue to be up mid-single digits year-over-year with fleet growth of only low single digits. Q1 2026 is also supported by a more constructive industry environment compared to Q4 2025, with the industry demand environment looking better. For the rest of 2026, we will manage our growth in a disciplined manner. This means holding airport growth at or below TSA levels, while pursuing off-airport and mobility opportunities. At the same time, we are focused on doing more for our customers. The improvements we have seen in our Net Promoter Score is a clear indicator that our work to create a more consistent, convenient and caring customer experience are resonating. We are deeply grateful to the millions of customers who choose Hertz, and we have recently lowered the threshold for achieving 5-star status to reward them even more for their loyalty. At a time and status across the travel industry feels harder to earn than ever, we are offering a faster, more transparent part, providing more value with every booking and one more reason to continue choosing Hertz. So in summary, our commercial playbook is working, and the results are starting to prove it. With that, I'll hand it over to Scott to walk through our financial performance. Jon Kirchner: Thanks, Sandeep, and good morning, everyone, and thanks for joining us. As you heard from Gil and Sandeep, the fourth quarter had a number of items that cloud the results. But once you get past the transitory impacts in the quarter, you can see some interesting foundational elements. The revenue trends are improving. Our fleet is rotated and model year 2026 buys have been secured at prices and volumes we expected. In spite of a richer fleet mix in 2026, which will provide a tailwind to RPD, we still expect to keep DPU for the year below $300 per unit. NPS took a big leap forward in 2025 and that's prime to continue in 2026. Our digital customer experience, operational consistency and customer-focused initiatives are being recognized by our customers. We have found a good balance between utilization and NPS scores, but have our eyes set on improving both at the same time. The moves we made last year to create a rental car fleet with an average age of less than 10 months, which is the youngest it's been in almost a decade and to drive record-setting utilization are now strategic tailwinds. The cost and efficiency actions paid dividends and will get even better in 2026. Throughout 2025, we pulled off a difficult task. We lowered unit cost while also reducing units. That's difficult to do in a heavy fixed cost and operationally complex business like ours. We have real opportunities for growth in 2026. The focus of that growth will be at our off-airport locations and in our mobility business. Our expansion of the platform outside of traditional rental car is progressing nicely. Our digital car sales business has made some important technological advancements on both the back-end website and the merchandising capabilities as well as the digital transformation of the car sales process. While early, we think 2026 digital expansion could produce a meaningful progression in the percentage of our car sales that will be transacted through retail channels. On mobility, while we are the industry leader in rental ride share, we are growing and developing the business to meet evolving needs. We also have been actively building in the background a substantial set of capabilities that we will be leveraging to position Hertz to be a significant player in the aggregation of the supply of mobility in the future, whether that is driver led or autonomous. This will ultimately be the future of Hertz, but we are balancing the current optimization of the mature part of our business while building the platform for the future. Even though the absolute financial results are not where we want them to be yet, the actions we have taken over the past year or so are showing real sustainable results and the opportunity in front of us is exciting. So with that preamble, I do want to quickly walk through some details in the quarter, where we are with liquidity and cover a bit of our 2026 outlook. Starting with the quarter. For Q4, we reported revenue of $2.0 billion, which came in ahead of consensus expectations with RPD broadly in line and down approximately 1% year-over-year. Importantly, excluding the prior year loyalty adjustment, revenue growth was up year-on-year with RPD nearly flat. Adjusted EBITDA for the quarter was a negative approximately $200 million. While this is a $150 million year-over-year improvement, it was still about $100 million off of our target. This was entirely in our vehicle carrying cost. We incurred about $20 million of additional costs resulting from the additional fleet to compensate for the elevated recalls. We also had a $20 million loss on the sale of assets due to the large number of cars available in the marketplace that weighed on residuals in the quarter. We also took a noncash depreciation expense of approximately $60 million due to the late in the quarter residual value adjustment by Black Book. While we do believe the adjustment on the forward view of residuals to be a bit conservative, we did take the entire impact to the P&L. We view these items as mostly isolated to the fourth quarter, albeit recalls will likely remain elevated throughout the first quarter. We expect the residual value market to improve as we head into the peak car sale cycle starting in Q1 into Q2. The government shutdown duration and timing also weighed on results. We were able to recoup most of the days lost in the period, but it did come in more off-peak days production since the shutdown came in what was becoming an improving October with positive demand and pricing momentum. While difficult to quantify and while the revenue for the quarter was still positive, we estimate the government shutdown cost us an additional $10 million to $20 million of adjusted EBITDA in the quarter. In total, the underlying business performed better than the reported adjusted EBITDA would suggest as we performed well on the items within our control. Transaction days were almost flat year-over-year as we kept the higher fleet to mitigate the recall issues and recoup some of the days lost due to the transitory events. Utilization remains solid. And even with the additional fleet, the global fleet was 3% lower than prior year. Adjusted DOE per day was another positive story. It improved 6% year-over-year, coming in at $36.39 as our cost initiatives are taking hold. It did, however, reflect higher collision severity and repair cost and ongoing elevated insurance costs. We still have more to do, but have done good work on addressing operating expenses in our big 3 categories: labor facilities and vehicle maintenance and repair. With further work to be done in growth in transaction days in 2026, we do expect lower unit costs this year. Core SG&A remained flat with total year-over-year variances primarily stemming from the timing of expenses in 2024, with 2025 being a more normalized expense level. Turning to depreciation and DPU. For 2025, we produced a full year net DPU of $300 per month. While this is right at our North Star metric, we were certainly not happy that we had to take a late charge to depreciation due to the move from Black Book. We were expecting to be below $300 per unit. However, if residual values end up where we think they will in 2026, this will prove to be timing of the expense and will benefit us with less depreciation this year. The fourth quarter ended at $330 per unit, down 21% year-over-year, but nonetheless, higher than we expected. Now let's talk liquidity. We ended the quarter with approximately $1.5 billion of total liquidity, including revolver capacity. This reflects the impact of the partial redemption of $300 million of the 2026 notes in Q4, leaving $200 million outstanding. The Wells Fargo make-whole liability, which had been reserved for some time, was primarily concluded with the $346 million payment made in late January. This reduced our available liquidity to just under $1.2 billion. This number was about $100 million lower than expected due to the timing of vehicle dispositions that were delayed and the early acceptance of vehicles in Q4 due to the larger number of recalls and the impact of the government shutdown. Other than the cost to carry the additional vehicles in the quarter, the timing of the vehicles in and out of the fleet is not expected to have any meaningful positive or negative impact on our expected liquidity at the end of the second quarter. Also, our ABS programs remain healthy with ABS vehicle fair values comfortably above net book values and market access is solid. We recently entered into financing transactions that we expect will result in an increase in our liquidity by approximately $200 million at an attractive cost of capital. We also have several other liquidity enhancement opportunities that we'll be evaluating in the coming months, that could total more than $500 million. In addition, we also have approximately $400 million of first lien capacity to refinance the expiring revolving credit facility commitments in June of this year. With the disciplined growth that we have planned for 2026, we have access to the liquidity capacity to make that happen. We expect to reach the low point of liquidity at the end of Q2 at something likely below $1 billion, as we invest in the fleet in the first half of the year and then expect to end the year well north of $1 billion as free cash flow generation improves after Q1 and from the return of capital that happens in the fleet rotation cycle in the back half of the year. To be clear, this assumes we action some of the liquidity enhancements we have available to us. Finally, let's turn to guidance for the year. For Q1, we expect transaction days and fleet to increase low single digits year-over-year. Total fleet utilization will likely be flat in Q1 year-over-year due to the impact from the heavy winter storms and continued elevated fleet recalls, which should decline throughout the quarter. On the revenue front, as Gil and Sandeep noted, January saw positive year-over-year RPD and revenue growth, with February trending even better and March bookings to date showing a similar trend. However, Q1 is still an off-peak quarter for us and the recall levels are still going to impact our results. Given this, our Q1 expected margin range is in the negative high single-digit to low double-digit range, which is a year-over-year improvement of approximately 600 to 800 basis points, assuming DPU at around $300 per unit. For the full year, we previously communicated an outlook of a 3% to 6% adjusted EBITDA margin range. While the revenue trends were positive and the internal expectations for DPU are in line with prior expectations, it is early in the year, and we would like to see more game film before we revise the guidance upward. That's why we are maintaining the guidance for the year in the 3% to 6% margin range. We continue to target $1 billion of adjusted EBITDA in 2027. With that, I'll turn it back to Gil for closing remarks. Wayne West: Thank you, Scott. 2025 was a year of back to basics, focused on rebuilding the core and transforming Hertz for the long term. We first tackled our fleet, the biggest problem to solve, along with cost and revenue, all while elevating our customer experience. Through our fleet strategy and rotation, we operated as an asset management company, and the team turned our fleet, which was once a massive headwind, into a competitive advantage positioning us well for 2026 and beyond. We delivered year-over-year improvements in unit cost even with a smaller fleet and we see a long runway of cost and productivity initiatives that cut across all aspects of our business. This, along with operating leverage from growth should help propel us forward. Unit revenue growth has been a key area of focus. The team's work around customer service, demand generation in the right segments, revenue management strategies and initiatives are paying off and we have the talent, tools and technology to continue this momentum and return Hertz to solid profitability this year and achieve over $1 billion in adjusted EBITDA in 2027. But our transformation does not stop there. We're both pragmatic and ambitious, focused on what's in front of us while also planning for the future. We're making progress in developing our platform to unlock value beyond our core business, leveraging the same operational discipline, rigorous cost control and revenue optimization that would define this turnaround. With that, let's open it up for questions. Back to you, operator. Operator: [Operator Instructions] Our first question comes from the line of Chris Woronka with Deutsche Bank. Chris Woronka: I guess, Gil, to start off, one of your competitors recently took about a $500 million write-down related to EVs. And obviously, Hertz went through a process a couple of years back that I think is complete or largely complete. Can you maybe give us a refresh on where you guys are in EVs and your strategy has changed or evolved at all recently? Wayne West: Yes. Chris, thanks for the question. Yes, I think a lot of headlines across all the automotive industry on EVs, of course, of late. And I think we're probably a little further down the road than most, and we do have a bit of a different strategy now in that I'd just start with some context. We're the largest fleet supplier to rideshare in the world, as I mentioned. It's really important to get that fleet right because the rideshare just has different fleet needs in our traditional rack business and EVs remain central to rideshare and remain a long-lived asset in that fleet. So we're just probably more experienced than anyone as an EV fleet operator at scale. We've been building a lot of operational muscle around EVs over the years, and that includes the technical expertise as well as operating infrastructure. So kind of as part of our transformation, as you well know, we've gone through and rightsized our EV fleet based on what the natural demand is for EVs. So essentially, we've redeployed that fleet in the right channels with the majority of that fleet moving towards rideshare business. And that puts EVs into real high-intensive operating environments. And that helps us accelerate our learning curve. So specifically with our Tesla fleet, just to give you an example, we're in the process of doing an interior refresh on that fleet. So it's really given the where we've encountered on the interiors over the last several years. So this is a low-cost investment per vehicle for us. And then the vehicle condition comes out looking nearly new and then extends the life of the useful life of that asset. And then, of course, has considerable economic benefits for us on that fleet. So we got a world-class maintenance and tech ops team. And they've done this all their life really on older generation aircraft, applying a similar approach where we refurbish the interiors and do it at a low cost. So it's what's happening with our Tesla fleet. And ultimately then, I think with that fleet, the limiting life factor will be battery life at this point, kind of given the current battery replacement cost. But even that could change in the future. But we got to remain agile with our EV fleet. It's really set us up well, though in our rideshare position. And then it's probably worth noting that, that experience we've been building with EVs really sets us up well in the future for AVs because I think every future autonomous vehicle will likely be an EV. So all that will bode well for us in the future. Operator: Our next question comes from the line of Chris Stathoulopoulos with Susquehanna International Group. Christopher Stathoulopoulos: So Gil, if a lot of commentary here on the mobility business, your prepared remarks I think you said mobility has the potential to more than surpass rent a car. So could you dig into a little bit more here on the future potential of the mobility business for Hertz? What does that look like? What is the plan for the next year, 1, 3, 5 years, if you could? Just want a little bit more detail on how you're thinking about that. Wayne West: Thanks, Chris. I mean, obviously, as we mentioned in the call, the potential is significant here, and we continue to position Hertz for the future of mobility. And I think we'll be a big part of that because we've got -- we've already got great partnerships in the rideshare space. So as you think about kind of the next step of mobility, it's really the evolution of rideshare into autonomous. So we've been piloting some innovative new models with a strategic partner, and we're starting to scale some of those. We'll talk about those in the future. But I think we're a natural player in mobility and ultimately, the AV space as it continues to evolve. So we've got really an incredible team leading our mobility business. I'm extremely bullish about what that future looks like. So maybe just to recap, as I see it, at least, how the space plays out. First of all, it will be a huge TAM, if you will. We had some comments in the script about that. And it's not a winner-take-all game. It's very big. And I think we're -- Hertz is really one of just a limited number of companies that have all the necessary ingredients to be a major player in AVs, right? Our core business is owning and operating large fleets of vehicles. And that's a foundational requirement in AVs and the model for mobility going forward. So we've got an iconic brand. We've got a global footprint. We got operational excellence. We got really advanced maintenance capabilities. And then, of course, large fleet management skills and as I mentioned -- just mentioned, experience managing EVs. And again, I'll just reiterate, I think in the future, almost all AVs will be EVs. So that experience will be a big stepping stone for us. But we've got rideshare experience, the infrastructure. We're an asset-heavy business, but we've got the vehicle financing capability. And then we've got a team literally with years of direct AV operating experience. So I mean, in sum, I think we've got the right ingredients to do it. We're focused on it. But I'd be remiss if I also didn't say we're also focused on making sure the core business is turning, head in the right direction, and we're not going to be distracted by anything around that. But we can do more than one thing, and we are and mobility is a big part of our future. Operator: Our next question comes from the line of Dan Levy with Barclays. Dan Levy: I wanted to go back to the question of DPU. And I know your North Star metric is the $300. But perhaps you could just walk us through again the path to how you can sustainably be at that $300 given some of the vehicle inflation that we've seen, what offsets do you have? Because just mathematically, if you're holding a car for 18 months and the price is going up, that DPU is going to just increase above $300. So what offsets do you have to get it to that $300? And what's the confidence on that? Wayne West: Yes. Thanks, Dan. I appreciate the question. I'll start, and Scott, feel free to add. But yes, we've got confidence that kind of our end-to-end fleet strategy that we've talked about in the past will work in any environment, first of all, and we can maintain the sub-300 DPU this year and beyond. So although as we noted, there's some seasonality in the trends and some volatility. But we've rotated the fleet. We've got model year '25, '26 vehicles to sustain our depreciation North Star and the used car market set up well this year as we move forward. We've also pivoting into heavier retail car sales, along with shorter hold periods. And I think both of those will be tailwinds for us as we go forward. But ultimately, it's about managing the right buy, hold and sell at a make-model trim level in order to maximize the retention value over that whole period. It's not necessarily the cap cost. It's the retention value from what we buy it for the net purchase price and what we sell it for. And that retention value then over that whole period is the key. So -- and managing that really gives us the ability to hit our DPU targets. Scott Haralson: Yes. Dan, it's Scott too. I'll just add an important sort of mathematical component here. Obviously, we buy a ton of vehicles at sort of large volumes that are significantly below MSRP. And at that sort of discount level, I mean, ideally, you turn around and sell the vehicle the next day, obviously, to monetize that discount. But obviously, we can't do that, and we rent the car for a period of time. But to Gil's point, the idea of a short hold has significant mathematical components, albeit operationally complex because you do need a large inflow of vehicles, you need the piping to be able to exit vehicles at that volume. So the combination of all those things create the ability to optimize DPU that we think will be below $300. And we have the capabilities to drive it a good bit further once all of the components sort of start humming. So I think mathematically, you could easily get to that point. And historically, the rental car business has been well below $300. So I don't think we're charting new territory here, respectively. But I think there's a lot of components that we've definitely gotten good at, and we'll continue to do that. But I think mathematically, it's important to sort of think of it around those factors. Dan Levy: Great. And if I could just ask a follow-up on the liquidity standpoint. So I appreciate the commentary on Q2 being the trough and some other liquidity actions. But just given you're still going to be a ways away from being free cash flow positive, maybe you could just comment on the free cash flow dynamics. But in the absence of that, what other capital raise options you have to keep the liquidity in line until you hit free cash flow positive? Scott Haralson: Yes. Let me touch on a couple of points there, Dan. I think we'll make pretty sizable strides in free cash flow generation in '26. Obviously, post Q1, if you sort of look at the margin profile, we'll be somewhat cash flow neutral in the year post Q1. And so the -- obviously, we got to drive the business in '27 to the point where we become cash flow positive, covering all of the components within our working capital needs. But we talked about a few things that we have in the pipeline, the $200 million initiative that we created, which was an alternative letter credit facility that reduces the need for those funds to be taken out of the RCF. We have a large number of initiatives that are not your typical sort of first lien offering, which we have as well that talk about things like more capacity within our ABS structure. We have real estate assets that are both locations we no longer need. I mean we're a 100-year-old company. So we have some excess assets that we need to monetize as we optimize our facility footprint. But we also have other locations where we do operate and want to continue that we may do sale-leaseback transactions on at a very good cost of capital. That's a better capital allocation than owning real estate across the entire network. We also have a number of strategic initiatives to grow our franchise base, including new geographies where we don't operate today, plus some locations that are corporate-owned and operated, which are desirable franchise opportunities that are both strategically interesting, but also create an upfront capital infusion opportunity. So there's a whole host of items here that give us a good bit of flexibility, including the first lien capacity that we have, which is roughly $400 million. A lot of that comes from the rolling off of some of the RCF capacity that we can refinance in the year. Operator: Your next question comes from the line of John Healy with Northcoast Research. John Healy: Gil, I wanted to go to a comment that you kind of weaved into the prepared remarks a few times, you used the word off-airport. And you seem to use it in separation with the word mobility. So would just love to get your view on the word off-airport, what you guys are doing there. If it is separate than the mobility business, and is it related to maybe a desire to get back into the insurance business that the company was in a while ago. Wayne West: Yes. Thanks, John. Yes, just to clarify, I appreciate that question. The way we were using it, the term off-airport was in respect to our rental car business, not for mobility. So it's a separate and included part of our rental car business. And we consider, of course, on-airport and our what we call Hertz local addition, off-airport volume in that mix. And maybe just for context, that growth in that, we do see the growth and it's profitable growth for us, and we're disciplined about that. But if you recall, as we rotated the fleet, we had to shrink our fleet in order to accelerate the rotation of the fleet. We're managing capital. We're managing vehicle availability. We're managing -- working our way through depreciation, all those things. So we had to shrink to accelerate the fleet rotation. Essentially, we kept our airport capacity more or less flat during that period. And we shrink in our off-airport HLE location and to some degree, our mobility business. So as we think about off-airport and growing that business in '26, it's really just kind of going back to where we were in prior years is certainly the first step of that. The demand is there, again, in various segments. And so that's really the context of off-airport. Mobility is separate, right? We're growing that business. It's even at a much faster rate than off-airport. And it's through the partnerships. And again, that's got, we think, a long runway. Scott Haralson: John, this is Scott. Just a quick comment. I think we view those businesses differently, too, by the way. The airport has different demand profiles, obviously driven by airlines and TSA demand, our off-airport business has a different cycle to it, obviously, related to insurance replacement and even some of the leisure demand and commercial components operate on a different cyclical component. So as we think about growth profiles, profitability profiles. We do view those a bit differently, which is why when we talk about growth, we segment it out into the sort of airport off-airport, rideshare components just because they behave differently. John Healy: Great. And then just one question on cap structure and balance sheet. You guys have said that, I believe, 300 to 600 basis points of EBITDA margin this year. If you're at the high end of that range, does that get you towards kind of cash flow breakeven for the year? And just longer term, any thoughts about the approach to deleveraging here? I mean, even on the '27 goal of $1 billion in EBITDA, even if we earmark a lot of that improvement to debt repayment, we're still an awfully levered company. So just wanted to get your thoughts about how we bring down leverage. And I know you talked about sale leaseback and some of those things. But I would just love to get your view on ideal cap structure and hypothetically, like maybe when we could be below certain leverage levels? Scott Haralson: Yes. John, it's a good question. Obviously, the business has to get to the point where it can cover its sort of debt servicing and working capital needs. I mean you could probably do the math within our balance sheet, but the sort of free cash flow breakeven number sits in that sort of 6% to 7%. So yes, at the high end of that, we're going to be pretty close to sort of free cash flow breakeven for the year. And I've said this before, obviously, the business has to get to the point where it's producing free cash flow to start thinking about using those funds to delever. There are other components that will take place in the future as well as we refinance. We may have the capability within our stock price to use equity at some point in the future that we've talked about that we're definitely price sensitive to that because we are so optimistic about where the business goes. And the other components of that, that we think through are how the platform and the initiatives will play out in forming the ability to delever. We think the components of mobility and fleet car sales will both drive operating profits to the business as well as an infusion of equity capital that may also participate in all the holistic views of capitalizing those components necessary to grow those businesses, but also helping the cap structure at the same time. So there's a lot of moving pieces, and this is going to happen over time. But the first step is getting the business on solid profitable footing. Operator: Our next question comes from the line of Ryan Brinkman with JP Morgan. Ryan Brinkman: With regard to the Hertz car sales strategy, what are you expecting in terms of the percentage of vehicles disposed of via various channels in 2026 relative to 2025? And maybe looking beyond this year also, what is assumed already in your North Star target for per unit depreciation of under $300 per month or $1 billion of EBITDA in '27 versus what level of disposition performance would be incremental to those targets? Wayne West: Yes. I'll start with the latter point, Ryan. Nothing, right? We're not assuming that Hertz car sales factors into the $1 billion of EBITDA in '27 or really anything material this year. The real key from a growth standpoint, there's 2 points I would make here on Hertz car sales because we do want to grow the percent of car sales that we have into retail. Keep in mind, historically, what we've done is to move volume through the rental car seasonal periods and do it through wholesale channels in order to match the timing of kind of the ins and outs of that. So we're shifting our strategy to move the bulk of that volume through retail channels and shorten our sales time to do that. Today, we're roughly at, call it, about 1/3 of our cars move through retail channels. Today, that's both Hertz car sales, our direct sales along with retail partners that we have established to move volume through. Aspirationally, we want to grow that to about 80%. So there's a path there, and we're pushing hard to do that. And then if you peel that back, I think we tried to cover a little bit of this in the script, but we see kind of a couple of pieces to that, right? We've got a physical footprint today. We've been investing in our digital channels and e-commerce as well. And the combination of those creates a really good model for us, right? So we can meet our customers where ultimately they want to be, right, rather than just relying either/or on a physical channel or a digital channel. So that combination is really important for us. We've got a lot of great ingredients to drive this. Of course, we've got a building customer base. People are test driving our cars every day. We've done rent to buy. We partnered with Cox to revamp our website. Again, I would encourage you guys to go see it. It's really impressive. I would also just mention, on a customer basis, the cars we sell to customers. The Net Promoter Scores of those buyers are as high as anything I've ever seen anywhere. They're over 90% Net Promoter Scores. That's almost impossible achievement, candidly. So the experience is already good. We've got a great trusted brand. And then it's a matter of top-of-funnel demand. We've got big partnerships that drive that. And then the real problems for us to solve are distilling that into qualified leads and conversion rates. And the team is really focused on that. We've got some great people helping us. And that -- those are the real keys. Along with driving up our net margin per sale. It's not just about volume. Ultimately, it's about adding a few thousand dollars to the net here, selling hundreds of thousands of cars where we have the material impact. So the net margin is key in the equation. We've been focusing really hard on reconditioning cost, along with capturing F&I that on the back end of the transaction that we've never had. So combination of those 2 plus selling more digitally reduces the overall selling expenses. So -- and we're seeing the margin side heading the right way on a per car basis, and then it's about increasing volume. We're -- look, it's -- this isn't easy, obviously, but we got the ability to -- again, we've already got the scale. It's just a matter of channel shift in the way we're selling. So a big opportunity for us. Ryan Brinkman: Okay. And then lastly, with regards to the more sophisticated approach to pricing that you referenced in your prepared remarks is leading to higher revenue per unit, and you expect to contribute more, are you utilizing a refining a new or existing software system? Or what would you say are the drivers of the progress so far and the catalyst for further improvement? Scott Haralson: And just to clarify, are you talking about the car sales or our rental business, rental car business? Ryan Brinkman: Now the rental, the pricing that's baked into the RPD. Scott Haralson: So we're doing the same, by the way, on the cars. But go ahead, Sandeep. Sandeep Dube: Yes, this is Sandeep here. Yes. Thanks for the question there on pricing sophistication. So see, we are relooking broad scale how we price demand overall, right? And it's a combination of improved systems. And we've talked about this in prior earnings calls around our work around there. And that's a longer term, and we are well on that journey. On top of that, you have to always relook how you structure your pricing and the approach that you use within the systems, right? And that's the piece that I referred to when I talked about Q4, where we've infused the revenue management team with some new talent. There's some really good thinking that's going on there. And we've applied different queries into how we actually price for demand, and that's leading to a different outcome there. So I think it's a combination of systems and different thinking. And by the way, this is still in the early innings of how we kind of go about this. This is a journey, and I expect continuous improvement on this front. Operator: Our next question comes from the line of Chris Woronka with Deutsche Bank. Chris Woronka: So the second question is going to be kind of as we think about the $1 billion target for next year on EBITDA, we know that the North Star targets are kind of numerically. But if I think about how much fleet maybe that requires? And then also more importantly, on the revenue side, maybe you can, at a high level, directionally bucket for us where you think -- is this market share on corporate? Is it market share on leisure? Is it more rideshare where you don't maybe have quite as much direct competition? If you could maybe, at some high level, bucket those out for us, what you think drives that would be super helpful. Wayne West: Okay. Well, I'll start, and I would encourage Scott and Sandeep to dive in. Thanks, Chris. Yes, first of all, I think in terms of the $1 billion EBITDA in '27, I mean, a little bit of context, at least from my view, I mean these aren't uncharted waters, right? We've been there in the past. Others in the industry are there now and achieve that level of performance. So it's clearly achievable. I think the North Star financial targets that we've given on DPU, RPU and DOE, along with some just modest growth, get us there conceptually, and we can talk about any of those assumptions. And then, of course, the approach we've taken on back to basics laid a foundation to get there. The trajectory of all those metrics are heading that way, right? They turn, they're heading that direction. I think the biggest economic lever, as you know, is the fleet, which we've addressed, and that's the economic engine. And we're tracking really with all the North Star metrics directionally where we want to go. We'll never be satisfied with the timing and we'll keep pushing hard. That is the one variable that's always a little difficult to gauge given the kind of nature of the significant transformation we've been doing. But there's a strong sense of urgency at the team. Everybody is full throttle. The needles are moving. So we've talked about depth some, maybe the revenue piece, you want to touch on. Sandeep Dube: Yes. On the revenue piece, I think, again, it's going to be very, very disciplined growth, right? And going back to our business lines, right? On the airport side, we're going to be very clear that our growth is going to be at or below TSA levels. And the beauty in there is we're going to keep refining the segments that we -- the segment mix there so that we generate a higher and higher margin out of our airports. And for the off-airport business, again, there's more growth there, and we'll keep working on that. I think Gil alluded to that earlier on. By the way, there's a segment mix play within the off-airport segment business line as well, which would help us enhance the margins there. And then lastly, mobility, again, we have talked about that. There's more growth there. We're growing that business at a pretty good clip and we'll continue on that journey. But I would say discipline in where we grow and discipline on how we fleet is the answer there. Scott Haralson: Yes. I think just real quick before we wrap up the call here, Chris, is that I think mathematically, all 3 levels of the North Star get you well above $1 billion. I think the point here is that there's a number of ways to get there. They all don't have to hit to hit $1 billion, plus you've got the fourth dimension of scale, which plays into here. And then we really haven't even talked about the platform component that adds on to it. So Gil talked about timing, but I think the takeaway is there's multiple ways to get there. Operator: There are no further questions at this time. This concludes the Hertz Global Holdings Fourth Quarter and Full Year 2025 Earnings Conference Call. Thank you for your participation.
Jonathan Paris: Good afternoon. Thank you for joining us today to review Definitive Healthcare's financial results. Joining me on the call today are Kevin Coop, Chief Executive Officer; and Casey Heller, Chief Financial Officer. During this call, we will make forward-looking statements, including, but not limited to, statements related to our market and future performance and growth opportunities, the benefits of our differentiated data and health care commercial intelligence solutions, our competitive position, customer behaviors and use of our solutions, customer growth, renewals and retention, our financial guidance, our planned investments and operational strategy, generating value for our customers and shareholders and the anticipated impacts of global macroeconomic conditions on our business, results and customers and on the health care industry generally. Any forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve a number of risks and uncertainties, including those discussed in the Risk Factors section and elsewhere in our filings with the SEC. Actual results may differ materially from any forward-looking statements. The company undertakes no obligation to revise or update any forward-looking statements to reflect events that may arise after this conference call, except as required by law. For more information, please refer to the cautionary statement included in the earnings release that we have just posted to the Investor Relations portion of our website. We will discuss non-GAAP financial measures on this conference call. Please refer to the tables in our earnings release and investor presentation on the Investor Relations portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure. With that, I'd like to turn the call over to Kevin. Kevin? Kevin Coop: Thank you, Jonathan, and thanks to all of you for joining us this afternoon to review Definitive Healthcare's fourth quarter 2025 financial results. On today's call, I'll provide highlights from our fourth quarter performance, review the operational progress we've made in 2025 and outline our key strategic priorities for 2026. Let me begin by reviewing our financial results for the fourth quarter, which were at or above the high end of our guidance ranges on both the top and bottom line. Total revenue was $61.5 million, down 1% year-over-year. We outperformed our revenue expectations on both subscription and professional services revenues. Adjusted EBITDA was $18.1 million, representing a margin of 29%, which was $1.1 million above the high end of our guidance. Our continued strong profitability performance is a testament to the underlying power of our business model and our ongoing expense discipline. We continue to generate solid cash flow, delivering approximately $55 million of unlevered free cash flow for the trailing 12 months. Our financial performance for 2025 compares favorably to the initial guidance we provided to investors last February. Setting appropriate expectations and delivering consistent financial results with transparency was one of the promises I made to investors when I became CEO, and I'm pleased that we were able to meet that objective in 2025. I would now like to review our operational performance for the year, supported by the 4 strategic pillars of data differentiation, integrations, customer success and innovation that we laid out for investors at the beginning of 2025. Before going into more detail, I do want to emphasize that we have made strong meaningful progress in each area and can confidently report that as we enter 2026 with a much stronger foundation for the future. While we are seeing improvements in all areas of focus, the expected benefits from these improvements will take time to fully be realized and that improvement trajectory is reflected in the 2026 guidance that Casey will review later. Starting with data differentiation. We delivered an important milestone in the second half of the year with the release of our fall expansion pack, which included bringing online a new claims data source. As you know, the claims market underwent a significant data disruption over the past 12 to 18 months. And with these releases, we have now restored our claims data volumes to above historical levels. Continuing to expand and strengthen our data assets with new elements that are not easily sourced remains foundational to our strategy. For example, we recently strengthened our core reference and affiliation data for health care executives and health care providers by adding mobile phone data. Overall, I am pleased with the progress we made in remediating the claims data market disruption, expanding our core data assets with new elements, ensuring our focus remains on maintaining our data differentiation and quality and expanding the value of our data over the course of 2025. This will remain a foundational priority going forward into 2026 and beyond. Our second pillar focused on seamless integrations. A core part of our strategy is ensuring it is as simple as possible for customers to utilize our data sets, proprietary software and analytical capabilities. Being an open platform is a foundational tenet of our product strategy, and we have successfully deepened the number of our integrations in 2025, including Snowflake, Databricks and the recent introduction of an important HubSpot integration in Q4. We launched a new pilot program with physician data and Salesforce, which we expect to be generally available this quarter. And we've been focused on increasing the automation of our integrations, which has dramatically shortened the time to integrate by about 25% over the course of 2025. This improves customer satisfaction and gets our data into the hands of our customers faster. Ensuring ease of integration to our customers' systems of record and systems of insight effectively improves retention as we know that those customers that are integrated will renew at higher rates than those that are not integrated. We are already seeing examples of this in action, including an important win in Q4, a large nonprofit academic affiliated integrated health system operating multiple hospitals, outpatient clinics and specialty service lines selected our population intelligence platform to enable more targeted segmentation within the region and surrounding markets. They needed to drive patient volumes across key inpatient and outpatient service lines while capturing additional market share. A core pain point was the significant internal effort required for data mining, layering, modeling and assumption-based analysis, which limited their ability to align resources around broader growth and strategy initiatives. Our seamless approach to integration and our agnostic capabilities that enabled flexible access to their systems were critical to this win where we delivered clean, enriched and actionable data directly into their existing workflows, allowing them to hydrate records and uncover incremental patient leads more efficiently. Turning to our third pillar, customer success. I am pleased with the improvement we have made throughout the year to improve customer satisfaction, ease of use and value-added services that will increase the stickiness of our solutions. While we will always be looking to iterate and improve our processes, I am confident that the steps we took in 2025 have built a strong, durable and repeatable customer engagement process. Retention improvement is more than just a customer success effort, though. Product development, data quality and GTM execution all play a significant role. The realignment of our focus across all functional groups working in service to a shared goal of improving the customer journey, including how they are compensated, is making a difference. Importantly, we have seen retention rates improve year-over-year for each of the past 3 quarters, including with the larger cohort of renewals we have in the fourth quarter. The impact of our coordinated customer-facing effort can be seen where our newly integrated commercial teams collaborated on an early risk identification, which proved critical in converting what was forecasted as a churn risk into a successful multiyear renewal. This example shows how proactive focus on addressing customer concerns will deliver tailored solutions that restore confidence in service of retention, not individual objectives. The integrated team approach with sales, support and success working together with a shared goal of producing happy customers benefits both the customer and our own retention goals. These changes are complex and took the early part of the year to put into effect with the impact showing improvement in the second half of the year. Intuitively, the improved sales, onboarding, training and success process will begin to show up as those customers experience the benefits in time. Therefore, we expect that the improved trajectory that we can already see will continue to accelerate, especially as the impact begins to show up in the new business we are signing now and starts renewing later this year without the legacy impact of prior disruptions from the claims situation or past organizational miscues. Finally, we had a notably successful year delivering against our fourth pillar, innovation and our focus on digital engagement. This pillar has been focused on several distinct sub areas. The first is digital activations, which enables customers to combine our data with other digital assets to generate actionable customer engagement. Over the course of the year, we signed nearly 30 agencies and already have more than 1/3 of them actively generating bookings for Definitive Healthcare. As a reminder, there is a natural lag between signing up of an activation customer or partner and when they begin generating revenue. We had ambitious growth plans for our activation business in 2025, and I am pleased to report that we outperformed this target. We are also tracking excellent progress in building from the agency activation channel, and we expect our early successes in this channel will make it easier to directly sign customer activation programs in 2026. Second is partnerships where we are building a dedicated partnership team that will help customers seeking syndication rights and new distribution channels. One example of this type of partnership was launched last quarter with Bombora and their curated ecosystem audiences. This platform helps distribute off-the-shelf and fully customizable audiences for activation on a variety of platforms such as The Trade Desk, Yahoo! DSP, Reddit or data marketplaces like LiveRamp. It extends the reach of our specialized intelligence and addressable audiences to the customer bases of these platforms that need to access comprehensive views of the health care organizations and professionals across the entire ecosystem. In addition, we see AI as a core enabling technology for growth that DH can harness with several important incumbent advantages. First, our proprietary data is our powerful foundation. Definitive is a data company first. AI presents a way to retrieve, analyze and harness data. Our advantage is the proprietary data itself, much of which is not publicly available as well as within our data curation system and processes. An AI model is only as good as the data it ingests and our advantage is taking today's high-performing AI models and applying them to our domain-specific proprietary and differentiated data. Second, in addition to the proprietary nature of our data, the longitudinal aspect of our data from over 15 years of intensive accumulation cannot be recreated. This data is critical to a customer that needs to understand how the health care ecosystem and its affiliations have changed over time. Third, contextual expertise. In-depth domain expertise is required to effectively operate as a trusted partner in health care, and our customers rely on us for that expertise. Competing in health care is complex. To provide effective AI workflow and analytics, it is essential to have that deep understanding of the complex relationships among the health care providers and their corresponding use cases, which require years of expertise to develop. Contextual relevancy and accuracy is required by this industry. The importance is evidenced by the fact that 60% of our largest life sciences customers leverage our advanced analytics expertise in addition to our data and half of our top 20 customers across all verticals rely on contextual domain expertise and advanced analytical insights. Finally, embedded customer relationships. As we integrate Gen AI into our products, beginning with our flagship view platform next quarter, our deep relationships with approximately 2,300 customers provide integration points for rapid deployment. Because our pricing and packaging strategy is based on value, not seats, the increased capabilities unlocked with Gen AI will drive both new use cases and adoption of new offerings such as digital activation. Almost 50% of our customers already integrate our data directly into their systems of insight and record via CRM connectors, APIs or lake-to-lake and our next-gen SaaS platform will offer another accelerant to our integrated strategic focus area, which we know drives increased retention. Overall, we have accomplished much in 2025, and I want to thank the entire Definitive team for delivering these improvements and advancing our strategy. In 2026, we expect to build upon the progress we made last year. The signs of success, especially in the second half of the year, have reinforced our belief that we have the right strategy in place. As we look ahead to 2026, our key priorities remain unchanged from our 2025 pillars. As noted above, different pillars are in different phases of maturation and delivering success. But as the year unfolds, we will be focused on investing incremental dollars in those areas showing the most promise. Given the success ramp we are seeing, we anticipate there will be opportunity to accelerate digital activation with our customers, extend our partnership and distribution efforts, and we have confidence that our Gen AI enablement of view will provide new and incremental upsell, cross-sell opportunities later this year. Our primary strategic objective remains that of returning the business to consistent revenue growth. Fundamental to that objective is improving retention, and we remain confident that the steps we are taking can and will deliver that outcome over time. While the macro environment remains challenging, we will continue to focus on those areas we can control, and we will be making the investments necessary to steadily improve operational performance. With that, I'd like to turn this over to Casey to discuss our financial results in greater detail. Casey? Casey Heller: Thank you, Kevin. In all my remarks, I will be discussing our results on a non-GAAP basis, unless otherwise noted. As Kevin mentioned, 2025 was an important year for Definitive that saw tangible improvement on our four strategic pillars and put us in a better position to meet our long-term objectives. I'm pleased by our ability to close 2025 by outperforming on both revenue and adjusted EBITDA, while executing against those core strategic objectives. This reflects the continuation of our disciplined approach to managing the business while we have continued to face top line pressures and a dynamic macro environment. In the fourth quarter, we delivered revenue of $61.5 million, down 1% year-over-year, adjusted EBITDA of $18 million, reflecting a 29% margin and expanding approximately 120 basis points year-over-year and adjusted net income of $8.6 million, resulting in $0.06 of non-GAAP earnings per share in the period, all of which were at or above the high end of our guidance for the quarter. We also delivered $2.5 million of unlevered free cash flow in the quarter and $54.9 million on a trailing 12-month basis. Turning to our results in more detail. Revenue of $61.5 million was above the high end of our guidance range and represents a 1% decline year-over-year. Subscription revenues of $58.5 million declined 3% year-over-year or declined 7%, excluding data partnership contributions and were modestly ahead of our expectations for the quarter. And we did again see modest improvements in our Q4 renewal rates year-over-year, but not to the extent we had hoped. Professional services revenue in the quarter was strong, up 49% year-over-year and outperformed our expectations. This was a combination of delivering on traditional analytics engagements as well as a ramp-up in our digital activations activity. Adjusted gross profit in the fourth quarter was $50.2 million, which was flat from Q4 '24. As a percentage of revenue, the adjusted gross profit margin of 82% expanded about 100 basis points year-over-year, driven by some short-term benefit to our cost structure in the period as we had removed one data source from product, but we're still in the process of onboarding an additional source that will come online in the next month or 2. This temporarily reduced COGS in Q4. Adjusted EBITDA was $18 million and reflects a 29% margin, which, as I mentioned, expanded about 120 basis points versus Q4 of '24 and was above the high end of our guidance, boosted by the revenue beat. Looking quickly at our full year results. Total revenue was $241.5 million, a 4% decline year-over-year. Adjusted EBITDA was $70.4 million, a 29% margin and unlevered free cash flow was $54.9 million. In terms of operating metrics, we saw gross dollar retention improve about 2 points year-over-year, reflecting the initial impact of the actions we've been taking to stabilize the business. At the same time, net dollar retention declined due to the ongoing pressure in our upsell motion. As we discussed throughout the year, the lower upsell opportunities put downward pressure on NDR in 2025. We're confident that the combination of the actions we have taken to restore claims volume and the innovation and products will be releasing in Q2 will provide exciting new upsell and cross-sell opportunities that will positively improve net dollar retention in 2026. Turning to cash flow. Our business continues to generate strong free cash flow due to our high-margin model, upfront billing and low recurring CapEx requirements. Operating cash flows for full year 2025 were $53.8 million, down 8% from the prior year, reflecting the revenue decline but was partially offset by strong working capital performance. And we generated $54.9 million of unlevered free cash flow in 2025. Our conversion rate of adjusted EBITDA to unlevered free cash flow was 78%, which is down about 14 points year-over-year. Adjusting for some onetime CapEx spend that largely occurred in Q1 '25, the conversion rate is 87% over the last 12 months. This cash generation provides flexibility to continue investing in growth as noted by the tick up in capitalized software spend as we restarted our organic innovation engine in 2025. As a result of that, we capitalized about $6 million of software development spend, a $5 million increase over the prior year. At the end of Q4, deferred revenue of $99 million was up 6% year-over-year and total remaining performance obligations declined 18% year-over-year. Current remaining performance obligations of $165 million were flat quarter-over-quarter but declined 12% year-over-year. As mentioned last quarter, we have now wrapped on the initial contributions from our data partnership agreement, which explains the favorable year-over-year cRPO growth that we printed exiting Q3. There are other dynamics impacting cRPO as well. In 2025, we saw a greater percentage of our new logo additions signed 1 year versus multiyear commitments than in prior years. This impacts both RPO as well as cRPO. Let me explain why. If you went back to the end of 2024, there was approximately $100 million of cRPO on our books related to commitments that extended beyond 2025. As we enter 2026, this amount is $85 million. This $15 million difference reflects the lower average duration of our contract portfolio entering the year and is a drag to cRPO growth. Before providing guidance on Q1 and the full year, I'd like to take a moment to frame where we believe the business is as we enter 2026. We made significant progress in 2025 across each of our strategic priorities and are confident we have set a solid foundation for the business to return to growth in the future. However, as Kevin mentioned, based on the timing of when these changes will be implemented, we will not see the full impact of these investments in 2026. This is reflected in our guidance for the year. Now moving to guidance for Q1. We expect total Q1 revenue of $54 million to $56 million, a revenue decrease of 5% to 9% year-over-year compared to Q1 '25. The sequential decline in revenue reflects that the improvement in renewal rates in Q4 only modestly improved year-over-year. As a reminder, a substantial portion of our yearly renewals occur in this time frame. Also keep in mind that there will be a partial period benefit to growth this quarter from the data partnership that began generating revenue during Q1 '25. Taking these factors into account, in Q1, we expect adjusted operating income of $9.5 million to $10.5 million, adjusted EBITDA of $12 million to $13 million or 22% to 23% adjusted EBITDA margin in Q1 and adjusted net income of $4 million to $5 million or approximately $0.03 per diluted share on 143.2 million weighted average shares outstanding. For the full year 2026, we expect revenue of $220 million to $226 million for a 6% to 9% decline year-over-year. For the full year, we expect total revenue dollars to be roughly flat sequentially through the year with a modest uptick in the second half relative to the first half. And we have continued to proactively manage our cost base while making targeted investments in growth areas. From a non-GAAP profitability perspective, the largely fixed nature of our costs mean that most of the revenue decrease will flow through and create negative operating leverage. We expect sales and marketing expense of 32% to 33% of revenue, development expense of 12% to 13% of revenue and G&A expense of 12% to 13% of revenue. We expect development expense to be modestly higher year-over-year as we make targeted investments for growth, while we expect to see sales and marketing as well as G&A expense reduced year-over-year as we drive efficiencies across support functions in each area. Translating that into dollars, in 2026, we expect adjusted operating income of $41.5 million to $46.5 million, adjusted EBITDA of $53 million to $58 million for a full year margin of 24% to 26%. This guide reflects our ongoing commitment to maintaining strong margins while investing in our key growth areas. The decline from 2025 levels is due to a combination of ongoing pressure on revenue and more than 1 point of impact from the onetime expense credits we recognized in the second and third quarter of 2025 that will not repeat this year. Adjusted net income is expected to be between $21 million to $26 million and earnings per share are expected to be $0.14 to $0.17 on 145.4 million weighted average shares outstanding. And while we don't explicitly guide on unlevered free cash flow, it's important to note that we do expect to see adjusted EBITDA to unlevered free cash flow conversion improving by several points in 2026 relative to 2025 given lower planned CapEx spend. As we wrap up, I'd like to reiterate that while we continue to face top line pressures, we remain committed to non-GAAP profitability and maintaining a solid margin profile while balancing investments for a return to growth in the future. We are confident that we have the right strategy and are committed to continuing to make progress against our key initiatives that, over time, we expect will improve customer retention, return Definitive growth and drive long-term shareholder value. And with that, I would like to open it up for questions. Operator: [Operator Instructions] Our first question today comes from Craig Hettenbach of Morgan Stanley. Jialin Jin: This is Jay on for Craig Hettenbach. I was just wondering, can you provide a quick update on the demand environment across your 3 end markets? And then any other common themes you can share from the large cohort of renewals from the December and January? Kevin Coop: Sure. So let me start with the integration strategy and the renewal impact that we're seeing come through our focus on churn improvement. So as we've noted previously, a significant portion of our retention trends were impacted by the industry-wide claims disruption, and we're confident that the actions that we took to remediate the claims data throughout the year will drive improvement in our performance as we move into '26. And as we look at the business from a cohort perspective, the first cohort of renewals, excluding the first quarter of '24 where the disruption occurred was posted this last quarter in Q4. And that performance on a business sold post Q1 '24 basis and up for renewal through 2025 shows about a 200 basis points improvement over the previous comparison quarters, even extending back to '22. So this indicates not only is our strategy focused on -- that is focused on data quality, integrations and improved customer experience that, that's working, we now are very confident that it will continue to build in 2026, and it gives us support for confidence in our plan. Casey Heller: And the only other component that I would layer on there is that we did see, as I mentioned, improvement in our renewal rates in Q4 year-over-year. They were modest and what we're seeing in January is fully incorporated into our 2026 guide. More broadly on the demand environment, no significant change, but certainly a couple of green shoots that we're continuing to monitor. We started to see sales cycles condense, as I think Kevin mentioned earlier in the prepared remarks. So those are just kind of some of the encouraging signs that I think are pairing a little bit of maybe some benefit in terms of what we're starting to monitor from a macro perspective as well as paired with some of our stronger own sales execution. Kevin Coop: And then maybe one other data point, which I think would be helpful is we have been focused on integrations as we know that integrated customers will renew at a higher rate than those that are not. I mentioned that in the prepared remarks. And in Q4, we added over 60 integrated customers. And to give you kind of perspective on that, we added 160 for the full year. So we're seeing the integration focus starting to accelerate. Our commercial teams are promoting that because it's good for the customer as well as good for us. And we're very confident that, that performance in the fourth quarter, which often is a more difficult quarter to get moving, was actually very positive, especially in comparison to the full year. Operator: From Needham, we have Ryan MacDonald. Matthew Shea: This is Matt Shea on for Ryan. Maybe just to start and then I have a quick follow-up. Would love to just double-click on the last question. Anything you can parse out, I guess, between end markets as you went through the renewal cycle? Any end markets that maybe surprised you, either positive or negative? And then I know in the past, downsells have been more of an issue in the life sciences and pharma end market. So I would love an update on how that end market in particular is doing? Casey Heller: Yes. Let me give you a little bit of color as far as what we're seeing in terms of the renewal profile across the business. 2025 for us was a year we're really focused on stabilizing the business. And I think that we were able to certainly accomplish that across a number of metrics. So if we look at gross dollar retention, gross dollar retention improved 2 points year-over-year. That actually was largely driven by our enterprise customers, which are strongly weighted towards the life sciences space, just given the size of the customers that we tend to deal with within life sciences. So that's an encouraging component there. But exactly, as you mentioned, as we've continued to talk about, we were seeing a little bit of the flip side of that in terms of net dollar retention, which declined a couple of points year-over-year due to the lesser opportunities around upsell and cross-sell opportunities. I think that as -- where we stand here today entering 2026, we are in a much stronger position. We have remediated the claims data disruption by bringing on a new data source late in '25. We've got an additional data source ready to come online in the next couple of weeks as well to further add to our claims volumes. And Kevin touched on some of the additional new data that we've added into product as well, plus just more broadly restarting our overall product innovation engine. So we've got a lot more tools in the kit essentially as we stand here at the start of 2026 than we did at the start of '25, and that gives us all the confidence in being able to continue to build upon the stabilization in the gross dollar retention and start to build back that net dollar retention improvement into '26. Matthew Shea: Okay. I appreciate that color. I guess maybe if we think about the inputs to the growth outlook for 2026, I know understanding churn is still a topic. But if I assume customer count declines in, call it, the 6% to 7% range like it did in 2025, to get to the midpoint of the 2026 guidance, I have to then assume year-over-year declines in revenue per customer. And despite the downsell pressure you guys have experienced in the last year or 2, you've been able to consistently grow ARPU through that headwind. So maybe just help us reconcile that. Is there more churn in store for 2026 than 2025? Or is it more so the downsells have finally reached the point where we should start to expect ARPU declines? Casey Heller: I think that there's an element here of one, over the last couple of years, we've continued to put more focus on our larger enterprise accounts. I think that, that is still very much aligned to our strategy, but there's also an element here when you think about the mix of our business. Diversified and provider are smaller than life sciences accounts. We are actually growing in diversified and provider. Both of those printed growth in Q4. So we've got 60% of the business that has returned to growth, which is really encouraging for us. So I think what you're capturing there is less of a churn issue and more of just a business mix element of the diversified and provider pieces of the business returning to growth and us continuing to pick up and add new customers there that do come in typically at a lower dollar value than some of the larger life sciences clients. Operator: Next, we'll hear from Brian Peterson of Raymond James. Brian Peterson: So maybe just starting on AI. I wanted to understand how much of your customer conversations are impacted by AI and what you guys would be able to deliver through your data assets, but also I can see scenarios where AI might be distracting or capturing share of budget maybe away from traditional vendors. I'd love to understand how you're thinking about the net impact of AI so far, at least through 2025. Kevin Coop: Yes. So I think the helpful aspect of our solution set and the type of use cases that we sell into, it's very health care-specific workflow. These are purpose-built solutions and the data that is collected in a way to be delivered in these purpose-built workflows. And it's around sales and marketing intelligence for contact level targeting and territory design. It's population and conditioning modeling. It needs to address market sizing, medical affairs planning, even key opinion leader mapping related to influence patterns and how that evolves over time or automating risk related to things like legal affairs. So we've got -- the type of use cases that we're solving aren't really optional, right? They're very much around commercial execution, product or strategy. And so that's sort of the base layer. Then you also look at it from which I mentioned in my prepared remarks, which was, look, AI modeling is only as good as the data it can mine. And we know that our differentiated data, which is focused on and founded on our best-in-class reference and affiliation data set gives us a clear advantage. And so the conversations that we're having, it's more around how do we apply and what can we do to apply the -- and harness AI as it relates to the existing use cases and workflow and health care suite workflows, which is why we believe that is a competitive advantage and a tailwind as opposed to a headwind for us today. Brian Peterson: Got it. Kevin. And I appreciate all the comments on the NDR and the customer dynamics. Are you guys able at this point to say when you think NDR may actually hit a bottom? It's good that you've seen the gross revenue retention improve. Just curious when that KPI should inflect? Casey Heller: It's fully our expectation that we're able to improve NDR within 2026. So we view 2025 as the bottom. As I mentioned, I think that there's a lot of work that we did in '25 that really positioned us to be starting 2026 on a stronger footing from a product innovation standpoint as well as the work we've done to add additional data, remediate the claims data issue as well as enhance some of the components that we have within our crown jewel, our reference and affiliation data as well. Kevin Coop: Yes. And I think -- I'm sorry, I was going to add on, if it's okay, maybe the contextual expertise and why we see the tailwind with AI, especially as it relates to that, is as we're bringing the Gen AI layer to what is already a highly effective front-end platform, that's going to allow us to -- it sort of democratizes the use today where while the platforms are very powerful, they do require a certain level of expertise and super users to access. And so with what we're doing this quarter, that's going to allow more users to have more access to unlock more value. And the fact that we are value-based pricing anyway, not seat-based, unlocking more value is going to be really helpful, especially as we focus on net dollar retention in addition to gross dollar retention because that will unlock more cross-sell, upsell and value unlock as we delight our customers with more value from the products and the platforms that we already have. Operator: Our next question comes from Jared Haase of William Blair. Jared Haase: Maybe I'll follow up on that point related to the NDR. And I appreciate all the underlying drivers that give you confidence that 2025 can mark the bottom here. I guess I just wanted to contextualize because obviously, we've been thinking a lot about some of the product development and innovation initiatives to help drive that. But just to put a fine point on it, I'm curious if you guys are planning any refinement in your go-to-market, specifically targeted towards the sales motion to drive better upsells as well in addition to the product innovation. Kevin Coop: Yes. So we've got really -- I would think about it in terms of 5 sort of prongs in that area. You've got the confidence coming from several key points. Number one, we continue to have extremely valuable differentiated data that improves our customers' business performance. The second thing that we've got is we are investing to develop purpose-built solutions on top of our purposeful solutions with AI, which will make it easier for the customers to actually value and create value from our data. The third, we have already completed our go-to-market and customer success integration, which allows us to impact the business positively with higher win rates, shorter sales cycles and with a consolidated commercial organization, we're seeing greater alignment, which is showing up in things like radically improved implementation timelines that has already decreased by over 25% year-to-date. And with the extending our AI investments in the product, the data and end user development within our 2026 product road map, which is already in there inside the financials, as Casey has already taken you through, that accelerated investment is going to start to produce real tangible outcomes as we bring these innovations to market starting later this quarter. And finally, we talked about this about a year ago or so, a little bit more than a year ago on our integration strategy, which we know is having a positive impact. You can see, I mentioned we had 60 integrations as opposed to 160 for the full year. And when we look at the retention rates from integrated customers, it's only going up. And we can talk a little bit more about the expansion of the integrations, but I don't think we should underestimate the value that we have as being an agnostic platform where we are able to integrate with the customer systems of insight and systems of record regardless of what those are, and often, they use multiple ways because that's how we start to see the stickiness come in. So whether they're integrating it through lake-to-lake, whether they need direct API integration or whether they're still accessing and oftentimes they do directly through our state-of-the-art soon-to-be AI-enabled workflow products. Jared Haase: Got you. Okay. That's helpful. And then I guess as my follow-up, so you mentioned the fall expansion pack and some of the big updates. You brought on the new claims data source in the fourth quarter as well. When you have big product refreshes or updates like that, I'm just curious how quickly you're able to communicate those upgraded features to the market. I'm wondering how much that factored into the year-end renewal discussions in the December, January time frame. And I guess the specific point around this is I'm trying to think about how much of that is sort of more incremental tailwind in 2026 selling discussions. Casey Heller: That's an excellent question. So given the timing of the fall expansion pack, that really came in at the start of Q4. And most of our customers have already kind of made most of the renewal decisions largely like 90 days out. So I actually don't think that we're seeing the impact from that -- the benefit from that showing up in the Q4 renewals just yet. I think we're going to learn about the extent that, that's going to boost renewals a lot more here in Q1 and Q2. So I think it's how that relates in terms of the guidance we've put together and put out is I think the guidance assumes some modest improvement in renewal rates, but I think that there certainly is still opportunity that we'll continue to monitor based on how quickly we see additional uplift and the impact on renewals. But it's not just the renewals. It's also now we've got -- we did a really good job historically of selling claims as an upsell motion and the cross-sell motion into our customers historically. We didn't really do that last year because we needed to address the data disruption. Now that that's been addressed, that opens up that avenue for us as well. So that will certainly be a boost to us in '26. There's a component of it baked into our '26 guide and we're continuing to kind of monitor results for more potential upside, and we'll talk about that more as the year goes on. Operator: [Operator Instructions] Next up, we have George Hill of Deutsche Bank. George Hill: I've just got two quick ones. Casey, you talked about the NDR improving or bottoming, I guess, in '26. I guess I don't know if you're willing to talk about like order of magnitude as you think about the recovery, like if we're modeling that going forward, kind of what does that look like? And Kevin, on the claims data, are you able to talk about like what amount of enterprise revenue does the claims data product -- to what amount of revenue does claims data underpin like various product revenue? And is the disruption there enough to consider that product significantly impaired? Or is there a resell process around that, like a reintroduction process as it relates to the claims data product? Are you able to just kind of go back to market with the patches that you guys have made? I understand that's the clumsy question. I apologize. Kevin Coop: Well, no, I mean, I get what you're -- the intent of the question is. So maybe what I'll do is I'll start with sort of the philosophical and the rationale and then maybe Casey can kind of quantify it to the question on both NDR as well as how do you size that. So the claims data, it's more -- it's really just a very simple issue that we faced. And it depends on the customer because it wasn't universally spread evenly across the country. So when you have, say, 30% of records that suddenly evaporate from the market and if you've entitled your customers to expect a certain number of records and now there's 30% less. Regardless of the reason, there's going to be pressure on rightsizing and downsell pressure when you renew or they want to be made right. And so remediating the claims data was twofold. One, we needed to get the actual counts back up to historical or better than historical averages, which is where we are now or above historical averages. At the same time, it gave us the opportunity to increase the quality because the one thing that I definitely -- and this relates to all of our data and all of our products. The single biggest reason and the #1 factor that our customers report why they select Definitive is because they rely on us for accuracy, and quality. Our data needs to be as pristine and accurate as possible. So it's not just -- it wasn't a simple answer. So now that you've gotten claims data that's been cross-sold very effectively in earlier years, that now creates a dissatisfaction even if the revenue component was less, it starts to impair other companies that may or other customers that may have acquired that as well. So remediating the volume and the quality at the same time was very important, and we are claiming job complete on that, and we feel very good about it. And I think it's starting to show up in the green shoots in the records going forward. As far as the question on how that impacts NDR and how you would size that, Casey, I don't know if you want to. Casey Heller: Yes. I think as far as what's assumed in our guide around NDR is a modest improvement, a couple of points. I think that, again, there'll be more that we'll monitor as we go through the year to be able to show if we're on track for that or if we've got the opportunity to do better. But we're confident in being able to deliver a couple of points of improvement on an NDR basis for '26. Operator: Next, we have Jeff Garro of Stephens Inc. Jeffrey Garro: I want to ask about renewals and sales activity in the life science end market. And you mentioned positive activity in December year-over-year, but I want to specifically combine that with the idea that we've heard from others, maybe some life science companies were distracted around December as they negotiated most favored nation pricing agreements with the administration. So curious to the extent you saw that and what you could tell us about pipeline development here in the first 50 days or so of 2026 as we get past that year-end 2025 period and start to look forward a little bit more as we've heard there's more budget certainty for these large pharma companies. Casey Heller: Yes. So let me start here around some of the dynamics we've seen in the life sciences space. Again, I don't think there's been a ton of change from the elements that we talked about all year. In Q4, there still was pressure around lack of upsell activity. But we talked about gross dollar retention improving about 200 bps at a total company level. That's a pretty consistent level within Life Sciences as well. So that stabilization and that improvement there, I think, is really important and it's something that we've been very focused on really kind of stabilizing that component of the business. As I mentioned earlier, when we got diversified and provider back to growth, now it's what's it take and what's that curve and really that the slope of that curve look like around life sciences. And that's what we're really focused around kind of executing against while continuing to nurture the growth that we're seeing within diversified in the provider space. But I can't say there's really been too significant of changes. I think we still are very highly engaged. We've got a lot of our relationships in the life sciences space are very long-standing. In fact, if you look at our logo churn rates, our logo -- sorry, our logo retention rates are extremely high in the life sciences space. And that's just an area that I think has been quite consistent for us for a long time. These are customers that have been with us for a long period of time. They value high-quality data. And we really just had these downsell pressures throughout '24 and '25 as a result of claims data disruption. And we feel really good about where we are today and being able to build back the revenue within these accounts over time. And that for us is really just a key component there of what is the slope of the life sciences recovery look like. And from a guidance perspective, we're being pretty prudent on the assumptions within the Life Sciences space until we get a couple of more green shoots under our belt. Jeffrey Garro: Great. I appreciate that. And one more quick one for me. Just the discussion of a return to organic innovation spend. I wanted to see if there's anything you can add more around the focus areas there and around the timing of product releases and eventual return on that investment. You mentioned one release later this quarter. So maybe help us just a little bit more with the cadence of other releases from there. Kevin Coop: Yes. As we're looking at our kind of compute capacity management and how we're deploying our resources, we're balancing the internal deployment of resources by focusing our engineering or problem-solving teams primarily and our AI-enabled product road map. And we're doing so with -- if I was going to give you the guidance on there, I would think of it in terms of Q2 is when we're really focusing on getting this into a more of a GA cycle, even though we are launching certain beta programs currently in this quarter, but I would look at it from a Q2 perspective. Operator: We have no further questions at this time. That concludes our meeting today. Thanks, everyone, for joining.
Operator: Thank you for standing by. My name is Kate, and I will be your conference operator today. At this time, I would like to welcome everyone to American Healthcare REIT Q4 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Alan Peterson, Vice President of Investor Relations and Finance. Please go ahead. Alan Peterson: Good morning. Thank you for joining us for American Healthcare REIT's fourth quarter 2025 earnings conference Call. With me today are Jeff Hanson, Chairman and Interim CEO and President; Gabe Willhite, Chief Operating Officer; Stefan Oh, Chief Investment Officer; and Brian Peay, Chief Financial Officer. On today's call, Jeff, Gabe, Stefan and Brian will provide high-level commentary discussing our operational results, financial position, our 2026 guidance and other recent news relating to American Healthcare REIT. Following these remarks, we will conduct a question-and-answer session. Please be advised that this call will include forward-looking statements. All statements made during this call other than statements of historical fact are forward-looking statements that are subject to numerous risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Therefore, you should exercise caution in interpreting and relying on them. I refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results, financial condition and prospects. All forward-looking statements speak only as of today, February 27, 2026 or such other date as may otherwise be specified. We assume no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law. During the call, we will discuss certain non-GAAP financial measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Reconciliations of non-GAAP financial measures discussed on this call to the most directly comparable measures calculated in accordance with GAAP are included in our earnings release, supplemental information package and our filings with the SEC. You can find these documents as well as an audio webcast replay of this conference call on the Investor Relations section of our website at www.americanhealthcarereit.com. With that, I'll turn the call over to our Chairman and Interim CEO and President, Jeff Hanson. Jeffrey Hanson: Well, thanks, Alan, and greetings to those of you joining us today. Before the team dives into our results, I want to start by addressing the leadership update that we shared earlier this month. As you know, I stepped into the role of Interim CEO, while Danny is on a medical leave of absence. I'm pleased to share that he's at home recovering well and is in good spirits. In fact, he remains engaged. He and I speak regularly each week on the business front, and he's participating in all of our Board meetings virtually while he's on the mend at home. He intends to return in the relative near term, but it's too early to have timing visibility at this point. By the way, we appreciate the many well wishes sent from our partners and stakeholders. We pass them along to the Prosky family. And for that, he's grateful. So thank you. For those of you who don't know me well, I served as Chairman since the company's formation and previously led AHR's predecessor companies as both Chairman and CEO. I'm 1 of the 3 co-founders of the companies, and I led this platform for roughly 16 of the past 20 years, alongside both Danny and Mat Streiff, Mat, of course, being our third founding partner and a current board member. Together, we built this platform over the past two decades with a clear vision, to create a disciplined health care company focused on providing and facilitating high-quality care and superior health outcomes. Our team here continues to reinforce this internally and externally as this vision is actually what drives our performance and long-term value creation, and this foundation remains firmly in place today. Along the way, Dan, Mat and I have built the executive management team that you know so well today. The rest of the Board and I have tremendous confidence in our team's ability to continue to do what they've done exceedingly well over the past decade, which is to drive the growth and the performance of this REIT. I want to be very clear at the outset. This is a seamless continuation of the strategy and execution you've grown to expect from this team. My role as interim CEO is one of continuity, support and advisory. There's no change in strategy. Our investment in capital allocation strategy, risk management framework, balance sheet posture and long-term value orientation remain unchanged, and our executive team continues to work very closely with the Board in executing against the established plan. It's also important to note that I've been engaged as the interim CEO full-time since the day after Danny's medical event. And I can tell you that the organization is operating with the same alignment, focus and clarity of execution as it ever has. One of the company's greatest strengths by the way has always been the depth and the commitment of our people, which is particularly evident during times like this. Importantly, the results you're about to hear reflect the strength of this platform and the depth of our team. And with that, I'll turn the call back to the team to walk you through the quarter and our outlook. Thank you. Gabriel Willhite: Thanks, Jeff. Operationally, the fourth quarter capped off another exceptional year of outsized NOI growth for AHR. We delivered total portfolio same-store NOI growth of 11.8% in the fourth quarter and 14.2% for the full year 2025. This marks our second consecutive year of double-digit total portfolio same-store NOI growth and it underscores the value of our hands-on asset management approach. Performance was once again led by our operating portfolio, which is comprised of our integrated senior health campuses, also known as Trilogy and SHOP segments. These segments now contribute 76.9% of consolidated cash NOI for our business where we continue to see the benefits of scale, alignment and operating leverage. The growth in our same-store operating portfolio in 2025 was driven by three primary things: occupancy gains, disciplined rate management and continued expense controls. Additionally, as occupancies moved higher throughout 2025, each incremental movement contributed to NOI growth and NOI margin expansion as we've seen margins expand 130 basis points and 280 basis points in our Trilogy and SHOP segments, respectively in full year 2025 compared to 2024. That operating leverage, combined with pricing discipline and occupancy is sitting near 90% positions us very well as we enter into 2026. Focusing on Trilogy, same-store NOI increased 14% in the fourth quarter and 18.4% for the full year. Same-store occupancy reached 90.6% in Q4, up 275 basis points year-over-year. Revenue growth was supported by both rate and also quality mix improvements. And quality mix continues to trend favorably. Medicare and Medicare Advantage penetration increased year-over-year, contributing 220 basis point improvements in both quality mix as a percent of resident days and as a percent of revenue in Q4 2025 compared to Q4 2024. We believe that this continued shift reflects exactly how Trilogy's proactive approach to aligning its care and services with the right payers best serves its residents. This emphasis on high-quality care and health outcomes continues to be recognized and appreciated by the health systems and Medicare Advantage insurers that Trilogy partners with. High-quality operators will continue to garner the most demand for growing care needs of the aging population. As we enter 2026, Trilogy is operating at historically strong occupancy levels with embedded pricing tailwinds that give us confidence in delivering another year of double-digit same-store NOI growth in the segment. Turning to SHOP. This segment again delivered the strongest growth across our portfolio. Same-store NOI increased 24.6% in Q4 and 25.2% for 2025 compared to the same period in 2024. Same-store occupancy surpassed 90% in the fourth quarter, averaging 90.6%, up approximately 290 basis points year-over-year. Combined with solid RevPOR growth, the resulting NOI growth is a testament to our and our operators' focus on high-quality care and outcomes in our investments in the resident and employee experience providing us additional pricing power in the markets we serve. These operational focus areas and investments along with the strong supply and demand imbalance within the long-term care sector have allowed us not to have to meaningfully compromise on any of the levers of revenue growth such as rate or occupancy within our pricing strategies. Once again, we expect SHOP to continue to lead our portfolio's organic growth in 2026, and this growth will be supported by our dynamic revenue management, which we're piloting with a number of our operators and properties by leveraging the platform that we continue to invest in with Trilogy. I expect that these developments in revenue management that have really been continuously evolving over time to allow us and our partners to capture sustained levels of above average NOI growth well into the next decade. Finally, I want to thank our operating partners for their commitment to our mission of providing high-quality care and outcomes for the residents they care for. Their standards of care have helped contribute to the great health outcomes and the resulting financial performance we've achieved, which we expect to continue this year. With that, I'll turn it over to Stefan. Stefan K. Oh: Thanks, Gabe. 2025 was a highly active investment year for AHR. We closed on over $950 million of new investments across our Trilogy and SHOP segments, all in collaboration with our trusted regional operating partners. Our investment philosophy remains consistent. We are focused on relationship-driven sourcing, disciplined underwriting and long-term cash flow durability and growth. The majority of our acquisition volume this year was within SHOP, where we added newer assets in attractive submarkets alongside existing regional operators. This has now positioned our SHOP segment as the second largest within our diversified portfolio in terms of cash NOI. By design, yet without set allocations, we've shifted more of our portfolio into our operating portfolio segments, which is where we continue to see the best risk-adjusted returns. Nonetheless, we will remain nimble and respond appropriately to any changes that occur in the transaction markets to take advantage of attractive opportunities as they arise. In many cases, our SHOP acquisitions were relationship sourced or off-market opportunities where we had deep familiarity with the operator and the local market dynamics. We continue to seek opportunities where we know the operator first and can underwrite performance with conviction. Our goal is not simply near-term accretion but sustained NOI growth. This is why we underwrite all our acquisition targets holistically by focusing on market demographics, operator expertise, acuity mix, an age of asset, just to name a few of the many metrics we evaluate to inform our potential risk-adjusted returns. The detail our team emphasizes allows us to be confident in allocating our dollars today to provide for the best possible near-term and long-term performance outcomes. Additionally, with many of our deals in 2025, we bought the newest asset within the respective markets, and we expect those communities to be market leaders for some time. Data continues to show that new starts and supply growth are at historically low levels, with deliveries of new stock below 1% of existing inventory, giving us conviction in our expectation that competitive pressure in those markets will remain muted. Further, any incremental supply should be absorbed rather quickly by the growing demand, highlighted by the baby boomer generation turning 80 this year. This dynamic should allow us to maintain market position for the next several years and beyond. In addition to successfully accelerating several previously announced pipeline deals in the third quarter, which enabled us to close approximately $665 million of new acquisitions in the fourth quarter, we have continued to secure and close new acquisitions in the first 2 months of 2026 that will further complement our portfolio. Year-to-date, we have closed on approximately $117.5 million in new acquisitions within our SHOP segment, and we maintain over $230 million of awarded deals in our pipeline. After a busy end to 2025, we continue to see more deal activity and more properties available for acquisition in 2026 through both off and on market channels, and we are prepared to competitively deploy capital in pursuit of this increasing volume of opportunities. With regards to development, our pipeline remains focused primarily on Trilogy expansions and campus growth initiatives. These projects are designed to generate attractive incremental yields with limited market risk, leveraging existing campuses to mitigate any operating losses upon opening as well as providing faster cash flow to recycle right back into the new development projects. In summary, capital allocation remains aligned with our long-term strategy. We believe we are well positioned within the industry with available liquidity and a strong operator network that allows us to source and execute on accretive opportunities. With that, I'll turn it over to Brian. Brian Peay: Thanks, Stefan. The fourth quarter rounded out a strong year for AHR as evidenced by the growth we were able to achieve. We reported normalized funds from operations attributable to common stockholders, or NFFO of $0.46 per diluted share in the fourth quarter of 2025 and $1.72 per diluted share for all of 2025. That represents 22% year-over-year NFFO per share growth in 2025 as compared to 2024. Importantly, this level of growth was achieved while continuing to improve our debt to EBITDA by nearly a full turn in 2025. Our earnings growth in 2025 was primarily driven by the double-digit total portfolio same-store NOI growth helped by the accretion from buying out the minority interest in Trilogy back in September of 2024, and additional accretion from the $950 million of new acquisitions. Our acquisitions were completed with a combination of retained earnings and accretively priced equity issuances over the course of the year from our ATM program and the November 2025 follow-on equity offering. I'm pleased that all areas of the organization contributed to the growth we deliver to our shareholders in 2025 and expect to carry this momentum into 2026. Looking ahead to this year, we issued 2026 NFFO guidance of $1.99 to $2.05 per diluted share. This implies another year of double-digit NFFO per share growth and only includes the previously consummated 2026 acquisitions that Stefan mentioned earlier of $117.5 million. Our total portfolio same-store NOI growth guidance for 2026 is between 7% and 11%. That range is comprised of the following segment level same-store NOI growth ranges: 8% to 12% growth in Trilogy, 15% to 19% growth in SHOP, 0% to 2% growth in Outpatient Medical and a range of 2% to 3% growth in our Triple-Net Leased Properties segment. Moving to our capital markets activity and balance sheet. We continue to execute opportunistically in the equity markets during Q4 of 2025. We settled forward equity agreements, raised additional capital via our ATM Program and completed a forward equity follow-on offering in November of 2025. We utilized this accretively priced equity to fully fund the approximately $665 million of acquisitions closed in the fourth quarter, the 2026 investments that have only recently closed and fund our planned 2026 development spend. As a result, we derisked much of the execution for the growth plans we have in 2026 and maintain ample capacity as highlighted by our 3.4x net debt-to-EBITDA to capitalize and close on the opportunities Stefan's team continues to evaluate. Importantly, this debt-to-EBITDA metric does not account for the approximately $287 million of unsettled forward agreements from our ATM and the November 2025 follow-on offering. We are entering 2026 from a position of strength. We have operating momentum, capital availability, disciplined underwriting and improving leverage metrics, equipping our team to continue to deliver on our mission of providing and facilitating high-quality care and health outcomes for our residents and creating value for shareholders. With that, operator, we'd like to open the line for questions. Operator: [Operator Instructions] Your first question comes from the line of Wes Golladay with Baird. Wesley Golladay: Can you maybe dive in a little bit deeper on the acquisition environment? Are you seeing any, I guess, subsegments, whether it's higher acuity or a little bit lower acuity that is having any cap rate compression or any changes to terms of the management agreements. Stefan K. Oh: Wes, yes, this is Stefan. Thanks for the question. First, let me just say that, obviously, we're very pleased with what we were able to accomplish in volume and quality of acquisitions this year. And I want to just publicly acknowledge the teams here at AHR and our operators for allowing us to do what we could do. I think just kind of directly at your question, we continue to focus on higher acuity SHOP assets. We think that there's a real benefit to focusing on the AL, the memory care side, I think it just allows us to have more confidence in the long-term stability of that asset class. We do obviously have some independent living in our acquisition portfolio that most of it is part of a continuum of care. But really, at the end of the day, that's maybe 20% of the total units that we're acquiring. I think there is a little bit of variance in terms of what we will see in pricing when it comes to a full continuum asset of AL memory care and IL versus something that might be strictly independent living. Obviously, a little bit lower cap rate on the IL side. But for the most part, we're sticking with the higher acuity asset class. So I think, again, that gives us some advantage. Operator: Your next question comes from the line of Ronald Kamdem with Morgan Stanley. Ronald Kamdem: Just two quick ones. Just starting with the SHOP, thinking about sort of the guidance for this year, baking in some deceleration. I was just trying to think through if you can decompartmentalize in terms of RevPOR and occupancy, how maybe you see this year playing out versus 2025? Brian Peay: Ron. Good morning, afternoon. So the thought is this, we had over 250 basis points of occupancy increase in our SHOP portfolio just in 2025. And the question becomes, are we going to do another 250-plus basis point increase? It's hard to say. I also think it's important to look at where we came from. Same-store NOI growth in SHOP grew 50% in 2024, 25% in 2025. And now the midpoint of our guidance range is 17%. So that's a pretty dramatic growth trajectory for that segment. We do know that we -- the more occupied our buildings get, the more pricing power we have. And at 90.6%, I think, is the same-store occupancy, we have more and more pricing power. You'll see us push rate for the existing residents, but you'll also see us pushing street rates far more aggressively. I think what you're going to see over time is there's going to start to become scarcity in certain markets. We have a tremendous conviction in the business over the next 5 to 10 years and can pretty comfortably say that occupancies are going to be somewhere between 95% and 100% during that time period, exactly where they end 2026 is sort of remains to be seen. That's I guess. Did you say you had another question? Ronald Kamdem: Yes. I just wanted to hit on sort of Trilogy a little bit as well just because you guys are at 90% occupied. I think you've made some comments about the benefit of quality mix being able to sort of help the business and so forth. I guess, just wanted to get an update on occupancy upside? And how much of that sort of mix shift you think can help sustain pricing? Gabriel Willhite: Yes. Great question, Ron. This is Gabe. So Trilogy's model, as everybody knows, is unique in the space where they've got the mix of skilled nursing, assisted living, independent living, memory care all under one roof in an integrated campus, and that creates different drivers for their NOI growth. We're pretty proud, like Brian said, at the numbers that they put up in 2024 and 2025. And we're very appreciative that we have a strong partner at Trilogy there, so I want to thank them for all their efforts on it. The key thing with Q mix is going to be shifting to the higher payer sources, which you've seen us do over the last two years, having more people in Medicare setting and Medicare Advantage settings helps and fewer in the Medicaid setting helps. We're also augmenting the existing campuses with more villa projects, which you can see in the development pipeline there pushing even more earnings growth through on the senior housing side and shifting the mix to more private pay globally. All those levers are things that Trilogy can use to drive the overall NOI performance, and it's difficult to predict exactly which way they're going to go. I can tell you that we're going to optimize for NOI growth. We're not going to sacrifice rate for occupancy. We're not going to sacrifice occupancy for rate. And we're going to make sure that Trilogy is pulling every lever that they have to continue to grow the business as they've demonstrated they can do. Operator: Your next question comes from the line of Austin Wurschmidt with KeyBanc Capital Markets. Austin Wurschmidt: I just want to go back to the same-store NOI growth outlook for Trilogy, recognizing it is a little bit lower than where you started last year straddling kind of the last 2-year starting point. I do recognize the occupancy is higher today, but Gabe, you did highlight the flow-through benefits at these levels. So I guess what are some of the moving parts to drive that upside versus the initial range that has kind of been a tailwind for you guys the last couple of years? Gabriel Willhite: Yes. Great question, Austin. I appreciate it. There are a number of different ways that things can break where I think with Trilogy, we've got upside potential that's disproportionate to downside risk. I do not see us going backwards in occupancy, but the velocity of occupancy gains could outpace even what we think, especially in the post-acute business where historically, there have been pressures on length of stay from both a Medicare and a Med Advantage plan perspective. Those seem to be normalizing. If that trend holds true, then I think you can expect some upside in our occupancy assumptions. The same is true about Med Advantage plans and the rates that we're getting there as well. 2025 was a tremendous year for optimizing rate around Med Advantage plans and primarily driven by one particular contract. If we had get more attention on that front, and we've got more partners that are recognizing and leaning into Trilogy's quality of care, I could see outsized growth coming from that lever as well. And then on the private pay side, what Trilogy has going on with revenue management is pretty unique. They've built a proprietary platform within their system, a solution that can price each unit dynamically in real time based on a number of attributes that they load into the program. They also can take micro market data real time and load that into the system. And they could push that information. They have a way to push that information through to the people that needed the most that are actually in the building. All of those things combined, I think, give them a strategic advantage, a competitive advantage on the revenue management front. And if we can push that throughout our platform to our other SHOP operators, I think it will benefit AHR as a whole. Austin Wurschmidt: That's really helpful. I mean are you able to offset the lower rate growth environment from the government reimbursement side of the business with the private pay portion and just through the mix shift opportunity you highlighted to drive that flow through? Or is it going to take more time, I guess, depending on -- you said, you kind of can't predict kind of the demand, but the contracts are in place to set it on the right path, I guess, directionally? Gabriel Willhite: That's a great question, Austin. That's the one that we all wish we had a crystal ball that was perfect to be able to tell where we go from here. There are scenarios where they can make up for it, I think, absolutely. But a lot of things would have to break Trilogy's way in order for that to happen. And I think it would be too speculative to be helpful for us to predict that those things would all break our way. Operator: Your next question comes from the line of Michael Carroll with RBC Capital Markets. Michael Carroll: Gabe, I wanted to circle back on your comments regarding the revenue management system. I know in your prepared remarks, I think you're highlighting some pilot programs of kind of rolling that out to some of your other SHOP-related partners. I mean, can you kind of help us understand where you are at in that process of rolling out that program? And have those partners started to see some type of benefit related to that yet? Gabriel Willhite: Yes. Thanks for bringing it up, Mike. I think it's an important differentiator for AHR as a whole, and it really stems from our unique partnership with Trilogy. So let me back up for a minute. With Trilogy, we've got, I think, an unparalleled alignment within the space, where the management agreement with Trilogy is highly incentivized based on an LTIP. And that LTIP is paid in AHR stock. We were the first people in the space to adopt the management equity plan that fully aligns our company's performance with the currency we're using to pay Trilogy's long-term incentive. What that did was really unlock a financial incentive for the Trilogy platform to help support our other shop operators. So now if they're doing extra work and investing in more time and effort and resources into helping our other SHOP operators perform better, they're actually participating in the value creation from that work. That was the catalyst for revenue management, and how that could be spread through our SHOP portfolio, but there are other areas where that can work as well. That can work in sales and marketing, search engine optimization, that can work in recruitment, employee engagement. It can work in enrichment for residents. There are a lot of different things that we're trying to test out to see how we can grow the platform value by partnering with Trilogy. And also some of our other operators that have great programs that can be spread throughout our operating platform to others through means that we can be a conduit for. So where we're at in that process is still too early for us to release the results from it. I think the people that are using it are both ends of a different spectrum. One is good operators that are very highly occupied, where the strongest lever for NOI growth is going to be revenue management in '26 and '27, '28, as they kind of pick up the pricing power from that very high occupancy. The other end of the spectrum is people who maybe have rates that are on the lower end of market and the markets that they're in and understanding why that exists, and if we can solve it with a revenue management tool then we'll just have another quiver or arrow in the quiver to use in these situations throughout our portfolio. Michael Carroll: And then what operators are finding this most successful? I mean I'm guessing that some of the bigger ones you have are probably not going to want or need this type of help. But are you starting with a few operators today and you plan on rolling it out to the majority of your operators down the road if it's successful with these first few? Gabriel Willhite: That's exactly right. We take a view that all of our partnerships with our operators are collaborative. We're not going to force anybody to use anything that they don't find to be helpful. If they're already maximizing their revenue management programs and they've already tapped into it as far as they can go, great. That's what we fully expect them to do. If they're smaller regional operators that feel like they're resource constrained, that don't have a full IT team to build out a proprietary program like Trilogy has, that's where we can be helpful. That's where we can help give them the resources they need to outperform the market. Operator: Your next question comes from the line of Nick Yulico with Scotiabank. Nicholas Yulico: In terms of the acquisitions, the awarded deals, the $230 million in the pipeline, I know those aren't in guidance, but can you just give us a sense for like the potential timing of those? And what is delaying the closing since I know -- I think you said some of those had been in place in the pipeline since the third quarter. Stefan K. Oh: Yes, this is Stefan. Well, I guess, just to address the first thing, it's not a delay of closing. Just to kind of go back to where we were when we last talked about on this call about acquisitions. At that time, we had about $580 million that we had closed through the point of the earnings call. Since that time, in the last 3.5 months, we've closed on about $500 million of acquisitions and added and closed on -- yes, closed on $500 million of acquisitions. And then in addition to that, we've added to our pipeline. So if you look at what we said in the third quarter call, where we had over $450 million of pipeline, we've actually added somewhere around $275 million to that today. It's a -- I mean, I will say that the pipeline is robust. The deal activity is very high. There's always a slowdown that happens in December and through the middle of January on the marketed deal side. But even despite that, we've seen a lot of activity happening over the past 4 or 5 weeks where new deals have been coming out. And on top of that, we we've been working with our operators on off-market deals. So there's a lot of deal flow. There's a lot of things that we are reviewing right now. And the pipeline is very dynamic. So I would expect that we're going to continue to be very busy reviewing deals that we think make sense for us and being very competitive on the ones that we really want to chase. Nicholas Yulico: Okay. And then just second question is on -- and again, going back to Trilogy segment, and when you guys break out the revenue by payer and bed type, as we think about the different buckets there that are, let's say, tied to the CMS rate that's going to be coming out in the next month or so. Can you just remind us sort of how this is going to work from a rate standpoint, how it plays out this year? Like how much that's going to dictate a portion of the revenue, as you explained on that page versus on the Medicare Advantage side, whether that's sort of in reaction to that rate just as people think about kind of the comfort level and where rates could be and how they impact Trilogy this year when you will have more visibility on that? Gabriel Willhite: Sure. So the main drivers off of the Medicare rate that's coming out in April are going to -- obviously, they're going to be Medicare and Medicare Advantage. So everybody can figure that part out about it. What's more nuanced and probably more helpful, Nick, is that within that Medicare rate, there is a mix shift even within the resident that comes in through Medicare. And Trilogy will optimize even within that payer source to find people with acuities that they feel like they can take care of well. So that's why you see a rate on the Medicare rate on that page in our supplemental, that's 5.2% when the national average increase was closer to 3%. So that's the acuity shift. And that can be helpful for revenue growth, that can be helpful for NOI growth and that can be helpful for margin expansion. On the Med Advantage side, those contracts typically price off of a percentage of Medicare as well. So the Medicare rate increase will flow through to Medicare Advantage. The dynamic part of that payer source though is that their individual contracts with different Med Advantage plans throughout the Trilogy portfolio, and there are a lot of them. All of those contracts are negotiated separately as a discount to the Medicare rate. And that's what you're seeing when you see the Medicare Advantage per patient day rate increase relative to the Medicare rate, we're basically shrinking the discount that's being applied from Medicare Advantage plans, and that's Med Advantage plans leaning into the quality at Trilogy. So Trilogy's 5-star rating is over 4 for its entire portfolio on an overall basis and over 4.8 for quality measures. Those numbers are far higher than other national providers and probably industry-leading on both counts. Those are the numbers that the Med Advantage plans are looking for when they're leaning into quality and trying to figure out we can really manage the cost of this residents' care the best and deliver the best quality of care for them. Operator: Your next question comes from the Juan Sanabria with BMO Capital Markets. Juan Sanabria: Just hoping you could talk a little bit more about the investment pipeline and what year 1 yields you expect. Given what you're seeing, what's kind of already locked and loaded, and what's being marketed. And as part of the acquisition strategy or goals if you're trying to move up "quality spectrum" to higher demographic type seniors that can afford higher rent increases or how you're thinking about affluence and importance there. Stefan K. Oh: Yes. Thanks for the question, Juan. So I think to the first part of your question, I would say that we have seen, on an aggregate basis, if you look at what we have been buying right now, pricing that's in around the high 5, low 6 number, stabilizing in the 7s. I think it's fair to say that there has been some cap rate compression that has occurred over the past few months. But I think that's still a pretty accurate reflection of where things are. In terms of how we're looking at our acquisitions, and what we're trying to achieve, our strategy has not changed. We are focusing on newer, higher-quality properties. We're continuing to focus on higher acuity communities. And of course, there is always going to be a component that's related to the demographics and the ability for those markets to have the ability to continue to pay higher rents as they move up. But I think that's also just a reflection of what kind of assets we're buying in terms of that higher quality. It's certainly our buildings that -- and communities that are much younger, much newer, fresher buildings. Residents are looking for something in that model. And I think as this population of future residents comes to fruition, there is an expectation that they are going to have a high-quality experience. So I would fully expect that, that is a population base that we will continue to be focused on just based on the type of assets that we're acquiring. Brian Peay: Juan, this is Brian. I would add to that. We're in a really advantageous position with our cost of capital. It allows us to buy buildings that are -- we call -- we're calling them value add, but it's not value add in the traditional sense that it's an old building that's falling down that you got to spend a bunch of capital on it. Instead, it's more likely a new vintage 2017, 2018 construction, maybe the developer still owns it. They were finally able to get out whole, and we were able to buy those. They're undermanaged. They could be in the 70% occupancy range, and it's in a market that we know, and we have a trusted operator that we feel very confident that they're going to be able to fill those things up. So we don't need to buy stabilized assets in order to get the returns that we want over time. They can come in a little lower, but we have full expectation that they're going to be in the 7s, if not maybe even better than that. Juan Sanabria: Great. And then just as my follow-up, curious on both the SHOP and the Trilogy segments on the NOI flow-through of incremental revenue with both segments kind of just over 90%, and how we should be thinking about that going forward? Gabriel Willhite: Yes. It's a range, Juan, this is Gabe, depending on how occupied you are. So at the high end of occupancy rates, you can maybe get 70%, 80% flow-through to NOI on incremental occupancy and SHOP. Same thing is true really in Trilogy's assisted living, memory care and independent living. On the post-acute care at Trilogy in the skilled side of the business, there's obviously lower pull-through because every patient needs a certain amount of hours of care per day. They're still -- don't get me wrong, there's still margin expansion that can come from that incremental occupancy that should be accelerating as you get to the higher occupancy levels because you're probably fully staffed as you get higher and higher up, but it won't be to the same extent as the SHOP portfolio because of the component of care. Brian Peay: Yes. Similarly, on the SHOP side, as you can imagine, the margins on the additional resident that moves in once you're above 90%, 95% occupancy, the pull-through is dramatic and Gabe sort of even referred to some of those numbers. In the AL side, it could be between 40% and 70% depending on your occupancy because at some point, you become fully staffed. You probably don't need to buy too much more incremental food for residents. Certainly, your insurance costs didn't go anywhere, your property taxes didn't go anywhere. So the pull-through is dramatic. And then on the IL side, which is definitely a much smaller component of our portfolio. I mean you're north of 70% pull-through on those. Operator: Your next question comes from the line of Michael Goldsmith with UBS. Michael Goldsmith: Maybe just on some of the like unstabilized or undermanaged properties that you are purchasing. Can you provide color to like what goes into turning around a SHOP asset that has been mismanaged? What makes your incoming operator different than the prior operator? And what are your operators going to do differently that the prior operators couldn't accomplish? Stefan K. Oh: Well, in many cases, it's experience, right? It's being -- having a presence in that market, having the experience of operating in those markets on scale, knowing what the demand levers are, how to market properly, how to hire the right staff, the right regionals to oversee those communities, building in the processes that they might have in place adding to the resident and the employee experiences. I mean there's a lot of different ways that I think someone with experience and the values that we see in our operators can change how those assets and communities are being managed. And the bottom line is you want great care, you want the employees to have a good experience, and you want the residents to also have a good experience. And I think our operators are prime to do that. They've got the ability to implement those in all the communities that we're acquiring. Gabriel Willhite: And I'd add to that, Stefan, I'd echo everything you just said. When we're partnering with operators on this, we're looking for experienced people that know how to run the business, know how to manage labor and expenses in addition to all the things that Stefan is talking about. And what we're seeing is that the outsized demand growth is actually having an impact on the transition time. So because you've got this pent-up demand for -- or maybe not pent-up demand is the right word, but surging demand for the product. If you can bring in a new operator and show people that are coming in for tours and seeing the building that you've got a great resident experience, you can fill the building up faster, and you can turn it around quicker than you have been able to in the past. And that is a very compelling investment opportunity for us. Michael Goldsmith: Got it. And as a follow-up, many of the SHOP players have been talking about a slight increase in competition for transactions. Can you talk a little bit about what you're seeing? And then in addition, does your relationship with Trilogy insulate you a little bit given you're able to deploy $370 million into Trilogy assets in 2025? And how should we think about Trilogy investment trends going forward? Stefan K. Oh: Well, let me start with just your answer about competition. I mean -- your question about competition. I think it's fair to say that there has been an increase in those that are pursuing SHOP, both from the other health care REITs and also from private equity. I think where our advantage lies is in the fact that about half of our acquisitions are being done on an off-market basis. We are working very closely with our operators, and they are bringing us potential transactions that they only know about because they have capital partners on the other end that are maybe looking to exit. Maybe they have assets themselves that they're at a point where they would like to recapitalize. So we have been able to, through our relationships, really grow our pipeline through those off-market assets that are available. Gabriel Willhite: On the Trilogy front, I'll take that one, Stefan. So it was an atypical year that we can't promise will happen again. So we had a lot of deals that we did with Trilogy that Trilogy was already managing for different capital that we had the opportunity to go out and recap with an operator that we completely trust 100%, sometimes in situations where the assets weren't even stabilized yet, so that we were confident in the growth profile from developments that we were doing through the pandemic. That's probably not repeatable. A lot of those opportunities we've already taken advantage of. What is repeatable, and what we do have an advantage on is the development capabilities of Trilogy. So like Brian mentioned earlier, there's $150 million to $200 million a year of development with Trilogy that we're essentially not competing with other capital partners for. So you can strip out the developer economics. In some cases, you can strip out the general contractor economics and those flow through directly to AHR and to the Trilogy management team that has an LTIP that's aligned with AHR stock price, so they participate in the value creation for the work there as well. Operator: Your next question comes from the line of Farrell Granath with Bank of America. Farrell Granath: I guess my first question was really just about the bridge between your normalized FFO growth and then your total same-store NOI growth and potentially on the other side of it, the total NOI growth that we could potentially expect especially in the SHOP segment when thinking about the acquisitions that you performed in 2025. Brian Peay: Yes. So listen, stopping short of giving you precise numbers, I can just give you a couple of things to keep in mind. On the SHOP side, because we only adjust our same-store pool once a year at the beginning of the year, there's a tremendous amount of SHOP assets that were sourced and purchased in 2025 that are not going to be in the same-store pool this year. And by the way, if you look at the supplemental at Page 10, you can see that the total portfolio is less occupied than the same-store portfolio. And that's really sort of tied in with that, what I described earlier, which was we're bringing in buildings that were undermanaged, they were underoccupied. And now we have an operator that we trust, and we feel very confident they're going to be able to fill those buildings. So I feel good about the non-same store, their ability to grow and all of those dollars and all that growth is going to inure to the benefit of the shareholders. They're just not going to show up in the same-store ratios. On the SHOP side, it's approximately 60% of the portfolio that's in same-store. On Trilogy side, I think it's 83%; 81%, 83%, something like that. So there's less non-same-store assets. And as you can imagine, those non-same-store assets were buildings that we took out of service because we wanted to add a wing or we took it out of service because we're adding patio homes. And that happens quite quickly. And by the way, the returns on those are dramatic and very beneficial to the bottom line. So generally speaking, I think that the non-same-store assets are going to perform well this year. You might even argue they're going to perform better than the same store. But the good news for us and the fact that we don't adjust the same-store pool except for at the beginning of the year that everything we bought in 2025 is going to be in the 2027 same-store growth. And so I would anticipate those numbers to be very positive as well. So we're talking about multiyear growth, bottom line. Farrell Granath: Great. And I believe you've been addressing this throughout the call, but just really wanted to nail it down. When thinking about the investment opportunity and especially with the pacing that you're able to be deploying your capital into these RIDEA-type structures, either through adding investments into Trilogy or into SHOP. How is that comparing to what you were able to do in '25, especially since now we've seen other peers have actually been increasing potential investment volumes for '26. Just trying to get a sense about where things could potentially shake out. Stefan K. Oh: I feel like you're trying to round about the questions for me to give you guidance. But I will say this. So obviously, if you look at how we acquired our portfolio, or how we -- how our acquisitions laid out last year, it was a little lumpy. Obviously, a lot of it came in the back end. I think you're going to see something that's a little more even over the course of this year. And I think I would just add, we are going to be looking at a lot of opportunities. We are going to be finding those that make sense for us. We're going to continue to be underwriting in a disciplined way that will provide us with high-quality assets and long-term performance. And we have the capital. We can compete, and I think we also have a great reputation as a buyer. So I think that, along with the fact that we are seeing more product available in the market, so far this year will lead to some very good things for us. Brian Peay: We're certainly aware of expectations for acquisition volume this year. I would tell you that we want to make certain we're not making bad deals. And if you think about the evolution of the underwriting, I think it may be evolving slightly. And what I mean by that is, it's not as though Stefan's team has immediately switched from being very conservative to overly aggressive. It's more a factor of when we were buying things in 2024 and 2025, we put in there some level of growth -- immediate growth in those. And what's happened is exactly that. We have seen that growth already in '26. We've seen the growth in late '25. So what that means is that they can continue to evolve their underwriting and be slightly less conservative. I think the other thing that he has mentioned a number of times, Stefan, that there's going to be enough volume out there, and there are going to be deals that are going to match up with our underwriting, with our needs, with our cost of capital, with our operator base and especially when we're bringing in such a huge chunk of those off-market directly through our operating partners. I give ourselves a pretty good shot at doing well this year on the acquisition volume. Operator: Your next question comes from the line of Seth Bergey with Citigroup. Seth Bergey: Good to hear about Danny is at home and doing better. I guess just to start off, you kind of mentioned some of the real estate that you're targeting wanting kind of maybe newer vintage assets in good locations and that all makes sense. I guess you touched on this a little bit with wanting to partner with operators that have experience. But just kind of given the alignment that you have with Trilogy and some of the revenue management tools that you've kind of discussed on the call. Would you kind of look for maybe less experienced operators to partner with where you can really kind of use that know-how that Trilogy has to kind of improve results and kind of drive higher returns on kind of with lower quality operators? Stefan K. Oh: That's a very interesting question. I think what I would say to that is, we don't necessarily want to go into a situation where we're basically developing the operator. We want to go forward and build with operators that have a proven track record. That is certainly the more sure and safer play for us. Obviously, there are probably a lot of great smaller operators out there that given the right resources, they could do some great things. But for us, I think we really want to focus on those that have the history and can prove -- and have proven themselves out. Gabriel Willhite: Yes. And I'd add to that, Seth. I think the question is really getting at what's the value that we can derive from Trilogy's platform to help support people, and that's come in a kind of a different angle than what you're talking about. It's not newer operators that are new to the game that have to build out their platforms and get good at what they do. It's taking smaller regional operators who maybe don't have the scale and resources that 150 facility Trilogy platform does, and saying, "hey, we're picking the winners and losers. You're obviously a winner. You know how to deliver great experience for employees and for residents, how can we help you scale and grow with you? How can we be the preferred capital partner for those best operators who want to grow because we know that the industry is going to demand growth from the best operators, and we're here for it." Seth Bergey: And then just as a kind of a follow-up. You've kind of talked on the revenue management tools that Trilogy have. You've talked on the operating leverage and on kind of the skilled side, some of the revenue optimization from the different payer sources. When you kind of think about kind of the margin expansion that's been about 300 basis points in SHOP, how much of that kind of do you attribute to kind of just the natural inherent operating leverage in the business, and how much of it is kind of the operating platform that you guys have with Trilogy. Gabriel Willhite: Great question. I think that what you're seeing so far is great operators that we've selected that are doing exactly what we want them to do, which is perform at a high level. We, for years, had operators summits and more recently created quarterly touch points with our operator groups to get together to share best practices, just for their own benefit, so they can start to build their platforms out and make sure that they're cutting edge because this is a very innovative business that's always changing and you can always get better at. I think some of that is picked up in the performance. But the Trilogy platform value is not fully realized and not fully baked. I think we're in early stages of where we can go with that platform. And hopefully, we'll have more to talk about in the next several quarters. Operator: Your next question comes from the line of Michael Stroyeck with Green Street. Michael Stroyeck: Within SHOP, what are you seeing in terms of seasonality so far in the first quarter? And how much of an impact on occupancy from seasonality is currently baked in the guidance? Gabriel Willhite: Yes. Good question. Last year, there was -- the flu had a meaningful impact on the portfolio. And although our move-in volume was as high as it had ever been. The move-outs were disproportionately high, and that was pulling overall occupancy down. So far, through early 2026, we're seeing much less of a flu impact. It's still -- I don't -- I think none of us in this room feel comfortable calling it that we're all the way past all the risk associated with the flu season. But so far, we're getting through it better than we did last year, and occupancy is not deeply impacted at least through February. Michael Stroyeck: Great. Then maybe one on the triple-net portfolio. There's a pretty steep decline in hospital coverage during the quarter. I know it's a small part of the portfolio and one of the tenants has had pretty thin coverage for some time. But can you maybe just provide some color on what drove that sequential step down and if there are any concerns with rent payments there? Brian Peay: Sure. Yes. Look, that hospital that we own in Southlake, Texas, it's a suburb of Dallas. The tenant is Methodist of Dallas, which is a AA- rated -- credit rated hospital system. They guarantee the lease. They vote with their dollars. They actually own along with the doctors, they own 9% of the hospital. They have personally invested upwards of $25 million of their own money into our building, which is really nice when people are willing to do that. So they're quite committed to this asset. The volatility is tied to the fact that these guys are really shifting this hospital from a surgical hospital to a community hospital. They have added an emergency medicine. They've added a stroke unit more recently. They've added nuclear medicine, and I think the next phase is Orthopedics. And so from any given month to quarter to the next, it's going to move around quite a lot. They're very committed to the building and the lease is guaranteed. So I feel quite comfortable with the risk profile on this one. They have a purchase option. It triggers in 2030. I would find it hard to imagine they would not wind up buying. Operator: I will turn the call back over to Jeff Hanson, Chairman and CEO, for closing remarks. Jeffrey Hanson: Well, thank you, operator, and thank you, everyone, for investing the time to join us today and for your continued support and confidence. It's much appreciated. I know that Danny is on the call as well. So we're looking forward to his return at the appropriate time. And in the meantime, the team remains focused on executing our strategy and creating long-term value for our shareholders. And with that, thank you. Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Maria Carrapato: Okay. Good afternoon. Welcome to our full year '25 conference call. Thank you for being with us again. We have the full Executive Committee with us, Corporate Executive Committee, and we'll kick off with Marco Patuano, CEO, a brief review of results, handing over to Raimon Trias, speakers for our financial overview, and then we're all available for Q&A. Marco Emilio Patuano: Thank you. Thank you, Maria. Good morning, everyone. It's a pleasure to be with you again as we open a new financial year and reflect on our results and our strategic progress. So in 2025, we delivered on all our promises, and we confirm how resilient our industrial model is. In a very volatile environment, we continue to execute our strategy with conviction and clarity and delivered results that demonstrate the quality of our assets and most importantly, the predictability of our revenues and organic growth model and reaffirmed the strength of the relationship with our plus. We successfully delivered on our 2025 guidance, and we reiterate our 2027 outlook. We have returned EUR 1 billion to shareholders through share buybacks, 1 year ahead of the plan, representing a total yield of 4.5%. We initiated dividend payments at the beginning of 2026 as committed at our Capital Market Day, and we continue on track to meet our leverage targets, reducing leverage from 6.39x in 2024 to 6.28x in 2025. We have reached an important turning point where year after year, we will generate increasing free cash flows, giving us greater flexibility to enhance our shareholder returns, fund industrial initiatives and reach our leverage targets. In 2025, we grew organically in all fronts with new points of presence accelerating throughout the year, showing continued demand for digital infrastructure. On a pro forma organic basis, our revenues increased by 5.8%, EBITDA by 7.1%, EBITDA after leases by 7.9% with a 1.6 percentage point increase in margin. Transformational industrial actions focused on boosting top line growth, optimizing cost and proactive lease management are unlocking the operating leverage of our business. Our recurring levered free cash flow grew by 11.5% and on a per share basis by 16.7%. And the free cash flow grew to EUR 350 million, confirming the positive momentum. On our capital allocation strategy, we completed the disposal of the French Data Center business, allowing us to increase our focus on core telecom infrastructure assets. At the same time, we have agreed to dispose our participation in the DIV II fund for circa EUR 170 million. DIV II for memory is a participation in a European infrastructure fund underwritten in 2021 in order for us to explore minority investment opportunities in digital assets. And we successfully issued in 2026, a bond for EUR 1.5 billion in 2 tranches to anticipate funding requirements, extending maturities and securing a pricing at 3.4%. From an organizational standpoint, we also recently announced the implementation of a more streamlined and agile leadership structure, which I will give you more color on shortly. Returning to our guidance for 2025, I would like to highlight our delivery across all the key metrics. And the fact that this guidance was set almost 5 years ago confirms the resilience and the predictability of our business. Consistent execution of our industrial plan is translating into operating results, which combined with normalizing capital intensity, underpins the trajectory of growing cash generation and sustained profitability. As I mentioned, we announced a new organizational leadership structure in February, marking important progress in the next chapter of our industrial transformation strategy. The new model is designed to bring sharper strategic focus, deepen customer relationship, enable faster decision-making and stronger functional alignment, all essential to support continued organic growth. We combined geographic cluster with a pan-European Vertical Solutions division, strengthening execution while ensuring consistency across markets. We are entering in a chapter defined by operational focus, team empowerment and agility, ready to capture the opportunities ahead. I would like to give you a flavor of why we created our new Vertical Solutions division. Several connectivity needs today exceeded the capacity of a traditional macro coverage and require solution very specialized by nature. Transportation, venues, city centers, public safety, defense, resilience, all of them are very different in terms of technical solution, but very similar across the geographies. We are deploying an operational model aimed to scale up every vertical connectivity solution, increase the commercial focus and ensure execution discipline and improve accountability. We are already leaders in Europe, leveraging on our centralized design capabilities and our country execution power, we want to further improve our performance. Now I hand over to Raimon to go over the highlights of our operating and financial performance. Raimon, please. Raimon Trias: Thank you, Marco. Good morning, everyone. I would like to start by reinforcing our very positive performance in terms of organic growth and cash conversion in the year '25. Robust revenue growth, combined with a continuous focus on operational excellence is driving higher profitability, a stronger operating leverage and expanding cash flow. Starting with organic revenues, we delivered a solid 5.8% year-on-year. EBITDA grew by 7.1%, supported by ongoing actions to increase operational efficiency. EBITDA after leases was 7.9% higher, reflecting our proactive lease management activity and recurring levered free cash flow rose 11.5%, supported by the disciplined implementation of our capital allocation strategy. Very important, the recurring levered free cash flow per share grows by 16.7%, underscoring the incremental value we create for shareholders. Moving to Slide 9. As usual, we show you the bridge between reported and organic pro forma revenue growth. Starting from EUR 3,941 million revenues in 2024, the perimeter adjustment for Ireland and Austria brings us to a pro forma revenue base of EUR 3,790 million. From there, the combination of escalators and CPI, colocations and build-to-suit deployments led to organic revenue growth like-for-like of 5.8%. This strong revenue performance, as you can see in the next slide, is led by healthy PoP growth in the fourth quarter '25 and as Marco said, throughout the year. Gross colocation and build-to-suit accelerated to 3,043 in the quarter, demonstrating sustained customer demand and a strong commercial traction across the portfolio. We recorded a strong colocation in France, 220; Italy, 887; and the U.K., 128. We continue BTS deployment across most countries and overall churn was contained at 307 units. Net new PoPs have shown consistent quarter-over-quarter growth throughout the year. Moving to Slide 11. The net PoP growth in 2025 has been 4.5%, fully absorbing a 1.2% churn influenced by the effects of 2 major consolidations in Spain and the U.K. In Spain, despite the Mas Orange network reconfiguration process underway, we recorded year-on-year growth in total PoPs. This reflects the importance of the support we provide our customers in their ongoing network deployments and how we benefit from the unlocked potential for MNOs to invest after-market consolidation. The U.K. also posted consistent quarterly growth, driven by continued 5G deployments, amendment programs and selective new site activity, illustrating the depth of demand and ongoing investment to catch up and improve network quality across the country. If we go to the next slide, the strength of our operational performance is again clear in this slide, which shows organic growth in Towers revenues of 5.5%, driven by contractual escalators, colocation and ongoing build-to-suit rollouts across our main markets. A reminder that these figures are adjusted for Ireland and Austria for comparability. Here, we have selected a few practical examples that show how our industrial strategy is being translated into real-world execution across different areas of the business. First, 5G densification in Italy. Fastweb, Vodafone and Cellnex Italy have extended their strategic agreement for an additional 12 years. This enables enhanced coverage and improved service quality through the deployment of 5G, supported by over 1,000 points of presence across the country. Second, network resilience and power autonomy. Telefonica and Cellnex Spain have signed the first agreement of its kind between a TowerCo and an operator to strengthen power assurance across more than 2,000 sites. This initiative improves network resilience and energy security following the recent blackouts in Spain. There is potential to develop more energy-related business across our portfolio, provide interesting upside to our core tower services. And third, the new markets through nonterrestrial networks. We provide land acquisition and construction capabilities to support low earth orbit satellite initiatives. Cellnex can provide essential gateways between LEO constellations and the terrestrial fiber backbone. Together, these examples illustrate how our operational strategy is being deployed on the ground and how it is opening new avenues for growth while reinforcing our role in next-generation connectivity. Let's move on to Slide 14. Fiber, connectivity and housing services delivered a strong 16% increase in revenues, supported by the continued rollout of the Nexloop project in France. Growth in DAS, Small Cells and RAN as a Service was driven by flagship deployments and the increasing relevance of neutral host solutions with projects delivered across venues and high-traffic locations such as [ Roig ] Arena in Valencia, La Cartuja stadium in Sevilla, PGE National Stadium in Poland, 5G rollouts in Madrid Metro in more than 40 parking facilities as well as multi-operator small cell deployments in Portugal and the renewal of long-term IoT agreements such as Securitas Direct. Our broadcasting business remained stable with a 1.9% growth year-on-year. And importantly, we secured the renewal of our long-term contracts with the leading broadcaster in Spain. On Slide 15, we can see that our industrial plan continues to scale and strengthened by the adoption of AI. The initiatives shown here aim to standardize processes, automate operations and reinforce asset management across the group. This collective effort is making the organization more agile, reducing operational complexity and improving our ability to respond quickly and consistently across countries. It is also visible externally. In 2025, customer engagement reached a new high with customer satisfaction index increasing to 8.3 out of a maximum of 10, the best result of the past decade. We are on a path of coordinated transformation that is elevating efficiency, effectiveness, quality and overall service experience. This industrial platform has helped so that our efficiency initiatives are translating in clear margin expansion, as you can see in the next slide. On a pro forma basis, we reduced cost per towers across all our key cost categories, 1.9% less in staff cost, 1.4% less in repair and maintenance, 4.9% reduction in SG&A per tower and 1.1% reduction in leases. Land management remains a key value driver for us. We deployed EUR 270 million across land acquisition CapEx and efficiency programs, generating around EUR 24 million in efficiencies, displaying how our disciplined capital allocation strategy helps offset volume and CPI-related inflationary pressures in lease cash-outs. These focused efforts have driven an increase in EBITDA margins of 300 basis points to 62.1%, up from 59.1% in 2023. The first part of the next slide shows the bridge from reported EBITDAaL and all the components that shape our free cash flow. In addition to our operating performance, this strong recurring levered free cash flow comes from an efficient capital and tax structure, combined with the continued decline in expansion and build-to-suit CapEx, free cash flow amounted to EUR 350 million. This free cash flow acceleration represents a turning point, as you can see in the next slide. Our operational improvements are clearly flowing down to cash. On a pro forma basis, recurring levered free cash flow grew by 11.5%, almost EUR 200 million. And on a per share basis, the increase was even stronger at 16.7%, also reflecting the share buyback program, which continues to enhance value per share. Looking at reported figures, free cash flow reached EUR 350 million, with underlying free cash flow, excluding or before the remedies, improving by EUR 307 million year-on-year. 2025 marked an important milestone for us with the entry into a new phase of consistent and rapidly accelerating free cash flow generation that supports our deleveraging strategy, as you can see in Slide 19. Net debt to EBITDA improved to 6.28x from 6.39x in 2024 and 6.85x in 2023, keeping us firmly on track towards our 5x to 6x target. I would like to note that the pace of deleveraging could have been faster. If we hadn't brought forward EUR 1 billion in shareholder remuneration, our leverage would have closed below the 6x. Our recent EUR 1.5 billion bond issuance that Marco mentioned before in January '26 successfully [ propounded ] most of our 2026 maturities with a strong appetite from investors on the back of a good market momentum and our strong rating outlook. We managed to extend maturities and secure an attractive 3.4% pricing. Now let me hand back to Marco so that he share our guidance '26 and '27. Marco Emilio Patuano: Thank you, Raimon. I would like to close our presentation with the message of confidence. The strength of our business and underlying sector drivers, the continued execution of our strategy and the power of our customer relationship give us the confidence to firmly reiterate our guidance for 2027 and share our outlook for 2026. Let me highlight that our old outlook has been adjusted to reflect 3 elements: the change of perimeter following the data center disposal, the discontinuation of our operation and maintenance business in Spain and the incremental financial costs associated with the share buyback. As you can see, we are very optimistic about our continued growth, profitability and cash generation. So in summary, 2025 was a great year for us, and we're very confident going into 2026 and 2027. Our business model is intact. Drivers of network investments are healthy and customer relationships are stronger day by day. Our organization is driven with renewed leadership focused on growth, efficiency and customer excellence. Our growth trajectory and increasing free cash flow underpin our commitment to enhanced shareholder remuneration and give us further capacity to outperform our CMD distribution targets. So thank you. Maria Carrapato: Okay. So before moving to the Q&A, I'd just like to highlight that in addition to the main slides in the body of the presentation, we've added a few new slides at the end, some fact slides that cover many of the topics that you often ask us. So we really hope you find them useful. And with that, we're now available to take your questions. Maria Carrapato: So the first question that we have on the line up is from Roshan Rohit -- Ranjit at Deutsche. Roshan Ranjit: I just got 3, hopefully, quite quick, please. Marco, you highlighted the Spanish revenue pick up, so kudos. I guess this is the benefit of the kind of the mergeco ready coming through now. Could you remind us how many ops and the trajectory of that ramp up through 2026, please? Secondly, on the EBITDA pick up, a strong acceleration on the organic growth. Is this now the benefit of the rank of [indiscernible] coming in and we should expect that momentum to continue through '26, or is there an element of timing effect in there, please? And lastly, thanks for the additional color on the backup slides. I'm quite interested in the RAN sharing slide, and you've given examples across Europe. Is it possible to get a sense of the kind of pricing premium across different markets that you attribute from RAN sharing?. Is it kind of a consistent uplift in the pricing? Or does it vary dependent upon market structure? Marco Emilio Patuano: Yes, very good. So on your first question on Spain, I take question 1 and 3, and I leave the EBITDA to lease to Raimon. So on your first question, so Spain had -- the first phase in Spain was the redesign of the network coming from Mas Orange. So you see that at the beginning of 2025, we had a material churn in the -- in our point of presence. We started in the second part of 2025 to activate the RAN sharing agreement we have with Digi, which was a part of the deployment strategy of Digi in Spain, and we started the so-called rural project in Spain with Mas Orange. Now for 2026, we start entering in the densification process project that we have with Mas Orange and we will continue to activate more PoPs with Digi. So 2025 was Mas Orange very much focused on reshaping the network and the activation of Digi filled the gap that was coming from some discontinuation in Mas Orange and 2026 on the contrary will be Mas Orange starting the densification project. Your second question on RAN. The question on RAN is pricing depends very much on -- not very much, to some extent on market conditions. You should imagine something between half of a colocation price and 1/3 of the colocation price, depending on the structure of the market. Normally, they have very, very, very limited activation costs on our side. So it's a pure margin for us. because there are basically no CapEx associated to this. Yes, there are some OpEx because our engineers have to make some little adjustments, but it's pure margin. Raimon Trias: The EBITDA perspective and Landco, as you will have seen this year, we have done up to EUR 270 million worth of initiatives, both on efficiency land acquisition across all the different countries that have allowed us to save approx EUR 24 million in terms of savings of EBITDAL. As you have seen on the guidance, this trend will continue going forward. The idea is that over the next years, since we created Celland, we have accelerated the amount that we are able to buy and we're buying more than prior years. It is true that we need to be careful not to compete with ourselves, and we need to keep certain level that normally we consider rate between EUR 250 million, EUR 300 million for the coming years to keep on achieving this level of savings going forward. Roshan Ranjit: That's great. So just on the last point, Raimon. So the kind of Q4 exit EBITDA growth would be something that we can expect through '26 then? Raimon Trias: I would say, if you take the savings that we have achieved this year, there is part of it, as you are saying, there has been a bit more of activity in the last quarter and a bit more of savings. So you have to consider that for doing the phasing for next year. But then next year, it will depend if we buy EUR 250 million, EUR 300 million, that the new savings of next year will kick in as well. Maria Carrapato: So moving on to the next question. It comes from Rohit at Citibank. Rohit Modi: I have 3, please, as well. Firstly, on the guidance for 2027, I understand the guidance was initially given it was a bit long dated and you have a broader range. Now given you are near to 2027, we have already in start of 2026, we still have, I understand 5% on range on the revenue level, but that goes down to 20% on free cash flow level and with a business like Cellnex where you have a higher visibility. I'm just trying to understand what are the swing factors on recurring level free cash flow and free cash flow for '27 that you expect that number can move from lower end to higher end. That's the first one. Second, again, there's a lot of noise we have seen particularly recently in Italy around renegotiation of contracts. I'm just trying to understand, Cellnex could be any kind of beneficiary if -- from -- if any, anything happens in Italy. And lastly, if you can just remind us around the derivative position that you have taken last year, the swaps just before the buybacks. I mean, is there a kind of termination date do you have on those swaps given you do mark-to-market and you have kind of cash outflow -- potential cash outflow if you move terminate that contract. Marco Emilio Patuano: Okay. So on 2027 guidance, yes, I remember there was a bit of skepticism in the recent past about our capacity to go to target. The more it was long term, the more the skepticism was higher. Today, I think that the level we reached in 2025 give good visibility of how the recurring level free cash flow and free cash flow are achievable. So what are the factors that made them achievable? Well, we defended and protected the revenue growth. The revenue growth despite a worse-than-expected originally expected CPI, we are maintaining a good level of growth. This is important. And as you saw, the idea of making a new organization is in order to keep revenue growth. We are performing well in terms of efficiencies, Raimon just explored. And even more, our discipline in capital allocation was demonstrated more and more. So the range for 2027 is what we confirmed at the Capital Market Day. And the more we get closer to this day, the more we see it feasible, both in terms of recurring levered free cash flow and even more importantly, in terms of full cash flow. So your second question was about contract renegotiation. Look, what I can tell you is that we already renegotiated several contracts. Renegotiated with Telefonica, we had no problems. We renegotiated with Vodafone, we had no problems. We renegotiated with KPN in the Netherlands, we had no problems. With Iliad in France, we had no problems. So our experience is that the renegotiation moment is a moment in which you sit with your client. The client will tell you what he likes and what he doesn't. But the core elements of our contracts have never been questioned. So the fact that it is a long term is a long term, the fact that it's an all or nothing, is an all or nothing, and it has never been questioned until today. On top of these, talking about Cellnex, what I can tell you is that the coming renegotiation are not tomorrow. So we have the next renegotiation we have one in Italy in 2030, and then we go to 2033, 2034, 2035, 2036, 2038, 2042, 2048. So in this moment, of course, we are looking with attention what happens in the industry, but our experience as of today has not been dramatic. And the last, I leave to Raimon. Raimon Trias: Yes. On the last topic, I'm not sure if I understood properly, but I'm going to try to answer what I understood. I think that you were asking why last year, most of the return -- all the return that we have done to shareholders have been through the share buybacks. There are various reasons. The first one, if you remember, in the Capital Markets Day, we committed to a dividend starting 2026. Why is that? You've seen the guidance that we have given. The free cash flow is between EUR 600 million and EUR 700 million. So it allows us to pay a dividend based on the cash generation from the business. Last year, we had cash available that it was coming partially from the cash generation of the business, the EUR 300 million that we have done EUR 350 million, but it was coming also from the divestments of Austria and Ireland. And on top of that, the share price was at a moment that was very attractive. That's why we also decided to use the proceeds for doing the share buyback. I hope it was clear enough. Rohit Modi: Sorry, it was regarding the swap, the swap contract that you entered last year, would you continue to have that contract? Raimon Trias: No, the equity swap, it is still in place. It matures in June '26, and it was bought at EUR 32, and we are today at EUR 31.5. Maria Carrapato: Okay. So moving on to the next question. It's coming from Arnaud Camus at Bestinver. Arnaud Camus: First, I assume the disclosure may be limited, but could you provide some indication of the size of the battery resilience agreement you have signed with Telefonica in Spain? Should we assume this is a replicable model to other countries of your footprint? And two, more broadly regarding the forthcoming Cybersecurity Act. I know it may still be early, but could you share any initial visibility on the potential CapEx envelope and implementation time as you are an infrastructure provider to telecom operators? And is it already considered within your 2027 guidance? Marco Emilio Patuano: So the battery agreement is still -- sorry, it's relatively sizable with Telefonica. We are discussing with them how to expand it more because what we agreed with them is to have modular development of this program based on the network design. Our technical teams are working strictly together. The target is to have several thousand sites covered. And it's a super interesting business model because what we do is like imagine not to be a pure infrastructure or a simplified infrastructure, but to be a service infrastructure provider. So we help to take care of the infrastructure from the bottom to the top. Having a program that allow us to buy batteries on a pan-European basis, we can have very good prices. And even more importantly, we have very long insurance terms for the life protection of those batteries. We agree on life protection up to 15, 20 years. Is it replicable? Yes, it's very replicable. We have several other customers that are interested in this business model exactly because of what I told you. We are negotiating very good prices on very good volumes. don't underestimate the fact that securing volumes in this moment in which there is -- starts to be a certain level of shortage on this type of elements is clear. About the Cybersecurity Act, the CSA, I was in Brussels last week talking about DNA and CSA, so the 2 regulations that are expected going forward. The answer is, yes, we are working very closely with the European community. There are still margins of nonclarity -- nonperfect clarity in what is going to be the final outcome. And to be honest, different member states have a different interpretation of the scope. Some are more strict, some are less strict. What we have in 2027, we are convinced that is full enough for what is going to be the requirement of the CSA. Then if you ask me if the CSA will be fully enforced in 2027, I'm not so optimistic. Maria Carrapato: Okay. So moving on to the next question. It comes from Fernando at Alantra. Fernando Abril-Martorell: Two quick questions from my side. First, on the expansion CapEx. I've seen it is down 6% year-on-year on a pro forma basis. So I don't know if you can elaborate a little bit on the main drivers behind this? And also, how should we think about its evolution for '26 and '27, the split between the different 3 CapEx items? And second, on PoPs growth. So you've accelerated throughout the year. Is it reasonable to assume a similar growth profile in '26? And can you give us an indication of what share of new PoPs will be linked to RAN sharing agreements? Marco Emilio Patuano: Okay. On expansion CapEx, so there are 2 elements. A few time ago, Raimon showed you that on DAS, Small Cells, RAN and other services, we grew almost 5%. The reality is that if you open this number between DAS and Small Cell RAN and other, you would have seen that DAS and Small Cell were growing about 8.1%, RAN about 10% and the other was growing much less. But the real focus for us today is DAS, Small Cells and RAN. So going forward, what we see -- the place we see having the CapEx is those 2 areas; DAS and Small Cells in this order, more DAS than Small Cells. So the Small Cell take-up is still low even though there are some interesting use case in some European countries that we are monitoring very closely of Small Cells covering city center very efficiently and with a very low urbanistic impact and the other is RAN. Our RAN project in Poland is using some CapEx. So this is about the expansion CapEx. Then of course, there is a part of expansion CapEx that is linked to colocation, but its tower expansion CapEx that you know every year, we have more or less the same. About PoP growth, Raimon? Raimon Trias: Yes. So during the year '26, you know that our growth in PoPs comes from 2 things, comes from colocations and it comes from build-to-suit. Build-to-suit will slow down a little bit in the year '26 basically because our programs of build-to-suit are reducing year-on-year as they come from the prior M&A deals. The normal colocation, we're expecting similar growth this year, not a big difference. And you were asking as well from our RAN sharing perspective. This year, the RAN sharing has mainly been in Spain with the entrance of Digi. And I would say that for next year, although you also have a bit in Italy, I would say that for next year, you have to consider that there will be similar RAN sharing coming from Spain and a bit in Italy as well. But I would just consider that from the colocation comes from Spain is what will be RAN sharing. Maria Carrapato: So moving on to the next question coming from Ondrej at UBS. Ondrej Cabejšek: I had to step away for a moment, apologies if I'm repeating the question. Please feel free to ignore. I have 2 questions, please. One is on the news that Iliad has decided to allocate part of the contract that you were mentioning at the previous quarter that you are kind of looking at the 4,000 sites in France. So Iliad has allocated at least half of this to TDF. I was wondering, Marco, if you can again kind of explain to us your thinking about the returns on this project, why this is the second project with Iliad specifically that you are kind of turning or walking away from presumably because of the kind of IR not meeting your standards. So that would be question number one, please. And second question related to France. We heard last week on the CMD that Christel, the CEO of Orange, was talking about again, again kind of investment remedies. And so I was wondering if this is something that is already somehow kind of taking shape in light of various positive, say, developments, for example, the European Council openly suggesting that M&A should be allowed and investment is needed, remedies are needed in that direction. So any kind of color on developing talks around that potential situation would be very helpful. Marco Emilio Patuano: Okay. I answer Nemrod and then today with us, there is also our Chief Strategy, who is French, by the way. So I will leave him to respond Ondrej. So on Nemrod, yes, we have been -- we participated to the tender and the tender itself is an evidence that there is more need of coverage and densification. So this is -- I commented a million times in the past and then there is a tender. So the good part of the story is that densification needs are there. We've been looking to the tender. We submitted an offer, but we submitted an offer that was in line with our capital allocation rules. So did make us not to reach the agreement with Iliad because it was out of our investment criteria and our capital allocation criteria. So we decided that if there was someone offering more, we would have stayed disciplined. So our goal is not to catch up with every investment there is in Europe. There are -- we are disciplined. We know where we create long-term value creation. And so that's it. We will focus on other projects. Vincent, would you like to answer the second question? Vincent Cuvillier: Yes, of course. So yes, we are obviously very -- extremely close to our different customers. We are not directly involved, as you perfectly know, within the discussion of the consortium. But we are also, as Marco mentioned, pretty convinced that any consolidation, if it happens, will come with investment remedies not only in new coverage, but also on the resiliency of the system. So we have shown our proactiveness with all our partner there to support these remedies. And as you perfectly know, in any case, what we will procure is to protect the NPV of our contract and giving some short-term flexibility in exchange of long-term growth that will come from these remedies without any doubt. And this is what we will protect -- this will result in the protection of the NPV of our contract. Marco Emilio Patuano: Okay. Thank you. So yes, I was with some members of the French institutional establishment and what they told me is that they consider infrastructure investment, a high priority for the country. So there's no doubt that there will be more investment coming. Maria Carrapato: Okay. So now moving on to the next question. We have Abhilash from BNP on the line. Abhilash Mohapatra: I just had one, please. I wanted to come back to the topic of the guidance ranges and specifically around the revenues. So about EUR 100 million delta for 2026 between low and high and EUR 200 million for 2027. Just wanted to understand specifically around revenues, what is the key factor there? Is it around inflation assumptions, presumably not given it's so close. So is it mainly around colocations? Or are there any other factors? So any color you could add there around the revenue would be very helpful. Marco Emilio Patuano: Yes. Do you want to Raimon? Raimon Trias: In terms of the guidance, the only thing that we have adjusted, you have it in the presentation is basically the change of perimeter that is coming because of the data center disposal. Also, we have adjusted the discontinuation of the operational maintenance activities that we have in Spain. If you recall, we decided to stop this something like 18 months ago, but it had an impact during 2 years still because it took some time to discontinue the operations. And the third thing that we have adjusted into the guidance is the impact of the increased share buyback that was not considered in our numbers in the Capital Markets Day. The rest of the guidance, '27 has not changed and remains as it was before. Abhilash Mohapatra: Apologies, if it was not clear from the way I framed the question. I was just -- maybe sort of more wondering around what is driving the variance between the low and high end of the revenue range. What are the key factors? Marco Emilio Patuano: Yes. I think that the width of the range depends very much on somehow the future of build-to-suit programs if we are going to allocate more build-to-suit programs or not. A [ Nemrod ] project enters, we have the full capacity in our cash flow to have such a project and it contributes to your growth. The Nemrod project doesn't enter, and we rely more on colocation and the existing commitments that we have. So having -- or maintaining a certain element is absolutely normal. And by the way, so it is also a decision of not to touch what we committed at the Capital Market Day. So if we start touching one point, then we have to make a full revision. So -- but if you ask me what can move us from the low end to the high end, I would tell you that what is going to come from colocation, RAN sharing, et cetera. More or less, we have a fairly clear picture. What are the commitments that are already taken. We know even the [ cent ] is possible that something more materialize in the coming months before -- between here and the end of 2027. Yes, and we will evaluate. We demonstrate we are disciplined. We're not going to make crazy stuff. If we do something, it's because it generates value, long-term value. So I think it's fine. Raimon Trias: If I can add to Marco, it's important that everyone understands the predictability of the business. This year, we have achieved the guidance '25 that was given 5 years ago. So the barrier that can happen within these numbers is very small in that perspective. Marco Emilio Patuano: Good. Abhilash Mohapatra: Thank you both for the color. So just to clarify, so you're saying that the high end of the guidance is more sort of predicated on additional build-to-suit projects over and above what we already have, if I understand that correctly for the revenue guidance... Raimon Trias: For going up to the higher part of the guidance, yes, there are other projects that should be won during the year to be able to get to the higher part of the guidance correctly. Maria Carrapato: Okay. So moving on. We can follow up afterwards if you still have any questions. Now moving on to the next question, comes from Fernando at Santander. Fernando Cordero: My two questions, in fact. The first one is related with a follow-up in the sense that you have been already asked about your confidence on the growth for 2026. I'm going a little bit beyond given that the build-to-suit activity is going to clearly decrease by 2027 and onwards. How confident are you of replacing the current [indiscernible] of growth coming from build-to-suit with colos. And the second question is on active equipment. You have already seen the project in Poland. I just would like to understand at which extent you would be also, let's say, open for additional projects, and particularly, I'm thinking in Spain, just as a way to complement your current portfolio and even to, let's say, to give more visibility in the long term to your current business in Spain? Marco Emilio Patuano: So the build-to-suit programs, as I said, 1 second ago, we are -- we have a program of committed that what has been already committed, has a sharp decline after 2026. 2027 will be materially lower than 2026. And -- so this is why we are working on analyzing future possibility, future opportunities that can appear in the market. On your question on active equipment and especially on Spain, I would say that it's not our sweet spot. So if you ask me if is this your sweet spot? My clear answer is no. We have the project in Poland. We are performing the project in Poland, I would say, fairly okay, okay in terms of how the project is going on, what are the returns, the relation with the client, et cetera. But what I can tell you is that contributing with a material benefit to the client we can do way more on the traditional perimeter than on the active component. Then every case is different. Today, a case in Spain is, I think, more a press rumor than a real case. So as of today, my answer is more no than yes. This is also something that is not so clear if it is a real case or a speculation. But I would say more no than yes. Fernando Cordero: My question on the PoP growth is because [indiscernible]. Maria Carrapato: We can't hear very well. Marco Emilio Patuano: Can you speak a bit louder, please, Fernando? Fernando Cordero: Can you hear me right now? Marco Emilio Patuano: Much better. Fernando Cordero: Okay. Perfect. Now my point is the following. There is a debate that at which extent your current PoP growth in Colors is subdued by the fact that you are deploying the build-to-suit programs. And in that sense, what should be, let's say, the your, let's say, your base case in terms of ops, it is the total growth that we are seeing today or just the colors when the build-to-suit product will be trading down. Marco Emilio Patuano: Well, the color that you see today is what we assume is going to be the rhythm of the colocation. And of course, if you see that the build-to-suit tend to reduce after 2027, we are going to push more on colocation. The point is we are looking to an important market share on new colocation. So what we are doing is maintain or eventually even increase our market share. And in order to do this, our technical team is working with proactive models in order to codesign with our clients better coverage. This is something that if you want, we can explore and explain better separately. Maria Carrapato: So moving on. Next question comes from James Ratzer at New Street. James Ratzer: I have 2 questions, please. So the first 1 is you're seeing some very encouraging growth in the kind of just organic colocation on your Towers. I'd be really interested just to hear more precisely where you're seeing that demand coming? Is this in kind of urban hot spots is this rural areas? Are these transport links. And you're speaking to the MNOs, where are you finding that particularly seeing this demand for organic colocation growth? And then secondly, kind of bigger picture, Marco. Where do you see Cellnex's portfolio of assets going, let's say, over the next 3 to 5 years. I mean if you announced here this morning another small disposal I mean, how do you see yourself at some point ever going back into acquisition mode and growing the portfolio of the business? I'd just love to here a bit more conceptually how you think about the kind of strategic portfolio over the next 5 years. Marco Emilio Patuano: Yes. Very clear, James. So on organic colocation, it's super interesting because when we go with my Chief Operating Officer and we start looking at the detailed figures, we look to our portfolio splitting between towers and rooftops and then urban, suburban, rural and deep rural. So the more you are tower in non-super dense area, the more you have opportunity for colocation, which is good common sense. If I'm in the center of Paris, adding a co-location on an existing rooftop is not difficult technically. It's difficult urbanistically. So you don't get the permit. So colocation are most of all suburban and suburban is the big roads and transportation corridors even inside the cities because these generate traffic congestion -- data traffic, not only car traffic congestion, but also data traffic congestion. And the rural, the rural is going to be a mix of colocation and RAN sharing. The more you go in deep rural, the more we suggest to our client to be efficient. We are making this, for example, in Switzerland. We are telling to our clients RAN share more because the industrial cost is for them, not for me, for them. The industrial cost make the investment having a better return. So the more you look at tower and the more you look at non-super dense urban area, the more you have opportunity for colocation. The more you have -- you are densifying dense urban areas, the more you have to think about more towers or eventually distributed small cell system or distributed antenna systems. I hope I made it clear, James. The second is how do we see the portfolio medium to long term? So point number one, everything that is noncore and you are easy to understand the participation, we were a limited partner in an investment fund. Hard for me to say that this is core. We had a commitment of further EUR 50 million to be invested in the future, and we could repatriate with a nice return, our old investment. So why not to rotate this asset? I think it was a relatively easy decision. We had a very good cooperation from the GP, the general partner cooperated with us very nicely. And so we made it. Now -- when you look at can Cellnex be on the buy side, I would say, for geographic expansion, I'm fairly categoric in saying no. I don't see Cellnex exit from markets and then reentering new markets because -- no, I don't see this that in terms of geography, I think we are pretty much okay. But if the MNO are claiming that there is too much fragmentation in the market, I would say the tower sector in some markets can say the same. In Spain, there are 4 tower players and 3 networks. In France, there are 5 tower operators. And if you count also smaller ones, you can eventually even consider it more fragmented. So those -- U.K. is the same. U.K. is pretty fragmented in terms of tower operators. Consolidation -- in-market consolidation in tower operator can make good synergies. The easy and evident one, I can manage more portfolio, more towers with less than proportional growth of people. This is, let me say, the trivial one, the easy one. The most interesting one is that when you put 2 portfolio together, you start realizing the real overlaps between portfolios and you can start decommissioning part of the portfolio, transfer to your clients part of the benefit. And this is what is -- what make it very, very, very interesting. So this kind of consolidation is not there today because there is nothing there today. But if your question is, how do I see it medium term, I think that this fragmentation, same as the MNO saying that it's unefficient, I can say that it's not particularly efficient even in the tower sector. Maria Carrapato: Okay. So now moving to... Raimon Trias: We have another 2 and then... Maria Carrapato: Yes. So now moving on to Graham at Jefferies. Graham Hunt: Yes. I'll just stick to one, if that's okay. Can I just ask a bit more on the reorganization that you announced that you took at the beginning of the year. Maybe if you could help us understand more about the characteristics of that business unit as to why it suits the cross-market leadership structure and what the challenges were that you're encountering before this that the new organization is looking to resolve. Marco Emilio Patuano: Thank you. Thank you, Graham. The reorganization was based on 2 main drivers. One is at corporate, we need to be more efficient. And to be more efficient, we need to be more focused and more slim, if you want, and then we have to decide what we do and what possibly it's not absolutely necessary. So this is why we made our organization at the headquarter level leaner. Leaner means faster and means also it makes easier to make decisions. So this is why we were reorganized the headquarter. When we were looking to the countries, we had some, let me say, some combination -- geographic combination that were a little bit hazardous. So we had a Portugal together with Poland, instead of being together with Spain, which is honestly not very geographically natural. So we've made some adjustments because it could make available some synergies that are not to imagine enormous synergies, but there can be some synergies. And the last and most interesting part was what we call Vertical Solutions. So Today, what happens is that if you take a large country like -- let's take 2 large countries, one is Italy and one is France. In Italy, the non TowerCo business accounts for a sort of EUR 40 million to EUR 50 million. In France, it accounts for less than EUR 5 million. Do you mean that the French market is 10x smaller than the Italian market? Or do you think that with the EUR 40 million to EUR 50 million, we covered all the opportunities we had on the Italian market? The answer is no and no. So -- but the problem was that sometime each and every country is very specialized and very focused on the day by day and sometimes some opportunities are simply not big enough, not priority enough, not to specialize -- we are not specialized enough to make it possible. So the idea was, okay, we are -- altogether, if I take all my countries, we are the #1 in Europe, but we don't play as the #1. We play 10x as a small operator, and we want to play one time as a big guy. But in order to do this, you have first to think big. If you think small, you remain small. So we need to think big. And in order to think big, I need to put all the volume together. And think central, act local is going to be the route. So I think that, yes, like every matrix organization, there are challenges, but it can work well. Do we have an example? Yes, Celland. It was a lot of small initiatives, each of them small. Now we have Celland and it's doing phenomenal. So let's try to capitalize on good experiences. Maria Carrapato: Okay. So now to end the call. I'll ask a question from Andrew at Goldman Sachs. Andrew Lee: I just wanted to -- just one question, just to dive in a bit more deeply into the Spanish densification reacceleration. You've obviously seen the equivalent PoPs in Spain tick up, I think, as was mentioned in an earlier question. Could you just give us a bit more insight? Because obviously, this is a key metric for us to be thinking about whether -- as to whether consolidation is a good or bad thing for telcos. And obviously, consensus thinks it's a bad thing and you think it's a good thing. So we're obviously all looking for evidence of densification acceleration. If that's happening now, what exactly does that look like? So what will be the equivalent PoP growth in Spain that you see in 2026 and 2027. I think -- sorry, the company average or Cellnex average is 3.7% equivalent PoP growth in the fourth quarter. What does it look like in Spain with that growth acceleration that we're seeing from densification? Marco Emilio Patuano: You are a little bit difficult because you talk about equivalent PoP and they talk about PoP. So the concept of equivalent PoP was a concept that has been used by Cellnex some time ago in order to facilitate the exercise of saying equivalent PoP time average price equal to revenues. The world doesn't work in equivalent PoP nor in average price. So average is a bit tricky exercise because I'm eating an entire chicken, you eat 0 and we had half a chicken each. So it's not true when we see if you're hungry at the end or not. So the growth in Spain or what happened in Spain is point number one, Mas Orange had to take 2 networks, one built at Orange standards and the other built at MASMOVIL standards, which were, believe me, very different and to create the Mas Orange network. So we had to avoid duplications. We had to make new colocations. We had to build -- or we have to build new sites, all at the new standard, which is the Mas Orange standard, which is the Orange standard. So top quality, top everything, carrier grade, top carrier grade. So this is what happened in Spain with Mas Orange, which is first part of the year, an accelerated decommission of PoPs, some of them anchor and some of them second. And then a progressive relocation of some of those antenna, most of them anchor, okay? On top of this, we are partner of Mas Orange in their rural deployment program, rural Spain program. And in the beginning of 2026, we are completing the delivery of this program. And this is the picture with Mas Orange. So going forward, what is going to happen? It's going to happen that they are working on improving -- further improving the quality of their network. We are making available more colocation and we are -- and we both committed that we will build for them some of the new installation that they need. Second, part of the decommissioned sites that Mas Orange made available have been taken by Telefonica. Why? Because it was a good location. There was a space on the antenna, which was made available by eliminating one previous antenna. Telefonica considered it interesting. So this happened in the second part of 2025 and will continue progressively in 2026. Our relation with Telefonica is particularly good, as you saw with the battery program. And so we are discussing with them if we can make available more sites with them. In their case, we are talking about more colocation than build-to-suit, but it's a very healthy relation. With Telefonica, we agreed on the activation of the RAN sharing program they have with Digi. It was -- it is a fairly big program. It started in the second part of 2025, I would say, in the last part of 2025, and it will continue in 2026. Why it took a little bit of time because we had not only to agree on a technical program, but also we had to amend our original contract in order to make available for them the RAN sharing on our network that originally speaking was not confirmed. So we made the agreement. So this is another demonstration that when people say that every time there is to discuss about agreements, it's a fight. No, it's a discussion. It's a discussion between 2 [ adults ]. And this is going to continue. In -- to be honest, our relation with Vodafone Zegona is not one of the largest relation -- business relations we have. So the fact that there is a little bit of noise around this is not affecting us particularly. Of course, if we can support Zegona and Vodafone in their network needs more than happy. As of today, it has been relatively small. But of course, if they need, we do. What we see more? We see more densification coming. This is something we absolutely see. We see more densification coming in Spain. And the big question mark is if Digi someday will deploy not only RAN sharing, but also some proprietary network. They did in other country. As of today, it's not in the plans, at least in the plans shared with us, but you never know. I hope I answered, Andrew. Andrew Lee: I guess the reason why you're using equivalent PoPs was just because it has a more direct correlation with actual revenue growth where these days so much. And it's really what we're trying to ask is like, is revenue growth going to accelerate? What's the revenue growth in Spain post consolidation, post the kind of the rebalancing of 2025? That's the real question. It sounds like you're not able you're not going to -- you can't answer that today, but I guess that's what we're really looking for. Marco Emilio Patuano: Well, what I can answer is that 2025 has been a little bit better than what we expected. So these -- so let's take the small positives. Maria Carrapato: Okay. Well, thank you, everyone. It's been a long call, very, very productive, I think. Thank you for your continued support. And as usual, the full team is available for following up if you have any additional questions. Thank you very much.
Luis Fernando Amodio Herrera: Ladies and gentlemen. It's a pleasure for me to share with you like every year around this date, the results of the recently finished year. Please allow me to highlight that these figures that we will mention next are the result of the deep transformation that the company has experienced in the last few years. The OHLA Group has been able to leave behind old habits to advance the determination towards a more solid and better prepared model in a global and competitive environment. That's why today, I address you all with a full satisfaction of accomplishment and a job well done. And with the conviction of having worked rigorously, coherently and with determination in each decision made. The figures that the CEO will mention next are not only reflecting a positive and sustained evolution, they also comply with the forecast communicated to the market. They also prove the effectiveness of adopted strategic decisions and the discipline with which they have been followed. To sum up, they are the evidence of a strategic and operational advancement that has been deep, foreseeable and structural. An advancement that many people considered hard to reach that now can be seen clearly reflected. Please allow me to mention especially relevant milestone that I feel especially proud of, because of what it symbolizes in terms of transformation and financial responsibility. The leverage ratio of the group is now 1.7x net EBITDA. This achievement is significant for 2 reasons: first, because back in 2020, this ratio was 11x, a figure, reflecting the size of the challenge that we were facing, and the breadth of the effort we needed to make; secondly, because it's the clearest proof of our rigorous belief in financial discipline. This financial discipline has allowed us to settle more than EUR 563 million of debt in 6 years. In this regard, I'd like to highlight that our main target is to reduce debt. It hasn't been a simple process, reducing debt at this level while strengthening the global performance of the group has required determination, rigor and an extremely precise management. That's why this milestone goes beyond a strictly financial terms, symbolizing the ability of this organization to work with excellence and increase its pipeline even in the most demanding context. And therefore, it is a great reason of pride for all of us. 2025 has also been a year of corporate governance strengthening that has materialized amongst other initiatives. In the addition of 3 new independent directors recruited according to the most demanding criteria of professionalism and excellence. In this way, half of the Board is now made of independent directors, reaching 50% of representation. Let me remind you that this ratio exceeds the recommendations of the main codes of good corporate governance. And they are a clear proof of the highest standards of transparency and independence. These new additions are great and proven background profiles in financing infrastructures with a deep knowledge of strategic markets where we aspire to consolidate our position as a reference company. The arrival of Ms. Socorro Fernández Larrea, and Mr. Vicente Rodero Rodero, and Mr. José Miguel Andrés Torrecillas brings a strategic perspective that has been leading in the Board's decision-making. In this way, we're reinforcing the technical quality and the independence of our Board. We're also advancing in a more balanced and demanding governance framework, strengthening, therefore, the trust of our shareholders and investors in the institutional solidity of the company. In 2025, we have also settled definitely some judicial uncertainties such as the arbitration procedure of the Sidra Hospital that were sort of [indiscernible] for the company. With this, we anticipate the shadows affecting our feasibility, and we open for our company a new stage free of contingencies fully focused on growth and returns for shareholders. With the disappearance of these shadows, the group is now presenting a solid situation in the face of the stakeholders that for years, questioned our stability that on many occasions, wanted to condition the confidence of the market. With the best financial structure over the last few years and with a reinforced corporate governance once cleared the main uncertainties, OHLA has now a great status to approach ambitiously our strategic plan. This plan has been conceived to consolidate a more profitable corporate model, able to generate sustainable growth and fully aligned with the excellence and growth standards we want for OHLA. Due to all this, I can firmly state that OHLA is now a new company, more financially solid, demanding in its management and a leading example in its governance and more ready than ever to face the challenges of an increasingly competitive and changing environment. Personally speaking, I cannot hide my pride as a President for being catalysts of this change. I'm proud of the talent and effort of our staff and of the collective ability to get over obstacles that seem unsurmountable. Now, OHLA, our future is built every day with a commitment of 32,000 collaborators that advance together in the same direction. Therefore, we firmly believe that the potential of this company goes way beyond the circumstances of each moment. And we face the future with a firm determination that OHLA will keep growing and helping grow everyone who is part of this project. Thanks so much for your attention. And next, I'll give the floor to our CEO, Mr. Tomás Ruiz, who will present in detail the results of the last year. Tomas Jose Gonzalez: Thanks so much, dear President. Good day, everyone. It's a pleasure to address you all today to present the results corresponding to the year 2025. As the President just mentioned, the figures we are now sharing are the direct result of a deep transformation of the company, sustained in time and performed with determination. 2025 has been a decisive year for OHLA, a year where we have consolidated our pace, reaffirming our operational solidity and showing that this company is ready to compete, grow and create value for the shareholder. As you may see in this presentation, OHLA yet another year has complied with all the targets we have set. And that's important -- extremely important because when a company meets their targets, they're responding to the confidence given to it. That's why complying and exceeding with the forecast is not yet -- yet another year is not just good news. It's a strict level. And based on this, please allow me to focus on 3 indicators that better show that anything has the deep financial transformation of OHLA since 2020. First of all, as the President mentioned, the gross debt reduction. We have gone from a ratio of 11x EBITDA in 2020 to 1.7x nowadays. It is a great reduction, not very common in our industry, reflecting a combination of discipline, prioritization in strategic matters and rigorous performance. Few companies can show a deleveraging process of this size without sacrificing the portfolio, the margins or the operational capability. In parallel, the company has transformed its operational capability, and that can be reflected clearly in our EBITDA. In only 5 years, OHLA has managed to travel its operational results, going from EBITDA that was not even reaching EUR 65 million to reaching levels of EUR 208 million. Besides 2025 is a third year in a row of cash flow generation in our activity, an indicator that for many years was recurrently negative and that now shows that we're going back to normal. In this graph that we are showing, we are showing how OHLA has met and outperformed all objectives included in the guidance at the start of last year. We had sales for EUR 4 billion, which outperformed the objective and EBITDA grew by 19% compared to the commitment that we took at the start of the year and by 36.4% compared to 2024, which means EUR 208.1 million EBITDA result. We have another positive net result. So we're back to black with EUR 1.7 million. So we've met the objective. In terms of order intake, we have EUR 4.6 billion (sic) [ EUR 4.7 billion ] , which once again outperformed the objective, which was 2.2%. Cash -- activity cash generation was EUR 76 million generated, which once again confirmed that we are back to normal in terms of liquidity for our activity. Credit rating has improved as well. We obtained a B2 (sic) [ B- ] by Fitch Ratings, which is better than what we had in 2024. And our gross financial debt, this is easy easier said than done, but we canceled EUR 192 million in debt. Now concerning the performance of our order book since 2029 (sic) [ 2019 ], we have gone from EUR 5.5 billion to EUR 9.7 billion in 2025, which is an all-time high. This is an order book increase of 77%. This is it's geographically diversified, and it emphasizes our home market. We are following a strategy, which is focused on selecting projects based on strict risk control criteria to guarantee and achieve sustainability in the value of our projects. We're also focusing on projects that mean under EUR 400 million in risk for the company. Our book-to-bill ratio is over 1x, and our order intake ratio is above the industry's highest standards. Whilst the order book in the United States grew up by EUR 4 billion -- up to EUR 4 billion in 2025, the geographical distribution has increased the relative weight of Latin America, which partly explains the improvement of our EBITDA. Now concerning main projects in 2025, I would highlight stable geographies in which we're operating with risk profile, which is aligned with our risk the ones that we very strictly established for our company. The Port of Miami in the United States is one of the most relevant ports in the country; the Lo Ruiz Tunnel in Chile. This is a key infrastructure for metropolitan mobility around Santiago; the extension of the Pan-American highway, which is an essential corridor for the regional transportation in Central America. In Spain, the new hospitals of Malaga and Huelva. And I would also like to highlight the strategic boost of our awards portfolio with the award of a new highway in Brazil with over 45,000 vehicles of traffic, which is already operating. Now concerning the activities, cash flow generation. Just to go a bit more in detail. This is a key indicator to understand the evolution of the company in the last 5 years. 2025 was the third year in a row where we had positive cash flow. This confirms once again that we're back to normal. And it's important to highlight that this was complemented by capital increases and the good response of our shareholders, which allowed us to cancel debt as well as making capital investments, whilst also facing the abusive redemption of performance bonds in Kuwait. So all of this explains why in spite of positive cash flow generation, our liquidity has gone down to EUR 847 million. Now concerning debt reduction, this is the main change that we have achieved, as we have mentioned. It's very important to keep reiterating that compared to 2020, we have canceled EUR 563 million in gross debt. This is and has been and will remain our main priority objective. And this is a significant effort for an organization that works in such high operating demand. The leverage ratio is 1.7x nowadays compared to 11x in 2020. And this is something that you do see in the industry. It requires discipline and operating soundness. Concerning sustainability, I would highlight that we have met 85% of the objectives that we established in our sustainability plan, thus showing that the road map that we created was feasible, measurable and executable. We have also reduced work accident rate by 35% in the last 3 years. Three key aspects that I would highlight about 2025, one of them has already been mentioned and addressed by the President. We took a step forward in our corporate governance by reestablishing our Board of Directors. Secondly, in 2025, we applied a cost reduction plan that is part of our strategic plan for 2025 to 2029. And the main objective of this cost reduction plan is to reduce costs by EUR 40 million. Amongst savings measures, we have partially relocated our headquarters, and we have partially -- we have applied organizational restructuring to simplify our overhead. And these measures already mean 50% of the forecasted savings, and we expect to achieve 85% of savings by the end of 2026. So we'll be doing more with less. And something very important in 2025 was that we cleared some of the most important uncertainties the company was facing with the rulings of the litigations of hospital -- the Sidra Hospital and the Doha Metro, both in Qatar. And these have meant a positive impact of EUR 17 million for OHLA. And further, in 2025, we agreed asset division of the Centro Canalejas in Madrid, which will allow us to manage this asset more efficiently. And to conclude, I would like to highlight that in 2025, we have EBITDA margins for Construction of 7% that we have positive cash flow generation that we have strongly reduced our gross debt, and we have deleveraged as well. We have extended note maturity until December 2029 without interim maturities. We have also cleared the main uncertainties that the company was facing. We are undergoing cost -- overhead cost reduction plan. And so we can be optimistic for 2026, and we forecast sales for over EUR 4.1 billion. We want to keep reducing overhead costs. We will keep focusing permanently on increasing gross margin, and we will reach over EUR 215 million EBITDA, order intake of EUR 4.4 billion. We will reinforce our financial stability and operating stability, and we will keep rotating nonstrategic assets. Thank you very much for your attention. And we're going to open the Q&A session with Víctor Pastor, who is the Financial Director of the group; and Pedro Arellano, who is the Director of Investor Relations and Capital Markets. But we will take a few minutes and we'll have a break before moving onto it. [Break] Pedro Villanueva: Good afternoon, everyone. Thanks so much for being here. And let's begin with the Q&A session. Please allow me first to address you apart from saying thanks. We have Tomás and Víctor Pastor as announced. But if there are any questions remaining, we'll respond to them very kindly from the Investor Relations department. We're getting quite a few questions by e-mail and also on the app. Now that you registered. So Tomás, let me ask the questions. We've had a recurring question during the presentation, which was when does OHLA expect to go back to dividends and whether it is included in the company guidance? Tomas Jose Gonzalez: Well, regarding this topic, I'd say that, of course, for any company, one of the main targets is to give out dividends to the shareholders. But in our road map, this target needs to go through other stations first. We've been working for that. And our debt reduction effort is geared towards that. And as the President said, we're going to keep working in reducing that debt. But obviously, the aim is to go back to the dividend payout. Possibly, we might not see that this year, but it's our target for the next year for 2027. Pedro Villanueva: Thank you. I'm going to combine a few questions we're getting regarding a litigation that was pending but favorable to us, which was the recovery of the debt with the Villar Mir Group that has been quite competitive. I think we got that question 9 or 10 times. Tomas Jose Gonzalez: Regarding that topic, I'll just highlight that just like any other OHLA debt, we are very rigorously to get the recovery. As we have seen in more relevant litigations regarding the amounts, sometimes we're successful in the recovery. But in the case of that specific debt, the tranche of that pending debt, which is not all of the debt is now in the process of recovery that may materialize in the next few months. We depend on the times of the judiciary power there. Pedro Villanueva: There's another question regarding the litigations for the rest of pending litigations, when do we expect them to be recovered so that are material in the cash flow of the company? Tomas Jose Gonzalez: Well, this varies depending on the litigation we're talking about. In some areas, sometimes there are some additional complications, in the specific case of litigation such as Doha. And once we have met our obligations in that country in Qatar, where we have some with subcontractors, we will be able to have excess cash flow and possibly in the first quarter, the first 5 months of this year. Pedro Villanueva: Thank you. We have a general strategic question that has been repeated in different times, and I tried to sum it up, hinting to us a strong growth in the last quarter and a progressive improvement of results throughout the year. Will that be kept? And we have a guidance of EUR 215 million. Is that aggressive? Is it not? How do we see it? Tomas Jose Gonzalez: Well, in our guidance, we always try to be conservative. And at the same time, we try to confirm our full compliance record for the things we commit to. That's why we say it will possibly be above EUR 215 million, but we should not forget that in this year's results, the last year's results, we foresee the effort of the Construction division with a year with excellent results. We also have some extraordinary impacts. And we take into account the net balance of positive and negative elements because we have also had some extraordinary negative elements like any company in this industry. We may be talking about an amount between EUR 20 million and EUR 25 million. Therefore, the target is to be above EUR 215 million of EBITDA, but we might be able to exceed that. Pedro Villanueva: Thank you. Now we have some questions regarding the balance sheet regarding the factoring without the possibility of recourse company. You have it in the balance sheet part is being the same as in 2024, EUR 101 million. And then we have other questions regarding debt management. Basically, how are we going to keep reducing the leveraging of 2026, which was the target announced in the presentation and whether that's related specifically to the bonds? Tomas Jose Gonzalez: Well, the main debt, not to mention the only debt of this company are bonds. As people know, we had important refinancing that finished last year, given us a stability horizon up to 2029. Despite that, as the President mentioned it, we keep reducing the amount of these bonds, the amount of debt. So we are working to rotate nonstrategic assets, and we'll keep doing so, so that we may reduce this debt. And once this happens, we'll be able to look for refinancing in even more convenient terms for the company. I don't know whether Victor might like to add anything. Victor Pastor: Good day, everyone. Maybe just add that in that debt, there is a penalty clause quite damaging for the company until August this year. And if we take into account that rotation that Tomás has mentioned and the fact that until August, that clause might entail a big payout by the company. Right now, we are working on the 2 fronts, asset rotation on the one hand to reduce debt; and other alternatives with a different debt profile in different markets. And with the pace and the credit profile of the company, we should be able to reduce the financial cost of that debt, which is quite costly and keeps increasing as years go by. So that's our strategy. Pedro Villanueva: Next, we have 2 questions. The first one is which work is being done with the banking pool with different banks and whether we see any possibility of increasing the capacity of the guarantees? Tomas Jose Gonzalez: Well, I'd like Victor to complement this question, but the work with the financial and banking committee is permanent. As proof of that, this year, just in this very month of February that is just finishing. At the beginning of the month, we closed extension of main line of guarantees in Spain with the FSM in terms even more favorable than we have for yet another year. But we keep working individually with different banks to extend it. The important growth of the portfolio in the last 5 years that has been nearly 80% wouldn't have been possible if we didn't have a strong support of these guarantees, not just the banking guarantees, but also the caution policies that we use in certain geographies and for some customers as well as the North American insurers, the [ Bondi ]companies with whom we have around EUR 3 billion in guarantees. But Víctor, maybe you would like to complement on this. Victor Pastor: Sure. Thank you, Tomás. Just to extend on this, this is constant work by the financial management area. And first, I should say at the beginning of this month of February, we extended the so-called FSM line with the banking pool we currently have for yet another year. And sometimes, there is specific focus in Spain like this year, and it's pretty obvious that the company has a business also internationally. We have a strong subsidiary in the U.S.A., another one operating in the Czech Republic, another important business, as mentioned in the presentation in Latin America. And besides working extending the capacity with Spanish institutions, which has been done since the Fitch rating increase and also after these results that hopefully would allow us to have greater capacity with Spanish institutions. For example, in 2025, in the Czech Republic, we have extended our lines with European, Austrian and German banks in guarantee lines for up to nearly EUR 50 million. In the U.S.A., this was extended with American banks up to nearly EUR 80 million. We also have bilateral agreements in Latin America, where we have increased our credit lines. And in general, our capacity between banking guarantees and caution policies is nearly EUR 5 billion in the group, which really makes a lot of sense because otherwise, we'll be unable to run these projects for those EUR 4.1 billion and having that other portfolio EUR 9 billion. So we keep working and we also have increase our possibilities in our capacity in 2025 and the financial community confidence keeps increasing. It has allowed us to keep working on all this capacity that I just mentioned. Pedro Villanueva: Thank you, Víctor. We have some repeat questions regarding the non-strategic assets defined as such, mainly in the service in Canalejas divisions. And in Canalejas, there's another subreply asking whether the agreement reached would change the perspectives of sale or the sharing prices that we had regarding the management of that asset? Tomas Jose Gonzalez: Well, first of all, the elimination of the uncertainty regarding the Canalejas asset is the relationship we have with our partner generated certain complexity in managing this asset. That has eased to now have more control and availability on the OHLA asset. That will be possible in time to give more value to the asset of the Galería and the Canalejas park in site. And we might be able to unlink it. It would not be immediate that maturity process of the asset may take a few months regarding the services, we've gone through these unlinkage process before. And now we are giving value to the company, and we'll keep doing so. Also paying attention to that unlinking process if there is an offer corresponding to the value of the company. Pedro Villanueva: Thank you, Tomás. We just have two questions. I think we've replied to all of them. There may be some other specific ones regarding the balance sheet I will answer directly to the banks that are asking and the analysts. There's a question concerning the news that we have seen in some local newspapers in Latin America concerning our forecasted activities in some specific Latin American countries and more specifically in Chile. And the question is what do we have to say? Do we have any comments on these pieces of news and what's our perspective in the country? Tomas Jose Gonzalez: Well, Chile is one of the natural markets of our company. We've been working there for over 40 years. Our order book has increased. Our track record is actually spotless. And this is why I was asking what the question was exactly because in the short -- in the last few years, we have faced 2 situations, the concession of Biobío, and this was an arbitrated negotiation with the client with the Ministry of Public Works to improve the terms of our contracts. because there were some delays when starting these works because we were lacking some permits. This is a highly technically complex project because this is about building 4 different hospitals in 4 different locations in one specific portion of the country in the Biobío region, which makes implementation very difficult. So these are delays that are non-attributable to the company, but rather to the lack of permits. And so the execution was delayed, as I was saying, but we have reached an agreement with the Chilean government, and we will move forward with this important award and the building of these 4 hospitals. There was another piece of news recently, and I don't know if that's the one that people are asking about, which is related to a small subsidiary that we have in Chile. This is a subsidiary that is hardly in operation. It was within the industrial -- our Industrial division, and it has lost traction and content in the last few years because it was in charge of projects that we're not really working on anymore. So we decided to wind it down in a petition. This is a normal process, and it will be continued in the next few weeks. But it doesn't imply as some newspapers wrongfully said that we are going to cease having a presence in that country. Pedro Villanueva: And now another specific question concerning -- the question says the severe deterioration of our Industrial division in this year, what are perspectives for 2026 and further in the future. Tomas Jose Gonzalez: Yes, the Industrial division had a complex situation this year for different reasons. First of all, because the renewable energies market, which is our specialization in this division is facing in some locations, specifically in Spain, saturation process or maybe if it's not saturation, at least a decrease in growth, which at the same time meant that projects were being slowed. We, at the same time, have started penetrating other markets, specifically in Latin America, and we will see a rebirth of these activities for 2026. So we hope we will outperform the situation in 2025. This was a situation which was due to market and company circumstances, and the situation of the different locations, but we are moving forward with this and in other locations. Pedro Villanueva: Okay. And we have one last question because we haven't received any more. And if we receive any further questions, then they will be answered by our department. So what sunk cost has this overhead reduction plan had? And what were they more specifically? Tomas Jose Gonzalez: Yes. So far, sunk costs were about EUR 10 million to EUR 11 million, and they are mostly related to some layoffs that we had to do. But these were very specific layoffs, more generalized layoffs where we are trying to eliminate redundancies and to, as I was saying in my presentation, do more with less because this is at the end of the day, what we will do to improve the results of the company. Pedro Villanueva: Okay. We just have another question. This is a very generic question, but the same is very specific. And it's Tomás, where do you think the company value or the objective price should lay? Tomas Jose Gonzalez: Well, this is a question for which we could have many answers. But in our opinion, our stocks are undervalued, because we are starting to see some value more clearly. But if we add up the assets of the company, I think everyone could reach that conclusion. I don't want to commit to a number, absolutely. But I think the reality will show what it is and that our share price will reach the position that we think you should have. Pedro Villanueva: Thank you very much. And I would just like to reiterate that this presentation will be recorded and available for 1 week, and it will be available as soon as possible, and we are at your disposal. Thank you very much. Tomás, I don't know if you'd like to say a few more words. Tomas Jose Gonzalez: No, just thank you very much for your attention. Thank you very much. Pedro Villanueva: Víctor? Victor Pastor: Same. Thank you very much to everyone. Pedro Villanueva: Thank you for joining us.
Maria Carrapato: Okay. Good afternoon. Welcome to our full year '25 conference call. Thank you for being with us again. We have the full Executive Committee with us, Corporate Executive Committee, and we'll kick off with Marco Patuano, CEO, a brief review of results, handing over to Raimon Trias, speakers for our financial overview, and then we're all available for Q&A. Marco Emilio Patuano: Thank you. Thank you, Maria. Good morning, everyone. It's a pleasure to be with you again as we open a new financial year and reflect on our results and our strategic progress. So in 2025, we delivered on all our promises, and we confirm how resilient our industrial model is. In a very volatile environment, we continue to execute our strategy with conviction and clarity and delivered results that demonstrate the quality of our assets and most importantly, the predictability of our revenues and organic growth model and reaffirmed the strength of the relationship with our plus. We successfully delivered on our 2025 guidance, and we reiterate our 2027 outlook. We have returned EUR 1 billion to shareholders through share buybacks, 1 year ahead of the plan, representing a total yield of 4.5%. We initiated dividend payments at the beginning of 2026 as committed at our Capital Market Day, and we continue on track to meet our leverage targets, reducing leverage from 6.39x in 2024 to 6.28x in 2025. We have reached an important turning point where year after year, we will generate increasing free cash flows, giving us greater flexibility to enhance our shareholder returns, fund industrial initiatives and reach our leverage targets. In 2025, we grew organically in all fronts with new points of presence accelerating throughout the year, showing continued demand for digital infrastructure. On a pro forma organic basis, our revenues increased by 5.8%, EBITDA by 7.1%, EBITDA after leases by 7.9% with a 1.6 percentage point increase in margin. Transformational industrial actions focused on boosting top line growth, optimizing cost and proactive lease management are unlocking the operating leverage of our business. Our recurring levered free cash flow grew by 11.5% and on a per share basis by 16.7%. And the free cash flow grew to EUR 350 million, confirming the positive momentum. On our capital allocation strategy, we completed the disposal of the French Data Center business, allowing us to increase our focus on core telecom infrastructure assets. At the same time, we have agreed to dispose our participation in the DIV II fund for circa EUR 170 million. DIV II for memory is a participation in a European infrastructure fund underwritten in 2021 in order for us to explore minority investment opportunities in digital assets. And we successfully issued in 2026, a bond for EUR 1.5 billion in 2 tranches to anticipate funding requirements, extending maturities and securing a pricing at 3.4%. From an organizational standpoint, we also recently announced the implementation of a more streamlined and agile leadership structure, which I will give you more color on shortly. Returning to our guidance for 2025, I would like to highlight our delivery across all the key metrics. And the fact that this guidance was set almost 5 years ago confirms the resilience and the predictability of our business. Consistent execution of our industrial plan is translating into operating results, which combined with normalizing capital intensity, underpins the trajectory of growing cash generation and sustained profitability. As I mentioned, we announced a new organizational leadership structure in February, marking important progress in the next chapter of our industrial transformation strategy. The new model is designed to bring sharper strategic focus, deepen customer relationship, enable faster decision-making and stronger functional alignment, all essential to support continued organic growth. We combined geographic cluster with a pan-European Vertical Solutions division, strengthening execution while ensuring consistency across markets. We are entering in a chapter defined by operational focus, team empowerment and agility, ready to capture the opportunities ahead. I would like to give you a flavor of why we created our new Vertical Solutions division. Several connectivity needs today exceeded the capacity of a traditional macro coverage and require solution very specialized by nature. Transportation, venues, city centers, public safety, defense, resilience, all of them are very different in terms of technical solution, but very similar across the geographies. We are deploying an operational model aimed to scale up every vertical connectivity solution, increase the commercial focus and ensure execution discipline and improve accountability. We are already leaders in Europe, leveraging on our centralized design capabilities and our country execution power, we want to further improve our performance. Now I hand over to Raimon to go over the highlights of our operating and financial performance. Raimon, please. Raimon Trias: Thank you, Marco. Good morning, everyone. I would like to start by reinforcing our very positive performance in terms of organic growth and cash conversion in the year '25. Robust revenue growth, combined with a continuous focus on operational excellence is driving higher profitability, a stronger operating leverage and expanding cash flow. Starting with organic revenues, we delivered a solid 5.8% year-on-year. EBITDA grew by 7.1%, supported by ongoing actions to increase operational efficiency. EBITDA after leases was 7.9% higher, reflecting our proactive lease management activity and recurring levered free cash flow rose 11.5%, supported by the disciplined implementation of our capital allocation strategy. Very important, the recurring levered free cash flow per share grows by 16.7%, underscoring the incremental value we create for shareholders. Moving to Slide 9. As usual, we show you the bridge between reported and organic pro forma revenue growth. Starting from EUR 3,941 million revenues in 2024, the perimeter adjustment for Ireland and Austria brings us to a pro forma revenue base of EUR 3,790 million. From there, the combination of escalators and CPI, colocations and build-to-suit deployments led to organic revenue growth like-for-like of 5.8%. This strong revenue performance, as you can see in the next slide, is led by healthy PoP growth in the fourth quarter '25 and as Marco said, throughout the year. Gross colocation and build-to-suit accelerated to 3,043 in the quarter, demonstrating sustained customer demand and a strong commercial traction across the portfolio. We recorded a strong colocation in France, 220; Italy, 887; and the U.K., 128. We continue BTS deployment across most countries and overall churn was contained at 307 units. Net new PoPs have shown consistent quarter-over-quarter growth throughout the year. Moving to Slide 11. The net PoP growth in 2025 has been 4.5%, fully absorbing a 1.2% churn influenced by the effects of 2 major consolidations in Spain and the U.K. In Spain, despite the Mas Orange network reconfiguration process underway, we recorded year-on-year growth in total PoPs. This reflects the importance of the support we provide our customers in their ongoing network deployments and how we benefit from the unlocked potential for MNOs to invest after-market consolidation. The U.K. also posted consistent quarterly growth, driven by continued 5G deployments, amendment programs and selective new site activity, illustrating the depth of demand and ongoing investment to catch up and improve network quality across the country. If we go to the next slide, the strength of our operational performance is again clear in this slide, which shows organic growth in Towers revenues of 5.5%, driven by contractual escalators, colocation and ongoing build-to-suit rollouts across our main markets. A reminder that these figures are adjusted for Ireland and Austria for comparability. Here, we have selected a few practical examples that show how our industrial strategy is being translated into real-world execution across different areas of the business. First, 5G densification in Italy. Fastweb, Vodafone and Cellnex Italy have extended their strategic agreement for an additional 12 years. This enables enhanced coverage and improved service quality through the deployment of 5G, supported by over 1,000 points of presence across the country. Second, network resilience and power autonomy. Telefonica and Cellnex Spain have signed the first agreement of its kind between a TowerCo and an operator to strengthen power assurance across more than 2,000 sites. This initiative improves network resilience and energy security following the recent blackouts in Spain. There is potential to develop more energy-related business across our portfolio, provide interesting upside to our core tower services. And third, the new markets through nonterrestrial networks. We provide land acquisition and construction capabilities to support low earth orbit satellite initiatives. Cellnex can provide essential gateways between LEO constellations and the terrestrial fiber backbone. Together, these examples illustrate how our operational strategy is being deployed on the ground and how it is opening new avenues for growth while reinforcing our role in next-generation connectivity. Let's move on to Slide 14. Fiber, connectivity and housing services delivered a strong 16% increase in revenues, supported by the continued rollout of the Nexloop project in France. Growth in DAS, Small Cells and RAN as a Service was driven by flagship deployments and the increasing relevance of neutral host solutions with projects delivered across venues and high-traffic locations such as [ Roig ] Arena in Valencia, La Cartuja stadium in Sevilla, PGE National Stadium in Poland, 5G rollouts in Madrid Metro in more than 40 parking facilities as well as multi-operator small cell deployments in Portugal and the renewal of long-term IoT agreements such as Securitas Direct. Our broadcasting business remained stable with a 1.9% growth year-on-year. And importantly, we secured the renewal of our long-term contracts with the leading broadcaster in Spain. On Slide 15, we can see that our industrial plan continues to scale and strengthened by the adoption of AI. The initiatives shown here aim to standardize processes, automate operations and reinforce asset management across the group. This collective effort is making the organization more agile, reducing operational complexity and improving our ability to respond quickly and consistently across countries. It is also visible externally. In 2025, customer engagement reached a new high with customer satisfaction index increasing to 8.3 out of a maximum of 10, the best result of the past decade. We are on a path of coordinated transformation that is elevating efficiency, effectiveness, quality and overall service experience. This industrial platform has helped so that our efficiency initiatives are translating in clear margin expansion, as you can see in the next slide. On a pro forma basis, we reduced cost per towers across all our key cost categories, 1.9% less in staff cost, 1.4% less in repair and maintenance, 4.9% reduction in SG&A per tower and 1.1% reduction in leases. Land management remains a key value driver for us. We deployed EUR 270 million across land acquisition CapEx and efficiency programs, generating around EUR 24 million in efficiencies, displaying how our disciplined capital allocation strategy helps offset volume and CPI-related inflationary pressures in lease cash-outs. These focused efforts have driven an increase in EBITDA margins of 300 basis points to 62.1%, up from 59.1% in 2023. The first part of the next slide shows the bridge from reported EBITDAaL and all the components that shape our free cash flow. In addition to our operating performance, this strong recurring levered free cash flow comes from an efficient capital and tax structure, combined with the continued decline in expansion and build-to-suit CapEx, free cash flow amounted to EUR 350 million. This free cash flow acceleration represents a turning point, as you can see in the next slide. Our operational improvements are clearly flowing down to cash. On a pro forma basis, recurring levered free cash flow grew by 11.5%, almost EUR 200 million. And on a per share basis, the increase was even stronger at 16.7%, also reflecting the share buyback program, which continues to enhance value per share. Looking at reported figures, free cash flow reached EUR 350 million, with underlying free cash flow, excluding or before the remedies, improving by EUR 307 million year-on-year. 2025 marked an important milestone for us with the entry into a new phase of consistent and rapidly accelerating free cash flow generation that supports our deleveraging strategy, as you can see in Slide 19. Net debt to EBITDA improved to 6.28x from 6.39x in 2024 and 6.85x in 2023, keeping us firmly on track towards our 5x to 6x target. I would like to note that the pace of deleveraging could have been faster. If we hadn't brought forward EUR 1 billion in shareholder remuneration, our leverage would have closed below the 6x. Our recent EUR 1.5 billion bond issuance that Marco mentioned before in January '26 successfully [ propounded ] most of our 2026 maturities with a strong appetite from investors on the back of a good market momentum and our strong rating outlook. We managed to extend maturities and secure an attractive 3.4% pricing. Now let me hand back to Marco so that he share our guidance '26 and '27. Marco Emilio Patuano: Thank you, Raimon. I would like to close our presentation with the message of confidence. The strength of our business and underlying sector drivers, the continued execution of our strategy and the power of our customer relationship give us the confidence to firmly reiterate our guidance for 2027 and share our outlook for 2026. Let me highlight that our old outlook has been adjusted to reflect 3 elements: the change of perimeter following the data center disposal, the discontinuation of our operation and maintenance business in Spain and the incremental financial costs associated with the share buyback. As you can see, we are very optimistic about our continued growth, profitability and cash generation. So in summary, 2025 was a great year for us, and we're very confident going into 2026 and 2027. Our business model is intact. Drivers of network investments are healthy and customer relationships are stronger day by day. Our organization is driven with renewed leadership focused on growth, efficiency and customer excellence. Our growth trajectory and increasing free cash flow underpin our commitment to enhanced shareholder remuneration and give us further capacity to outperform our CMD distribution targets. So thank you. Maria Carrapato: Okay. So before moving to the Q&A, I'd just like to highlight that in addition to the main slides in the body of the presentation, we've added a few new slides at the end, some fact slides that cover many of the topics that you often ask us. So we really hope you find them useful. And with that, we're now available to take your questions. Maria Carrapato: So the first question that we have on the line up is from Roshan Rohit -- Ranjit at Deutsche. Roshan Ranjit: I just got 3, hopefully, quite quick, please. Marco, you highlighted the Spanish revenue pick up, so kudos. I guess this is the benefit of the kind of the mergeco ready coming through now. Could you remind us how many ops and the trajectory of that ramp up through 2026, please? Secondly, on the EBITDA pick up, a strong acceleration on the organic growth. Is this now the benefit of the rank of [indiscernible] coming in and we should expect that momentum to continue through '26, or is there an element of timing effect in there, please? And lastly, thanks for the additional color on the backup slides. I'm quite interested in the RAN sharing slide, and you've given examples across Europe. Is it possible to get a sense of the kind of pricing premium across different markets that you attribute from RAN sharing?. Is it kind of a consistent uplift in the pricing? Or does it vary dependent upon market structure? Marco Emilio Patuano: Yes, very good. So on your first question on Spain, I take question 1 and 3, and I leave the EBITDA to lease to Raimon. So on your first question, so Spain had -- the first phase in Spain was the redesign of the network coming from Mas Orange. So you see that at the beginning of 2025, we had a material churn in the -- in our point of presence. We started in the second part of 2025 to activate the RAN sharing agreement we have with Digi, which was a part of the deployment strategy of Digi in Spain, and we started the so-called rural project in Spain with Mas Orange. Now for 2026, we start entering in the densification process project that we have with Mas Orange and we will continue to activate more PoPs with Digi. So 2025 was Mas Orange very much focused on reshaping the network and the activation of Digi filled the gap that was coming from some discontinuation in Mas Orange and 2026 on the contrary will be Mas Orange starting the densification project. Your second question on RAN. The question on RAN is pricing depends very much on -- not very much, to some extent on market conditions. You should imagine something between half of a colocation price and 1/3 of the colocation price, depending on the structure of the market. Normally, they have very, very, very limited activation costs on our side. So it's a pure margin for us. because there are basically no CapEx associated to this. Yes, there are some OpEx because our engineers have to make some little adjustments, but it's pure margin. Raimon Trias: The EBITDA perspective and Landco, as you will have seen this year, we have done up to EUR 270 million worth of initiatives, both on efficiency land acquisition across all the different countries that have allowed us to save approx EUR 24 million in terms of savings of EBITDAL. As you have seen on the guidance, this trend will continue going forward. The idea is that over the next years, since we created Celland, we have accelerated the amount that we are able to buy and we're buying more than prior years. It is true that we need to be careful not to compete with ourselves, and we need to keep certain level that normally we consider rate between EUR 250 million, EUR 300 million for the coming years to keep on achieving this level of savings going forward. Roshan Ranjit: That's great. So just on the last point, Raimon. So the kind of Q4 exit EBITDA growth would be something that we can expect through '26 then? Raimon Trias: I would say, if you take the savings that we have achieved this year, there is part of it, as you are saying, there has been a bit more of activity in the last quarter and a bit more of savings. So you have to consider that for doing the phasing for next year. But then next year, it will depend if we buy EUR 250 million, EUR 300 million, that the new savings of next year will kick in as well. Maria Carrapato: So moving on to the next question. It comes from Rohit at Citibank. Rohit Modi: I have 3, please, as well. Firstly, on the guidance for 2027, I understand the guidance was initially given it was a bit long dated and you have a broader range. Now given you are near to 2027, we have already in start of 2026, we still have, I understand 5% on range on the revenue level, but that goes down to 20% on free cash flow level and with a business like Cellnex where you have a higher visibility. I'm just trying to understand what are the swing factors on recurring level free cash flow and free cash flow for '27 that you expect that number can move from lower end to higher end. That's the first one. Second, again, there's a lot of noise we have seen particularly recently in Italy around renegotiation of contracts. I'm just trying to understand, Cellnex could be any kind of beneficiary if -- from -- if any, anything happens in Italy. And lastly, if you can just remind us around the derivative position that you have taken last year, the swaps just before the buybacks. I mean, is there a kind of termination date do you have on those swaps given you do mark-to-market and you have kind of cash outflow -- potential cash outflow if you move terminate that contract. Marco Emilio Patuano: Okay. So on 2027 guidance, yes, I remember there was a bit of skepticism in the recent past about our capacity to go to target. The more it was long term, the more the skepticism was higher. Today, I think that the level we reached in 2025 give good visibility of how the recurring level free cash flow and free cash flow are achievable. So what are the factors that made them achievable? Well, we defended and protected the revenue growth. The revenue growth despite a worse-than-expected originally expected CPI, we are maintaining a good level of growth. This is important. And as you saw, the idea of making a new organization is in order to keep revenue growth. We are performing well in terms of efficiencies, Raimon just explored. And even more, our discipline in capital allocation was demonstrated more and more. So the range for 2027 is what we confirmed at the Capital Market Day. And the more we get closer to this day, the more we see it feasible, both in terms of recurring levered free cash flow and even more importantly, in terms of full cash flow. So your second question was about contract renegotiation. Look, what I can tell you is that we already renegotiated several contracts. Renegotiated with Telefonica, we had no problems. We renegotiated with Vodafone, we had no problems. We renegotiated with KPN in the Netherlands, we had no problems. With Iliad in France, we had no problems. So our experience is that the renegotiation moment is a moment in which you sit with your client. The client will tell you what he likes and what he doesn't. But the core elements of our contracts have never been questioned. So the fact that it is a long term is a long term, the fact that it's an all or nothing, is an all or nothing, and it has never been questioned until today. On top of these, talking about Cellnex, what I can tell you is that the coming renegotiation are not tomorrow. So we have the next renegotiation we have one in Italy in 2030, and then we go to 2033, 2034, 2035, 2036, 2038, 2042, 2048. So in this moment, of course, we are looking with attention what happens in the industry, but our experience as of today has not been dramatic. And the last, I leave to Raimon. Raimon Trias: Yes. On the last topic, I'm not sure if I understood properly, but I'm going to try to answer what I understood. I think that you were asking why last year, most of the return -- all the return that we have done to shareholders have been through the share buybacks. There are various reasons. The first one, if you remember, in the Capital Markets Day, we committed to a dividend starting 2026. Why is that? You've seen the guidance that we have given. The free cash flow is between EUR 600 million and EUR 700 million. So it allows us to pay a dividend based on the cash generation from the business. Last year, we had cash available that it was coming partially from the cash generation of the business, the EUR 300 million that we have done EUR 350 million, but it was coming also from the divestments of Austria and Ireland. And on top of that, the share price was at a moment that was very attractive. That's why we also decided to use the proceeds for doing the share buyback. I hope it was clear enough. Rohit Modi: Sorry, it was regarding the swap, the swap contract that you entered last year, would you continue to have that contract? Raimon Trias: No, the equity swap, it is still in place. It matures in June '26, and it was bought at EUR 32, and we are today at EUR 31.5. Maria Carrapato: Okay. So moving on to the next question. It's coming from Arnaud Camus at Bestinver. Arnaud Camus: First, I assume the disclosure may be limited, but could you provide some indication of the size of the battery resilience agreement you have signed with Telefonica in Spain? Should we assume this is a replicable model to other countries of your footprint? And two, more broadly regarding the forthcoming Cybersecurity Act. I know it may still be early, but could you share any initial visibility on the potential CapEx envelope and implementation time as you are an infrastructure provider to telecom operators? And is it already considered within your 2027 guidance? Marco Emilio Patuano: So the battery agreement is still -- sorry, it's relatively sizable with Telefonica. We are discussing with them how to expand it more because what we agreed with them is to have modular development of this program based on the network design. Our technical teams are working strictly together. The target is to have several thousand sites covered. And it's a super interesting business model because what we do is like imagine not to be a pure infrastructure or a simplified infrastructure, but to be a service infrastructure provider. So we help to take care of the infrastructure from the bottom to the top. Having a program that allow us to buy batteries on a pan-European basis, we can have very good prices. And even more importantly, we have very long insurance terms for the life protection of those batteries. We agree on life protection up to 15, 20 years. Is it replicable? Yes, it's very replicable. We have several other customers that are interested in this business model exactly because of what I told you. We are negotiating very good prices on very good volumes. don't underestimate the fact that securing volumes in this moment in which there is -- starts to be a certain level of shortage on this type of elements is clear. About the Cybersecurity Act, the CSA, I was in Brussels last week talking about DNA and CSA, so the 2 regulations that are expected going forward. The answer is, yes, we are working very closely with the European community. There are still margins of nonclarity -- nonperfect clarity in what is going to be the final outcome. And to be honest, different member states have a different interpretation of the scope. Some are more strict, some are less strict. What we have in 2027, we are convinced that is full enough for what is going to be the requirement of the CSA. Then if you ask me if the CSA will be fully enforced in 2027, I'm not so optimistic. Maria Carrapato: Okay. So moving on to the next question. It comes from Fernando at Alantra. Fernando Abril-Martorell: Two quick questions from my side. First, on the expansion CapEx. I've seen it is down 6% year-on-year on a pro forma basis. So I don't know if you can elaborate a little bit on the main drivers behind this? And also, how should we think about its evolution for '26 and '27, the split between the different 3 CapEx items? And second, on PoPs growth. So you've accelerated throughout the year. Is it reasonable to assume a similar growth profile in '26? And can you give us an indication of what share of new PoPs will be linked to RAN sharing agreements? Marco Emilio Patuano: Okay. On expansion CapEx, so there are 2 elements. A few time ago, Raimon showed you that on DAS, Small Cells, RAN and other services, we grew almost 5%. The reality is that if you open this number between DAS and Small Cell RAN and other, you would have seen that DAS and Small Cell were growing about 8.1%, RAN about 10% and the other was growing much less. But the real focus for us today is DAS, Small Cells and RAN. So going forward, what we see -- the place we see having the CapEx is those 2 areas; DAS and Small Cells in this order, more DAS than Small Cells. So the Small Cell take-up is still low even though there are some interesting use case in some European countries that we are monitoring very closely of Small Cells covering city center very efficiently and with a very low urbanistic impact and the other is RAN. Our RAN project in Poland is using some CapEx. So this is about the expansion CapEx. Then of course, there is a part of expansion CapEx that is linked to colocation, but its tower expansion CapEx that you know every year, we have more or less the same. About PoP growth, Raimon? Raimon Trias: Yes. So during the year '26, you know that our growth in PoPs comes from 2 things, comes from colocations and it comes from build-to-suit. Build-to-suit will slow down a little bit in the year '26 basically because our programs of build-to-suit are reducing year-on-year as they come from the prior M&A deals. The normal colocation, we're expecting similar growth this year, not a big difference. And you were asking as well from our RAN sharing perspective. This year, the RAN sharing has mainly been in Spain with the entrance of Digi. And I would say that for next year, although you also have a bit in Italy, I would say that for next year, you have to consider that there will be similar RAN sharing coming from Spain and a bit in Italy as well. But I would just consider that from the colocation comes from Spain is what will be RAN sharing. Maria Carrapato: So moving on to the next question coming from Ondrej at UBS. Ondrej Cabejšek: I had to step away for a moment, apologies if I'm repeating the question. Please feel free to ignore. I have 2 questions, please. One is on the news that Iliad has decided to allocate part of the contract that you were mentioning at the previous quarter that you are kind of looking at the 4,000 sites in France. So Iliad has allocated at least half of this to TDF. I was wondering, Marco, if you can again kind of explain to us your thinking about the returns on this project, why this is the second project with Iliad specifically that you are kind of turning or walking away from presumably because of the kind of IR not meeting your standards. So that would be question number one, please. And second question related to France. We heard last week on the CMD that Christel, the CEO of Orange, was talking about again, again kind of investment remedies. And so I was wondering if this is something that is already somehow kind of taking shape in light of various positive, say, developments, for example, the European Council openly suggesting that M&A should be allowed and investment is needed, remedies are needed in that direction. So any kind of color on developing talks around that potential situation would be very helpful. Marco Emilio Patuano: Okay. I answer Nemrod and then today with us, there is also our Chief Strategy, who is French, by the way. So I will leave him to respond Ondrej. So on Nemrod, yes, we have been -- we participated to the tender and the tender itself is an evidence that there is more need of coverage and densification. So this is -- I commented a million times in the past and then there is a tender. So the good part of the story is that densification needs are there. We've been looking to the tender. We submitted an offer, but we submitted an offer that was in line with our capital allocation rules. So did make us not to reach the agreement with Iliad because it was out of our investment criteria and our capital allocation criteria. So we decided that if there was someone offering more, we would have stayed disciplined. So our goal is not to catch up with every investment there is in Europe. There are -- we are disciplined. We know where we create long-term value creation. And so that's it. We will focus on other projects. Vincent, would you like to answer the second question? Vincent Cuvillier: Yes, of course. So yes, we are obviously very -- extremely close to our different customers. We are not directly involved, as you perfectly know, within the discussion of the consortium. But we are also, as Marco mentioned, pretty convinced that any consolidation, if it happens, will come with investment remedies not only in new coverage, but also on the resiliency of the system. So we have shown our proactiveness with all our partner there to support these remedies. And as you perfectly know, in any case, what we will procure is to protect the NPV of our contract and giving some short-term flexibility in exchange of long-term growth that will come from these remedies without any doubt. And this is what we will protect -- this will result in the protection of the NPV of our contract. Marco Emilio Patuano: Okay. Thank you. So yes, I was with some members of the French institutional establishment and what they told me is that they consider infrastructure investment, a high priority for the country. So there's no doubt that there will be more investment coming. Maria Carrapato: Okay. So now moving on to the next question. We have Abhilash from BNP on the line. Abhilash Mohapatra: I just had one, please. I wanted to come back to the topic of the guidance ranges and specifically around the revenues. So about EUR 100 million delta for 2026 between low and high and EUR 200 million for 2027. Just wanted to understand specifically around revenues, what is the key factor there? Is it around inflation assumptions, presumably not given it's so close. So is it mainly around colocations? Or are there any other factors? So any color you could add there around the revenue would be very helpful. Marco Emilio Patuano: Yes. Do you want to Raimon? Raimon Trias: In terms of the guidance, the only thing that we have adjusted, you have it in the presentation is basically the change of perimeter that is coming because of the data center disposal. Also, we have adjusted the discontinuation of the operational maintenance activities that we have in Spain. If you recall, we decided to stop this something like 18 months ago, but it had an impact during 2 years still because it took some time to discontinue the operations. And the third thing that we have adjusted into the guidance is the impact of the increased share buyback that was not considered in our numbers in the Capital Markets Day. The rest of the guidance, '27 has not changed and remains as it was before. Abhilash Mohapatra: Apologies, if it was not clear from the way I framed the question. I was just -- maybe sort of more wondering around what is driving the variance between the low and high end of the revenue range. What are the key factors? Marco Emilio Patuano: Yes. I think that the width of the range depends very much on somehow the future of build-to-suit programs if we are going to allocate more build-to-suit programs or not. A [ Nemrod ] project enters, we have the full capacity in our cash flow to have such a project and it contributes to your growth. The Nemrod project doesn't enter, and we rely more on colocation and the existing commitments that we have. So having -- or maintaining a certain element is absolutely normal. And by the way, so it is also a decision of not to touch what we committed at the Capital Market Day. So if we start touching one point, then we have to make a full revision. So -- but if you ask me what can move us from the low end to the high end, I would tell you that what is going to come from colocation, RAN sharing, et cetera. More or less, we have a fairly clear picture. What are the commitments that are already taken. We know even the [ cent ] is possible that something more materialize in the coming months before -- between here and the end of 2027. Yes, and we will evaluate. We demonstrate we are disciplined. We're not going to make crazy stuff. If we do something, it's because it generates value, long-term value. So I think it's fine. Raimon Trias: If I can add to Marco, it's important that everyone understands the predictability of the business. This year, we have achieved the guidance '25 that was given 5 years ago. So the barrier that can happen within these numbers is very small in that perspective. Marco Emilio Patuano: Good. Abhilash Mohapatra: Thank you both for the color. So just to clarify, so you're saying that the high end of the guidance is more sort of predicated on additional build-to-suit projects over and above what we already have, if I understand that correctly for the revenue guidance... Raimon Trias: For going up to the higher part of the guidance, yes, there are other projects that should be won during the year to be able to get to the higher part of the guidance correctly. Maria Carrapato: Okay. So moving on. We can follow up afterwards if you still have any questions. Now moving on to the next question, comes from Fernando at Santander. Fernando Cordero: My two questions, in fact. The first one is related with a follow-up in the sense that you have been already asked about your confidence on the growth for 2026. I'm going a little bit beyond given that the build-to-suit activity is going to clearly decrease by 2027 and onwards. How confident are you of replacing the current [indiscernible] of growth coming from build-to-suit with colos. And the second question is on active equipment. You have already seen the project in Poland. I just would like to understand at which extent you would be also, let's say, open for additional projects, and particularly, I'm thinking in Spain, just as a way to complement your current portfolio and even to, let's say, to give more visibility in the long term to your current business in Spain? Marco Emilio Patuano: So the build-to-suit programs, as I said, 1 second ago, we are -- we have a program of committed that what has been already committed, has a sharp decline after 2026. 2027 will be materially lower than 2026. And -- so this is why we are working on analyzing future possibility, future opportunities that can appear in the market. On your question on active equipment and especially on Spain, I would say that it's not our sweet spot. So if you ask me if is this your sweet spot? My clear answer is no. We have the project in Poland. We are performing the project in Poland, I would say, fairly okay, okay in terms of how the project is going on, what are the returns, the relation with the client, et cetera. But what I can tell you is that contributing with a material benefit to the client we can do way more on the traditional perimeter than on the active component. Then every case is different. Today, a case in Spain is, I think, more a press rumor than a real case. So as of today, my answer is more no than yes. This is also something that is not so clear if it is a real case or a speculation. But I would say more no than yes. Fernando Cordero: My question on the PoP growth is because [indiscernible]. Maria Carrapato: We can't hear very well. Marco Emilio Patuano: Can you speak a bit louder, please, Fernando? Fernando Cordero: Can you hear me right now? Marco Emilio Patuano: Much better. Fernando Cordero: Okay. Perfect. Now my point is the following. There is a debate that at which extent your current PoP growth in Colors is subdued by the fact that you are deploying the build-to-suit programs. And in that sense, what should be, let's say, the your, let's say, your base case in terms of ops, it is the total growth that we are seeing today or just the colors when the build-to-suit product will be trading down. Marco Emilio Patuano: Well, the color that you see today is what we assume is going to be the rhythm of the colocation. And of course, if you see that the build-to-suit tend to reduce after 2027, we are going to push more on colocation. The point is we are looking to an important market share on new colocation. So what we are doing is maintain or eventually even increase our market share. And in order to do this, our technical team is working with proactive models in order to codesign with our clients better coverage. This is something that if you want, we can explore and explain better separately. Maria Carrapato: So moving on. Next question comes from James Ratzer at New Street. James Ratzer: I have 2 questions, please. So the first 1 is you're seeing some very encouraging growth in the kind of just organic colocation on your Towers. I'd be really interested just to hear more precisely where you're seeing that demand coming? Is this in kind of urban hot spots is this rural areas? Are these transport links. And you're speaking to the MNOs, where are you finding that particularly seeing this demand for organic colocation growth? And then secondly, kind of bigger picture, Marco. Where do you see Cellnex's portfolio of assets going, let's say, over the next 3 to 5 years. I mean if you announced here this morning another small disposal I mean, how do you see yourself at some point ever going back into acquisition mode and growing the portfolio of the business? I'd just love to here a bit more conceptually how you think about the kind of strategic portfolio over the next 5 years. Marco Emilio Patuano: Yes. Very clear, James. So on organic colocation, it's super interesting because when we go with my Chief Operating Officer and we start looking at the detailed figures, we look to our portfolio splitting between towers and rooftops and then urban, suburban, rural and deep rural. So the more you are tower in non-super dense area, the more you have opportunity for colocation, which is good common sense. If I'm in the center of Paris, adding a co-location on an existing rooftop is not difficult technically. It's difficult urbanistically. So you don't get the permit. So colocation are most of all suburban and suburban is the big roads and transportation corridors even inside the cities because these generate traffic congestion -- data traffic, not only car traffic congestion, but also data traffic congestion. And the rural, the rural is going to be a mix of colocation and RAN sharing. The more you go in deep rural, the more we suggest to our client to be efficient. We are making this, for example, in Switzerland. We are telling to our clients RAN share more because the industrial cost is for them, not for me, for them. The industrial cost make the investment having a better return. So the more you look at tower and the more you look at non-super dense urban area, the more you have opportunity for colocation. The more you have -- you are densifying dense urban areas, the more you have to think about more towers or eventually distributed small cell system or distributed antenna systems. I hope I made it clear, James. The second is how do we see the portfolio medium to long term? So point number one, everything that is noncore and you are easy to understand the participation, we were a limited partner in an investment fund. Hard for me to say that this is core. We had a commitment of further EUR 50 million to be invested in the future, and we could repatriate with a nice return, our old investment. So why not to rotate this asset? I think it was a relatively easy decision. We had a very good cooperation from the GP, the general partner cooperated with us very nicely. And so we made it. Now -- when you look at can Cellnex be on the buy side, I would say, for geographic expansion, I'm fairly categoric in saying no. I don't see Cellnex exit from markets and then reentering new markets because -- no, I don't see this that in terms of geography, I think we are pretty much okay. But if the MNO are claiming that there is too much fragmentation in the market, I would say the tower sector in some markets can say the same. In Spain, there are 4 tower players and 3 networks. In France, there are 5 tower operators. And if you count also smaller ones, you can eventually even consider it more fragmented. So those -- U.K. is the same. U.K. is pretty fragmented in terms of tower operators. Consolidation -- in-market consolidation in tower operator can make good synergies. The easy and evident one, I can manage more portfolio, more towers with less than proportional growth of people. This is, let me say, the trivial one, the easy one. The most interesting one is that when you put 2 portfolio together, you start realizing the real overlaps between portfolios and you can start decommissioning part of the portfolio, transfer to your clients part of the benefit. And this is what is -- what make it very, very, very interesting. So this kind of consolidation is not there today because there is nothing there today. But if your question is, how do I see it medium term, I think that this fragmentation, same as the MNO saying that it's unefficient, I can say that it's not particularly efficient even in the tower sector. Maria Carrapato: Okay. So now moving to... Raimon Trias: We have another 2 and then... Maria Carrapato: Yes. So now moving on to Graham at Jefferies. Graham Hunt: Yes. I'll just stick to one, if that's okay. Can I just ask a bit more on the reorganization that you announced that you took at the beginning of the year. Maybe if you could help us understand more about the characteristics of that business unit as to why it suits the cross-market leadership structure and what the challenges were that you're encountering before this that the new organization is looking to resolve. Marco Emilio Patuano: Thank you. Thank you, Graham. The reorganization was based on 2 main drivers. One is at corporate, we need to be more efficient. And to be more efficient, we need to be more focused and more slim, if you want, and then we have to decide what we do and what possibly it's not absolutely necessary. So this is why we made our organization at the headquarter level leaner. Leaner means faster and means also it makes easier to make decisions. So this is why we were reorganized the headquarter. When we were looking to the countries, we had some, let me say, some combination -- geographic combination that were a little bit hazardous. So we had a Portugal together with Poland, instead of being together with Spain, which is honestly not very geographically natural. So we've made some adjustments because it could make available some synergies that are not to imagine enormous synergies, but there can be some synergies. And the last and most interesting part was what we call Vertical Solutions. So Today, what happens is that if you take a large country like -- let's take 2 large countries, one is Italy and one is France. In Italy, the non TowerCo business accounts for a sort of EUR 40 million to EUR 50 million. In France, it accounts for less than EUR 5 million. Do you mean that the French market is 10x smaller than the Italian market? Or do you think that with the EUR 40 million to EUR 50 million, we covered all the opportunities we had on the Italian market? The answer is no and no. So -- but the problem was that sometime each and every country is very specialized and very focused on the day by day and sometimes some opportunities are simply not big enough, not priority enough, not to specialize -- we are not specialized enough to make it possible. So the idea was, okay, we are -- altogether, if I take all my countries, we are the #1 in Europe, but we don't play as the #1. We play 10x as a small operator, and we want to play one time as a big guy. But in order to do this, you have first to think big. If you think small, you remain small. So we need to think big. And in order to think big, I need to put all the volume together. And think central, act local is going to be the route. So I think that, yes, like every matrix organization, there are challenges, but it can work well. Do we have an example? Yes, Celland. It was a lot of small initiatives, each of them small. Now we have Celland and it's doing phenomenal. So let's try to capitalize on good experiences. Maria Carrapato: Okay. So now to end the call. I'll ask a question from Andrew at Goldman Sachs. Andrew Lee: I just wanted to -- just one question, just to dive in a bit more deeply into the Spanish densification reacceleration. You've obviously seen the equivalent PoPs in Spain tick up, I think, as was mentioned in an earlier question. Could you just give us a bit more insight? Because obviously, this is a key metric for us to be thinking about whether -- as to whether consolidation is a good or bad thing for telcos. And obviously, consensus thinks it's a bad thing and you think it's a good thing. So we're obviously all looking for evidence of densification acceleration. If that's happening now, what exactly does that look like? So what will be the equivalent PoP growth in Spain that you see in 2026 and 2027. I think -- sorry, the company average or Cellnex average is 3.7% equivalent PoP growth in the fourth quarter. What does it look like in Spain with that growth acceleration that we're seeing from densification? Marco Emilio Patuano: You are a little bit difficult because you talk about equivalent PoP and they talk about PoP. So the concept of equivalent PoP was a concept that has been used by Cellnex some time ago in order to facilitate the exercise of saying equivalent PoP time average price equal to revenues. The world doesn't work in equivalent PoP nor in average price. So average is a bit tricky exercise because I'm eating an entire chicken, you eat 0 and we had half a chicken each. So it's not true when we see if you're hungry at the end or not. So the growth in Spain or what happened in Spain is point number one, Mas Orange had to take 2 networks, one built at Orange standards and the other built at MASMOVIL standards, which were, believe me, very different and to create the Mas Orange network. So we had to avoid duplications. We had to make new colocations. We had to build -- or we have to build new sites, all at the new standard, which is the Mas Orange standard, which is the Orange standard. So top quality, top everything, carrier grade, top carrier grade. So this is what happened in Spain with Mas Orange, which is first part of the year, an accelerated decommission of PoPs, some of them anchor and some of them second. And then a progressive relocation of some of those antenna, most of them anchor, okay? On top of this, we are partner of Mas Orange in their rural deployment program, rural Spain program. And in the beginning of 2026, we are completing the delivery of this program. And this is the picture with Mas Orange. So going forward, what is going to happen? It's going to happen that they are working on improving -- further improving the quality of their network. We are making available more colocation and we are -- and we both committed that we will build for them some of the new installation that they need. Second, part of the decommissioned sites that Mas Orange made available have been taken by Telefonica. Why? Because it was a good location. There was a space on the antenna, which was made available by eliminating one previous antenna. Telefonica considered it interesting. So this happened in the second part of 2025 and will continue progressively in 2026. Our relation with Telefonica is particularly good, as you saw with the battery program. And so we are discussing with them if we can make available more sites with them. In their case, we are talking about more colocation than build-to-suit, but it's a very healthy relation. With Telefonica, we agreed on the activation of the RAN sharing program they have with Digi. It was -- it is a fairly big program. It started in the second part of 2025, I would say, in the last part of 2025, and it will continue in 2026. Why it took a little bit of time because we had not only to agree on a technical program, but also we had to amend our original contract in order to make available for them the RAN sharing on our network that originally speaking was not confirmed. So we made the agreement. So this is another demonstration that when people say that every time there is to discuss about agreements, it's a fight. No, it's a discussion. It's a discussion between 2 [ adults ]. And this is going to continue. In -- to be honest, our relation with Vodafone Zegona is not one of the largest relation -- business relations we have. So the fact that there is a little bit of noise around this is not affecting us particularly. Of course, if we can support Zegona and Vodafone in their network needs more than happy. As of today, it has been relatively small. But of course, if they need, we do. What we see more? We see more densification coming. This is something we absolutely see. We see more densification coming in Spain. And the big question mark is if Digi someday will deploy not only RAN sharing, but also some proprietary network. They did in other country. As of today, it's not in the plans, at least in the plans shared with us, but you never know. I hope I answered, Andrew. Andrew Lee: I guess the reason why you're using equivalent PoPs was just because it has a more direct correlation with actual revenue growth where these days so much. And it's really what we're trying to ask is like, is revenue growth going to accelerate? What's the revenue growth in Spain post consolidation, post the kind of the rebalancing of 2025? That's the real question. It sounds like you're not able you're not going to -- you can't answer that today, but I guess that's what we're really looking for. Marco Emilio Patuano: Well, what I can answer is that 2025 has been a little bit better than what we expected. So these -- so let's take the small positives. Maria Carrapato: Okay. Well, thank you, everyone. It's been a long call, very, very productive, I think. Thank you for your continued support. And as usual, the full team is available for following up if you have any additional questions. Thank you very much.
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: Good day, and thank you for standing by. Welcome to the Prosegur Cash Full Year 2025 Results Presentation. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Miguel Bandres, Head of IR. Please go ahead. Miguel Ángel Bandrés Gutiérrez: Good morning to everyone, and thank you for joining today's call. I'd like to welcome you to our 2025 Q4 and full year results presentation that will be presented by Jose Antonio Lasanta, our CEO; Javier Hergueta, our CFO; and myself. The presentation shall take around 30 minutes in which we will share the most relevant events that have taken place in the period for our business as well as our performance. We'll comment on our key financials, our geographical performance and our transformation effort as well as our sustainability initiatives and will end with key concessions. After, we will open a Q&A session. Should we not get to respond to everything in today's session, we'll get back on any open topics on an individual basis. I want to again thank you all for your attendance and just remind everyone that this presentation has been prerecorded and is available via webcast on our corporate web page that you can find at www.prosegurcash.com. But before I hand the floor to Jose Antonio, I'd like to share some news regarding cash that have lately appeared in the media. They cover interesting topics such as the importance of cash for lower income families in the U.K., the stance towards cash of North Americans, how often cash is used in Colombia or the resilience of cash payments in the Eurozone. There are all cases that show the relevance of cash in different geographies and for different purposes, be it privacy, inclusion or budgeting or expense control. In the first news we can read from the BBC that the UK government will grant cash payments to people that happen to be in financial need. This new funding scheme will provide emergency funds for low-income individuals across England. This highlights how important cash is for all segments of society, especially for those that are most vulnerable. To reach them effectively and to allow them to buy their expenses accordingly, no other payment means is as effective and as inclusive as cash is. In the second year, we crossed Continue continent towards the U.S. We read from MoneyWise, that 84% of Americans oppose having a cashless country, citing privacy and spending control as key reasons for their positioning. Once again, in different places around the world, citizens are rising to defend their privacy and their right to control their personal spending. 84% is more than a relevant amount as we take into consideration when regulators are working on warrantying basic economic premium for which cash, its acceptance and its availability are crucial. Next, and moving down to Colombia, we can read from the [indiscernible] that this country stands out amongst cash users since 7 out of 10 daily payments are made with physical money. Here, we can see that in Colombia, consumers stand behind their payment choice, backing cash as their most preferred option. When doing this, they show with their example, the relevance of cash for Latin American economies and the preference citizens have for it. And lastly, and coming back to Europe, we can read from Euronews that Europeans pay for more than half of their purchases in cash. In 14 of the 20 countries in the Eurozone, cash is the most widely accepted method of payment accounting for between 45% and 55% of all transactions. Again, here, we can see that because of the many positive attributes cash has, it's the preferred payment means in over 70% of Eurozone countries. All the above are a reflection of the many events and news that take place in the world regarding cash that underscore its unique attributes and the endorsement it gets from consumers and authorities alike. We are proud to assure that the availability of cash in society continues to run smooth and effectively in close collaboration with other relevant stakeholders such as financial institutions, retailers or regulators. After this news update, I will share today's agenda. Firstly, Jose Antonio will review the period's highlights. Second, Javier will share with us the key financials for the year, after which Jose Antonio will take the floor again to reflect our transformation initiatives, and then I'll share key developments per region. Finally, Jose Antonio will update us on the latest sustainability developments before sharing key conclusions and open the Q&A session. This being said, Jose Antonio, the floor is yours. José Antonio Lasanta Luri: Thank you, Miguel, for sharing interesting news in the world of cash. Good morning to everyone, and thank you for attending. 2025 has been a challenging year for our company, in which despite an unfavorable exchange rate environment in Argentina, a key market for us, having taken decisive steps towards its macro normalization we have managed to maintain a relative operating margins and improve our bottom line in relative and absolute terms based on our determined transformation and a sequential improvement in Europe and a strong performance in Asia. All of this demonstrates our business model resilience. Our top line has shown organic growth of over 5%, which has been tainted by an 11.1% currency impact that accelerated as the year progress. We must remember that 70% of our revenue is not in euros and is hence affected both by the evolution of U.S. dollar versus the euro and by local currency fluctuations versus the U.S. dollar. Combining both elements, sales declined by 4.9%. Despite the above, we have been able to maintain a 12% EBITDA margin, I would like to here highlight that the nonrecurring efficiency program we have carried out since Q2 to improve our operations and in which we have invested more than EUR 15 million has been finalized and offset by positive extraordinary items. To end the year, our EBITDA margin has improved in Q4 by 30 basis on a quarter-on-quarter basis, reaching 12.5% on sales. Net profit has increased by 3.3% and 30 basis points versus 2024 to EUR 94 million, showing the improved performance of the bottom part of our P&L. Regarding Transformation, we continue to advance at a very strong pace. Sales for these solutions now account for 35.2% of total revenue and the penetration has increased by 300 basis points year-on-year. Of particular relevance has been the performance of our Cash Today solutions that have behaved very well in our geographies. In terms of cash flow, our free cash flow reached EUR 108 million on the back of disciplined CapEx control as well as in strict working capital management. With this, we have been able to reduce our total net debt by EUR 36 million year-on-year, which is a clear proof of our commitment to debt reduction. Lastly, I want to share that we have effectively repaid the EUR 600 million bond we've had out outstanding and that our balance sheet is strong, flexible and well funded on to 2030. As well, our Board has proposed a EUR 62.5 million dividend for the year 2025 to be paid in 2026, which implies maintaining the same dividend per share as the prior year. Lastly, it's important for us to highlight that Standard & Poor's has included us in the demanding Global Sustainability Yearbook for 2026, which recognize our constant effort to have a sustainable company. With this, I'd like to hand over to Javier so he can share with us our key financials. Javier Hergueta Vázquez: Thank you, Jose Antonio. First, looking at our profit and loss account. Revenue has reached EUR 1,987 million. As we can see on the right-hand side of the page, Organic growth reached 5.3%, while inorganic at almost 1%. However, as Jose Antonio pointed out in the prior slide, foreign exchange has negatively affected us by 11.1%. When totaling all these effects, our overall sales have decreased by 4.9% in the year. Asia continues to be clearly our organic growth leader, and we foresee that to continue into the future. Our EBITDA totals EUR 356 million, which, together with depreciation of EUR 118 million in the period makes us reach an EBITDA of EUR 238 million, 5% less than in 2024. It is important to highlight that despite both the currency and Argentina's normalization impact on our country mix, we've been able to maintain our 12% relative margin. Looking at the bottom right-hand side of the page, the one-off impact from the extraordinary efficiency program that summed EUR 50 million and for which we expect a payback of 18 months has been offset by other positive extraordinaries fundamentally related to prior acquisitions deferred payments. As we continue down our P&L, amortization of intangibles reached EUR 22 million, EUR 3 million less than last year and with which we reached an EBIT of EUR 260 million, 10.9% of sales, which is 10 basis points improvement versus 2024. It is important as well to note that the financial results totaled EUR 47 million, EUR 13 million less than in 2024, mainly on lower currency impact with which we reached an earnings before taxes of EUR 169 million, EUR 3 million more than 1 year ago and allows us to improve our margin over sales by 60 basis points to 8.5%. Taxes totaled EUR 75 million in line with last year in absolute terms and results in a reduction of 60 basis points in the tax rate to 44.4%, a trend that should continue into the future. With that all, our net profit reaches EUR 94 million, growing 3.3% versus one year ago and represents 4.7% of total sales, a 30 basis points improvement year-on-year. I want to underline the resilience of our P&L that shows especially in its bottom part towards net profit. This all allows us to deliver earnings per share of EUR 0.0607, 1.2% better than the one achieved a year ago. Even in such an adverse environment, we have been able to not only protect but improved profitability for our shareholders. If we go to Page 5, we can review our cash flow and net debt position. Starting from the EBITDA I shared in the prior page of EUR 356 million for the year, provisions and other items deduct EUR 69 million, EUR 34 million more than the prior year, explained by the difference year-on-year in extraordinaries and other noncash items. Income tax implied a cash outflow of EUR 83 million, EUR 19 million more than in 2024 while CapEx has totaled EUR 82 million, showing our discipline towards CapEx management, which we aim at maintaining in relative terms over sales. Investment in working capital has totaled EUR 14 million despite growing organically at 5.3%, as we've seen earlier and representing a substantial reduction of EUR 21 million year-on-year as a result of an effective DSO and DPO management. With this all, our free cash flow reaches EUR 108 million, implying a 77% conversion over EBITDA in the year, improving 300 basis points over 2024. Interest payments reached EUR 19 million, slightly over a year ago despite the refinancing program carried out throughout the last part of the year. And M&A payments have totaled EUR 52 million contributing to reduce the M&A-related outstanding debt by EUR 70 million. Dividend outflow totaled EUR 61 million and treasury stock some EUR 8 million in 2025. Our net financial position at the beginning of the period was at EUR 643 million, to which we shall decrease the net cash flow and as well deduct the EUR 10 million negative impact from foreign exchange rate. These results in the net financial position for the end of the period of EUR 711 million, increased fundamentally due to M&A payments made and extraordinary efficiency costs to which we must add EUR 98 million of IFRS 16 debt, EUR 55 million in deferred payments and EUR 40 million positive of treasury stock achieving a total net debt of EUR 850 million, reducing EUR 36 million year-on-year and taking it below 2023 levels. Our resulting leverage ratio has reached 2.4x, 0.1x more than 2024 fundamentally driven by the effect of currencies on our EBITDA levels. As said, we are confident that into 2026, we will be able to continue our deleveraging. With this, I would like to hand over to Jose Antonio, so he can share with us on Transformation. José Antonio Lasanta Luri: Thank you, Javier. Looking into Transformation, I'm very happy to share that these solutions now represent 35.2% of our total sales. In 2025, revenue of our Transformation solutions reached EUR 700 million, which is a 4.1% increase in relative terms. Once again, this underlines that our products are very well received by our customers and continue to trust in us as a key service provider. This growth over 2024 is especially relevant if we take into account that in 2024, we undertook very relevant nonrecurring projects of ATMs in Latin America that have not been repeated into 2025. Together with the already mentioned currency impact that, of course, as well affects the sales. Penetration of our total sales, as I said, now reached 35.2%, implying an increase of 300 basis points year-on-year. If I am to highlight one especially key performer, this has been our Cash Today solutions but continue to deliver extraordinary growth in our geographies and to which we have increased our product type range. We are determined to continue the transformation of our company into the future, focusing on our key solutions. Cash Today, ATMs, banking correspondence and ForEx business. With this, I would like to pass over to Miguel, so he can share with us the key highlights of our performance by region. Miguel Ángel Bandrés Gutiérrez: Thank you, Jose Antonio. I would like to first start sharing with you the key developments in Latin America, our main region that accounts for 58% of group sales. Revenue in the region totaled EUR 1,145 million in 2025 and this implies a decline of 11.5% versus the same period achieved a year ago, driven fundamentally very strongly adverse 17% currency effect. The evolution of the U.S. dollar versus the euro as well as the local currency versus the U.S. dollar have taken negative toll on our sales. Very important to note that underlying organic growth has been 5.4%, which reflects a positive evolution overall in the region, save Argentina. Different elections that have taken place in the later part of the year and the measures taken in order to balance public spending have affected consumption as reflected in our figures. We're confident that as the country continues its change efforts, growth will restart, and we'll see strong activity back. Transformation products have experienced as well a very positive year despite the currency effect and they've managed to grow versus the prior year, reaching EUR 435 million, which is 38% of total sales, increasing thus the penetration by 490 basis points. Growth in the region has been fueled by strong performance of Cash Today and banking correspondent initiatives. In terms of margins, pro forma EBITDA, which excludes the one-off impact of the EUR 50 million efficiency program carried out in the region in the last three quarters and other extraordinary items related to prior acquisitions, payments has reached 16.1% of sales. That is an 80 basis point reduction versus one year ago, fundamentally due to the Argentina normalization as well as the effect of currencies and the country mix. we believe this margin should expand into 2026. Turning now to Page 8. Europe accounts for 33% of group sales. Revenue in the region has reached EUR 662 million. That's a 1.4% or EUR 9 million increase over a year ago. This growth is backed on an organic positive 1.5% growth that has been slowly by receiving the accelerating quarter-on-quarter and that we believe will continue into 2026. The region experienced a minor 0.1% drop back from currency effect. We have to underline that this growth has taken place in a year where Spain and Portugal have seen modest 2% increases in GDP terms, and Germany, our biggest market in the region has experienced no growth. Transformation in the region now reaches 33% of total sales, a 10 basis point improvement over one year ago. The main contributor to this Transformation product growth continues to be Cash Today, which we believe still has a lot of room for growth from our expanded product range. When we look at margins, pro forma EBITDA, which excludes extraordinary positive impacts due to prior M&A payments, has improved by 15.6% to reach EUR 35 million and in relative terms, totals 5.4% of sales, 70 basis points better than in 2024. We're confident that on a pro forma basis, the margins of the region will continue to grow and will actively contribute to the company's more balanced growth and margin profile. We now turn to Asia Pacific, a region that now represents 9% of group sales, up from 7% in 2024. Sales in this geography have reached EUR 180 million, a significant 26.4% improvement year-on-year. It's particularly important to note that this growth has been propelled by a 21.7% organic growth, which continues strong across the region. Such a growth is backed from strong economies, a significant outsourcing still to be developed and an increasingly high adoption of our transformation products. However, as we've already seen in prior quarters, currencies have reduced our revenue by 8.1% in euro terms. They've been affected by the decline in both local currencies versus the U.S. dollar and U.S. dollar versus the euro throughout the year. Looking at Transformation. These products have grown by 53.9% to reach EUR 47 million in 2025. The penetration achieved is of 25.8% of sales, a significant increase of 460 basis points year-on-year. Especially noteworthy, considering the strong push of the core business. This growth has been driven fundamentally by the ForEx business. In terms of margins, as anticipated, EBITDA significantly improved to double the territory, reaching 10.4% of sales and EUR 19 million in absolute euro terms. Thank you for your attention, and now I'll turn it to Jose Antonio. José Antonio Lasanta Luri: Thank you, Miguel. I would like to now share our key sustainability-related development. Regarding the environment, I am glad to share our achievements in terms of decarbonization. We have reached our goal of reducing our carbon footprint by 8.4% versus a reference year of 2023, and clearly beating our yearly target of 1.7% reduction. This shows our commitment to reducing the impact of our business and the environment in an always economically meaningful manner without jeopardizing quite the opposite of our financials. As well, I am pleased to let you know that we have been ranked in Standard & Poor's 2026 Global Sustainability Yearbook, it is noteworthy to reckon that this list recognizes a select group of companies recognizing us in the top 15% amongst over 8,000 candidates for outstanding sustainability performance. Turning to our people. I'm very happy to share that we've been able to reduce our workplace accident frequency rate by 9% versus 2024 as a result of the multiple initiatives in terms of training and prevention we have invested in over time and to continue improving our team's safety, reflecting the above rate, we have launched a Road to Safety training targeted at our fleet teams taking into account that a large portion of our colleagues are in the logistics area and that this is where most accidents take place. We are sure that this initiative will have a very positive impact. Lastly, in the governance area, I am proud to share that we maintained the highest rating on the AENOR Good Corporate Governance index reaching G+++ rate, a level granted only to the best-performing companies. And as well, I want to share that almost 2,500 employees have achieved our corporate compliance certification that assures that we are a more robust and trustworthy company. Lastly, this year, we have improved in almost all key ESG ratings we are in. We can see particularly significant improvements in the S&P Global and MSCI ratings showing that third-party independent agencies ratify our efforts and achievements in the matter. We are sure that by taking care of our people by decreasing accidents, reducing our impact on the environment and improving our governance, we build a more sustainable company. And now I would like to summarize my main conclusions. 2025 has been a very demanding year in which we've been able to improve our bottom line profitability as well as continue to transform in an adverse exchange rate environment. Our business has weathered the normalization actions undertaken by the Argentina authorities as well at the dollar and other currencies devaluation. In this difficult environment, we have been able to both implement the efficiency program and capture growth and profitability in Europe. We have been showing a resiliently accelerating quarter-on-quarter improvement, while Asia continues to show a strong growth. We foresee these trends to continue into the future. Transformation has been at the forefront of our strategy where we are to focus on our four key families of solutions. Cash Today, ATMs, CORBAN and the ForEx business. Regarding them, we will continue to enlarge our offering and digitalize our portfolio. These efforts have resulted in improving our net profit by 3.3%, demonstrating our strong commitment to creating shareholder value and maintaining a strong shareholder remuneration while we reduce debt. In all, as said, 2025 and despite the evolution of currencies in Argentina's normalization, has been a transformative year for us. We have improved our bottom line, made our operations more efficient and continue to transform our company. We are sure that we are best prepared to face 2026, a year in which we are already working hard to continue delivering and where you should see an improved LatAm business and continued profitability and growth in Europe and a consolidation of our Asian performance. Thank you very much again for your attention. And now I would like to open the floor to any questions that you might have. Operator: [Operator Instructions] We will not take the first question from the line of Alvaro Bernal from Alantra. Alvaro Lenze Julia: I have three. The first one is regarding LatAm. We have seen it has suffered significantly this quarter with declines in organic growth. If you can explain a bit better the underlying behind this? Is it solely because of Argentina or Brazil is also suffering? And your view on this going forward into 2026, do you expect a recovery here? And also, if you can shed some light regarding the margins in the region, it would be very helpful. That's the first question. The second one is regarding investments. We have seen muted investments in both CapEx and leases this year. How do you see this going forward? Do you expect them to jump again as you renew, for example, opening stores for the ForEx business? Or if you can give us some color, it would be very helpful. And lastly, how do you see net debt for 2026? Do you have a specific target in mind? Leverage or whole number? It would be very helpful. José Antonio Lasanta Luri: Thank you, Alvaro. Going to your first question, it's true what you're saying. If we take out Argentina, the growth of LatAm has accelerated in the fourth quarter. So it's been mostly Argentina, I would say, 100% of the issue in the fourth quarter. How do we see it in the future? We see that is going to be an important improvement in Argentina back to the relative performance that was before year 2025. So we see margins stabilizing and getting to where we were in 2024. It's true that the mix is going to change in the mix of countries. So there will be some change in there, but there is going to be an improvement, and it's going to be an important improvement there in Latin America. Second question on CapEx. Again, it's true what you are saying. This year, we've been quite shy on the CapEx of ForEx. But this year, we are going to have a stronger boost where we have won two big airports, Frankfurt new terminal and JFK Terminal 1, Terminal 6. So we'll be investing on those two airports, and we'll keep investing on new retail branches. So there's going to be some boost in CapEx there on the ForEx business. At the same time, we are going to keep optimizing our CapEx in the rest of the areas. So I think we are going to see that there is going to be optimization on the -- what we call infrastructure CapEx. And we see some improvements there. But as you said, totally overcome by the CapEx we are going to undertake on the ForEx business. And on the third question, our commitment is to deleverage to keep bringing down the debt of the company. So we believe there is going to be a delivery on relative terms, but also in absolute terms as we have seen this year. This year has been mainly focused on three areas. And this year, I think it's going to be -- we are going to see deleveraging on banking debt as well. The bank also -- Yes. I think that's more or less the answer to your three questions. Operator: We will now take the next question from the line of Enrique Yaguez from Bestinver Securities. Enrique Yáguez Avilés: A bunch of questions about Argentina and then a couple of them [ other ] issues. Regarding Argentina, I don't know if you could give us what kind of organic declines suffered last year, how much are the Argentina worth over the total group revenue? In the first quarter, you see some signs of recovery. I mean, in the medium term, probably we will stabilize, but how is the situation now? Then on the restructuring plan announced in LatAm last year, I would like to know if all the costs have been already [ incurred ] or just provision and how would that cope with the recent labor reform announcing Argentina? If you could save some money or not [indiscernible] on this. Sorry, I was late at the conference, but I didn't now if you provided what was the net extraordinary impact of EUR 12 million in Q4 because I think on a gross basis, it could be higher here because probably more restructuring costs we are improving in LatAm. Thank you very much. José Antonio Lasanta Luri: Thank you, Enrique. Regarding your first question, in Argentina, there were three things that happened. The first one was a consumption came down because of the policies of the government, and although you see an increase on GDP of the country, the GDP growth has been mainly focused on the energy and our cultural sector. But the internal economy and the [ consumption ] is very depressed right now. Although the government has stated that this year is going to be a much better year. To tell you the truth, we have seen very small recovery. There's been some recurring but really small and not at such extent as government has stated. The second event that has happened is that the valuation has been much worse than inflation. So [indiscernible] more accounts of the valuation has been quite important. And then the third one has been the monetary policy restrictions that the government has put a constraint on the money that the banks have to hold that has been at 58% compared to 13% that is in Europe north of 58%. I think the government has said that we are going to open this year and they want to really make the internal growth, internal consumption growth much higher. And we are going to be very -- we are going to be expecting or looking forward to this very early. Although I think we have -- what has been really an achievement for us is that after some of the restructuring costs, we are now at the same relative terms than we were before 2025. So I think the country has done a tremendous effort in adjusting the cost structure, which is really difficult in our business. And really, the country has done very, very well on that front. Restructuring cost, it's true that it's been incurred like 90%, 95% of the whole program. So in February, we are going to do the last few weeks, but it's [ small bit ]. And why not in January? It's because non-January is a very strong month in Latin America and also a lot of people take holidays. So it's very difficult to adjust your last weeks during January and where we've done it during February, but everything is done in February. The plan is to have a payback of around 18 months. So we are going to see the -- all the savings, we are going to harvest the savings of this program during the year, we are going to see at the late part of the year, a very important kick back for the savings. And then the third question was about -- is we mainly -- some deferred payments that we have in some of the M&As. You know that whenever we do a transaction, we try to -- we record the business plan given by the sellers and normally is quite bullish. And there's been some adjustments on the deferred payments of [ the tail ] of the acquisition that we've done that we did in 2023 and then [ 2022 ]. Enrique Yáguez Avilés: [ The compensation growth from M&A ] José Antonio Lasanta Luri: Yes. Do you want to... Javier Hergueta Vázquez: Just to clarify, if you still have [ that ] it's basically the adjustment on the pending payments, which are recognized in our balance sheet. So as Jose Antonio was saying, we are typically recognizing it on the initial business case and there are typically some adjustments between that scenario and the actual performance, and this is reflecting that. So lower level of pending payments going forward in our balance sheet. Enrique Yáguez Avilés: Okay. And how much was the restructuring cost in Q4 in LatAm just to have the... Javier Hergueta Vázquez: So in Q4, we've undertaken EUR 3 million more of efficiencies programs in Latin America. So when you see the LatAm figures, I mean, in the adjustments, EUR 3 million come from the efficiencies program, EUR 3 million come from the M&A arena. Operator: We will now take the next question from the line of Joaquin Garcia-Quiros from JB Capital. Joaquin Garcia-Quiros: So the first one is in Europe, we've seen some recovery or acceleration throughout the quarters. Now the growth is almost up 3% for the fourth quarter. What can we expect for this year? Should we see this 3% more or less now as the trend going forward? Or was it just something specific for this quarter and Germany should continue to weigh down of that growth? And then for Asia Pacific, it's been growing fairly positive throughout this year. Should that growth continue? Or should we expect already a slowdown in 2026? And then lastly, assuming that Argentina recovers, would mid-single-digit EBITDA growth be achievable? Thank you. José Antonio Lasanta Luri: Thank you, Joaquin. How do we 2026 by region, as you said, I think the global business, we are going to see a growth of mid-single digits in terms of sales and some profitability enhancement above that. So I think that's the global picture. If we go by region, I think Latin America is going to improve, mainly because of Argentina. We are positive on that one because of the restructuring program. So we are going to see some earnings enhancing there. Then Europe, we are going to see some growth in the business. I think the 3% growth, I think, is going to be beaten this year. It's going to be a bit higher and also some earnings enhancing there. And in Asia, still a small region, but we are very positive on it. Indonesia is doing a fantastic job and also the Philippines, India -- we have seen a very strong growth there. And then I think the Australian issue that we have has been more or less solved. It will be completely resolved hopefully in June to September 2026, which will be signed a deal with the major customers for medium-term for medium term. So I think that's going to give us a lot of stability. And if we look at the lower part of the P&L, I think we are going to have also good news on the financial cost on the tax and the tax rate both in the P&L and in the cash flow because, as you know, in Argentina, taxes are paid -- made on previous year profits. So this year, our taxes have been -- our tax bill has been quite high for the profit that we have had in Argentina. So next year, we are going to have some tax bill cut because of that. So that will improve also our cash flow. So I think we are positive on the -- of achieving the mid-single digit growth in global terms then some earnings enhancing at EBITDA level has been a much better increase on the net profit level. I that's going to be more or less the summary. And this is going to be reflected on cash flow because of this tax bill that we just mentioned. So that's our -- and we will use this cash flow to deleverage a bit more. So this is more or less the summary that we have for 2026. Operator: There are no further questions at this time. I would now like to turn the conference back to Jose Antonio Lasanta, for closing remarks. José Antonio Lasanta Luri: Thank you very much for your attendance and for your questions, investing questions as always and we'll meet next year and as I said, I think we are very positive on 2026 because of the trends of the market. And because of the last issues on the industry that you know that yesterday, Brink's announced the acquisition of NCR. And I think this is going to be the confirmation of a strategy that we are seeing that CAD companies are going to take the lead and the forefront for bank ATM [indiscernible] of outsourcing that we are seeing in the market. So thank you very much for your attendance. Thank you very much. Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Operator: Good day, everyone. Thank you for standing by. Welcome to the Xperi Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Sam Levenson from Arbor Advisory Group. Sam, please go ahead. Samuel Levenson: Thank you, operator. Good afternoon, and thank you for joining us as Xperi reports its fourth quarter and full year 2025 financial results. With me on today's call are Jon Kirchner, Chief Executive Officer; and Robert Andersen, Chief Financial Officer. In addition to today's earnings release, there's an earnings presentation on our Investor Relations website at investor.xperi.com. We encourage you to download the presentation and follow along with today's commentary. Before we begin, I would like to provide a few reminders. First, I would like to note that unless otherwise stated, all comparisons are to the same period in the prior year. Second, today's discussion contains forward-looking statements about our anticipated business and financial performance that are predictions, projections or other statements about future events, which are based on management's current expectations and beliefs and therefore, subject to risks, uncertainties and changes in circumstances. For more information on the risks and uncertainties that could cause our actual results to differ materially from what we discuss today, please refer to the Risk Factors and MD&A sections in our SEC filings, including our Form 10-K for the year ended December 31, 2025, to be filed with the SEC. Please note that the company does not intend to update or alter these forward-looking statements to reflect events or circumstances arising after this call. Third, we refer to certain non-GAAP financial measures, which are detailed in the earnings release and accompanied by reconciliations to the most directly comparable GAAP measures, which can be found in the Investor Relations section of our website. Last, a replay of this conference call will be available on our website shortly after the conclusion of this call. I'll now turn the call over to Xperi's CEO, Jon Kirchner. Jon Kirchner: Thank you, Sam, and thank you, everyone, for joining us on our fourth quarter and full year 2025 earnings call. As we finish the year, it seems an appropriate time to look at the investments made over the past few years, appreciate our recent progress in hitting key metrics that set the stage for future growth and discuss the next phase of focus for the business, substantive revenue increases through advertising and data monetization. Let me first provide an overview of the progress we made during the quarter against this past year's goals. Progress that continues to give us confidence in our belief that we're reaching a key inflection point as a business. There are 3 key areas of progress over the past year. First, at the end of 2025, we reached 5.3 million monthly active users on our TiVo One ad platform, surpassing the year's goal of 5 million and registering an increase of over 250% over the course of the year. As I've noted in the past, footprint growth is critical for us to reach larger scale in the U.S. and the larger European countries, which in turn is expected to facilitate more effective monetization of our installed base. Next, in the Connected Car market, our DTS AutoStage footprint also continued to grow, reaching over 14 million vehicles, 40% growth when compared to the prior year. We believe AutoStage is a unique platform, both in terms of scale and reach, and we are already seeing signs of the platform's value as we progress advertising and data monetization trials with ecosystem partners. And finally, in our Pay TV business, our video over broadband subscriber count grew 25% year-over-year to reach 3.25 million subscriber households. Subscription-based revenue from IPTV continues to build, which we believe will provide a balance within our Pay TV business as revenue from our older Pay TV products is expected to continue to decrease. Thus, we expect the Pay TV business will level out over the next several years as our IPTV business continues to serve those customers that want a flexible IPTV streaming bundle in a modern, rich and compelling user interface. We also anticipate broadband households will provide additional streaming monetization opportunities. Turning to our summary financial results for the quarter. We recorded consolidated revenue of $117 million, a decrease of $6 million compared to last year as growth in Media Platform and Connected Car were more than offset by a combination of anticipated decrease in Consumer Electronics, driven by lower demand and memory cost and supply chain issues and Pay TV, which benefited from minimum guaranteed arrangements recorded in 2024 that didn't occur in 2025. During 2025, we proactively reduced non-GAAP adjusted operating expense, lowering it by 13% compared to 2024. This change was primarily due to workforce reductions that were implemented over the past year. We achieved adjusted EBITDA of $22 million for the quarter, bringing the year's adjusted EBITDA to $77 million or 17% of revenue, which was at the high end of our outlook range for the year. We also recorded operating cash flow of $4 million in the quarter, bringing operating cash flow close to neutral overall for the year. Let me now go through each of our 4 business areas, starting with Media Platform. As noted earlier, we reached a key milestone for our TiVo One ad platform by hitting 5.3 million monthly active users at year-end, a remarkable achievement for both growth on the platform and acceptance of our TiVo operating system into the market. We continue to add new capabilities for the TiVo operating system, including the deployment of Blacknut Cloud Gaming and demonstrations of the operating system directly on high-end mini LED smart TVs, set-top boxes and sound bars. We also deployed a video-based homepage ad unit to provide advertisers with more ways to reach our audiences. Within Media Platform, we achieved significant revenue growth in advertising when compared to a year ago, with average revenue per user for TiVo One finishing the year at $7.80, down slightly from the prior quarter due to our user base growing faster than related monetization revenue. We expect ARPU to take a bit of time to normalize as both revenue and footprint growth are expected to accelerate on the platform. Advertising partnerships continue to be an important foundation for our goal of accelerating revenue growth. And during the quarter, we entered into new agreements with Titan Ads, OpenGlass and Anoki, all well-known industry resellers of premium CTV inventory, such as home screen video ads in the European and U.S. markets. We also launched FreeWheel as a new supply-side demand partner and began generating revenue through the partnership. Our advertising business also saw progress through our direct sales efforts with homepage ad campaigns executed for clients, including Hallmark Media, Freeform, NBCUniversal and TNT. Moving to Connected Car. The momentum for DTS AutoStage continued with the signing of Mercedes Benz to launch DTS AutoStage video service powered by TiVo. This win adds another major OEM launching on our Connected Car video platform, which we believe cements our position as a leading supplier of Media Platforms to automotive OEMs. It's worth noting that Mercedes is the first car brand to offer all 4 of Xperi Connected Car solutions, HD Radio, DTS:X immersive sound, AutoStage audio and video powered by TiVo. As a leading brand that often sets direction for the automotive industry, we believe Mercedes support furthers momentum for our Media Platform and technology solutions. At year-end, AutoStage had a footprint of over 14 million vehicles from many automotive brands. Also during the quarter, we added a significant number of radio broadcasters across the U.S., Europe, Australia, Lat Am and Africa, further expanding the global services connected to the AutoStage platform. Our HD Radio solutions saw continued adoption with several new models from Toyota, Honda, Audi and others launching in the fourth quarter. We also signed a multiyear agreement with a large U.S.-based Tier 1 supplier that is expected to provide a cost-optimized HD Radio implementation over the next few years, which we believe will further propel the growth of HD Radio among major car brands. Finally, we also signed a multiyear DTS audio deal with a large Asian Tier 1 supplier, which is expected to secure our DTS decoder in a number of future car programs. Moving to our Pay TV business. As noted earlier, our IPTV subscriber base continued to grow, increasing by 25% year-over-year to hit 3.25 million subscriber households at year-end. For our managed IPTV service, we posted wins with [ Prism Fiber ] and MIDTEL in the U.S. and with Celerity and MOPC in Canada. We also continued to grow our broadband-only wins, including new deals with Blue Stream Fiber, Buckeye, [ Prism Fiber ], MIDTEL, Carnegie, Hickory and Velocity. During the quarter, we signed multiyear agreements with ClaroVTR for IPTV services in Latin America and with Frontier Communications in the U.S. for content discovery services. In addition, we signed a notable multiyear agreement for classic guides technology with Canadian-based telecom operator, Cogeco. Moving to our Consumer Electronics business. During the quarter, we continued to expand the IMAX Enhanced program with new product categories such as high-end earbuds. We also saw adoption of the program by Yamaha and the signing of a key renewal with Onkyo. Now all major audio-video receiver manufacturers are participating in the IMAX Enhanced program, which we believe reflects its position as the premium audio/video solution in the marketplace. We also signed a decoder and post-processing renewal with Sound United, which owns premium brands like Denon and Marantz. Lastly, we signed a multiyear agreement with a leader in the PC space, covering sound technologies for consumer products as well as extending audio technology penetration into its commercial products. In a few moments, I'll turn to a discussion of our pivot to audience monetization, advertising and growth. But let me first turn the call over to Robert to discuss our financial results in more detail. Robert? Robert Andersen: Thanks, Jon. Let me start by reviewing revenue results for the quarter. Overall, revenue finished at $117 million, lower by 5% when compared to last year. As Jon noted earlier, we had 15% revenue growth in Media Platform due to significant growth in advertising revenue, along with 5% growth in Connected Car revenue from higher minimum guarantee arrangements that were completed during the quarter. This growth was more than offset by a 21% decrease in Consumer Electronics revenue, driven by lower customer demand due to memory costs and supply chain issues, along with a 7% decrease in Pay TV revenue from minimum guarantee arrangements recorded in the prior year and due to lower revenue from our end-of-life consumer DVR business. Looking at overall financial results, our non-GAAP operating expense for the quarter improved by $10 million or 13% compared to the same quarter of 2024 due primarily to proactive personnel reductions implemented over the course of 2025. We posted $22 million of adjusted EBITDA or 19% of revenue, essentially in line with last year's numbers. Non-GAAP diluted earnings per share was $0.24, lower than the prior year by $0.15 due primarily to lower non-GAAP tax expense in the fourth quarter of 2024. Turning to the full year results. We finished 2025 with revenue of $448 million. This was a 9% decrease compared to the prior year due to 2 primary areas. First, we saw a 21% decrease in Pay TV revenue due to an expected reduction in core Pay TV revenue from overall industry trends, a challenging comparison with a significant multiyear minimum guarantee agreement that we recorded in 2024 and from the ongoing reduction in our consumer business as our DVR products have entered end of life. And second, our Consumer Electronics business decreased by 5% compared to 2024 due to disruptions in unit volumes from memory supply issues as well as the comparable of revenue from the divested Perceive business that was sold in late 2024. Our Connected Car business posted 12% year-over-year growth due to a higher volume of minimum guarantee arrangements where the revenue is required to be recorded upfront. Our Media Platform business was essentially flat year-over-year as growth in advertising revenue was offset by expected decreases in both middleware licensing and revenue from our Stream 4K device. Turning to overall financial results for the year. Our non-GAAP adjusted operating expense of $274 million improved by $60 million or 18% compared with the prior year due primarily to reductions in headcount implemented during the year, the divestiture of Perceive at the end of 2024 and the shifting of certain operating expenses to cost of revenue as newer products have begun generating revenue. We finished the year with adjusted EBITDA of $77 million or 17% of revenue, resulting in growth of 2 percentage points when compared to 2024. Turning now to the balance sheet and statement of cash flow. We finished the fourth quarter of 2025 with $97 million of cash and cash equivalents, which was level with our balance from the third quarter of 2025. We generated $4 million of operating cash flow in the quarter, which was $3 million higher than the same quarter in 2024. For the full year, operating cash flow was $0.5 million usage, right in the middle of our updated guidance range of neutral operating cash flow, plus or minus $10 million. Notably, achieving essentially neutral operating cash usage for 2025 demonstrates a significant improvement over prior year, where our operating cash usage was $55 million. We had $2 million of free cash flow usage in the quarter. Let me now turn the call back over to Jon to cover our key operating metrics and objectives going forward. Jon Kirchner: Thanks, Robert. Five years ago, when we began the journey to combine TiVo and Xperi, we recognized that the product business would need to go through a meaningful transformation, significantly changing cost structure and operating model as viewership shifted from traditional media to streaming. As we close out 2025, a few years into our journey as a stand-alone independent company, I'm pleased to report that many of our previously stated long-term goals have either been achieved or we have direct line of sight to accomplishment in the next 12 months. This includes our goal of growing our MAU platform from the more than 5.3 million users towards our goal of at least 7 million, something we expect to surpass during 2026. We also set an initial goal of 4 smart TV partners, which has now been exceeded for a total of 10, which we believe validates the market need for an independent TiVo OS platform. In addition, we sought to grow our IPTV subscriber base to at least 3 million subscriber households, a goal that has now been surpassed. In Connected Car, we had previously set a long-term goal of building the AutoStage platform footprint to at least 15 million vehicles. By year-end, we had surpassed 14 million, and we have line of sight to meeting and exceeding our goal of 15 million vehicles in 2026. With that scale, we expect to progress auto monetization trials with broadcast and OEM vehicle partners with the goal of enabling monetization-based revenue growth to accelerate in 2027 and beyond. So as we've made multiyear investments and seen tremendous progress in building the critical foundations for a long-term monetization business in both the home and the Connected Car, we feel confident in our belief that we've reached an inflection point in our business. With increasing amounts of audience engagement across our home and Connected Car platforms as consumers watch video and listen to radio content, we have the opportunity to connect advertisers with our unique audiences providing enhanced targeting and data solutions. We believe that being the only independent omnimedia platform with scale that can deliver high-value TV home screen ad units along with the opportunity to reach unique engaged audiences in the Connected Car is a combination that differentiates our Media Platform from others in the marketplace. This strategic positioning, combined with our established presence in both programmatic and direct sold advertising markets with anticipated growing demand for premium ad inventory gives us confidence in our expectation of successfully selling our owned and operated ad inventory to drive meaningful monetization revenue growth. We expect that during 2026, we'll see Media Platform revenue double, and that growth will continue to build in 2027 as our footprint continues to scale, and we have more sellers working with our platform. We also expect that as footprint scales and ad sales ramp up, ARPU will normalize as a result. As we exit 2026, we expect ARPU to exceed $10, growing over time towards $20-plus, driven by increased engagement and ad optimization. As we turn to 2026, let me provide a few business metrics we'll be using to gauge our progress this year. First, our goal is to grow our MAU footprint beyond 7 million. This, in turn, is expected to expand the opportunity for monetization downstream over the typical 5- to 7-year life of TV ownership. Second, as we expand our selling efforts, our goal is to double Media Platform revenue and exit the year with ARPU above $10, which will provide further evidence that we're selling ever more data and advertising across our media platforms. Third, with an installed base of over 14 million vehicles with DTS AutoStage, we expect to generate ads and data monetization revenue on the AutoStage footprint. Taken together, achievement of these goals will provide further visibility to the growth potential and strategic value of our Media Platform business. Let me now turn the call back to Robert to discuss our outlook for 2026. Robert Andersen: Thanks, Jon. Before I provide our outlook for the year, I think it would be helpful to understand how the parts of our business are trending. As Jon discussed earlier, we expect Media Platform revenue to double relative to 2025, reflecting our belief that we have reached the inflection point for advertising monetization. We believe this growth, in addition to continued growth in our Connected Car business will substantially offset anticipated decreases in our Pay TV and Consumer Electronics businesses in 2026. Notably, we believe certain legacy Pay TV product lines are nearing the end of significant decreases and the business is expected to level out behind IPTV subscription growth over the next several years. Also, we expect our Consumer Electronics business to face challenging comparisons in 2026 due to a number of multiyear deals recorded in prior periods that will impact revenue in 2026, but are expected to be recontracted in 2027. Now to our outlook for 2026. We expect full year revenue to be in the range of $440 million to $470 million. This range reflects our expectation of doubling Media Platform revenue and takes into account our current view of broader market risks across our business, including memory and supply chain challenges and other macro uncertainties. Consistent with the normal pattern of our business, we expect the year's revenue to be slightly weighted to the back half of the year. For adjusted EBITDA margin outlook, we expect a range of 17% to 19%, which reflects the benefit of expense reductions from 2025 with the range corresponding to the width of our revenue guidance range. Operating cash flow is expected to be between $15 million to $25 million and capital expenditures to be between $15 million and $20 million, yielding positive free cash flow at the midpoint of these ranges. On other items, we expect non-GAAP tax expense to be approximately $20 million and our diluted share count to be between 48 million and 49 million shares. Also, from a GAAP-based perspective, we expect stock-based compensation expense for 2026 to be approximately $31 million, lower by 25% from the $41 million incurred in 2025. Let me turn the call back over to Jon for final comments. Jon Kirchner: Thanks, Robert. As you can gather from our narrative on this call, we're pleased with the significant progress we've made on our key strategic objectives. We believe we are now at an inflection point for the growth of advertising revenue on our Media Platforms business. It's good to finally have some wind at our backs rather than facing consistent headwinds in our efforts to transform and reposition our business. That concludes our prepared remarks. Let's now open the call for questions. Operator? Operator: [Operator Instructions] And our first question comes from the line of Jason Kreyer with Craig-Hallum. Jason Kreyer: So just a quick question on the Smart TV side. Curious what the mix of that is between European markets and domestic markets and how that's trending or how you expect that to trend over the course of this year? Jon Kirchner: Yes. Jason, Currently, the TiVo One installed base is basically roughly 60% in Europe, 40% in the U.S. And keep in mind that, that not only reflects TVs, but reflects IPTV boxes that are running the TiVo One ad platform, which are predominantly in the U.S. I think over time, you'll see that mix start to change as we see a second TV OEM show up in the marketplace here in the U.S. But there's no question in the near term, it's going to be more European weighted. Jason Kreyer: And then you had a release earlier this year, you're launching home screen ads on TiVo. That's been a pretty big driver for capturing incremental spend for a lot of platforms out there. Just curious if you can frame your expectations for contribution there. Jon Kirchner: I think it's an important part of how we think about the monetization opportunities on our platform, in part because the home screen represents maybe the most valuable piece of real estate as people begin to engage with content and jump from one piece of content to another. We've got a robust offering there from a home screen capability in terms of what the ad unit can do. And I think along with, obviously, in video ads, along with data monetization, all 3 of which kind of combine to form the basis of our expected revenue growth this year and really that represents the revenue in the ad monetization business for us, I think we feel like we're pretty well positioned. The reactions we've gotten to our home screen ad unit from partners is very strong. Operator: And our next question comes from the line of Hamed Khorsand with BWS Financial. Hamed Khorsand: I'm just trying to get clarification on the ARPU for TiVo One. You said there was an acceleration in usage, but you only went up by 500,000 subscribers sequentially. In the prior quarter, you went up by 1.1 million, and you were able to achieve the ARPU -- a higher ARPU. So I'm just trying to understand why ARPU declined this time even though the growth was slower. Jon Kirchner: So Hamed, you've got a couple of things that are going on in the revenue calculation, which I think we actually published a definition of how you get there. There is remember, it's a lagging indicator over 4 trailing quarters. So depending on how that average moves relative to how dollars are starting to appear on the platform, there's also some dollars that are covered in certain campaigns that get amortized across your footprint in that calculation. So depending on the relationship between the growth of footprint to the growth of revenue, that's why the ARPU metric will certainly move around at the beginning. Over time, as you end up with a more normalized situation where there's more, let's call it, consistent growth on the platform, and there's obviously ever more the numerator to that calculation continues to grow, I think our expectation that you'd see it more consistently be up and to the right. Robert? Robert Andersen: And let me add in. I think for the denominator here for the average monthly active users, that the number has continued to increase pretty substantially. If you just look at MAU growth from Q3 to Q4, 10% sequential growth, so $4.8 million to $5.3 million. And over the course of the last year, it's grown from 1.5 million at the end of 2024 to $5.3 million at the end of 2025. So 250% growth. What we're finding is that our user base is growing faster than the attendant advertising associated with that base. It takes a little while for the new TV to start to generate revenue. So that might explain a little bit why you saw -- well, that does explain why you saw a slight decline in the ARPU, down to $7.80 at the end of the year. That's going to fluctuate a little bit just depending on the growth rates of the 2 pieces, the numerator and the denominator. Does that help, Hamed? Hamed Khorsand: That's helpful. And then the other question is, are you done with the cash expense side of the cost savings initiatives, the headcount reduction that you were undertaking? Robert Andersen: No, we'll have some costs in Q1 as well. We incurred some of the cash expense in Q3 -- excuse me, Q4, but we'll have some in Q1 as well. Hamed Khorsand: Okay. My last question was you were talking about monetizing the AutoStage platform, I'm assuming this year. Is it -- have you already started doing so? Or is there a time line as to when you expect to do so? Jon Kirchner: I think it will play out as you get more towards midyear, some of the beginnings of it. We are well engaged on a number of things. And I think the first part that we'll begin to see, Hamed, is data-related monetization, more so than ad monetization because we're generating a lot of data from the platform that is of tremendous interest to advertisers and broadcasters. And as I said, we're well into a number of conversations. And on the back of that is where you'll see the ads piece of that start to show up. There's continuing work there as well. So in short, we've got a very, very unique platform that is quite large. And from a from a perspective of thinking about the radio industry with lack of real targetability, et cetera, et cetera, and even measurement still being, let's call it, dated in its methodology, we have a real-time system that gives a tremendous amount of information to people about what consumers are engaged with, what content, et cetera, how trending is happening. And all of that, I think, puts us in a pretty interesting position. And one other adjunct to that, of course, is more effective advertising is almost -- is completely dependent on having ever better data. And one thing that's not lost on us is being one of the largest providers of contextual data around media assets, both music and video. It's part of the reason we think as you put all this together, we have a really unique opportunity to provide unique solutions that are value-added across not only in one environment like the car, but across environments as you think about the home and the car. Operator: [Operator Instructions] And our next question comes from the line of Matthew Galinko with Maxim Group. Matthew Galinko: Would there be a geographic bias to the Connected Car monetization as that starts coming in, I guess, midyear in '27? Jon Kirchner: I think certainly, you'll see -- I would expect you to see it more North America-based initially. But some of the work we're doing is with folks outside the United States already as well. So I think you'll see a European element of that and possibly further geographic expansion. It's broadly of interest to the industry at large across the globe. Matthew Galinko: Got it. And as we think about that $20 ARPU number, can you maybe talk about what you're seeing today that gives you confidence that we get there over time? And kind of what time frame are you thinking about getting to that number? Jon Kirchner: Well, I think what gives us confidence is there are robust markets and tremendous interest in better targeting solutions and premium CTV inventory. And I think being an independent provider plus having heavy using IPTV households that represent some unique audiences not typically part of the mix for many advertisers. We have the opportunity to, I think, optimize engagement on the platforms, which in turn, as the footprint continues to grow, those 2 things will drive higher ARPU where there's established markets for what we're trying to do. So -- and we're working, as we talked about on this call, in particular, with a number of partners who have tons of experience and in many ways, are making the market happen today with selling these ad products and connecting them with brands and advertisers who have an interest in reaching consumers. So I think everything about it gives us confidence that provided we continue to execute well and plug into the various ad markets, whether they be programmatic or with direct sellers, whether they be employed by us or employed by resellers, that if we have the ad units and we have the audiences that continue to grow as we continue to optimize engagement that you will ratably continue to see ARPU grow. The exact timing of getting from where we are today to north of $20, I think we're very interested in seeing how with more and more sellers coming online in the course of '26 and how all that plays out, that will give us a better sense of how and when we think we'll achieve that. But we know there's plenty of precedent for those kinds of numbers. We're a little bit different because our mix is Europe and the U.S., not just U.S. alone. But the one thing I would tell you about Europe that may be notable is that there's even larger dislocation between where the ad dollars are in Europe meaning far more ad dollars, roughly 75% of all your ad dollars in Europe are still connected to linear, even though streaming viewing obviously is an ever-growing percentage of total audience engagement. And so what does that mean? It means over the next few years, there's plenty of expectation that you're going to see more ad dollars aggressively move out of linear into streaming. And as that happen, the real estate -- as that happens, the real estate around home screen and streaming engaged audiences becomes more valuable, which in turn will drive up the ARPU associated with that in Europe as well. Matthew Galinko: Got it. And if I could just sneak 1 last question in. On the Consumer Electronics business, I guess how does the supply chain issue factor into 2026 outlook there? I think you mentioned a lower mix of minimum guarantees also impacting '26. But what is your expectation for supply chain and memory shortages? Jon Kirchner: Well, I think we know it's impacting how people think about their product planning in terms of what manufacturing planning looks like, what pricing looks like and in turn, what consumer demand ultimately looks like in the face of potentially more challenging pricing or availability. So I think we -- based on our conversations with analysts and with our industry customers, I think we're taking a cautious view of what that looks like. And remember, a good portion of our business is still unit-based. So depending on how that plays out, that will ultimately determine what the CE revenue in total looks like. So I think we're sitting here cautiously, just kind of watching carefully. We've also got people that are still grappling with an ever-shifting tariff environment and what does that mean for their own supply chains and where do they want to be and that kind of thing, which has the impact sometimes of impacting how think about -- how people think about production plans or even their partners as they -- if they're producing with partners. So I think all of that leads to some slight uncertainties that are factoring into how we think about CE. Operator: And that concludes our question-and-answer session. I will now turn the call back over to Jon Kirchner for closing remarks. Jon Kirchner: Thanks, operator. We're pleased with the meaningful progress we made last year, and I want to thank the entire Xperi team for their continued focus and execution as we work to deliver long-term value for our shareholders. We look forward to sharing further updates with you on our first quarter call, and that concludes today's call. Thanks for joining, everybody. Operator: And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.
Teresa Urquijo: Good afternoon, ladies and gentlemen. Thank you for joining MERLIN's Full Year '25 results presentation. You can find all the materials that will be presented in today's call on our website. I will please ask you to abide by the disclaimer contained in it. Our CEO, Ismael Clemente, along with our two directors Ines Arellano and Francisco Rivas will walk you through the main highlights of 2025. We'll then open the line for Q&A [Operator Instructions]. With no further delay, I pass on the floor to Ismael. Ismael Orrego: Thank you, Teresa. Good afternoon, everyone. We are in front of a very interesting set of results, certainly, the best I have seen since we have been leading this company. It's been almost perfect year because the fantastic performance of the data center division has been accompanied by very, very solid performance also on the traditional asset classes. And all that has been reinforced by an excellent behavior of the share. So frankly speaking, what can I say? I mean the operating momentum is super strong. We are enjoying satisfactory rental growth in all asset classes, traditional and nontraditional, because in data centers, we are also achieving better rents than underwritten. We have a high occupancy, 95.6%, and continue solidly generating FFO with a plus 5.1% print in the year. In offices, we have a very remarkable like-for-like of 3.5%. But more importantly, an interesting release spread of 4.8%, which is probably the reflection of what we commented in past calls that the Madrid market particularly is now under a certain like short squeeze. I mean, there is distraction on the offer side, which is causing, of course, an effect on the pricing of the demand. The occupancy stays at all-times high, 94.2%, and this is particularly noteworthy in a year in which Barcelona has been a relatively softer market than it was in the past, and has lost occupancy. So Madrid has been able to compensate Barcelona, which will continue for the coming years to be one of our weak spots that we will continue working because sooner or later, the market will digest the current situation of oversupply and will come back to normality. In logistics, we have been positively surprised by the release spread, particularly because, as commented on a number of past calls, this is a market where we were seeing a little bit of less strength than we have been seeing in the past years. But this year has been extremely strong, particularly on the release spread. The reason why the like-for-like is low is simply because we have lost 3 points of occupancy, which is normal, because we were occupied at 99%. And we told you that there was only one way to go from there, which was down. And -- but we ended the year with a very good printing occupancy of 96.4%. Shopping centers, another super strong year, surprising us on the upside with a very good like-for-like of 4.7% and still with very affordable rental levels for our clients at 11.0% in occupancy cost ratio. So very, very strong year in shopping centers. On data centers, well, basically, we have achieved a full derisking of Phase 1. So Phase 1 is now water under the bridge. I mean, we will report it as assets in operation from now on in order to try also to simplify your lives, because if we continue reporting Phase 1, Phase 2 and soon Phase 3 is going to be -- is going to be a rubik cube. So that will convert into assets in operation with an occupancy of 100%. We have also achieved a very interesting derisking of Phase 2 with the lease-up of our Arasur 2 asset 48 megawatts, which is around 20% of the total capacity of Phase 2, but more importantly, it was the next Indian trying to attack the fort. I mean it was ready for service December 2026. And as such, now is done. The next ready for services are end of '27. So we have now plenty of time to work on those -- on the leads in which we are already working and starting exchanging technical documentation, and then we will need to come to terms in the economic side of the business and then move into documentation, which, in some cases, particularly with hyperscalers, can be a painful process. In terms of financial performance, the value uplift has been very strong, but this has been mainly boosted by data centers who have contributed close to EUR 360 million increase to the total revaluation of the portfolio. 4.7% GAV increase in the year. The total shareholder return, 10.2% is fantastic. But more importantly, we believe it's relatively sustainable, because we know what is coming, and we think unless the world goes upside down, which is another possibility, if 2026 is a relatively simply flat year in terms of performance of traditional asset classes, we believe we can achieve very similar figures at the end of December. Our financial situation remains very strong. The loan-to-value is low at 28.9%, 100% fixed rate. And we don't have maturities till November 2026, maturity which is already tackled. I mean with the existing cash at banks and a number of bond taps and bank lines that we are signing in the coming days, that maturity will be already tackled without affecting the CapEx needs of the data center department. And we have been able to maintain our rating, both with S&P and Moody's, which is always interesting because at the end, that cost is one of our raw materials. And we need to continue keeping our competitiveness in terms of rating. In terms of value creation, EUR 129 million in noncore divestments, as already disclosed to market, you were perfectly aware that we had this almost done. And then probably the most interesting thing is that we have another close to EUR 130 million already signed and to be executed in '26 and '27, which is very interesting because basically almost half of our targets for '26 and '27 are already covered in the absence of any accidents. It's important to pay homage to the activity of our different business divisions. The year has been excellent in terms of pre-lets. In offices, we have signed more than 56,000 square meters beyond the daily trading, I mean, the ins and outs that happen every day in the portfolio. In logistics, 73,000 plus and Head of Terms, which we believe is going to become a reality of another 55,000. So significant progress also in logistics. And in shopping centers, to me, the most salient activity in the year has been the inauguration with an almost full pre-let of the Marineda extension, 26,000 square meters, which has made the Marineda concept in La Coruna even more dominant than ever. I mean it's a center, which is really rock solid and is one of the jewels in our little crown. And in data centers, well, we are now at 112 megawatts IT versus 45 latest reporting. And therefore, when 66 new megawatts have been lit and the prospects for the derisking of the rest of the Phase 2 remain brilliant. So in terms of main financial magnitudes, the GRI print was EUR 541.9 million, plus 3.5% like-for-like in the year. The FFO, what we broke our own record is better than the one of year 2019, EUR 326.7 million plus 5.1% year-on-year. But it is important to note that in 2019, we had EUR 84 million of BBVA rents in our belly. So with a little bit of help from data centers, around EUR 30 million, we have been able to overcome the sale of the BBVA portfolio, which, with hindsight, I believe, was an excellent decision because we delevered the company in anticipation of high interest rate cycle. And that gave us also a sufficient financial muscle to be able to develop Phase 1 of our data center deployment program, which was absolutely necessary because have we tapped the market to develop data centers starting from scratch and the market will have been a little bit incredulous about our capacity to do. So we had to do it with our own money, and BBVA was instrumental for that. The EUR 0.58 achieved are plus 7% versus the initial guidance, although we updated to EUR 0.56 in -- I think it was in 3Q, we updated to EUR 0.56. In reality, we expected EUR 0.56, but in dataset, we have had little income from -- particularly from better margin in our data center operation and well, some income also from NRCs from the installation of machinery on behalf of our clients through remote hands agreements in our data center division. The LTV stands at 28.9%, which is pretty low, but more interestingly, net debt-to-EBITDA stands at 9.0x. Of course, it is growing, but it is growing as we are spending in the construction of new units in our Data Center division. The NTA per share is EUR 15.36. And for the first time, we are very, very close in our share price to our NTA, which is incredible to see. I mean, I'm really, really enjoying to see that when I shut on my computer, and I see the share price evolution, I am really humbled. The GAV like-for-like has gone up by 4.7%. But very importantly, with an EPRA net income yield of 4.6%, which is sound, because these days, improving NTA or improving GAV through asset revaluations is easy, but we have taken exactly the contrary way. I mean we have completely recalculated our prospects for particularly logistic pre-lets and part of the logistics division and we have decided to expand a little bit our yields in order to make sure that we repair the roof now that the sun is shining rather than doing it when the things start to get rough. TSR, as commented, and leads us to propose dividend per share of EUR 0.44 for the year, which is slightly above the 80% threshold, but I think we have to share a little bit with our shareholders the good operating momentum of the company. In terms of EPS, we have, after careful reflection for the moment, we have taken the decision to continue to not capitalize interest expenses. We believe it is cleaner. We believe it reflects better the real operation of the company. And therefore, as a consequence of that, we are indicating for 2026, a relatively flat figure in terms of EPS and DPS. But we will, of course, endeavor to bid it if we can. It won't be easy because it is mainly attributable -- the reason why it's flat is mainly attributable to the fact that all the growth in top line is absorbed by more financial expenses as we continue basically building. We continue building our inventory. And as a consequence, we continue employing our debt capacity. And this is, of course, raising the bar of our financial expenses. And for the moment, it is hitting in our top line growth. 2027 will be a different thing. I mean, in 2027, will be a year in which we will start seeing the first hints of what the DC division will bring in the future to this company and '28, '29 and '30 as commented on many other occasions, at least on the model, of course, you never know, but they look like a big party. That is it. I mean I pass the floor to Ines Arellano who is going to comment on the different asset classes and Francisco Rivas will comment specifically on the Data Center Division. Inés Arellano: Thank you, Ismael. So moving to what today represent 55% of our portfolio, offices. We've generated EUR 292 million of rents, and that is a 3.5% increase in like-for-like as commented by Ismael, very, very sound, with a very high release spread up 4.8%. It is true that if we were to take into account this one lease that we mentioned last year, it would have been 0.4%, but at least it's in the positive arena. The occupancy at 94.2% all-time high. Again, we'll watch very carefully how the evolution in Barcelona keeps ongoing, but we are confident that eventually this will be digested. It's been a very healthy leasing activity market with more than 275,000 square meters contracted. And in terms of valuation, we see a 1.2% like-for-like increase with an implied gross yield of 4.9%, not reaching 5 yet, which as you know, it's always been the number that we thought should be the right one for office. Ismael Orrego: 5.25%. Inés Arellano: Okay. And a net initial yield of 4.2%, and this implies a 2 basis points yield expansion. And as said, the little momentum continues, as demonstrated in Slide 8 with five very good examples of standout leasing deals spread across not just CBD, but also key peripheral corridors, and they all have secured very high-profile tenants. You have three assets here that are still in the work-in-progress portfolio, meaning these are not in operations yet. But you also have two like Castellana 278 and Las Tablas where we've secured very high tenants, very high-quality tenants like a university and a bank. Moving to Slide 9. We continue, again, to see a strong trend of reconversions. And we wanted to lay down what is the current stock of Madrid. You see a little bit of everything. So this number may seem a little bit big to you, depending on the source that you used to consider. We've taken the Belbex number -- this is not only made by pure office buildings. It's also taking into account the offices associated to industrial users, some residential buildings that are being used as offices as well and also administrative buildings. What we see is that there's more than 1 million square meters expected to go back to their original residential use, because right now, as we stand, the highest and best use for a lot of these space is actually beds, beds, because this is both living, resi, hotels. And there is an additional 1.5 million square meters that could be reconverted again to these other uses out of the pure office building. What are we doing? We have identified 7% of our stock in Madrid office, okay, not the whole stock, but just in Madrid whereby this doesn't mean that we're going to be selling the whole 7%. But we've identified 33,000 square meters that will be sold so that somebody else reconvert it plus another 27,000 square meters that we are going to suddenly refurbish or reconvert them for educational uses. Moving to Slide 10. What we see is that -- well, we still believe that unique assets deserve to remain as offices. And this is a perfect example, Alfonso XI. There's a clear scarcity of good space, 10,000 square meter size buildings in prime CBD, and we are fortunate of having owning these unique assets, is right in the middle of Madrid, and we know that there are best-in-class tenants looking for space like this one. So we are going to refurbish this asset. We are actually refurbishing this asset, and the expected yield on CapEx will be around 9.6%. So there's another example in Page 11. Again, super prime office building, Liberdade. As you know, this one we bought it on purpose to be converted into what it will soon be probably the best office building in the Lisbon market. And as of today, even if we have not started commercialization, we have fully let to a top luxury group, all the retail, the high street retail space. Then we have Adequa. This is to show you that there's no only demand for pure prime CBD assets. Adequa is one of those examples where a tenant of ours that was willing to expand to grow in a campus, very, very close to Castellana has actually signed an agreement with us, a turnkey project. And so again, the yield on CapEx around this one is around 10%, 10.4%. And we will soon in '28 and '30, we will have these two buildings built up and completing what today is Campus Adequa. And then finally, this is a jewel. This is a very small building, but a true jewel. and it's going to be even more valuable once Renazca project gets executed. As you know, it has been approved. And once it is executed, we know very well that a lot of tenants will be willing to pay very high rent for these unique assets, which for those who have visited Plaza Ruiz Picasso building is just next to it, you can actually monitor the works from that one. Moving to logistics in Slide 15. GRI like-for-like has been positive despite the loss of a tenant in 48,000 square meter warehouse in [indiscernible] that had an impact of 3% in occupancy. The sound 5.8% Release Spread, together with an average CPI of around 2.5%, has helped to increase rents by 2.5 reaching EUR 86 million. Gross yield at 5.7%, slightly higher than the average yield of the portfolio 5.3%, and net initial yield at 5. The leasing activity has been strong with more than 440,000 square meters contracted compared to only 100,000 square meters in '24, while valuation uplift has been moderate being only 1.2% on a like-for-like basis. This has been mainly driven by the increase in CapEx. Certainly more on future development, but a little bit as well on existing assets due to, for example, fire safety measures. In '25, we finished construction and delivered 21,000 square meters fully led to [indiscernible]. And we've also sold 73,000 square meters warehouse that was under refurbishment in Vitoria and have added a couple of projects to the committed pipeline, now amounting to 279,000 square meters. Yield on CapEx for all these projects remain quite appealing at 13.2%. The noncommitted land bank has therefore reduced by 61,000 square meters outstanding at 183,000 square meters located mainly in Madrid and Barcelona. If we move to shopping centers, well, this has been said already by Ismael. it's great performance in every KPI that you can look at, the GRI of EUR 133 million, it's an uplift of 4.7% like-for-like. It's a great combination of a very high Release Spread plus CPI. In terms of valuation, this EUR 2.1 billion portfolio has gone up by 2.9% with an implied gross yield of 6.4 and net initial yield of 5.7. And this portfolio, shopping center portfolio is shifting to adapt to market trends and customer needs, and we are seeing retailers demanding new formats, so fewer, but bigger and certainly better located. The synergies with logistics, they continue to be a reality, and this is value also for the largest storage spaces that they required and experience of our customers keep on being the main and main focus of everything that we do. And in Slide 21, you have a few examples of new retailers leasing space in our assets, mainly focused on health and beauty and leisure/home entertainment. And with no further delay, I pass the floor to Francisco who will explain where the future is coming from, the data centers. Francisco Gonzalez: Many thanks, Ines. Moving into the Data Center section, I would like to start by congratulating, Ismael did, our data center team and the vision for a fantastic 2025 year, which had a very strong workload and proved the excellent execution. Part of this effort, as you have seen, has been crystallized at the beginning of this year, 2026, with the signing of very significant contracts across our assets. Turning now to the presentation on Page 24, we provide as always an overview of the two phases under operation and/or construction with updated figures. On the one hand, we present the results of Phase 1, which we will now refer as Ismael said, as assets in operation, where the 64 meg have been fully contracted. The originally 14.5% gross yield on cost shared with you 12 months ago has now increased to 15.8% with a stabilized GRI of EUR 97 million above the previous EUR 88 million reported 12 months ago. Regarding Phase 2, which we will refer as work in progress WIP, we have been able to redensify the first two buildings in Lisbon moving from 36 meg to now 40 meg increasing the total size of Phase 2 from 246 meg to 254 meg as you have here in the presentation. And this has led as well to an update of both the total investment amount and expected stabilized GRI now at EUR 397 million, delivering a very attractive 14.4% gross yield on cost. And in terms of commercialization, moving now to Page 25, we have successfully completed the letting of the three assets of this Phase I, following the signing of an 18-meg contract with a very well-known new cloud operating [indiscernible] and first time in our portfolio reaching the full occupancy of our assets in operation. And for those of you who are more curious about the technical aspects, 34 meg out of the 64 are air cooled while 30 meg are liquid cool. And by the type of specification we have it means that these 30 meg liquid cool are targeting above 70 KV per rack. On our experience right now, they are more in the 120 KV per rack, which shows that the type of technology they are using is the last of one of [ NVIDIA ]. On Page 26, we show how the rental income will ramp up on a yearly basis with EUR 31 million already received in terms of rents in 2025 and a forecast of EUR 66 million for 2026, resulting in a stabilized GRI as we mentioned before, of EUR 97 million in 2027. From a value creation perspective, Page 27 shows the breakdown of total costs incurred. The valuation already captured, although it's a little bit more limited in [indiscernible] in the signing of this new contract that the appraisal was not aware of and the expected additional value to be accrued if the value assumptions remain unchanged as we are disclosing in the footnote. So this EUR 291 million estimated value, we expect to be captured in the next valuations if those are retained. Moving to Phase 2. On Page 28, we include a brief reminder of the commercialization status of our data center assets that we divided, as you know, in bookings, advanced negotiations and let or prelet. And with this in mind, in Page 29, we summarize the status of the different projects of Phase 2 with now a total capacity of 254 meg IT. Going one by one, in Bilbao 2, what we call ARA II, the construction is progressing on schedule. After 14 months of execution, we have gained sufficient certainty to enter into prelet agreement as the ready-for-service dates that we show in the presentation, December 2026 are very, very certain. This is a highly complex deployment because we will coexist the deployment of the equipment that we have as landlords, but also the client equipment, which are largely based on a liquid cooling solution. The kind is -- was already in our portfolio is very well, no new cloud operator focused on AI and the level of densities that the client is requesting allows us to know that they are using a state-of-the-art technology, as all of you know. The connection to the substation of this building 2 has been already completed with our first building, what we call ARA III and right now, we are just progressing with cabling of that -- of those that were created for our first asset there. Regarding Bilbao ARA I, as we will show in the following slides, the construction has started at the end of last year, beginning with piling works, and we have maintained our estimated ready for service by the end of 2027. Moving now to the center part of the page, in Lisbon Compos. At the end of 2025, we started the construction of the first two buildings following, believe it or not, 1.5 years of piling works. And please consider the Lisbon region is both flood-prone, as unfortunately, we have experienced some few weeks ago, but also is located in a seismic zone and which has required a significant soil preparation, reason why of this 1.5 years of previous works. And as an example, the piling works have reached approximately 35 meters in depth, just to avoid situations as recommended. And thanks to this preparation, none of the works were affected by the heavy rains experienced in the region earlier this month. From a construction point of view, we have once again redensified the buildings, increasing capacity to 40 mg per building IP, benefiting from the insights gained from client discussions that we have held over the last months. In parallel, substation works have also started with a ready for service in all these first two buildings by December 2027. In terms of leasing, we are in very good progress regarding the initiative that we will comment on the following slides, while keeping the buildings ready for the latest computing technologies in case the first option does not ultimately materialize. Moving into the 2 Madrid projects. In [indiscernible] approval, what we call [Foreign Language] in Spain of the land, and we are in the final stage of securing the organization permits to begin on-site works, which will run simultaneously with the building construction. The ready-for-service is currently planned for the first half of 2029. Regarding [indiscernible] located, as you know, on the same street as [indiscernible] we obtained environmental assessment approval at the end of last year and right after demolition works are started and are going and the construction permit has been already requested just to make sure that when we finalize the demolition works, we can immediately start. Given the previous timing experiences, we are still maintaining ready- for-service in the second half of 2029 although knowing that we have already power on site what in our naming we call power ready supplied, we have already entered in negotiations with several clients interested in this site precisely for the reason that power is already there. Regarding CapEx commitment planning for Phase II and now I'm moving into Page 30. 2025 has been a record year for the company in terms of CapEx commitments. And this is significant because you need to know that a significant portion of this CapEx relates to equipment, which typically has shorter execution timelines once we commission it on site. Commitments have reached EUR 987 million versus the previously reported EUR 836 million, but also the next two years looks very strong in terms of CapEx commitments. So in the absence of any capital event, the company expects to tap the debt market, as Ismael was mentioning before, again, mainly during the second half of the year, once the equity that we raised in 2024 is fully deployed and at work. The target stabilized GRI is planned for 2030 as mentioned in the last quarter presentation, at EUR 387 million, delivering a 14.4% stabilized gross yield on cost. All these figures are reflected in Page 31, 32 and 33, which includes images showing construction progress in both Bilbao, Arasur and Lisbon campuses. And for those attending to our Capital Markets Day in the 9th and 10th of March, you will have the opportunity to see these projects at a human scale, which I think I can tell you that is pretty impressive. Finally, on Page 34, we would like to share the status of our EU Gigafactory initiative. As previously mentioned in the last year call, timelines of this initiative have experienced significant delays and based upon our latest information, the work resolution is now expected before year-end 2026. As we have stated several times, our Phase 2 projects were not conditional upon obtaining the EU Gigafactory award. In fact, this initiative was not even under consideration when we launched Phase 2 and we have always maintained discussions with traditional clients, both hyperscalers and new class operators in line with our original business plan. Nevertheless, as we always say, we've tried to be constructive shareholders -- stakeholders and good citizens, and we remain prepared for initiatives that could benefit the regions where we operate, particularly the Iberian Peninsula and we strong believe we continue believing that bringing the EU Gigafactory status to our region will create a lot of value, whether we are -- whether or not we are directly involved. As you may recall, we have set most of our capacity in Arasur, Capacity 1, and the full capacity of [indiscernible] for this initiative in Spain and the first two buildings for our Lisbon campuses of the Portuguese initiative. And we were always betting an Iberian consortium, so both Spain and Portugal, something that looks like were well received because most of the countries are doing exactly the same in other parts of Europe and offering several locations per country to allow synchronized computing and across the campuses. Situation as of today is that the Spanish government has shown a preference for another Spanish project. And thereby, they have released the capacity that we have reserved for that initiative in ARA II and [indiscernible] I, which, as you have seen, are both now fully let as following the -- what we have always commented to have one option and the other. With regards to ARA I, we are in advance negotiation with a particular client, and those negotiations, of course, will be more intensified and documented once the ready-for-service dates are becoming more and more and more closer. Regarding our Lisbon Campos, we remain committed to this EU initiative, which is now why we are moving forward with the first two buildings in connection with the Portuguese proposal. And once again, as we approach ready-for-service dates, the number of clients inquiring about availability continues to grow. For this reason, we will welcome clarity from the EU in terms of the timing because as soon as we are approaching and approaching delivery times, normally more clients are interested and we would want to have to take a decision there. And now Ismael will close this presentation with the closing remarks and outlook before we enter into Q&A. Ismael Orrego: Okay. Francisco, thank you. Well, on Page 36, closing remarks and outlook. Everything which is written here is pretty evident. So I'm not going to torture you with any more bulls***. The only thing that I will say is that the idea is to move in terms of lets and pre-lets from the current 112 to as close as possible to 100 megawatts in data centers. And this could be achieved through one of several combinations of facts. I mean, more normally, it will be through the documentation of the Lisbon lease which could come in the form of formalization of the EU Gigafactory program or otherwise, through an alternative route. I mean we have been lately adapting our -- the design of our campus there to the specific requirements of a certain client. You must have noticed that the total capacity has increased by 8 megawatts. Well, this came at the cost of 12 additional million in construction cost that I believe makes sense. And now the white rooms conform to the specifications of concrete SOQ of a concrete client. But more importantly, are perfectly flexible to adapt to the requirements of either other neo hyperscalers or neo cloud clients. So with that, I believe the 2026 should be the year of Lisbon. We will work -- we will endeavor to achieve that target. And that's it, dividend and FFO, we have already commented on it. And I believe the best thing we can do is move into Q&A so that you can make your questions in the line. And we will do our best to be able to reply to your questions. Operator: [Operator Instructions] The first question comes from the line of Marios from Bernstein. Marios Pastou: I've got a couple of questions from my side. So firstly, on the lease-up and the pre-letting of your data center pipeline. I think you mentioned that Bilbao building 2 was pre-let to existing neo cloud tenant and that Madrid say, was to a new neo cloud operator. So can you comment on the occupier type you're having discussions with across Phase 2 and whether we should anticipate a diversification of your tenant base across that phase? Ismael Orrego: Okay. Look, Marios, basically the leasing of Bilbao 02 has been closed with an existing client of ours. The one in Madrid, however, was a different one. At present, the diversification of our tenant roster is perfectly distributable. You can imagine with only 112 megawatts let, that I will beg you all to wait till we are 1 gigawatt in operation in order to calculate the real diversification of our portfolio, because have you calculated our diversification in logistics in 2014, you will have come to the -- this main conclusion that it was 72% DHL. But now no client -- individual client represents more than 10% of our rent. So we need to continue building if we want to continue leasing. What I can tell you, talking about Phase 2 and preliminary conversations for Phase 3 is that we are talking to every kind of clients you can imagine. You love hyperscalers. We are talking to all the hyperscalers except one, which is a self-builder. But the other three, we are talking to them. And we are talking to no less than 5 Tier 1 neo clouds alike. So sooner or later, we will end up closing an agreement with a big hyperscalers and you all will breathe with tranquility. But I need to remind you that closing deals with hyperscalers is not an easy thing. It comes at a cost, because they are the fastest cowboy in town. And as such, they have a big pistol. And you have to be very, very careful because that pistol can kill you. So it's big organizations, complicated organizations, you can engage in very fruitful and healthy conversations with the infrastructure guys, with the cable guys, with the first-line guys, but when you move into middle office and back office, it can be complicated. And at times, it is as frustrating as reaching contractual status and then stopping conversations because the conditions can turn abusive very quickly. So we will end up closing deals or reaching agreements with hyperscalers, but probably already in Phase 2 and more surely in Phase 3, but you need to bear with us for a second because we also need to defend our financials, which are your financials. So let's not be childish on this, and let's not -- let's be careful about what we wish for because closing an agreement with one of these is very easy. However, the fact that this agreement is good is a very different thing, okay? So we have to continue working in that respect. What I can tell you is that we are now technically qualified with 3 out of the 4 hyperscalers, so at least we know that our facilities conform to their technical specifications. And sooner or later, we will end up closing. Operator: The next question comes from the line of [ Veronique from Kampen ]. Unknown Analyst: Maybe first on just the other business lines. I was hoping could you give some additional color on what you expect in terms of occupancy rate, any big departure planned in '26, especially for offices and logistics? So your view towards '26 for those business lines? Ismael Orrego: Okay. Well, in offices, the idea is to remain relatively flat. So we have finished this year at 94.2%. The idea is to finish this year between 93% and 94%, which is already a significant effort because you have to take into account that in April, we are losing 11,000 square meters from Meta in Barcelona in the middle of '22 at. Yes, in a building, which is a winner, clearly winner in the market, but replacing 11,000 square meters in today's market in Barcelona is not an easy task. So we have to be prudent, taking into account the situation of the market there. In logistics, our idea is to improve a little bit the occupancy or compared to the 96.4% we have. It's quite binary because it depends a lot on whether we are able to lease one big shed in the Henares corridor or not. If we lease it up, then it's going to be very close to 100% again. But let's not plan for that, at least for the moment, we will inform in due time. And then in shopping centers, we are going to remain relatively flat, because it's almost impossible to go higher. I mean, yes, I mean, you can go 20 basis points higher or that it is complicated to go significantly higher. In shopping centers, in fact, what we are trying to do now is to yield manage a little bit our portfolio, because we are the cheapest shopping center owner in Iberia in terms of OCR. And that is always a very interesting position to start from, and we will yield manage a little bit our shopping centers, although the behavior is impeccable for the moment. Unknown Analyst: Okay. That's clear. And then one question around data centers. So your gross yield on costs went up again. And you also mentioned that the margins actually were better than expected, but I see that's a number that you haven't changed in the slides. So could you give some color on the movements on those numbers and why you still report a 70% margin if it was actually better so far? Inés Arellano: Because Veronique, this is Ines. What has been better is the today's margin. While we are on ramp-up, we do not achieve the 70%. So 70% margin is on stabilization. And so we were expecting lower than what we have achieved margin during the ramp-up. 70% remains as the stabilization margin. Ismael Orrego: Okay. And regarding the growth yield on cost, it is simply a reflection of the fact that the market is helping us. I mean, yes, of course, I mean, there are -- the teams are doing a fantastic job, but we are operating in a market which is quite favorable at present. So this is why we are improving -- if you look at our forecast in data centers, both in terms of cost per megawatt and delivery times, we have been absolutely bang on compared to the numbers we gave you. So our construction cost has been exactly the one we forecasted. Even though you might notice that in Phase 2 is higher than in Phase 1, the only reason is that in Phase 2, we had to buy 2 of the 6 plots of our data centers. And also Phase 2 is fully liquid, while in Phase 1, we had some air, okay? So that is the reason why we have a higher cost. Also Lisbon, as commented by Frank, is a slightly more costly construction to make because of the strict seismic regulations similar to Japan or California. We expect -- I mean, the -- we have already raised by 20 basis points the expected yield on cost on Phase 2. let's see how the leases come up. We might be able to bid it or not. I mean, that we better say than sorry. I mean we prefer to underestimate a little bit rather than being absolutely bullish, particularly when there is so much to be done before inaugurating those assets. I mean the RFSs other than Bilbao, Arasur 2 are expected for the end of '27. And between now and the end of '27, there is a lot to see. So let's continue -- let's remain prudent. Unknown Analyst: Okay. Clear. Sorry, one small follow-up on Lisbon. I just wanted to double check. It says now advanced negotiations on the slide for the Lisbon asset. Is that referring to the EU effect? Or is that concerning something a different tenant? Ismael Orrego: That one is concerning the EU Gigafactory. Then with different tenants, it cannot be -- it is not advanced negotiations. It's simply leads, bookings. The Portuguese government is conscious of that. They are honest people, and they are also trying to find a way to firm up part of the commitment rather than leave everything conditional upon obtaining the EU program. They are looking at ways to firm up part of their commitment so that we can close an agreement and we don't need to go through an alternative route. Operator: So the next question comes from the line of Florent Laroche from ODDO. Florent Laroche-Joubert: So actually, I would have just one question on data centers. So we can see that -- so you have made a lot of progress on Phase II. So congratulations, but we can see that you have also a lot of work to do before completing Phase II. Why is it today the right timing to present us the Phase III in 2 or 3 weeks? And why it is the right timing maybe to start to launch this Phase III in terms of risk? Ismael Orrego: Well, the reason is twofold. On one side, we have a number of internal definitions, and we report as we reach the milestones of those specific definitions. But in my mind, I see Phase 2 significantly derisked. Let's leave it that way. Second, power land is a scarce asset in Europe. I mean everyone is dying to get powered land. We are lucky enough to have a lot of power land in our ownership, because we started asking for power in 2021 and '22 when nobody else was asking for that. So I think it is in the best interest of all of our shareholders that we make full use of that powered land. And then the future only God knows, but at least make use of everything we currently have because we continue enjoying very interesting yields on cost. And what is more important, we continue commercializing in clear market. At the beginning, when we explained this new venture of data centers to all of you, our prediction is that we will commercialize maybe Phase 1 in clear market, there will be no competition. But certainly, we were expecting competition for Phase 2. The truth is that the market is full of noise, full of bull****, but in reality, very few people are really building or building to the exact specifications of AI, and therefore, very few can really meet the requirements of AI clients. And to our surprise, we are commercializing Phase 2 almost on a clear market basis. The next reasoning is that if we go fast with Phase 3, we could achieve a very similar result. So basically, I believe it will be extremely unfair to our shareholders not to move. We know it's a lot of complication. We know it's a lot of construction yards. We have recently incorporated one executive just for the control of our works. But I think the best thing we can do if we want to be responsible managers is to move on and continue developing capacity because we are in a situation in the market which is as favorable as you can probably think. Operator: The next question comes from the line of Celine from Barclays. Celine Huynh: I just have two questions, please. The first one is on the beat on the FFO this year. It was driven by better gross to net margin in DCs. Can you explain how you achieved that and whether we could expect the same in 2026? And secondly, it's about retail. Your name popped up in the news regarding a large Spanish shopping center portfolio. Can you provide any comments if you can? And if you can't comment, we've seen the expansion into DCs, but there wasn't much mention about retail. So can you clarify your appetite for shopping centers going forward? Ismael Orrego: Okay. Well, starting by the easiest, which is the FFO gross to net. Well, as commented by Ines, we have basically improved compared to our projections, because we had a better margin. And talking about margin, the margin we expected for this year, that was not the stabilized margin, okay? It was not 70%. It was well below 70%. That was the margin we expected for this year that we have beaten that margin a little bit because we have been able to operate more efficiently our data centers. And then we have, as commented before, we have also benefited from a number of little tweaks and things that we have been doing on behalf of our clients. Many of our clients do not have a super big established presence in Europe. And as such, they rely on our own engineers in order to install equipment or make offices fit-outs, do improvements to their equipment once installed. I mean we are helping them to do that, and they are paying us for that service. And as a consequence, we have improved a little bit the gross to net margin in our data centers, but not to a point in which we are in a position to reforecast the 70% stabilized, which we are -- we will very soon reach. But we cannot reforecast that because, first, 70% is already a very good gross to net margin, particularly compared to what our peers in the U.S. are getting. And second, because we still do not have all the information in order to be able to reforecast that. And then retail... Inés Arellano: Celine, just to be clear, can you please repeat the question that you made? Celine Huynh: There was just a news that you were about to bid on a Spanish portfolio, retail portfolio. So could you comment on that? Ismael Orrego: Well, basically, we are very happy with the performance of our retail. We have in a number of occasions commented with you that being a listed company, sometimes you cannot be too contrarian to the market because if we had, we would have loved to bid for 1 or 2 assets in the past 3, 4 years, but we have been being -- we would have been slaughtered in a public place, I mean had we done it. So now there is a retail portfolio available in the market that we have analyzed in depth in a number of occasions already. It was very difficult to reach an agreement with the sellers because it was a relatively convoluted situation. But now it's out there. What I can tell you is that the assets are high quality. They will make a perfect fit with ours. But I can also tell you that this will be a capital recycling exercise. So if you are afraid about us using one penny out of our data center spending capacity, this is not the case. I mean if we are to bid for this portfolio, which we will only do if we can achieve a positive capital recycling figure, I mean if the capital recycling disappears, we will not bid. And we are not going to participate in an investment banking auction. So we will do our best. We have a number of pros and cons. Our main con is that, of course, we don't control the French connection. Our main pro is that the Spanish staff, we know them very well. They are colleagues in the market and they will be probably very happy to join the family. So we will see what comes out of that process. But if one day, we end up bidding for that and we are successful, what I can assure you is that we will rotate internal capital, try to sharpen the pencil a little bit in terms of ROA, I mean, try to obtain a positive print, positive arbitrage in ROA and make sure that the data center effort is not even disturbed by this acquisition. Remember, there is a big hype in the market about resi transformation, et cetera. We have a number of levers that we could action in order to make sure that we can rotate capital in an efficient way, okay? Celine Huynh: Okay. Ismael, just to be sure, we're talking about a portfolio that is worth more than EUR 1 billion, right? So you would have to sell more than EUR 1 billion. Is that correct? Ismael Orrego: Yes. That is... Celine Huynh: Okay, that is a big amount. Ismael Orrego: Yes. Operator: The next question comes from the line of Fernando Abril from Alantra. Fernando Abril-Martorell: I have 3, please. First on the recent [indiscernible] rent. So it was clearly above your expectations. I think correct me if I'm wrong, but it was around EUR 140,000 more or less per megawatt month. So I know it is Madrid, but how should we interpret your embedded 130 assumption for the entire Phase 2 because it seems a bit prudent probably to me. Also on the contract terms of the Bilbao 2 and Hefata, I don't know if there were any material changes to duration or escalator structures compared to previous agreements. And then last, you know that the Spanish grid operator, and also several Spanish utilities have recently announced increased CapEx plans for the power network. So I would like to know your view on this and whether you believe or not that these investment plans will meaningfully alleviate grid congestion and improve the power availability in Spain or not? Ismael Orrego: Thank you, Fernando. Well, first, on the price of Hefata 2, we are not going to be very specific because it's our client, and of course, the terms of engagement of our contracts have to remain secret. But it is true that in the global underwriting of Phase 2, we were relatively conservative at 118.5% on average, and we are beating those figures. But it's always good to remain prudent because there could be deviations in course. There could be many things, equipment that could vary. So we have to be -- we have to remain prudent, but it's true that in that particular contract, it's been better than expected. And then in terms of contract, basically the same that we have been doing up to now in the region of 10 years and with fixed escalators, which are now slightly higher because the 10-year inflation swap is also higher. So we are happy with the contract to all terms. Remember that one of the reasons among many that why we moved into data centers is because they were able to improve our WAULT once we sold the 3 portfolio. That, of course, was a secret weapon. I mean it was clearly improving our average WAULT across the portfolio. One of the reasons why we moved into data centers was because the WAULT were pretty attractive. They remain so. And in fact, not only that remain, so the clients are now wanting longer terms if they can, in exchange for rent because they are trying to lock up IT capacity in a market which is starved of IT capacity. There is very few, very few places where you can land 20, 30 megawatts of AI capable equipment. It's -- there are not so many places in the world. Colocation is a different thing. But AI is very special, and there are not so many places in the world where you can do it. And one thing also that the clients like a lot and why they are ready to compromise for longer terms is expansion capacity. I think it was a good vision in our side to bet from the very beginning on super large plots with a lot of energy in which we could grow with the client doing one building, another building, a third building and a fourth building. That has been probably a very good decision and clients like it because once they send their experts, their engineers to a certain location, they achieve significant synergies if they can operate a more significant capacity than simply just one data center and move to another place within the country. So this is the situation. And regarding [indiscernible] and the increased CapEx, it's a much welcome piece of news. Of course, our stance with the regulator has always been that they need to improve the grid. The Spanish grid is, believe it or not, because all of you are affected by the 28th of April blackout last year, but that was a different thing and happened for different reasons. That the Spanish grid is super high quality. It is very well designed, very well duplicated and wet and is very robust. Of course, it will need investment in order to adapt to the new demand because at present, we are coming from a world in which the consumption was going down year after year because many households were incorporating self-generation. And as such, the consumption was going down and down and down. But we are in front of an era in which consumption contrary to some of the official estimates that were made a long time ago and probably wrong with the new circumstances, consumption will go up and will go up very significantly, if only because of the effect of the data center industry. As a consequence, the country has to make an effort in terms of bringing together generation and consumption. So that means investing in distribution and transport. And any news in that respect are very much welcome. The alternative is to allow and probably could be a very interesting complement, the alternative will be to allow private grids. But that is always complicated in Europe. As you know, it's the world -- the word private is not very much allowed in Europe. And private grids are only a reality for very small distances. I mean when you are bringing a certain generation mainly from renewable sources into a certain point that bigger grids are not that common in Europe. So very happy to see that they are starting to move. The only problem is the speed of movement, which, as you know, is a problem always with the public sector. For the moment, the only entry door we have found to the grid is through agreements with renewable producers. And this is what we are doing. I mean we are engaged in a number of negotiations with a number of renewable generators and you will be keeping abreast of our evolution over the coming months/years because it is the only practical way to access the grid as of today. I mean one day, there will be a bigger grid and electricity eventually will be widely available. But if you want to continue honoring your demand request from your clients, the only way is through agreements with renewable generators. Operator: The next question comes from the line of Stephanie Dossmann from Jefferies. Stephanie Dossmann: I would have two questions. The first one regarding data centers and the appraisal values. I understand that appraisers recognize the value creation closer to the time of the lease signing. But could you say how much of Phase 2 is currently factored into the appraisal values? Francisco Gonzalez: So what the appraisers are doing is they're just incorporating into their valuation the assets that are under construction. So once we start construction, then those assets come into the perimeter. You have seen June 2025 that we have incorporated several assets, mainly ARA II and Lisbon 1 because they have already started construction. And then in December 2025, we have incorporated -- we started construction as disclosed before in ARA I and Lisbon 2, which means that the appraisal takes that into the appraisal. The rest of the power land that we have is not being -- so it's hold at cost. And only when we start construction, then is when we -- when the appraisal enters into that valuation. From a valuation point of view, then you need to differentiate between the assets which are under operation and the assets that are considered as WIP. In the cases of assets in operation is exactly what like an office building or shopping center or logistics that we have. So they do normally a DSF of 10 years. And that's the reason why they arrive at this value. And regarding WIP, as you may remember in logistics, appraisers tend to wait until the very last moment when the asset is completed and you have a tenant to reappraise the asset and then we're holding at cost the different development. But also, you need to be aware that those type of exercises normally were carried out over a period of between 9 months and 15 months only because the construction of logistics is much, much quicker. In the case of a data center, it's different. First one is, first, the land that you hold at cost already just because you are starting a construction there. It means that this power land all of a sudden becomes more -- becomes a reality first. And second, you are incurring a lot of cost and approaching pre-lets over the period of the 2 years that normally 2.5 years that takes us to build this type of assets. So I would say that the value is little by little absorbed until delivery times. Of course, the fact that we have pre-lets or not pre-lets of course, give more certainty to the projects, but this is how they are normally approaching it. Inés Arellano: Stephanie, just to add to what Francisco commented, it is very important for you to know that the 4 land plots that are -- that have been included in the scope of work for the appraisers, they were on land that belong to us. So just by putting the market value, which is powered land and not raw land, they were sitting in our balance sheet at almost nothing, just by consider them as powered land that it's a significant uplift on a relative basis, of course, right? So Phase 2, as Frank said, the first thing to know is or the first thing to bear in mind is how that land -- the market value of that land stands. In our case for what we had before, is certainly an uplift, not -- it is not the same for the land that we buy, of course, because that's the market value. And then as the different milestones of CapEx keep on going and as you approach the cash flow, you will get more value crystallized. But for this 4 particular projects, there's obviously been an uplift because they're sitting in our balance sheet for long at almost 0. Stephanie Dossmann: All right. And my second question relates to more traditional business. The office market in Barcelona. You said it is softer, of course. I was wondering what you expect on the midterm. I mean I understand you expect no oversupply shortly, but will the demand be strong enough to see higher Release Spread going forward? And what's your view generally speaking on the Barcelona office market? Ismael Orrego: Okay. Look, the Barcelona office market is in a digestion crisis. 320,000 square meters without client joined the market at the end of '24 and that hit is still being felt across the market. So this is taking a hit on the tension, the demand tension in the 22 ARA, more noticeable in occupancy than for the movement in rents but clearly noticeable. Our expectation in a normal world is that we had positive Release Spread overall in Barcelona this year, not brilliant, 1.7%, but still positive. So rents are holding for the moment. The market has corrected itself, as you can expect. So no new construction starts have happened since 2024. And in normal circumstances, unless the Afghanistan, Pakistan war expands to Iran, Israel and U.S., Russia, normally, within 18 to 24 months, Barcelona should be able to absorb the excess offer and come back to a certain normality. That would be what we would normally expect. Could be a little bit more, could be a little bit less, but Barcelona remains a strong small city, I mean, very specialized in certain submarkets within offices. A little bit of pharma, a little bit of gaming and tech. And as a consequence, we expect the city to continue performing robustly once they have been able to absorb this little blip caused by a situation of oversupply and touristification of the office development. Operator: And the final question comes from the line of [indiscernible]. Unknown Analyst: I have a couple of questions, if I may. One is in relation to your guidance for 2026. I'm trying to understand what assumptions are going in there in terms of additional debt funding. I think you said that in the second half, you're going to raise some more debt. In terms of share count, if you assume any change in that? And also in terms of the logistics, whether you assume that, that big asset that has been vacated by the client is going to be lifted up at any point during the year. So that's my first question. Ismael Orrego: Okay, Daniela. Look, regarding the guidance, the guidance stems out of our modeling of the year. We believe that the top line, the income could go up by around EUR 40 million easily, but it's going to be eaten by bigger financial expenses mainly. Why is that? Because there will be two events during the year. Money is fungible, so EUR 800 million will disappear when we have to repay our bond. And second, the speed at which we are spending or investing money in CapEx because of our Phase 2 deployment is significant. Already in 2025, we exceeded our original budget. I say ever, I believe the original budget was like EUR 830 million and we ended up spending like EUR 980 million. So we have spent more money in CapEx commitments, okay, in the year than -- commitment, meaning when we commission a certain equipment, we pay between 20% and 40% upfront, and then we pay the rest upon the reception of the equipment. However, that money for us becomes untouchable because we need to phase that payment if and when the equipment is received. So in our models, this is what we are seeing. Whether that could be achieved, I mean if we are quick in leasing up some logistic gaps, we should be able to improve it. They wouldn't move that much the needle because if you take into account that logistics account for around EUR 84 million of our rents and the rents expected for this year are going to be in the region of EUR 600 million, it's not going to move the needle that much. What share count considered for the guidance, same share count. And that is, of course, a very tricky question, I know, because you are already assuming that there is going to be capital issuance at some point. But this is -- I mean, we are talking apples-to-apples. The 58 is with the same share count we have at present. Unknown Analyst: Second question, if I may. And that's on Phase 3. I wonder whether there's been any investment, even minimal infrastructure preparation in Lisbon. If I'm correct, Lisbon is Part 1 of your Phase 3. And given what you mentioned about the earthquake risk and all that kind of stuff. I wonder whether there's already been a little bit of investment in infrastructure into that and related to also Phase 3, what would be the earliest date that you would like to start ordering equipment or start properly deploying into Phase 3? Ismael Orrego: Okay. Regarding the commissioning of equipment for Phase 3, et cetera, we will inform in detail about Phase 3 on the Capital Markets Day. But you will see what is basically the cash flow schedule in -- for Phase 3, and you will see it significantly overlaps with Phase 2. Regarding whether we have already advanced infra investments for Phase 3, yes. I mean, in Lisbon, we have been preparing the ground for plots 3, 4, 5, and we might start precharging land for plots 6 and 7. But we are talking about relatively humble investments. I mean we are not talking about significant things. Likewise, we have spent money in the licensing of a number of projects, including, for example, the one in [indiscernible] where we are already requested construction license, and we have already applied for specific planning status by the autonomous region. We are building up electric capacity in anticipation of Phase 3. For example, the whole purpose of the Solaria agreement in November was that, was to illuminate plots 5 -- 4 and 5 of Arasur and some of the other agreements that we might be reaching in or have reached in as we speak, are also related one way or another to Phase 3 or pipeline. But we will inform about all that in the Capital Markets Day. The only thing that is important for you to keep in mind is that Phase 3 will be defined with everything that is being licensed and has power. So it will not include any pie in the sky or talking about things in which we could get the electricity, et cetera. We will be very specific about that on the Capital Markets Day. Operator: Thank you very much. There are no further questions. Just a quick reminder, many of you already know, but we'll be hosting our Capital Markets Day in Bilbao the following 9th and 10th of March. It won't be broadcasted. It will be recorded and then uploaded into our website. But all of our material will be published on our website that morning, the 10th of March. So hopefully, all of you can make it so you get to enjoy a nice wine. And you know where we are in case you have any other questions and have an excellent weekend.
Operator: Greetings, and welcome to the Diversified Energy 2025 Annual Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Douglas Kris, SVP, IR and Corporate Communications. Thank you, Douglas. You may begin. Douglas Kris: Good morning, and thank you all for joining us today, and welcome to our fourth quarter and full year 2025 results conference call. With me today are Diversified's Founder and Chief Executive Officer, Rusty Hutson; and President and Chief Financial Officer, Brad Gray. Before we get started, I will remind everyone that the remarks on the call reflect the financial and operational outlook as of today, February 27, 2026. Certain statements made on today's call are forward-looking and may be subject to risks and uncertainties relating to future events and the future financial performance of the company. Actual results could differ materially from those anticipated. The risk factors that may affect results are detailed in the company's most recent public filings with the SEC, including the annual report on Form 10-K for the fiscal year ended December 31, 2025, filed on February 26, 2026. During this call, we also reference certain non-GAAP financial measures. Our disclosures regarding those items are found in our earnings materials on our website and in our regulatory filings. I will now turn the call over to Rusty. Robert Hutson: Thank you, Doug, and thank you all for joining the call today. Before diving into the recap of the year and the fantastic operational and financial results that we posted last night, I want to start the call today with some opening remarks around our strategy, our culture and the theme that we believe fits well with our accomplishments in 2025, we are proven. I believe we are at an inflection point for our industry and for our company. The landscape is changing rapidly, not only in upstream but the entirety of the energy value stream. Consolidation is accelerating. Volatility in commodity prices, especially natural gas, is increasing. Competition has never been more intense, and the choices we're making right now matter more than ever. But in the 25 years since I founded Diversified Energy, I believe we are in the best position we have ever been in. I'm truly excited for the future and the next 25 years of Diversified. As the founder and CEO of our company, I'm extremely proud of the business we have built, the professionalism of our team, the quality of our assets, our sound financial condition and the strength of our business model. Importantly, a ticker symbol doesn't drive results. People do. Diversified is a leader, an innovator, a pioneer because of the talent, skill, tenacity and capabilities of every member of our team of professionals. Whether in the field or at a desk, Diversified is a leader because we trust our people and empower them to do their very best work. Our people are the track record. They are the results. They are the proof, and we are proven. For those of you following along with our year-end 2025 results slide deck, which we posted to our IR website last night, I plan to cover a few slides and then turn the call over to Brad to discuss highlights from our financial results. After Brad's remarks, I will provide some closing thoughts before opening the call for your questions. Starting on Slide 3. Given current market dynamics, especially related to the energy sector, I believe it's important for analysts, investors and all stakeholders to understand in simple terms, the investment opportunity we offer. As the founder, I was the first investor 25 years ago. I used my home equity to purchase a small package of wells in West Virginia, which led to a $50 million initial public offering in 2017. Today, I still hold all my shares as the largest individual shareholder with company insiders holding approximately 6% of the shares outstanding, demonstrating the team's belief in the quality of our company and the future prospects for our business. I will not go through all of the investment qualities listed on this slide but the 6 simple attributes that Diversified possesses are not only what we provide but also what we deliver and ultimately tie back to a simple statement listed here as number one. Diversified is the first and currently only publicly traded company focused on acquiring, operating and optimizing established cash-generating energy assets. We believe the first-mover competitive advantage we built continues to bolster our business and is a key component in the record results we achieved in 2025 while allowing us to continue creating value as a proven business model and a compelling investment thesis. For the past 25 years, we focused on acquiring and operating cash-generating energy assets so that we could provide our investors with a consistent and reliable return. We know that this proven focus provides investors with a unique and lower-risk method of investing in oil and gas assets, and I am proud that we were and are the leader in this strategy. Turning to Slide 4. As we look further across the subsectors of the energy investment landscape, it's important to recognize that diversified exhibits several of the positive investment attributes of these subsectors, while notably delivering a significantly higher free cash flow yield. We believe these attributes represent a straightforward thesis for a multiple re-rate in our shares as we currently trade on average 3 turns below those other cash-generative subsectors of the overall energy industry. Given this low relative valuation, we believe our shares offer a triple threat of attractive investment style. As a value stock that trades at an attractive 4x EV to EBITDA multiple and over 25% free cash flow yield, as a growth stock with attractive top line revenue growth of over 140% and free cash flow growth of over 110% year-over-year and as an income stock with an attractive current dividend yield of approximately 8%. Our company remains a unique yet consistent and proven investment opportunity. Turning to Slide 5. When we view the high-level recap of the past calendar year, 3 words come to mind: innovation, transformation and focus. Innovation from the Mountain State Plugging Fund and Carlyle strategic financing partnership, transformation from the approximately $2 billion in accretive acquisitions, inclusive of Maverick Natural Resources and Canvas Energy, focus from delivering on goals to improve financial leverage, expand our investor universe and achieve multiyear sustainability performance. It's impressive to know that we delivered success during a time of commodity, geopolitical and financial market volatility and equally impressive that it was all done in 1 year. Once again, it illustrates we are proven. Turning to Slide 6. We are kicking off 2026 continuing to execute on our proven acquisition playbook, and I will spend a few minutes on the specifics of the deal we announced last evening. We are excited to announce the acquisition of Sheridan Production Partners, a privately held company with assets in East Texas, including a bulk of its leasehold and production in Panola and Harrison Counties. As you can see from the map, the acquisition is a true bolt-on to our existing operations and has the potential to create significant value above the purchase price through the combination of high-quality assets with our proven operating model. We are acquiring an additional 61 MMcfe per day of natural gas production in the sought-after Gulf Coast region and notably in proximity to our 120 MMcf per day Black Bear processing facility. We are acquiring Sheridan for approximately $245 million, which represents a PV-15 valuation. The acquisition is being funded with our current liquidity, which we announced last evening was approximately $577 million. This established producing asset has an extremely low corporate production decline profile of approximately 6% and is anticipated to contribute approximately $52 million in next 12 months EBITDA during calendar year 2026. We believe this accretive acquisition offers a tremendous opportunity, adding contiguous acreage in the operating region, delivering strong, stable production with estimated reserves of approximately 397 Bcfe and immediate line of sight to operating efficiencies from our smarter asset management and the ability to capture meaningful synergies from the increased asset density in field operations, integrating processes and systems under our DEC platform and consolidating corporate functions. We anticipate the acquisition closing during the second quarter of 2026 and look forward to integrating these high-quality assets into our asset base. Turning to Slide 7. As we discussed throughout 2025, we established a goal to move our primary listing, reincorporated in the U.S. and publish U.S. GAAP financials as an SEC regulated accelerated filer. With our SEC 10-K filing last evening after the New York Stock Exchange market close, we fully achieved our listing and reporting objectives going hand-in-hand with our 25-year milestone as an operating company. This achievement and formal move to the U.S. markets mark a new chapter and provide the company with a larger stage to further expand its investor base and ultimately create the opportunity to increase the value of our business. As I reflect on the history of our public company journey as a public company over the past approximately 9 years, the sheer magnitude of our growth in operational and financial scale and capabilities reinforces the art of the possible with our get stuff done culture, and I'm excited for what we can accomplish in the future. Turning to Slide 8. Our proven business model continues to deliver on our 4 key pillars of our capital allocation priorities, which are as follows: Systematic debt reduction; return of capital through dividend distributions and share repurchases; and growing our portfolio of cash-generating assets through accretive strategic acquisitions. As you can see here on this page, we reinforced our track record on all of our priorities for shareholders in 2025. During 2025, we repaid approximately $277 million in principal. We returned approximately $185 million to shareholders through dividends and strategic share repurchases, representing approximately 16% of our current market capitalization. Worth noting, we have demonstrated a track record of robust and disciplined capital allocation with approximately $2.3 billion in shareholder returns and debt principal repayments since our IPO in 2017. Importantly, we believe our shares remain a compelling investment at current levels, and we will continue to take advantage of the current cycle and market dislocation to opportunistically repurchase shares. Together, these actions demonstrate the power of our disciplined and flexible capital allocation priorities and the quality and consistency of the cash generation capabilities of our portfolio of assets. We will remain focused on our key strategic pillars. With that, I'll turn the call over to Brad to discuss our financial performance and portfolio optimization results in greater detail. Bradley Gray: Thank you, Rusty. I share Rusty's excitement for Diversified's future and my confidence in our teams, in our assets and in our ability to generate consistent, reliable cash flow has never been higher. I appreciate the dedication and commitment of our teams to deliver quality results each and every day. We'll now turn to Slide 9. Before sharing the highlights of our financial and operational results for the full year 2025, I would like to focus on the right side of this slide. This presentation very simply illustrates how our accretive growth of cash-generating energy assets paired with best-in-class operational and corporate infrastructure translates into material bottom line growth. I'll start with production. The daily production exit rate for December was approximately 1.25 Bcfe per day, and our production for the year averaged approximately 1.1 Bcfe per day. The growth in our low-decline resilient production base has put the company in a great position to participate in LNG exports and data center energy demand and to benefit from the growing demand from our products while continuing to supply energy to our local communities and our commercial customers. And our vertically integrated marketing team provides us with a terrific strategic advantage to get our products to market at the highest possible margin. Total revenue was $1.83 billion, and adjusted EBITDA was $956 million for the year, beating our stated guidance and with our adjusted EBITDA margin landing at 58%. Our adjusted EBITDA was a record for our company. And as the one member of our leadership team who joined Rusty before our public offering, I'm very proud of the quality and scale of the company that we have built. Notably, our portfolio optimization processes or better known as the POP allowed us to generate approximately $170 million in additional cash proceeds. These results are exciting to reflect on, but the real excitement is about the opportunities in front of us and the capabilities of our team to capture those opportunities. Our adjusted free cash flow for 2025 was $440 million, which was burdened with approximately $55 million of transaction costs. Our net debt stood at approximately $2.8 billion at year-end, and we improved our overall leverage by over 20% to 2.3x since year-end 2024, which would allow us to achieve a leverage ratio within our target level of 2 to 2.5x net debt to EBITDA with approximately $577 million in liquidity. Our balance sheet strength is providing us the optionality and the flexibility to navigate and take advantage of the opportunities that we believe are available, notably the Sheridan acquisition. Additionally, our investment-grade rated nonrecourse ABS notes helped contribute to our financial resilience and ensure we maintain our discipline to consistently repay outstanding debt, of which we repaid approximately $277 million in 2025. In summary, our team's strong execution of our strategy to acquire and optimize stable, consistent cash-generating energy assets enabled strong free cash flow generation and allowed us to continue to prioritize returning capital to shareholders and paying down debt. Turning to Slide 10. One can simply describe Diversified Energy as the E&P company without the E. Our model provides a derisked option, which focuses on optimization and innovation in order to deliver outsized results and longer-term financial resilience in any commodity price environment. And on this page, we are zooming out on that multiyear track record of several key financial metrics and bottom line fundamentals that have created per share value for our investors. Notably, a prudent and disciplined strategy to capitalize and integrate acquisitions has delivered a 12% compounded annual growth rate in EBITDA per share. an 11% growth rate in cash flow from operations and an 8% growth rate in free cash flow per share. We believe that these metrics reinforce that our business model is proven. This slide also illustrates how we've been able to generate a solid return of capital for investors by utilizing a more flexible capital allocation framework, which incorporates both strategic share repurchases and consistent dividends. Turning to Slide 11 now. One of the main benefits of our disciplined acquisition strategy is that we have created multiple drivers of cash flow generation and growth. Our expanded asset portfolio benefits from a low decline production profile, commodity diversification, a disciplined hedging program and material upside from anticipated operational and administrative synergies that we generate from our scale and vertical integration. The key metrics at the bottom of this page highlight the impact of our disciplined acquisition framework and the power and advantage that vertical integration and scale provide meaningful value to our shareholders. We have delivered year-over-year growth in free cash flow while also reducing overall leverage. And this was a terrific achievement for our team in such a short period of time. This simple yet proven strategy of acquiring assets at attractive valuations using low-cost investment-grade rated financing allows us to capture a spread and with our operational excellence and portfolio optimization, improve our return on investment. With this proven playbook, we have and plan to continue building a resilient platform of cash flow generating assets. Turning to Slide 12 now. Our proactive portfolio optimization program or our POP is a continuous evaluation and execution process for us. Since 2023, we have taken advantage of increasing opportunities to monetize the large inventory of undeveloped acreage that we have accumulated, which notably was ascribed 0 value as part of our acquisition processes. We utilize our deep operator relationships and market experience to generate additional unlevered free cash flow to deploy toward value-creating opportunities. During 2025, we have generated approximately $160 million in divestment proceeds, and we repositioned that cash for strategic share repurchases and 2 highly accretive acquisitions, which meaningfully lowered our leverage. Moreover, the cumulative $314 million in proceeds from portfolio optimization in the last 3 years has enhanced our return on investment by approximately 10% for the $3.7 billion of acquisitions that we completed since entering the Central region in 2021. Collectively, the numerous optimization opportunities provide cash-generating levers to grow our business, increase free cash flow and bring forward the hidden or unrealized value of our portfolio of assets. And by reallocating the incrementally generated cash flow from our POP programs, we can also support superior shareholder returns. Turning to Slide 13. We continue to see robust results and additional value creation from our non-op joint venture partnership, specifically in the Western Anadarko Basin. This capital-light approach with an industry-leading development partner offers an elegant solution for adding reserve replacement and ultimately free cash flow while delivering a compelling return profile. During 2025, we saw an approximately 60% rate of return on these new wells, which are trending approximately 75% liquids. This additive production meaningfully offsets our approximate 10% annual corporate production decline. For example, we anticipate that non-op production to exit 2026 at just over 12,500 BOE per day. Additionally, we have recently added a new Permian Basin non-op partnership, which provides additional commodity diversification and the potential for even higher project returns. And notably, the upfront proceeds from the sale of the land and the working interest to our Permian development partner offset our capital spending and further increase our ultimate rates of return. Now to Slide 14. Our stewardship operating model is supported by our long-tested smarter asset management practices, which optimizes the cash flow from the assets we acquire through production enhancements and expense efficiency. And our daily priorities require us to look for, find and execute activities that enhance margins. Our daily priorities drive additional cash flow and in the long term, do and will create value for shareholders. These daily priorities, which are safety, production, efficiency and enjoyment are unique to Diversified, and they allow us to continue to generate resilient, consistent free cash flow as the PDP champion. The subtitle on the cover of our earnings presentation says, proven, stepping up when others step away. This statement is about responsible stewardship. We were innovators in buying PDP assets that other companies neglected or lost focus on. Our proven business model steps up to own these assets and make them safer, efficient and more profitable. Simply stated, optimization is stewardship. So to wrap up my comments, I want to say thank you to all of our teams for their excellent work over the past year. Our company is well positioned to grow and generate consistent cash flow for our shareholders. This positioning of strength is due to hard and smart work from our skilled team of professionals. I will now turn the call over to Rusty for some final thoughts. Robert Hutson: Thanks, Brad. Before we take questions, I want to provide some final thoughts on our outlook for 2026 and the milestone of our 25th anniversary. Turning to Slide 15. We continue to emphasize we are a differentiated energy producer that seeks to optimize established, often overlooked and undervalued cash-generating U.S. energy assets. We maximize value in a unique way by minimizing traditional E&P risk, growing our revenue streams, optimizing our asset portfolio and being good stewards of our capital while generating real, consistent, meaningful cash flow. In 2025, our results were impressive, and we were able to exceed or achieve our guidance on important financial metrics, adjusted EBITDA and adjusted free cash flow. Notably, all of our additional guidance metrics were also within the guidance range. As we embark on our 2026 journey, we have published full year 2026 guidance seen here on the slide using the same operational and financial metrics. I would note that these guidance metrics do not incorporate the Sheridan Production acquisition announced yesterday. Also, as a reminder, we continue to include cash generated from our portfolio optimization programs in adjusted EBITDA and adjusted free cash flow and is anticipated to be approximately $100 million for the full year 2026. Turning to Slide 16. When the founding father set out to build America, they aim to create something that would last, something rooted in hard work, responsibility and the belief that what was created must be cared for and nurtured for it to endure. That same belief defines Diversified Energy. As our nation celebrates its 250th anniversary, we celebrate our milestone 25th anniversary. For 25 years, Diversified has stepped up when others stepped away, investing in established energy assets and committing to their full life cycle from production to responsible retirement. We are, at our core, adaptive out-of-the-box thinkers, innovators and trailblazers. We pioneered a new way of working using scale and vertical integration, leveraging technology and flipped the narrative on natural gas and oil production while also maintaining the discipline and predictability required to make our work profitable. This culture, this mindset, this belief has allowed us to transform one company's divestiture into our consistent cash flow. What started as an idea and one small well package acquisition in West Virginia in 2001 has evolved into a 2,200-plus person organization, a sizable publicly traded entity that generates over $2 billion in revenue annually, a top 3 landholder in the Lower 48 and the largest owner of wells in the U.S. We took a different approach to responsible energy production. We were the underdogs, but we proved ourselves. For 25 years, we made our own rules, crafted our own strategy and created enormous value for stakeholders and shareholders along the way. Now is the moment to consider what we've done and how we got here, what we set out to do, how we were unique and what we proved. Now is the moment that we give each other a collective high five because we are proven and now others follow us. As America looks ahead, Diversified does the same. We are grounded in our values, focus, experience and our commitments. With that, I'd like to turn it over to the operator for the Q&A portion of today's call. Operator? Operator: [Operator Instructions] Our first questions come from the line of Neal Dingmann with William Blair. Neal Dingmann: Nice details. Rusty, my first question just on capital allocation. In the prepared remarks, you kind of gave the rankings but I'm just curious how you think about -- you've always had a good dividend. Is there a sort of an optimal dividend yield that you all target? And then in that same vein, with leverage, you've been able to take that down. Is there an optimal or kind of a leverage goal as well? Robert Hutson: Yes. No, I don't think we really sit around and think about what our dividend yield is. We have a dividend -- fixed dividend that we feel comfortable that the free cash flow will support that will give our shareholders a good return. And then that's where we stay. We don't really look at the dividend yield. That's going to be based on the share price and where it goes, and we just kind of try not to focus on that. We focus on what we feel like we have the financial capabilities of paying with free cash flow. On the other hand, as it relates to leverage, we've stated our business with the type of funding that we use with the ABS, asset-backed securitizations, we're very comfortable having that 2 to 2.5 range. There's times when it could come down closer to 2, and there's times where it may go a little higher than that at 2.5. But staying within that range is a real -- is a goal for us and really important for us as we grow the business through acquisition. Bradley Gray: And Neal, one thing I would add as it relates to leverage, one fact that I would not want anybody to just skate over is the fact that we paid down $277 million worth of debt last year. So our business continually deleverages. It should be close to $300 million this upcoming year. So we continually deleverage and build up equity value in these ABS notes. Neal Dingmann: Great point. And then my second question, just on non-op activity. It seems like you have a lot of -- I was going to ask on acquisitions but I'm just excited on your non-op activity. It seems like there's a lot of upside potential. I mean, whether that's Mewbourne and Mid-Con or others. Could you talk about just what you're currently seeing in the non-op. Are you seeing where -- I know there's a sort of non-operator talked about some private sort of shutting things down. It seems like you're having just the opposite where you're having some sort of fantastic activity. Could you talk about potential upside around your non-op activity? Robert Hutson: Yes. Our Western Anadarko, you mentioned with our -- in Oklahoma with Mewbourne. Neal, we've just seen tremendous results there. The commodity prices haven't affected those IRRs to a level where we would ever think about shutting that down. They're just that good. And we've seen great success there. We still have a runway to go. And so we're going to continue to invest alongside of Mewbourne in that program. We're also seeing -- we mentioned it in our comments, we're the largest leaseholder, one of the largest leaseholders in the Lower 48. That gives us a lot of flexibility and a lot of optionality. And so we're leaning into that in our Permian acreage with another non-op partner and fully expect to invest as we move into 2026 and see some pretty good returns there, especially with the uptick in oil that we've seen here recently. So we're excited about the non-op piece. It allows us to have some organic growth within our portfolio without having to put the G&A cost that running a program ourselves would do. And so it's a big piece of what we're going to be doing moving forward. Operator: Our next questions come from the line of Charles Meade with Johnson Rice. Charles Meade: Yes, I'd like to start off with -- ask for a little more color around this, the Sheridan acquisition you guys announced yesterday. It looks like to me, that's an area that has a lot of historic Cotton Valley production, but also it's more recent in the last few years, there's been a lot of horizontal Haynesville production there. And so I wonder if you can talk about -- when I look at the 6% decline you gave us for that though, it really suggests to me that there hasn't been a lot of recent drilling or at least a lot of recent horizontal drilling there. And so I wonder if you could talk about the nature of that production, what zones is coming from? How much is horizontal versus vertical? And really, one of the things I'm aiming at is an idea of how much undeveloped acreage you guys might have there that's a candidate for your portfolio optimization? Bradley Gray: Charles, the way we've really looked at this acquisition opportunity, it is a perfect strategic bolt-on to our business franchise there in East Texas. We've got tremendous overlap with our field operations, with our midstream business. And so it is a great tuck-in where we can add in highly -- high-margin production into that area. Along with it, it does come some additional acreage, and I think we highlighted that in the press release. So we'll have some opportunities there. And as we've done with our POP program, we'll look for the best ways to bring value forward, whether that's through some type of development or some type of just sale or some type of non-op relationship. So this is a perfect tuck-in acquisition. It's only $245 million for us. It's adding reserve replace -- it's adding reserves, and it's also adding incremental cash flow to just the overall corporate cash flow that we produce. Robert Hutson: And just to add on to that, it's kind of a mix. It obviously has horizontal wells in the package. To your point, they haven't been drilled in the last few years. But the other real important factor here is this is in the proximity of our processing facility in that area. And so it gives us some potential upside there to move gas maybe down to our processing facility and get the liquids exposure as well. The other thing I would say is, too, is that this is an area that's gotten really, really active and hot pretty much the whole area down there. But -- so as Brad was mentioning, we'll look to find the best value for that undeveloped acreage, whether it be a JV like he was saying or a sale or whatever. So there's lots of optionality here, lots of synergies that we can lean into and really key to our acquisitions, take an acquisition, pay for it and get additional value that brings what you pay for it to a better valuation. Bradley Gray: Yes. Charles, last comment I'd say is just there's a page in our presentation that talks about the strategic value of in-basin acquisitions, that framework. This one hits every box there. Charles Meade: Yes, it definitely seems like it could be a good fit. On the financing of it, is this already in process with the Carlyle, ABS structure? Or what's the state and path forward for the financing? Bradley Gray: Yes. We're -- we've got the liquidity on our credit facility to finance this acquisition, and that's our initial plans to close it with that. Operator: Our next questions come from the line of Jonathan Mardini with KeyBanc Capital Markets. Jonathan Mardini: Just on the non-op side, you said the 2 non-op partnerships together, they're expected to offset about half of the natural decline in 2026. Just looking forward, how are you thinking about the scale that you'd like to get for these non-op partnerships? For example, would you look to have enough partnership activity to offset all of your base decline? Robert Hutson: Well, we'd love that. We'd love it. But you ultimately have to have the programs that make sense and that are -- have good rates of return. So these 2 that we've mentioned have that. And so these would be the 2 that we're going to lean into. There could be more coming in the future. And we're -- as I've stated, I believe, the last call that we did, we're high-grading our acreage. We're looking at multiple opportunities to lean into all that value. These are 2 that are extremely important to us and that are already kicked off, but there could be more coming in the future. Bradley Gray: Yes. And one thing I would say, we did this Canvas Energy acquisition at the end of 2024 that came with a lot of acreage and a lot of opportunity. And so with commodity price movement, if there is any commodity price movement upward, that price movement will unlock additional development opportunities for us. So like we said in our comments, we've got a lot of cash-generating levers in our portfolio. Robert Hutson: The last thing I would say there as well is that don't underestimate Appalachia. We have some acreage in Appalachia that has some really, really good prospects at some point. We're kind of monitoring the situation that's going on there but it could end up being a big, big win for us up there as well. Jonathan Mardini: Understood. That's helpful context. I just want to ask about the asset sales. You previously talked about maybe a $40 million or $50 million run rate of asset sales is a good baseline. We saw 2025 come in over $160 million. With the 2026 guidance, including about $100 million of these proceeds, how do you just think about the updated run rate for these land sales? And are you seeing more buyer interest today? Robert Hutson: Yes. I mean I would say there's buyer interest. Again, we're high-grading our portfolio. We're looking at all of our acreage positions. Last year was the first year with all the acreage that we had acquired through Maverick and Canvas. This year, we'll have a little more -- we've seen a little more interest levels in a couple of things that we didn't anticipate last year. But I think -- and Brad, you can comment on this as well. I think $40 million to $50 million is a run rate type expectation on a normal year. Bradley Gray: Yes, post 2026, we've already issued expectations and guidance on '26 at $100 million. But on a go-forward basis, we believe that $40 million to $50 million is a comfortable number. We have a vast portfolio of assets and acreage. And so opportunities come our way very often. Robert Hutson: And I find it interesting that a lot of the areas that people didn't think about or didn't really put a lot of attention, all of a sudden are regaining interest levels and people are starting to come back and look at different things. So that's what gives us comfort in the guidance. Operator: Our next questions come from the line of Paul Diamond with Citi. Paul Diamond: Just drilling down a bit more on the Permian JV. In the Central Basin, we have a bit more of the details. Is there anything else you can disclose on locations, working interest, expected production run rate through the year, anything like that? Robert Hutson: I would say we'll have more data around that after the first quarter. Give us a little time on that. But no, look, it's really close to moving forward here and getting kicked off. And so we'll have better data to kind of help you to drill down more so at the end of the first quarter. Paul Diamond: Got it. Understood. And then jumping over, can you talk about the bigger news or news last year was the plugging funds. Can you talk about the status of where that sits and the potential opportunity set and I guess how you go about potentially extending that to other states? Robert Hutson: Yes. I'm still surprised at how that got kind of gotten -- just kind of blown over by most people. But that was a big win for us as it relates to asset retirement. We're on a -- we have a really, really good financial assurance policy there now that we've made our first payment into that. That will go on for 20 years. We'll continue to plug the wells that we have committed in the state already for the next 20 years as well. We want to utilize that in some of the states where we have the higher well counts for sure, especially in Appalachia, mostly. And so we're working to try to get inroads there. I would tell you that there's a couple of states that would probably do it very quickly, and we'll probably circle back to them this year. But we're working on one as we speak and really want to get that one squared away. So it's a great product. It really -- the whole industry should be looking at this as a way to deal with asset retirement obligations long term. And I think even the states themselves with their orphan well program should be looking at something similar. But no, it was a big win for us. Obviously, my relationship with the politicians in West Virginia gave us the ability to take advantage of that there first. And so we'll continue to work with some of the other states and probably you would probably -- you'll probably see us do something else with a couple of the other states this year. Bradley Gray: And Paul, I would just add, this program, as Rusty indicated, we're very excited about. This program, when it works as designed, and it will because it really is just math and time, moves the financial liability for plugging our West Virginia wells off of our balance sheet and away from future cash flows of this business. It is a significant victory for our company. Operator: Our next questions come from the line of Sam Wahab with Peel Hunt. Sam Wahab: Congrats on another great set of results. A lot of my questions have been answered but one that still stands out is sort of linked with the Sheridan transaction and the strategic partnership with Carlyle. I noticed, obviously, the Sheridan deal is very much gas weighted compared to Maverick last year, where we introduced a lot more liquids. I mean is that a signal of intent in terms of strategy? You talked earlier about data center demand, LNG opportunities. Would that partnership be more gas weighted going forward? And what does the landscape look like for opportunities? And is gas at the moment a better deal than potentially oil given the uptick in prices? Robert Hutson: Yes. Good question. We are -- I've said this before, we're not really focused on whether it's liquids or gas. What we're focused on is the value that we can get from the acquisition. In this case, it was mostly gas, obviously, but it was sitting right in our geographical operating area and just gave us all kinds of opportunities to drive the cost down, increase the -- we bought it on a margin. We think we can increase that margin. And so that's what made it so attractive to us. The Carlyle partnership, they don't really care whether it's liquids or natural gas either. And so -- but they do have a size -- they obviously want to do deals of a little larger than this one. And so that's primarily the reason why we just did this one on our own through our own liquidity. But they are -- they don't have a preference, whether it's liquids or natural gas. We're all about where can we get the best return. That's what we're focused on. And whether it's liquids, whether it's natural gas, it doesn't matter to us. Operator: Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Rusty Hutson for closing comments. Robert Hutson: Thank you all for attending today. Obviously, if any other questions or have any additional information that you need, please reach out to Doug in his numbers in the press release for you to reach out. Thank you all, and have a great day. Operator: Thank you, ladies and gentlemen. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time, and enjoy the rest of your day.
Teresa Urquijo: Good afternoon, ladies and gentlemen. Thank you for joining MERLIN's Full Year '25 results presentation. You can find all the materials that will be presented in today's call on our website. I will please ask you to abide by the disclaimer contained in it. Our CEO, Ismael Clemente, along with our two directors Ines Arellano and Francisco Rivas will walk you through the main highlights of 2025. We'll then open the line for Q&A [Operator Instructions]. With no further delay, I pass on the floor to Ismael. Ismael Orrego: Thank you, Teresa. Good afternoon, everyone. We are in front of a very interesting set of results, certainly, the best I have seen since we have been leading this company. It's been almost perfect year because the fantastic performance of the data center division has been accompanied by very, very solid performance also on the traditional asset classes. And all that has been reinforced by an excellent behavior of the share. So frankly speaking, what can I say? I mean the operating momentum is super strong. We are enjoying satisfactory rental growth in all asset classes, traditional and nontraditional, because in data centers, we are also achieving better rents than underwritten. We have a high occupancy, 95.6%, and continue solidly generating FFO with a plus 5.1% print in the year. In offices, we have a very remarkable like-for-like of 3.5%. But more importantly, an interesting release spread of 4.8%, which is probably the reflection of what we commented in past calls that the Madrid market particularly is now under a certain like short squeeze. I mean, there is distraction on the offer side, which is causing, of course, an effect on the pricing of the demand. The occupancy stays at all-times high, 94.2%, and this is particularly noteworthy in a year in which Barcelona has been a relatively softer market than it was in the past, and has lost occupancy. So Madrid has been able to compensate Barcelona, which will continue for the coming years to be one of our weak spots that we will continue working because sooner or later, the market will digest the current situation of oversupply and will come back to normality. In logistics, we have been positively surprised by the release spread, particularly because, as commented on a number of past calls, this is a market where we were seeing a little bit of less strength than we have been seeing in the past years. But this year has been extremely strong, particularly on the release spread. The reason why the like-for-like is low is simply because we have lost 3 points of occupancy, which is normal, because we were occupied at 99%. And we told you that there was only one way to go from there, which was down. And -- but we ended the year with a very good printing occupancy of 96.4%. Shopping centers, another super strong year, surprising us on the upside with a very good like-for-like of 4.7% and still with very affordable rental levels for our clients at 11.0% in occupancy cost ratio. So very, very strong year in shopping centers. On data centers, well, basically, we have achieved a full derisking of Phase 1. So Phase 1 is now water under the bridge. I mean, we will report it as assets in operation from now on in order to try also to simplify your lives, because if we continue reporting Phase 1, Phase 2 and soon Phase 3 is going to be -- is going to be a rubik cube. So that will convert into assets in operation with an occupancy of 100%. We have also achieved a very interesting derisking of Phase 2 with the lease-up of our Arasur 2 asset 48 megawatts, which is around 20% of the total capacity of Phase 2, but more importantly, it was the next Indian trying to attack the fort. I mean it was ready for service December 2026. And as such, now is done. The next ready for services are end of '27. So we have now plenty of time to work on those -- on the leads in which we are already working and starting exchanging technical documentation, and then we will need to come to terms in the economic side of the business and then move into documentation, which, in some cases, particularly with hyperscalers, can be a painful process. In terms of financial performance, the value uplift has been very strong, but this has been mainly boosted by data centers who have contributed close to EUR 360 million increase to the total revaluation of the portfolio. 4.7% GAV increase in the year. The total shareholder return, 10.2% is fantastic. But more importantly, we believe it's relatively sustainable, because we know what is coming, and we think unless the world goes upside down, which is another possibility, if 2026 is a relatively simply flat year in terms of performance of traditional asset classes, we believe we can achieve very similar figures at the end of December. Our financial situation remains very strong. The loan-to-value is low at 28.9%, 100% fixed rate. And we don't have maturities till November 2026, maturity which is already tackled. I mean with the existing cash at banks and a number of bond taps and bank lines that we are signing in the coming days, that maturity will be already tackled without affecting the CapEx needs of the data center department. And we have been able to maintain our rating, both with S&P and Moody's, which is always interesting because at the end, that cost is one of our raw materials. And we need to continue keeping our competitiveness in terms of rating. In terms of value creation, EUR 129 million in noncore divestments, as already disclosed to market, you were perfectly aware that we had this almost done. And then probably the most interesting thing is that we have another close to EUR 130 million already signed and to be executed in '26 and '27, which is very interesting because basically almost half of our targets for '26 and '27 are already covered in the absence of any accidents. It's important to pay homage to the activity of our different business divisions. The year has been excellent in terms of pre-lets. In offices, we have signed more than 56,000 square meters beyond the daily trading, I mean, the ins and outs that happen every day in the portfolio. In logistics, 73,000 plus and Head of Terms, which we believe is going to become a reality of another 55,000. So significant progress also in logistics. And in shopping centers, to me, the most salient activity in the year has been the inauguration with an almost full pre-let of the Marineda extension, 26,000 square meters, which has made the Marineda concept in La Coruna even more dominant than ever. I mean it's a center, which is really rock solid and is one of the jewels in our little crown. And in data centers, well, we are now at 112 megawatts IT versus 45 latest reporting. And therefore, when 66 new megawatts have been lit and the prospects for the derisking of the rest of the Phase 2 remain brilliant. So in terms of main financial magnitudes, the GRI print was EUR 541.9 million, plus 3.5% like-for-like in the year. The FFO, what we broke our own record is better than the one of year 2019, EUR 326.7 million plus 5.1% year-on-year. But it is important to note that in 2019, we had EUR 84 million of BBVA rents in our belly. So with a little bit of help from data centers, around EUR 30 million, we have been able to overcome the sale of the BBVA portfolio, which, with hindsight, I believe, was an excellent decision because we delevered the company in anticipation of high interest rate cycle. And that gave us also a sufficient financial muscle to be able to develop Phase 1 of our data center deployment program, which was absolutely necessary because have we tapped the market to develop data centers starting from scratch and the market will have been a little bit incredulous about our capacity to do. So we had to do it with our own money, and BBVA was instrumental for that. The EUR 0.58 achieved are plus 7% versus the initial guidance, although we updated to EUR 0.56 in -- I think it was in 3Q, we updated to EUR 0.56. In reality, we expected EUR 0.56, but in dataset, we have had little income from -- particularly from better margin in our data center operation and well, some income also from NRCs from the installation of machinery on behalf of our clients through remote hands agreements in our data center division. The LTV stands at 28.9%, which is pretty low, but more interestingly, net debt-to-EBITDA stands at 9.0x. Of course, it is growing, but it is growing as we are spending in the construction of new units in our Data Center division. The NTA per share is EUR 15.36. And for the first time, we are very, very close in our share price to our NTA, which is incredible to see. I mean, I'm really, really enjoying to see that when I shut on my computer, and I see the share price evolution, I am really humbled. The GAV like-for-like has gone up by 4.7%. But very importantly, with an EPRA net income yield of 4.6%, which is sound, because these days, improving NTA or improving GAV through asset revaluations is easy, but we have taken exactly the contrary way. I mean we have completely recalculated our prospects for particularly logistic pre-lets and part of the logistics division and we have decided to expand a little bit our yields in order to make sure that we repair the roof now that the sun is shining rather than doing it when the things start to get rough. TSR, as commented, and leads us to propose dividend per share of EUR 0.44 for the year, which is slightly above the 80% threshold, but I think we have to share a little bit with our shareholders the good operating momentum of the company. In terms of EPS, we have, after careful reflection for the moment, we have taken the decision to continue to not capitalize interest expenses. We believe it is cleaner. We believe it reflects better the real operation of the company. And therefore, as a consequence of that, we are indicating for 2026, a relatively flat figure in terms of EPS and DPS. But we will, of course, endeavor to bid it if we can. It won't be easy because it is mainly attributable -- the reason why it's flat is mainly attributable to the fact that all the growth in top line is absorbed by more financial expenses as we continue basically building. We continue building our inventory. And as a consequence, we continue employing our debt capacity. And this is, of course, raising the bar of our financial expenses. And for the moment, it is hitting in our top line growth. 2027 will be a different thing. I mean, in 2027, will be a year in which we will start seeing the first hints of what the DC division will bring in the future to this company and '28, '29 and '30 as commented on many other occasions, at least on the model, of course, you never know, but they look like a big party. That is it. I mean I pass the floor to Ines Arellano who is going to comment on the different asset classes and Francisco Rivas will comment specifically on the Data Center Division. Inés Arellano: Thank you, Ismael. So moving to what today represent 55% of our portfolio, offices. We've generated EUR 292 million of rents, and that is a 3.5% increase in like-for-like as commented by Ismael, very, very sound, with a very high release spread up 4.8%. It is true that if we were to take into account this one lease that we mentioned last year, it would have been 0.4%, but at least it's in the positive arena. The occupancy at 94.2% all-time high. Again, we'll watch very carefully how the evolution in Barcelona keeps ongoing, but we are confident that eventually this will be digested. It's been a very healthy leasing activity market with more than 275,000 square meters contracted. And in terms of valuation, we see a 1.2% like-for-like increase with an implied gross yield of 4.9%, not reaching 5 yet, which as you know, it's always been the number that we thought should be the right one for office. Ismael Orrego: 5.25%. Inés Arellano: Okay. And a net initial yield of 4.2%, and this implies a 2 basis points yield expansion. And as said, the little momentum continues, as demonstrated in Slide 8 with five very good examples of standout leasing deals spread across not just CBD, but also key peripheral corridors, and they all have secured very high-profile tenants. You have three assets here that are still in the work-in-progress portfolio, meaning these are not in operations yet. But you also have two like Castellana 278 and Las Tablas where we've secured very high tenants, very high-quality tenants like a university and a bank. Moving to Slide 9. We continue, again, to see a strong trend of reconversions. And we wanted to lay down what is the current stock of Madrid. You see a little bit of everything. So this number may seem a little bit big to you, depending on the source that you used to consider. We've taken the Belbex number -- this is not only made by pure office buildings. It's also taking into account the offices associated to industrial users, some residential buildings that are being used as offices as well and also administrative buildings. What we see is that there's more than 1 million square meters expected to go back to their original residential use, because right now, as we stand, the highest and best use for a lot of these space is actually beds, beds, because this is both living, resi, hotels. And there is an additional 1.5 million square meters that could be reconverted again to these other uses out of the pure office building. What are we doing? We have identified 7% of our stock in Madrid office, okay, not the whole stock, but just in Madrid whereby this doesn't mean that we're going to be selling the whole 7%. But we've identified 33,000 square meters that will be sold so that somebody else reconvert it plus another 27,000 square meters that we are going to suddenly refurbish or reconvert them for educational uses. Moving to Slide 10. What we see is that -- well, we still believe that unique assets deserve to remain as offices. And this is a perfect example, Alfonso XI. There's a clear scarcity of good space, 10,000 square meter size buildings in prime CBD, and we are fortunate of having owning these unique assets, is right in the middle of Madrid, and we know that there are best-in-class tenants looking for space like this one. So we are going to refurbish this asset. We are actually refurbishing this asset, and the expected yield on CapEx will be around 9.6%. So there's another example in Page 11. Again, super prime office building, Liberdade. As you know, this one we bought it on purpose to be converted into what it will soon be probably the best office building in the Lisbon market. And as of today, even if we have not started commercialization, we have fully let to a top luxury group, all the retail, the high street retail space. Then we have Adequa. This is to show you that there's no only demand for pure prime CBD assets. Adequa is one of those examples where a tenant of ours that was willing to expand to grow in a campus, very, very close to Castellana has actually signed an agreement with us, a turnkey project. And so again, the yield on CapEx around this one is around 10%, 10.4%. And we will soon in '28 and '30, we will have these two buildings built up and completing what today is Campus Adequa. And then finally, this is a jewel. This is a very small building, but a true jewel. and it's going to be even more valuable once Renazca project gets executed. As you know, it has been approved. And once it is executed, we know very well that a lot of tenants will be willing to pay very high rent for these unique assets, which for those who have visited Plaza Ruiz Picasso building is just next to it, you can actually monitor the works from that one. Moving to logistics in Slide 15. GRI like-for-like has been positive despite the loss of a tenant in 48,000 square meter warehouse in [indiscernible] that had an impact of 3% in occupancy. The sound 5.8% Release Spread, together with an average CPI of around 2.5%, has helped to increase rents by 2.5 reaching EUR 86 million. Gross yield at 5.7%, slightly higher than the average yield of the portfolio 5.3%, and net initial yield at 5. The leasing activity has been strong with more than 440,000 square meters contracted compared to only 100,000 square meters in '24, while valuation uplift has been moderate being only 1.2% on a like-for-like basis. This has been mainly driven by the increase in CapEx. Certainly more on future development, but a little bit as well on existing assets due to, for example, fire safety measures. In '25, we finished construction and delivered 21,000 square meters fully led to [indiscernible]. And we've also sold 73,000 square meters warehouse that was under refurbishment in Vitoria and have added a couple of projects to the committed pipeline, now amounting to 279,000 square meters. Yield on CapEx for all these projects remain quite appealing at 13.2%. The noncommitted land bank has therefore reduced by 61,000 square meters outstanding at 183,000 square meters located mainly in Madrid and Barcelona. If we move to shopping centers, well, this has been said already by Ismael. it's great performance in every KPI that you can look at, the GRI of EUR 133 million, it's an uplift of 4.7% like-for-like. It's a great combination of a very high Release Spread plus CPI. In terms of valuation, this EUR 2.1 billion portfolio has gone up by 2.9% with an implied gross yield of 6.4 and net initial yield of 5.7. And this portfolio, shopping center portfolio is shifting to adapt to market trends and customer needs, and we are seeing retailers demanding new formats, so fewer, but bigger and certainly better located. The synergies with logistics, they continue to be a reality, and this is value also for the largest storage spaces that they required and experience of our customers keep on being the main and main focus of everything that we do. And in Slide 21, you have a few examples of new retailers leasing space in our assets, mainly focused on health and beauty and leisure/home entertainment. And with no further delay, I pass the floor to Francisco who will explain where the future is coming from, the data centers. Francisco Gonzalez: Many thanks, Ines. Moving into the Data Center section, I would like to start by congratulating, Ismael did, our data center team and the vision for a fantastic 2025 year, which had a very strong workload and proved the excellent execution. Part of this effort, as you have seen, has been crystallized at the beginning of this year, 2026, with the signing of very significant contracts across our assets. Turning now to the presentation on Page 24, we provide as always an overview of the two phases under operation and/or construction with updated figures. On the one hand, we present the results of Phase 1, which we will now refer as Ismael said, as assets in operation, where the 64 meg have been fully contracted. The originally 14.5% gross yield on cost shared with you 12 months ago has now increased to 15.8% with a stabilized GRI of EUR 97 million above the previous EUR 88 million reported 12 months ago. Regarding Phase 2, which we will refer as work in progress WIP, we have been able to redensify the first two buildings in Lisbon moving from 36 meg to now 40 meg increasing the total size of Phase 2 from 246 meg to 254 meg as you have here in the presentation. And this has led as well to an update of both the total investment amount and expected stabilized GRI now at EUR 397 million, delivering a very attractive 14.4% gross yield on cost. And in terms of commercialization, moving now to Page 25, we have successfully completed the letting of the three assets of this Phase I, following the signing of an 18-meg contract with a very well-known new cloud operating [indiscernible] and first time in our portfolio reaching the full occupancy of our assets in operation. And for those of you who are more curious about the technical aspects, 34 meg out of the 64 are air cooled while 30 meg are liquid cool. And by the type of specification we have it means that these 30 meg liquid cool are targeting above 70 KV per rack. On our experience right now, they are more in the 120 KV per rack, which shows that the type of technology they are using is the last of one of [ NVIDIA ]. On Page 26, we show how the rental income will ramp up on a yearly basis with EUR 31 million already received in terms of rents in 2025 and a forecast of EUR 66 million for 2026, resulting in a stabilized GRI as we mentioned before, of EUR 97 million in 2027. From a value creation perspective, Page 27 shows the breakdown of total costs incurred. The valuation already captured, although it's a little bit more limited in [indiscernible] in the signing of this new contract that the appraisal was not aware of and the expected additional value to be accrued if the value assumptions remain unchanged as we are disclosing in the footnote. So this EUR 291 million estimated value, we expect to be captured in the next valuations if those are retained. Moving to Phase 2. On Page 28, we include a brief reminder of the commercialization status of our data center assets that we divided, as you know, in bookings, advanced negotiations and let or prelet. And with this in mind, in Page 29, we summarize the status of the different projects of Phase 2 with now a total capacity of 254 meg IT. Going one by one, in Bilbao 2, what we call ARA II, the construction is progressing on schedule. After 14 months of execution, we have gained sufficient certainty to enter into prelet agreement as the ready-for-service dates that we show in the presentation, December 2026 are very, very certain. This is a highly complex deployment because we will coexist the deployment of the equipment that we have as landlords, but also the client equipment, which are largely based on a liquid cooling solution. The kind is -- was already in our portfolio is very well, no new cloud operator focused on AI and the level of densities that the client is requesting allows us to know that they are using a state-of-the-art technology, as all of you know. The connection to the substation of this building 2 has been already completed with our first building, what we call ARA III and right now, we are just progressing with cabling of that -- of those that were created for our first asset there. Regarding Bilbao ARA I, as we will show in the following slides, the construction has started at the end of last year, beginning with piling works, and we have maintained our estimated ready for service by the end of 2027. Moving now to the center part of the page, in Lisbon Compos. At the end of 2025, we started the construction of the first two buildings following, believe it or not, 1.5 years of piling works. And please consider the Lisbon region is both flood-prone, as unfortunately, we have experienced some few weeks ago, but also is located in a seismic zone and which has required a significant soil preparation, reason why of this 1.5 years of previous works. And as an example, the piling works have reached approximately 35 meters in depth, just to avoid situations as recommended. And thanks to this preparation, none of the works were affected by the heavy rains experienced in the region earlier this month. From a construction point of view, we have once again redensified the buildings, increasing capacity to 40 mg per building IP, benefiting from the insights gained from client discussions that we have held over the last months. In parallel, substation works have also started with a ready for service in all these first two buildings by December 2027. In terms of leasing, we are in very good progress regarding the initiative that we will comment on the following slides, while keeping the buildings ready for the latest computing technologies in case the first option does not ultimately materialize. Moving into the 2 Madrid projects. In [indiscernible] approval, what we call [Foreign Language] in Spain of the land, and we are in the final stage of securing the organization permits to begin on-site works, which will run simultaneously with the building construction. The ready-for-service is currently planned for the first half of 2029. Regarding [indiscernible] located, as you know, on the same street as [indiscernible] we obtained environmental assessment approval at the end of last year and right after demolition works are started and are going and the construction permit has been already requested just to make sure that when we finalize the demolition works, we can immediately start. Given the previous timing experiences, we are still maintaining ready- for-service in the second half of 2029 although knowing that we have already power on site what in our naming we call power ready supplied, we have already entered in negotiations with several clients interested in this site precisely for the reason that power is already there. Regarding CapEx commitment planning for Phase II and now I'm moving into Page 30. 2025 has been a record year for the company in terms of CapEx commitments. And this is significant because you need to know that a significant portion of this CapEx relates to equipment, which typically has shorter execution timelines once we commission it on site. Commitments have reached EUR 987 million versus the previously reported EUR 836 million, but also the next two years looks very strong in terms of CapEx commitments. So in the absence of any capital event, the company expects to tap the debt market, as Ismael was mentioning before, again, mainly during the second half of the year, once the equity that we raised in 2024 is fully deployed and at work. The target stabilized GRI is planned for 2030 as mentioned in the last quarter presentation, at EUR 387 million, delivering a 14.4% stabilized gross yield on cost. All these figures are reflected in Page 31, 32 and 33, which includes images showing construction progress in both Bilbao, Arasur and Lisbon campuses. And for those attending to our Capital Markets Day in the 9th and 10th of March, you will have the opportunity to see these projects at a human scale, which I think I can tell you that is pretty impressive. Finally, on Page 34, we would like to share the status of our EU Gigafactory initiative. As previously mentioned in the last year call, timelines of this initiative have experienced significant delays and based upon our latest information, the work resolution is now expected before year-end 2026. As we have stated several times, our Phase 2 projects were not conditional upon obtaining the EU Gigafactory award. In fact, this initiative was not even under consideration when we launched Phase 2 and we have always maintained discussions with traditional clients, both hyperscalers and new class operators in line with our original business plan. Nevertheless, as we always say, we've tried to be constructive shareholders -- stakeholders and good citizens, and we remain prepared for initiatives that could benefit the regions where we operate, particularly the Iberian Peninsula and we strong believe we continue believing that bringing the EU Gigafactory status to our region will create a lot of value, whether we are -- whether or not we are directly involved. As you may recall, we have set most of our capacity in Arasur, Capacity 1, and the full capacity of [indiscernible] for this initiative in Spain and the first two buildings for our Lisbon campuses of the Portuguese initiative. And we were always betting an Iberian consortium, so both Spain and Portugal, something that looks like were well received because most of the countries are doing exactly the same in other parts of Europe and offering several locations per country to allow synchronized computing and across the campuses. Situation as of today is that the Spanish government has shown a preference for another Spanish project. And thereby, they have released the capacity that we have reserved for that initiative in ARA II and [indiscernible] I, which, as you have seen, are both now fully let as following the -- what we have always commented to have one option and the other. With regards to ARA I, we are in advance negotiation with a particular client, and those negotiations, of course, will be more intensified and documented once the ready-for-service dates are becoming more and more and more closer. Regarding our Lisbon Campos, we remain committed to this EU initiative, which is now why we are moving forward with the first two buildings in connection with the Portuguese proposal. And once again, as we approach ready-for-service dates, the number of clients inquiring about availability continues to grow. For this reason, we will welcome clarity from the EU in terms of the timing because as soon as we are approaching and approaching delivery times, normally more clients are interested and we would want to have to take a decision there. And now Ismael will close this presentation with the closing remarks and outlook before we enter into Q&A. Ismael Orrego: Okay. Francisco, thank you. Well, on Page 36, closing remarks and outlook. Everything which is written here is pretty evident. So I'm not going to torture you with any more bulls***. The only thing that I will say is that the idea is to move in terms of lets and pre-lets from the current 112 to as close as possible to 100 megawatts in data centers. And this could be achieved through one of several combinations of facts. I mean, more normally, it will be through the documentation of the Lisbon lease which could come in the form of formalization of the EU Gigafactory program or otherwise, through an alternative route. I mean we have been lately adapting our -- the design of our campus there to the specific requirements of a certain client. You must have noticed that the total capacity has increased by 8 megawatts. Well, this came at the cost of 12 additional million in construction cost that I believe makes sense. And now the white rooms conform to the specifications of concrete SOQ of a concrete client. But more importantly, are perfectly flexible to adapt to the requirements of either other neo hyperscalers or neo cloud clients. So with that, I believe the 2026 should be the year of Lisbon. We will work -- we will endeavor to achieve that target. And that's it, dividend and FFO, we have already commented on it. And I believe the best thing we can do is move into Q&A so that you can make your questions in the line. And we will do our best to be able to reply to your questions. Operator: [Operator Instructions] The first question comes from the line of Marios from Bernstein. Marios Pastou: I've got a couple of questions from my side. So firstly, on the lease-up and the pre-letting of your data center pipeline. I think you mentioned that Bilbao building 2 was pre-let to existing neo cloud tenant and that Madrid say, was to a new neo cloud operator. So can you comment on the occupier type you're having discussions with across Phase 2 and whether we should anticipate a diversification of your tenant base across that phase? Ismael Orrego: Okay. Look, Marios, basically the leasing of Bilbao 02 has been closed with an existing client of ours. The one in Madrid, however, was a different one. At present, the diversification of our tenant roster is perfectly distributable. You can imagine with only 112 megawatts let, that I will beg you all to wait till we are 1 gigawatt in operation in order to calculate the real diversification of our portfolio, because have you calculated our diversification in logistics in 2014, you will have come to the -- this main conclusion that it was 72% DHL. But now no client -- individual client represents more than 10% of our rent. So we need to continue building if we want to continue leasing. What I can tell you, talking about Phase 2 and preliminary conversations for Phase 3 is that we are talking to every kind of clients you can imagine. You love hyperscalers. We are talking to all the hyperscalers except one, which is a self-builder. But the other three, we are talking to them. And we are talking to no less than 5 Tier 1 neo clouds alike. So sooner or later, we will end up closing an agreement with a big hyperscalers and you all will breathe with tranquility. But I need to remind you that closing deals with hyperscalers is not an easy thing. It comes at a cost, because they are the fastest cowboy in town. And as such, they have a big pistol. And you have to be very, very careful because that pistol can kill you. So it's big organizations, complicated organizations, you can engage in very fruitful and healthy conversations with the infrastructure guys, with the cable guys, with the first-line guys, but when you move into middle office and back office, it can be complicated. And at times, it is as frustrating as reaching contractual status and then stopping conversations because the conditions can turn abusive very quickly. So we will end up closing deals or reaching agreements with hyperscalers, but probably already in Phase 2 and more surely in Phase 3, but you need to bear with us for a second because we also need to defend our financials, which are your financials. So let's not be childish on this, and let's not -- let's be careful about what we wish for because closing an agreement with one of these is very easy. However, the fact that this agreement is good is a very different thing, okay? So we have to continue working in that respect. What I can tell you is that we are now technically qualified with 3 out of the 4 hyperscalers, so at least we know that our facilities conform to their technical specifications. And sooner or later, we will end up closing. Operator: The next question comes from the line of [ Veronique from Kampen ]. Unknown Analyst: Maybe first on just the other business lines. I was hoping could you give some additional color on what you expect in terms of occupancy rate, any big departure planned in '26, especially for offices and logistics? So your view towards '26 for those business lines? Ismael Orrego: Okay. Well, in offices, the idea is to remain relatively flat. So we have finished this year at 94.2%. The idea is to finish this year between 93% and 94%, which is already a significant effort because you have to take into account that in April, we are losing 11,000 square meters from Meta in Barcelona in the middle of '22 at. Yes, in a building, which is a winner, clearly winner in the market, but replacing 11,000 square meters in today's market in Barcelona is not an easy task. So we have to be prudent, taking into account the situation of the market there. In logistics, our idea is to improve a little bit the occupancy or compared to the 96.4% we have. It's quite binary because it depends a lot on whether we are able to lease one big shed in the Henares corridor or not. If we lease it up, then it's going to be very close to 100% again. But let's not plan for that, at least for the moment, we will inform in due time. And then in shopping centers, we are going to remain relatively flat, because it's almost impossible to go higher. I mean, yes, I mean, you can go 20 basis points higher or that it is complicated to go significantly higher. In shopping centers, in fact, what we are trying to do now is to yield manage a little bit our portfolio, because we are the cheapest shopping center owner in Iberia in terms of OCR. And that is always a very interesting position to start from, and we will yield manage a little bit our shopping centers, although the behavior is impeccable for the moment. Unknown Analyst: Okay. That's clear. And then one question around data centers. So your gross yield on costs went up again. And you also mentioned that the margins actually were better than expected, but I see that's a number that you haven't changed in the slides. So could you give some color on the movements on those numbers and why you still report a 70% margin if it was actually better so far? Inés Arellano: Because Veronique, this is Ines. What has been better is the today's margin. While we are on ramp-up, we do not achieve the 70%. So 70% margin is on stabilization. And so we were expecting lower than what we have achieved margin during the ramp-up. 70% remains as the stabilization margin. Ismael Orrego: Okay. And regarding the growth yield on cost, it is simply a reflection of the fact that the market is helping us. I mean, yes, of course, I mean, there are -- the teams are doing a fantastic job, but we are operating in a market which is quite favorable at present. So this is why we are improving -- if you look at our forecast in data centers, both in terms of cost per megawatt and delivery times, we have been absolutely bang on compared to the numbers we gave you. So our construction cost has been exactly the one we forecasted. Even though you might notice that in Phase 2 is higher than in Phase 1, the only reason is that in Phase 2, we had to buy 2 of the 6 plots of our data centers. And also Phase 2 is fully liquid, while in Phase 1, we had some air, okay? So that is the reason why we have a higher cost. Also Lisbon, as commented by Frank, is a slightly more costly construction to make because of the strict seismic regulations similar to Japan or California. We expect -- I mean, the -- we have already raised by 20 basis points the expected yield on cost on Phase 2. let's see how the leases come up. We might be able to bid it or not. I mean, that we better say than sorry. I mean we prefer to underestimate a little bit rather than being absolutely bullish, particularly when there is so much to be done before inaugurating those assets. I mean the RFSs other than Bilbao, Arasur 2 are expected for the end of '27. And between now and the end of '27, there is a lot to see. So let's continue -- let's remain prudent. Unknown Analyst: Okay. Clear. Sorry, one small follow-up on Lisbon. I just wanted to double check. It says now advanced negotiations on the slide for the Lisbon asset. Is that referring to the EU effect? Or is that concerning something a different tenant? Ismael Orrego: That one is concerning the EU Gigafactory. Then with different tenants, it cannot be -- it is not advanced negotiations. It's simply leads, bookings. The Portuguese government is conscious of that. They are honest people, and they are also trying to find a way to firm up part of the commitment rather than leave everything conditional upon obtaining the EU program. They are looking at ways to firm up part of their commitment so that we can close an agreement and we don't need to go through an alternative route. Operator: So the next question comes from the line of Florent Laroche from ODDO. Florent Laroche-Joubert: So actually, I would have just one question on data centers. So we can see that -- so you have made a lot of progress on Phase II. So congratulations, but we can see that you have also a lot of work to do before completing Phase II. Why is it today the right timing to present us the Phase III in 2 or 3 weeks? And why it is the right timing maybe to start to launch this Phase III in terms of risk? Ismael Orrego: Well, the reason is twofold. On one side, we have a number of internal definitions, and we report as we reach the milestones of those specific definitions. But in my mind, I see Phase 2 significantly derisked. Let's leave it that way. Second, power land is a scarce asset in Europe. I mean everyone is dying to get powered land. We are lucky enough to have a lot of power land in our ownership, because we started asking for power in 2021 and '22 when nobody else was asking for that. So I think it is in the best interest of all of our shareholders that we make full use of that powered land. And then the future only God knows, but at least make use of everything we currently have because we continue enjoying very interesting yields on cost. And what is more important, we continue commercializing in clear market. At the beginning, when we explained this new venture of data centers to all of you, our prediction is that we will commercialize maybe Phase 1 in clear market, there will be no competition. But certainly, we were expecting competition for Phase 2. The truth is that the market is full of noise, full of bull****, but in reality, very few people are really building or building to the exact specifications of AI, and therefore, very few can really meet the requirements of AI clients. And to our surprise, we are commercializing Phase 2 almost on a clear market basis. The next reasoning is that if we go fast with Phase 3, we could achieve a very similar result. So basically, I believe it will be extremely unfair to our shareholders not to move. We know it's a lot of complication. We know it's a lot of construction yards. We have recently incorporated one executive just for the control of our works. But I think the best thing we can do if we want to be responsible managers is to move on and continue developing capacity because we are in a situation in the market which is as favorable as you can probably think. Operator: The next question comes from the line of Celine from Barclays. Celine Huynh: I just have two questions, please. The first one is on the beat on the FFO this year. It was driven by better gross to net margin in DCs. Can you explain how you achieved that and whether we could expect the same in 2026? And secondly, it's about retail. Your name popped up in the news regarding a large Spanish shopping center portfolio. Can you provide any comments if you can? And if you can't comment, we've seen the expansion into DCs, but there wasn't much mention about retail. So can you clarify your appetite for shopping centers going forward? Ismael Orrego: Okay. Well, starting by the easiest, which is the FFO gross to net. Well, as commented by Ines, we have basically improved compared to our projections, because we had a better margin. And talking about margin, the margin we expected for this year, that was not the stabilized margin, okay? It was not 70%. It was well below 70%. That was the margin we expected for this year that we have beaten that margin a little bit because we have been able to operate more efficiently our data centers. And then we have, as commented before, we have also benefited from a number of little tweaks and things that we have been doing on behalf of our clients. Many of our clients do not have a super big established presence in Europe. And as such, they rely on our own engineers in order to install equipment or make offices fit-outs, do improvements to their equipment once installed. I mean we are helping them to do that, and they are paying us for that service. And as a consequence, we have improved a little bit the gross to net margin in our data centers, but not to a point in which we are in a position to reforecast the 70% stabilized, which we are -- we will very soon reach. But we cannot reforecast that because, first, 70% is already a very good gross to net margin, particularly compared to what our peers in the U.S. are getting. And second, because we still do not have all the information in order to be able to reforecast that. And then retail... Inés Arellano: Celine, just to be clear, can you please repeat the question that you made? Celine Huynh: There was just a news that you were about to bid on a Spanish portfolio, retail portfolio. So could you comment on that? Ismael Orrego: Well, basically, we are very happy with the performance of our retail. We have in a number of occasions commented with you that being a listed company, sometimes you cannot be too contrarian to the market because if we had, we would have loved to bid for 1 or 2 assets in the past 3, 4 years, but we have been being -- we would have been slaughtered in a public place, I mean had we done it. So now there is a retail portfolio available in the market that we have analyzed in depth in a number of occasions already. It was very difficult to reach an agreement with the sellers because it was a relatively convoluted situation. But now it's out there. What I can tell you is that the assets are high quality. They will make a perfect fit with ours. But I can also tell you that this will be a capital recycling exercise. So if you are afraid about us using one penny out of our data center spending capacity, this is not the case. I mean if we are to bid for this portfolio, which we will only do if we can achieve a positive capital recycling figure, I mean if the capital recycling disappears, we will not bid. And we are not going to participate in an investment banking auction. So we will do our best. We have a number of pros and cons. Our main con is that, of course, we don't control the French connection. Our main pro is that the Spanish staff, we know them very well. They are colleagues in the market and they will be probably very happy to join the family. So we will see what comes out of that process. But if one day, we end up bidding for that and we are successful, what I can assure you is that we will rotate internal capital, try to sharpen the pencil a little bit in terms of ROA, I mean, try to obtain a positive print, positive arbitrage in ROA and make sure that the data center effort is not even disturbed by this acquisition. Remember, there is a big hype in the market about resi transformation, et cetera. We have a number of levers that we could action in order to make sure that we can rotate capital in an efficient way, okay? Celine Huynh: Okay. Ismael, just to be sure, we're talking about a portfolio that is worth more than EUR 1 billion, right? So you would have to sell more than EUR 1 billion. Is that correct? Ismael Orrego: Yes. That is... Celine Huynh: Okay, that is a big amount. Ismael Orrego: Yes. Operator: The next question comes from the line of Fernando Abril from Alantra. Fernando Abril-Martorell: I have 3, please. First on the recent [indiscernible] rent. So it was clearly above your expectations. I think correct me if I'm wrong, but it was around EUR 140,000 more or less per megawatt month. So I know it is Madrid, but how should we interpret your embedded 130 assumption for the entire Phase 2 because it seems a bit prudent probably to me. Also on the contract terms of the Bilbao 2 and Hefata, I don't know if there were any material changes to duration or escalator structures compared to previous agreements. And then last, you know that the Spanish grid operator, and also several Spanish utilities have recently announced increased CapEx plans for the power network. So I would like to know your view on this and whether you believe or not that these investment plans will meaningfully alleviate grid congestion and improve the power availability in Spain or not? Ismael Orrego: Thank you, Fernando. Well, first, on the price of Hefata 2, we are not going to be very specific because it's our client, and of course, the terms of engagement of our contracts have to remain secret. But it is true that in the global underwriting of Phase 2, we were relatively conservative at 118.5% on average, and we are beating those figures. But it's always good to remain prudent because there could be deviations in course. There could be many things, equipment that could vary. So we have to be -- we have to remain prudent, but it's true that in that particular contract, it's been better than expected. And then in terms of contract, basically the same that we have been doing up to now in the region of 10 years and with fixed escalators, which are now slightly higher because the 10-year inflation swap is also higher. So we are happy with the contract to all terms. Remember that one of the reasons among many that why we moved into data centers is because they were able to improve our WAULT once we sold the 3 portfolio. That, of course, was a secret weapon. I mean it was clearly improving our average WAULT across the portfolio. One of the reasons why we moved into data centers was because the WAULT were pretty attractive. They remain so. And in fact, not only that remain, so the clients are now wanting longer terms if they can, in exchange for rent because they are trying to lock up IT capacity in a market which is starved of IT capacity. There is very few, very few places where you can land 20, 30 megawatts of AI capable equipment. It's -- there are not so many places in the world. Colocation is a different thing. But AI is very special, and there are not so many places in the world where you can do it. And one thing also that the clients like a lot and why they are ready to compromise for longer terms is expansion capacity. I think it was a good vision in our side to bet from the very beginning on super large plots with a lot of energy in which we could grow with the client doing one building, another building, a third building and a fourth building. That has been probably a very good decision and clients like it because once they send their experts, their engineers to a certain location, they achieve significant synergies if they can operate a more significant capacity than simply just one data center and move to another place within the country. So this is the situation. And regarding [indiscernible] and the increased CapEx, it's a much welcome piece of news. Of course, our stance with the regulator has always been that they need to improve the grid. The Spanish grid is, believe it or not, because all of you are affected by the 28th of April blackout last year, but that was a different thing and happened for different reasons. That the Spanish grid is super high quality. It is very well designed, very well duplicated and wet and is very robust. Of course, it will need investment in order to adapt to the new demand because at present, we are coming from a world in which the consumption was going down year after year because many households were incorporating self-generation. And as such, the consumption was going down and down and down. But we are in front of an era in which consumption contrary to some of the official estimates that were made a long time ago and probably wrong with the new circumstances, consumption will go up and will go up very significantly, if only because of the effect of the data center industry. As a consequence, the country has to make an effort in terms of bringing together generation and consumption. So that means investing in distribution and transport. And any news in that respect are very much welcome. The alternative is to allow and probably could be a very interesting complement, the alternative will be to allow private grids. But that is always complicated in Europe. As you know, it's the world -- the word private is not very much allowed in Europe. And private grids are only a reality for very small distances. I mean when you are bringing a certain generation mainly from renewable sources into a certain point that bigger grids are not that common in Europe. So very happy to see that they are starting to move. The only problem is the speed of movement, which, as you know, is a problem always with the public sector. For the moment, the only entry door we have found to the grid is through agreements with renewable producers. And this is what we are doing. I mean we are engaged in a number of negotiations with a number of renewable generators and you will be keeping abreast of our evolution over the coming months/years because it is the only practical way to access the grid as of today. I mean one day, there will be a bigger grid and electricity eventually will be widely available. But if you want to continue honoring your demand request from your clients, the only way is through agreements with renewable generators. Operator: The next question comes from the line of Stephanie Dossmann from Jefferies. Stephanie Dossmann: I would have two questions. The first one regarding data centers and the appraisal values. I understand that appraisers recognize the value creation closer to the time of the lease signing. But could you say how much of Phase 2 is currently factored into the appraisal values? Francisco Gonzalez: So what the appraisers are doing is they're just incorporating into their valuation the assets that are under construction. So once we start construction, then those assets come into the perimeter. You have seen June 2025 that we have incorporated several assets, mainly ARA II and Lisbon 1 because they have already started construction. And then in December 2025, we have incorporated -- we started construction as disclosed before in ARA I and Lisbon 2, which means that the appraisal takes that into the appraisal. The rest of the power land that we have is not being -- so it's hold at cost. And only when we start construction, then is when we -- when the appraisal enters into that valuation. From a valuation point of view, then you need to differentiate between the assets which are under operation and the assets that are considered as WIP. In the cases of assets in operation is exactly what like an office building or shopping center or logistics that we have. So they do normally a DSF of 10 years. And that's the reason why they arrive at this value. And regarding WIP, as you may remember in logistics, appraisers tend to wait until the very last moment when the asset is completed and you have a tenant to reappraise the asset and then we're holding at cost the different development. But also, you need to be aware that those type of exercises normally were carried out over a period of between 9 months and 15 months only because the construction of logistics is much, much quicker. In the case of a data center, it's different. First one is, first, the land that you hold at cost already just because you are starting a construction there. It means that this power land all of a sudden becomes more -- becomes a reality first. And second, you are incurring a lot of cost and approaching pre-lets over the period of the 2 years that normally 2.5 years that takes us to build this type of assets. So I would say that the value is little by little absorbed until delivery times. Of course, the fact that we have pre-lets or not pre-lets of course, give more certainty to the projects, but this is how they are normally approaching it. Inés Arellano: Stephanie, just to add to what Francisco commented, it is very important for you to know that the 4 land plots that are -- that have been included in the scope of work for the appraisers, they were on land that belong to us. So just by putting the market value, which is powered land and not raw land, they were sitting in our balance sheet at almost nothing, just by consider them as powered land that it's a significant uplift on a relative basis, of course, right? So Phase 2, as Frank said, the first thing to know is or the first thing to bear in mind is how that land -- the market value of that land stands. In our case for what we had before, is certainly an uplift, not -- it is not the same for the land that we buy, of course, because that's the market value. And then as the different milestones of CapEx keep on going and as you approach the cash flow, you will get more value crystallized. But for this 4 particular projects, there's obviously been an uplift because they're sitting in our balance sheet for long at almost 0. Stephanie Dossmann: All right. And my second question relates to more traditional business. The office market in Barcelona. You said it is softer, of course. I was wondering what you expect on the midterm. I mean I understand you expect no oversupply shortly, but will the demand be strong enough to see higher Release Spread going forward? And what's your view generally speaking on the Barcelona office market? Ismael Orrego: Okay. Look, the Barcelona office market is in a digestion crisis. 320,000 square meters without client joined the market at the end of '24 and that hit is still being felt across the market. So this is taking a hit on the tension, the demand tension in the 22 ARA, more noticeable in occupancy than for the movement in rents but clearly noticeable. Our expectation in a normal world is that we had positive Release Spread overall in Barcelona this year, not brilliant, 1.7%, but still positive. So rents are holding for the moment. The market has corrected itself, as you can expect. So no new construction starts have happened since 2024. And in normal circumstances, unless the Afghanistan, Pakistan war expands to Iran, Israel and U.S., Russia, normally, within 18 to 24 months, Barcelona should be able to absorb the excess offer and come back to a certain normality. That would be what we would normally expect. Could be a little bit more, could be a little bit less, but Barcelona remains a strong small city, I mean, very specialized in certain submarkets within offices. A little bit of pharma, a little bit of gaming and tech. And as a consequence, we expect the city to continue performing robustly once they have been able to absorb this little blip caused by a situation of oversupply and touristification of the office development. Operator: And the final question comes from the line of [indiscernible]. Unknown Analyst: I have a couple of questions, if I may. One is in relation to your guidance for 2026. I'm trying to understand what assumptions are going in there in terms of additional debt funding. I think you said that in the second half, you're going to raise some more debt. In terms of share count, if you assume any change in that? And also in terms of the logistics, whether you assume that, that big asset that has been vacated by the client is going to be lifted up at any point during the year. So that's my first question. Ismael Orrego: Okay, Daniela. Look, regarding the guidance, the guidance stems out of our modeling of the year. We believe that the top line, the income could go up by around EUR 40 million easily, but it's going to be eaten by bigger financial expenses mainly. Why is that? Because there will be two events during the year. Money is fungible, so EUR 800 million will disappear when we have to repay our bond. And second, the speed at which we are spending or investing money in CapEx because of our Phase 2 deployment is significant. Already in 2025, we exceeded our original budget. I say ever, I believe the original budget was like EUR 830 million and we ended up spending like EUR 980 million. So we have spent more money in CapEx commitments, okay, in the year than -- commitment, meaning when we commission a certain equipment, we pay between 20% and 40% upfront, and then we pay the rest upon the reception of the equipment. However, that money for us becomes untouchable because we need to phase that payment if and when the equipment is received. So in our models, this is what we are seeing. Whether that could be achieved, I mean if we are quick in leasing up some logistic gaps, we should be able to improve it. They wouldn't move that much the needle because if you take into account that logistics account for around EUR 84 million of our rents and the rents expected for this year are going to be in the region of EUR 600 million, it's not going to move the needle that much. What share count considered for the guidance, same share count. And that is, of course, a very tricky question, I know, because you are already assuming that there is going to be capital issuance at some point. But this is -- I mean, we are talking apples-to-apples. The 58 is with the same share count we have at present. Unknown Analyst: Second question, if I may. And that's on Phase 3. I wonder whether there's been any investment, even minimal infrastructure preparation in Lisbon. If I'm correct, Lisbon is Part 1 of your Phase 3. And given what you mentioned about the earthquake risk and all that kind of stuff. I wonder whether there's already been a little bit of investment in infrastructure into that and related to also Phase 3, what would be the earliest date that you would like to start ordering equipment or start properly deploying into Phase 3? Ismael Orrego: Okay. Regarding the commissioning of equipment for Phase 3, et cetera, we will inform in detail about Phase 3 on the Capital Markets Day. But you will see what is basically the cash flow schedule in -- for Phase 3, and you will see it significantly overlaps with Phase 2. Regarding whether we have already advanced infra investments for Phase 3, yes. I mean, in Lisbon, we have been preparing the ground for plots 3, 4, 5, and we might start precharging land for plots 6 and 7. But we are talking about relatively humble investments. I mean we are not talking about significant things. Likewise, we have spent money in the licensing of a number of projects, including, for example, the one in [indiscernible] where we are already requested construction license, and we have already applied for specific planning status by the autonomous region. We are building up electric capacity in anticipation of Phase 3. For example, the whole purpose of the Solaria agreement in November was that, was to illuminate plots 5 -- 4 and 5 of Arasur and some of the other agreements that we might be reaching in or have reached in as we speak, are also related one way or another to Phase 3 or pipeline. But we will inform about all that in the Capital Markets Day. The only thing that is important for you to keep in mind is that Phase 3 will be defined with everything that is being licensed and has power. So it will not include any pie in the sky or talking about things in which we could get the electricity, et cetera. We will be very specific about that on the Capital Markets Day. Operator: Thank you very much. There are no further questions. Just a quick reminder, many of you already know, but we'll be hosting our Capital Markets Day in Bilbao the following 9th and 10th of March. It won't be broadcasted. It will be recorded and then uploaded into our website. But all of our material will be published on our website that morning, the 10th of March. So hopefully, all of you can make it so you get to enjoy a nice wine. And you know where we are in case you have any other questions and have an excellent weekend.
Operator: Hello, and thank you for standing by. My name is Tiffany, and I will be your conference operator today. At this time, I would like to welcome everyone to the HEI Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mateo Garcia, Director of Investor Relations. Mateo, please go ahead. Mateo Garcia: Thank you. Welcome, everyone, to HEI's Fourth Quarter and Full Year 2025 Earnings Call. Joining me today are Scott Seu, HEI President and CEO; Scott DeGhetto, HEI Executive Vice President and CFO; and Shelee Kimura, Hawaiian Electric President and CEO; and other members of senior management. Our earnings release and our presentation for this call are available in the Investor Relations section of our website. As a reminder, forward-looking statements will be made on today's call. Factors that could cause actual results to differ materially from expectations can be found in our presentation, our SEC filings and in the Investor Relations section of our website. Today's presentation also includes references to non-GAAP financial measures, including those referred to as core items. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure. We will take questions from institutional investors at the end of this call. Individual investors and others can reach out to Investor Relations. Now Scott Seu will begin with his remarks. Scott W. Seu: Aloha kakou! Welcome, everyone. For today's call, I'll start with an overview of the important accomplishments we've made over the past year and touched on our priorities going forward. Scott DeGhetto will walk through our financial results and then open it up for questions. Over the past year, we continue to execute on the priorities we've communicated since the Maui wildfires in 2023, and I'm proud of the progress we've made. We've advanced key initiatives, including progressing the Maui wildfire tort settlement, pursuing legislative measures that support our communities as we deal with the risk of wildfires, implementing wildfire safety improvements that have reduced the risk of ignition from utility equipment and laying the groundwork for a successful second multiyear rate period under our performance-based regulation, or PBR framework. Our actions to date help ensure our ability to serve and invest in our communities for the long term. Last quarter, we discussed the process to obtain final court approval of the Maui wildfire towards settlement. We continue to make good progress in resolving the remaining contingencies to payment. In late December, the Maui Circuit Court granted our motion for summary judgment on the subrogation insurers direct claims. In January, the court granted final approval of the class settlement agreement and provided a good faith settlement determination. We also received another favorable decision from the Hawaii Supreme Court. As previously disclosed, the subrogation insurers moved to intervene in the class settlement process, and the Maui Circuit Court denied this attempt last June. The insurers appealed, and the appeal was sent to the Hawaii Supreme Court. On February 10, the court affirmed the lower court's denial of the subrogation insurers motion to intervene in the class settlement. In doing so, it made clear that a class settlement transforms an insurer's subrogation rights into lean rights the same way an individual settlement does, which is what the court rule on a year ago. This decision ends the insurer's efforts to derail the class settlement. And because they lack party status in the class action, the insurers should not be able to file a successful appeal to the final approval of the class agreement previously granted by the Maui Circuit Court. This positive result moves us one step closer toward final court approval of the settlement agreements. In sum, we've continued to work through the administrative steps required to see the settlement through to completion and trigger our first payment. We're also pleased that we've been able to finalize settlements resolving both the shareholder class action and shareholder derivative lawsuits filed in connection with the Maui wildfires. As disclosed last quarter, in early November, we signed binding term sheets to settle the litigation. In late December and early January, the settlements were finalized and executed. The agreements provide for complete resolution of both sets of litigation with the company's obligations fully funded by insurance proceeds. Turning to legislation. As we've discussed over the past few quarters, Hawaii's historic wildfire legislation signed into law last July acknowledges the need for legislative measures to protect our communities and support the financial stability of electric utilities in the face of increasingly severe weather events. The PUC's wildfire fund study was completed at the end of December, and this was a crucial first step in implementing our state's milestone legislation. Work continues to establish a liability cap with the PUC rule-making process expected to take 18 to 24 months. Details around the wildfire fund will be established sometime thereafter. The PUC also approved the utility's 3-year wildfire safety strategy in late December, concluding that the strategy can be expected to reduce wildfire risk and emphasizing the importance of continuous improvement. The utility has achieved many of the operational objectives laid out in the strategy ahead of schedule, and we'll continue rapidly advancing the strategy as we progress through 2026. We'll be submitting our next update to the PUC in April. We've also continued to make our company stronger and more resilient through carefully managing our balance sheet. Our successful $500 million utility debt issuance last year as well as our revolver upsize to $600 million support our financial flexibility and liquidity as we look toward the elevated capital cycle ahead. We also continue to advance our state clean energy goals with the utility reaching a 37% renewable portfolio standard or RPS in 2025. We remain on track to meet the 40% by 2030 statutory RPS requirement. Affordability has been essential focus as we've advanced our strategic and operational priorities. Customer bills remained stable in 2025 despite the significant investments we've made in wildfire safety and resilience. The utility continues to offer financial assistance to working families including providing over $1 million in payment assistance. Turning to the next slide. As we look ahead to our objectives for 2026, we'll continue working to resolve the conditions to payment in the tort litigation settlement agreements. We believe we're in the home stretch of this process as the only remaining steps are resolving all outstanding appeals. This includes resolving the appeal the insurers have taken from the judgment entered in our favor in their direct subrogation actions. Turning to our ongoing rate rebasing. As discussed on our last earnings call, we are pursuing an alternative process that could allow for resetting rates without the time costs and resources typically required for a full rate case proceeding. We see this as an opportunity to develop a rate rebasing proposal in a nontraditional manner. Consistent with fundamental PBR tenants set forth by the commission and state legislature, encouraging innovation and honoring a stakeholder-driven process. We plan to submit a joint rebasing proposal with UluPono initiative, a PBR Working Group stakeholder party by March 6. We'd also like to address some of the elements that could be improved under our PBR regulatory framework, including our annual inflationary adjustment and performance incentive mechanisms, or PIMS. This will happen in the process that the PUC has designated as PBR Phase 6. We expect further guidance from the TUC on a schedule for Phase 6 after the rebasing proposal is submitted. Affordability remains a central focus as we look ahead toward the commencement of the second multiyear rate period under PBR, especially given the elevated capital investment cycle projected over the next few years. We are pursuing low-cost financing options that would reduce impacts to customers from critical investments required for safety and results. In the coming months, we'll be submitting a request to finance wildfire safety strategy CapEx and other infrastructure resilience costs via securitization, which is typically the lowest cost of capital available for these types of investments. In summary, in 2026, we'll continue to execute on our key objectives of advancing the tort settlement and our rate rebasing process while implementing the wildfire risk reduction measures outlined in our wildfire safety strategy. Although much remains to be done, I'm optimistic about the path ahead and proud of what our team has accomplished to date. Finally, we'll be seeing an executive transition at HEI at the end of the quarter. As previously determined by our Board of Directors in 2024, Scott DeGhetto's term as HEI's CFO expires on April 1. And as a result, Scott will resign effective April 2. Paul Ito, the current Treasurer and CFO of Hawaiian Electric will resume his prior role as HEI's CFO, effective April 2, 2026. Scott joined us as our CFO shortly after the Maui wildfires in 2023, and he's played a crucial role in helping lead our company through the most challenging period we've ever been through. His leadership and expertise have been critical for our success, and I'd like to thank Scott for all that he's done. And even though he'll hand the CFO reins over to Paul come April, Scott won't be too far as we'll have him support us as our consultant. Again, I thank Scott and I welcome Paul back to his previous role. Scott DeGhetto, I'll now turn the call over to you. Scott Deghetto: Thank you, Scott. And it's been a pleasure working alongside you in serving this company. I'll start with our financial results on Slide 6. For the full year 2025, we generated net income of $123.1 million or $0.71 per share compared to a net loss of approximately $1.4 billion in 2024. The results include $16.5 million of pretax Maui wildfire-related expenses net of insurance recoveries and deferrals. Approximately $12.6 million of that amount was recorded at the utility. Results for the year also include $12.4 million of losses related to the strategic review of Pacific Current. Excluding these items, which we refer to as non-core, consolidated core net income was $149.3 million or $0.86 per share. This compares to core income from continuing operations of $124.3 million or $0.98 per share in 2024. Utility core net income for the year was $177.5 million compared to $180.7 million in 2024. The decrease was driven by higher O&M expenses, primarily due to previously deferred consulting and legal fees, higher interest expense, higher depreciation and the recognition of tax credit benefits in the previous year. Holding company core net loss was $28.2 million compared to $56.4 million in 2024. The lower core net loss was driven by lower interest expense due to the lower debt balance following the retirement of holding company debt in April and higher interest income from cash being held on the balance sheet to make the first settlement payment. Turning to the next slide. As of the end of the fourth quarter, the holding company and the utility had approximately $16 million and $486 million of unrestricted cash on hand, respectively. In addition, the holding company has approximately $530 million in combined liquidity available under its ATM program and credit facility capacity. The utility also has approximately $540 million of liquidity available under its accounts receivable facility and credit facility capacity. Consistent with last quarter, Hawaiian Electric's Board of Directors approved a $10 million quarterly dividend to HEI for the fourth quarter of 2025. There have been no changes to our settlement financing plans since what we communicated last quarter. We still expect to fund the second settlement payment with debt and/or convertible debt and expect that payments thereafter will be funded with a mix of debt and equity depending on market conditions. As Scott Seu mentioned, outstanding appeals must be resolved before we can make our first $479 million settlement payment, which we now expect to make in the second half of 2026. Turning to the next slide. We still expect 2026 CapEx of $550 million to $700 million in 2027 and 2028 CapEx to increase further to $600 million to $800 million and $600 million to $850 million, respectively. This level of spend is consistent with our expectations communicated last quarter and is subject to additional PUC approvals and further resource adequacy initiatives and analysis. At that, let's open up the call to questions. Operator: [Operator Instructions] Your first question comes from the line of Michael Lonegan with Barclays. Michael Lonegan: Just wondering if you could talk about the latest appeal by the insurers. What do you see as the chances the Hawaii Supreme Court takes up the case? Or do you think it's possible that they deny to hear the appeal based on some of the language from the prior appeals or prior cases with the Supreme Court? Scott W. Seu: Mike, this is Scott. Thanks for the question. Yes. So the only remaining item here is that appeal, the subros appeal of the earlier summary judgment, which dismissed their claims, their direct claims against the defendants. There's been no briefing scheduled yet on this appeal that was just filed in January. I do think that ultimately, of course, I don't want to get ahead of our Hawaii Supreme Court. But essentially, this is the last step. And all decisions by the Circuit Court and the State Supreme Court have been very supportive of the settlements. Again, I won't speculate we'll speak for the Supreme Court. But I'm -- maybe I'll stop my comments there. Michael Lonegan: Okay. And then on financing the second settlement payment, what are your latest thoughts on a preference between debt or convertible debt or a combination thereof? And do you think you'll wait until after the settlement is approved to do this financing? Or is it something we could see like with the first settlement capital raise where you did that already with equity? Scott Deghetto: Mike, Scott DeGhetto. So no change in plans from what we've been saying over the past several quarters. It will be a relevering at HEI either through debt or convertible debt. Right now, based upon market conditions, I would say we're leaning more towards convertible debt and doing it all as convertible debt, but that certainly can change. as we go forward. And then in terms of the timing of that payment, we don't anticipate doing anything until after the settlements approved. As you know, that first payment was raised a while ago. It's being held in escrow. And then once the settlement is approved, we have 30 days to make that payment. And so then we would look -- once that payment is made, we'll continue to look at the markets and determine at the appropriate time when we would raise that money. I don't think it will be a year in advance like we did the last one. But you just never know. It depends on where the market is at that particular time. Michael Lonegan: Great. And then you talked about financing your capital program with the prior debt issuance and then also retained earnings, a good portion of it. With the remaining amount, do you expect to use your $250 million ATM program, how much of that -- and what could be the cadence of issuances of that if you were to use that? Scott Deghetto: So in terms -- let me hit the ATM program first, and then I'll kick it to Paul Ito to talk a little bit a bit more about financing down at the utility and his thoughts on that. But in terms of the ATM, the ATMs out there, we have the ability to use it again, we'll be opportunistic in use of that. We may use it. We may not. It just again, depends on market conditions, but that's always an option for us. Michael Lonegan: And then lastly from me, American Savings Bank, you talked about selling the remaining roughly 10% stake of that. Is that assumed in your financing plan? Or how should we think about the timing of that potential sale? Scott Deghetto: So we still intend to divest that remaining 9.9% in calendar year 2026. Again, just depends on market conditions, how the bank is doing, et cetera. So we continue to look at that regularly. And again, we do have plans to divest that this year. Operator: Your next question comes from the line of James Ward with Jefferies. Jamieson Ward: Congratulations, Paul. And Scott wishing you all the best. In terms of the PBR rebasing, what should we think about in terms of what's actually in that upcoming March 6 joint proposal. You've spoken to it at a high level, but the 2 to 3 most material elements may be target revenue methodology, PIM redesign of a follow-up on that, et cetera? How should we be thinking about what's in there? Scott W. Seu: Yes, James, I think we've described the high-level elements of what we're trying to work through. including the inflationary adjustment factor, having a true-up mechanism as opposed to the current structure. Looking at the PIMS and making sure the PIMS are nice and tight in terms of our ability to actually influence outcomes as well as also the potential return from those PIMs if we show that we have truly performed well there. We've also mentioned in the past looking at expanding the scope of EPRM, the exceptional project recovery mechanism. So those are the key elements I'd say. Jamieson Ward: Okay. Got you. I have a follow-up on the pen but just first, in terms of like rebasing outcome, for risk just described this as the final extension. And what are the specific triggers that we should think about in terms of what would cause you to pivot back to a traditional 2027 test year rate case a second half '26. Like how are you managing the risk of that Jan 2027 new rate states slipping? Scott W. Seu: James, let me hand it over to Joe Viola at the utility. He's our Senior Vice President, overseeing our regulatory affairs. Joe Viola: The March 6 day is when we'll be submitting the rebasing proposal with one of the PBR stakeholders, Ulupono, as Scott had mentioned. The commission after that will just take a look. We figure in about 30 days. They'll make sure that everything as a formal matter administratively is in there that they expect and then give us an order to proceed with the rest of the process. We'll make -- the only thing that would cause us to pivot to a 2027 test year rate case is if that rate basing falls over denied. Jamieson Ward: Got it. Okay. That's very helpful. On the per design, we actually hosted a call recently, we posted a number of the past year, Hawaii-focused former regulators, other people attached to the political process and so on. And they were as clear for me, which I'm sure you guys already would be aligned with and happy to hear, but reiterating 150 to 200 basis points of incremental earnings power above your authorized ROE with the original intention for the PIMS and that's coming from on high. With that in mind, and given how the initial ones were often designed with things that were outside of your control, unfortunately. And also the imbalances in terms of asymmetry in terms of downside and upside. What -- on the PIM redesign, what does a more meaningful package look like to you guys in practice? Like what would the top 2 or 3 PIM changes be that you're pursuing? And how should we think about that symmetry in terms of upside versus downside? Joe Viola: This is Joe again. I think in terms of the ultimate reward opportunity, we think -- we believe that the commission should eventually support what they said in the past at 150 to 200 basis points, and we'll support that. We think there's other support for that as well. In terms of what we want to see going forward, we've learned a lot, living under the first 5 years of PBR. So when we say more meaningful package, we want to make sure that the targets are reasonably set and the means to achieve them are reasonably within our control. That's the important part. We're going to look going forward, as Scott mentioned, we'll be discussing with the specific topics and specific priorities would be for those incentives. But it's -- to us, it's the design to make sure that we can achieve them. And that's our main goal. . Scott W. Seu: Yes. The only other thing I'd add, James, is we're also interested to see if we can actually reduce the total number of PIMS because that has been a bit of a challenge over the last few years managing a long list of PIMS. Jamieson Ward: Got it. That's very helpful. Last question I have is the wildfire platform here, legislation passed. So you're now guiding the 8 to 24 months for the liability cap process. wildfire fund thereafter. We obviously saw the PUC report at the end of the year to the legislature. So bringing it back right to the 24 months back to 2026, what are the 2026 milestones we should be watching for liability cap, wildfire fund, securitization. It sounds like wildfire fund might not be on there. I'll leave it open, but I think that's what the other part people would like to on. Scott W. Seu: Yes, James. So as you noted, right, at the end of last year, the PUC filed their report on the fund, the potential for a fund. And in that, they indicated that it should actually be taken up after the PUC rule-making process for a limitation of liability happens, which the PUC has indicated that, that would be the 18- to 24-month period beginning -- roughly the beginning of this year. So as far as critical milestones, I mean a state agency rule-making process, 18 to 24 months, it will involve a lot of information gathering, data gathering. And eventually, they would file a proposed set of rules for comments and review and then they would go back and take those into account and issue the final. Once the final rule making is proposed, there is a certain period of time for the governor to actually be able to weigh in with his own comments. And at that point, once that is resolved, then the rule becomes final. So those are the high-level steps in the rule-making process. As far as other critical milestones this year, it's really all on that PUC rule-making process. And I think I would also say there's nothing that would be teed up for example, in front of the legislature this year. Jamieson Ward: Got it. Okay. I appreciate it, and see you next week at the conference. Operator: That concludes our question-and-answer session. I will now turn the call back over to Scott Seu for closing remarks. . Scott W. Seu: I just want to close by saying again to all of our investors and interested stakeholders. Thank you for your support. 2025, like I said, was a year where we felt we really -- we're able to make a lot of progress in terms of advancing our key initiatives. I also want to one more time, just thank Scott DeGhetto for his service as HEI's CFO, coming to us shortly after the Maui wildfires in 2023. And Paul Ito, I welcome you back to our team at HEI. So with that, thank you very much. Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.