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Jean Poitou: Good morning, and welcome. Thank you for joining us for this presentation of the 2025 annual results. I have been the new CEO since last September. My name is Jean-Laurent Poitou. I met some of you already. So not just the 2025 annual results, but also in line with what we announced on 22 January when we presented our Horizon strategy for the next few years. We'll tell you about the outlook. I will not reiterate what was said then, but we are -- we'll be looking at the implications of Horizons for 2026. I have next to me Olivier Champourlier, our CFO, who will give you details about the numbers. So the key figures for 2025. EUR 2.525 billion in revenue. That's an organic growth of 0.6%. Now that's less than the ambition that we have for future years. Nonetheless, the profitability is in line with what we announced for 2025 since we have 12.8% in operating margin before accounting for the dilutive effects of operations conducted in 2025, particularly the acquisition of the BVA Family and infas. Now then growth is less than hoped for. However, with a tight budget policy in the 50 operations, we were able to observe the necessary discipline to stay in line with our expectations for future years. So a few words about what we announced back in September and now the numbers as they have come out in the press release. In the EMEA region, that's about half of our revenue, organic growth stood at 2%. Now it was 5.5% in 2025 compared to 2024. So there's a continuing momentum on the EMEA region. Now if you look at the various businesses or the various markets or the audiences for the private sector, consumers, customers, patients, physicians. We find that organic growth stands at 2.1%. And so we emphasize this because on the citizens part, then there is Ipsos' activity with the public sector decision-makers, and that has a significant weight on growth. Our business there in the private sector has pursued this momentum with a 2% growth. And so in those areas where the automated services are most used by customers, we still enjoy good growth, including in those areas where services are automated, and that is particularly visible for the Ipsos digital platform. That's a platform that enables our customers either directly or with the help of our teams to conduct their surveys using that platform with the questionnaires, enabling them to have access to our human response through our panels and having an automatic rendition of the results on the platform, organic growth 27%, about 30% since the beginning. And since this is an automated platform that generates profitability twice as high as the group's average, and that is very promising indeed because in a world where technology, automation, artificial intelligence make it possible to conduct a significant amount of research using these solutions such as Ipsos Digital. This is very promising indeed, even if we can still do better. And then, of course, we're returning to significant acquisitions, the BVA Family and infas, so we are in France, or businesses in Italy -- so that business is growing. And also PRS IN VIVO, you may remember, this is assessing packaging. With PRS IN VIVO, we have a significant presence in a number of big markets, including the United States. And so infas, which enables us to have a reinforced presence in Germany and the public sector. Now the public sector, public affairs, now this weighs heavily on growth, several hundred million, but this is negative growth this year, minus 8%. So we're talking about EUR 30 million decline compared to last year, nonetheless. Public affairs is a major strategic asset for Ipsos. We reaffirmed this at Capital Markets Day for a simple reason. With our better understanding of citizens, we have items of background that produce and justify our -- well, not just the recommendations, the insights in line with responses we get from respondents as consumers, our patients, but also taking on board their own background, their opinions. And that, of course, enhances the quality of our surveys. But then this is a resilient business, and that's, of course, the unfortunate side of the -- well, the cyclical dimension of public affairs. This was hit, as you can well imagine, by complex and challenging political situations in our big markets in the U.S., in France, but also in Australia, New Zealand, India. And of course, budget situations and the shutdown in the U.S. certainly didn't help. So significant ups and downs. But in some cases, this business can be countercyclical. And that is, of course, one of the reasons why we keep the business. And then we didn't make the most of that growth potential. Our presence in many countries, a global presence really when you've conducted surveys on major public policies, transportation, health or whatnot, we can inform decision-makers in other countries. And so we can leverage that. Our presence in public affairs in many countries should enable us to relaunch that business. And of course, I didn't want to spend the whole time discussing public affairs. But even though the performance in -- was a bit disappointing. But without further ado, I'll give the floor to Olivier Champourlier, our CFO, who will give you details about the figures for 2025. Olivier. Olivier Champourlier: Good morning, ladies and gentlemen. So as Jean-Laurent pointed out, total revenue for the year 2025 stood at EUR 2.525 billion. Total growth, 3.4%. You have organic growth, 0.6%, scope effects 5.8%, and that is essentially related to the acquisitions, the BVA Family and infas, but also negative currency effects of minus 3%. And that, of course, weighed down on revenue. And that is a consequence of euro's performance vis-a-vis the U.S. dollar and other currencies. Looking at regions, EMEA growth stood at 12%. This is significant growth with a positive impact from acquisitions because the main acquisitions from the previous year, infas and BVA were in Europe, infas in Germany, BVA Family in France, Italy and Britain. Within the EMEA region, organic growth stood at 2%. And that, of course, is a good performance after -- well, in 2025, the growth stood at 5.5%. So within that region, there are several movements. Continental Europe enjoyed a significant growth, upwards of 2% in Germany, in Spain stood at 6%, Belgium 3%. And Eastern Europe, upwards of 10% and driven -- that was driven by Turkey. Same region, you have the Middle East, and this is enjoying dynamic growth, 8%. Nonetheless, it should be pointed out that you have one country with negative growth, and that's France. France suffered a 3% decline. That was mostly due to lower orders from the public sector if you -- and that is, of course, related to fiscal conditions, political uncertainty. But without that, had it not been for that, then we would have had some growth in France. Americas, 0.3% total growth, minus 3.4%. The difference between the 2 is negative FX with the depreciation of the U.S. dollar vis-a-vis the euro. So you have Latin America with sustained growth plus 5%. North America, by contrast, had a slight decline, minus 0.14%. That business in the U.S. was penalized because there was less public affairs business. And as Jean-Laurent pointed out, the shutdown in the U.S. and fiscal budget restrictions had a negative impact and the revenue was down 15% in the U.S. but restated for that, in North America, growth would have been 2%. Some businesses are resilient in the service lines, and that's consumer goods -- on the consumers market. That did well last year. Finally, you have Asia Pacific. You have 2 subregions there. China, of course, is the largest country, the biggest country in that region, and their growth was stable last year. And that in itself is pretty satisfactory in what is actual a challenging and indeed shrinking market. And for the rest of the region, growth was negative, minus 4%. That's Asia Pacific, not including Mainland China, minus 4%, and that was impacted by less business in public affairs in Australia and New Zealand, but also India. There was, of course, a host of elections in 2024. Now if you look at revenue by audience, we have service lines for consumers and clients and employees with a similar growth, 2.1%. That includes mostly understanding the markets and brands, the significance of the advertising market and what are known as mystery customers. Citizens, that includes public affairs then and what we call corporate and corporate reputation, and that had negative growth -- organic growth, minus 8%. The main markets were the U.S. and France that suffered, as Jean-Laurent indicated in an uncertain political environment, the shutdown in the U.S. and fiscal restrictions in a number of states. But a source of satisfaction is the business on doctors and patients that had positive organic growth, 2.4% compared with minus 3% last year. And so we have resumed growth there. That's mostly to do with innovation in oncology, rare diseases and studies on GLP, which concerns the treatment of type 2 diabetes and obesity. That these were growth factors for us. Business on the digital platform also enjoyed significant growth, 27%, but that platform enables us to deliver studies -- service for consumers, and that is the first line on this table. Restating for services to citizens, so the minus 8%. On the private sector, growth was 2.1% and you have to emphasize this, our business with private players remains very satisfactory indeed. Now looking at the income statement, revenue enjoyed 3.4% growth. Gross margin was up 2% so not quite as fast as the growth of revenue. The ratio stood at 68.7%, down 90 basis points compared to last year. Now how do you account for that? There are 2 effects. You have scope effects, and that is the acquisition of BVA and infas. And so this had an impact gross margin to the tune of 60 basis points. Infas is a public affairs business and so not using online platforms. And so the margin there is lower than the group's average. And so that was to be expected. And so no surprises there. At constant scope, we have a decline of 30 basis points decline in gross margin. That's because we have a high cost of data collection. That trend is only temporary. And for the year 2026, we expect -- in fact, we expect that margin rate to improve in line with previous years. Below that, you have the wage bill and SG&A. These were up -- well, because of the acquisitions mostly, but restating for that, that is acquisitions. The wage bill remained stable. So we were able to adjust our cost structure to the scope of our business. And regarding SG&A, that remained stable as well. There are 2 factors there. We kept investing in technology and information technology. So that's a significant increase, but then we were able to offset that with the savings on other items, SG&A items, mostly on offices on rents. There, the tax -- income tax rate was 25% in line with the rate for 2024. The operating ratio is 12.8% compared to 13.1%. It's on a constant ratio -- constant scope, it was 12.3%. So that is because of the acquisitions, but this is in a situation we are trying to keep costs under control. Net profit attributable to the group stood at EUR 240 million. You have -- the earnings per share adjusted is EUR 5.5 per share then. Regarding cash flow, gross operating cash flow stood at EUR 410 million compared to EUR 430 million last year, and that is, of course, in line with the lower operating margin. Regarding change in WCR, that was negative to the tune of about EUR 30 million, and that is for 2 reasons, higher business because the business grew 3.2% in Q4 2024. And also, we had provisions for the bonuses for variable compensation, and that was down compared to last year, and that is the disbursement that will occur in H2 2026. The intangible assets, and that's the CapEx standing at EUR 78 million, up EUR 78 million -- sorry, EUR 78 million, up EUR 9 million compared to 2024. And that is in line with what we told the market. We keep investing in strategic solutions, platforms, panels and generative AI, sorry. Free cash flow stood at EUR 181 million to be compared with an average of about EUR 200 million. So free cash flow is more or less in line, at least close to the average performance of the last 4 years. If you look at below that line on free cash flow, you have acquisitions and financial investments for the year, EUR 178 million, and that is, of course, the acquisitions, the BVA Family and infas again. We bought back some shares to deliver free shares to our employees to the tune of EUR 14 million. Then there was dividends paid about EUR 80 million. And regarding financing operations, there's an increase in that, about EUR 100 million. And that's -- you have 2 operations there. We issued a bond of EUR 400 million in January 2025. And in June of the same year, we paid back the previous bond, EUR 300 million. So the net effect is EUR 100 million. And then finally, let me conclude with the financial position, the group's financial position. It's an outstanding situation. The balance sheet is sound. Net debt stand at EUR 219 million compared to EUR 57 million last year, but that's because of the acquisitions. The debt-to-EBITDA ratio remains sound at 0.5x EBITDA so above -- way above last year, but that's because of the acquisitions. But regarding gross debt, it stands at EUR 525 million because of the refinancing of the bond, we don't have any short-term deadline. The next one is 2030. And we have undrawn credit lines above EUR 400 million. And so we have, of course, plenty of cash available. Thank you for your attention. And now I'll give the floor back to Jean-Laurent, who will give you a more detailed analysis of our business. Jean Poitou: Thank you, Olivier. So we've discussed 2025. 22nd of January, we discussed the future 2 time Horizons, '26, '28 and the longer out to 2030. We're going to briefly return to that to focus on what it entails both in terms of intervention and actions on our activity in terms of numbers for the current year. Our priority is a return to organic growth by continuing to maintain current margin levels and our prime obsession is that of stronger organic growth than the 0.6% that we've just mentioned. We're in a dynamic industry. So we're continuing to see our clients and the example of our change in our activity, excluding public affairs, continues to demonstrate that in 2025, our clients require ever more capacity to predict, to compare information from several source to inform their decisions, investment -- new products, advertising, new packaging, new points of sale, either physical or digital. So we're in a market that will continue to drive our growth. And for that, we've taken 6 strategic choices that I'll return to briefly. It was a subject of a longer intervention, January 22 that I'll recall here. Firstly, we've decided to retain all the activities that we can cross all our 70 activities and 16 service lines, giving us a clear understanding of the people that we pull and then we provide data on the basis of the surveys to our clients. Secondly, our global footprint because it allows us to take global mandates from key accounts for Ipsos, but also allows us in each and every market to have the insights of that market to know how we pull people in villages, in towns in Peru, how we pull people online in the United States. They're very specific to each market. So our global footprint guarantees the quality of our access to respondents and also the ability to deploy solutions globally. Third, conviction, third belief, we must move ever fast in supplying answers to our clients at a time where we can with a well-crafted prompt, have a first version of a storyboard or an image for an ad campaign. It's -- there's obviously no question of waiting for weeks to know what will be the impact, the possible score of a particular storyboard or image. Fourth convention to do that, we must leverage technology and AI. Ipsos started years back to invest in contemporaneous tech and AI, but it must transform the way we work to achieve this priority of speed. I mentioned respondents and how our local as well as our global criteria was a criteria for access. Human respondents are the basis on which we can then recalibrate synthetic data, human respondent through the millions of people we can pull each and every day of quality and relevance for our clients will obviously continue to improve to invest in our panels to continue to bring in-house our ability to pull people on a regular basis and therefore, grow our proprietary panels. Sixthly, our activity remains centered on data information to our clients, but we must improve our position on value-added services, predictively analyze data, integrate data from varying sources that our clients can get either from social media, their own tools, CRM or surveys we supply them or surveys supplied by other marketplace. So these strict 6 strategic choices are key. But what's important is execution. In 2026, the first thing is to implement in terms of technical solutions of the systems and operating models that we're currently developing to have globally managed services that are managed consistently with the same methods, the same price ranges, the same technology, the same way of processing and retrieving the information wherever we operate. Identification, we have 6 heads of 6 globally managed services, 6 out of 70 is a small proportion, might you say, but in fact, that's several hundred million euros. These are well-established services where these GMS heads throughout the world will be responsible for driving growth and profitability of those services with local teams, not a matter of doing it fully centralized way, consistent with our approach, combining global presence and local relevance with the tools and we invest, and that's where we focus our investment on new tech AI-based solutions so as to recover it to the full DRI that only a uniform approach allies. We invest in the same platform across the board and develop it and deploy it consistently. We managed and leverage the ROI, making the first 6 of these GMSs globally managed services. First 6, once we have an operating model combining centralized management of the service and local rollout, we'll continue. It's but a beginning, we'll have others over and above the 70s. We'll extend it to other products that can be deployed across the world with a more centralized model. Secondly, we must continue to accelerate the rollout of digital and the use of -- by our clients, EUR 140 million, a platform that has a profitability higher than double that of Ipsos growing 40%, but we must do far more. When we look at our regions, the use of Ipsos digital is broadly dissimilar. So we're going to strengthen usage where we consider. We're not maximizing market opportunities with the platform. We'll continue to enrich the solutions based on this platform, allow us to treat specific services, focus groups, quality, brand insights and surveys, a set of solutions simpler and easier, essentials on the digital platform, allowing our clients to access services that they wouldn't be able to access without. And lastly, we'll open Ipsos Digital to new audiences. Concretely today, a client who conducts a survey with our help or directly on Ipsos Digital has access to our panel. We'll be able to connect other sets of respondents, the data of our clients, respondents who are not just consumers, but business leaders to supply trends on B2B or doctors and patients. So we'll open this up through the APIs. Access to panels other than those currently available today on Ipsos Digital, we believe that the accelerating growth of Ipsos Digital is a priority within our reach this year. Thirdly, around commercial efficiency. Today, we have a growth that is lower than that we're seeking. Obviously, we're going to go all out on empowering all leaders, the business leaders of the main countries of the business lines in our major markets so that each can have 1, 2, 3 clients with costed explicit targets to which is linked their annual performance. We're going to increase empowerment on commercial efficiency. And then there are a number of large contracts, more efficient platforms, greater in-housing, we must be even more competitive on these major contracts. We're also going flat out on what we have to retain that in terms of renewals to leverage the contracts that we don't currently own. So commercial activity on those major contracts. And then with the economic equation of having a local development team for the smaller accounts, we will bolster our activity, continuing to conquer new logos with business development teams where that is justified. So with that, we should rely on our heightened commercial efficiency to drive organic growth. But none of that is possible without the strengthening, as I mentioned, of our tech capabilities and to leverage opportunities open to us with AI. So we strengthened our management team with the appointment of Nathan Brumby as Chief Platforms and Technology Officer of Ipsos in charge of all our tech developments and solutions of data processing and AI with 2 simple priorities. On the one hand, continue to ensure that all tools where we've already invested major differentiating factor for Ipsos some more widely used where they can be. It's not the case currently today. And secondly, by investing in solutions, which for the service lines are AI-based solutions to reach our speed target to automate far more than is the case today. Our production chains speed because we said that tech should allow us on our production chain to accelerate and ensure, as we said at the CMD, responses provided real time for others, less than 48 hours. It's an upheaval. It's a radical shift in the way we work and the tools that we use. Obviously, it's not going to have at the drop of a hat. This is going to be -- it started in 2026. It won't add in '26. It needs to be broken down service focus where the speed factor is key for our clients, where our automation capacity must be leveraged rapidly. And so we've broken down and separated this speed requirement over several years by leveraging our platforms, reinventing our production chain with agents that can automate tasks done by our teams and by rethinking the way we work around many of our major services. For that, of course, we're capitalizing on the strengths that remain, our people, clients and innovation. I've been in professional services for some 10 years. We have teams that measure the employee engagement rate, do that for the clients, sometimes for us. 76% engagement rate is far higher than the average engagement rate that we're seeing at 72%. That's a benchmark. We have people who have a passion for what they do. They're committed. And then we have loyal clients over all clients spending at least EUR 1 billion so that we supply insight data production services. There's one in 100 who leaves us every year. So we have a churn rate of our client base that's very low. Lastly, innovation. [ GRIT ], an organization that looks at the various market player point named Ipsos, the most innovative company in the sector. We see this importance of innovation at this turning point of market surveys. It's absolutely critical to have this competitive edge brought to us by innovation on playing to these strengths, we're reaffirming our ambition to make Ipsos the world leader on actionable insights in which our clients take major decisions, product innovation, advertising, commercial rollout with a high impact and AI-based. What does that lead to in terms of the number? These are the targets in our CMD average growth '26 to '28 between 3% to 4%, accelerating in the out years, '29 to '30 to exceed 5%, operating margin of 13.5% in 2028 that must exceed 14% in the following period. Free cash flow cumulative over those -- over the order of EUR 1.4 billion, coupled with our low leverage that Olivier mentioned, our capacity to mobilize debt. If we need to invest primarily on acquisitions, many on solutions and tech accelerators, but also on our panels and acquisitions closer to Ipsos, EUR 1.2 billion that we plan to mobilize over 5 years. In 2026, our organic growth outlook is in the range of 2% to 3%. So we're embarking on this trajectory that will lead us to an average organic growth between 2% and 3% over the next 3 years. Operating margin of the order of that achieved in 2025. Turning now to the other commitment made at the CMD, an increased return to shareholder of 40% to 50% shareholder return of adjusted diluted EPS. This return will comprise 2 parts: one, an increase of our dividend per share, EPS adjusted diluted at EUR 2. But in addition, we consider that we have the ability without changing the trajectory that I've just mentioned, investing in acquisitions and in our tech and panel to have a share buyback program cancellation, which will be submitted to the AGM in May of EUR 100 million in 2026. So those are the main outlook points that I wish to share with you before opening up for Q&A with 2 items on our agenda, 16th April for the Q1 results and May 20 for our Annual Shareholders' Meeting. Thank you for your attention. We'll now take your questions. Operator: Question number one. Emmanuel. Emmanuel Matot: Good morning, gentlemen. My name is Emmanuel Matot of ODDO BHF. I have several questions. Regarding your target for organic growth for 2026, we note a significant acceleration to 3% compared to 0.6% in 2025. Do you believe that this will be for all audiences, all types of audiences? Or are you looking mostly at the Citizens business, which should go back to normal, having suffered an 8% decline in 2025. So are we looking at a year where -- with a sort of steady growth from H1 to H2? Or do you expect H2 to be significantly higher than H1? That's regarding the momentum on revenue. Second question about moving parts and the operating margin expected in 2026. Are you looking at something stable at 12.3%? I expect that is to do with organic growth in revenue, this gross margin where you want an improvement in margin and yet the data collection cost went up in H2 2025. And so was that only temporary? And then I imagine that the acquisitions -- well, they are useful, but they themselves should improve their own performances. And then I was a bit surprised by this share buyback program, EUR 100 million. It's about 7% for the shareholder. What prompted that decision? Unknown Executive: Well, we'll take the question about organic growth. And where is this to occur mostly? Well, we have a strategic plan where we propose to invest in what are known as Globally Managed Services. And so these are businesses to do with the first line of business, namely consumers. And so we expect growth there to accelerate because we've been investing in GMS specifically on that line -- on that business line. On public affairs, we were at minus 8% in 2025, and we certainly hope -- expect the situation to improve. Having said that, that was low ebb at minus 8%. So we are looking at a resumption of growth, at least a better performance in public affairs and stepping up business in the other business lines. Regarding the operating margin, we said it would be higher, well, equivalent to that of 2025. And so 2025, we published a margin of 12.3%. So it should stand at about that. There, again, various factors involved. There were acquisitions and they had dilutive effects in 2025, but the dilutive effects should peter out in 2026 and indeed -- and they should dwindle away in 2027. But we will keep investing. So there will be capital expenditure there. That's, of course, regarding technology acquisitions. And then there will be -- we expect some productivity gains because we will be managing our panels and other instruments to make our tools more productive. Regarding gross margin, historically, well, gross margin has grown over time. This year, of course, it was down because of acquisitions, but there are 2 types of acquisitions. You had infas. Infas is mostly a public affairs business, and there's not much to be gained from synergies. But the BVA Family is a more traditional line of business covering all areas. And so there, we do expect synergies. Indeed, with the BVA Family, we started merging our teams, and we are proposing new solutions and the teams from BVA are joining our organization there. And so we expect gross margin and operating margin in these businesses to be in line with the profitability of the rest of the group by 2027. Regarding the share buyback program, well, if you look at the present share price, this was a good opportunity. But also, we believe that the share price does not reflect the actual value of the company in terms of growth, profitability, the debt ratio and all these factors are not fully reflected in the share price. And indeed, we -- even though organic growth was slightly less than our expectations, we still have a good performance. And so when the share price is low, this is a good time to buy back a significant amount of shares to be canceled. And indeed, that will be proposed to the AGM later this year. On revenue seasonality, what are the expectations for 2026? Well, look, we are engaging in an in-depth transformation of our business, new tools, new ways of working, commercial effectiveness and such like. So we are looking at a 3-year horizon. We cannot break down this. We cannot look at this on a quarterly basis. Unknown Analyst: My name is [indiscernible]. I had 2 questions, a technical question first on digital data, digital twins, new players that are banking on the fact that the digital twins may well replace panelists in the long run. Do you -- are you using that at all? I mean that's the question. And then in view of productivity gains, thanks to AI, Ipsos Digital is growing pretty fast. Why aren't you banking on much higher growth in margin? I mean, you could be more ambitious than that surely. Unknown Executive: Regarding virtual data, we don't want to get into the detail of that, but we have 2 strong beliefs. Number one, of course, AI in general, makes it possible to generate virtual twins or equivalents of individual data collected from actual respondents. So if you have a digital twin of the population, say, patients of that category, all you need to do is ask the question and you get the right answer and you don't need to go out and actually send questions to real people with phone calls or surveys and such like. But that's the theory. Well, one thing, though, is these things are changing slowly but surely. But of course, the actual people change as well. We need to recalibrate things. Some responses will need to be adjusted. And well, you have audiences that are more difficult to access. So we can use virtual twins instead, but we have to control for all that. But at the end of the day, we want precise information because if you launch a new product and the virtual respondent is left behind actual development, well, then our customers is spending money in the wrong place. So we can do this, but we have to rely on actual respondents. We have academic partnerships who are working on that, but cautiously. Regarding the impact on profitability, if you look at 2026, we will be rolling out some of the solutions we have been investing in, but we will need to keep investing to grow these solutions with -- to have differentiated solutions using AI with a broader and broader spectrum of services. So profitability is because, of course, some services such as Ipsos Digital are automated, so profitability increases, but we still need to invest in panels and in other technical solutions. So we are looking at growing margin, and we expect it to grow all the way to 2030. Nonetheless, we have to remain at the forefront of innovation. Eric Blain: Eric Blain from Finance Connect. About the profit margin, you say that the platform has generated 30% growth. What's the revenue of the platform? EUR 640 million. And so with a good profit margin. So that certainly drives the group's margin up, doesn't it? You said that there was dilution effects that these should be -- that would be petering out next year. And so the gross margin at the end should improve, but capital expenditure is remaining stable. So surely, given that, you should do better than last year, not the same as last year. And the second question about EUR 100 million worth of share buyback. Why is this? And if the price -- the share price goes down in spite of that buyback program, will you delist it? And if you look at the profit margin by geographical area, very much like the previous presentations where you had some granularity on margin by territory. Could we have some color on that? Unknown Executive: Well, on question number one, the operating margin in 2026. And that is a bit like the previous question. You have to keep in mind that we are looking here at a trend over 3 years. We have a strategic plan, and we are looking at operating margin of about 13.5% by 2028 and 14% for the years after that. So as early as this year, we have been -- there will be capital expenditure with new solutions, and we do expect this to bring fruition later on. Right now, we are rolling out the plan. Some tools are available. Others will arrive in H2, but we have to be realistic here. These new assets will bear fruition later on, maybe by 2027. So for the time being, we simply would like to confirm that, well, we're pretty confident, at least we expect to keep operating margin the same level as 2025. On the matter of profitability because you are referring to capital expenditure, that increased significantly in 2025 compared to 2024, 18%, up EUR 80 million. So we're looking at growth through innovation here. And so we need to keep investing. That, of course, does eat away at the profit margin. If we look at the payout policy, we are -- well, we repeat what we said, we're looking at anywhere between 40% and 50% of net adjusted income paid back to shareholders through dividends, of course. Having said that, we have no further comments on future buyback programs in the following years and depends on a number of factors. I mean, we do not propose to delist the company. We do propose to remain autonomous and independent. And if you look at a breakdown by geographical area, normally, we do not communicate on that. Eric Blain: But maybe you could at least tell us about numbers in the U.S. or specifically. Maybe you can... Unknown Executive: Well, the U.S. market has higher margins than other territories. But the low dollar is a dilutive factor. Yes, there was an effect on currency effect. You didn't mention. No, we didn't mention it because it's not significant. Operator: [indiscernible] Unknown Analyst: Congratulations for this. A question on the major tech players such as Meta, Google, Alphabet. You mentioned in the past that you were going to generate significant revenue with those key accounts and to be added in your services. Is that still the case today? Could you detail better for us what you're doing for the major U.S. tech clients? Unknown Executive: Yes. Well, coming from a world where I had a lot of dealings with the major tech players, the fact that they're amongst our largest key accounts. This is something that interested me keenly, and it ties in with the question about synthetic data to a certain extent. One of the added values we're bringing is our detailed knowledge over and above the mere processing and presentation of data, the lessons learned and access to real respondents because these tech players have access to the people who access their platform. So each has primarily access to the people who access their platform. We have access to everyone, those who access their platforms and the others. So when it's a matter of pulling their reputation on the market to have access to specific audience segments, well, they rely on our capability. And that's our fifth strategic conviction. It's a major differentiating factor in this important world through its economic and social importance of the major tech that we're very relevant for them. Operator: Questions on the line? The first question comes from Berenberg. Over to you. Unknown Analyst: Jean-Laurent, Olivier, just a few questions from my side. Firstly, could you give us some insights on what you're seeing in terms of activity? Are you seeing a slight improvement over Q4 '25? And secondly, what's the percentage of the utilization of your own panels? And what percentage you're targeting by 2028? And recently, in your presentation, you mentioned GMS. You plan to extend GMS to several service lines. What is the time horizon for that unfolding? And how much might GMS is represented in 2028? Jean Poitou: Well, we're not -- well, we'll be presenting the Q1 figures on April 16, as indicated on the slide. So we have no comment at this stage on the activity for Q1. But on the panel percentage, well, we're not going to disclose on the percentage utilization of our panels, but we have an internalization issue. The proportion of our own panels in the activity will increase by '28 to answer your question, this internalization, in-housing an important effort for us. And then after extension of GMS today, 6 services, which we're investing in specific platforms where we're changing the operating model to manage them globally, we are going to land this model in 2026, continue to extend them in the second half of '26, early part of '27, depending on the speed of change. I haven't modelized in '28 what the percentage will be. But what is clear is that we're going to go for a few hundred million to a growing share that will probably top at that horizon half our revenue. Operator: We have another question on the line. From UBS. Hai Huynh: Hai from UBS. The first one is just a little bit beyond '26, right? Because you guide for 2% to 3% for '26, but the average for '26 and '28 is 3% to 4%. Now Ipsos Digital is already growing 27% this year. So can you help us bridge towards that gap to 3% to 4%? Are you expecting Ipsos Digital to grow even further than the 27% rate? Or where do you see the acceleration to get -- to bridge that gap? That's my first question. And the second question is just how should we think about the pricing and margin dynamics for GMS versus your traditional ad hoc research? And then the third question is on the free cash flow. So you delivered EUR 181 million this year. And in your CMD, you're expecting EUR 1.4 billion to basically fund your acquisitions and your strategy over the next 5 years. So could you help us also explain on where do you expect free cash flow to ramp up? Is that going to be back-end weighted? Jean Poitou: So on Ipsos Digital, indeed, however, remarkable this growth of 30% is it's EUR 140 million. If I just look at the dissimilarity, heterogeneity of usage, and we can beef up the portfolio based on digital solutions. Ipsos Digital will be far higher growth. It's a major focus areas for speed and for obvious economic reasons. On the growth profile and profitability of GMS, that drive innovation through new products, new solutions, new products of our clients based around creativity or the ad segment and behavior analysis. These are sectors that are both today in the portfolio, a few hundred million euros of those 3 broad categories of services that we manage globally, growth and profitability above the Ipsos average. Lastly, on FCF for the next 5 years, yes, we announced an FCF over the next 5 years of EUR 1.4 billion when comparing to what we achieved in '25. You'll see that there's an acceleration pathway versus 2025 to reach that EUR 1.4 billion over the 5-year period. I think that's about it in terms of questions. It remains for me to thank you, and see you on April 16 for the Q1 results. Thank you. Have a great day.
Véronique Bédague-Hamilius: [Foreign Language] [Interpreted] is in line with our WCR and co-development projects, and this reflects operations that are going to be launched at commitment margins and the current market conditions. Our backlog has no longer fallen since the 30th of September. We're being more selective about our operations, and this means that we're replenishing the backlog with quality operations that are robust. Our operating cash flow is positive, EUR 107 million. It should be noted that even without opportunistic decisions, our operating cash flow would still be positive, plus EUR 54 million for the year 2025. I'd also like to remind you that all of our bond maturities in 2025 have been repaid via proceeds from disposals made in 2024, and our liquidity is EUR 588 million. That's very good, which means that we can meet our medium-term maturities, and we can redeploy with selective and profitable operations. The second message is that we have organized a pickup of COP that's now positive at EUR 25 million as compared to losses of EUR 118 million in 2024. So this is an improvement of plus EUR 140 million over that period. The units that have been launched during the crisis that had to be recalibrated, restructured in 2024 are gradually being phased out. They represented 70% of revenue in 2025, and it will be more balanced in 2026. So those bad years are being absorbed. All of the operations being launched today are at the level of our commitment margins. That's an average of 7%, reflecting our product mix. As you know, we have orchestrated a major drive to reduce costs. These are operational and production costs. In 2024, we launched a major savings plan, EUR 100 million by the end of 2026. So we have already achieved EUR 92 million. Nexity is now at the same size as it was 10 years ago, and the market is comparable to that of 2025. So our structure is fully in keeping with market size today, meaning that we can capture the very best business in terms of margins. There are a number of upsides. In particular, we are rolling out a major performance plan to reduce the production costs of our housing units, and this will gradually have a positive impact as we move into new operations. And more broadly, the production costs of housing units on the market is higher than our potential clients' purchasing power. So we need to constantly challenge our cost structure, and we will continue to do this in 2026. 2025 saw a major increase in profitability of services. Our third message is that we've consolidated our leadership role. We recorded 12,000 reservations, residential reservations over the years. So this confirms our leadership position. Our market share is 13%, up 10 basis points. And this means that we are really a leader for buyers, home buyers, which is a very good market. Our commercial performance is better than the market for all of the segments for the second quarter in a row, and Jean-Claude will come back to this in more detail. New Nexity is completely operational. It's organized in a territorial multiproduct and refocused way, focused around the planning, developer and operator model. The business is much simplified and organized around skills that are integrated into our operations. All the assets that don't come under this scope have had tough decisions taken on them. This new organization means that there will be a new generation of leaders essential for Nexity of the future in the Executive Committee. This is key success and confirms that this organization and this momentum are relevant. In Nantes, for instance, we have a major urban renewal project on a former administrative site on the island in Nantes. And this is mixed development project, 28,000 square meters, derisked financial structure. In Tours, we're developing a whole neighborhood, St. Paul with three buildings, including a 14-story tower and student residence. This will bring in more than EUR 100 million of revenue and EUR 8 million of margin. And for the medium-term perspective, the pipeline currently represents five years of business activity with high-quality potential, 42,000 housing units that have had sales purchase offers for them, 3.5 years, and this potential will be maintained. So by the end of 2025, Nexity is a derisked company ready to move into the new real estate market cycle that's opening up. And I'd like to talk to you about how I see this market. It's true that the real estate cycle is still somber, but there are a number of encouraging signals, which would seem to indicate we're on the dawn of an about turn. Political consensus has changed a lot over the course of the last year. Measures to encourage housing, particularly with new status for private landlords reflects this consensus at national level. The new housing law was difficult to get voted, but it was voted, and there is this new consensus. And then there are municipal elections coming up at the moment. And in Nexity, we're looking at this very closely and housing is a key issue in all large towns. These elections means that we'll be able to have a new development momentum with the new teams in place for whom housing is inevitably very important. So Nexity is the leader. It's agile to respond to this new demand. Regarding bulk sales, we've worked on an offering, which takes on board the changing market and demand for smaller housing units with a focus on climate adaptation. Nexity is a historical recognized partners with more than 100 social housing operators, both regionally and nationally. The second key market is that of homebuyers. We're very careful about the equation of location, price, product and quality to the highest standards. In 2026, we will be supporting the new measures of loan rent, which will bring the personal contribution to -- down from EUR 600 to a more acceptable level between EUR 150 and EUR 500. We draw on historical expertise for these products, these investment products and whatever the status, we are going to have to make sure that buy-to-let investment be at the core because it means that People can use bank borrowing to buy a long-term asset, which will bring new value for them and help to create value in the future. And I will hand over to Jean-Claude. Jean-Claude Bassien Capsa: [Interpreted] Good evening, everybody. I'd like to talk about the business activity in 2025. The slide you see here shows the indicators of business activity. I will go through this in some detail. So commercial offer is well suited to the market. It's high quality, and this is key for derisking Nexity. Particularly, we don't have any completed unit stock, and this shows that we've managed the portfolio in a cautious and effective way. 90% of the units that are available are positioned in areas where there's high demand. These are the A, Abis, and B1 areas. This is up 15% points rather compared to 2022 and 17% for those where demand is higher. This reflects good alignment and concentration of demand on the market. Regarding reservations, we have more than 12,000 that were recorded over the year. Nexity is outperforming the market on all market areas in the second quarter in the row. And our market share is slightly up 13%. The volumes are down 10%, but the national market, as Veronique said, is well down 11%. But as far as we're concerned, we notice continuous improvement quarter-by-quarter. Regarding retail sales, two factors. First of all, private investors are not as present because the Pinel scheme was wound up at the end of 2024, but strong momentum for home buyers, up 19% on 2025 with 2,600 units reserved. Regarding bulk sales, as expected, we're seeing that there's been a good pickup in H2 and particularly Q4 with 3,800 units. That's 15% of the bulk sales for the year as a whole in the last quarter. And this confirms the message that we reiterate over and over. There is a seasonal trend for bulk sales, and this shows that. Bulk represented 7,450 units for Nexity. Now if we now focus on the sustained momentum of home buyers, it's up 19% over the year, 2,600 reservations. That's significant in volume. We're back to the precrisis level. Good momentum for commercial units with 100 commercial projects launched for retail sales since the beginning of the year, very targeted and attractive operations. And finally, we are present in areas where there's high demand and low offer, which are eligible to VAT at 5.5% and our capacity to have offerings with good attractive solutions for zero loan schemes, zero-rate loan scheme. And this is all part of our Loan = Rent scheme approach as well. So 14,000 building permits were obtained in 2025. Now looking at the commercial mix, two points. continued good momentum for homebuyers, 21% for reservations, the total. That's up 5 basis points in 2024, and of course, bulk sales, which are more than 60% of the total. Looking at service properties, student hospitals and co-working spaces displayed solid indicators for or Studea, the momentum is driven on the one hand by the growth of the fleet with the opening of four new student residences over the year with service properties of over 17,000 units in 54 cities and record occupancy at 98%. For co-working activities, we continue to see very high occupancies compared to the market at 83% with constant emphasis on improving profitability as opposed to chasing after volume. And finally, on distribution activities, which we recall were very much oriented investor-driven until 2024. reservations are up plus 9% in a private investor market that is down without the P&L, reflecting the agility and the ability of our teams to reposition themselves on other products for distribution. Finally, looking at the pipeline at the end of 2025, this represents five years of business in hand, quality potential of 42,000 housing units that are signed for, namely 3.5 years of revenue, 83% of the potential is in high demand areas, Abis, A and B1. This potential is committed through our commitment committees commensurate with our target of 7%. The backlog accounts for 1.5 years of business in hand. It is stable compared to Q3 and secured to the tune of 48%. We continue to seek selective replenishment of the backlog in order to go towards the margin rate target of 7%. I'll now hand over to Pierre Henry, who will give you the details of our financial performance. Pierre Pouchelon: [Interpreted] Thank you very much, Jean-Claude. Good evening, everyone. First slide here goes over our main -- our key figures that I will go through one by one in the presentation. Let's start off with revenue. New Nexity revenue stands at EUR 2.7 billion, EUR 2.8 billion for the group revenue, down 14% on a like-for-like basis, impacted as expected by the decline in revenue of service -- commercial property of 87%, namely due to the delivery of the major projects in 2024, for example, La Garenne and Colombes. Residential housing accounts for 83% of revenue of the group, down slightly by 5% due to the decline of business since 2022. On service, services, the revenue of service properties is up 9%, mainly due to the pickup of the fleet and very strong occupancy. Distribution until 2024 involved distribution mainly of P&L investment products and had to be repositioned on smaller investments such as student residences in 2025. Now looking at the operating income for the year. what you see here is the return to operating profitability of New Nexity. This is a key point. First of all, the most important thing is for the core activity of the group, restructuring of the margin in residential properties with the launching of new transactions in 2024, which are consistent with target margins and take into account the cost of the works and the production costs in the market in 2025. The second driver is the improvement of the profitability of services with a 13% margin on service properties and a return to equilibrium in the distribution business. The current operating income for New Nexity comes out at EUR 25 million, an improvement of EUR 143 million versus 2024, of which EUR 120 million on the planning and development model that we explained earlier. Current operating income for service properties is up plus EUR 15 million at EUR 38 million, driven mainly by service properties with a margin of close to 13%, which is due to the high level performance on Studea, very high occupancy and a decline in cost distribution is back to breakeven. Net income for 2025 includes a nonrecurring negative result of minus EUR 128 million, reflecting the bookkeeping of the determined action taken over the financial year, seeking to deleverage the balance sheet. Breaks down into three main categories: nonrecurring costs due to the finalization of the disposal plan over the management business and the opportunistic approach, mainly on commercial property in an office -- commercial property market that has significantly declined, in particular, in the Paris region. Cost due to -- arising from the discontinuing of transactions, which were our own decision. Finally, reorganization, and we are looking at deleveraging the group by -- in 2025. WCR came out at EUR 606 million at end 2025, down by almost 30%, minus EUR 226 million on end 2024. The WCR of the Planning act and -- the Residential Planning and Development act business is up EUR 161 million due to the continued cost cutting, greater selectivity in purchasing of land, optimization of the time lines between acquiring land and the first funding commitments. And the decline of EUR 17 million internationally is due to the delivery of the [ Plana resi ] project in Italy. Now on the net debt stood at EUR 278 million before accounting for the increased stake in Angelotti. So meaning down EUR 52 million. This accounts for a decline of 16% on 2024. Net financial debt stood at EUR 328 million, well below guidance, which stood at a maximum of EUR 380 million. As said before, continued deleveraging has been enabled through positive cash flow with a return to profitability continued optimization of the WCR and our investment, our disposals mainly on commercial properties and proper control over our financial costs. The structure of financial debt reflects, first and foremost, gross debt of EUR 914 million, down 17% over one year by EUR 182 million, down 40% over two years. And this has a favorable impact on the cost of debt, which comes out at 2.8%, down 40 basis points. We talked about the debt ratio that came out at 4.9x, ahead of the trajectory of the covenant. Liquidity after redemptions of EUR 321 million in bond maturities in the first half came out at EUR 588 million. And on the right-hand side of the chart, we have the average maturity of our long-term debt. We have given you on this slide, the trajectory of the banking covenant in order to give you a full visibility on our progress on the debt ratio end of 2025. I'll hand over to Veronique. Véronique Bédague-Hamilius: [Interpreted] Thank you very much. To conclude, 2025 was a year of continued deleveraging and of recovery in our operating profitability. As a systemic actor and market leader, we have taken stock of market developments, not only from a cyclical standpoint, but also structural. And we have not waited for the cyclical recovery, but we have launched a deep restructuring of the group. The balance sheet is now in a clearly deleverage financial situation. And management has also prepared and organized the group for structural adjustments in the market, and we are now able to capture all profitable growth opportunities. Through this financial -- this financially more healthy situation and our capacity to exploit a return to growth, we are now at a time where the potential for value creation for Nexity shareholders seems significant, and the group's management is extremely committed to this value creation process. The trajectory of our financial leverage remains a priority. We have proved this in 2025 by getting below a leverage ratio of 5x, well ahead of covenants, and we will continue this in 2026 with the goal being as soon as possible and no later than '27 to achieve a leverage ratio below 3.5x. We will, therefore, continue our financial discipline on net debt, in particular, combined with the gradual increase in EBITDA, notwithstanding a top line momentum, which will still remain under some constraints in 2026. And finally, to conclude, I'd like to share with you our guidance points. We are aiming for improved operating profitability with a return on capital of New Nexity up as well as continued decline in the leverage ratio back to less than 3.5x at latest 2027. Before answering your questions, I would like on a more personal note to thank Jean-Claude, who has been with me for the past seven years and who has decided, as you've seen in our press release, to resign with effect from the next General Meeting. Jean-Claude will continue to accompany me in the transition until then. Jean-Claude has done a remarkable job in implementing the transformation of the group. He has supervised our financial trajectory and has contributed to preparing us for the new real estate cycle. The [ co-MACs ] and myself would like to say how grateful we are to him and to emphasize that he has made a decisive contribution to building the New Nexity. I'm ready to answer. We're ready to answer your question. Unknown Analyst: [Interpreted] Good evening. Congratulations for the current operating income result. That's EUR 160 million up compared to last year despite the decline in sales. I've got three questions, if I may. The first question is, could you go back and explain how you deal -- dealt with the difficult years, the stocks from the difficult years. And what's going to be the share of bulk sales in 2026? The second question relates to the noncurrent income. Pierre Henry, you've explained this a little bit, but I'd like to have more information on this. And then the status of private landlord. If we look at this in some detail, it only really pay off for about 20% of households, but not for the others. Do you think that this will really help to support the real estate development market in France? Pierre Pouchelon: [Interpreted] I think it's by him who's asking the questions if we didn't hear you announce your name, but I think I recognize you. Regarding the previous years where we had to restructure, we did that in 2024. We had to adjust to the previous cycle to sales prices at the moment. These were operations that were launched before 2024. And those years still represent about 70% of margin and revenue. It will be more balanced in 2026. That's the percentage to completion method that we're using. The ones that have been started up, that's buying the divisions, negotiating or starting the building. So all of this is contributing increasingly to the margins in 2024, 2025 and 2026 and will account for the majority in 2027 when we will have cleared finally, the previous cycle. Regarding bulk sales in 2026, we always said that we have a medium-term vision. We don't think that the mix is going to be that different from the previous two years. So as Jean-Claude showed you, about 60% of our sales bulk, and 40% retail. The noncurrent income, there are a number of categories here. First of all, you've got the capital losses. We've wrapped up some management activities. So now we're focusing on operational and distribution. We don't have management anymore. We've got a small subsidiary of property management, but that was -- disposal took place in 2025. So that's been wound up. And then we've got balance sheet risks. So we have disposed of some operations that were underway. We got offers for those. This is mainly commercial business. And in some cases, we've discontinued operations. That was our decision. Our idea was to have a mix of bulk and retail, but the social housing operators backed out, and we didn't want to move more towards the retail market because it's a very tight market at the moment. set for homebuyers. And then there's a reorganization costs. And this relates in 2025, mainly to the winding up of transformation of Nexity with an approach of really having a mapping of the geography, identifying target markets, and we had to take tough decisions about whether to keep our brands, the Edouard Denis brand, for instance, in some geographies, we decided to discontinue that in some areas and move everything to Nexity. These decisions were taken with a special agreement where we had to redundancy agreement for 120 employees. Véronique Bédague-Hamilius: [Interpreted] Regarding the private landlord status, so this is something that one could discuss at great length as compared to the P&L scheme. I think that it does have some potential. You can make more savings, the higher your marginal tax rate, obviously. But it's still got a lot of potential for many households because it generates a real incentive. We can see our clients are showing interest. Real estate investment is not just driven by tax incentives, although that's significant in the decision, but deciding to invest in property is also to generate some income. And when people retire, they often think of doing that. It's the only way to set up capital by borrowing, and it's also something you can pass on to your children. And it's a kind of life insurance policy. If something happens to you, well, you've invested in real estate, in property, and that is then handed on to your children, grandchildren. I don't think it's going to have the same impact as the P&L scheme, but it will have a significant impact. And that will begin to pan out around June and July because the banks who are the main sources that distribute to this will have to get themselves organized. But don't underestimate the value of this scheme. Jean-Claude Bassien Capsa: [Interpreted] I see a written question from [ Cristian Rastasanu ], which relates to the reservation trajectory. And it mentions the fact that at the beginning of 2024, our objective was 14,000 units, and now it's 12,000 units. Do we have additional adaptation measures planned for Nexity given that trajectory and also the whole issue of the momentum on the market, which we mentioned at the beginning of these presentations. Going back to the past, don't forget where we've come from. In March 2024, most people on the market thought that we were coming up for a rebound. And everybody on the market got repositioned with that in mind. But actually, macroeconomic events had -- and political events, you're right, had a major impact on that trajectory. We bore the brunt of that as did everybody else on the market. But we did have a cost reduction drive and we stepped it up. And as Pierre Henry has just said, we put in place a streamlining drive for our brands, and this led to a reduction in our business scope, particularly for Ecuador. Regarding the outlook, I think we need to be perfectly clear on this. Veronique has made it clear at the beginning. There are some encouraging signs, but these don't show that the market is growing yet. What we see is that there's growing awareness at a political level that housing is a major issue. And this is across the board. And this has given rise to concrete results at a political level, which will bear fruit, but that will take time. And that's the first point. And the second point is that I think you can all see that the municipal elections in France which will take place in March are driven to a very large extent by concerns about housing, and this is bound to have an impact post elections with the new teams in place. Is our size in line with these developments? Pierre Henry said, we're back to the size we had 10 years ago in terms of headcount and units. All of this is more or less in keeping with the situation 10 years ago. So we are in line with the new market situation. As Veronique said, we undertake to take all necessary measures to be able to have complete control of our cost trajectory. We need to do that. We have to be -- have that discipline because the market is that households do not have sufficient purchasing power to buy housing or to rent housing. And so we're going to have to face cost reductions. Pierre Pouchelon: [Interpreted] We have further questions. Maybe I'll try and answer those. We have one here about the minus EUR 130 million for service properties. On the opportunistic decisions on the equity method, we have one project impairment under the 2025 consolidated financial statements because we -- on commercial property projects, we do not want to have WCR at risk, and we have a partner here, and we have aligned on that, and we have reflected this in our 2025 financial statements and this will be disposed of in 2026. On the trend in reservations, but as Jean-Claude has recalled, and I think for the first quarter means nothing for a developer. This has to be emphasized. And regarding retail sales is stable on last year. For bulk sales, it's too early to make a forecast because, as you know, there are very strong seasonal effects, and we will look at this again in April when we release our results, but we're in line with what we did in 2025 at this point. And on clarification of guidance, well, clearly, we're looking at an improvement in improved profitability, improved margins, in particular in residential property because that's where the margins have to improve. Revenue will decline in 2026 because this is a mechanical effect due to the decline in reservations. And the turning point will probably be in 2027. So this guidance means that we are focusing on improved operating profitability, in particular for our core businesses and the development margin and together with a decline in the debt ratio to get to the 3.5x debt ratio as soon as possible, and we are on a positive trend there. Next question from Christophe Chaput from ODDO. you may go ahead. Christophe Chaput: [Interpreted] I hope you can hear me well. First of all, I'd like to go return to the disposal of assets in Slide 25. you were talking about EUR 54 million. Just to be clear, the sound is very poor as the interpreter. Looking at operating cash flow, EUR 107 million. This includes the minus EUR 54 million further to the disposal. And we see this in the WCR in -- on Page 26. Well, in the EUR 107 million without including the EUR 54 million arising from the disposal at the end of the year. So put otherwise, as Veronique said, restating the investments, the cash flow stands at EUR 57 million. That's right. Okay. Looking at the guidance, you have been speaking in 2026, the decline in the debt ratio. But what about the debt level? Is this going to continue declining the actual mass of the debt load? Pierre Pouchelon: [Interpreted] Well, Christophe, at present, what we're talking about, and this is the message from this release, is that we feel that we deleverage the balance sheet and deleverage Nexity. As you -- so our track record over the past two years means that we are going to be using -- having very strict discipline on net debt, but that's no longer the main topic. What we're looking now is the improved return on capital, improved EBITDA. And over the past two years, we have significantly deleveraged the WCR in residential property and we are now achieving satisfactory WCR and cash flow generation. Nexity now means involved EBITDA and improved EBITDA means improved profitability in residential properties. So we're focused on that. This means ironed financial discipline. And the key point now is generating cash flow and improving operating profitability in our core business, namely in development and planning. Christophe Chaput: [Interpreted] And on improved profitability, the sound is very poor, as the interpret. Cost savings, when can we expect a return to the 7% operating margin? Pierre Pouchelon: [Interpreted] Well, in 2027, 2028, are very much dependent on our capacity to roll out these new transactions in 2026. And the local election are going to be very important for us because we have many projects where we are going to be aggressive, but we're going to be even more aggressive at 23rd of March of this year. Christophe Chaput: [Interpreted] And just an update perhaps on the Carrefour transaction, if I may ask you about that. Pierre Pouchelon: [Interpreted] The Carrefour transaction, we're still looking at three planning permission requests, which we haven't had yet. This -- we still have to wait until after the council elections and 10 planning positions to be submitted in 2026. So significant step-up on all of this after the local elections and Carrefour is very much part of that focus post local elections. And in the forecast for Nexity, both in potential and in backlog, I must clarify that there is nothing at present regarding Carrefour, just to be very clear on that. Since there's no land permit granted, this has no impact on the backlog, and it should be the same in 2026. Véronique Bédague-Hamilius: [Interpreted] There are no further questions. Apparently not. If not, then thank you all very much indeed, and have a good evening. Goodbye. [Statements in English on this transcript were spoken by an interpreter present on the live call.]
Carina Chow: Good afternoon. This is Carina, Head of Corporate Communications and Sustainability at Champion REIT. Welcome to the Champion REIT 2025 Annual Results and Analyst Briefing. Today, our CEO, Ms. Christina Hau; and our Investment and Investor Relations Director, Ms. Amy Luk, will present our 2025 annual results. And after the presentation, there will be a Q&A section. So without further ado, please, Christina. Shun Hau: Thank you, Carina. Hello, everyone. [Foreign Language]. This year, 2026 is the 20th anniversary of Champion REIT. We are the second largest REIT in Hong Kong by market cap at this moment. And over the past 2 decades, we have been adhering to proactive asset management strategy on enhancing asset quality and delivering long-term value for our stakeholders. The property portfolio has grown by an acquisition of Langham Place Office and Mall, unification of ownership of Three Garden Road and the first overseas acquisition in London. And on sustainability, our Three Garden Road has attained the first Quadruple Platinum Existing Building in Hong Kong in 2024, and we will continue our commitment to ESG going forward. So let's look at the 2025 result highlights. The overall market sentiment in Hong Kong has improved, supported by stronger stock market, tourism rebound and interest rate drop, which restore business confidence. The robust capital market is driving solid office demand. Site inspection for Three Garden Road increased by 61% in the second half of the year compared with last year. On retail side, our proactive tenant management is paying off. The sales of our new tenants across different categories in 2025 record a remarkable increase of 80% compared with previous operators. IP-driven pop-up stores tied to major marketing campaigns delivered triple-digit sales growth. That's 8 -- generating 8-digit sales and 7-digit extra income. And on financial management, we continue to adopt a prudent approach and successfully secured a HKD 1.5 billion of banking facilities for refinancing the bank loan due in 2026 ahead of maturity and lower average HIBOR in 2025 has resulted in meaningful interest savings. So I now pass to Amy to walk through the overall financials. Amy Ka Ping Luk: Thank you, Christina. Let's look at the 2025 full year results highlights. While we saw signs of market recovery and stabilization, the overall operating environment remained challenging, given abundant oversupply in the market and also change in consumer behavior. Under this market backdrop, occupancy of our portfolios remained stable and resilient and lower interest expense partially offset the impact of negative rental reversion. For the full year of 2025, total rental income dropped by 9% year-on-year to HKD 1,988 million and net property income dropped by 11% to HKD 1,613 million. Distributable income dropped by 10% to HKD 859 million. And then our distribution per unit dropped by 11% to HKD 0.1263. And looking at our balance sheet, looking at the debt profile, our gearing ratio maintained at a healthy level of 25.4% at the end of 2025. And for the debt refinancing completed in last year, we brought in new lenders into a syndicated loan, and we also secured a new bilateral facility with an existing lender. For debt maturing this year with outstanding balance of HKD 2,285 million as at the 30th December 2025, we took a proactive approach and secured HKD 1.5 billion of bank loan facilities for refinancing ahead of maturity. And we are now in active discussion with lenders for the remaining portion and got positive feedback from our lenders. The lower average HIBOR in 2025 brought 60 basis points drop in average effective interest rate to 3.8% comparing with 4.4% in 2024. This brought a meaningful interest savings, driving down cash finance costs by 13.5% to HKD 557 million. We also obtained inaugural A rating from Japan rating agencies, JCR and R&I last year, affirming our stable capital structure. And turning into valuation, our portfolio value stood at HKD 56.2 billion with unchanged cap rate at the end of last year. The per square foot valuation of Three Garden Road was less than HKD 20,000 per square foot, which is undemanding comparing with the notable transactions of central office. I'll now hand over to Christina to walk through the property portfolios. Shun Hau: Thanks, Amy. And let's begin with Three Garden Road. The improving financial market sentiment has driven up demand for central office, and we observed increasing leasing inquiries from third quarter last year, while second half site inspection increased to -- increased by 61% year-on-year. And we have secured new tenants from the asset management and family office sectors last year. Currently, 67% of Three Garden Road tenant is banking and asset management related. And we adopt a proactive approach in lease renewals and over 75% of leasing expiring in 2026 has been successfully renewed, which enhanced income visibility and occupancy maintained at stable level at 81.6% in the market with abundant supply. The lease maturity profile is now well spread after all these actions in the next years after renewal with our anchor tenants last year. So at Three Garden Road, we are doing more than just providing office space. We are building a vibrant community and ecosystem. Our year-round calendar of festive and wellness event attracted over 6,700 person times. For Langham Place office, the property remains a preferred location for health care, beauty and wellness operators, while lifestyle and wellness tenants accounted for 68% of area as at 31st December 2025. And last year, we have introduced over 10 new wellness tenants as well as other sales services tenants to enhance tenant diversity. And occupancy remained stable at 86.9% as at 31st December 2025. And we continue to solidify our position as a premier wellness hub across 6 dimensions, namely physical, emotional, intellectual, spiritual, social and financial well-being. Our 6D Wellness channel have accumulated 4.6 million views since launch and a social wellness hall at 49th floor of the property held a series of wellness events such as social, sound healing, therapy dog yoga, dance work shop, which were well received by participants. And we also partnered with the Hong Kong Retail Management Association, HKRMA, to introduce the first quality service charter in Hong Kong for beauty and wellness operators with over 90% tenants -- related tenant participate. This sets a new benchmark for service excellence across beauty, health, medical and lifestyle categories. For Langham Place Mall, we continue to reinforce the positioning of the mall as a retail transactor with agile leasing and marketing strategies as the mall celebrated its 20th anniversary last year. Our proactive tenant management captured market trends and brought in up and coming new tenants, including popular IP brands, which resulted in double-digit sales growth in lifestyle segment. Occupancy of the mall maintained at a high level of 99.3%, while rental income was affected by replacement of anchor tenant occupying 13.8 percentage by lettable area, also some softening in tenant sales in particular category. So we adopt stay local trend global strategy by integrating local cultural elements with global retail trends. Last year, we introduced over 30 new tenants, including first in Hong Kong, Chiikawa Ramen Buta, and various tenants across different segments as shown in the slide. The new tenant generated sales of 80% higher than the previous tenant, demonstrating the positive result of tenant mix refinement. Throughout the year, Langham Place Mall delivered a strong and diverse event calendar. We begin with collaboration featuring local artists in emerging brands, followed by a series of fashion-driven activities designed to reinforce the mall's positioning as the leading retail trendsetter. And we also deepened engagement through partnership with global IPs, including Squid Game, Star Wars, Baby Oysters, Chiikawa, Kuromi and finished the year with the debut Noodoll in Hong Kong in the Merry PotatoMAS event. IP collaboration and emotion-driven experiences are popular across different generations. To capture this trend, we partnered with a range of global IPs to deliver differentiated and engaging experience in Langham Place Mall. This brought in pop-up store sales of marketing -- major marketing events recording triple-digit growth last year. Our regular festive season promotion events also continue to strengthen the engagement of our loyalty club members. During the year, our member base grew by 27% year-on-year and member spending increased by 11% year-on-year. So now I will pass to Amy to talk about the sustainability. Amy Ka Ping Luk: Thank you, Christina. On sustainability, we continue to work closely with our tenants and business partners to drive measurable impact across our portfolio. Leveraging on artificial intelligence, we optimized the utilization of chiller plant at Three Garden Road, which resulted in 6.1% reduction in energy usage. Last year, our ESG Gala, the theme innovation, inspiration and integration gathered over 1,000 industry leaders and change makers. Also, our tenant engagement program, EcoChampion Pledge, delivered positive results with 80% of participating tenants formalized their energy targets and action plans. On social aspect, we continue to partner with community organizations to deliver meaningful social impact. Among these efforts on social and community, our ethical consumption pop-up store at Langham Place Mall, which promoted cautious consumptions engaged nearly 20,000 visitors. While we continue our support for the government Strive and Rise program for the third consecutive year, our Christmas celebration event, which connected the community in our Three Garden Road generated 9.7% in social value for each HKD 1 sponsorship. Our sustainability efforts continue to gain prestigious recognition. In 2025, we were honored to receive the GRESB 5-star rating for the third consecutive year, and we are also pleased to be awarded AA+ in the Hong Kong Sustainability Benchmark Index. These achievements reaffirm our commitment to deliver high standards in sustainability. I'll now pass back the time to Christina to talk about the outlook. Shun Hau: Thanks, Amy. Looking ahead, we will continue to adopt proactive strategy to optimize performance across our portfolio. For office, we aim to solidify Three Garden Road's position as a top wealth management destination. Currently, we will diversify tenancy at Langham Place Office to build on its wellness hub foundation, ensuring resilience amid ongoing supply pressure in the office market. For retail, the average daily inbound of Mainland and overseas tourists increased by 11% and 16%, respectively, in 2025, despite the outbound Hong Kong residents remain. The growth in tourist arrival should provide support to the Hong Kong retail market. And we will reinforce the stay local trend global strategy for Langham Place Mall and continue to capture evolving customer trends to refine our tenant mix. At the same time, we will enhance our retail payment offerings to mitigate rising headwinds from online retail. For liability management, we will explore opportunities to broaden our lender base and maintain a balanced portion of fixed rate debt. And finally, we'll further strengthen our role as a super connector and super value adder to create value through deeper collaboration with tenant partners and stakeholders across our ecosystem. And this is the end of our presentation. Thank you. Carina Chow: So let's come with the Q&A section. So please feel free to raise your hand and state your name and company. Xinyuan Li: So this is Cindy from Citi. Three questions from me, please. The first one is on your 20th anniversary. I'm wondering if you would consider returning to 100% distribution to celebrate that. Second question is on the office enquiries. So obviously, the 60% increase in inflection is very encouraging. I'm just wondering if that would translate into, say, better expectation on occupancy and rents into 2026. What's the current spot rate and what's the expectation for 2026? The third question is actually related to the budget speech today that government mentioned to facilitate brief restructuring or privatization. How is your reading into this? And do you expect Champion REIT to benefit from such in any aspect? Shun Hau: Thank you, Cindy Li. So back to your first question about the 100% distribution. Currently, we maintain the 90%, I think, is quite prudent and suitable because we retain some of the surplus to upgrade our premises by putting up CapEx work to improve the quality, the hardware of our building. So that, of course, is subject to the Board's decision, but we did think this is -- at this level is appropriate. And for the office inspection, yes, it is encouraging. The inspection growth by 61% and it, in fact, did translate into more leases or new leases in 2025, in fact. So we hope to see the momentum continue, and with the momentum of the stock market and financial market and financial performance, wealth management in Hong Kong, we do see the increase in demand, then it will induce expansion needs and also new office setup needs in Hong Kong that require a prime Central location as the office premises. So the current spot rent for Three Garden Road is mid-60s to 70. So yes, regarding the reprivatization is also -- at this moment, we have not touched a point on this issue yet. And yes... Wai Ming Liu: This is Raymond Liu from HSBC. I've got 3 questions. So the first question is about the Three Garden Road. Can management elaborate the change in the passing rent of the project on the office side over the past 12 months? Should we expect similar changes to take place in 2026? This is the first question. And the second question is about the rental reversion. Just wanted to have more idea on this one. Because management commented over 75% of 2026 expiries were concluded. So can management share with us a little bit more color about the rental level that you signed year-to-date compared to the latest passing rent? So the last big question is about the Langham Place Mall. So can management share with us the tenant sales performance year-to-date, seems that the footfall has been very good based on our on the ground observation. Shun Hau: So the change in passing rent in 2025, in fact, is dragged down by the renewal of an anchor tenant, okay, which is around mid-teens of our occupied area. And the rent reversion, we do see there's narrow -- the gap has been narrowed, and we foresee that the rent reversion gap will be continued to remain a narrower situation. So the sales of the Langham Place Mall, when we look into the Hong Kong retail sales, yes, in fact, the last year's 1% growth of total retail sales was mainly driven by the double-digit increase in online sales. So that imposed some impact on the offline sales, which, in effect, has decreased by 0.1%. And within that, in fact, the electronics and also the watches, jewelry, especially the gold price had risen a lot in 2025, right. That the gold rush did impose a huge increase in the sales of the jewelry shops. So -- but however, in Langham Place, we don't have this jewelry shops in our portfolio. So we are not able to capture that same amount of sales increase in our Langham Place Mall. And we have 5% decrease in sales, mainly driven by the high base in 2020 high base back in 2024 on the beauty segment. Mark Leung: This is Mark Leung. I got about 2 questions is regarding on the office. First of all, we saw that the vacant space is roughly less than 10% for Three Garden Road and around maybe 13% for Langham Office. Could you elaborate whether these 4 vacant space are interconnected? What I mean it is a 12, 13, 14 or it's really spread around. I think that's the first question. And then the second question is, have we -- if it is more like a connected big space, have we seen any interest from an anchor tenant? Do you see possibility for anchor tenant take any large space from these vacant 2 buildings in the next 12 months? Shun Hau: I think for our Three Garden Road, some are whole floor, but they are not connected, okay? So for Langham Place, also it's the same situation. Some are scattered. Some -- we have some whole floors vacated by some anchor tenants, okay? But do we think -- do we foresee their needs? Yes. We do, for example, some tenants that require larger in area, new tenants, we have been actively in discussion, but still not yet anything we have -- we can disclose now, yes. Amy Ka Ping Luk: And in fact, last year, we got existing tenant at Three Garden Road taking more space from the financial sector. Shun Hau: Yes. So they expanded a whole floor to set up their private bank section. Percy Leung: This is Percy from DBS. I have 3 questions. First of all is regarding your strategy at Three Garden Road. I understand that inquiries have improved significantly recently. Just wondering what is your leasing strategy going forward? Would you be more -- continue to be more flexible in terms of the rents in order to secure higher occupancy, which will you prioritize more? And also what is the expiring rent for 2026? Secondly, in terms of the Langham Place Office for 2026, could you give us more color regarding the expiry profile? And what's the current renewal process for that chunk? And thirdly, I got a question regarding the Langham Place Mall. I understand that our rental income actually dropped quite a bit, mainly due to the major cinema operator lease renewal as well as, I guess, lower turnover rent. However, when we take a look in terms of the passing rent per square foot is actually higher compared to December 2024. Just want to check what's the strategy... Shun Hau: So for Three Garden Road, I think to maintain higher occupancy is also our top priority because we want to mitigate the expenses of the net property expenses. That means the building management fees, et cetera. So our priority remains the same. We provided flexible leasing terms and also tailor-made solutions. And also we -- last year, we have built manufactured units that were quickly leasing out to cope with the market needs and to cope with those commercial related, family office-related tenants demand. So we continue to do that. So also, we will look into our hardware provisions as well in order to -- for us -- we have kickstarted the toilet renovation in 2022, and we'll complete it in 2027. But we are undergoing a total review and study of our hardware in Three Garden Road, whether there is room for upgrading and improvement to uptick our competitiveness. So that's our strategy. And expiry in 2026 of Three Garden Road is around 80s. So -- and also for Langham Place Office, the renewal is not as -- the early renewal situation is not happening in Langham Place Office because they are operators, they are really using the premises for doing business. So they are like retailers, they would wait and see how their business going. The macro -- they are very sensitive to the macroeconomics and how their business is doing. So they tend to confirm the renewal at closer to their renewal date or the lease expiry date. And that's the usual pattern we saw in the Langham Place Office. And actually, the passing rent as at -- on the retail side, the passing rent as at 31st December of 2025 is higher because of the base rent and the turnover rent at that date, in fact, is doing better than 2024. So that's the reason. Carina Chow: So if there's no further questions, so we could conclude the briefing section today. Thank you for joining us. Amy Ka Ping Luk: Thank you. Shun Hau: Thank you.
Operator: Ladies and gentlemen, thank you for standing by. Welcome to The TJX Companies Fourth Quarter Fiscal 2026 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, February 25, 2026. I would like to turn the conference over to Mr. Ernie Herrman, Chief Executive Officer and President of TJX Companies, Inc. Please go ahead, sir. Ernie Herrman: Thanks, Charlie. Before we begin, Deb has some opening comments. Debra McConnell: Thank you, Ernie, and good morning. Today's call is being recorded and includes forward-looking statements about our results and plans. These statements are subject to risks and uncertainties that could cause the actual results to vary materially from these statements, including, among others, the factors identified in our filings with the SEC. Please review our press release for a cautionary statement regarding forward-looking statements as well as the full safe harbor statements included in the Investors section of our website, tjx.com. We have also detailed the impact of foreign exchange on our consolidated results and our international divisions in today's press release and in the Investors section of tjx.com, along with reconciliations to non-GAAP measures we discuss. Thank you. And now I'll turn it back over to Ernie. Ernie Herrman: Good morning. Joining me and Deb on the call is John. I want to start today by acknowledging our global associates for their excellent work in 2025. I truly appreciate their ongoing commitment to both TJX and our customers every day. Now to an overview of our results beginning with the fourth quarter. I'm extremely pleased with our excellent fourth quarter results. Fourth quarter sales, profitability and earnings per share were all well above our expectations. Overall, comp sales were up a very strong 5% with comp sales strength at each of our divisions. I'm convinced that our exciting assortment of merchandise and great values resonated with shoppers across all of our retail banners this holiday season. Further, our teams did an excellent job transitioning our stores post holiday to the categories and trends that appeal to consumers and I am confident that our merchandise mix positions us well as we start the year. For the full year, overall net sales surpassed $60 billion, making a major milestone for our company. We are even more excited about the future and the global opportunities we see to keep growing our customer base and to capture additional market share by bringing excitement to shoppers with our values. Full year comp sales increased a very strong 5%. Profitability increased significantly and earnings per share grew double digits, all well above our initial guidance for the year. Importantly, we are confident that we attracted new shoppers to our stores in every country that we operate in. I want to again recognize the excellent execution of our teams and the collective efforts of our associates across the company, which led to this terrific performance in 2025. As we begin 2026, the first quarter is off to a strong start. We have many initiatives planned that we believe will keep driving sales and traffic this year. We remain confident that in-store shopping is not going away and believe our focus on offering customers an exciting treasure hunt shopping experience every day will continue to serve us well. Additionally, we are always looking at ways to further improve our in-store shopping environment and remain committed to investing in store remodels and new prototypes that we believe will enhance the customer shopping experience. In fact, I believe that our organization has done such a great job in this area that it has helped drive the remarkable consistency of comp increases across our store base. Availability of quality branded merchandise in the marketplace continues to be outstanding, and we are in a terrific position to flow a fresh assortment of goods to our stores and online this spring and throughout the year. Longer term, we are convinced that the flexibility of our business and our unwavering commitment to value will continue to be a winning retail formula. I'll speak more about our performance and our confidence in gaining additional market share over the long term in a moment. But first, I'll turn the call over to John to cover our fourth quarter and full year financial results in more detail. John? John Klinger: Thanks, Ernie. I also want to add my gratitude to all of our global associates for their hard work and commitment to TJX this year. Now I'll share some additional details on the fourth quarter. As I recap our fourth quarter results, I'm going to speak to everything on an adjusted basis, which excludes the net impact from a litigation settlement related to the credit card interchange fees and the related expenses associated with that settlement. Reconciliations detailing the net impact of these settlement of these settlement-related items on our results can be found in today's press release and on the Investors section of our website. Net sales grew to $17.7 billion, a 9% increase above last year. As Ernie mentioned, our fourth quarter consolidated comp sales increased 5%, which was well above our plan and on top of a 5% increase last year. I want to note that our quarterly comp was trending higher prior to the winter storms that swept across North America at the end of the quarter. Importantly, we saw sales pick up again after the storms passed. Our fourth quarter comp was driven by a combination of a higher average basket and an increase in customer transactions. Further, we saw strong comp sales increases in both our apparel and home categories as we have all year long. Adjusted pretax profit margin of 12.2% was up 60 basis points over last year's 11.6% and well above our plan. Adjusted gross margin was 31.1%, up 60 basis points over last year's 30.5%. This increase was primarily driven by a higher merchandise margin and expense leverage on sales, partially offset by unfavorable inventory hedges. Adjusted SG&A was 19.1%, favorable 10 basis points versus last year's 19.2%. Net interest income negatively impacted pretax profit margin by 10 basis points versus last year. All of this led to adjusted diluted earnings per share of $1.43, up 16% over last year's $1.23 and well above our plan. Fourth quarter adjusted pretax profit margin and adjusted diluted earnings per share were both well above plan. This was primarily due to lower shrink and expense leverage on above-plan sales, partially offset by higher incentive compensation accruals. As for our divisional performance in the fourth quarter, each of our divisions saw comp sales growth of 4% or better and had strong adjusted segment profit margins. Now to our fiscal '26 results. Once again, for our full year financial results, I'm going to speak to everything on an adjusted basis, which excludes the net impact from a litigation settlement related to credit card interchange fees and the related expenses associated with that settlement. Net sales grew to $60.4 billion, a 7% increase over last year. Consolidated comp sales were up 5% and driven by both a higher average basket and an increase in customer transactions. Adjusted pretax profit margin was 11.7%, up 20 basis points over last year's 11.5%. Full year adjusted gross margin was 31%, up 40 basis points over last year's 30.6%. This increase includes a 20 basis point benefit from shrink favorability. We once again saw shrink favorability across all of our segments. I want to take a moment to acknowledge the outstanding efforts of our associates who worked hard all year long to drive this improvement. I'm also pleased to share that shrink is essentially back to our pre-COVID level. We believe this speaks to our culture of working to quickly address issues that come up and our commitment and laser focus on fixing them. Full year adjusted SG&A was 19.5%, 10 basis points unfavorable to last year's 19.4%. Net interest income negatively impacted full year pretax profit margin by 10 basis points versus last year. All of this led to full year adjusted diluted earnings per share of $4.73, up 11% over last year's $4.26. Ernie will talk about our full year divisional highlights in a moment. Moving to inventory. Balance sheet inventory was up 14% and inventory on a per store basis was up 10%. We feel great about our inventory levels and the excellent availability we are seeing in the marketplace. I'll finish with our liquidity and shareholder distributions. For the full year, we generated $6.9 billion of operating cash flow and ended the year with $6.2 billion in cash. In fiscal '26, we returned $4.3 billion to shareholders through our buyback and dividend programs. Now I'll turn it back to Ernie. Ernie Herrman: Thanks, John. I'll cover some full year divisional highlights. I'm extremely pleased with the strong and consistent sales performance across each of our divisions. All of our businesses delivered comp sales growth of 4% or better this year. Importantly, each division drove increases in customer transactions and attracted new shoppers throughout the year. I truly believe our value proposition appeals to a wide customer demographic across our retail banners, which differentiates us from so many other major retailers. I am convinced that each of our divisions is set up extremely well to continue capturing market share around the world for many years to come. At Marmaxx, overall sales for the full year grew to $36.6 billion. Marmaxx's comp sales grew a strong 4% with increases in both their apparel and home categories. Further, comp sales were up across each of Marmaxx's regions and consistent across all customer income demographics. At Sierra, we were very pleased with their performance as they delivered healthy sales growth while accelerating their store openings across the United States. Additionally, our U.S. online businesses continue to add new categories and brands to deliver even more freshness and excitement for our e-commerce shoppers. As to Marmaxx's outstanding -- as to Marmaxx's profitability, adjusted full year segment profit margin increased to an outstanding 14.4%. Going forward, we are very excited about the opportunities we see to open more stores, attract more shoppers and increase sales at our largest division. At HomeGoods, annual sales surpassed $10 billion, a great milestone for this division. Comp sales increased a very strong 5% with broad strength across all regions of the country. During the year, we opened 27 stores for this division, bringing our eclectic mix of home fashions to even more consumers across the United States. As to profitability, HomeGoods' full year adjusted segment profit margin increased to an outstanding 12%. Long term, we see plenty of opportunities for HomeGoods and HomeSense to capture an even bigger share of the United States home market. At TJX Canada, full year sales increased to $5.6 billion and comp sales increased an outstanding 7%. It was great to see consistent and strong performance at all 3 of our Canadian retail banners, which each delivered similar comp increases. Adjusted segment profit margin on a constant currency basis increased a strong 13.8% -- increased to a strong 13.8%. Through our winners, Marshalls and HomeSense banners, we are one of the top destinations for apparel and home fashions in Canada. We continue to see a long runway for growth and are excited to further grow our footprint across this country. At TJX International, full year sales grew to $8 billion and comp sales increased a strong 4% with strength in both Europe and Australia. In Europe, we are the largest brick-and-mortar off-price retailer and believe our size and scale allow us to offer consumers an unmatched mix of merchandise at great value. Further, we are on track to open our first stores in Spain this spring and are excited to deliver our values to more shoppers in Europe. In Australia, sales were once again outstanding, and we continue to open stores across the country. As to profitability, I am extremely pleased with the TJX International division's improvement in 2025. Adjusted segment profit margin on a constant currency basis increased significantly to 7.3%. Going forward, we are confident that we can continue capturing more shoppers in each country that we operate in. We continue to be very pleased with our joint venture in Mexico and minority investment in the Middle East. In Mexico, we've made excellent progress on the merchandising side of the business and continue to see opportunities to further optimize the store assortment. In the Middle East, Brands for Less stores continue to perform well, and they have plans to continue opening stores across that region. We're excited to be participating in the growth of off-price in these regions of the world. Moving on, I'd like to highlight some of the key reasons why we are confident that we can continue to grow our company and gain market share around the world for well into the future. First is our relentless focus on delivering value for our customers every day. Availability of merchandise continues to be exceptional as our team of more than 1,400 buyers source from a universe of approximately 21,000 vendors every year, including thousands of new ones. We have developed very strong relationships with our vendors and believe they look to us to clear their excess inventory and to grow their business and introduce their brands to new customers. This gives us great confidence that we will have plenty of access to goods going forward and that we are in an excellent position to continue bringing shoppers joy and terrific value every time they visit. Second, we believe our strategy of operating stores across a wide customer demographic will continue to serve us well. With outstanding access to good, better and best merchandise, we can curate our stores with an assortment that appeals to various income and age demographics. This allows us to reach a broad range of shoppers, which we believe differentiates us from many other major brick-and-mortar retailers. Further, we continue to see an outsized number of new younger customers visiting our retail banners at each of our divisions. All of this gives us confidence that we can continue to open stores in new markets in each of our geographies. This leads me to my next point, which is the significant opportunity we see to grow our global store base. We see the long-term potential to grow to 7,000 stores with our existing retail banners in our current countries and Spain. We have an excellent track record of opening stores in the right locations in the right markets and are convinced that we will continue to do so. With the long-term opportunity to open 1,700-plus additional stores globally, we see a very strong path ahead for continued global growth. Fourth, we believe we are a retail leader in flexibility. Our business is centered around being flexible, including our buying, our store formats and our supply chain and systems. This allows us to quickly pivot to take advantage of hot categories and trends in the marketplace and get the right goods to the right stores at the right time, which we believe drives shopper excitement when they visit. Going forward, we are confident that our flexibility will allow us to successfully navigate ever-changing macro environments and economic landscapes, just as it has throughout our 50-year history. Lastly, I am convinced that the strength of our talent and our focus on culture have been major contributors to our success and will continue to drive the business for many years to come. I truly believe that the tenure, depth of expertise and off-price knowledge of our teams are unmatched. Further, we continue to invest in teaching and training our associates to develop the next generation of TJX leaders. I am confident that our global talent base and consistency of our culture will be tremendous advantages as we continue our growth around the world. In closing, we feel great about our terrific performance in 2025. We are confident in our plans for 2026, and as always, we will strive to beat them. Our value perception remains very strong. I'm convinced that our focus on value and delivering an exciting treasure hunt shopping experience will continue to bring joy to shoppers around the world. I am so excited about the growth opportunities we see in both the near and long term, and I'm confident we can achieve them. The entire TJX team is laser-focused on executing our business model to grow our top and bottom lines and to continue our global growth and to capture additional market share. Now I'll turn the call back to John to cover our full year and first quarter guidance, and then we'll open it up for questions. John Klinger: Thanks again, Ernie. I'll start with our full year fiscal '27 guidance. We are planning overall comp sales growth of 2% to 3%. For the full year, we expect consolidated sales to be in the range of $62.7 million to $63.3 million, up 4% to 5%. We're planning full year pretax profit margin to be in the range of 11.7% to 11.8%, flat to up 10 basis points versus last year's adjusted 11.7%. Moving to full year gross margin. We expect it to be in the range of 31.1% to 31.2%. This will be up 10 to 20 basis points versus last year's adjusted 31% due to an expected increase in merchandise margin. We are expecting full year SG&A to be 19.5%, flat versus last year's adjusted 19.5%. We're expecting incremental store wage and payroll costs to be offset by lower incentive compensation accruals this year. We're planning net interest income of $76 million, which we expect to delever fiscal '27 pretax profit margin by 10 basis points. Our full year guidance assumes a tax rate of 25.0% and a weighted average share count of approximately 1.12 billion shares. As a result of these assumptions, we're expecting full year diluted earnings per share to be in the range of $4.93 to $5.02, up 4% to 6% versus last year's adjusted $4.73. Lastly, I want to mention that we are evaluating the potential impact of last Friday's ruling on tariffs and monitoring the changing tariff environment. That said, our full year guidance assumes that we will be able to offset the tariff pressure on our business this year. Moving to the first quarter. We're planning overall comp sales to increase 2% to 3%, consolidated sales to be in the range of -- excuse me, $13.8 billion to $13.9 billion, up 5% to 6%. Pretax profit margin to be in the range of 10.3% to 10.4%, flat to up 10 basis points versus last year's 10.3%. Gross margin to be in the range of 29.9% to 30%, up 40 to 50 basis points versus last year's 29.5%. This would be due to an expected favorable inventory hedge comparison to last year and an expected increase in merchandise margin. SG&A to be 19.8%, 40 basis points unfavorable versus last year's 19.4%. This would be primarily due to incremental store wage and payroll costs. We're also planning net interest income of $22 million, which we expect to have a neutral impact to our year-over-year first quarter pretax profit margin. Our first quarter guidance also assumes a tax rate of 23.1% and a weighted average share count of approximately 1.12 billion shares. Based on these assumptions, we expect first quarter diluted earnings per share to be in the range of $0.97 to $0.99, up 5% to 8% versus last year's diluted earnings per share of $0.92. Moving to our fiscal '27 capital plans. We expect capital expenditures to be in the range of $2.2 billion to $2.3 billion. This includes opening new stores, remodels and relocations as well as investments in our distribution network and infrastructure to support our growth. For new stores, we plan to add 146 net new stores, which would bring our year-end total to well over 5,300 stores. This would represent a store growth of about 3%. In the U.S., our plans call for us to add 45 net new stores at Marmaxx, 35 new stores at HomeGoods, which includes 11 HomeSense stores and 24 new Sierra stores. In Canada, we plan to add 13 new stores. At TJX International, we plan to add 19 net new stores in Europe, which includes our first 5 stores in Spain and 10 new stores in Australia. Lastly, we're planning about 540 remodels and plan to relocate approximately 40 stores in fiscal '27. As to our fiscal '27 cash distribution plans, we remain committed to returning cash to shareholders. As we outlined in today's press release, we expect that our Board of Directors will increase our quarterly dividend by 13% to $0.48 per share. Additionally, in fiscal '27, we currently expect to buy back $2.5 billion to $2.75 billion of TJX stock. In closing, I want to reiterate that we are excited about the growth opportunities we see in the long term. We are in an excellent position to continue to invest in the growth of TJX while simultaneously returning significant cash to our shareholders. Thank you, and now we're happy to take your questions. Operator: [Operator Instructions] Our first question comes from Lorraine Hutchinson. Lorraine Maikis: Ernie, can you update us on pricing actions that you've taken? How is the customer reacting to some of the higher ticket prices? And is that reaction any different for different demographics? Ernie Herrman: Great question, Lorraine. First of all, it's all done along with knowing what the out-the-door retails are at competition around us, right? So when we -- on an existing item, if that price is moving around us and we want to ensure that we're maintaining the appropriate value gap, we could take a pricing action where it's changed. Again, it's not -- I want to call out that it's been selective on certain categories or items. Then we have pricing -- when you call pricing action where if you're referring to sometimes our ticket is going up, right, that can also be pricing action related to a change in our mix or you might -- that shows up as maybe an average retail change because our mix is changing. So for example, we, in Marmaxx, for fourth quarter had a lot of better goods at higher prices. That had nothing to do with what we would have had before. It was a change in the mix. And so there, the prices went up on certain items. So it's a combination of a couple of things. We have not seen, I think, Lorraine, when you were asking at the beginning, the -- we have had very consistent success across the board, as you can see from our business, our turns are all representative of our value. Our out-the-door value is still exceptionally strong. We do the -- we always -- and I think I've talked about this before, we do surveys to ensure customer perception of the value is still where -- and in fact, it's actually improved over the last 6 months. And the neat thing about our model is we don't dictate in many cases, the retail change. We kind of follow the market. So when the market moves down or up on an item, we want to maintain the proportional gap in value, exciting gap in value, and we'll adjust and take an action accordingly. So I hope I answered your question there. Operator: Your next question comes from Matthew Boss. Matthew Boss: Congrats on another nice quarter. Ernie Herrman: Thanks, Matt. Matthew Boss: So Ernie, what's your ability to further accelerate your offense globally if we're thinking about this year, maybe to take advantage of disruption in the marketplace, whether that's from tariff volatility and what it's doing to sourcing and supply chains or even the consolidation that's happening at luxury retail? And then I've got to ask my near-term question, which is, could you just elaborate on the strong start to the first quarter? Have you seen any moderation relative to the fourth quarter at any of your segments? Ernie Herrman: That's very good, Matt. Let me start with your first question first and on the offense because, by the way, I can't -- you're like a mind reader here because I was going to talk about some of the things we're doing that I think we're in a mode right now where the consumer is so open to trying new venues as clearly, they've been disappointed in some of their in-store shopping experience or merchandise content at various other retailers. And I believe our teams have taken advantage of that. And let me give you a few things that are offensive plays because this is why when you asked the question, I was thinking, man, this is exactly one of the things I was hoping to talk about. First of all, on offense, we want to continue to drive our top line, right? And so we feel as though the customer is really open to trying other things. So our marketing -- and we talked about this at our last meetings and a couple of times during the year, our marketing teams are very aggressive. We are using marketing as an offensive weapon more than we ever have before. In fact, I don't know if you've noticed, we have a new campaign in HomeGoods that just launched. We have a new campaign in T.J. Maxx that will be -- and in Sierra that we're going to be launching in the near term. We've been doing things like we've had Maxx linked up with the Olympics, had great promotional spots with the Olympics. We are -- on all the fronts, we're using marketing mix modeling methodology there to look at what do we -- where are we driving top line with our marketing approach. This is a very sophisticated approach that I think I've also talked about before, which the teams have been all over the last few years, but they are ramped up on this even greater so in fiscal '27 to continue to look at where we're spending and what the creative is like to try to capture additional market share. Secondly, we are going after brands, I would say, in a more aggressive manner than we also have ever had before. We mean more to the branded vendor community than ever as witnessed by some of the closures you're talking about. So our teams are doing a lot more regular meetings with some of the key brands through various levels of their management with our management. And that's not been something that we're initiating all the time, it really comes from a lot of the vendors because they want to do business with us. And that's across, Matt, good, better and best product. So that's been key. And then the other thing we're -- John mentioned it when he mentioned remodels, store environment, again, all under the heading of playing offense. So you start with marketing, you want the exciting -- I want to get them in the stores. Then when they're in the store, I want to give them the most exciting value mix possible. That's what we're doing with the branded merchandise market. And by the way, availability is off the charts. I think I mentioned outstanding in the -- and I know you guys like to have fun with whatever wording we're using. But today, it's outstanding and off the charts. But in all seriousness, we're having to slow the buyers down to a large degree in every division that we're operating in. So that's telling us something on availability. But store shopping experience, we're very aggressive about testing new remodels -- I'm sorry, new prototypes and being aggressive about refreshing our stores because that is one of the ways -- John and I talk about all the time, that's one of the ways we continue to drive consistent comps across all of our regions and stores in the world. When you have 5,000-plus stores, it would be easy to let some of that investing go by the wayside and you could fall -- you could deteriorate in your comp sales. So also another one we play offense on, again, I love your question, sorry, I'm going on, is store payroll. So we believe playing offense in our store -- I give my -- a lot of credit to our field management, the directors of stores in TJX, all are strong believers in staffing our stores to play offense, get the goods on the floor, take the markdowns aggressively, get the merchandise out where the customers can get at it in a very organized, pleasant shopping experience, get the customers through the register. And I think that's all part of playing offense and it shines against what some of the other retailers are doing today. So I think that sums up offense. John, do you want to? John Klinger: Yes. So on your second part of your question regarding the strong start, again, a lot of what Ernie has talked about here, just the focus on execution, just -- and customers continue to look for value and our store locations are a place that they're very pleased when they come in. And so we're just seeing a continuation of just strong performance. Ernie Herrman: Yes. And Matt, to piggyback on John's -- another thing that we analyze and the marketing team is also terrific at feeding to John and me information on income demographics, age demographics, right, John? John Klinger: Yes. I mean certainly, in Q4... Ernie Herrman: Very balanced. John Klinger: Very balanced. So it was -- we look at basically above $100,000 and below $100,000 in the U.S., and it was the same comp both above and below. And by geography, it was very consistent in the fourth quarter and just very consistent performance across all of our divisions. Ernie Herrman: Another highlight there also is that we skew -- versus the general population, we skew and have been because of some of the new customer acquisitions over the last couple of years, we're skewing a notch younger than the average customer. You take 18 to 34 and age 35 to 54 and 55 plus, we skew a little younger than the general population, which is -- I think, bodes well for our future. Matthew Boss: Best of luck. Congrats again. Ernie Herrman: Thanks, Matt. Operator: Our next question comes from Paul Lejuez. Paul Lejuez: SG&A leverage came in a little bit lighter than I think what you guided to despite higher sales. So just curious if you could talk about the flow-through and maybe what the offsets, what drove less leverage than you might have expected, if there was something to the TJX Foundation or incentive comp, marketing? And then just second, if you could talk a little bit more about traffic versus ticket or transactions versus ticket by segment and how you're thinking about those metrics as the drivers of that 2% to 3% comp assumption for '26? John Klinger: Yes. So yes, on your first question, the Q4 SG&A compared to our guidance is essentially the incentive accrual plain and simple. As far as the traffic and the ticket, both of them were up in the quarter. I would say that across all of our divisions, transactions were up with the exception of HomeGoods, which was essentially flat. Prior to the storm that swept across the U.S. late in January, HomeGoods' transactions were running up. But when I look at the driver, the bigger impact was the basket and within that was average retail that did drive that basket increase. And again, we've seen this over the last couple of quarters. So it's nothing new. We're quite pleased that -- again, that we continue to see customers, the transactions, the customer traffic through our store, to Ernie's point, between of the advertising, the age of the customer, it just -- it's leaning into the product mix that we have in our store and customers are quite happy. Ernie Herrman: Yes, Paul, I think the -- to John's point, and HomeGoods, it was only in Q4. For the year, HomeGoods was still up a little bit in transactions. And I think one of our reasons -- and I think you mentioned what's helping -- what would we be confident in helping the 2% to 3% on the combination of basket and ticket. And I think the route that we look at here, again, we're different from traditional retailers, this good, better, best combination and the teams and myself were, in fact, yesterday with one of the senior leaders at Marshalls, we talked about that balance and the word balance, I always like to leave you with is one of the things that I think our teams do the best, which is they balance good, better, best, but they balance even within those, having the right looks, not having fashion and balance to basic and balance to contemporary looks in home in a department versus basic traditional looks, things like that. The ticket, we don't purposely top down, drive an average retail situation or we do it off the value and then driven by having good, better, best and having a mix within each. And that's what gives us a lot of faith that we can meet and actually exceed our going-forward plans. Paul Lejuez: Got it. And Ernie, if you were to exceed that 2% to 3%, do you think it's more likely to come from more transactions or ticket? Is there one that you would favor and expect to be a... John Klinger: It's hard for us to predict that going forward. It's based on the customers. Ernie Herrman: Yes. Right now, all I would say without talking about going forward is it's just kind of a mix of all of those. There isn't one thing that if you look over this past year, it was -- right, John, it was kind of a mix of ticket and basket and transactions. And I think, once again, like for us, I think that's a good way for us to not plan on any one of those components, maybe a combination of them. John Klinger: As long as we're driving the top line, to us, it really doesn't matter whether it's coming from the basket or the transactions as long as they're both healthy. Ernie Herrman: Right. Paul Lejuez: Got it. Good luck. Ernie Herrman: Thank you, Paul. Operator: Our next question comes from Brooke Roach. Brooke Roach: How favorable was the stronger AUR and margin delivery in the quarter? And then looking forward, can you speak to the drivers of merchandise margin improvement that you're forecasting for the year and the most important areas of opportunity that you see there within the business? Ernie Herrman: All right. John, do you want to take the first. John Klinger: As far as a stronger AUR, we don't parse that out. I mean we basically said when we talked about sales that for the quarter, it was more the basket than the transactions that drove the comp. And within that, it was the average retail that drove that. So we can't really parse out any more of that. And then as far as merchandise margin. Ernie Herrman: Yes. So Brooke, you're asking -- so in other words, are you asking how are we delivering the merchandise margin improvement? Or is that what you're getting at? Brooke Roach: I'm asking what the forward merchandise margin improvement is based on where you see the biggest opportunity? Ernie Herrman: Okay. So well, one of the biggest opportunities is a couple of things going on in the market, which is good for us. First of all, we have the flexibility to bob and weave with a truly glutted market of merchandise, which allows us to wait out which buys are the best buys. So again, when you have 1,400 buyers in all these locations, so many of the buyers can cover so many categories. And the teams -- our merchants are trained to know that we don't have a commitment to have to have anything in stock. So when you operate under that premise, our merchants are able to say, I'm going to go for the most exciting buy for the customer that delivers the healthy merchandise margin at the same time, and we can negotiate it that way. So this is -- and this is really part of the secret sauce where we're different, I think, than many other retailers because we have so many tenured merchants here. As again, I mentioned that in my speech. And we have a university, we have training. And also our buyers are most of the time getting the first call on excess inventories because the market likes to deal with our buyers. They're straightforward. They're courteous, they're good to deal with. They're on -- yes, pay on time, fair. Now take -- so you take those into account, you have a glutted market. By the way, we're in a very good liquidity position as we enter the year. So I'm loving that. So again, we're off to a strong start sales-wise. The only thing that can make that better, which is what we have right now is a really strong liquidity positioning across -- every banner is in good shape on their liquidity. In fact, we've recently talked about that. So that always bodes well. And then setting aside, and this isn't key, is when there's confusion with the whole tariff thing or in and out. And generally, one way or the other, and I think you've covered us long enough to know, indirectly, our buyers are very good at navigating through that. And usually, we figure out a way to benefit in terms of our merchandise margin situation when there's confusion out there, which obviously that's probably going to happen again. So thank you for your question on that, though. I think it's spot on. And I think, by the way, this is how we also drive top line, not just margin because when they -- those buys benefit us both ways, merchandise margin, but they benefit us on driving sales with a more balanced, exciting value mix. Operator: Our next question comes from Aneesha Sherman. Aneesha Sherman: I have a couple of follow-ups on margin as well. The first one is on HomeGoods. HomeGoods versus Marmaxx, the margin gap has widened in recent years. And I know you've talked about the drivers being freight and fixed costs. Do you see an opportunity for HomeGoods to catch up to Marmaxx level margins, especially if we see continued relief on freight and potentially some lower tariffs on Asian source markets? And then a quick follow-up on your comments just now on gross margin drivers. Can you talk about what you're assuming for the non-IMU-related drivers like shrink, operating leverage as well as freight in the next year for your gross margin assumptions? John Klinger: Yes. I want to start with HomeGoods. So we're very pleased with the improvements that we've seen in HomeGoods. So HomeGoods, they leveraged 150 basis points in the fourth quarter, and they've leveraged 110 basis points on the year. So really happy with how they've been able to do that. And they've been able to do that with sales leverage, merchandise margin improvement, which is a combination of the buying, the freight favorability that we've seen come through and of course, shrink. And then the other thing is they've had a lot of operational efficiencies as well that we've seen come through. We're not going to speculate whether they're going to reach Marmaxx levels because Marmaxx continues to go up as well. And so -- but look, they they're doing a tremendous job at improving their pretax profit as they have over the last couple of years. Ernie Herrman: Aneesha, it's -- John and I talked about, but recently, I was with the HomeGoods team, and I think John would second this. They are so driven though to -- we don't put a number on it, but they -- it's funny you asked that question because they are driven to try to get as close to Marmaxx as they can without us putting a number on it. So as witnessed by these last couple of years, the incremental bottom line operating margin in that business has to be, I think, in the industry, one of the highest brick-and-mortar home operating margins, and they're proud of it, but I think there's room to go. But we -- again, to John's point, we're not going to commit to how high is up. I just know they don't -- how do I put it? They don't work to just meet these plans, as you can see. John Klinger: Yes. Operator: Our next question comes from Michael Binetti. Michael Binetti: Like the Olympics content, that was really nice. I'm curious at a high level how you thought about the macro and building the strategy into the macro this year or any differences you think are important versus the past few years when you think about how the consumer has responded to your business with stimulus in the past? Anything that you focus the playbook on to go after that share or whether you thought about drivers to spending like no tax on tips and over time and how that can be incremental? And then I'm also curious on -- when we saw you in December, you were talking a lot about being more aggressive in marketing, not necessarily that you would delever it, but I'm curious, I think you do want to grow that. You've seen a lot of success. Maybe just talk to us about where that plays in the leverage profile this year, if there is an opportunity to delever to go after some more top line? Ernie Herrman: Yes, Michael, great big strategic question on. And really part of what I think when I talked back before when I think it was Matt asking about playing offense, that has -- I think that applies to what you're asking, which is one of the big things we're doing this year, and we really started last year. By the way, when we started expanding into Mexico, for example BFL, we are bullish on the fact that we have the tenure of these teams here that I keep looking and the senior team piece looking at wanting to leverage that more than we ever have before. So we have this experience. We've trained up a lot of succession planned associates that are right behind them that is allowing us to play offense also. I did not mention that earlier when I talked about -- to answer Matt's question. So when John and his team and when we go to look at the financial plans and plan out and we look at years out, we say we have a lot of runway to keep growing TJX. As witnessed in my script, I mentioned just the current banners and countries we're in, including Spain, we have a lot of room, let alone, we have, I think, other room to keep expanding like Mexico and grow that business. And our investment in BFL. But the core business here just has more green space than I think we thought we did. And so I think with the store closures, with the -- I would call it the more -- the softer sales and maybe some of what would have been overlapping customer-based competitors, I think that allows us in the macro, to your question, to look at continuing to take more market share, and that's back to kind of Matt's question about playing offense more. So on all fronts, you're going to see us in a nice way, as we always try to do culturally, continue to be more aggressive, I think, than we ever have before. and driving top line, taking market share, opening stores wherever we think there's the right calculation of transfer sales, but new store opportunity. And I think every division is figuring out ways to do that. And that's kind of the difference. I think you're asking has our outlook changed. It's not radical, but I think it's been tweaked a little in the last couple of years. John, did you want to add anything else or... John Klinger: If the customers through tax benefits have more in their pocket this spring, we're certainly going to -- we're advertising. The advertising is very aggressive as far as showing up where the customers' eyes are. And again, Ernie talked earlier about the product mix, that good, better, best mix appealing to a broad range of customers. We're going to put our best foot forward and hopefully see increased market share. Ernie Herrman: What's been -- Michael, what's been neat is also we've talked about this and you from the meeting a couple of months ago, is our brands are even better for gift giving than ever before. I think they're cooler in terms of -- whether it's HomeGoods or Maxx or Marshalls or T.K. Maxx in Europe, winners and Marshalls in Canada, we are getting more and more of gift-giving, I think, purchases across all the different holidays, too. And I think that goes along with our image on each of the brands continues to upgrade. Sierra, same thing. So I think that is a whole other piece of business that we used to do well fourth quarter and other, but I think we're capturing gift-giving business throughout the year now. Michael Binetti: I appreciate it. Congrats again. Ernie Herrman: Thank you. John Klinger: Thanks, Matt -- Michael. Operator: Our next question comes from Simeon Siegel. Simeon Siegel: Really nice job. Ernie, I appreciate your comments on your own ability to work through tariffs. I was curious if you have any thoughts yet on impacts that the uncertainty might have on the vendors and channel inventory going forward? And then, John, I appreciate the shrink commentary. How do you think about that going forward? Sorry if I missed it. Is it just generally neutral at this point? Or is there anything else to keep in mind? Ernie Herrman: All right, Simeon. Well, in terms of the vendors, and this is so hot off the press. It's hard for me to say it's so early. We're not exactly sure what the vendors are going to do in terms of the looking back, by the way. In terms of looking forward, that's what's going to be really interesting to see if some prices come down on certain items, if tariffs get adjusted on certain categories. And then how does that play out with retail? Again, we don't -- we're very fortunate in our model because we just kind of -- we get to watch what happens at the retail level around us, and we react accordingly. But my guess is there could be some spots if a vendor wasn't doing too well with the category and part of it was due to tariffs, they'll probably take a look at those prices again and adjust their prices down where it makes sense. Provided everything -- the reason I'm hesitant to say anything is we don't know where things are going to actually land long term here. We have some idea as just -- as everyone around us, I'm sure, is watching. But that's kind of the best of our ability to guess right now. John Klinger: Yes. And then just getting on to your question about shrink. So the last 2 years, we've had 20 basis point improvements each of the last 2 years. And we're -- like we said on the call, we're essentially back to where we were pre-COVID. So we've done a lot of work, and the teams have really done an amazing job of creating an environment in the store that is safe for our customers, safe for our associates and also promotes people to shop and not make it a hassle for people to shop. So areas that we've increased our shrink -- or excuse me, our shrink methods have actually given us in many areas an increase in sales. And so over the last year, we did things that, again, we believe improved our shrink performance. Those will be annualized this year. And then currently, the teams are going through all the stuff from last year to see where are some of the other opportunities. We're not taking the foot off the gas here on shrink at all. It's just that now that we're pretty much back to where we were pre-COVID, we're going to continue to look for wins, but I don't think the wins will be as great as they were as we brought it back to where we were pre-COVID. Operator: Our final question of the day comes from Jay Sole. Jay Sole: Maybe, Ernie, I just want to talk about HomeGoods a little bit. Can you just really dive into that the 6% comp. Are you seeing opportunities in new categories? You're talking about so much opportunity buying. I think people always assume you need apparel. But are there other things, whether it's bed, kitchen, bathroom, home, like area rugs, lamps, anything that's adding to the store that's new that's driving that comp that you see more potential just because of everything that the company is doing? Ernie Herrman: Yes. Jay, great question. First of all, I can't give specific category information because that kind of puts it out there as to -- for others to kind of know, maybe they should go at that. However, what I will tell you is it's a very widespread there, which is one reason their business is so healthy across numerous categories. We're an open book. If you go in the store, you will see, and I think where the HomeGoods team has done an amazing job is going after some of the categories that around us, stores have closed in or downplayed. And so there's this opening need for demand in certain categories that the HomeGoods team has gone after because they have a bit of a captive audience now. If somebody wants a certain -- I won't say what the category is, they kind of have to go to home goods. And there's a half dozen of those. And then when you go to basic -- so let me give you basic categories I can talk about that aren't like this isn't a news flash. So if you go to basic bedding, sheets, towels, blankets, comforters, there's less competition out there and nobody touches the home goods values. On utilitarian categories, so whether it's deck, whether it's from picture frames to candles to stationery items, we're kind of a one-stop shop with fashion and functionality at crazy values. And I think the formula, I would say -- and by the way, remember in TJX now, we're over 30% of TJX's home business. HomeGoods, as you know, hit a monumental mark last year at the $10 billion. But John and I always talk about home and TJX is a key strategic advantage for us because we have so many homebuyers that collaborate and are able to put together this very fashion eclectic impulse-driven mix. And the neat thing is in every geography we're in, if you watch all the social media, customers have figured out that we are the most impulse-driven type of home store to shop, which is why I think our home goods shoppers get so excited and find it impossible to only spend $100 when they walk in. So I realize I can't give you as many specifics on the exact categories, but I can tell you, it's very widespread. And I give all that credit in the world to our merchants and HomeGoods and our home merchants across the corporation. Okay. That was our last question. Thank you all for joining us today. We look forward to updating you again on our first quarter earnings call in May. Take care, everybody. Operator: Ladies and gentlemen, that concludes your conference call for today. You may all disconnect, and thank you for participating.
Operator: Good day, and thank you for standing by. Welcome to the Dine Brands Fourth Quarter and Fiscal Year 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. And now I'd like to introduce your host for today's program, Matt Lee, Senior Vice President, Finance and Investor Relations. Please go ahead, sir. Matthew Lee: Good morning, and welcome to Dine Brands Global's Fourth Quarter and Fiscal 2025 Conference Call. This morning's call will include prepared remarks from John Peyton, CEO and President of Applebee's; and Vance Chang, CFO. Following those prepared remarks, Lawrence Kim, President of IHOP, will also be available, along with John and Vance to address questions from the investment community during the Q&A portion of the call. Please remember our safe harbor regarding forward-looking information. During the call, management will discuss information that is forward-looking and involves known and unknown risks, uncertainties and other factors, which may cause the actual results to be different than those expressed or implied. Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release and 10-K filing. The forward-looking statements are as of today, and we assume no obligation to update or supplement these statements. We will refer to certain non-GAAP financial measures, which are described in our press release that is available on Dine Brands' Investor Relations website. With that, it's my pleasure to turn the call over to Dine Brands' CEO, John Peyton. John Peyton: Good morning, everyone, and thanks for joining us today. As usual, today, we'll discuss Dine's fourth quarter and full year 2025 financial results. I'll share some key insights into what we learned in 2025 and how we'll leverage those learnings to extend our strategy in the year ahead, and Vance will then discuss our financial results and 2026 guidance. Our brands' 2025 performance improved compared to 2024, and that was no accident. It was driven by deliberate execution against our clear set of priorities, enhancing the guest experience through operational improvements, strengthening our marketing to better connect with guests and advancing menu innovation and everyday value platforms across our brands. In parallel, we, along with our franchisees, continue to invest in the bricks-and-mortar experience of our restaurants through dual brand openings, supporting Applebee's remodels and improving the look and feel of our company-owned portfolio. These initiatives built trust with our guests and started translating into tangible results with improving unit level performance driven by positive sales and traffic trends and higher guest engagement scores across our brands. This progress came amid a still challenging consumer environment with guests remaining highly intentional about how they spend their discretionary dollars. Value remains a critical driver in that decision-making. Of note, in the fourth quarter, both the casual and family dining categories experienced some softening in comp sales and traffic as we moved into December. Overall, the value mix remained steady for both brands with Applebee's at 34% and IHOP at 20% despite IHOP's value menu increasing from 5 to 7 days. Over the past few years, we've been intentional in evolving how we define and deliver value, ensuring that we have compelling everyday offerings that are available at all of our brands anywhere, anytime. For us, value is not simply price. It's an all-encompassing experience that includes portion size, food quality and most importantly, the overall guest experience. We refer to that as the vibe. And that focus on the vibe, the food, the service, the atmosphere represents a meaningful opportunity to drive traffic and strengthen brand relevance. We believe this approach positions us well for sustained positive performance in 2026 and beyond. And as we look to 2026, we're staying the course. The progress we made throughout 2025 validated our strategy and our focus is on disciplined execution, continuing to drive steady improvement and building on the positive momentum we established. So with that, I'll walk through our financial results. For the full year, we generated $219.8 million of adjusted EBITDA compared to $239.8 million last year. In Q4, adjusted EBITDA was $59.8 million compared to $50.1 million in the same quarter last year. Adjusted free cash flow was $62 million. And in terms of comp sales, Applebee's comp sales were positive 1.3% for the full year compared to 2024's comp sales of negative 4.2%. And in Q4, Applebee's reported negative 0.4% in comp sales. IHOP had full year comp sales of negative 1.5% compared to comp sales of negative 2% in 2024. For the quarter, IHOP posted comp sales of positive 0.3%, driven by positive traffic. So now I'll share some updates across our portfolio, starting with Applebee's. In 2025, Applebee's returned to positive sales growth as we sharpened our focus on value, marketing and the guest experience. While the environment remained competitive, performance was in line with our expectations, underscoring our confidence in the strategy and momentum that we're building. In the fourth quarter, the 2 for platform represented approximately 22% of transactions, supporting both off-premise demand and check growth. The new Grilled Cheese cheeseburger launched in Q4 was our highest selling stand-alone burger ever and our highest selling 2 for burger of all time, reinforcing the strength of the platform. Also, our Ultimate Trio, which we launched in August, remained the best-selling appetizer of Q4, representing approximately 11.5% of transactions. In January, we launched our O-M-Cheese Burger available on both the 2 for platform and also individually at $11.99. This new burger was an instant hit and is now the newest highest-selling burger of all time on our 2 for platform. These launches highlight the momentum of our only at Applebee's menu innovation strategy and reflects strong guest demand for menu offerings that can't be replicated at home. Off-premise was a source of growth in 2025 as guests increasingly chose the convenience of eating with us outside the restaurant. In the fourth quarter and full year, off-premise comp sales increased 6.2% and 6.5%, respectively, with delivery up 10.5% for the year. On the digital marketing and social media front, Applebee's delivered year-over-year growth across key platforms in 2025, outperforming our organic social growth targets. Social media accelerated throughout the year, highlighted by an 84% increase in posting cadence and 107% lift in engagement in the back half of the year compared to the front half. Additionally, Club Applebee's, our data-driven personalization program is driving higher engagement among members. Looking ahead to 2026, we'll focus on core fundamentals that directly enhance the guest experience and drive profitability. Specifically, we're emphasizing manager visibility in the dining room, which is linked to higher guest satisfaction and more consistent execution and improved off-premise order accuracy, a key lever for cost reduction and repeat business. We're confident that the Applebee's strategy is working, and we'll continue to build on this progress. Since the start of the year, we've seen positive sales trends despite the severe weather, which position us well as we look to carry 2025's momentum into 2026. And now for IHOP. In 2025, IHOP's back to Basic strategy delivered meaningful progress and traffic is the clear highlight. Traffic improved throughout the year. And in the fourth quarter, IHOP delivered positive traffic and sales, outperforming Black Box in both metrics. Notably, this performance came during a year when the family dining segment remained under pressure. IHOP outperformed Black Box in traffic every month of the year, and that outperformance accelerated meaningfully in the fourth quarter. This is a strong signal that guests are responding positively to IHOP's approach and breakthrough marketing. In September, we launched the IHOP value menu, an expanded and rebranded version of House Faves, now available 7 days a week. This gives guests greater confidence that they can access meaningful value any day of the week while preserving a balanced menu mix. At IHOP, value is designed to drive traffic, not replace full margin items, and that's exactly what we're seeing. The value menu is drawing guests into the restaurant. And once they're here, guests are also choosing premium offerings such as our breakfast, combos and LTOs, like our pumpkin spice and coffee cake pancakes. As a result, average check comp improved 150 basis points during Q3 to Q4. Off-premise also contributed to IHOP's steady sales growth and a positive 4.5% comp sales increase in Q4. Targeted promotions through third-party supported delivery, resulting in delivery comps that reached low double digits throughout much of the quarter. These efforts extended the reach of our platform through digital channels and allowed us to meet guests where they are. Marketing and digital engagement also kept IHOP top of mind for our guests throughout the year. Social impressions and views increased significantly and overall engagement increased over 300% year-over-year. These results reinforce IHOP's relevance with younger guests and reflect the effectiveness of our investments in social media to reach broader audiences. Operationally, we remain focused on strengthening the fundamentals and in partnership with our franchisee committees, we are constantly evaluating different ways to improve efficiency and execution. Recall that at IHOP, we completed a full rollout of our new POS and handhelds in 2024. These tech enhancements, combined with process improvements supported better throughput and guest flow, delivering a roughly 7-minute or 12% improvement in table turn times versus 2024. At the same time, guest complaints declined for the second consecutive year, underscoring progress in the in-restaurant experience. And although we ended the year slightly below our comp sales expectations, the positive trajectory for IHOP continued into January despite the impact from the winter storm. As we move into 2026, our focus at IHOP is on disciplined, consistent execution, driving traffic through accessible value and culture-driven marketing, protecting margins through balanced menu mix and continuing to improve restaurant operations to deliver an incredible guest experience every day. Now at Fuzzy's, we saw encouraging progress beginning in Q3 that extended into Q4 and rolled into 2026 as different initiatives around our key priorities, improving the technology, engineering a more profitable menu and enhancing the in-restaurant experience started to gain traction. Enhancements to our off-premise offerings, including a revamped online ordering platform and expanded third-party delivery partnerships contributed to modest improvements in sales and traffic, with the brand outperforming the Black Box comp set in sales every month in Q4. Additionally, Fuzzy's expanded its Houston footprint by opening 2 additional Fuzzy's Taco and Mark's fast casual plus prototypes. This new hospitality service model is already encouraging higher beverage attachment and driving a noticeable shift toward premium Taco category orders. And now turning to international. We ended the year with 32 international dual brand restaurants, an increase of 14 for the full year. Dual brands are proven to be an effective, capital-efficient way to expand our footprint and introduce our brand into new markets with meaningful white space across our core international regions of Canada, Mexico, Latin America and the Middle East, we see our dual brand platform as an opportunity to drive international growth over time. And to speak more about development, we accelerated the pace of total gross new openings with 80 new restaurants globally in 2025 versus 68 in the prior year. Restaurant openings remain a key growth lever as we head into 2026. From dual brands and the Applebee's Lookin' Good remodel program to targeted investments in our company-owned portfolio, we're working to strengthen the physical experience of our brands and improve unit level performance. So I'd like to provide an update on dual brands. As we discussed last quarter, dual brands represent a meaningful long-term opportunity for net unit growth. In 2025, we established the foundation, proving out the model, refining the operating playbook and building confidence with our franchisees. The results further reinforce our conviction on the importance of dual brands. As of today, we've opened 32 dual brand restaurants in the U.S., including 3 company-owned locations with an additional 9 dual brands under construction. These restaurants continue to outperform single brand locations, delivering approximately 1.5 to 2.5x higher revenue. We continue to see evidence that the dual brand concept is highly complementary with balanced performance by both brands across all 4 dayparts. At the same time, we're identifying opportunities to streamline operations, including reducing table turn times and refining kitchen layouts that improve throughput and efficiency. Based on feedback from our franchisees, we continue to expect payback periods of less than 3 years. Franchisee interest remains strong and the pipeline is expanding as operators see the benefits of the model firsthand. Based on our current pipeline, we expect to achieve at least an incremental 50 dual brand openings in 2026, bringing us close to 80 domestic dual brand restaurants by the end of this year. As we move into 2026, our focus with dual brands is on disciplined expansion, scaling thoughtfully, applying what we've learned and ensuring we can deliver consistent results as the concept grows. Dual brands are not the right solution for every market, but where they make sense, they are powerful incremental unit growth and profit drivers for us as well as the franchisees. Beyond dual brands, we also made meaningful progress with the Applebee's Lookin' Good remodel program. We ended the year with 103 remodeled restaurants, more than our initial goal, and early results are encouraging with, on average, mid-single-digit lifts in sales when remodels are combined with marketing as well as improvements in operations and the overall guest experience. Refreshing the physical environment remains an important part of improving brand relevance and guest experience. And based on this progress, the remodel program continues in 2026 with the goal of remodeling another 100, if not more, locations this year. Development is an increasingly important part of our growth story. The progress we made in 2025 strengthens our foundation and positions us well to drive steady, disciplined growth in 2026 and beyond. And so now I'll turn the call over to Vance. Vance Chang: Thanks, John. We made meaningful progress in 2025. Applebee's returned to positive comparable sales for the year, and IHOP exited the year with 2 consecutive quarters of positive traffic. We also completed our debt refinancing in June and continue to return capital to shareholders, all while maintaining a strong balance sheet. On the top line, consolidated total revenues increased 6.2% to $217.6 million in Q4 versus $204.8 million in the prior year, primarily driven by the timing of when we took back restaurants from franchisees. This was offset by a decrease in franchise revenues, primarily due to the take back of restaurants and closures. For the full year, we generated $879.3 million in total revenues, which was 8.2% higher than the prior year, resulting from the timing of when we took back company restaurants, partially offset by a decrease in franchise revenues from the restaurants taking back and a decrease in rental income. Excluding advertising revenues, franchise revenues in Q4 decreased 2.8%. For the full year, franchise revenues, excluding advertising revenues decreased 3% due to the decrease in IHOP domestic same-restaurant sales, the company taking back restaurants from franchisees, closures and merchandise sales. Rental segment revenues for the fourth quarter of 2025 decreased compared to the same quarter of 2024, primarily due to lease terminations and the impact of company acquired IHOP restaurants in March of 2025. G&A expenses were $51.5 million in Q4 of 2025, down from $52.3 million in the same period of last year, primarily driven by the recovery of fees from the franchisee. We ended the year with $203.8 million, up from $196.7 million last year due to an increase in compensation-related expenses, predominantly incentive compensation and professional services fees, partially offset by the fee recovery. Adjusted EBITDA for Q4 of 2025 increased to $59.8 million from $50.1 million in Q4 of 2024. The increase in adjusted EBITDA for Q4 2025 includes the timing of national advertising fund benefit. Adjusted EBITDA for 2025 decreased to $219.8 million, down from last year's $239.8 million. Our 2025 EBITDA was unfavorably impacted by $10 million from our company-owned restaurants due to the investments and transitory costs we've discussed previously. Adjusted diluted EPS for the fourth quarter and full year of 2025 was $1.46 and $4.45, respectively, compared to adjusted diluted EPS of $0.87 and $5.34 for the fourth quarter and full year of 2024, respectively. Now turning to the statement of cash flows. We had adjusted free cash flow of $61.5 million in 2025 compared to $106.4 million for the same period of last year, driven by company restaurant operations, including restaurant CapEx and the launch of our remodel incentive program. CapEx for 2025 was $35.6 million compared to $14.1 million for 2024. The higher CapEx includes the cost from our company-owned restaurants, of which 70% is related to deferred maintenance and remodeling costs and 30% is related to dual brand conversion costs. We finished the fourth quarter with total unrestricted cash of $128.2 million compared with unrestricted cash of $168 million at the end of the third quarter. Regarding capital allocation, we returned $92 million of capital to shareholders in 2025 through buybacks and dividends. Due to the significant discount in our stock price, on our Q3 2025 call, we committed to repurchasing at least $50 million of shares during Q4 of 2025 and Q1 of 2026. In Q4, we repurchased $31 million, which was slightly over 7% of our shares outstanding. For the full year, we bought back approximately 2.4 million shares or 15% of our shares. We continue to believe our shares are undervalued and remain committed to our goal. In 2025, Dine System sales were approximately $7.8 billion, demonstrating the scale and size of our brands. Applebee's 2025 same-restaurant sales increased 1.3% year-over-year. Average weekly franchise sales per restaurant in 2025 were $54,300, including approximately $12,400 from off-premise or 23% of total sales, of which 11.8% is from to-go and 11% is from delivery. Off-premise saw a positive 6.5% lift in comp sales in 2025 compared to the same period last year. IHOP's 2025 same-restaurant sales were negative 1.5%. Average weekly franchise sales per restaurant in 2025 were $38,700, including $8,000 from off-premise or 21% of total sales, of which 7.5% is from To Go and 13.1% is from delivery. Turning to commodities. Applebee's commodity costs in Q4 increased by 0.5% and IHOP commodity costs increased by 3.5% versus the prior year. For the full year, Applebee's commodity costs increased 0.1% due to inflation, while IHOP saw a 6.4% inflation, primarily driven by the higher egg prices in the beginning of 2025. Excluding eggs, IHOP's commodity inflation was 3%. Our supply chain co-op CSCS, expects commodity costs in 2026 at mid-single digits for Applebee's and low single digits for IHOP. The primary driver for both brands commodity costs is higher beef prices, including the lapping of favorable beef contracts at Applebee's and the impact of tariffs more broadly on our market baskets. Our franchisee health remained resilient. Our most recent quarter indicates an improvement in both margin percent and dollars for our franchisees, driven by improved sales and cost management. CSCS continues to work across both systems to identify additional cost savings opportunities and support restaurant profitability initiatives through both operational improvements and input costs. In 2025, we implemented projects resulting in over $46 million of annualized savings across both systems, and we continue to partner with CSCS to leverage our scale and make progress on our cross-functional restaurant profitability initiatives. Lastly, our company-owned portfolio remains instrumental in strengthening brand performance and supporting the overall health of our system. Operating these restaurants also helps us maintain a presence in key markets while providing us the ability to reinvest directly in the business, test and refine initiatives and create proof points that can scale across the system, all while maintaining our asset-light business model. At the end of 2025, we operated 72 company-owned restaurants, including 2 new dual brand restaurants we just built, just about 2% of our system. In 2025, we completed 14 remodels and 2 dual brand conversions. Given the positive results we're seeing from these investments, in 2026, we expect to remodel approximately 23 restaurants as well as complete approximately 8 dual brand conversions. While we invest in the physical aspects of the restaurants, we are seeing sequential improvements with key operational scores such as reduced guest complaints and improved table turns since we have taken over the restaurants. Our approach and focus remains the same, which is to improve performance, strengthen brand fundamentals and ultimately refranchise these locations at the right time. Before turning the call back over to John for Q&A, I'd like to share our financial guidance for 2026. On development, we anticipate that we're moving closer towards a period of returning to combined net positive unit growth for our domestic Applebee's and IHOP brands. It's also important to note that the average unit sales of new restaurant openings are greater than older closed restaurants and it's not a 1:1 ratio. For the Applebee's brand, we're expecting 15 to 5 net fewer domestic restaurants. This reflects an increase in gross openings from both stand-alone and dual brand openings, offset by a similar amount of closures as prior years. For the IHOP brand, we're expecting between 10 net fewer domestic restaurants and 10 new domestic openings. This reflects continued growth of stand-alone locations, nontraditional and dual brand locations, offset by expected closures as a result of natural expirations of franchise agreements. In 2026, we're expecting domestic system-wide comp sales for Applebee's to range between 0% and 2%. The comp sales range reflects current trends as well as our ongoing focus on menu and bar innovation, marketing optimization and growth in our off-premise channel. At IHOP, we're expecting domestic system-wide comp sales to range between 0% and 2%. The comp sales range reflects current trends and the continued evolution of our IHOP value menu, check driving initiatives and increased engagement across channels. We're forecasting a G&A range of $205 million to $210 million, including noncash stock-based compensation and depreciation of approximately $35 million. This reflects a slight year-over-year increase primarily tied to investment in our dual brand initiative, given the strategic rationale and strong results we're seeing. On EBITDA, we're guiding to a range of $220 million to $230 million. Our outlook reflects the positive trends in our franchise business and modest improvement in our company-owned restaurants, which is based on our existing portfolio. To the extent portfolio changes, we'll update our shareholders. We anticipate 2026 CapEx to be in the range of $25 million and $35 million, which is slightly lower than 2025. Our CapEx reflects continued investment in our company-owned restaurants, including capital for dual brand conversions. With that, I'll hand it back over to John. John Peyton: Thanks, Vance. I'll close just with a brief recap. 2025 was a meaningful improvement for all of Dine, rooted in strong partnerships with our franchisees, driven by focused priorities across our brands and executed against clear long-term goals to generate value for the future. We will remain disciplined with capital allocation, accelerating share repurchases to capitalize on what we see as a meaningful valuation discount. Given the strong start to Q1, we're optimistic for the year ahead and achieving additional growth, led by improved comp sales, improved traffic and net unit development. And so with that, I will turn the call over to the operator for questions and answers. Operator: [Operator Instructions] And our first question for today comes from the line of Jeffrey Bernstein from Barclays. Jeffrey Bernstein: My first question is just on the comp trends. You seem encouraged by the strengthening fundamentals of both brands. I know both brands fell short of, I guess, the sell-side consensus for the fourth quarter comp, but I'm assuming that's just us perhaps not modeling it very well. I'm just wondering how the fourth quarter compared to your internal expectations? And then just to clarify, I want to make sure that the first quarter, I think you said strong start at both brands despite the weather. So is it fair to assume both brands are running within that flat to plus 2% that you guided to for the full year? John Peyton: Jeff, it's John. Vance will take you through the comp trends in the first quarter. Vance Chang: Jeff, this is Vance. For both of our brands, the momentum that we saw, we talked about in Q3 continue to build into Q4. But as you noticed with the best of the industry, we did experience some temporary softening in December. So that's the inter-quarter trend. But we're now seeing that momentum building back up in Q1 despite the winter storms and both brands have recovered to the pre-winter storm trend of positive trajectory, which allows us to provide the guidance that we just did. Jeffrey Bernstein: Understood. So it's safe to say that both are now positive and within that 0 to plus 2% despite the inclement weather? John Peyton: That's correct. Jeffrey Bernstein: Understood. And then my follow-up, Vance, the share repurchase, you talked about the acceleration in '25 versus '24. I think it was north of $60 million in '25, which, like you said, I think is like 15% of the market cap. I think you had already implied that between the fourth quarter and the first quarter, you're looking at a combined $50 million, which would leave, I guess, $20 million for this first quarter. Just wondering what your plans are for full year '26 with your view that such a significant valuation discount, how we should think about the share repurchase plans for the full year '26? Vance Chang: Jeff, our capital allocation priority is the same. We're going to invest organically to drive dual brand development to drive company restaurant improvement. But a key part of it is capital return, and we are net buyers at this price. So we're going to continue that buyback program as long as we believe there is a discount in our share price versus the price where we think the company should be. Operator: And our next question comes from the line of Dennis Geiger from UBS. Paul Gong: This is Paul on with Dennis. And my first one is just wondering if you guys have noticed any change in consumer behavior by different income or age cohort. And I think I recall last quarter, you guys mentioned there's some higher income shifting in -- some lower income shifting out. Just wondering if you are still seeing that happening in fourth quarter and maybe into first quarter? John Peyton: Paul, it's John. I can answer that on behalf of Applebee's and IHOP because we see very similar consumer behavior in both brands. The way I would characterize the consumer broadly for 2025 is that they were looking for both the value and the vibe. And by value, we mean, obviously, the price of the item, but also the taste, the quality, an abundant serving and most importantly, the vibe, which is a really good service. And we see that trend continuing to '26. In terms of specific consumer behavior, it was pretty consistent through all 4 quarters of last year. The value portion of tickets at Applebee's was about 1/3, and that number was about 20% at IHOP. And you're correct, of all of our cohorts, both brands saw growth in the higher-income guests. The other income categories were relatively stable. And then both brands also attracted new guests in the fourth quarter, which we attribute to our product innovation and our marketing. On the Applebee's side, that would be the Grilled Cheeseburger and the Ultimate Trio via 2 for $25 and at IHOP, the everyday value menu expanding to 7 days a week and all the promotion we had behind that. Paul Gong: Great. And then just on the dual brand openings, I think you guys talked about at least 50 in 2026. And I think the net opening between the 2 brands is about maybe down 25 to plus 5 units. Is that correct? And does that imply that there's going to be about like 45 to maybe 75 total closures? And how should we think about development and closures going maybe a little bit beyond 2026 based on the current projections and pipeline? John Peyton: Sure, Paul, it's John again. I'll take that in terms of the development strategy. And then perhaps, Vance, you can follow up with more detail about the net numbers. So when it comes to development, our strategy the last couple of years has been to make sure that we have multiple products available to our franchisees and to other developers so that we have the right product for the right franchisee in the right market. And at this point, of course, that includes the dual brands. It also includes individual Applebee's and IHOPs. And it includes both new builds and conversions. As we've mentioned in the past, more than 80% of new IHOPs are actually conversions. And so as we look at our total pipeline that's been accelerated by our dual brands, as you referenced, we see an inflection point coming where we get to positive net unit growth sometime in the next 12 to 24 months. And that's fueled certainly in part by the interest in the duals and the pipeline that we're building. Vance, can you speak more specifically to the unit count question and the closures that Paul referenced? Vance Chang: Sure. Paul, good to hear from you. So the way we think about closures, we've said this before, for a system our size, we typically see closures in the 2% to 3% of our portfolio in that range. So you can probably model it the same way going forward. That closure rate hasn't changed dramatically. In fact, it probably in the next few years, it should come down primarily because of, one, the dual brand possibility; two, the natural expiration of the franchise agreement is going to come down over the next few years. So we see that. But aside from that, I think the other side of the equation is opening, so you can net out the math to get to the net numbers you're talking about. And so that's -- for this year, globally, I think we opened 80 restaurants this year, and that number will continue to go up as we build our dual brand pipeline. John Peyton: And specifically, Vance, just to connect that last dot is that the closures are expected to decline because the dual brand is now serving as a mechanism to "save" lower revenue restaurants that might have otherwise closed. But now that they can add the second brand, it puts them back into a healthy space. Operator: And our next question comes from the line of Brian Mullan from Piper Sandler. Allison Arfstrom: This is Allison Arfstrom on for Brian Mullan. Curious what you're seeing at IHOP with the changes on value on the weekend. Is it bringing on the weekend working for franchisees? Or any other color would be helpful there. John Peyton: Allison, that sounds a good question for Lawrence. Lawrence Kim: As in all promotions and programs, we partner closely with our franchisee partners before bringing a program like that to life, and that is in particular, even with the everyday value menu. And as we converted the House phase, which is a Monday through Friday program into the everyday value menu, which launched this past September, we obviously tested this prior in key several markets to understand the incidents on the weekend impact. And the great news is that even on the weekends, our incidents remained at around 10% of total checks even as expanded from Monday to Friday into the weekend. And so in partnership with our franchisee partners, we've continued to maintain momentum of the everyday value menu. We're actually extending it all throughout 2026, and we're excited for the momentum it's bringing, especially in regards to traffic. Operator: [Operator Instructions] Our next question comes from the line of Nick Setyan from Mizuho. Nerses Setyan: In 2025, obviously, there was a big pivot towards value at both brands, which stabilized to accelerated traffic trends. How are we thinking about 2026? Is sort of the cadence of value? Is it enough now? Is there anything that we need to do more, whether it's in value or in addition to value? How are we thinking about incremental comp drivers in 2026? And then the second question is just on the operating cash flow side, any reason why it shouldn't be in line to above 2025 given the EBITDA guidance? John Peyton: Nick, it's John. I'll address Applebee's first and then Lawrence will take IHOP and Vance will take cash flow. So our strategy for Applebee's is to, number one, have fewer promotions in market for longer periods of time. And so in the past several years, we might have 10 to 12 different promotions in a given year. In '26 and at the end of '25, we're focused more on 6 to 8. And our primary message is the 2 for $25 menu, which on its own accounts for 22% of our tickets. We think that communicating that program more consistently and more often is exactly what guests are looking for in 2026, just as they were in 2025. The second component of that is that as we communicate 2 for $25 each quarter, we will introduce a new a new entree and a new appetizer so that we also have exciting new news and innovation along the way. And so as an example, when we introduced the Grilled Cheese Cheeseburger in Q4, that became our #1 selling burger of all time and drove the performance that we saw toward the end of the year before we slowed in December. And in January, as Vance referenced, we introduced the O-M-Cheese Burger, which if you haven't seen it, is a burger cut in half and served in a skillet of bubbling cheese. And that quickly became our #1 best-selling burger ever, blew up on social media and has been a big driver of our performance in Q1. And so our strategy for the year is to leverage 2 for $25, and we have other exciting new entrees like the O-M-Cheese Burger planned for the rest of the year. Lawrence? Lawrence Kim: Yes. And similar to Applebee's, for IHOP, we also, in the same light, have fewer promotions with longer period times in terms of sustaining those promotions. As you know, our current primary messaging is around the $6 everyday value menu, and you're going to continue to see that trend. But as mentioned in a prior call, we are complementing that with our barbell strategy. And this is including other promotions, for example, like our latest bottomless pancake promotion, which we tied in with a very strong cultural moment with fantasy football. But also, we have a great lineup of innovation. And you have to complement that with new news to balance that equation of value plus innovation and bring that excitement and awareness to new consumer bases as well. So we're constantly listening to our guests, looking at different trends. And coming into 2026, we're going to complement our everyday value menu with, for example, a new proprietary coffee because you got to have the best coffee in the world together with the best pancakes in the world. But also, we're going to be innovating around our omelet platform. So this March, we're also going to introduce a new barbecue pulled pork omelet, which we're excited because it's something our guests have been asking for. And then, of course, as we go further into the year, we have a whole lineup of innovation to balance that. But we're staying extremely focused and vigilant in terms of our key strategies of maintaining value as the core and driving that and complementing that together with innovation. Vance Chang: Nick, this is Vance. Good to have you back, man. So for free cash flow -- in this quarter, we -- there were some timing issues. So we actually had to pay 2 quarters of interest expense. And that's part of our -- that's impacting the cash flow. We also had higher remodel incentives. And obviously, you saw the nonoperating part, the CapEx and some of the working capital changes that's impacting this year's cash flow. But we do expect next year to be back on a more normalized basis. And given the higher EBITDA guidance, we expect cash flow to improve next year as well. Operator: And our next question comes from the line of Brian Vaccaro from Raymond James. Brian Vaccaro: Just back to the fourth quarter comps. Could you walk us through the traffic and check dynamics for each brand? John Peyton: Sure, Vance can do that. Vance Chang: So fourth quarter, let me see -- so we had negative 0.4% comp for Applebee's. Check was up about 3% and then the rest was traffic for Applebee's. IHOP comp was 0.3% and then our check was slightly down, call it, flattish, and then the traffic was up. So that's the makeup. Brian Vaccaro: All right. And in the quarter -- or in the year of 2025, the company operations, I think the EBIT loss was about $8 million, which I think was a little bit ahead of your expectations. But I'm just curious, what kind of an EBIT loss have you layered into your '26 EBITDA guidance for company operations? Vance Chang: Brian, so -- basically -- so you're talking about EBIT and then we kind of -- we're thinking about it in terms of EBITDA with a similar trend. But basically, we're expecting company restaurant portfolio to be at a breakeven level for '26. And then 2025, if you're backing out depreciation, company restaurant and backing out some of the onetime stuff, transitory cost type of things, company restaurant portfolio was negative $10 million of EBITDA. So we're expecting to see a meaningful swing in performance. Operator: This does conclude the question-and-answer session of today's program. I'd like to hand the program back to John Peyton, Dine Brands' CEO, for any further remarks. John Peyton: Jonathan, thank you for moderating, and thank you, everybody, for your questions this morning. I'll just summarize with where we started in that we're pleased that 2025 performed better than 2024. We certainly don't think that was an accident. We think it was because both of the big brands focused on marketing and social media with new messages and new plans. Both of them really put the value programs front and center in front of consumers and backed it up with great menu innovation like we discussed today. And we also made great experience in the guest experience in terms of operations and OSAT, which we didn't talk about this morning, but both guests improved their reviews in terms of guest satisfaction. So thank you all for your time this morning, and look forward to talking to you next time. Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.
Operator: Good morning, and welcome to ODDITY's Fourth Quarter 2025 Earnings Conference Call. Today's call is being recorded, and we have allocated time for prepared remarks and Q&A. At this time, I'd like to turn the conference over to Maria Lycouris, Investor Relations for ODDITY. Thank you. You may begin. Maria Lycouris: Thank you, operator. I'm joined by Oran Holtzman, ODDITY's Co-Founder and CEO; and Lindsay Drucker Mann, ODDITY's Global CFO. Niv Price, ODDITY's CTO, will also be available for the question-and-answer session. As a reminder, management's remarks on this call that do not concern past events are forward-looking statements. These may include predictions, expectations or estimates, including statements made about ODDITY's business strategy, market opportunity, future financial performance, customer acquisition costs and potential long-term success. Forward-looking statements involve risks and uncertainties, and actual results could differ materially due to a variety of factors. These factors are described under forward-looking statements in our earnings press release issued earlier today and in our most recent annual report on Form 20-F filed with the Securities and Exchange Commission on February 25th, 2025. We do not undertake any obligation to update forward-looking statements, which speaks only as of today. Finally, during this call, we will discuss certain non-GAAP financial measures, which we believe are useful supplemental measures for understanding our business. Additional information about these non-GAAP financial measures, including their definitions are included in our earnings press release, which we issued today. I'll now hand the call over to Oran. Oran Holtzman: Thanks, everyone, for joining our call today. 2025 was a strong year for ODDITY. We delivered record financial results with revenue, adjusted EBITDA and adjusted EPS all ahead of our plan. Revenue increased 25% to a record $810 million. We delivered record adjusted EBITDA of $163 million, representing 20.2% adjusted EBITDA margin. Across the year, we were able to once again raise our financial outlook every quarter on revenue and profit, and this is despite experiencing challenging user acquisition costs in H2 that drove an increase in advertising spend. Our strong and profitable repeat rates allowed us to once again deliver results ahead of our plans. And we accomplished all of this while investing heavily in our future. Notably, this year, we successfully launched our third brand, METHODIQ, which expands our reach into the medical grade space where we see enormous potential. In addition, we continued our ongoing investments in ODDITY LABS in our tech infrastructure as well as new products and new brands. We believe that our powerful platform, brand and technology, combined with our growth investments, create long runway for us to grow in a big, attractive and profitable category, where we are well positioned to outrun our competition. We finished the year with strong balance sheet position with $776 million in cash and cash equivalents. Even as we work tirelessly to address what we believe is a near-term dislocation in our user acquisition cost, there is no change to our long-term vision, strategy or our commitment to growth. First, the consumer immigration online where our brands maintain leading positions. One of the best indicators of our business health is our very strong repeat sales. In 2025, approximately 70% of ODDITY's revenue came from repeat sales. Customer cohorts repeat behavior remains very strong and continues to increase. 12-month net revenue repeat rates for our 2024 cohort of first purchases increased from the 2023 cohort and remained over 100%. We believe these are outstanding repeat metrics compared with other direct-to-consumer companies and reflect the health of our brands, the quality of our products and the high satisfaction from our customers. Moving to our brands. IL MAKIAGE grew revenue low double digits in 2025 to approximately $560 million. IL MAKIAGE Skin was a highlight as planned and finished the year at approximately 40% of IL MAKIAGE brand revenue, expanding from around 30% of brand revenue in 2024. The rapid success of IL MAKIAGE Skin since its launch in 2022 demonstrates the power of our platform and our ability to leverage our user base and technology to quickly scale new products and categories. International markets were also a key driver for IL MAKIAGE. ODDITY International revenue, the majority of which is from IL MAKIAGE grew 42% for the year. International markets represents 17.5% of overall ODDITY net revenue for 2025 compared with many of our competitors that generate more than 65% of net sales from international markets. SpoiledChild also had a strong year, increasing revenue double digits to approximately $250 million. This is an incredible accomplishment for an online-only brand that just launched 4 years ago and once again shows the power of our platform and ability to scale. We remain excited about SpoiledChild's long-term potential, including new product expansion in beauty and wellness. The launch of METHODIQ, our third brand, was a highlight accomplishment in 2025. METHODIQ is a medical telehealth platform that aims to deliver high-efficacy treatment at scale, starting in dermatology, addressing concerns like acne, hypopigmentation and eczema. It is off to a great start, and we are very pleased to see its initial success. Our early focus on acne hyperpigmentation and color products is showing good traction, and we believe this will be big categories for us. We are seeing good metrics and continuous improvement in our KPIs even as our customer cohorts increase in size. What we see in METHODIQ's app engagement reinforces our view that METHODIQ can uniquely deliver high standard of care for a broad audience and do it with great convenience. When we look at the app down rates, onboard completion, weekly check-in rates and care team engagement, we can see the demand, and we are bullish about how our app technology will drive user compliance satisfaction and success. Moving on to the second focus area of our long-term growth strategy, the consumer adoption of high-performance products that better address their pain points. Our product development pipeline for all 3 brands are focused on bringing the market top performers that we believe beat the competition on efficacy. ODDITY LABS continue to push the frontier of ingredient innovation in beauty and wellness. Over the past 18 months, we have made major strides in our capabilities and infrastructure to improve our work with the goal of shrinking our time lines and improving the probability of success in identifying game-changing molecules. Our efforts in process and infrastructure have driven significant improvements in our productivity, increasing the number of targets we can tackle and allowing us to push projects along faster with greater accuracy. One highlight area is our work in traditional biology, which expands on our strong in silico and in vitro foundations. This work helps us to get stronger reach on the most relevant biomarkers for our products, increases our predictive power of success and does it in a way that is scalable, representative and [ retrigerous ] science. Another highlight is our ability to identify biological targets that can influence a desired effect. We are focused on pain points with large commercial opportunities, including acne hyperpigmentation and aging. And our target list include pathways like reducing melanin production and boosting collagen and elastin. We are leveraging AI agent to map targets and structures and also applying our work in traditional biology to identify novel targets. We recently expanded our capabilities into peptides to add to our small molecule foundations and are working on peptide solutions in areas like acne and aging. This expansion into peptides gives us the flexibility to identify the right modality to address an individual biological target. At the same time, we are working in parallel to improve topical delivery of different activities to ensure they reach the relevant areas in skin and maximize the biological effect. We expect to have 8 products in market in 2026 made with ODDITY LABS molecules. The innovation for METHODIQ is especially exciting, including molecules that cover key categories, including acne, eczema and hypopigmentation and more to come in the future that we are bullish about. Turning to our acquisition costs. We experienced an unprecedented dislocation in our account with our largest advertising partner, which we believe is due to recent changes in their algorithms that slightly diverted us to less desirable auctions and traffic at abnormally high costs. These changes resulted in significant abnormal increases in our new user acquisition cost for ODDITY that are not correlated with the market or our historical experience. We have never seen anything close to those acquisition costs, not in ODDITY and also not in other beauty advertisers. This elevated acquisition cost is severely hurting our ability to acquire new users efficiently at high scale as we normally do in the first half of each year and have done consistently for the past 8 years very successfully. Both IL MAKIAGE and SpoiledChild appear to be impacted by these algorithm changes, although the impact on IL MAKIAGE was more severe probably due to its higher scale. After identifying the root cause in late January, we quickly moved to implement strong remediation actions, primarily around the modern infrastructure that we hope will get us back to the right options and ultimately drive improvement in our new user acquisition with significant progress in Q2 and normalization in Q3 or Q4. These types of algorithm updates are not new and have been ongoing through the years, and we've historically adapted to them. In this case, it was harder than before to identify how these updates were impacting our business, and therefore, it was harder to identify the root cause. We believe we got hit by the algorithm change due to our user acquisition strategy that includes a Try-Before-You-Buy offering, which is a rare in beauty and therefore, may be an [ edge ] case within the new algorithm changes. We believe the algorithm updates impacts on how this platform interprets and weighs the signals associated with Try-Before-You-Buy model, primarily due to its inherent higher return rates and diverted us to lower quality auctions at abnormally high cost disconnected from the market. For more context about the model, Try-Before-You-Buy is designed for the benefit of the consumer by reducing the risk of trying our products online. It is a pro-consumer model that allow us to replicate online the experience of physical stores like Sephora, where consumers can try products in real life and materially reduce the risk of purchase. This model is growing due to its complex execution. We believe it's an edge case and a nonobvious interaction within the platform's new auction dynamics. After assessing the driver of what we believe is hitting us, we quickly moved to fix it. Our remediation actions are designed to reduce Try-Before-You-Buy, down-weighting while preserving the ability for new customers to purchase products on a trial basis with minimal risk. Important to note, Try-Before-You-Buy isn't a dependency for us. We offer it as a better alternative for consumer, but our agile model allow us to rebalance towards the standard buy offering if we see it is needed. Unfortunately, because we only recently identified the root cause and despite working tirelessly to fix it, we have not had much time to take action, and it takes time to recover. Therefore, we expect negative impact on our 2026 financial results with the most significant impact expected in H1. But I want to be very clear, despite the dislocation in our new user acquisition we are currently facing, we are not changing our model, our strategy or our long-term focus on growth. The main objective of the company right now is correcting this issue and being in a position to immediately pivot back to growth. I want to close with some perspective on this moment in time. Over the past 8 years, we grew from $25 million of revenue to $800 million of revenue despite multiple changes on ad tech side, a prominent one with iOS 14. We have navigated algorithm adjustments by our ad partners in the past, and we believe we will be able to also address the [ chronic ] dislocation. Most importantly, we believe we understand the problem and in a world of complex online auctions, understanding the problem is always the hardest part. We don't see this as a structural issue or a secular disruption as you are seeing in other sectors or a negative macro trend for our category. It is a technical issue. And from here, we believe it is a matter of time and execution to deliver the strong outcomes we have constantly delivered over the past 8 years. And as I said, we believe we have a strong plan in place, and I hope to see normalization in H2. With that, I will turn it over to Lindsay. Lindsay Mann: Thanks, Oran, let's turn to our Q4 results, which I'll refer to on an adjusted basis. You can find the full reconciliation to GAAP in our press release. ODDITY delivered an outstanding quarter to cap off a record-breaking year. We grew net revenue by 24% in the quarter to $153 million. Growth was driven primarily by an increase in orders, while average order value declined slightly year-over-year. The 24% revenue growth we delivered this quarter exceeded our guidance for growth of 21% to 23%. Gross margin of 70.5% compressed 220 basis points year-over-year and exceeded our guidance for gross margins of 69%. The delta versus our outlook was driven in part by product mix. We delivered adjusted EBITDA of $13 million in the quarter and adjusted EBITDA margin of 8.2%, above our guidance for adjusted EBITDA of $10 million to $12 million. Adjusted EBITDA margin compressed by 410 basis points year-over-year due to planned investments for future growth, including the METHODIQ brand launch, ODDITY LABS and Brand 4 as well as higher media costs. We delivered adjusted diluted earnings per share of $0.20 compared to our guidance of between $0.11 and $0.13. Our adjusted EBITDA and earnings per share excludes approximately $8 million of share-based compensation. Turning to some highlights for the full year of 2025. We grew net revenue by 25% to $810 million with double-digit growth from both IL MAKIAGE and SpoiledChild. This 25% growth is ahead of our long-term algorithm target for 20% sustained top line growth. Net revenue growth was primarily driven by an increase in orders, while average order value increased slightly year-over-year. Gross margin of 72.7% expanded 30 basis points year-over-year, driven by cost efficiencies. We delivered adjusted EBITDA of $163 million. Adjusted EBITDA margin of 20.2% is consistent with our 20% long-term earnings algorithm target. And that's despite our planned investments in future growth initiatives, including METHODIQ brand launch and ODDITY LABS and despite increased advertising costs. Advertising costs increased approximately 50% year-over-year, reflecting growth investments in international markets and METHODIQ as well as higher acquisition costs for IL MAKIAGE and SpoiledChild. We delivered adjusted diluted earnings per share of $2.21. We exited the year in a strong liquidity position, including $776 million of cash, cash equivalents and investments on our balance sheet. The buildup in reserves in 2025 was driven by our successful exchangeable note offering and free cash generation of $84 million for the year. Free cash flow in the fourth quarter was negatively impacted by approximately $19 million of increased inventory due in part to new inventory investments in METHODIQ on top of our seasonal inventory build ahead of the Q1 selling period. We amended our credit facilities in January of 2026 to expand our borrowing capacity to $350 million. These facilities remain undrawn. As for potential uses of cash, we believe repurchasing our stock is attractive at recent share prices and intend to opportunistically return cash to shareholders through buybacks. There's $103 million remaining on our previously announced repurchase authorization. As Oran discussed, we experienced a significant increase in our new user acquisition spend Q1 to date. The timing of normalization is uncertain, although we're working hard to have this behind us. Our remediation actions have started but are still in early stages, so we're not going to make any predictions on their success. Due to the uncertain timing of recovery, we're not issuing full year '26 guidance at this time, but we'll provide updates to our progress and outlook as we get more visibility. A few things to keep in mind for your models. We expect Q1 sales will decline approximately 30% due to reduced acquisition revenue. We're still spending acquisition dollars today despite much higher CPA, and this is so that we can continue feeding the algorithms the signals needed to reset and normalize. At current CPAs, we are not profitable at first order, and that has material negative impact on our near-term EBITDA. We are, however, still profitable on a 12-month direct contribution margin basis because of the strong repeat we generate from acquisition sales. Based on the expected timing of CPA normalization, Q2 sales are also likely to decline, but it's too soon to determine the magnitude. Q1 and Q2 are historically our largest periods of user acquisition. And from that acquisition, we typically generate significant repeat revenue over the balance of the year. The reduced user acquisition activity today will therefore result in lower repeat sales later in the year, even if acquisition costs normalize. We're managing costs through this period to offset EBITDA pressure but continue to carve out investments in growth initiatives like ODDITY LABS, new brands, product development and our tech infrastructure, and we believe this is the right strategy to set us up for sustained growth if CPA normalizes. With that, I'll hand it back to the operator for questions. Operator: [Operator Instructions] The first question is from Youssef Squali from Truist Securities. Youssef Squali: Maybe dig a little deeper into the algo change. I'm assuming this is related to Google's Andromeda. When did the issue actually start -- when did you start seeing it? Has it -- is it continuing to -- is the trend continuing to worsen? Or has it kind of stabilized? And lastly, Oran, when you talk about the issue being related to Try-Before-You-Buy, does that mean that you guys are going to deemphasize that? Or is there work around it such that you can continue to differentiate yourself through that offering and still maybe rank higher? Lindsay Mann: Thanks, Youssef. We didn't specifically name the advertising partner, but the issue is we first observed that something was different in the second half of 2025, and we did call it out on our November earnings call, but it did get much worse as we entered 2026 and really began to scale our business. And I think at the time, when we've spoken to you, we had started to see some improvement, but it's always difficult for us to get a read on CPA as you go in the holiday quarter because it's just not a typical market. There's a lot of noise. And so as we moved into Q1 and we started to scale, that's when we saw the dislocation. Oran Holtzman: [ H4 ] moving from Try-Before-You-Buy, look, we believe that we can still solve it. We try, as I mentioned, we believe it's pro consumer. We believe it's the right thing to do. But I also mentioned that we can -- that we know how to move to buy like the rest of the industry. I want to say that more than 95% are selling via [ buy so ]. It's not something new, and we know how to do. As for what we do, there are a range of things that we need to identify the issue and working on fixing it. We Try-Before-You-Buy, including Deep Signals Audit, Final UI/UX adjustment, a lot of work on the infrastructure side, building new prediction models, offering adjustments and different audience strategies. We wouldn't sit here today if we didn't think that we can solve it, we try. We would say that we are moving to buy, but the fact that we believe that it's solvable with the current business model. Operator: The next question is from Anna Lizzul from Bank of America. Anna Lizzul: I just wanted to ask on the change or the lack of guide here, I guess, and what you can recover for the remainder of the year, it does seem like an uphill battle. Is it possible to shift this user acquisition really from Q1 or H1 into Q2 or H2? Or will there be more of a delay? And does this change your thinking at all on distribution, just given you are vastly sold on direct-to-consumer, would this make you think at all about going into retail? Oran Holtzman: As mentioned, no change in our strategy. Thank God, this is our strategy. Online is our strategy. Online continue to grow, and there is no change in our plans or no plans to move into retail at this point. We are confident we can go back to growth. We believe it's something that it's a temporary change that happened that we need to adjust to. So no change in distribution strategy. Lindsay, do you want to answer about the second half of the year? Lindsay Mann: Yes. Thanks Oran. So, we're navigating a situation today where CPA is significantly higher than last year, in some cases, 2-plus x higher in some cases. And as a result, we've dialed back on our acquisition to manage it. Remember that, as I mentioned in my prepared remarks, at current CPAs, we are not profitable at first order. And so that has a material negative impact on our near-term EBITDA. We are still profitable on a 12-month contribution margin basis. But in the near term, as we spend, you have pressure. And since Q1 and Q2 are our largest periods of acquisition, we'll have -- as I mentioned in my remarks, we'll have that carryover effect into the back half of the year as we lose the repeat. And so in the short term, we view this as a pothole that we'll have to recover from. But as the business in CPA normalizes as we hope it will in the back half of the year, we'll be on a track to normalize our financial model as well. Oran Holtzman: By the way, I would just add that Lindsay mentioned even more than 2x. If we saw something gradually increasing in terms of CPA, we wouldn't think that something is completely off. We know that the current numbers that we see in user acquisition are completely off market, and we know it's -- and therefore, we believe it's something technical, and we work really hard to go back to -- by the way, we never built the business on marketing margin, on making profit from better acquisition strategy or execution. We build the business on repeat. that can protect us from regular increase in media spend. By the way, we see it every year. But this is something completely off, very unusual. We never saw anything like it. And based on my understanding, like it doesn't exist elsewhere. Operator: The next question is from Brian Tanquilut from Jefferies. Brian Tanquilut: Maybe, Lindsay, just as I think about the model, right, I mean one of the things that we've always loved about your business is how you can flex the advertising spend. And obviously, as you said, CPA is up more than 2x in some cases. So when we think about how you would strategize around this, I mean, once things normalize, I mean, should we expect kind of like a steep pullback on advertising expense? Or just curious how you're thinking about strategizing around this once we get that normalization point? And then can you just give us any color on retention rates or reorder rates that you're seeing in the market? Oran Holtzman: I'll start and maybe you take it. Even when media is abnormal as now, you don't want to stop the train. You still need to feed the algorithm and continue to spend so that you are giving it signals, it needs to go back on track. We have balance between not overspending at this crazy CPA that doesn't make sense while keep them -- and the signals going. And that's our plan to keep balance that way until we fix it. Lindsay Mann: As far as what normalization looks like for us, it would be something in line with what the rest of the industry CPA is. That's typically how our business has operated. It's a very, very big auction. It's a lot of competitors in there, and we typically are around where we would see our competition in terms of CPA. Right now, we're completely dislocated and off market based on this dislocation and this malfunction of sorts. And as we address it, as Oran said, we should be getting back to track. I don't know if I remember your second question. Brian Tanquilut: Just on the reorder rate that you're seeing anything there as well. Lindsay Mann: Repeat rates remain very strong. This is one of the reasons why we know we don't have a brand issue. We don't have a saturation issue. We continue to see very good performance out of our repeat. Repeat revenue is for 2025, around 70% of our sales. And as we look at our 12-month net revenue repeat rates, those increased again. So the 2024 cohort that repeated in 2025, that number increased relative to the prior year. So that's well nicely over 100%. And even as we look at our more recent cohorts within who started in 2025, those net revenue repeat rates on a 6-month or so basis are better than they were in the prior year. That trend remains very strong. Operator: The next question is from Andrew Boone from Citizens Bank. Andrew Boone: Can you guys help us understand just what exactly is changing within your guys' funnel? Is this higher CPMs? Is this lower click-through rates? Is this worse on-site conversion, meaning it's a lower quality user that you're targeting? Help us understand that dynamic. And then one of the things that we've also always appreciated about the business is just your ability to be able to pull different levers to be able to sustain that 20% growth. And so can you just help us understand the size of this channel and your inability to be able to allocate spend elsewhere and help us understand just why this is an overly large impact versus what we would have thought was a more diversified ad platform? Oran Holtzman: Yes. When we refer to our ability to grow through multiple -- in multiple areas, one thing that is important to note because this change is for ODDITY is global and across brands, it makes it harder, and that's why we came to the market with 30% decrease target in Q1. It's very hard to continue to grow without overspending. And obviously, this is something that we don't want to do in those CPA levels. Lindsay, do you want to continue? Lindsay Mann: Yes. As it relates to mix, what I can tell you is that for our largest ad partner, if you just look at pure platform orders, -- so that's any order that can be attributed directly to an ad from this specific partner. Those revenues make up just under 1/4 of our revenue, and that's based on our internal attribution system. But keep in mind, this is just pure acquisition dollars. And on top of acquisition, you also get repeat, you have direct revenue. So there's additional impact. We have relationships with many different ad partners. I want to say almost -- I don't want to say all of them, but many, many different ad partners, but your ability to scale is only so much with each individual, and so this is impacting us. Operator: The next question is from Georgia Anderson from Evercore ISI. Georgia Anderson: You mentioned that you've made kind of significant actions to fix this. Can you maybe clarify if these are more structural, I guess, technical fixes to your internal, I guess, data feedback loops, maybe retraining your AI to find intent users, kind of things like that? Or is the rebound expected to come from like a strategic shift in budget allocation? Maybe just talk us through the fixes that you're making. Oran Holtzman: Yes, it's both infrastructure side, offering adjustments and signal adjustments. We do all. The good thing about us is those points of time, like when you need to make multiple changes, we do everything in-house. We are not dependent on third parties, data scientists, developers, media buyers, so we can run dozens of variants at the same time. And that's what we did in the past few weeks. And therefore, we believe that we are more prepared than most companies to address it. Operator: The next question is from Scott Schoenhaus from KeyBanc Capital Markets. Scott Schoenhaus: Lindsay, is there areas that you're currently seeing strength that you could possibly offset this weakness strategically? I want to focus here on international opportunities and then the Brand 3 rollout, which you mentioned was -- has seen nice success. Oran Holtzman: Yes. I'll start with the good news. We launched Brand 3 METHODIQ. It's growing more than what we saw in IL MAKIAGE when we launched IL MAKIAGE, it's facing SpoiledChild. So we are very pleased to see the demand and success of METHODIQ by the way, as we thought. As for international and other areas, you still need user acquisition, and we still don't want to overspend just to meet the revenue goals. I never run the business like that before. And that's why the business is profitable for many, many years and last year, 20%. So -- we first need to fix it and then we go back to growth. Operator: The next question is from Ryan MacDonald from Needham & Company. Ryan MacDonald: As we think about balancing sort of the near-term priority of sort of fixing the problem here versus sort of balancing with longer-term investments to sort of continue the growth sort of growth trajectory once these problems are solved. Can you talk about sort of what that balance looks like internally right now? And then what are some of the priorities, whether it's continuing down the path of product development with ODDITY LABS growing METHODIQ brand? Also, is there a risk here that we see a delay or a push out in sort of the Brand 4 launch plans as well? Oran Holtzman: Since we identify -- since we believe we identified the problem, we are not changing our investments in growth. We believe it's the right thing to do. We continue to invest in labs. We continue to build Brand 4, and we continue to work tightly on new products in NPD for IL MAKIAGE, SpoiledChild and METHODIQ. And that's for the first question. The second one, what was it, Lindsay? Lindsay Mann: What was the second question, Ryan? Ryan MacDonald: Yes. So it was just any concerns about a delay in Brand 4? And then as we kind of come out of this, whether you lean into investment more aggressive for growth as we work back towards the balance of 2020 or sort of work more towards margin expansion? Oran Holtzman: The current focus of my leadership is fixing the problem. That's the first priority. Most of the teams are working on that. At the same time, we continue to invest in ODDITY LABS, we continue to grow it, and we continue to build Brand 4. Operator: The next question is from Kate Grafstein from Barclays. Kate Grafstein: I was just wondering how does this dislocation impact the launch of METHODIQ? I know you had planned to step up spending in the first half of the year with this launch, and that was expected to have an impact on your EBITDA margins in the first half. Oran Holtzman: Yes. The fact that METHODIQ is relatively small, we can -- it means that we can continue to grow it without the negative effect that we see. It doesn't mean that the [ core ] problem doesn't affect METHODIQ. But since it's running at low scale compared to IL MAKIAGE, SpoiledChild, we can continue to grow and meet our targets for this brand for this year. Operator: This concludes the question-and-answer session. I would like to turn the floor back over to Oran Holtzman for closing comments. Oran Holtzman: Thank you guys for joining. See you next quarter. Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Operator: Hello, everyone. Thank you for joining us and welcome to the Hyliion Holdings Fourth Quarter 2025 Earnings Call. [Operator Instructions] I will now hand the call over to Greg Standley, Chief Accounting Officer. Please go ahead. Greg Standley: Thank you, and good morning, everyone. Welcome to Hyliion Holdings Fourth Quarter 2025 Earnings Conference Call. On today's call are Thomas Healy, our Chief Executive Officer; and Jon Panzer, our Chief Financial Officer. A slide presentation accompanying today's call is available on Hyliion's Investor Relations website at investors.hyliion.com. Please note that during today's call, we will be making certain forward-looking statements regarding the company's business outlook. Forward-looking statements are predictions, projections and other statements about anticipated events that are based on current expectations and assumptions. As such, are subject to risks and uncertainties. Many factors could cause actual results to differ materially from forward-looking statements made on this call. For more information on both factors that may cause the company's results to differ materially from such forward-looking statements, please refer to our presentation and press release as well as our filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on forward-looking statements and we undertake no duty to update this information unless required by applicable law. With that, I will now turn the call over to Thomas. Thomas Healy: Hello, and thank you for joining us for Hyliion's Fourth Quarter and Full Year 2025 earnings call. Heading into 2026, we are positioned strongly to deploy more early adopter units and move towards commercialization. As we shared on our last call, the KARNO power module is now performing at a level that meets our initial customer needs. On today's call, we'll provide more details on our early customer deployment plans and cover the current status of UL certification and product performance, demand we're seeing across commercial and military markets and how we are preparing to scale production to support growth. Turning first to UL certification. We made significant progress during the quarter and are now nearing completion of this important milestone. To provide additional context, UL certification for the KARNO power module occurs at 3 levels: the linear electric motor, the battery pack and the full power module. I'm pleased to share that we have successfully completed UL testing for both the linear electric motor and the battery pack, meaning we have completed 2 of the 3 certifications we need. We have completed our initial round of testing on the full power module. Through that process, we identified several small refinements, including gasket updates to further strengthen water ingress protection and the opportunity to incorporate recent power output improvements. With those enhancements now underway, we plan to begin our next round of UL testing shortly and expect to complete the certification in the second quarter. Overall, we are very encouraged by the progress and view UL certification for early adopter units as a near-term gating item towards delivering units to customer sites. Beyond certification progress, we now have 5 KARNO units at our facility, 2 development units and 3 early adopter customer units. These systems are being continuously exercised through a range of load profiles, extended duration testing, customer-specific operating scenarios and military representative applications. As we shared last quarter, we achieved over 150 kilowatts of power generation, which is sufficient for initial customer deployments. We have since demonstrated 175 kilowatts of power production and testing following recent upgrades and we expect to reach the full 200-kilowatt design power rating by year-end as we transition into commercialization. These improvements include refinements to the piston design and updates to cylinder liner material to enhance heat retention within the system. Importantly, we do not believe reaching the full rating will require any fundamental architecture changes, but rather a series of incremental optimizations across the platform. The steady progress we have made in the past couple of quarters, reinforces our confidence in achieving the final 200-kilowatt design specifications this year. Fuel flexibility continues to be a key differentiator of the KARNO system, and we have made meaningful progress in this area during the quarter. We successfully demonstrated dynamic fuel switching with the KARNO power module transitioning between natural gas and propane. The system can automatically switch between fuels without shutting down and without any user input to indicate which type of fuel is being utilized. We simply changed the incoming fuel supply and the unit continues to operate as designed, truly highlighting our unique fuel-agnostic capability. Another recent accomplishment was successfully running a KARNO core on diesel fuel and being able to export power to the grid while meeting Tier 4 final emissions requirements without the use of exhaust after treatment systems. We expect to begin incorporating diesel capability into customer-deployed systems this year. Diesel capability is particularly important for defense applications where it remains the dominant fuel source. More broadly, the majority of installed generators worldwide operate on diesel, which significantly expands the KARNO power modules addressable market in mission-critical and prime power applications. For example, many data centers prefer pipeline natural gas for prime power, but still require on-site diesel for resiliency. We believe our ability to operate on both fuels will allow customers to avoid purchasing separate natural gas and diesel generators, instead relying on a single flexible platform for both primary and backup operations. Next, I'd like to share our outlook for 2026, including our deployment plans, product development priorities, business development activity and manufacturing capability. We are entering 2026 with strong demand across commercial, data center and military markets. As previously shared, we have nearly 500 units under nonbinding letters of intent. In addition to a broader set of customers actively evaluating the platform. The primary focus now is transitioning from development into real-world, field deployments and moving towards commercialization and scaling. From a development perspective, our overall plan remains consistent with what we have previously communicated. We expect to deploy approximately 10 early adopter units prior to commercialization including the 2 units delivered to the Navy last year and a third unit that we have recently completed and that will go to a customer site following UL certification and product validation. Throughout 2026, we plan to deploy these systems into customers' environments with commercialization to follow late in the year. One area where we are seeing particularly strong long-term interest is the data center market. With recent industry announcements pointing towards a shift to 800-volt DC architectures for next-generation AI facilities. We believe our KARNO technology is uniquely well positioned. Our platform already operates at 800 volts DC, which aligns directly with this emerging standard and has the potential to reduce conversion stages, lower equipment requirements, improve overall system reliability and efficiency and simplified site electrical architecture. In 2026, we plan to demonstrate this capability in live environments to showcase the potential. Early this year, we successfully demonstrated a mission representative Navy load profile on a Navy-owned KARNO asset. The system managed rapid load changes and sustained performance under high stress operating conditions, reinforcing its suitability for shipboard and defense use. This is an important validation milestone and has accelerated discussions around additional defense platforms and with NASA, who is exploring coupling our KARNO technology with nuclear power generation. We have identified several near-term opportunities across multiple branches of the military that are moving towards potential contract awards, which we expect to finalize this year. We believe these opportunities could represent $40 million to $50 million worth of new revenue opportunities on top of the approximately $20 million of contracts with O&R that we are currently executing on today. As part of our current Navy program, we plan to deliver additional KARNO power modules and cores in 2026 for specialized shipboard testing. Once completed, these deliveries will represent about half of our early adopter units. One deliverable will be a multi KARNO power module for the ship, demonstrating our ability to create higher-power systems through coupling our 200-kilowatt cores. Building on our work with the Navy, I'd like to provide an update on plans for a previously discussed 2-megawatt KARNO power module, which we believe aligns well with the needs of data centers and other high-power applications. In 2025, we spent significant time developing a multi-KARNO power module configuration for shipboard use. Through that effort, we identified substantial overlap between the Navy architecture and what is required for higher power commercial deployments. As a result, we have leveraged that design foundation to advance a modular, scalable configuration suitable for data center applications. Our initial concept was a 2-megawatt system comprised of 10 200-kilowatt KARNO cores integrated into a compact footprint, roughly the size of a 20-foot shipping container. Recent customer discussions have led us to evolve the configuration into a more flexible architecture. The system is designed to scale in approximately 800-kilowatt increments, allowing configurations, such as 800 kilowatts, 1.6 megawatts, 2.4 megawatts, 3.2 megawatts and so on. This modular approach aligns closely with feedback from data center customers where power requirements vary depending on site electrical architectures. By enabling expansion through the addition of core sets, we can tailor output to specific customer needs while maintaining high power density and resiliency. Moving on to our commercial customer deployments. We recently entered into a strategic partnership with ABM Industries to support the deployment of integrated distributed energy solutions. This collaboration, combines KARNO technology with ABM site engineering, integration and operational capabilities, helping simplify deployment and broaden customer access across commercial, industrial, data center and mission-critical applications. ABM is also equipped to offer energy as a service contracts with their customers. This partnership allows us to remain focused on advancing and commercializing the KARNO platform while leveraging an experienced partner to support end-to-end customer solutions. Next, I will provide a brief update on our manufacturing readiness. Today, we operate more than 30 additive manufacturing machines the majority of which are located at our Austin facility. These printers span 3 different machine models with configurations that are able to produce 1, 2 or 4 parts at once. We expect to take delivery of several additional printers this year that we've had on order from last year. With these additions, we believe our additive manufacturing capability will be well positioned to meet planned production needs for 2026 and 2027, while providing a strong foundation for scaling further into 2028. Our current focus is on maximizing the speed, power and productivity of each machine. During the first quarter of 2026, we initiated efforts to improve printer throughput and we'll be dedicating both printer time and engineering resources to these optimization initiatives throughout the year. In parallel, we plan to take delivery of and begin testing one or more printers equipped with the latest laser technology from GE Colibrium, which we believe has the potential to further improve print speed and efficiency. On our last earnings call, we discussed the potential risk related to magnet supply, particularly given the export constraints from China. We are pleased to share that we have made meaningful progress in mitigating that risk and have already begun receiving components. While this does not fully eliminate supply chain risk, it substantially reduces our exposure and improves our confidence in supporting planned production. To wrap up, I'd like to share our key milestones for 2026, which are summarized on this slide and highlight the achievements we expect to deliver over the course of the year. We began the year with an early win by successfully operating the KARNO core on liquid fuel and meeting emissions requirements. Looking ahead, we expect to achieve UL certification for the early adopter KARNO power modules during the second quarter of this year, which will enable broader customer site deployments. In parallel, we expect to achieve the full 200-kilowatt design power by the end of 2026. We also plan to complete the remaining early adopter units during the year. These deployments are an important step towards validating system performance across real-world applications, and will support our plan to commercialize the 200-kilowatt KARNO power module in late 2026 which will then allow us to begin scaling production. In addition, we expect to complete a multi-KARNO core platform featuring the systems and controls required to coordinate multiple units operating in tandem. This configuration will serve as a stepping stone towards a larger multi-megawatt KARNO system designed to support data centers and other customers with high power requirements. We expect to secure additional U.S. military contracts with a total revenue opportunity of $40 million to $50 million, further advancing the development work underway to support autonomous navy vessels and other mission-critical defense applications. Taken together, these milestones support our expectation of generating approximately $10 million of revenue during 2026 from a combination of commercial customer activity and R&D service contracts. Looking ahead over the next 3 years, we plan to build on the progress to achieve in 2026 as the KARNO power module transitions from early deployment into scaled commercialization. In 2027, we expect to ramp commercial deliveries and expand the range of applications where KARNO is deployed. This includes advancing the development of our multi-megawatt KARNO power module for data center applications. We view 2027 as the year where we transition from initial commercialization into meaningful production scale. In parallel, we plan to expand our additive manufacturing capability in preparation for anticipated growth in 2028. By '28 and beyond, we expect to accelerate commercial growth as increased production capacity enables us to address a broader portion of customer demand. This includes fulfilling interest in multi-megawatt systems for data centers as well as continued expansion within military applications. To wrap up, 2025 was a year focused on resolving product and production challenges, strengthening the core architecture of the KARNO power module, expanding its operating capabilities across fuel and mission profiles and improving performance. In 2026, our focus shifts from development to deployment, and commercialization. With UL certification nearing completion, early adopter units moving into the field, growing military engagement and strong data center interest, we believe we are well positioned to transition from validation to scaled execution over the coming years. With that, I'll turn the call over to Jon to walk through the financial update. Jon Panzer: Thank you, Thomas, and good morning, everyone. In the fourth quarter, we recorded revenue of $700,000 from research and development services related to our contracts with the Office of Naval Research. Cost of sales was $600,000, resulting in a small gross margin gain. In the fourth quarter of 2024, we recorded $1.5 million of R&D revenue and a $100,000 gross margin gain. As a reminder, R&D services revenue reflects the sale of KARNO cores and related components to the U.S. Navy and the work we perform to test and validate these units. Total operating expenses for the fourth quarter were $15 million down from $17.2 million in the fourth quarter of 2024. The decrease was driven by lower R&D and SG&A costs as well as a $500,000 in gains from asset sales in connection with the powertrain exit and termination. R&D work continued at a strong pace in the quarter, but was lower than '24 when we were purchasing components at a faster pace. SG&A expenses were down about 6% compared to the fourth quarter of 2024, due primarily to lower facilities and insurance costs, partly offset by a small increase in labor costs. Our total net loss in the fourth quarter was $13.2 million, down from $14.4 million in the fourth quarter of '24. For the full year 2025, we recorded revenue of $3.5 million, all from R&D services and gross profit of $170,000. This compares with revenue of $1.5 million and gross profit of $100,000 in 2024. Full year operating expenses were $65.7 million compared to $64.4 million for all of 2024. The small increase compared to '24 is related to higher R&D expenses this year partly offset by lower SG&A and powertrain exit and termination expenses. Our full year net loss was $57.2 million compared to $52 million in 2024. Turning to our cash and investment position, we spent $12.4 million during the fourth quarter and $67.4 million for all of 2025. Full year capital spending was $23.7 million and consisted primarily of additive printing machines and related equipment, along with facility investments to support printer operations. Cash generated from asset sales for the full year was $2.2 million. As a reminder, asset sales related to the monetization of equipment previously used in our powertrain division and will continue into 2026. We finished the fourth quarter with $152.4 million of cash and short- and long-term investments on our balance sheet. While this outcome is a little lower than the $155 million we projected for year-end, we did end up deferring $10 million of planned equipment financing into 2026. Excluding that deferral, our year-end cash and investment balance would have been about $7.5 million higher than projected, mostly due to lower capital spending and lower operating expenses. Looking forward into 2026, as Thomas noted earlier, we expect to generate approximately $10 million in revenue this year from both R&D services and commercial customers. Commercialization of the KARNO power module is expected to occur late in the year. Also, as Thomas mentioned, we plan to slow capital spending in 2026 as we work to optimize the output of the printers that we have on hand today. We are planning to execute equipment financing for up to $10 million this year, although that amount may shift up or down based on actual capital expenditures and available lease capital. Overall, for 2026, higher revenue, thoughtful expense control, lower capital spending and planned equipment financing are expected to result in a lower level of total spending compared to 2025. Our current forecast is for net spending of just over $50 million during the year resulting in a year-end cash and investment balance of approximately $100 million. On past calls, we've consistently noted that we expect the capital we have on hand today to be sufficient to carry us through commercialization of the KARNO power module. Based on our current plans, that continues to be the case. Last quarter, we noted that we anticipate that additional capital will eventually be required to support production growth, particularly for the purchase of additional additive manufacturing equipment. In anticipation of that eventuality, we have filed a standard S3 shelf registration statement with the SEC to provide us with additional capital raising flexibility in the future. An S3 is a valuable tool commonly used by established public companies to efficiently and opportunistically raise funds from time to time through the issuance of debt or equity. Now I'll turn the call back over to Thomas. Thomas Healy: As we look ahead, our focus for 2026 is clear. We'll be building units and getting them into the field, expanding real-world operating experience and moving into commercialization. We believe this year will be defining for Hyliion as customers begin operating the platform in live environments, and we transition from development to scaled execution. Beyond initial deployments, we see significant opportunity in both data center infrastructure and military applications. The shift towards an 800-volt DC architecture in next-generation AI data centers aligns directly with KARNO's design and we believe our modular and fuel flexible platform is well positioned to position this evolution. At the same time, resilient and mission-critical power remains a priority for the U.S. military. We are excited by the opportunity ahead and our focus on execution as we move into the next phase of growth. I will now hand it over to the moderator to open up for Q&A. Operator: [Operator Instructions] Our first question comes from the line of Martin Malloy with Johnson Rice. Martin Malloy: Congratulations on all the progress you're making. Wanted to ask about the commercialization later this year. And you mentioned, I think, half the units will be going to the U.S. Navy. Could you talk maybe about the end markets for the other units and where you're seeing customer interest from? You mentioned data centers. Is that where the other half of the units are going? Thomas Healy: Sure. Appreciate the question. So military is a huge focus for us this year. We're at the point where we're actually starting to put the systems together, that will go into that unmanned autonomous ships. So that's a very exciting one for us this year. Other applications include just prime power. So think about like powering facilities, providing power for EV charging, those sort of opportunities. And then the last one is that data center side of things. So ultimately, data centers are looking for that larger platform that 2.4, 3.2-megawatt system. But one of the focuses for this year is we can really showcase and provide the benefits to data centers even on a 200-kilowatt system. And so one of the things that we decided to do is take some of these early adopter units and actually use them as mobile units that we can showcase in various applications. And so one of the ones we do plan on showcasing this year is a data center opportunity. Martin Malloy: And just for a follow-up question. Could you maybe talk about the capacity that you'll have as you exit this year in terms of manufacturing on a megawatt annual basis or give us some measures what it would cost to add additional megawatts per year in manufacturing capacity so we can get a feel for how '27 might look? Thomas Healy: So at this stage, we haven't shared exact specifics around what you're asking. Reason being is we really want to showcase, improve this printer speed improvements that we are highlighting. So that's going to be a big focus for this year. Just to give a little background there, as you buy an additive machine and you start utilizing it, there are levers you can pull like how much power in the lasers, how many parts you're producing on a build plate, things like that to increase the throughput. And so that's going to be the focus for this year. And then with that, that will give us a stronger clarity on exactly how much capacity we have with the existing installed base. But all that being said, we are highly confident that we've the strong production capacity for '26 and '27. And then as we look at 2028, that's where we envision we'll really need to start adding additional printers to start scaling capacity. So I know that does not give you the exact color you were looking for, but hopefully, you understand why we want to focus on those printer speed improvements and proving that we can get to the throughput that we anticipate. Operator: Our next question comes from Sean Milligan with Needham & Co. Sean Milligan: When you talk about the incremental $40 million to $50 million potential from the military, I'm trying to understand, is that -- like do you consider that skilled deployments? Or is that like additional testing across different platforms and different agencies, things like that, that would then scale -- could scale beyond that $40 million to $50 million range? Thomas Healy: Yes. So it is really focused on additional applications and more unique development for the military and so right now, we have our Navy work we're doing. It's really focused around being the prime power on a fully unmanned autonomous ship platform. We are also looking at stationary power deployment. So think about like powering a base doing that with the Navy. These additional contracts are both a continuation of that work plus adding actually new applications, new opportunities. So think about like different ship platforms, think about other branches of the military, how they need prime power solutions as well and starting to expand the use cases of the KARNO technology. It's not so much just placing a standard PO to just buy additional equipment. But obviously, all this work we're doing with the military is in an effort to go to that stage. Sean Milligan: Great. And then on this new 800-kilowatt module that you're talking about. I think historically, you gave some numbers around KPIs for the KARNO versus like fuel cells or traditional gas. I was curious if there's any update in terms of like how this module might change that? Does it look more attractive for you as you scale up to the larger platforms here? And then what kind of risks are there scaling up from the 200 to the 800 and then the 3.2 ultimately, what do you need to work through on your side to prove that up and get that done? Thomas Healy: All right. So a few pieces to that question. So first is around kind of how it compares against other solutions in the market. So we see customers looking at kind of the conventional internal combustion engines, looking at fuel cell and then looking at technology like ours. In terms of how it shapes up, and I'll put some broad numbers to it, is with a normal internal combustion engine, cost per kilowatt. And maybe I'll use -- if you look at our 200-kilowatt system, what the end numbers would be, if you bought a 200-kilowatt internal combustion engine really designed for prime power and natural gas solutions. You're probably going to be approaching that $250,000, $300,000 for that actual solution. Then as you look at our system, we're more around $0.5 million. As you look at fuel cells, you're up closer to around that $700,000. So it really still puts us in the middle of those 2, which is what we -- where we're targeting to be. And then obviously, our system has benefits over those other solutions that really drive the payback, the return on investment. So that's improved efficiency, so you're actually going to use less fuel. And then on the maintenance side, having lower maintenance as well as what we're anticipating, which will then help you with driving a faster payback and return on your investment. So that's kind of how we shape up against competition. Now another one of the benefits of this modular platform is it allows customers to really match the power they need with the amount of capacity we're giving them. So different data centers have different architectures, and this 800-kilowatt system allows that flexibility. In terms of the risk you asked about of going from 200 to 800 to then the 3.2. So the key thing here is the actual power generation unit that 200-kilowatt KARNO core remains the same in every size iteration. And so once we validate and have confidence in that 200-kilowatt architecture, you're really just replicating it. I would equate it to think of like going and buying an electric vehicle, you can buy ones that have different ranges. At the end of the day, they're just putting more of the same batteries in the vehicle to get you longer range. We're taking the same approach to power generation, where we're putting more of the same KARNO cores back together to give you more capacity. So in '25, we actually spent a lot of time, a lot of effort on developing this 800-kilowatt system because that is what's being utilized in the -- for the Navy. And then from there, what we said is, well, as opposed to going and doing a reengineering and doing a 2-megawatt system, why don't we just take that 800-kilowatt and make that modular so that those can be stacked together. So we're already well underway with the development of that system actually. Sean Milligan: And then on the ABM deal or partnership, can you just give us a little more background on ABM and maybe like their expertise in terms of power deployment and like what end markets they are stronger in? Thomas Healy: Absolutely. So ABM has a lot of breadth and experience in this space in power generation. And their skills are widespread, everything from -- they've got a strong customer base. Customers are already working with that are coming to them saying, "Hey, we need additional power. We need to scale and expand." To then they can actually do the site engineering. So look at how do you integrate the actual power unit. Then they can actually do that integration work, the actual deployment and then they're set up to also do the long-term continuing service and upkeep of that site as well. And in addition to all that, they also offer energy as a service solutions to their own customer, which for background there, that means that ABM would actually come in and procure and buy the technology, the solutions and then they would charge the end customer based on a cost per kilowatt type of a purchasing agreement to make it easier for customers to adopt solutions for power gen. So ABM very well versed in this space, one of the large players there. And then there focuses range everywhere from things like airports to data centers, to mission-critical application. So we've already started discussions with ABM and end customers together, and we're excited to see where that will take us here in '26 and beyond. Operator: Our next question comes from Ted Jackson with Northland. Edward Jackson: So I've got a few questions for you. Let's start with just making sure I understand kind of CapEx and capacity. So right now, exiting, say, exiting '25 at 30 printers. And if I understand then, you're going to add 1 or 2 more during '26 and rather than expand the fleet the effort is really focused on using it better. But when we exit this year, roughly speaking, you'll be at 32 units, but you'll be running them at a much higher throughput rate. Is that the message? Jon Panzer: Yes. Ted, I think you've got it summarized accurately. We don't know exactly how many we'll add, maybe a handful this year. So I wouldn't say exactly 2, it might be a little more than that. But those are units we had on order from last year. But you're thinking about it correctly. We've got a certain amount of capacity, and that capacity rate has been growing as we get more of these printers commissioned and operating to their optimum state. As Thomas has mentioned earlier, some of these are the latest generation printers, which have higher laser power than what we're used to. So the work that we're going to do to increase print speed this year will be related to taking advantage of that higher power and also just other programming opportunities that just make the printers run faster. So that's a lot of -- the good news is that's a great increase in output with not a whole lot of investment in terms of dollars. So that's what our focus will be on this year. So yes, we'll end in 2026 with a handful more printers and more throughput from the ones that we have. Edward Jackson: And then the range of your printers is everything from -- there's the older ones with one laser, and then you have some with 2 and then you've had some with 4. And these -- the one we'd be purchasing will be more of these -- of the 4 laser printers. Is that correct? Jon Panzer: Actually, it's a mix. It's a mix. So Thomas also mentioned that GE is working on some new laser technology, and we're excited to help them out on development of that or trying to test out what that's capable of and that will actually be one of the printers with the smaller number of plates. So we've really got opportunities across the range of our printer fleet. Edward Jackson: And then, I mean, I know you probably won't tell me this, but to kind of get a sense in terms of just sort of understanding as you roll through this and then you start your capacity expansion and the CapEx. I mean, roughly speaking, for like the ideal printer whatever one it might be, what's the outlay for a singular unit? Jon Panzer: The cost -- what are you asking? For a printer or for... Edward Jackson: Yes. Jon Panzer: I mean these are commercially available printers. So our exact cost we can't share, but that is information that if you're looking at what additive printing machines cost that's pretty readily available. Thomas Healy: Maybe, Ted, just to add slightly more just some machines can actually come in less than $1 million and then other machines can be in the low single-digit millions. Edward Jackson: And then going over to the kind of your revenue forecast and the development work you do, you're guiding to $10 million of revenue mix between development work and I assume some unit revenue recognition. Starting with the development work. You had $20 million of revenue with the U.S. Navy. If you kind of go through it, you rolled through about $5 million of that so far. So you've got about $15 million of that kind of left to work through. You got another, let's call it, $40 million or $50 million across other things that you think you can bring in. When we look at -- start with the older stuff, I mean, will you recognize a significant piece of that remaining $15 million in '26? How do we think about that? And then what would be the time line if you would, for the new revenue related to get these contracts and where you would start seeing it happen? And then kind of what are the milestones that you have to do to recognize that and get paid? Jon Panzer: There's a lot of pieces there. So remind me if I forget one of them. So the -- you're correct that most of the revenue that we project to earn this year would be from R&D services, although there will be commercial revenue from following commercialization of the very initial units that are early deployment units. And that part that is R&D services revenue is part of that $20 million roughly of R&D contracts that we have. Part of that we spent in 2024. Part of it last year, I think you're right, about $5 million spent so far. There is upside opportunity that just based upon the pace of our work. Some of that could roll into 2027 as well. The new contracts that we were talking about today, we plan to get those -- we hope to get those under contract and those will -- are really more kind of next fiscal year and really will provide us that runway and pathway into 2027 and beyond. See, again, the time line for those new contracts, again, we expect it to be kind of late in the year. And then on the commercialization side, the milestones, obviously, we want to get a lot of hours on the units that we have, get these initial early adopter customer units in the customers' hands, finished testing at our location, put them on customer sites. They have to meet customer specifications in terms of their operating capabilities. We mentioned UL certification has to be completed, and there's some steps around just our manufacturing processes and so forth that have to be optimized and repeatable and so forth. So there's a lot of steps, fairly well-defined things that we have to do, which we expect to get done over the course of this year. Does that catch everything you were asking? Edward Jackson: It did. And then on the 10 systems, I mean, I know 10 Systems it's a rough guestimate for what you think you'll be able to put out in the field during '26. Half of those are from the military. So I'm going to assume those are not like the boxes, if you would, that I've seen in new testing facilities, but a little more bespoke, let's call it, the remaining, will you recognize revenue on any of those? I mean I'm hard-pressed to see like if you're going to do 10 that -- and you have $10 million in revenue that you're going to recognize revenue on all 10 units that you're kind of circling in for kind of being put to customers? But would you recognize revenue on KARNO modules outside of the military [ during '26 ]? Thomas Healy: Sure. So maybe just to start off with the color of the units. So yes, about half of them going to military now. That is actually a split of some of them in at that 800-kilowatt module designed for going into the ship plus actually, just to your point, Ted, about the military will also be taking delivery of boxes as well units that are in a full 200-kilowatt enclosure, which is more focused on base deployment and prime power applications. So we're actually doing both with the military, which is pretty exciting. And then on the units, the remaining units, which are more commercial ones, some of those will be going out to customer sites deployed. They are paying for these systems, even though we won't recognize revenue right on the front end. They are paying for the systems. And then some of those units, a couple of them, we're also anticipating having them as units that we can -- as we were talking about bringing out the data center, showcase the abilities there, integrate into customer sites and really prove that application because as we look at '28, '29, 2030, there is so much growth happening in the data center space that we want to make sure that people will view us this year as a viable solution in that market. And so that's where it's important for us to showcase that. I'll then hand it over to Jon on how it works in terms of actually recognizing that early adopter unit revenue though. Jon Panzer: Yes. So just as an example of some of the early units that we expect to deploy initially here and some that are already built and operating. Once we have reached official commercialization, then we would expect to recognize revenue for those. There could be some that are still in the process of acceptance and so on that may slip outside of that. But yes, that's the point of commercialization that we can recognize revenue and the earliest ones that we deliver would be the prime candidates for that recognition right away. Edward Jackson: Yes. But just to make sure I understand. You will recognize some revenue. But when you talk about the 10 units, it's not 10 units that are going to flow through in terms of your P&L, it's 10 units that you're actually going to -- for a lack of a better term, you're going to ship them? They're going to be -- saying they might not have been accepted and revenue recognized... Jon Panzer: Yes, you're correct. And maybe just to decompose the revenue a little bit further, there's going to be services related to R&D services, so testing and engineering work, even stuff we contract out. And then the deliveries that Thomas just mentioned on full systems and 800-kilowatt system. And then what we would call commercial customers, the initial units that we're deploying now with our early adopter customers, those will turn into revenue once we've crossed the threshold of commercialization as well as making sure, individually on those contracts that we've met the contract -- the customer contractual requirements. Edward Jackson: And then my very last question because I've taken up more time than I'm allowed, I think. But with -- you're up to 175 kilowatts with regards to the KARNO now, Thomas. You've got -- you said as you've kind of gone through testing. I mean, it's part of the process of why you go through beta and everything else under the sun is -- you got more tweaks to do to get up to the 200 kilowatts. Can you take a little time and kind of talk about where the things are that you need -- that you've discovered that you need to revise and kind of where you are in the process to resolving those issues for lack of a better term. So that we can -- so that you can get to that 200-kilowatt goal? That's my last question. Thomas Healy: Perfect. All right. So yes, obviously, great progress in the quarter getting to that 175. We -- another core thing is we don't see it as fundamental architecture changes to get to the full 200 kilowatts. It's really about refinement. So to use an analogy, like this is a heat powered solution, right? And so it's almost like squeezing a balloon. When you go -- contain the heat in one area like squeezing a balloon, it wants to expand and go out other areas. And so we talked about earlier in the year of '25 the regens, that's really -- that fine mesh, the thermal battery, we saw a deficiency there. Once we solve that, it was like squeezing the balloon in that area to then it showcased some other areas we needed to work on. So to give examples, those are -- over the past quarter, we've been working on a new cylinder wall sleeve that has better thermal properties, so it doesn't let heat transfer through as easily. We're working on a new piston design that reduces the amount of radiation. So heat that can actually flow through it as well as smaller things like improved thermal blankets around the solution that keeps heat in better. Some unique materials that can stop heat from transferring from one part to the other. All this, as noted, it's small changes. Some of the things that I mentioned just now have already been rolled in. That's what got us to those improved power levels. Others are at a stage where we just got the first batch of these new cylinder wall, sleeves in just this past week. Pistons, we expect to get those in, in the coming weeks. And so we are in the middle of still evolving that, but tying this all back together, it's important to note, like we're at the point where the power that these systems are producing now is sufficient to get the initial units out there. And so that is the prime focus right now. And then in parallel, we'll work on continuing to get up to that 200 kilowatts. So hopefully, that adds some helpful color. Operator: Our next question comes from Martin Malloy with Johnson Rice. Martin Malloy: Just wanted to ask about the control systems that you mentioned. Is that something you're developing internally? Or could we see some sort of partnership there? Thomas Healy: We've really taken the approach of developing all the software in-house. So it is Hyliion's IP, the design developed in-house by Hyliion and we see this as a key part of our solution and one that -- I didn't mention this in Ted's last question, but we even see some software improvements that we can make that will even squeak out some additional kilowatts out of the system. So with all that in-house solution owned by us, where we will integrate with others for site integration, right? So we will not be the primary controller on a site. That is something that we will integrate with other site systems or others EV charging pedestals, things like that and then let them operate it. It is key to note though, we do have the ability to integrate into other DC architectures. So think about like a battery pack, you can plug a battery pack right into the KARNO power module, and we can communicate directly with that and even control the battery. And so we see it as a very advanced software and one that customers who have been on site have actually seen it as a little bit of like a Tesla moment where Tesla was the first to really put a large screen and display into their cars. We're -- believe we're one of the first to really put a large screen and a lot of information that a user can look at real time on the actual power module and get feedback both at the unit or through the cloud. Jon Panzer: Yes. We've got a very strong software and controls team and they were -- many of them were some of our top people back when we had our powertrain division. So we've been really able to leverage those -- skill set of those people. Operator: [Operator Instructions] There are no further questions at this time. I will now turn the call back to Thomas for closing remarks. Thomas Healy: Thank you, everyone, for joining today's call. Apologies again for the technical difficulties at the start there, but glad we were able to get that resolved. And just setting the stage again for 2026, this is a year that we're focused on getting units out there into the field, getting those customer deployments out there and really showcasing the units working. We started the deployments of early adopter units last year, continue that this year and get units out into the field. And then as we look at the years ahead, I mean, a lot of exciting opportunities growing, not just in prime power, but then the other 2 that we mentioned heavily on this call with the military -- expanding upon military contracts and then also the data center space. So we look forward to hopefully sharing further good news in those 2 areas throughout this year. Thank you again for joining the call. We look forward to chatting again on our next earnings call. Operator: This concludes today's call. Thank you for attending. You may now disconnect.
Kenny Green: Good day to all of you, and welcome to Allot's conference call to discuss its results for the fourth quarter and full year 2025. I would like to thank Allot's management for hosting this conference call. [Operator Instructions] As a reminder, this conference call is being recorded. If you have not received the company's press release, please check the company's website at www.allot.com. With me today on the line are Mr. Eyal Harari, CEO; and Ms. Liat Nahum, CFO. Following Eyal's prepared remarks, we will open the call for the question-and-answer session. Both Eyal and Liat will be available to answer those questions. You can all find the highlights of the quarter, including the financial highlights and metrics, including those we typically discuss on the conference call in today's earnings press release. Before we start, I'd like to point out the following safe harbor statement. This conference call may contain projections or other forward-looking statements regarding future events or the future performance of the company. Those statements are early predictions and Allot cannot guarantee that they will, in fact, occur. Allot does not assume any obligation to update that information. Actual events or results may differ materially from those projected, including as a result of changing market trends, delays in the launch of services by Allot customers, reduced demand and the competitive nature of the security services industry as well as other risks identified in the documents filed by the company with the Securities and Exchange Commission. Also, the financial results in this call will be presented mainly on a non-GAAP basis. Allot believes that these non-GAAP financial measures provide more consistent and comparable measures to help investors understand Allot's operating performance in the quarter for all the data, please refer to the financial tables published in the results press release issued earlier today, which also include the GAAP to non-GAAP reconciliation tables. And with that, I would now like to hand the call over to Eyal Harari, CEO of Allot. Eyal, please go ahead. Eyal Harari: Thank you, Kenny. We delivered a strong fourth quarter, concluding a year of accelerated revenue growth, significant expansion in cybersecurity ARR and solid improvements in profitability and operating cash flow. In 2025, we returned to double-digit year-over-year revenue growth, reaching $102 million, up 11% versus 2024. We reported our highest level of profit and cash flow in over a decade, reflecting a significant step-up in operating leverage and demonstrating the scalability of our business model. Our primary driver of growth, our Cybersecurity as a Service offering continues to scale rapidly and is increasingly driving the quality and predictability of our revenue base. As of year-end 2025, the ARR was up 69% year-over-year, and we continue to experience very strong traction. Recurring revenue continued to grow as share of total revenue and increased to 28% of revenues for the fourth quarter, underlying our transition towards a structurally recurring and more resilient revenue model. For the full year, recurring revenue representing 62% of total revenue, significantly enhancing our revenue visibility. We ended the year with the strongest balance sheet in many years with over $88 million in cash and no debt, providing strategic flexibility to invest in growth initiatives while maintaining financial discipline. Overall, our results illustrate the success of our go-to-market focus and the power of our Cybersecurity-first strategy. At the start of 2025, I laid out Allot's strategy for renewed growth. We are focused on being a cybersecurity-first company operating globally under a unified business unit with a proven synergetic capabilities of cybersecurity and network intelligence. Our success in 2025 demonstrates that this strategy is working. We believe our integrated cybersecurity and network intelligence solutions uniquely position us within the service provider ecosystem. Our subscription-based cybersecurity offering as a service generates recurring monthly revenue and provide us with good visibility. The pipeline of new potential business continues to be strong, and our offering is gaining broad traction. The growth from cybersecurity as a Service offering is built on 4 pillars. First, we constantly are working to expand the number of CSPs and telcos that we work with to launch cybersecurity protection. Every new CSP we partner with immediately expand our addressable market as it brings us a large new customer base. We recently reported the Compax Venture selected us as a cybersecurity partner, enabling its brands and community-based MVNO customers to differentiate their services with built-in cybersecurity powered by our solution. This partnership significantly enhanced the value proposition that these MVNOs offer to their customers and opens for us another scalable avenue of recurring revenue, extending our reach into new customer segments and use cases. The second pillar, after launch, we expand our services to new end user segments at the CSP or telco, for example, from broadband to mobile customers. Third, we focus on growing penetration of our cybersecurity protection services among our end users by partnering with the customer to market the solution and ensure those subscribers understand the significant added protection they will get at the marginal increase to the monthly bill. And finally, fourth, we look to upsell new applications and product to customers. As part of this strategy, we recently released our off-net solution, an example of a product with significant value added because it ensures that the end user can remain connected and protected to the CSPs or telcos even when the end user is not on their network. These innovations enable our customers to introduce high-tier security plans to their subscribers, increasing ARPU and driving incremental recurring revenue for both the operator and Allot. We have already upsell this product to both existing and new customers. Looking ahead to 2026, as cybersecurity threats continue to intensify, we remain focused on protecting the consumer and SMB markets, segments that we believe remain underserved by traditional security solution. Our ambition is to evolve from providing 360 degrees protection of data to delivering 360 degrees protection of the digital life of the consumer. This expands security beyond networks and devices to the individual encompassing identity protection, scam prevention and AI-driven security services. This vision reflects how we see consumer cybersecurity evolving over time and is supported by a pipeline of new AI-enabled products that we have been developing for over a year, strengthening our competitiveness and long-term differentiation. AI is fundamentally reshaping the cybersecurity landscape. Attackers are increasingly using AI to operate at greater scale, speed, precision and personalization. At the same time, enterprises and consumer are rapidly adopting AI-driven application, introducing new and often unmanaged attack surface. This shift requires rethinking of traditional security approach. AI-enabled world must be proactive, seamless embedded into the everyday digital usage and require minimal to no end-user configuration. Our Cybersecurity as a Service platform already delivers real-time zero effort protection, providing scalable, always-on security that evolves in step with rapidly advancing AI-driven threats. In parallel, we are actively leveraging the latest AI technology to further enhance our solutions, addressing current risk while anticipating emerging AI-powered threats. The significant global investment in AI infrastructure is creating a growing need for advanced cybersecurity protections, and it is a meaningful opportunity for Allot. Within the SMB segment, we are executing aggressively to deliver more competitive end-to-end security solutions. We believe the small and midsized business market remains underserved in the cybersecurity landscape and that delivering protection via the network is the most effective approach. We now offer immense protection beyond the business network with OffNetSecure, have launched Firewall as a Service, which is already live and deployed, and we introduced DDoS protection for SMBs, enabling protection of inbound traffic, not just outbound. In addition, we expanded into identity with domain-level identity theft monitoring, helping SMB protect the digital identity of all the users across the organization. Together, these capabilities bring enterprise-grade security to SMB through a simple cloud-delivered model. Today, our Smart product is sold as part of our unified cybersecurity first platform with its best-in-class technology continue to drive strong demand. We are executing on recently won projects, including SG Tera redeployments and upgrades while continuing to invest to maintain our technology leadership. Interest in the SG Tera platform remains strong, supported by the healthy pipeline from both existing customers upgrading and new customer wins. We were recently selected by a Tier 1 telecom provider in Asia in a multiyear deal worth high single-digit millions to deploy our network intelligence solution. This deployment will enable the operator to gain detailed application level visibility into network traffic and extract actionable insights. This follows our largest customer win in over 5 years, a tens of millions of dollar agreement signed last year with a Tier 1 operator in the EMEA region. The deals include a long-term recurring maintenance and support component, underscoring the strength of our cybersecurity first strategy. Together, these 2 deals provide increased revenue visibility with Smart product revenues expected to be recognized in 2026 and 2027. Looking ahead, we have a pipeline of solid opportunity for Smart. While SECaaS is our primary growth engine, the recent multimillion-dollar project wins reinforce Smart's role in providing multiyear revenue visibility and supporting the overall profitability with potential upside depending on the project conversion timing. We continue to invest in marketing and sales. These investments are focused on strengthening our go-to-market capabilities, supporting new product launches and driving demand across both service providers and enterprise segments. As part of this effort, we will be participating in major industry events in the coming months. In a few weeks, we will attend Mobile World Congress in Barcelona, where we plan to meet with many of our existing and new potential customers and partners and showcase our latest product and services. We will also participate in the RSA Conference in March, one of the leading global cybersecurity conferences. At RSA, we will demonstrate our cybersecurity solution and capabilities. Our goal is to generate increased traction with new potential customers interested in our Cybersecurity as a Service offering. In summary, we are pleased with our 2025 performance, highlighted by the strong fourth quarter, double-digit revenue growth, improved profitability and cash flow and a significantly strengthened balance sheet. We believe 2025 mark for Allot a structural transition to a more scalable and profitable growth model, driven by our differentiated security first strategy and expanding recurring revenue base. Given the continued growth in our cybersecurity business, strong visibility and solid backlog, our momentum is set to continue in 2026. We expect SECaaS to continue delivering strong double-digit ARR growth, increasing its contribution to the total revenue and driving overall revenue growth in 2026 to between $113 million and $117 million alongside continued profitability improvements. Overall, I'm increasingly optimistic about Allot's future and excited to continue executing on our cybersecurity first strategy. And now I would like to hand it over to our CFO, Liat Nahum, for the financial summary. Liat Nahum: Thanks, Eyal. Revenue in the fourth quarter were $28.4 million, up 14% year-over-year. Revenue from our growth engine, Cybersecurity as a Service were $8.1 million in the quarter, up 70% year-over-year and comprising 28% of our revenue in the quarter. Cybersecurity as a Service ARR as of December 2025 was $30.8 million, up 69% year-over-year. For the year, total revenue was $102 million, up 11% versus $92.2 million last year, with Cybersecurity as a Service up to $26.8 million, representing 26% of our overall revenue. We finished 2025 with more than 60% of our total revenue being recurring revenue. I will now discuss the non-GAAP financial measures. For all our financial results, including the GAAP financial measures and the other various breakdowns of our revenue, please refer to the table in our results press release. Non-GAAP gross margin in the quarter was 71.9% compared with 69.7% in the fourth quarter of last year. Non-GAAP gross margin for the full year 2025 was 72% compared with 70.6% for the full year of 2024. Non-GAAP operating expenses were $16.8 million compared with $15.6 million in the fourth quarter of last year. Non-GAAP operating expense for the full year of 2025 were $64.5 million, similar to $64.4 million for the full year of 2024. We reported Q4 non-GAAP operating income of $3.6 million, up 101% compared with $1.8 million in Q4 2024. Non-GAAP operating income for the full year 2025 were $8.9 million, a significant improvement compared with $0.6 million for the full year of 2024. Allot had 490 full-time employees as of December 31, 2025. Non-GAAP net income was $4.1 million in the quarter or a profit of $0.08 per diluted share, up 105% compared with $2 million in Q4 2024 or a profit of $0.05 per diluted share. Non-GAAP net income for the full year 2025 was $10.9 million or a profit of $0.23 per diluted share compared with $1.6 million in 2024 or $0.04 per diluted share. We reported $8.1 million in positive operating cash flow in the fourth quarter and $17.8 million positive operating cash flow for the full year of 2025. Significantly improving our liquidity position and demonstrating the cash-generating nature and potential of our business model. Cash, bank deposits and investments as of December 31, 2025, totaled $88 million versus $59 million as of December 31, 2024. As of year-end 2025, Allot has no debt. Looking ahead to 2026. As mentioned in previous quarters, our non-GAAP gross margin depends on the specific product mix sold in the quarter. Our expectations for gross margin in the coming year is in the range of 70% as it has been in the previous years. Significant spending on AI data centers has created a sharp increase in demand and supply constraints for key components such as memory and servers. While we are actively managing our supply chain and cost structure, we expect this industry-wide trend to contribute to cost of goods pressure in the near term. As for operating expenses, we expect an increase in our sales and marketing expenses as we invest in sales and building our pipeline for the next 3 years. We also expect a modest increase in R&D expenses as we continue to invest in developing our products. In addition, since the beginning of Q3, the U.S. dollar weakened significantly versus the Israeli shekels. Given the fact that our headquarters are in Israel, we have significant operating expenses in shekel. Although we are hedging part of that expense exposure for 2026, the negative effect of this weaker dollar has been included in our profitability projections for 2026. Despite this FX and cost of hardware challenges, as Eyal noted, we are seeing strong traction with our security-first strategy that integrates cybersecurity and network intelligence, and we are forecasting double-digit revenue growth in 2026, driving revenues to between $113 million and $117 million. We also expect to drive continued profitability improvement. That ends my summary. Eyal and I are now happy to take your questions. Operator: [Operator Instructions] The first question is from Jonathan Ho from William Blair. Jonathan Ho: Congratulations on the strong results and guidance. I just wanted to see if you could give us a little bit of additional detail on maybe what drove the strength in the SECaaS business this quarter as well as any additional detail on your comments about robust double-digit ARR growth in 2026. Is there any way you can maybe triangulate that for us in terms of what that ARR growth could look like? Eyal Harari: Thank you, Jonathan. The results in the quarter for the SECaaS ARR were definitely strong and above our expectations. This was based on the very good adoption rates we see for the security services we already have launched with our customers. We announced in the last 4 quarters, multiple wins between Verizon and Vodafone and adding the new wins in MasMovil in Panama and additional services that were launched with new and existing customers. This expanded our addressable market. And we see that the traction for the security service continues to be strong and therefore, deliver this increased ARR number and revenue. As for next year, we are just in the beginning of the year. We are still seeing that the demand is very high for our security services. And we are expecting, as we said, robust double-digit growth, which means we are -- while our revenue for the total company is double digit in about 13% to 14% in the midpoint, we are expecting the SECaaS ARR to be much higher than that. While we don't have exact number to share in this stage, we believe it will be significantly strong. And this is why most of the growth for the year will come from the SECaaS ARR. The SECaaS ARR, just as a last comment, as you saw, was just passed 1/4 of our total revenue. So it starts to be affecting our total revenue with that increase. Jonathan Ho: Excellent. And then just in terms of your opportunity with the MVNOs, can you talk a little bit about what that could mean in terms of unlocking additional total addressable market? How long it takes for that partnership to maybe translate into revenue and bookings? Yes. Just help us with a little bit more detail there. Eyal Harari: So I will start with the general comment about the MVNO market. We identified that our cybersecurity as an add-on is a unique value proposition. While we started focusing on the MNOs, the network providers, we identified that if we target MVNOs that are coming with a unique business proposition, this might make a lot of sense because they are typically looking for a differentiator. And we are working to offer different MVNOs to add cyber to their base package. And by that come with a more secure network proposition. They are typically not differentiated by the network quality or the big network provider brand like the Verizon or the Vodafone. And we believe cybersecurity could be a nice differentiator. The partnership with Compax, which is an enabler to an MVNO launch is around embedded our security in their infrastructure, which makes it easier to the MVNOs to launch new services. We are currently targeting 2 new MVNOs that are about to launch during Q2 that the cybersecurity will be embedded in their offering. It's hard to know the exact influence because it's -- our success is relied on their success. We know they are targeting into going to millions of new subscribers, and therefore, it could be significant, but we really are dependent on their success in the market, and it's very hard for us to assess it internally at Allot. So overall, we believe it's a new seed we planted that might evolve into something bigger over time. It's not going to influence in the next couple of quarters. But over time, with their subscriber growth and their new network launch, this is another addition to the mix. And we are hoping that following the successful 2 new MVNOs, we will be able to continue to market to additional MVNOs across the world. Operator: The next question is from Nehal Chokshi of Northland. Nehal Chokshi: Congrats on the great results, fantastic cash from operations. On the SECaaS ARR, you've already given a lot of color here on the qualitative drivers. Could you remind us a year ago, you, I believe, described also in a somewhat nebulous way your SECaaS ARR expectations of double digit. And I guess this is additional characterization from robust ARR -- SECaaS ARR growth. So the first question here is, is the wording intentionally more positive than a year ago? Eyal Harari: I don't want anyone to speculate. We do see good demand for the solution. We are giving the visibility we have as we shared before, we are dependent on when we will bring the new customer wins, when there's new wins will be launched and go to market and the timing of those launches are not always in our control and also different marketing campaigns that our customers are having. We believe that the overall strong growth will continue, and this is reflected in our overall top line growth. And we will share more visibility as the quarter progress, and we have more certainty and clarity on service launches. I would say that a significant part of our growth is coming from services that are already launched and already in the market. And we don't see any reason why this should not continue to drive strongly. Nehal Chokshi: Okay. And then as far as the sequencing of incremental ARR as we go through calendar '26 by quarter, what are your initial thoughts on what that profile would most likely look like? I understood that there's a lot of uncertainty still. Eyal Harari: So again, we are looking for strong double digit. If you compare to where we are and you see the incremental growth quarter-by-quarter, you can see that we are progressing very well. And even if you just take Q4 number, compared to where we were in Q1, you'll see an increase. We believe that the incremental revenue and also incremental ARR to be in the same range. But as mentioned, this all depends on the go-to-market campaigns of our customers, which can bring us to even higher numbers as we see some strong campaigns going on in the market for the beginning of the year. And we will know more once we see the results coming in from the campaigns that are undergoing now and to see how they are successful. On the first quarter, we are not -- we are building mostly on what we already have launched. And this is the shorter-term growth as we described in the different growth pillars. And when we go down into the year, we are relied on additional service launches that will drive additional growth to the second part of year. So overall, we are very confident about our SECaaS opportunity this year. Nehal Chokshi: Okay. Great. Last question for me is that in the beginning part of your prepared remarks, you talked about a new SKU already being adopted by existing customers. Can you just give a little bit more detail around that? Eyal Harari: I mentioned the OffNet product that last quarter, we announced the first customer win since we are continuing to work with both our existing and new customers to add this OffNet security component. While our key differentiator is that our security is embedded with the network, we identified additional demand for customers that they want to keep the same best-in-class protection even when they are not on the home network of their customer or their carrier. So if I am now moving from a cellular connectivity to a WiFi, I want to make sure that I don't lose the same high level of protection. And this is where the off-net protection step in. This is an increased value that helps our customers to increase the revenue from the security package. It's like a higher deal of security. And by that is another revenue generator for Allot. As I also added, we are adding additional new products that are being launched as we speak. We are going to share more information as part of the product launch campaign to further increase and add more cybersecurity protections and capabilities that will add into our upsell, cross-sell growth opportunity and drive the shorter and midterm growth for the company. Operator: The next question is from Shaul Eyal of TD Cowen. Shaul Eyal: Congrats on completing a very solid year. Eyal, one of the topics [indiscernible] in recent weeks is whether AI is hitting software. And in that context, the more resilient cyber arena was not immune to sharp stock declines, although a lot shares showed great stability. Talk to us about what your customers are telling you in that context as you drive a different model than other pure security companies? And I have a follow-up. Eyal Harari: Thank you, Shaul. So we do see that AI is increasing the awareness of the cybersecurity threat. I remind we are focusing on the lower-tier customers, the consumer and the SMBs that are typically more open market for cybersecurity. So most of us as consumers and small business owners are still very much unprotected and the awareness is much lower compared to where other enterprise customers are. We see that it's easier to explain consumers that cyber threat is real and the whole buzz around AI and with all the good that it brings, but also the cybersecurity hazards that are created by it. This is something that we believe overall increase the demand and helps carriers to sell more cybersecurity protection in Israel, we see some commercial ads that are targeting for this audience. And this is why we believe that this will drive our demand for our product. And the beauty is that it comes from the network, and therefore, it's always on embedded in the solution and provide you a more secured service. Shaul Eyal: Eyal, maybe talk to us about progress at Verizon, maybe as an example. And how do you envision any potential upsells you haven't seen previously? In other words, how long does it take you to penetrate one of those CPSs and then start and upsell new capabilities that, for example, were not under the master agreement. Just curious. Eyal Harari: So obviously, working with CSP is a long sales cycle. The beauty is that once you are working with the CSP and once you show you are a trusted partner and you already have the contractual framework, the sales cycle is typically shorter. And we definitely demonstrate that in past expansions, even with Verizon that we, in the past -- in the middle of last year, announced the expansion from -- moving from the protecting the fixed wireless access to protecting the mobile business customers. Without getting into specific opportunities with specific customers, I would say that definitely those new additions of the OffNet, as mentioned, and the other new cyber protection engines that I shared on the prepared remarks, these are creating opportunity with our installed base to further enhance our revenue and ARR from those customers. Operator: The next question is from Jonathan Ruykhaver from Cantor Fitzgerald. Jonathan Ruykhaver: So the question I have -- the first question I have is just around the opportunity you're seeing from Sandvine. From what I've read, it seems like Sandvine has emerged as a new entity. It seems like the focus might be more enterprise, cloud and MSP relative to Tier 1 carriers. So I'm just curious if you're seeing any incremental change as it relates to share gains vis-a-vis Sandvine? Eyal Harari: In general, we are not commenting on competition. I would say that -- most of our focus, as you see in our plans and results is around the cybersecurity. So this is where we are mainly putting most of our R&D efforts and our strategic investment. We do see, as mentioned before, that our Smart product line is performing very well. As mentioned in my prepared remarks, we added another high 7-digit new agreement during the last few months that is adding to our backlog of opportunities around the Smart that give us good visibility into '26 and '27 to continue have the Smart product line as important contributor to our revenue growth and profitability. And we continue while executing well and capturing the opportunity in the network intelligence space, we continue to grow and invest strongly into the cyber and continue to grow strongly in this space. Jonathan Ruykhaver: Yes. No, that -- I understand that completely. It just -- it seems to me, obviously, the Smart business is still pretty meaningful overall. And as it relates to AI as a potential disruptor, I am just curious when you look at resources and where you're going to invest in the future and just how does that coincide with the potential increase in network traffic that could be driven by AI. It seems that, that could be a benefit for the SG-Tera III platform. Eyal Harari: Yes. Definitely, AI adds some network traffic in the AI data centers, and we are looking on ways how this adds more demand for traffic intelligence like giving more visibility on the AI use cases that are implemented, getting the right priority to make sure AI critical workloads are getting the right quality of service. And this is why we believe part of the Smart product line should add more capabilities that are in this space. Jonathan Ruykhaver: Yes. Okay. That makes sense. And then the final question, and you've alluded to this already, but from where I sit, it seems like being deployed across the telco infrastructure really has a lot of advantages as it relates to the traditional endpoint deployment for most consumer cyber vendors today. And I know you've talked about new capabilities on the cyber side coming out. Can you give us any more color on timing and specific products? It seems like AI-driven malware, phishing scams, identity theft. It's all a network native problem that you seem to be well addressed to -- well positioned to address. So any other details on that? Eyal Harari: Yes. So one of the things I mentioned before that we see that consumers are looking for a higher level of protection, not only from the network threats, but more from, as you indicated, fraud-related concerns. And part of our innovation and where we are going to add more value is how we can further enhance our protection around identity, how we can use the network data to identify fraud. For example, if you are trying to go into your bank account and suddenly you get a fraudulent domain like phishing attempts or that becomes today much easier to create. And we see that with AI, you create a new domain like instantaneously. And this is something we want to add as additional level of protection to our customers. Jonathan Ruykhaver: So from a timing perspective, are these opportunities that become monetizable as we look into 2027? Eyal Harari: Yes. We are going to launch those capabilities during 2026, the first batch of capabilities. And therefore, we believe this will start to contribute to our revenue, some of them even in '26 and some of them into 2027. Operator: The next question is from Matthew Calitri of Needham & Co. Matthew Calitri: This is Matt Calitri over at Needham. I wanted to stick on the fraud point for a second here. And I was wondering if you guys have any anecdotes you can share on what end users are seeing in regards to the rapid evolution and increased occurrence of AI-generated fraud attempts and how Allot's technology is keeping pace with these more sophisticated attacks. Eyal Harari: Yes. So I don't know if there is, again, a specific anecdote, but as pointed before, we see an increased sophistication and celerity in how often you are encountered with sophisticated impersonation when it's so easy to create new application and it's so easy to create new websites, it's easier for attackers now to go and target you with those fraudulent activities. While in the past, maybe it was done for larger enterprise because it required a lot of efforts to implement. We see that today, it's so easy that also all of us as consumers and small businesses are under attack. What we are trying to do is leverage the unique visibility we have to the network, the fact we see the whole network traffic. We see new network patterns that are happening. And by that, we have -- we are well positioned to identify those frauds in a faster and more accurate way and give this level of protection to our customers. Matthew Calitri: Got it. Very helpful. And then are you seeing any acceleration in pipeline progression? And specifically, I'm wondering if you're hearing from CSPs that they've either lost deals because they don't have a security offering or they've had customers get breached and need more protection there? Anything in that regard would be helpful. Eyal Harari: Yes. We definitely see around the globe, different occasions of cybersecurity events that affect dramatically the carriers around the globe. This usually gets front page on this -- on the country. And we all see that the risk on the consumer is higher, and we see different use cases and events that are populated. Now we are seeing that cybersecurity services are becoming more and more popular but still a lot of -- there are still a lot of CSPs in different countries that are not yet offering that. So we do see some countries which we start to work with and then some other carriers also want to add this service. We see regions that in a certain country, there is no offering, and they are looking to now get also this as cybersecurity becomes more important. So overall, the awareness for cybersecurity for consumer market is getting higher. And SMBs are -- weren't so concerned years ago, now are being more and more concerned with this and asking for higher level of protection. For example, we launched a new firewall as a service. Firewall is very well known and commoditized in the enterprise space. And we see that now also small businesses want to get the same level of protection from the incoming traffic, not only making sure their outbound is protected. Adding to that, we are also looking to add DDoS protection based on the assets we have from the Smart product line that we are introducing as part of the SECaaS. So small businesses could get higher care of protection with the higher risk evolves. Operator: The next question is from Rory Wallace of Outerbridge. Rory Donald Wallace: I was wondering if you could comment on book-to-bill in the Smart business in 2025. I know you mentioned securing the additional high single-digit millions order from an APAC customer in Q4 on top of the tens of millions order earlier in the year. So is it safe to assume that the book-to-bill was fairly positive? And if so, maybe you could contextualize the guidance for 2026 and what you're baking in as far as how much of the pipeline converts to revenue and backlog? Eyal Harari: So the book-to-bill we have is way over 1 as we announced during the year. Starting the year, we announced multiple new accounts of multimillion dollars, then further updating about the tens of millions of dollars and then another new opportunity that we talked about with high 7 digits. All of that is accumulated to many millions of dollars that are still not recognized and our backlog is in a very good shape. And as we start '26, we have very good visibility with the mix of those new wins that adds to the backlog, adding to the recurring revenue that we ended the year of north of 60%. So we are very well positioned to the year, and this is why we guided for continued accelerated double-digit growth on the total revenue for the company. Rory Donald Wallace: Got it. And with the new product launches, for example, the Firewall as a Service and even identity protection at the domain level, which you mentioned, I believe, for the first time today, how is Allot specifically well positioned to sort of modularly add on these additional products for SMBs and consumers? And is this something that's allowing you to stand out in current RFPs or bids with new carriers that see that you can offer more than just a simple anti-malware product, but you can actually bring this one-stop shop solution. Eyal Harari: So Rory, it's both. It's -- first of all, when we are now going into new customers, our offering in cybersecurity engines is more enhanced and we can meet more and more requirements and demand. Part of our strategy was always to this 360 degrees protection. So in the years of product innovation, we build protection from the network, from the WiFi routers and from the DNS. We added the OffNet protection, and we added more capabilities on those different touch points. So firewall, DDoS, identity are different additions that make our portfolio more robust and more attractive when we enhance with new customers. But as you pointed, it's super critical for our existing customers. We have more than a dozen of customers that contribute significantly into our ARR today. Large Tier 1 customers that are offering our current services. And all of those additions are an easier, quicker wins to add on top of the service because we already have the relationship, we already have the agreements. We already have the success in the market with the current service. And they like us looking to see how we can make more money together. And all of those additions are going to support the growth in the coming year. Rory Donald Wallace: Got it. And then with the vision on the consumer side and how you plan to sort of extend capabilities beyond just data protection to digital life cycle. Could you maybe elaborate a little bit on how you see that unfolding? Eyal Harari: Yes. So if we take the value of the networking as the anchor and the base of our protection, but once we are already offering a solution to the customer and with AI coming and creating those additional worries and threats, we want to have a wider and more robust protection to all of these capabilities or requirements. And identity is one example. So even if you are -- your identity is transverse in the network and exposed from different websites and different applications, while this is not a network security, that we are providing. We believe that for the same customers that have already sold from the CSP new service, they want to see and hear how we can protect from identity tests and how we can help them with fraud, how we can help them with increased phishing attempts. We all get those messages. And with the current technology, there are still a lot of concerns from customers. And we are trying to get and answer this demand and create this upsell opportunity for us. So networking is our anchor. This is our secret sauce. This is where we see a lot of the data. And we are taking this not only to protect the data part of the customer, but the whole identity, the whole experience and try to minimize all the threat that he has in the digital environment. Rory Donald Wallace: Got it. And then with the near-term environment, you mentioned kind of the incremental SECaaS ARR that we saw in Q4 of around $3.3 million. That's sort of a good level to use in Q1. And you mentioned promotional activity and go-to-markets that are going on. It seems like Verizon, in particular, is really leaning into the FWA business Internet security product. And is that something that you think could bode well, I guess, for the SECaaS business this year? Eyal Harari: Yes. We see a lot of potential and demand for the SECaaS. As mentioned, our existing customers are promoting the services in different campaigns without specifying which customer is doing what. And as you saw the incremental revenue and incremental ARR this quarter was very strong, we don't have any reason to assume it's going to be softer in the coming quarters. We still see a lot of potential demand coming from our base. And on top of that, we want to add more upsells and cross-sells with new customer launches that we are working -- our sales team are working to add new CSPs to the mix and upsell into existing CSPs, those new cyber protection. So we have all the reasons to believe that the SECaaS growth will continue to be very strong this year. And we are working to continue to ensure that it's going to be a multiyear opportunity and some of our investment is already to secure additional very strong growth into following years. Rory Donald Wallace: Got it. And sorry, I'm running on here, but one more question just on the cost side. Liat mentioned the DRAM shortages impacting margins, which I think is no surprise for people in the networking space. With the Smart gross margins at around 70%, is it safe to assume that the -- I guess, the percent of the BOM of the product that's DRAM is likely not too material. And so this is maybe a few hundred basis points of margin headwind? Or is there any way that you could help us think a little bit more about gross margin and the DRAM impact in 2026? Eyal Harari: Liat? Liat Nahum: Yes, sure. So in general, as we said, we factored some of the cost constraints that we see around the hardware due to the demand and the constraints that we see with AI and specific chips and related items. We are still forecasting the 70% gross margin. And as we also stated, SECaaS is becoming more and more material as a percentage of our revenue. So of course, it also compensates. So we don't expect to be on the lower ranges like previous years, still in the range of 70% factors in those constraints as we currently know [indiscernible]. Rory Donald Wallace: Got it. Eyal Harari: Just to add to this, Rory, we still look on -- as you saw in the prepared remarks, that our profitability will continue to improve. We are seeing that while this external pressure is there, there is an opportunity for -- some of it will be to increase the price with the customers because we cannot control the whole price of the supply chain. And some of it is going to continue to improve because of the SECaaS, as Liat mentioned, that is coming with higher margin, and this goes into a higher portion of our total revenue. So with all this pressure, we are still looking for expansion of our profitability. And with the growth that is expected, both top line and bottom line will improve very positively. Rory Donald Wallace: Understood. So it's more of an acknowledgment of the DRAM cost, but not a warning that it's going to significantly hinder the progress. Well, I think you -- great job with the results in the call. I think you really -- you laid out the vision here for why a lot is both the traffic management and security capabilities really play into the current environment and how AI is a force multiplier for the hacking side and requires that protection on the SMB and consumer side. And I think also talked a lot about how Smart is benefiting. So in light of the volatility in the stock today, would just encourage you and the Board to think about having a share buyback authorization to take advantage of days like today, I think with $88 million of net cash and $18 million of cash flow in 2025. You're more than adequately capitalized. And as we know, markets can be volatile and irrational in the short term. So just few steps from a long-term committed shareholder. Eyal Harari: Thank you Rory, noted. Operator: There are no further questions at this time. Allot's replay will be available on Allot's website in the next day. Thank you for your participation. You can go ahead and disconnect.
Operator: Good morning, everyone. Welcome to Exchange Income Corporation's conference call to discuss the financial results for the 3 and 12 months ended December 31, 2025. The corporation's results, including the MD&A and financial statements, were issued on February 24, 2026, and are currently available via the company's website or SEDAR+. Before turning the call over to management, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meaning of the safe harbor provisions of Canadian provincial securities laws. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the quarterly and annual MD&A, the Risk Factors section of the annual Information Form and EIC's other filings with Canadian securities regulators. Except as required by Canadian securities law, EIC does not undertake to update any forward-looking statements. Such statements speak only as of the date made. Listeners are also reminded that today's call is being recorded and broadcast live via the Internet for the benefit of individual shareholders, analysts and other interested parties. I would now like to turn the call over to the CEO of Exchange Income Corporation, Mike Pyle. Please go ahead, Mr. Pyle. Michael Pyle: Thank you, operator. Good morning, and thank you for joining us on today's call. With me today are Richard Wowryk, our CFO, who will highlight our financial results, along with Jake Trainor and Travis Muhr, who will expand on our outlook. Yesterday, we released our year-end results for 2025. Our annual performance in 2 words was incredibly strong. Our results set historical records for revenues, adjusted EBITDA, free cash flow, free cash flow less maintenance capital expenditures, net earnings and adjusted net earnings, both on an absolute basis and more importantly, on a per share basis. We also exited the year with no convertible debt on our balance sheet. We strategically wanted to simplify our financial structure, and we were able to redeem all outstanding convertible debentures during the year, with the vast majority of the convertible debentures being converted into equity, leading us to our lowest leverage levels in 15 years. Per share records and a delevered balance sheet in the same year is a difficult task. We are proud of this accomplishment. Furthermore, last week, we announced an investment-grade credit rating. This is an impressive achievement as it is a confirmation by DBRS on the stability and the diversity of our business. We now have the capability to issue long-term fixed rate bonds as a layer in our capital structure, which will provide a more permanent form of fixed rate financing at generally lower interest rates. However, I want to be perfectly clear, this does not change our conservative view on leverage. Rather, it is another tool for us to utilize debt effectively as we continue to grow EIC via either acquisition or growth capital expenditures. As I look back over 2025, these record results were generated during a year where global growth was subdued due to rising trade tensions and political uncertainty. Monetary policy was adjusted in both Canada and the United States to stimulate growth as inflationary pressures have begun to subside. Supply chains experienced significant disruptions due to United States tariff actions, international shipping delays due to geopolitical events and several climate-related disruptions, including significant wildfire activity in Northern Manitoba and elsewhere. There was also economic bright spots, including the surge in artificial intelligence investments and businesses with strong fundamentals and competitive moats showed their value. EIC is a shining example of how a diversified and resilient business can navigate periods of uncertainty and continue to thrive. We executed on our strategic initiatives and the proof is in the pudding with our annual results. Our overall results were driven by 20% increases in adjusted EBITDA in each of our segments. In our Aerospace and Aviation segment, the increase was primarily due to the highly strategic acquisition of Canadian North on July 1. Canadian North continued to meet and, in fact, exceed our expectations of profitability and culturally has been a great fit with our other air operators. Our maintenance capital expenditures experienced in the first 6 months were elevated. However, that was expected as we increased the anticipated increased maintenance capital expenditures for the first 12 months of ownership and then a return to normal maintenance CapEx in the future. The Aerospace and Aviation segment was also driven by strong yields in our passenger business, even though there was a temporary reduction in revenue and margins in the second quarter due to the significant wildfire season. We also saw overall strength in our rotary business with fire suppression work, coupled with continued strong performance in our medevac businesses as the scope in our contracts continues to expand. Our aircraft sales and leasing business continues to see robust demand and increasing rental rates for leased aircraft and engines. Parts sales and whole aircraft sales continue to be very strong as well as the demand for regional aircraft remains robust. Lastly, our aerospace business line saw the impact of the second aircraft commencing operations in the U.K., which led to strong Q4 gains over the comparative period. We also continue to see numerous inquiries from various parties around the world for our ISR experience. Recently, Canada released its defense industrial strategy, which aligns greatly with the activities of EIC and our aerospace business. EIC has pitched a Made in Canada solution for Arctic security and sovereignty, which aligns with this industrial strategy. Our Made in Canada team spans multiple provinces and territories with existing indigenous partnerships. We continue to have active discussions with various leaders and decision-makers and are hopeful that our proposal will be successful. I also want to provide an update on the status of the Australia ISR bid. We recently extended our bid for a second time to early April as the bid would have technically expired this month. We continue to believe that we submitted a very strong bid and are waiting for the government of Australia to finish their analysis and come to a conclusion. Our Manufacturing segment had a strong fourth quarter results from both a revenue and profitability perspective. Our Environmental Access Solutions business had a strong finish to the year with net rentals and sales driving the results in Canada. Canada also has strong growth prospects in the later part of '26 as large linear projects are anticipated to need matting solutions. Our composite matting business in the U.S. continued to have favorable customer feedback on the System 7XT mat. During our due diligence, we were very impressed with the testing and the capabilities. However, real-world experience has even exceeded those high expectations. Due to the significant demand signals and the overall confident matting business taking more market share from the traditional wood mat business in the U.S., we announced a state-of-the-art plant in the Southeast U.S. I'm pleased to announce that the plant will be built in Saltillo, Mississippi, and we anticipate the plant will be operational in the mid- to later part of 2027 so that we can execute on our strategic objectives for the North America wide matting business. Our multistory window solution business had somewhat of a stronger quoting season and booked some sizable projects in various jurisdictions in the U.S. and Western Canada. However, 2025 remained a difficult year. As we anticipated and previously disclosed, the reduced profitability was due to the competitive pressures and lower bookings experienced in earlier years. However, the team made progress on reducing our overhead and combining the physical footprint of the business, which will serve us well in the future. We will also continue to retain our experienced staff. When the business turns, we will be ready to capitalize and meet the pent-up demand that exists for affordable housing. Our Precision Manufacturing and engineering business led a strong first quarter as we continue to see positive demand signals within numerous underlying businesses. Business sentiment continues to improve. We see that our customers have accepted some uncertainty as the new normal and have been releasing purchase orders, resulting in increased sales activity in the back half of 2025, which drove strong results for the fourth quarter. Rich will highlight the key metrics for both the 3 months and the full year ended December 31. But before I turn the call over, I wanted to talk about the recent recognition of our business model and our share price. During the year, our market capitalization has increased substantially and today stands at well over $5.5 billion. The market capitalization and the underlying results are lagging indicators of the sustainable, resilient business model that we have built. We have a fantastic foundation of underlying subsidiaries with cultures and people that contributed to achieving these results. Our business model and principles have not changed for over 20 years. We know that we are set up for an accelerating growth profile in the future, and our head office and management teams could not be more excited. Jake and Travis will focus on the outlook for our segments for 2026. However, before I pass over the call, I wanted to speak about our 2026 guidance. While we have not changed our guidance range issued at the end of Q3, we announced 2 contracts since the prior guidance was issued, that being the Air Canada commercial agreement and the acquisition of Mach2. Both are accretive to our shareholders. And accordingly, we have updated our guidance by telling people we have a bias from the mid to the upper end of the $8.25 to $8.75 guidance range. I will now pass the call over to Rich. Richard Wowryk: Thank you, Mike, and good morning, everyone. For the fourth quarter, revenue was $930 million. Adjusted EBITDA was $216 million. Free cash flow was $165 million. Free cash flow less maintenance CapEx was $68 million and adjusted net earnings and net earnings were $58 million and $52 million, respectively. Earnings and adjusted earnings per share were $0.94 and $1.06, respectively, which were increases of 62% and 33% over the prior period. Free cash flow per share increased by 30% to $3, while free cash less maintenance CapEx increased by 38% to $1.24. The per share metric increase is remarkable because the weighted average shares outstanding increased by 14% during the fourth quarter compared to the prior period due to conversion of convertible debentures during the year, shares issued from our acquisitions. All the key performance indicators were fourth quarter high watermarks. These results were driven by both segments with 27% and 38% period-over-period increases in adjusted EBITDA for our A&A and Manufacturing segments, respectively. The Aerospace and Aviation results were driven by strong profitability at each of the business lines due to the acquisition of Canadian North, strong load factors at our various air operators, strong demand for leases and parts at our aircraft sales and leasing business line and the start of operations of the second aircraft for the U.K. home office in Aerospace, along with higher tempo flying under various contracts. Our Manufacturing segment profitability was driven by strong rental and mat sales within our Canadian Environmental Access Solutions operations, along with continued robust demand for our composite matting solutions in the U.S. operations. Lastly, Precision Manufacturing and Engineering had a strong fourth quarter, driven by underlying strength in telecommunications, data center and hydronic heating solution sales. Construction has commenced on a second state-of-the-art manufacturing facility for our U.S. composite matting business. Growth capital expenditures of approximately $4 million were made in 2025, and we anticipate that production should start up in mid- to late 2027. Estimated cost for the new facility is up to USD 60 million, and the expected returns are significantly above our required return threshold. We are seeing significant demand for our System 7XT mat, but further noting that composite mats are replacing traditional wood and mat market share in the U.S. is driving excitement within our management team. Maintenance capital expenditures in the fourth quarter of 2025 were $97 million and were higher than the comparative period due to the acquisition of Canadian North and the timing of maintenance events in our Aerospace and Aviation segment. Growth capital expenditures during Q4 were $134 million and were primarily driven by acquisitions of engines and aircraft in our aircraft sales and leasing business line to increase their leasing portfolio, coupled with King Air aircraft deliveries for the BC Medevac contract in our Essential Air services business line. From a cash flow and working capital perspective, we had a strong finish at the end of the year with a reduction in our net investment in working capital and a positive impact on our cash flow from operations, driven by efforts from our subsidiary management. Last year, we highlighted that certain government receivables were uncharacteristically behind historical collection patterns and those were resolved within 2025. Further, due to the reduced level of output within our multistory window solutions business line, we were able to return significant working capital during the year. We actively manage our working capital and worked with each subsidiary team to convert working capital from 2024 into cash, and we're very happy with the performance throughout 2025. The corporation's aggregate leverage is at historic lows. We had the goal of simplifying our capital structure and achieved that goal during 2025, which looking back was an incredible feat. More than 90% of the convertible debentures were converted into equity of the corporation. For 2026 and beyond, the only dilutive instruments on our balance sheet relate to deferred shares, which will simplify our dilutive EPS. After year-end, we announced that EIC has achieved an investment-grade credit rating with a BBB low rating with a stable outlook from DBRS. With the credit rating, we can access bond markets in the future and could utilize bonds as a fixed rate long-term form of financing. Based on the rate environment today, this would also reduce interest costs. We exited fiscal 2025 with an overall leverage ratio of 2.73, which is the lowest it has been in approximately 15 years. This also does not include the pro forma impact of growth capital expenditures for which a full year return has not yet been fully reflected in our financial statements, such as the U.K. Home Office second aircraft is one example. We've previously discussed that there is a time lag between making those investments and the timing of the adjusted EBITDA increases. With over $300 million of capital deployed by year-end, we anticipate meaningful returns in the years to come, which have been incorporated into our 2026 guidance. Our M&A pipeline remains very strong. Adam and his team executed on a strategic investment in the first quarter of 2026 with Mach2. We have always wanted to diversify our cash flows and provide another avenue for growth. We had looked at a number of narrow-body and commercial businesses. However, none of them met our stringent investment criteria based on their management teams, their niche focus or financial metrics. Fortunately, we found Mach2, which met all of those criteria. Regional One has built the data infrastructure and architecture that is capable of scaling into other aircraft types. And now with the Canadian North 737 data and the narrow-body and wide-body data for Mach2 and experienced personnel at Mach2, we can realize on significant opportunities in that space. Mach2 is situated very near our Regional One business and the management team is well known to our Regional One management team. 737 and narrow-body business is the world's largest aircraft aftermarket parts and leasing business. And therefore, we have a unique opportunity to leverage our strengths to create meaningful returns for that business line long into the future. In terms of other acquisition opportunities, our pipeline includes opportunities in both segments, which are similar to our existing businesses. We have a great foundation of businesses and to the extent that we can find ancillary opportunities to expand our competitive moats, we're always interested in those accretive opportunities. As a reminder on the seasonality of our business, the first quarter is our seasonally slowest quarter because of the impact of winter roads and weather-related impacts for our air operators, coupled with reduced demand for our Environmental Access Solutions business line as the ground is frozen and doesn't require the same level of matting protection. Third quarter experiences our highest level of activity across our businesses and the second and fourth quarters would approximate the average per annum results. Collectively, 2025 was a foundational year for EIC. We simplified our capital structure and executed on all of our strategic initiatives. We added Canadian North in a highly strategic acquisition. And after year-end, we announced Mach2 and our investment-grade credit rating. We are confident that our balance sheet is in a position that allows us to execute on future transactions and the foundation has been laid for future accelerated growth. I will now turn the call over to Jake, who will provide an update for the 2026 outlook for Aerospace and Aviation. Jake Trainor: Perfect. Thank you, Rich. Overall, we're expecting another strong year of growth from our Aerospace and Aviation segment as the trends highlighted by Mike and Rich are expected to continue into fiscal '26. The growth investments made in the past, in addition to the contractual wins, whether it be the second aircraft for the U.K. home office, the commencement of the Newfoundland and Labrador Medevac contract midway in 2026 or the expansion of the Air Canada commercial agreement and increased routes that we've been experiencing will all contribute to the increase in revenues and profitabilities. I will specifically focus on the growth factors by business line. Our Essential air service business line will see growth driven by a multitude of factors when compared to the prior period. The most significant impact will be the inclusion of Canadian North for a full fiscal year. Other increases include the expansion and extension of the Air Canada commercial agreement, which will see aircraft starting to fly midway during the year. We also anticipate stable load factors across our network when compared to 2025. Lastly, we expect continued growth in our medevac business, including the start of the Newfoundland and Labrador medevac contract, which is anticipated to start operations in mid-2026. Offsetting some of these gains is the impact of continued labor shortages and supply chain challenges. Although we're not seeing a worsening of these dynamics, the challenges still remain specifically on aircraft parts, consumables and overall costs, which are experiencing significant inflationary pressures. The aerospace business line is expected to see growth due to strong flying tempos for our surveillance and aircraft going into service for the U.K. home office, which will have year-on-year effects as that aircraft only started operations in the fourth quarter of 2025. Our aircraft sales and leasing business is also expected to experience growth as the investments made in aircraft and engines are leased to customers. There is always a lag between investment and cash flow generation as such, aircraft have to be readied and the lease contracts executed. Regional One remains an opportunistic buyer and stands ready to complete transactions that are accretive to the portfolio. The demand for Regional One and Mach2 remains robust as evidenced by increasing lease rates and shortages of critical parts across the industry, and we expect that trend to continue in 2026. On a long-term basis, we expect maintenance capital expenditures to increase consistently with increases in adjusted EBITDA in our Aerospace and Aviation segment, which is the biggest driver of our consolidated maintenance CapEx. We anticipate an increase over 2025 due to the full year inclusion of Canadian North, coupled with increased flying due to our recent investment in aircraft over the past few years. Lastly, we continue to invest in deferred maintenance at Canadian North and anticipate those investments to continue in the front part of the year. Growth capital investments -- or excuse me, expenditures in 2025 include the 3 remaining new King Air aircraft for the BC EHS contract. Regional One is always working on opportunistic aircraft and engine acquisitions, which may result in growth investments being made in the aircraft and sales business line. Before I pass it off to Travis, the other theme that I've been speaking about at external events and conferences, which is EIC's exposure to the defense and security as well as dynamics within that industry. The recently released Canadian defense industrial strategy is a clear and welcome call to action. When government focuses on an outcome it needs such as capability, readiness, availability or serviceability, industry will do what we do best: invest, integrate partners, manage risk and deliver. That's a model that we've proven around the world, and it's a model that Canada is now rightly setting out to use here at home. The strategy named 10 sovereign capabilities to be prioritized, of which many of these align with our EIC core competencies. These include aerospace, digital systems, in-service support, specialized manufacturing and training and simulation, among others. The defense industrial strategy aligns with our communications with officials within the government over the past year. And EIC obviously has defense and security ties within our aerospace activities, including in-service support and our ISR operations. However, we do have a number of other opportunities, which may not be as obvious. Our specialized manufacturing companies are already engaged in providing parts for defense and space-related applications. Another important capability that EIC can bring to bear is our unique infrastructure in the North. We are the leading experts in Northern aviation and operating in harsh Arctic climates. As people and goods are transported to the north to support enhanced defense activities, it will be a positive tailwind to our air operators. And finally, EIC and its training capacities, including MFC training and CTI can help solve training and development gaps. CarteNav, which is PAL's mission system, has a fully developed command and control digital system capabilities, which are world-class and utilized by several countries around the world for security purposes. I'll now pass it off to Travis to talk about some of the commentary on the manufacturing segment and some of the other opportunities within defense and security within manufacturing. Travis Muhr: Thanks, Jake. Our Manufacturing segment is also uniquely capable of providing solutions to the government. As the north is developed, there'll be a need to expand the transmission and distribution along with opportunities for long linear projects as resources get developed, which will provide further tailwinds for our Environmental Access Solutions business line. Our Precision Manufacturing and Engineering business line has several subsidiaries which have positive exposures to defense and security. Our West Tower business has over 35 years of installing towers and infrastructure into remote and demanding areas. There are numerous opportunities to install radar towers and other infrastructure across the north, and we have unique capabilities due to our scale, manufacturing capability and industrial technology benefits experience. Ben Machine already provides its precision CNC machining and welding of high-precision short-run critical components for defense and space companies across North America and around the world. Our hydronic heating company, DryAir, provides solutions for hydronic heating and hot water applications, which should also be critical for concrete curing and heating alternatives in the north. Looking at 2026 from a manufacturing point of view, we're anticipating materially consistent results overall when compared to 2025 due to changes within our business lines for 2 reasons. Firstly, we see the continuation of the strengthening business environment for many of our Precision manufacturing and engineering subsidiaries, coupled with a positive outlook for our Environmental Access Solutions business line. All the businesses within our Manufacturing segment were experiencing a strong level of customer inquiries in 2025, and we saw that strength converted to sales when looking at the fourth quarter results for both Precision Manufacturing and Engineering and Environmental Access Solutions. Our multistory business -- windows business line has also experienced strong level of inquiries. Performance was as expected in the fourth quarter with period-over-period declines due to the type of projects, production gaps and tariffs. Of note, the recent Supreme Court case on tariffs does not impact that business line as the primary source of tariffs were the Section 232 tariffs on aluminum and steel, which remain in place today. The business line for 2026 will continue to be impacted by project gaps and reduced margins due to the demand environment in prior year bookings because of high interest rates and developer uncertainty. We're starting to see some improvement in various regions around the U.S. and Western Canada. However, developers remain on the sideline due to the excess supply of small condo units, especially in Toronto and developer cost uncertainties. Our Environmental Access Solutions business line is expected to generate higher returns in fiscal 2025. Demand for our composite matting remains robust, and the plant continues to operate maximum capacity consistent with 2025. Our Canadian operations are expected to be a major driver for the business as we start to see strong results in the fourth quarter from a rental and mat sales perspective. Further, we anticipate that long linear projects will commence in the latter half of 2026 across several industries, including transmission and distribution, pipeline and oil and gas. The longer-term prospects of the business remain very robust as there will be material investments in transmission and distribution across North America due to growing electricity demands from homes, vehicles and more importantly, AI and data centers. The Government of Canada major projects office is focused on strategic nation building investments, which provide significant tailwinds in the longer term. This will result in continued strength for the business line into 2027 and beyond. The Precision Manufacturing and Engineering business line is expected to improve from a revenue perspective, but due to changes in project mix, profitability is expected to be materially consistent with 2025. The fourth quarter was a very strong quarter for the business due to product mix and delivery of hydronic heating units, which were deferred from earlier in the year, and we continue to see a strong quoting environment across the various companies. This business line is very diversified with exposure to the defense industry, technology industries, including data centers and telecommunications. The anticipated maintenance CapEx are expected to be slightly higher than the prior year due to the timing of replacement activities. We're also anticipating growth CapEx to be incurred in each of the business lines, but they should be relatively consistent with 2025 with the exception of Environmental Access Solutions where growth capital expenditures will be outlaid for the new state-of-the-art composite plant as discussed by Rich as well as investments in Canadian rental fleet based on market dynamics and anticipated projects. I'll now pass the call back to Mike. Michael Pyle: Thanks, Travis. 2025 and our strategic initiatives have been -- have set the foundation for EIC for the future. 2025 was an incredible year for our business as we set records in all of our key metrics. I am extremely confident in the future of our company. EIC is at the intersection of a number of critical themes and trends. We have remained true to our principles and what has made us successful for the past 20 years plus will continue to accelerate that success in the future. Thank you for your time this morning, and we would now like to open the call to questions. Operator? Operator: [Operator Instructions] Your first question is from Steve Hansen from Raymond James. Steven Hansen: First question, it relates to the matting business. It sounds like it has inflected here from previous levels. Just given some of your commentary about rebuilding the fleet in Canada and the growth CapEx, is it fair to say that visibility is improving through the balance of the year and into '27? I'm just trying to make sure we didn't have sort of a onetime or 1 quarter sort of bump in the business or just trying to understand that it's got better visibility going forward. Michael Pyle: It's a good question, Steve. The matting business -- our comments are sort of the sum total of 2 things. We had some abnormal project delays during the first part of 2025, particularly on integrity digs and some pipeline work that are regular things we do every year and didn't get done earlier in the year. In Q4, we returned to normal in that area. So that generated some improvement in this quarter and will help us into the beginning of next year. We have more mats on rent now than we did at this point last year. But I think the real story is in what's coming. We have a number of T&D projects in Eastern Canada that we're bidding on, and we will win our share of those. And the number of pipeline projects that are at the bidding stage or being awarded to general contractors. And while it's unlikely those generate revenue in the first half of next year, you'll start to see that in the back half of '26. And I think in '27, we're hitting back into a super cycle of the business, much like we did when we went -- when we originally purchased it in 2021 or 2022. Steven Hansen: Okay. Very helpful. And just a quick second one for me is just on the Mach2. I was just hoping you could maybe frame sort of the size of the market opportunity that you're stepping into here, recognizing that it's obviously a much larger set of aircraft out there. But then I guess, secondarily, how do you expect to approach that market from sort of a cadence perspective and tipping your toes in or growing more aggressively? How do you envision the growth profile evolving there? Michael Pyle: That's a really good question, Steve. The Mach2 is part of our strategy. It's not our whole strategy for moving into the narrow-bodies and wide-bodies. Just to back up, Regional One's secret sauce and the reason they're so phenomenally good at narrow at the regional jet turboprop market is they understand who the customers are, what products they need and the value of those assets. So when we're buying aircraft, we buy them with margin in before we lease them, before we do anything. And so we've always coveted the 737 market in particular because it's so huge relative to the regional jet market. But it's important to understand that most of the 737 market is an OEM market. When you're talking about a 737 MAX or those things, those are bought from the manufacturer. They're leased by finance companies. What we do when we lease aircraft is we're burning up green time. We're not a finance lessor. And so most of that -- the newer versions of those aircraft really don't apply to us. Where our opportunities lies as those aircraft age, the value of parts may exceed the value of the plane as pieces. And the knowledge with the team at Mach2, the skills of the people that work there, combined with the knowledge we're drawing from Canadian North's experience in the 737 business will let us dip our toe in there. I think it's safe to say that we're going to walk before we run here. There's a big comparison that if we went back 8 or 9 years in Regional One, we really didn't participate in the ERJ market, the Embraer market. And we were given a couple of opportunities. We slowly dipped our toes in. And now we do almost as much work in the ERJs as we do in the CRJs. I think you'll see a similar movement in the 737s where we'll invest in greater parts inventories, greater depth, develop our knowledge and then slowly move into it. It's not something that you should anticipate a light switch. I think it's a slow, steady growth and bringing in the expertise we got from Mach2 will accelerate that from what we could have done on our own. Operator: Your next question is from James McGarragle from RBC Capital Markets. James McGarragle: Congrats on the strong Q4 here. I got one for Jake here though on the Canadian defense opportunity. So obviously, some pretty big announcements recently. So can you just kind of give us an update on some of the conversations that you're having in Ottawa and what you see as the opportunity set for exchange here over the next couple of years? Jake Trainor: Sure. Thanks, James. A couple of things you got to keep in mind. Some of the big procurements that the government is working on are kind of generational when you're looking at shipbuilding, submarine acquisition, wrestling with the fighter jet issues. So again, there's some of those massive procurements that obviously, that's not our wheelhouse of activities. But what is, is defense and security in the North. And we're seeing -- in terms of opportunity sets, obviously, the ISR capability is one that, as we've announced, we've engaged with the Canadian government. But more broadly beyond that, there is -- and we're seeing it now in just terms of some of the volumes of the logistics support, the travel, the support to greater attention for folks in the north. They're traveling up to the north. That's certainly one. Some of the resource development that, again, comes with enhanced attention on defense and security around the critical minerals. We're seeing that. And then the last piece, and Travis touched on it briefly, was looking at some of our other subsidiaries where there's a general sense of renewal of infrastructure. So whether it's additional towers or maintenance of towers, and that's not only defense and security, that's with our air navigation provider, our ATC system. There's just, as I said, a general overview or a requirement to continue investing in infrastructure that we're going to see touch a number of our businesses across the portfolio. So again, something that we're truly excited about. James McGarragle: Appreciate the color. And then on -- just on the projected return thresholds for Canadian North, when you acquired it, you mentioned the returns would be a little bit below into '26. We should see those things improve. We saw the update on the -- you have to help on the pricing side, given that agreement you signed last year. But can you just give us an update on how things are tracking operationally against some of those return targets that you guys have internally? And then just a little bit more generally, what's the opportunity, what's the capacity in Canadian North to kind of take advantage of some of this Arctic sovereignty investment longer term? And I'll turn the line over after that. Michael Pyle: Thanks, James. When you look at Canadian North, I think it's safe to say that we had ambitious goals for the company. We had great faith in the management team there and that when teamed up with EIC, we could create some impressive results. And it's clearly exceeded our internal expectations. The EBITDA we're generating, we've made more changes and accomplished more than we anticipated at this point in the process. And so when you look at what we need to do from an earnings point of view to get to our 15% return, we're ahead of where we thought we would be. The part that will still take us through next year is the deferred maintenance stuff where we're catching up on some of the overhauls and stuff where they have used rentals as opposed to overhauls. And so that will continue through this year. In terms of capacity, there's room for year-over-year growth, which we expect. But if we get to the point where we're building a military base or there's a new mine or there's those things, the incremental investment in a couple of extra aircraft is modest relative to the returns because we own all of the fixed base infrastructure. Canadian North is well underway to building a new freight hub in Ottawa, which is nearing completion now. In fact, that was the majority of the growth CapEx we incurred in that company last year. It's nearing completion. So I would say that the infrastructure of the business to grow is there. As it grows more and more, we'll add aircraft to meet the demand. The one piece I would say that's a little bit different than that would be on the charter business. The first phase of liquid natural gas plant business is complete, and that you saw that come to a close in Q4. The balance of the charter business continues, although as I said several times, that's at much tighter margins that we're really interested in participating in. So we're in great discussions with our customers. If we're successful on renegotiating those contracts at their maturity, we'll continue in that. If not, we won't. And just as a reminder, we didn't pay anything for that part of the business. Those are the only aircraft in EIC that are leased, and we bought the Canadian North business for asset value. So we may be able to redeploy some of those leased assets into the core business if we needed to, to augment our capacity. Jake Trainor: And Mike, it's -- one other point I'd just like to add to add a bit of color is the other critical angle that we've got is the human capital. We're one of the largest employers in the north. We have incredible relationships with the Inuit and the indigenous partners out there. And again, just understanding the time and space constraints, building a workforce that is able to perform in a harsh environment is a significant -- one of the moats that Mike was talking about earlier. That's a significant challenge for anybody. So again, that's something that we can continue to scale, and it's a big opportunity for us. Operator: Your next question is from Cameron Doerksen from National Bank Financial. Cameron Doerksen: So I guess maybe my question on the balance sheet. Obviously, you've got the investment-grade credit rating, which is great. But I'm just sort of wondering, big picture, how you'd sort of like to see the structure of the balance sheet longer term. I mean, obviously, there's an opportunity to do a fixed interest rate debt deal here. But I guess, how would you like to see the split of the business kind of longer term between raising some debt in the public markets versus the credit facility? And maybe a corollary to that is what sort of interest rate savings do you think you might be able to achieve if you do tap the capital markets for debt? Michael Pyle: I'll take most of that, and then I'll give Richie the hard part, which is the savings part. I think it's really important to understand why we're excited about the bond market. We have tons of liquidity. Our current facility is $3.5 billion, and we've got about $1.25 billion of dry powder. So even with Adam's capability and investing money that we're in good shape there. What the bonds bring us is a fixed rate piece to our balance sheet. We've always had convertibles since our inception, and those served as a big part of our fixed rate exposure. Now with bonds at a far lower rate than convertibles ever were and quite frankly, at a lower rate, depending on term, of course, than our floating rate, I think you'll see over time, bonds make up a significant piece of our capital structure. In the past, we've used interest rate swaps to give ourselves exposure to fixed rates. The bond market is far cheaper than the swap market today. And so I think you'll see us grow that. And one of my personal phobias is when you get into refinancing risk when you have big pieces of paper. And so I like to stagger those over a number of years. And I think over time, as our bond part of our financing matures, you'll see us doing that with different lengths of bonds to make sure that we are unduly impacted depending on what's happening 5 years from now when a bond comes in. And I guess the other thing that's really important that our shareholders rely on us for is we've maintained a very consistent level of debt since our inception. Bonds don't change that. It reduces our reliance what we used to have on convertible debentures and it reduces our reliance on our operating facility, but it doesn't change the aggregate level of debt we're comfortable carrying. Richard Wowryk: Yes. I think, Cam, just to answer your question on savings. It really depends kind of where you're anchoring to. So if you're anchoring obviously to kind of the convertible debenture market, those savings are very meaningful, especially when you include kind of the amortization of the cost of that transaction. So you're 1.5%. If you're comparing it to our credit facility on a variable basis, that suggest that's less comparable in that it's a 4-year facility versus in the bond market, something that's 5 or 7 years. But even on a 5-year fixed basis versus a 4-year floating basis, you'd have some savings on the fixed side. But I think where the comparison versus the credit facility is more meaningful is, as Mike noted, as the debentures we completed those redemptions, but also we have 2 interest rate swaps that are maturing in April of 2026. We've started to ramp up our review of extending those. And when you compare the interest rate swap market versus the bond market, those savings when you're thinking about something of term in 5 years in the bond market versus the swap market, you are saving -- it's not as large of a delta versus the convertibles, but it is still meaningful savings for that certainty of term. So we're excited about it. And we'll still pick up some savings versus the floating, but it's really versus the other capital alternatives that we have to achieve a portion of fixed rate debt where the savings are more material. Michael Pyle: When you look at the fact that we basically carried about a turn of EBITDA on average over our history in convertible debt. And those were in round numbers, the low 6s in terms of interest rates plus the cost of raising versus a bond probably in the very low 4s with very little cost of raising. You're talking about something in the range of 200 basis points versus our historical capital structure, and that's a meaningful difference on our cost of capital. Cameron Doerksen: Okay. No, that's super helpful color on that. And just maybe one quick follow-up for Richard. Just, I guess, on the working capital, you had a big, I guess, positive swing in Q4. It looked like a big change in the accounts receivable. Just wondering what that was. And I guess maybe any thoughts around working capital expectations for 2026? Richard Wowryk: Yes, for sure, yes. So this is consistent with kind of the messaging that we've been giving throughout 2025, but also with the messaging that we gave for 2024. There were a number of government accounts that were kind of well behind our collection patterns in 2024, and we rectified those by working with our partners throughout 2025. And as we always do, we work to develop processes to make sure we don't end up back there. So that was significantly successful during the period. We talked about kind of the multistory window solutions. There's some drawdown of working capital there because of business volumes. And the other thing that we talked about throughout 2024 and early 2025 is just Regional One taking advantage of certain buying opportunities and finding the right place to sell those assets. And just the size of assets that we had purchased throughout 2024, late 2024 and early 2025, the timing of those sales resulted in kind of temporary bumps in working capital. And it isn't something that we apologize for. Regional One will be opportunistic. And if the intention is to resale the assets relatively quickly, those will sit in inventory. And we'll continue to undertake those types of investments as they generate the returns that Regional One does. So -- and to your question on 2026, we haven't provided something formally, but we would expect marginal increases in working capital throughout 2026 just based on the growth in the business. We'll continue our laser focus on working capital throughout the year as we've shown successes throughout 2025 and try to parlay those into other wins. But I wouldn't expect a repeat of 2025. It was driven by a couple of things that we've talked about for kind of the last 12 to 18 months. Operator: Your next question is from Matthew Lee from Canaccord Genuity. Matthew Lee: Maybe we can start with the step-up in manufacturing margin we saw this quarter. Can you maybe just break down how much of that mix or how much of that is mix versus the performance of the individual businesses? And then just maybe some guideposts as to how you're thinking about margin expansion in '26 and then '27? Michael Pyle: Sure. In the fourth quarter, it's more driven by product mix than a major change in the business. Fiscal 2024, the fourth quarter was a very tough period for DryAir, our heating systems company. Conversely, 2025 was a very good fourth quarter. So you've got a delta of a better-than-normal year versus a worse-than-normal year that helped support margins. We had increased rental activity at our Canadian matting business, which is strong for margins. And when we look at that, taking that forward, it's not dramatic in the first half of next year. But as the year progresses, as the rental, the fleet gets more and more deployed, the rental business is higher-margin business, which drives the aggregate margin across the segment. The other thing I'd point out is that the composite matting business ran flat out in the fourth quarter, and we did -- we had just got it the year before, and it wasn't quite running at the same level. So that strengthens it. There's not much of a delta coming up in that. The business is selling every mat it can make, and we anticipate that for the balance of '26 until the new plant opens in '27, which again should be good for margins as we go forward there because the SG&A with the business won't ramp at the same rate as revenues will when the new plant comes online. Matthew Lee: So if I'm understanding that on a holistic level, kind of further margin expansion from efficiencies in '26 and then '27 further ramp as the capacity comes online and of course, Quest starts to recover. Michael Pyle: Quest recovers and the -- I think we're heading into the beginning of a new super cycle in the Canadian matting business. The amount of bidding we're looking at on the pipeline business, but more so the transmission and distribution business, I think we're going to see that business being very busy as we head into the back end of next year and into 2027. So I think that's also very bullish for margins as we go into '27. Matthew Lee: Understood. And then maybe on the ISR front, obviously, a lot of talk about Australia amongst investors. But can you maybe talk about the conversations you're having with other countries and how those conversations have changed as the geopolitical environment has evolved in the last couple of months? Michael Pyle: I think what's changed in the geopolitical environment is 2 things. And Canada is kind of a poster child for it. One is, in the past, there was kind of do I really need to do this and the reliance on the group of NATO and a reliance on the Americans, the position of the U.S. President telling countries they need to help look after themselves has been great for this business. And the uncertainty politically. You can see it, as an example of Greenland. I mean, the talk that NATO partners dispute area of land is not something we've seen in a long time. And so the demand we're seeing from countries wanting to look after themselves is very heightened. And it's across the board. We're in discussions in a lot of places that I'm not at liberty to discuss. But I can say it's like countries to what we do. In the last 5 years, we've added work in the Netherlands. We've added work in Great Britain. We've expanded and lengthened our contract in the Caribbean. We're in discussions. I said we've talked to Greenland about their opportunities. We've been very public on the fact that we've had discussions with the government of Canada in providing them with a northern surveillance solution. So it's pretty pervasive and across the board. Wins tend to be choppy. You don't know exactly when a government is going to come to conclusion. Australia is a great example of that. The Australians are very sophisticated from a bidding point of view, and this process has been going on for over 5 years. We're surprised that it hasn't come to a conclusion yet, but it's going to. And we certainly aren't going to win every opportunity, but we are going to win some of them. And the magnitude of these projects, whether it's a hypothetical 10-plane deal in Australia or something smaller than Canada or something in that 2 or 3 plane range in European countries, all of those fit directly into our sweet spot. And if we're having this call a year from now, I'm pretty confident that we're going to announce some exciting stuff by then. Operator: Your next question is from Krista Friesen from CIBC. Krista Friesen: Maybe just to follow up on Matt's question there. As you think about the number of opportunities for your ISR business over the next 12 to 18 months, would it be fair to say that as you think about the opportunities for debt, it's mostly going to be prioritized towards future potential contracts? Or are you still very much open to other M&A? Michael Pyle: I think if I said to you that I was prioritizing my capital for ISR, Adam would beat me up when I got back to the office. We're kind of -- because they're driven by different parts of our company and different people, they don't really compete for capital so much as if we're successful on both the acquisition front and on earning new contracts, our leverage will creep up. And if it creeps up, we'll use equity if as and when we need it. But we're in a spot right now, Krista, where our leverage is the best it's been since like 2010, I think, at 2.73x and with $1.5 billion -- $1.25 billion, I'm sorry, of dry powder and maybe the opportunity in the bond market. I think we're in a great spot from a liquidity point of view. But I really want to be clear, we're not going to trade off opportunities. We're going to take them all, and we'll just make sure they're appropriately financed. One of our great strengths is if you look back over history, we've always had a balance sheet that lets us thrive in bad markets. So whether it was in 2009, where we were a $60 million market cap company, and we did a $60 million deal right in the middle of the markdown or when we had some silliness with a short attack during 2017, we grew dramatically or even in COVID, we maintained our dividend and did a couple of acquisitions and pay down debt. So we're fixated on maintaining the right level of leverage. And Rich's job is to make sure we have the right level of liquidity. And so we aren't really trading off one against the other. Acquisitions are a little harder to predict when we're going to be successful. But we typically get a couple of them across the line, and I see no reason why this year would be any different. Krista Friesen: Okay. Great. And then maybe just on the Air Canada announcement earlier this year, clearly, a strong vote of confidence in PAL Airlines. Are you able to share a little bit more detail on the cadence of deploying these additional aircraft with Air Canada? Michael Pyle: Jake, do you want to take that? Jake Trainor: Yes, for sure. Thanks, Mike. Great question, Krista. Again, you got to appreciate that we're -- as we continue to expand that offering, we've got to bring crews in. We've got to train. We're buying aircraft because we don't have them sitting on the shelf. So from that announcement, our intent is mid-2026 is when they're going to start being reflected in the scheduled operation. So -- and the other point I want to say is this is a significant vote of confidence as you stated, because it's only an extension -- it's not only an expansion of the number of aircraft, it's an extension of the entire package of aircraft with Air Canada by a further 4 years. So again, tremendous stability and again, strength in partnership. Operator: Your next question is from Konark Gupta from Scotiabank. Nathan Britto: One. It's Nate Britto, actually filling in for Konark Gupta. Just have a couple of questions. Are there any areas within the EIC portfolio where you are in advanced stages of AI adoption? And are there any subsidiaries that may significantly benefit from AI investments around the globe? Michael Pyle: We don't have kind of quantum AI projects that are materially changing the business. There is incremental investment being made in things, everything from airplane maintenance, airplane security and other things like that. But there's nothing that's really a quantum leap from AI. We do tend to use our head office team to help our subsidiaries deploy when they see an opportunity. Maybe one of the biggest benefactors from AI would be our CTI training business in the U.S. We spend a lot of time utilizing AI in the training and then training our customers on the use of AI in their business. And so probably the biggest impact would lie at CTI. Nathan Britto: Okay. That's very helpful. And just as an addition, I would just ask, in terms of your M&A pipeline, how are sellers' expectations these days? And do you think the manufacturing end market has more opportunities than aviation? Michael Pyle: I think it depends on how you look at that. The -- because there are rules in aviation about where you could operate, what ownership you can have in other countries. So by definition, aviation is more limited than manufacturing because manufacturing doesn't have those. Having said that, the areas where we're active in aviation have tremendous growth opportunities in the medium term. We've talked a lot about what's happening in Canadian North. We've talked about in ISR. We've talked about our continued desire to grow our air ambulance medevac business. We're already the biggest in Canada, and we intend to continue to grow that business. So if we talk about the overall macro, I would say there's more opportunities in manufacturing. But if you look sort of closer to home and the things that are bolt-on and things that are close to what we do, I would view them as very similar. I think you'll see a significant continued growth in the matting business. The opportunity in the U.S., the movement towards composite matting is real. It's long term. It's worldwide. And our product is quite simply the best. And so we're going to get that plant up and running, and we'll start taking on, whether it be rental opportunities, selling outside of the U.S., expanding our geographic coverage. We were ecstatic that we had a number of our mats used in the oil patch. And typically, the oil patch are the hardest on mats, and that's why wood matting has historically been what's used there. And we've had great success with our mat on a couple of projects there. Operator: Your next question is from Razi Hasan from Paradigm Capital. Razi Hasan: Can you maybe just talk about the margin implications for the Aerospace business, training versus ISR? And going forward, do you expect the Aerospace business to have a higher contribution than it did in 2025? And if so, just what are the puts and takes there? Michael Pyle: So the big macro you brought up first is bang on is that the margins in anywhere where we own the aircraft are always higher because of the capital deployed. So our training business is a very low capital business. Our return on investment is great, but our EBITDA margins are much, much lower. As we grow the ISR business, it tends to be the highest or near the highest of our aviation businesses from a gross margin point of view. So the growth of that will be good for margins. For competitive reasons, I'm not going to get too detailed about what those are, but they're commensurate with the risks and the capital we put forward on those aircraft. Razi Hasan: Okay. That's helpful. And then maybe just switching gears just on Canadian North. As much as you can speak to, can you just maybe walk through the revenue contribution from Canadian North? It looks like the segment was much stronger than we had estimated. So I just want to make sure we're modeling it properly. Any color there would be helpful. Michael Pyle: I don't have those numbers in front of me. What I would say is that maybe one of my guys can grab and see if they can pull up while I'm talking. But the -- you have to break Canadian North into 2 pieces, the regular business in the North, which is very similar to what Com Air does, which would have very similar margins to the balance of our Northern aviation. And then you have the charter business. And I'm not talking about the charters within the far north. I'm talking about the charter business servicing the oil patch and servicing the natural gas projects. In those cases, those margins are much lower. So as we make some of the changes in the Canadian North business and merging some of the purchasing capabilities and those things with EIC, you will see a continued improvement in gross margins at Canadian North and the margins continue to improve with the full price increase that was in the new contract with the government of Nunavut taking effect because when we took the contract, we signed the contract, there's a whole bunch of tickets that were already outstanding under the old pricing. And so the full impact is just showing up now. So that's part of the reason you saw increases in margins in that period. Richard Wowryk: And just -- while we don't normally disclose subsidiary by subsidiary financial information within our ICFR disclosure within the MD&A, there is a note that aggregates revenue for Newfoundland Helicopters and Canadian North from a revenue perspective. So you can pull what the 6-month impact was for those 2 entities. Canadian North is materially all of it based on the size of the deal. The one thing I would caution, though, is when you just think about projecting that into the future is that as we've noted, the LNG contract wound down in the fourth quarter of 2025 here. And so just multiplying that by 2 and saying that's what revenue is going to be in 2026 would be overstating the impact of those charter revenues because of where that contract is. Operator: [Operator Instructions] And your next question is from Amr Ezzat from Ventum. Amr Ezzat: Congrats on a very strong year. I've got just one very maybe conceptual question for you guys on guidance. So you guys reiterated 2026 with a bias to the upper end following Mach2 and Air Canada. But as I think about the defense and sovereign themes that you guys discussed in your prepared remarks, can you help us distinguish what's structurally embedded in your current 2026 run rate versus what would represent an incremental upside. And I do understand that you guys don't include any sort of ISR wins. But specifically, are you seeing stronger activity levels in defense adjacent parts of the portfolio that support the base case independent of ISR contract wins? Michael Pyle: Yes. It's a really good question. The simple way to look at it is our guidance is always based on what we know. So it's based on contracts we've won, investments we've made. And so when we looked at our guidance after the 2 things we've announced, the Mach2 and the Canadian North acquisition, we thought do we change our guidance based on this. And because neither of them were full years in the current year. And if you added what the portion of the year that we had to our internal budget, it would get us over the top of the range that we have, but closer to the top of it. We decided to move within the guidance we've given as opposed to replacing the guidance. In terms of opportunities and things we're seeing in defense, we haven't really included anything in there other than what we either have or very highly confident we will have in that guidance. So as we succeed on some of these defense initiatives, whether it be ISR or maybe it's West Tower building radar towers in the north or any number of those things or quite frankly, the development of a critical minerals mine in a Callaway. Those things would be additive to what's in the budget. We try not to predict what's coming in, and then you can get very choppy results versus your guidance. We want to make sure people can rely on what we predict. And so as a result, we really don't put much in there for positive wins that we aren't sure of yet. Amr Ezzat: Understood. What I'm hearing is it seems conservative. Michael Pyle: Those are your words, I'm not... Amr Ezzat: Yes, these are my words, exactly. If you allow one more follow-up, and I'm not sure you could answer this, like can you -- do you guys like quantify or can you quantify how much of your manufacturing, whether it's revs or EBITDA are exposed to defense and probably very hard to answer, but... Michael Pyle: It's really hard to quantify that. What I would say is when you take defense/investment in the north because the investment in the North is going to be much more than just ISR or a military base. The investment in the north is going to be developing in critical minerals. It's going to be work on the Northwest passage. It's going to be nation building. There's discussion of pipelines across there to Churchill. All of those provide dramatic opportunity for us. We are the north to steal the Raptors statement in terms of we now -- with the acquisition of Canadian North, we own the infrastructure to do whatever people need us to do up there. And that's something that we're -- to be honest with you, we're just cutting our teeth on. When we bought the company, we bought it based on what we knew it does, not what we think it can do in the future. And so I really believe the opportunity in Nunavut and the Northwest Territories in Yukon, we're just starting. Richard Wowryk: The only thing I'd add... Jake Trainor: Go ahead, Richard. Richard Wowryk: The one thing that I'd add is that it's a growing part. And we're leveraging the collective expertise across all of our organizations to work through bidding processes with our manufacturing folks who may not have the same experience going through large government procurement processes. So we are cross-leveraging resources and experiences from subsidiaries that have that experience to increase our exposure to the kind of the defense world on the manufacturing side. Jake Trainor: Yes. I was just going to -- I was going to expand the fact that while some of our businesses don't have direct defense exposure today, every one of our businesses had the opportunity to, whether it's the exposure to the infrastructure that is going to need to be built, whether it was the services provided to enhance defense and security or direct activity on behalf of the various government agencies for defense and security. So again, it's probably less about what specific percentage exists today and more about the roadmap of opportunities we're looking at moving forward. Amr Ezzat: Understood. And I do agree. I think it's a very underappreciated part of your business. Operator: There are no further questions at this time. Please proceed. Michael Pyle: I want to thank everyone for joining us this morning. I don't generally comment on stock price and those kind of things, but this is an exciting morning as the early trading has pushed our stock over the $6 billion market cap for the first time. So it's a good way to start the week. Thanks, everybody, and I look forward to talking to you with our Q1 results and at our AGM in May. Have a great day. Operator: Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.
Operator: Greetings, and welcome to the Veeco Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] It is now my pleasure to introduce your host, Alex Delacroix, Head of Investor Relations. Thank you. You may begin. Alex Delacroix: Thank you, and good afternoon, everyone. Joining me on the call today are Bill Miller, Veeco's Chief Executive Officer; and John Kiernan, our Chief Financial Officer. Today's earnings release and slide presentation to accompany today's webcast is available on the Veeco website. To the extent that this call discusses expectations for future revenues, future earnings, the timing and expected benefits of the proposed transaction with Axcelis, market conditions or otherwise make statements about the future. These forward-looking statements are based on management's current expectations and are subject to the risks and uncertainties that could cause actual results to differ materially from the statements made. These risks are discussed in detail in our Form 10-K annual report and other SEC filings. Veeco does not undertake any obligation to update any forward-looking statements, including those made on this call to reflect future events or circumstances after the date of such statements. Unless otherwise noted, management will address non-GAAP financial results. We encourage you to refer to our reconciliation between GAAP and non-GAAP results, which you can find in our press release and at the end of the earnings presentation. We will not be addressing questions related to our pending merger with Axcelis. Please note that on February 6, 2026, our stockholders voted to approve all proposals related to our pending merger with Axcelis. We urge you to read the joint proxy statement relating to the transactions with Axcelis. With that, I would now like to hand the call over to our CEO, Bill Miller. William Miller: Thank you, Alex, and thank you, everyone, for joining us on our call today. Veeco executed well in 2025 and accomplished important milestones, setting the stage for future value creation. We grew our semiconductor business, experienced rapid expansion in our order activity for compound semiconductor and data storage customers, supporting strong growth in 2026, and continued to invest strategically in next-generation technologies. Additionally, on October 1, 2025, we announced an all-stock merger agreement with Axcelis Technologies to create a leading semiconductor equipment company. Our new products are gaining powerful traction, fueled by accelerating demand from AI and high-performance computing. As hyperscalers ramp their next-generation infrastructure, we're seeing clear acceleration in order activity. This momentum drove a meaningful build in backlog at year-end, supporting an increase in revenue for 2026. Later in the call, John will provide additional detail on our backlog. Revenue for our semiconductor business reached another record in 2025, which was primarily driven by laser annealing and wet processing and ion beam EUV technology. We shipped an LSA evaluation system to our second Tier 1 DRAM customer, showing exciting progress for penetration with our memory customers. A key driver for the semiconductor market came from our advanced packaging business, which we doubled year-over-year. This was driven by wet processing and lithography tool shipments for 3D packaging. New products for the compound semiconductor market are gaining significant traction and driving market share gains. We received orders for our new Propel 300-millimeter GaN-on-silicon system for GaN power and microLEDs and Lumina plus arsenide phosphide for photonics and solar end markets, which support revenue growth primarily in the second half of 2026. Additionally, in the data storage market, we see customers expanding capacity, increasing CapEx spend and adopting Heat-Assisted Magnetic Recording, resulting in increased orders in the third and fourth quarter of 2025 for our ion beam and wet processing equipment. This is driving an increase to revenue principally in the second half of 2026. We continue to invest in strategic opportunities for future growth with our next-generation technologies. We've extended our IBD300 systems evaluations at 2 DRAM memory customers into 2026. Our customers are providing positive feedback with respect to the quality of film performance. We remain excited about the opportunity to introduce ion beam as the fourth deposition technology for the front-end semiconductor space. Additionally, our customers are evaluating our next-generation nanosecond annealing systems, which are progressing well, and we expect to expand the evaluation program to another customer in 2026. Let me take a moment to briefly update you on the progress of our proposed merger with Axcelis. We're pleased that shareholders of both companies approved the merger at their respective special meetings held on February 6. In addition, we've secured regulatory approvals in several key jurisdictions and remain actively engaged with the relevant authorities in China as we work toward the final clearance needed to close. Based on our continued progress, we anticipate completing the transaction in the second half of 2026. Furthermore, our integration work with Axcelis continues to reflect our strategic alignment and confidence in the merger. We believe the combination will increase R&D scale, enable a broader complementary product platform, realize several growth synergies and ultimately drive sustainable returns for all our stakeholders. Switching gears to financial highlights for the quarter and full year. Our fourth quarter revenue came in at $165 million, and our EPS came in at $0.24, both at the midpoint of guidance. Our semiconductor business accounted for 67% of revenue. The full year top line was $664 million, and our EPS was $1.33, with our semiconductor business hitting a record year, accounting for 72% of total revenue. This performance demonstrates we're well aligned with ongoing investments in advanced semiconductor technologies and customers' road maps. Next, I'll review Veeco's critical role in the semiconductor manufacturing space, where the majority of our revenue is generated and we continue to grow year-over-year. Veeco has historically had a strong position with foundry and logic customers for annealing applications, and the foundation has provided a high level of trust and repeat business across advanced nodes. At the same time, expanding our presence into memory is one of the most important strategic priorities. The transition to AI-driven architectures, high-bandwidth memory scaling and 3D structures are driving new thermal processing and material requirements where Veeco has clear technical advantages. For our LSA tool, we're production tool of record at all 3 Tier 1 logic customers, demonstrating our strong competitive position. Our next-generation NSA system has 2 evaluations at Tier 1 logic customers, and we're planning to ship an evaluation system to the third Tier 1 logic customer in 2026. These evaluations for our customers' low thermal budget applications such as contact annealing, 3D device stacking and material modifications are progressing well. We're expecting sign off of 2 evaluations during 2026 with the potential for pilot line orders to shortly follow. On the memory side, we continue to make meaningful progress penetrating the space and are expanding our footprint with Tier 1 DRAM manufacturers. In addition to being the production tool of record at a leading HBM DRAM customer, we recently shipped an LSA evaluation system to a second DRAM manufacturer, an important milestone that reflects growing confidence in our laser annealing capabilities for memory applications. We also had 2 IBD300 systems under evaluation at leading DRAM customers with evaluations extended into 2026. Our IBD300 system enables deposition of low-resistance films that are critical for advanced DRAM structures such as bitline. This provides Veeco with another opportunity to expand our SAM with the next-generation memory nodes. Further penetrating the memory space represents a significant long-term growth opportunity as DRAM requirements become increasingly complex with the transition to HBM, stacked architectures and low-resistance metallization designs. Our recent wins and evaluation activity represents early but significant steps toward establishing meaningful long-term growth in the DRAM market as this segment accelerates within the industry. Veeco is also the market leader for IBD EUV systems for the deposition of defect-free mask blanks. Leading logic and memory device makers continue to expand adoption of EUV and future adoption of high-NA EUV lithography, which our IBD technology is a key enabler. We're also expanding our business to include EUV pellicles, which are increasingly being used to protect the mask from particles. We're confident our product road map is well aligned with the industry and our customers' needs. Lastly, in advanced packaging, we've doubled our business from $75 million in 2024 to $150 million in 2025, driven by AI-related demand. We've won multiple orders for advanced wet processing and lithography systems from leading foundries, and we continue to see strong demand driven by heterogeneous integration and 3D packaging. Looking ahead, we forecast semiconductor market growth at the leading edge, driven by AI and high-performance computing. We expect our semiconductor served available market to continue to expand, driven by new nodes and AI-related demand, including investment in gate-all-around, high-bandwidth memory and 3D packaging. In annealing, we project our SAM to be $1.3 billion by 2029 as devices continue to shrink and shallower and more precise anneals are required to improve performance. In 2026, we see our logic, foundry and memory customers all increasing capacity for our annealing tools. Next, our IBD300 platform for low-resistance metals together with our ion beam deposition systems for EUV mask blanks and pellicles represent a total SAM opportunity projected to reach $500 million by 2029. The need for low-resistance metals deposited in a uniform manner is required for better device performance and to minimize power consumption. Lastly, in the back-end semiconductor process, our advanced packaging business for our wet processing and lithography tools continues to expand and the SAM is projected to reach $650 million by 2029. Throughout the year, we've demonstrated the ability to respond successfully in meeting our customers' extreme high-volume manufacturing ramp of advanced packaging for AI. Based on the strong relationships we've developed with Tier 1 foundry and memory customers, we're invited to engage with their R&D teams and becoming a critical partner in their future road maps. We continue to focus the organization on our key growth areas and remain excited about successfully positioning our business to align with industry advancements and meeting our customers' growing needs. I'll now hand the call over to John to walk through the financials and provide an outlook for 2026. John Kiernan: Thank you, Bill. To begin with revenue for the year, revenue came in at $664 million, declining 7% from the prior year. Our semiconductor business delivered $477 million in revenue, up 2% year-over-year and comprising 72% of revenue. Revenue in the semiconductor market was driven largely by laser annealing, ion beam technology and our advanced packaging wet processing and lithography products. As disclosed in January, 2 LSA tool shipments to customers in China were under customs review. These matters have since been resolved, and we recognized $15 million of revenue related to these systems in the fourth quarter of 2025. Compound semiconductor revenue totaled $60 million, a decline from the prior year, representing 9% of revenue. Data storage revenue totaled $39 million, declining from the prior year and comprising 6% of revenue. Lastly, scientific and other revenue was $89 million, increasing from the prior year, making up 13% of revenue. Turning to revenue by region. The Asia Pacific region was 50% of revenue, led by shipments to leading Taiwanese semiconductor customers for multiple vehicle products. Our China portion was 27% of revenue with a decrease from the prior year in laser annealing systems. The U.S. accounted for 15% of revenue. And lastly, EMEA was 8% of revenue. Our order backlog ended the year at $555 million, a significant increase of $145 million from the prior year. This 35% growth in backlog reflects the strong acceleration in orders in the second half of 2025. This positions us well for revenue growth in 2026, principally in the second half. I will provide additional market segment commentary in the guidance section. Moving to our full year 2025 non-GAAP operating results. Gross margin came in at 41%. Operating expenses totaled $188 million. Operating income was $84 million and net income was $80 million, with tax expense of $10 million, yielding an effective tax rate of 11%. Diluted EPS was $1.33 for the year on approximately 61 million shares. I'll now provide selected GAAP full year data. Amortization expense was $3 million. Our equity compensation expense was $37 million; depreciation, $17 million; and net interest income was $4 million. Turning to Q4 revenue by market and geography. Revenue came in at $165 million, flat from the prior quarter and at the midpoint of our guidance. Semiconductor revenue declined slightly, comprising 67% of revenue. In the compound semiconductor market, revenue increased from the prior quarter to $20 million, totaling 12% of revenue. Data storage revenue remained flat at $10 million, comprising 6% of revenue. Similarly, scientific and other revenue remained flat at $24 million, making up 15% of revenue during the quarter. Looking at revenue by region, the percentage of revenue from Asia Pacific increased to 54% due to an increase in semiconductor sales, mainly in Taiwan. Revenue from China was 23%, U.S. 18% and EMEA was 5%. Now moving to our quarterly non-GAAP operating results. Gross margin totaled 38% at the midpoint of our guidance. Operating expenses totaled $49 million, also in line with our guidance. Income tax expense was approximately $1 million, resulting in an effective tax rate of 4%. Net income came in at $15 million, and diluted EPS was $0.24 on 62 million shares. On the next slide, I will discuss our balance sheet and cash flow highlights. We ended the quarter with cash and short-term investments of $390 million, a sequential increase of $21 million. From a working capital perspective, our accounts receivable decreased by $6 million to $111 million. Inventory increased by $12 million to $275 million and accounts payable increased by $12 million to $55 million. Customer deposits included within contract liabilities on the balance sheet increased by $14 million to $50 million. Cash flow from operations increased from the prior quarter to $25 million, bringing our total for the year to $69 million. And CapEx totaled $3 million during the quarter and $16 million for the year. I would now like to provide a non-GAAP outlook for Q1 and fiscal year 2026. Q1 revenue is forecasted between $150 million and $170 million. We expect gross margin between 37% and 38%, OpEx between $48 million and $50 million, net income between $9 million and $15 million and diluted EPS between $0.14 and $0.24 on 62 million shares. The momentum of orders secured in the back half of 2025 will contribute to meaningful revenue growth, primarily in the second half of 2026, supporting a strong full year outlook. Full year 2026 revenue is forecasted between $740 million and $800 million. We expect gross margin between 41% and 43%, OpEx between $205 million and $220 million, net income between $94 million and $115 million and diluted EPS between $1.50 and $1.85 on 63 million shares. Let me provide commentary for each of our market segments. Beginning with the semiconductor market, we expect strong growth from our Tier 1 customers driven by AI and high-performance computing, more than offsetting declines in mature node China business. We are seeing accelerating demand for our LSA tools at advanced nodes, along with growth in wet processing applications for advanced packaging as customers scale capacity driven by AI and HBM. In the compound semiconductor market, we see growth in 2026 weighted in the second half. We received several orders in 2025 for our new Propel 300-millimeter GaN-on-silicon system for GaN power and microLED applications as well as orders for our new Lumina plus arsenide phosphide system supporting photonics and solar end markets. These new product wins are driving revenue in the second half of 2026. We are also seeing continued engagement from customers and are taking orders for deliveries into 2027. In the data storage market, we secured orders in the second half of 2025 for our ion beam and wet processing equipment. As we move into 2026, customers are signaling broader HAMR adoption, increasing CapEx investments and expanding capacity. These trends by our customers are driving momentum for our business as we are fully booked in 2026 and have multiple orders extending into 2027. Before I hand the call over to the operator for Q&A, I want to reinforce that AI is a critical driver of Veeco's growth in semi, compound-semi and data storage markets, and we have a strong portfolio of enabling technologies that are increasingly critical to serve leading customers. From a semiconductor market perspective, analysts are projecting the industry to grow to over $1 trillion in the near term with AI accounting for more than half of sales. We are confident that Veeco is well positioned to create long-term value in an increasingly AI-driven semiconductor market. We are also excited about the pending Axcelis merger, which we feel will enable us to better accelerate our investments in next-generation technologies and offer an even better product portfolio to our customers. I would now like to turn the call over to the operator to open up for Q&A. Operator: [Operator Instructions] As a reminder, given the pending merger with Axcelis, Veeco management will not be addressing questions related to the merger. [Operator Instructions] And the first question comes from the line of Dave Duley with Steelhead Securities. David Duley: I was wondering for the outlook for 2026, if you could give us an idea of what you expect your semi business to grow and your hard disk drive business to grow. Actually, just all 3 segments, to your best of your abilities, would be awesome. John Kiernan: Yes, I'll take that, Dave, and thanks for the question. So yes, so we've given a guide of $740 million to $780 million of revenue for next year. William Miller: $800 million. John Kiernan: $800 million, excuse me. Thank you, Bill. $740 million to $800 million next year. So if you pick the midpoint of the guide at $770 million, that's up 16%. And we do expect growth in the semiconductor piece of the business, the compound semiconductor and the data storage piece. The one area of the market that we expect to be down would be the scientific and other after a strong year in 2025, and we had some large quantum computing orders that we don't see at this point continuing into 2026. So we're going to see that business, call it, about $60 million at the midpoint of our guide, down by about 33%. But let me come back to the semiconductor market first. It is our largest market. We expect growth around 15% at the midpoint of our guide, so about $550 million revenue year in 2026 for the semiconductor piece of the business and fairly in line with the range of estimates for WFE growth between 10% and 20% for next year. On the compound semiconductor side, as Bill mentioned in the prepared remarks, we're really making traction with some of our new products and particularly for the GaN-on-silicon 300-millimeter for both GaN power and microLED and our new large batch size arsenide phosphide tool for solar and other applications. And we expect that business to be up about 1/3 next year to about $80 million. And then the data storage, we started signaling the data storage that customers were increasing the order activity in Q3. We expected that activity to continue in Q4. It has. And we're expecting that business to double to about $80 million in 2026. And we mentioned in our prepared remarks as well that we're fully booked for system orders for 2026 at this point in time and even started booking orders into the beginning of 2027. David Duley: And along that last point in the hard disk drive business, if you're fully booked this year and it's spilling over into next year, I would imagine your customers' CapEx is obviously going up. I would think this would be a multiyear increase in business in that sector. Maybe you could just help us understand what you think. William Miller: Yes. We're definitely seeing with the adoption of HAMR, the capital intensity is going up. Certainly, their CapEx is increasing. And we're seeing the first round of orders that we'll be shipping in '26 are really for the front-end fabs. And now we're starting to see some orders not only continuing in the front end, but also the back-end fabs that we call the slider fabs for shipment in '27. So it does seem that the amount of heads that are being shipped is increasing because the slider fab is really just a function of the number of heads shipping. So that's a very positive sign actually. So I think it's -- there's clearly legs into '27 and potentially beyond. David Duley: Great. Final question for me is on the Propel. I was just wondering, that's the GaN-on-silicon tool, I believe. What do you think the opportunity for revenue production is in '26 and '27? And I would imagine the outlook there might be increasing just given that there seems to be a lot of momentum to adopt GaN in the data centers. William Miller: Yes. What we -- as you know, Dave, we've had an evaluation system at a leading power IDM for some time. And that's going very well. We're in a very solid position there. And we -- I think on our last call announced that we actually received a pilot line order -- received a pilot line order for a -- excuse me, a pilot line order for shipment in 2026. And so that's going to drive incremental business in probably approaching $15 million range. And I would expect there's a possibility if they stick with their plans of continuing to ramp in '27, we might receive orders in the second half of '26 to be shipped in '27 for that. So that's the power opportunity. We also have a tool in backlog for 300-millimeter Propel GaN-on-silicon for a microLED application. And we're actually doing demos with a few different customers for microLEDs as well as other GaN power opportunities. Operator: The next question comes from the line of Denis Pyatchanin with Needham. Denis Pyatchanin: I have a question about the gross margins. So it seems like we've taken a little bit of a dip here in Q4 and then in Q1, I think in Q4 was because of some evaluation systems. And I think you're still guiding a little bit below where you were trending before that. Maybe can you tell us about gross margins in Q1 and how you see them progressing through the rest of the year, given that you guided, I think, 41% to -- was it 43% for 2026? John Kiernan: Sure, Denis. Thanks for the question, and I'll be happy to. So yes, we're guiding Q1 at a similar level to Q4. And we had highlighted coming into Q4 that we saw a change in our product mix. And that product mix moved a little bit more to advanced packaging as a bigger percentage of the overall business with a lower gross margin profile and also some impact from anticipated signoffs from evaluation systems. And I would say that for Q1, we're seeing a similar revenue profile and similar margin drivers there for Q1. As we look into the year, we do see gross margin accelerating and accelerating, particularly in the second half of the year next year. And that's driven by a couple of factors. One, that we're seeing business from our new products and the gross margins on those new products are higher than the most recent averages. Increase in the data storage business will help towards gross margin improvement and significantly higher volumes in the second half of the year next year will also benefit the gross margin profile. And I would say, as we exit the second half of the year or we're in the second half of the year in 2026, we would expect to see gross margins at our 45% gross margin target. Denis Pyatchanin: That's some great detail. So just following up on that, is there currently any sort of tariff headwind that's factored into the guide? And could you quantify it if possible? John Kiernan: Yes. So we started to see the impact principally in the second half of last year, and it was running about 100 basis points of gross margin headwind to pre-tariff regime. And we are baking in slightly higher tariff regime in our forecast in 2026 compared to 2025. Operator: Thank you. We -- at this time, we have no further questions. I'd like to turn the call back over to Bill Miller for closing remarks. William Miller: Thank you. As we look ahead to 2026 and beyond, we remain confident in our ability to build momentum. We continue to be excited about the pending merger with Axcelis, which we believe together will enhance our ability to bring needed solutions to the rapidly evolving semiconductor industry and better serve our customers and shareholders. We look forward to keeping you updated on our progress. I would like to take a moment to thank our customers and shareholders for the continued support as well as recognizing our employees for their dedication. Have a great evening. Operator: Thank you. This concludes today's conference. You may disconnect your lines at this time, and we thank you for participating.
Anette Olsen: Good morning, everybody, and a heartly welcome to the fourth quarter presentation for Bonheur 2025. My name is Anette Olsen. I'm the CEO of Bonheur. Today, we will do the presentation as usual, where Richard Olav Aa, our CFO, will present to you the overall figures. And we will then move to presentations by each individual CEO for the underlying companies. We have today a new CEO that we will present to you. She has been with us for a bit of time now, but first time presenting, and that is Maren Sleire Lundby. She is the CEO of Fred. Olsen Seawind. So a heartly welcome to you, Maren, and for everybody else. We will move to the figures. Richard? Richard Olav Aa: Yes. Thank you, Anette, and also a warm welcome from me to this fourth quarter presentation. Before moving into the numbers, I think in my view, there are a lot of events this quarter, but maybe 3 things that I would like to point out that we -- one is that we continue to grow our earnings despite that significant assets like the Mid Hill windfarm and the installation vessel, Brave Tern, both have been idled the full quarter. And despite of that, the earnings continue to grow. Secondly, we have a major transaction this quarter with our long-term partner, MEAG, which we have been partnered in the renewables side for many years now, but also now are partnering with Fred. Olsen Windcarrier, which both Haakon Magne Ore and I will come back to. And thirdly, is a stellar booking performance in Cruise Lines. I think it's the best fourth quarter booking we ever had, and Samantha will come back to that in her presentation. A lot of other events as well, but I would like to highlight those 3 before we move into the numbers. So here, we have the highlights for the quarter per segment. I will be quite brief on this because this will be well covered by the CEOs. But starting from left, Renewable Energy and EBITDA fourth quarter last year of NOK 444 million, down from NOK 587 million. The main explanation for the reduction is that in fourth quarter '24, we booked NOK 160 million in insurance claim on the Mid Hill windfarm, that we don't have in the fourth quarter of '25. There are, of course, other pluses and minuses. Generation is somewhat down. We still have outages on several windfarms this quarter, but that was also the same in the fourth quarter in '24. So the main explanation on the result is the insurance. Sofie will cover the grid situation more in detail, but there are pluses and minuses there. It's very positive what we see in the U.K., that the U.K. government really takes renewable energy seriously and not at least with the new AR7 auction and also they're reinforcing the grid. Unfortunately, this comes with some negative impact on us and especially on the Mid Hill windfarm that Sofie will come back to. On the construction side, she will also cover that in much more detail. But Crystal Rig IV is soon to be finished actually this quarter. And then we have Windy Standard III, where we now have some issues related to turbine transportation, which could potentially delay the project. Wind Service, a good improvement from NOK 180 million to NOK 359 million year-over-year and despite Brave Tern being idled in the full quarter. Good operational quarter for Blue Tern and Bold Turn and also GWS had a strong finish to the year. Maybe most significantly in the quarter is the transaction with MEAG MUNICH ERGO, which is a long-term renewable investor, one of the leading in the world, which we have been partnering with on windfarm side. We also made a partnership agreement with them where they come in to FOWIC, invest EUR 150 million or approximately 24% in FOWIC. And this cooperation is intended to strengthen FOWIC's long-term strategic opportunities. For those who have followed us a while, you maybe remember 4 years back, we tried to IPO FOWIC that we had to pull away from due to the full-scale invasion of Ukraine, which is actually 4 years ago as we speak. Looking in retrospect now, I think we believe this is actually a better strategic transaction for the company. But financially, it's a total different valuation than we saw and a much better valuation than we saw in the IPO. So we're quite happy with this solution for FOWIC and also Haakon Magne Ore will come back to seeing it from more the company perspective. Cruise Lines, a quarter of continuous improvement, both on occupancy and yield. Still, the occupancy is below where it should be. But again, like I started with, and Samantha will cover more into detail, the booking numbers, which have grown 17% and really a massive change in this quarter -- in the fourth quarter, sorry, is really pointing to an improved occupancy for the future if Cruise Lines can keep up that kind of booking performance. Other investments, also an improvement. That's really related to the turnaround in NHST, which are now producing healthy margin for the media business. Per Arvid will cover more the progress on floating solar in particular, but we continue to invest both in floating solar and floating wind in 1848. Another news this quarter is that the Board proposed a dividend of NOK 7.30 per share, approximately NOK 310 million in payout. That is a healthy growth from last year dividend of NOK 6.75. The equity in the parent company after also allocating to the dividend of NOK 300 million, continues to grow and goes up year-over-year from approximately NOK 1.8 billion to approximately NOK 8.7 billion, and the equity in the parent stands with this dividend allocation at 68%. Summing up a little bit more long-term and maybe in particular, how the year ended, and this is the rolling 12 months revenues and EBITDA for the group. So the last data point is obviously the full year since it's rolling 12 months. We see on the revenue side, we end the year on a lower level than we had in '24. That is basically related to, see the bump on the Wind Service. That is due to the big contract we had with Shimizu for the Blue Wind vessel where we took in the full revenue, but also the full cost of that vessel. In addition, we sold off UWL and also the termination fee related to the big terminated contract in FOWIC also is a year-over-year event on the revenue side. Maybe more importantly is the earnings. That continued to grow year-over-year. You see the end position there with the black line. It's an improvement from '24 despite, as I started with, significant assets being out during the year and good improvements in many of the business units. We've been through this on a high level, but so just briefly going through the a little bit more detail on the revenue and EBITDA per segment in the fourth quarter. Revenue is down NOK 194 million. We see the main explanation is in renewable, and that is, again, the insurance claim on Mid Hill that was a part of the fourth quarter '24 revenues and not fourth quarter '25 revenues. Wind Service, a slight reduction in revenue. That is, again, related to termination fees, Blue Wind and UWL. So the 2 remaining vessels, we have 2 vessels that have been in operation and also GWS had a very strong finish to the year on the revenue. So good underlying revenue growth in Wind Service. Cruise Lines, flat on revenue measured in Norwegian kroner, but here we have to remember that the krona has strengthened quite a bit to the pound year-over-year. So there is a good underlying growth in pounds in Cruise Lines. And then some growth in NHST. On the EBITDA, the reduction in revenues due to the insurance claim plays also then directly into the reduction in EBITDA in renewables. While we see on Wind Service, the performance of Bold Tern, Blue Tern, and also GWS in a strong finish to the year, makes the EBITDA grow quite considerably year-over-year. Also Cruise Lines improved yield and occupancy, improved EBITDA, and also then the turnaround on NHST improved EBITDA there. So in total, EBITDA improves by NOK 73 million year-over-year. And like I started, a continuous improvement in EBITDA despite significant assets being out of operations. Then the consolidated figures, we have already explained the revenues and EBITDA. Depreciation is higher than normal this quarter. That is related to FOWIC that we have scrapped some of the equipment on the tern vessels coming out of the upgrades that we don't see a need for anymore after upgrades. Net finance is higher than normal this quarter. It was lower than normal the fourth quarter in '24. This is mainly related to unrealized gains and losses on the interest rate swaps in Fred. Olsen Renewables on the 2 joint ventures, which are project financed in the U.K. So in a way, fourth quarter '24 was abnormally low and fourth quarter this year is normally high. On taxes, we have the opposite, a normal low tax quarter that is related to Blue Tern entering the tonnage tax system, where we can reverse some of the earlier accrued taxes. So taxes year-over-year improved NOK 73 million. So all in all, also the EBITDA improved NOK 73 million, but we also see this also flowing down to an improvement in the bottom line on the net result. That takes me to my last slide, that is the group capitalization per fourth quarter '25. There are no big changes to this since the third quarter. So I will be quite brief. It's well in line with our policy, which you see on the left-hand side. Cash sitting in 100% controlled entities, close to NOK 5 billion. And the external debt we have in 100% controlled entities are mainly related to the bonds issued by Bonheur, close to NOK 3.1 billion. So where we control things 100%, we are net cash positive by close to NOK 1.7 billion. Where we have significant debt is, again, on the 2 joint ventures in the U.K. with [ TRL ] and Hvitsten, where the external debt is close to NOK 4 billion. Wind Service, which is GWS and where we don't control 100% GWS and Blue Tern, cash and debt net each other out and the same with NHST, which has a cash position slightly above the debt. So I think I will end there, just saying that the balance sheet is strong and hand it back to you, Anette. Anette Olsen: Thank you, Richard. First out is Sofie Olsen Jebsen, CEO of Fred. Olsen Renewables. Sofie Olsen Jebsen: Thank you. Hello, everyone. So summing up this quarter for Fred. Olsen Renewables, our production was 8% lower than the same quarter last year. I'll come back to the reasons for that. One point to highlight is that Mid Hill had an outage both in this quarter and in same quarter last year. But last year, that was compensated by insurance. For our construction projects, Crystal Rig I has estimated full production in March. And on Windy Standard III, the second construction project, the turbine component transportation is potentially delayed. You know this overview of our business model, and we are working to mature our projects towards the operation phase. So no big changes here from previous quarters. Moving on then to give a bit of a backdrop of the market. We have seen this quarter that the European power prices have risen due to an increasing demand. And that, combined with a weakened renewable output and then an increased need for fossil-fired generation has led to the higher prices that we see. There has been winter, so the demand has increased as normal. Additionally, we see that the Nordic power prices are the lowest in Europe, even though they increased significantly towards year-end. And then we see that continental market prices are indeed supported by fossil-fired generation that has increased. It also remains to comment that the prices are sensitive to hydrology, temperature, and changing gas prices. Moving on to production. That was 8% lower, as mentioned. We have this quarter seen external grid outages and constraints that I will come more on to. But in short, there is an ongoing grid upgrade program in the U.K. That is a good thing for the industry as a whole. Unfortunately, that is affecting our windfarm Mid Hill negatively, which has an outage this quarter, unfortunately. It also had an outage the same quarter last year, but that was due to a transformer failure at the substation and hence compensated by insurance. We're also seeing grid export constraints at Rothes and Rothes II. In addition to these external grid events, we have had lower production in Sweden at Hogaliden and Faboliden due to grid export limits, which are also then slightly external, but also icing and blade issues where we estimate that the blade repairs will be completed by Q3. In Norway, at Lista, we have partially curtailed turbines because we see there has been some fatigue-related broken bolts in the foundations, which we are -- have been investigating and are scheduling out a repair program for, which will be completed by Q4. I think it's worth mentioning that these foundations at Lista are quite solid. They are anchored down in the bare rocks. And when the bolts have been broken there, it has -- it is due to some fatigue-related reasons. On a more positive note, our windfarm, Crystal Rig I in Scotland has seen an increased availability on the recovery program we have there, which is the windfarm we have with very early generation design turbines. So moving on then to go a bit more into the grid outages and constraints, which we thought it was interesting to give you some more flavor of this quarter. Because the Mid Hill grid outage, which is current, is scheduled by SSE, so not controlled by us, to last until April '26. Now it's -- that was the original schedule. We now see an expected reenergization in July '26, which reflects weather impacts, supplier delays, and also supplier quality-related issues that SSE have experienced. There is also a second outage planned by SSE from November to April, so November 26 to April 27. There are mitigating actions underway, which we are working very hard on at the moment, and we expect a more firmer schedule to be updated by this mid-year. On Rothes I and Rothes II, we have seen grid constraints. They have been constrained since December '25 with then export limited at 50%, i.e., 25 megawatts per site because there has been a current transformer failure at the substation. In order to complete the repair there, there will be a 0 outage period from February to March so that SSE can perform all the job they need to do. After this, we expect all of the 3 sites above actually to return to full capacity once the outages are finished. Moving on then to our construction projects. Crystal Rig IV near Edinburgh in Scotland is estimating full production in Q1. I would also like to update on Windy Standard III, which is more in the southwest of Scotland, where we have seen new regulations since the beginning of this year that has significantly reduced the capacity for the Scottish police escort for abnormal load transport, which is required to transport blades, et cetera. We have now updated information on the availability of police resources, which result in a potential 4 to 6 months delay of these turbine component transportation. We are investigating mitigating actions and the impact that this may have on cost and schedule is still to be assessed. So this is the latest information I can give you as of now, and it also marks the end of my presentation. Thank you. Anette Olsen: Thank you, Sofie. And then next is Haakon Magne Ore, Fred. Olsen Windcarrier. Haakon Magne Ore: Good morning, everyone. If you turn over to the highlights for the quarter, I'm pleased to also say this quarter that fourth quarter was yet another quarter with solid operations. I think we have said that for the year, but I think it's good illustrated by that we achieved more than 99% uptime on our vessels throughout the full year. Further, as Richard mentioned, MEAG -- late December, MEAG announced an investment in FOWIC of EUR 150 million. I'm very pleased to also say that that formally closed in February. On the market side, I think we see -- continue to see the same trend as we have spoken about for the last 1 to 2 years, where we see that the underlying turmoil in the value chain and the industry is impacting the volatility of demand, especially towards the end of this decade. If we then turn over to the quarter itself, what the vessel has done. Bold Tern continued with good performance on the monopile drilling campaign of France. Brave Tern, there we used the period coming out of yard to prepare and mobilize for the Thor project. This is the first project for us with the new 14, 15-megawatt generation turbine. The vessel went on hire on Tuesday evening, and I think we are close to being fully loaded already for the first round. Blue Tern, it was on a major O&M campaign with Vestas for the quarter. This was the third consecutive major O&M campaign for the vessel this year. So I think it's very good that it proves its value in the higher-end O&M market. And also to illustrate the performance for the 109 days contract we had with Vestas, we actually had 0 downtime. I think that is one of the first time in the company history that we are able to deliver such a long contract without having any -- an hour of downtime. If we go more into the quarter, as I said, solid performance for the quarter. We were very close to 100% uptime, as Richard mentioned, both Brave Tern did not work. It was mobilizing and preparing for the Thor project. And I think I just added a picture in the slide to illustrate what we have done. You see now the new blade rack, which is out of the vessel. I think a little bit also illustrating the size of the turbines we are now starting to handle in addition to it being a nice picture. For the year, we, as I said, reported around above 99% uptime when we are on contract. And we had a quite significant amount of yard time. So more or less on average one vessel out every quarter due to yard, which hopefully now comes to an end in this year. I think we have touched upon it a couple of times, MEAG investing EUR 150 million in FOWIC. They will get around 24% ownership. It builds on an established relationship. But I think as we see it, I think it's a very good transaction, both for Bonheur and also for FOWIC. FOWIC was debt-free before this transaction. With the transaction, we further strengthened our position to deliver on our target to remain a leading payer long-term. So we are in a position to develop the company when we find the opportunity in the market. On the accounting side and the financials, we ended the quarter with an EBITDA of EUR 28 million, which led to an annual EBITDA of EUR 137 million. That was actually the fifth year with increasing EBITDA and a new record for the company. If you go to my last slide on the backlog. At the end of the year, the backlog was at EUR 391 million. I think that the trend we have seen for the last year with major new contract activity being slightly on the lower side than what we normally have seen in general for the industry continued also this quarter. On the positive side, the early announced reservation for the Gennaker project in 2028 turned into a firm charter party and is now part of the backlog. On the market side, I think 2026 will be the most busiest year on record for the industry. The number of turbines, which is scheduled to be installed, is significantly above what we have seen in the last 3 years. So activity-wise, the medium-term is high. But as we have mentioned, we see that the turmoil in the value chain that started back in '22, '23, it impacts the timing of demand. This is not new. This trend has been there for some time, but we see that it impacts the timing of demand, especially when we look into the end of this decade due to the long lead time in the industry. So I think that concludes my remarks. Anette Olsen: Thank you, Haakon Magne. Samantha Stimpson, Fred. Olsen Cruise Lines. Welcome. Samantha Stimpson: Good morning. So if I go through the highlights first. So overall, a good performance in Cruise Lines for quarter 4 with increases being seen in utilization, yield, as well as continuing our focus on cost controls. We also continue to see improvement in customer satisfaction, and I'm pleased to say forward bookings are looking strong. So if I take you through that in a little bit more detail. So we've been able to increase yield per passenger per day by 3%. Our utilization also increased by 3%, which gave us an overall, with the cost control measures, EBITDA impact of a positive NOK 14 million year-over-year. When we look at customer satisfaction, our customer Net Promoter Score continued to increase in the quarter with a positive 10-point improvement, demonstrating that we continue to listen to the guests and improve our customer proposition, supporting our retention going forward. And again, pleased to say as per Richard's update this morning, that forward bookings are looking strong. In addition to that, quarter 4 bookings actually performed very well for late departures in the Q4 2025 period. And sales for '26 and '27 are looking very promising. And if we look at our final slide, it just gives you a bit of an overview of the sailings that we had as we went through Q4. So Borealis, you can see here, 7 sailings in that period. She had fewer sailings than Bolette and Balmoral, predominantly due to her dry dock that happened during the Q4 period. And then what you can see is Balmoral had more sailings in that period, demonstrating, as I mentioned in the previous update, that we are continuing to focus on increasing the number of sailings, therefore, having shorter sailings in each of the quarters, enabling us to carry more passengers in each of the quarters. And that's the end of my update. Thank you. Anette Olsen: Thank you, Samantha. And Maren will now cover the Fred. Olsen Seawind. Maren Lundby: Thank you. So good morning, everyone. My name is Maren. I stepped into the role as CEO of Fred. Olsen Seawind in December last year. So a few highlights from last quarter from our side. We have 2 strong projects in attractive markets. We have diligent and flexible development strategies in our projects. And the strong results from AR7 announced earlier this year confirms the policy supports in the U.K. as well as our strategic direction set out for our U.K. projects. For an overview of our portfolio, we'll -- we can see Codling Wind Park, a bottom fixed project in Ireland together with EdF. We have secured site exclusivity, grid access, and a CfD contract for 1,300 megawatts for 20 years. In late '24, we submitted the consent application, and we are actively engaging with authorities and stakeholders to progress the consent determination. The project's focus is on maturing supply chain and business case towards FID following the consent award. In Scotland, we have a 1,000-megawatt floating project together with Vattenfall, Muir Mhor. There, we have secured site exclusivity, onshore consent, land areas, and grid access. So the remaining milestone is the offshore consent, which we expect to come in later this year. So the project is focused on securing the final consent, obviously, as well as progressing towards a CfD auction. So if we zoom in a bit to the project in Ireland, where the consent application process is ongoing and followed very closely by the team. We are also in the process of submitting data under the further information request that we received from the Irish government last year. As you may recall, this has postponed the expected consent determination somewhat. The Irish government, however, remains fully committed to its offshore wind ambitions as was illustrated by the successful Tonn Nua auction in late '25. Codling is still a key project to reach the government's offshore wind ambitions. Within the project, we are preparing for procurement processes on all the major scopes on the back of the expected consent determination. Moving to Scotland and my final slide. We have signed land option agreements last year for both the landfall and onshore substation area. As I mentioned, the onshore consent was awarded and so was grid was secured last year and also advanced with the radial connection. We have potential to improve the connection dates further. And with all this, together with the expected offshore consent to come this year, we will be in position to bid into a CfD auction when we receive the final consent. We remain focused on being the first mover or one of the first movers in Scotland for floating offshore wind. And as I mentioned, the strong results from AR7 confirms the U.K. government support towards the industry, its ambitions towards clean energy 2030 targets as well as confirming that strategic direction that we have set out for the project. Thank you. Anette Olsen: Good. Per Arvid Holth, Fred. Olsen 1848. Per Arvid Holth: Thank you, Anette. So in my previous presentation in the last quarter, I presented the numbers from the International Energy Agency, showing that solar PV is the fastest-growing source of renewable energy and will be the largest source of renewable energy by 2028. And in Fred. Olsen 1848, we strongly believe that floating solar will be part of supporting that growth. So in this presentation, I thought I'd go one step deeper and focusing on shore lines. It's basically inland and nearshore FPV that is we look at and speak about why we in 1848 are targeting the shore lines and distributed PV applications. As you can see, it is expected to have a solid contribution to the growth for island communities and ports. So nearshore FPV is something that we have been convinced about in 1848, and it's also a very strong driver behind the design of our floating solar PV technology, BRIZO. Nevertheless, we see that nearshore solar is lagging a bit behind inland, which has already reached utility scale developments. But we do see movements now in the markets across Southeast Asia, in the Pacific, in the Indian Ocean, and in the Korean. So our focus has really been on where do we enter nearshore solar with our technology. And here, island communities and ports powered by fuel oil stand out as a clear case. So if we move to the next slide, that is because there are some clear pain points for these applications that a nearshore FPV plant can solve. One is a high power price, several times higher usually on islands than on -- than the global average, being dependent on importing fuel oil brings volatility to your electricity prices. Energy security is important in most regions these days and relying on imported energy is reducing energy security. Of course, it's not sustainable. And if you want to grow renewables along the shore, then scarcity of land can be an issue. So for these pain points, a technology like BRIZO brings relief and solving these pain points. And that is through cost savings, floating solar is cost competitive to fuel oil. It solves land and carbon footprint challenges. That is every kilowatt hour produced by floating solar displaces a kilowatt hour produced by fuel. And it also resolves the footprint challenges, which can be onshore. Every kilowatt hour produced by a local source is more secure than one that depends on imports. So it strengthens energy security. And another benefit for nearshore PV is it's scalable at speed. So a technology like BRIZO comes in modular -- 3-megawatt modular parts. So you can start with 3 megawatt, increase with 12, and so on and so on as the demand increases. So as a summary, entering the nearshore market, we see that the displacement of electricity generated by fuel oil is a natural starting point. And beyond that, we also see clear scaling applications for floating PV, supporting industrial scale developments or even utility. So a bit of a sneak pick on how we look at nearshore to finalize the CEO presentation at this time. Thank you. Anette Olsen: Very good. We will now open up for questions. Operator: [Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Daniel Haugland from ABG Sundal Collier. Daniel Vårdal Haugland: I have 3 questions. I'll start on FOWIC and the MEAG deal. It's a very interesting transaction, obviously. So I was wondering, can you give any more commentary on what is kind of the strategic rationale or maybe your plans here? You kind of commented a little bit about it, but I see that the deal includes some primary components. So do you have any kind of plans to do with the proceeds, et cetera? So I'll just start there. Richard Olav Aa: No. In general, I think the financial details is disclosed in details in the presentation on what is secondary and what is primary share issues. So I think you have that details in the press release itself. When it comes to the strategic, what -- how we are going to develop the company, then I have to refer to the Bonheur guiding policy where we do not disclose any thoughts on major investments or future before it potentially is done. Anette Olsen: It's nice, though, to see that MEAG believes in us and wants to invest in the company. Richard Olav Aa: Absolutely. And as I said, it puts the company in a very good position. It was in a very good position being debt-free. But now with this added flexibility, we are in a position to rapidly take advantage of opportunities should they arise. Daniel Vårdal Haugland: Okay. Then I have a question on Cruise. I think you -- it maybe a few quarters ago, but I think you indicated that Bolette was also going to dry dock in Q4. So that doesn't seem like it happened. So any commentary on whether there's kind of a planned dry dock for Bolette now, let's say, in the next couple of quarters or? Samantha Stimpson: So I think I heard all of your question. So in quarter 4, Borealis had her dry dock and quarter 1, Bolette had her. So quarter 1 of this year, Bolette had her dry dock, so it was complete. You're right, the original plans 2 years ago were to do both vessels in Q4, but I made that change the year before last to separate the dry docks one in each quarter. Daniel Vårdal Haugland: Yes. That make sense. And for the -- but kind of the duration is kind of approximately the same, I guess? Samantha Stimpson: What, sorry? Richard Olav Aa: Duration. Anette Olsen: Duration. Daniel Vårdal Haugland: So a couple weeks, I guess? Samantha Stimpson: Yes. So the duration of the dry docks for both vessels, so for Borealis and Bolette was around sort of 2.5 weeks for each of the dry docks. Daniel Vårdal Haugland: Okay. Super. And then just last question. So my question is basically on renewable energy. So are you seeing any kind of external interest in your onshore portfolio? And the reason I'm asking is obviously that Orsted sold its European onshore portfolio to CIP this quarter and it seems like they are getting a good price. So are you guys kind of also open to do anything structurally in onshore? Not obviously selling the entire business, but let's say, divesting parts of the portfolio to further develop new projects or something like that if an opportunity arise? Sofie Olsen Jebsen: Thank you for your question. I think what I can comment on there is that we are very much focusing on progressing a solid and healthy portfolio of projects in the markets that we are in. So that is our main focus at the moment. And we will let you know about any other developments if and when they occur. Operator: We are now going to proceed with our next question. And the questions come from the line of Lars Christensen from Fearnley. Lars Christensen: I have a question in relation to the Fred. Olsen Cruise. Is there any planning of future fleet here in relation to that? You're starting to have a pretty old fleet in the Cruise segment. Is it possible to get any color on that, please? Anette Olsen: Future possibilities. Samantha Stimpson: So under Bonheur guidance, I can't sort of speculate on anything. What I can say is, in '22, we welcomed 2 vessels into the fleet, larger vessels, which we were very excited to receive. And we continue to monitor activity in the market. And yes, I think we're in a good position. We've still got opportunity to continue to focus on utilization and occupancy improvements with the current fleet, but we'll continue to monitor the market and our performance. Lars Christensen: Okay. And then I also have one question in relation to Codling. Is it possible to get any color on how much you have invested so far into the project? Sofie Olsen Jebsen: Thank you. The question was how much we have invested so far into Codling project? Yes. I believe the number is NOK 800 million. Richard Olav Aa: Yes, it's disclosed on Page 18 in the report, both for Codling and Muir Mhor. Yes. Sofie Olsen Jebsen: Yes. Operator: [Operator Instructions] We have no further questions at this time. So I'll hand back to you for closing remarks. Anette Olsen: Well, thank you very much, everybody. It seems that the presentations this time are fairly clear and understood. So thank you for joining us.
My Vu: [Presentation] Good morning, and a warm welcome to Hoegh Autoliners Fourth Quarter presentation. My name is My Linh Vu, Head of Investor Relations. And with me today, we have our CEO, Andreas Enger; and our CFO, Espen Stubberud, who will walk you through the last quarter business and financial performance. As usual, we will conclude the webcast with a Q&A session at the end of the presentation. So if you have any questions, please send an e-mail to our Investor Relations mailbox at ir@hoegh.com. So with that, I will leave it to you, Andreas. Andreas Enger: Thank you, My Linh. And once again, welcome to our quarterly presentation, starting today with a picture of Hoegh Sunrise, one of our newbuild vessels that was named -- had celebrated its naming ceremony last summer with valued customers in the land of the Rising Sun. We are pleased to report another quarter, and this is also an end of the year with solid performance in -- I think in somewhat we could justifiably call a somewhat turbulent year on the macro side, but has still translated into very solid performance from our part. EBITDA for the quarter, $145 million, translating into net profit $105 million, gross rate of $91.4 million. And we are now back on our regular full payout dividend policy of which this quarter translates into $99 million. One more new build delivered in the quarter, a solid equity ratio of 55%. If you look at the year, $621 million of EBITDA and $513 million net profits delivered, gross rate of $93.4 million. We have declared for the year dividends of $424 million, maintaining our very solid dividend yield, taking delivery of 3 vessels, and we have a return on invested capital of 26%, all adding up, as I said, to very robust performance. I'm just going to go through some pieces on the market and sustainability and then hand over to Espen for capacity financial before we end up with an outlook for -- in the current quarter. On the market side, I think it's relevant to emphasize the importance of China and Chinese car exports for our industry and for the capacity balance and clearly being the driver for vessels running full and delivering the performance. Europe remains China's clearly largest export market, but we also see strong growth in other markets such as the Middle East and South America. So the export boom is broadening. The Chinese OEMs are almost doubling their market share in Europe in 2025, now surpassing American and Korean OEMs. So it's a very, very strong continued growth from China that is the main driver in development of our industry. And that goes across also the cargo segments. Clearly, the main driver from China is new vehicles, where China has established a clear position over the last few years as the dominant car exporter to the world, and that development is continuing at full force. Also importantly, we'll had some fairly soft development in the High & Heavy market over the last several years, but we are now seeing a change in that. But also that part is driven by a strong growth in the exports of construction equipment from China with other exporters being largely flat. Then let's turn to our contract backlog. In the quarter, we have increased the contract share of volumes transported up to 84%. That is a result of our strategy over the last years to prioritize duration and robustness of contracts over short-term profit rate optimization and clearly increasing the contract rate from 80% to 84% in the quarter is diluting to profit because we are actually leaving behind potential higher paid cargo to serve our customers as a part of our strategy. We believe that is a, what should I say, resilient, robust strategy in the current market, and we are pleased to continue to exercise that even if it then leaves out some opportunities to take higher paid cargo. The average duration of the contract backlog is 2.9 years, almost 3 years. We are basically sold out for 2026, also have a very strong contract backlog into 2027. We have added $250 million of contracts during Q4, though being contracts below the $100 million threshold individually for separate reporting, but there's still been a solid contract inflow during the quarter. And when it comes to the 29% of contracts that are up for renewal during 2026, those are -- 80% of those are with customers that has been with us for 10 years. So it's with very solid customer relationships where we basically expect good opportunities to renew most of or all of those. And then obviously, we have the other ones which we talked about, the rate agreements, which are noncommitting agreements where we have clients in a structure where we unfortunately have had to do a little less of taking low paid cargo. And just on the spot volumes, which is a small share of it, but I just also want to emphasize that our spot business is primarily High & Heavy or break bulk business where the volume of sort of individual lots and spot cargo is larger. So 70% of the spot volume is in the High & Heavy segment. On the sustainability side, we are with the introduction of our new builds, delivering strong improvements on our carbon intensity. And this is to the story we have around our Aurora-class vessels that are delivering substantially better carbon performance also on fossil fuel and so on that side, it is the Aurora class primarily that is driving our improvements. But we also had a fairly intensive docking cycle during the last year, and we do have extensive energy efficiency improvements scheduled for all our dry dockings of legacy vessels. So it's a combination of continuous improvement of energy efficiency on our legacy fleet and introduction of very carbon-efficient newbuilds. We also have certified 4 of the Aurora class vessels during the quarter for shore connection. So we are stepping up shore power as a source of reducing auxiliary engine use and carbon emissions in port. Then I'll leave it to Espen for capacity and financials. Espen Stubberud: Yes. Turning to the capacity market. We've had a couple of years now with a relatively strong fleet growth. We had 75 vessels delivered during 2025 and 13% fleet growth. So despite quite a large number of ships being delivered, the charter market remains strong, although the pricing is down from the elevated levels seen in '23 and '24, the pricing is still relatively expensive and has been stabilizing and moving flat over the last few months. And in fact, into January this year, pricing is up. So there are no idling ships. The capacity market is firm. And if you want to add a few ships over the next few months, there are very, very few candidates. Turning to the financial update. As Andreas already said, 2025 was another strong year for Hoegh Autoliners. Despite U.S. tariffs, despite U.S. port fees, despite increasing imbalance in our system and not the least the growth in the net fleet. EBITDA came in at $621 million, that's down from 2024. Two main drivers. One is reduced rate and one is -- the other one is increased charter costs. The rate is down about $5, as we can see here, from $85 net to about $80 year-over-year. That's following our strategy of adding to our contract backlog, taking on more contract business, long-term agreements, which has increased the share of contract business from 73% in '24 to 82% in 2025. The increased charter cost comes from overall growth in volume. We increased total volume by 10%, but increased volume out of Asia by 40% year-over-year, and that comes with added charter costs. Turning to the quarter. The Q4 volume came in at 3.9 million cubic meter. That's down 2% on quarter-on-quarter. That's following us having 2 vessels fewer in operation. We redelivered 2 ships in the third quarter to long-term charters, and we also sold 1 vessel. So this -- we had 2 ships fewer in operation. That's just a quarterly impact as we had, as Andreas said, another newbuild delivered in December and also one very early in January. We've seen very strong demand from contract clients, as Andreas alluded to, also towards the year-end, which has increased the share of contract cargo in the fourth quarter and is reducing the rate by close to 2%. EBITDA came in at $145 million. That's down $10 quarter-on-quarter, $5 million is related to USTR cost, while the remaining $5 million is sort of a net impact of lower activity and somewhat lower rates. It looks like net profit is down 21% quarter-on-quarter. Just as a reminder, we sold 1 vessel then in the third quarter. So the third quarter net profit before tax includes $20 million from selling that ship. Adjusting for that, the net profit before tax is down 7%. Looking at the EBITDA bridge quarter-on-quarter, you can see the drop in volume following fewer operating days and marginally lower rates. Lower activity comes with lower fuel costs and also lower voyage costs. However, in this quarter, the lower voyage cost was fully offset by the USTR cost, which is booked under voyage expenses, leaving us with $145 million in the fourth quarter. We have a strong balance sheet with healthy ratios and stable ratios. Net debt-to-EBITDA still at 1x, equity ratio of 55%, moving flat, and we ended the year with $299 million in cash, somewhat up from previous quarters following the change in dividend calculation that we announced in the last quarter. We also had close to $200 million in liquidity reserves at the end of the year from a revolver. That revolver was originally maturing in the first quarter of '28 and have been extended by 2 years. So we end the year with $299 million, and we have decided to pay out cash in excess of $200 million, meaning we'll pay out $99 million in dividends in March, and we now paid out $90 per share. Then I think we're at the outlook, Andreas? Andreas Enger: We're coming to the outlook section. And very briefly, what we have seen last year and what we still see is that demand for ocean transportation and car carriers remain strong, supported primarily by increasing demands from Asia. When it comes to the discussions going on around the Red Sea and the Middle East, there is no return to the Red Sea transit planned for the near future. The risk level is still considered high, and we are observing, but not planning to act on that in the near term. And for the first quarter 2026, somewhat also driven by, as I said, two newbuild deliveries right in December and early January of this year, getting into operation, meaning that we now have the first 8 of our Aurora-class newbuilds in operation and performing very well, helping us to a slightly increased -- expectation of a slightly increased EBITDA in first quarter of 2026 over the fourth quarter of '25. That ends our presentation. And then I think we'll leave it to My Linh to manage questions from the audience. Thank you. My Vu: Thank you, Andreas. And we have received a few questions from our online audience during the webcast. And the first question is relating to our capacity planning. So that the company has planned to sell further older ships during 2026. Do the companies have the plan to sell further older ships during 2026? Andreas Enger: I don't think we -- I mean, I think we are continuously looking at what to do with our fleet composition, but we don't have any immediate plans for selling vessels. And I'm not -- I wouldn't -- I don't think we would guide anything on that because vessel sales are also, I think, in this market triggered by opportunistic situations. But we are clearly committed to fleet renewal and energy efficiency. So we -- I think it's fair to say that with our newbuild program, we have a strong preference from larger, modern, more efficient and more carbon-efficient vessels over what is the dominant sort of legacy fleet in our market. My Vu: Thank you, Andreas. And the next question. We have talked a lot in 2025 about the structural trade imbalance that has negatively affecting our operating costs. Can we comment a little bit, do you see any improvement in this point for 2026? Espen Stubberud: Yes. I think we've had a history in our company to try to fill ships in both directions, and we've been doing that successfully for a number of years. We saw -- starting 2024, we saw that we had a slight imbalance, meaning we ballasted about 1 ship per month from the Atlantic and back to Asia. And as we've talked many times, we've seen very, very strong growth in Asia over time with obviously China as the main driver. And the growth we've taken and seen over the last year of 40% means that all the growth is coming in Asia and the volumes coming back is somewhat in decline, meaning that the imbalance has increased quite a bit. So the balancing activity is up 2.5x year-over-year. So -- and I think that's a theme for all operators. I don't think we see any change to that into '26. So we expect that imbalance that we've seen in '25 to be about the same in '26. My Vu: Thank you, Espen. Yes. And the next set of questions coming from analyst Petter Haugen, ABG. First, about our outlook. Can you say more about slightly above in the guidance for Q1? Andreas Enger: No, I think we mean slightly above. My Vu: Yes. And the next question is about the full year guiding. So one about, the company and our segment guides for full year EBITDA. Why we do -- we choose not to guide for the full year? Andreas Enger: We basically -- if you look at the world around us, we believe that guiding for a full year is mostly speculative, and we don't engage in speculation. My Vu: Yes. And for our new building plan, we have put today about 12 vessels on order. Are we contemplating further new builds? Andreas Enger: We have -- I think I said repeatedly that we consider these 12 vessels to be the current program. Clearly, if you look into our 2040 and 2050 objectives, I'm sure there will be further newbuilds in there. But currently, there are none in our plans. My Vu: Thank you, Andreas. Yes. And also from this -- in this quarterly presentation, we also updated our contract backlog, including renewals for 2027. Can we comment anything about the expected duration or rates for the 29% contract renewal in 2027? Andreas Enger: No, I don't think so. But I think we are experiencing strong demand for contracts, the typical sort of duration of contracts, I guess, in our industry has been sort of 3 to 5 years for the longer contracts. And I think we are likely to be in that territory. But that is -- it's a bit individual contract by contract, and it's something that we -- and these are things that we haven't even started negotiations. But I think we said in our presentation that the -- most of the contracts that we are going to have renewal negotiations in 2026 are long-term customers. They stayed with us for a long time. So it is -- we are negotiating with companies where we have a long-term relationship. My Vu: Thank you, Andreas. And one of the topic that we talk a lot about in the last quarterly presentation in the next question from our investor online. So with the current -- for now, the USTR port fees on pause until November 2026. What are our view about how much EBIT coming back in November? How much do you think we can pass this on to our customers? Andreas Enger: I think I said a few minutes ago that we're not engaging in speculation. And I think that having any view on that now is highly speculative. What I would say is that closely following, working through relevant challenge to understand, respond to -- and if there is any possibility, particularly together with our customers, including U.S. customers that will be hurt by some of those fees. We are working actively with the matter, but I think we're pretty far from one thing to speculate on the outcome. My Vu: Thank you, Andreas. And we mentioned in light of the strong China export demand ongoing, we also have that comment in our outlook. What is the management latest view whether the car carrier order book is still too big? Andreas Enger: I think -- I mean, I think what we observe is that the current -- I mean, the order book so far, counter to most expectations have been absorbed very well, and we see it continue to be absorbed well. And so in that sense, I think the view that the order book was far too big is becoming maybe challenged by realities. But -- and I think the answer to that question will -- is basically based on a forward view on Chinese exports. And what we see from our customers is that they have the capacity, they have quality products and they have attractive price points. If the Chinese are allowed to continue their export growth, you will continue to get good absorption of capacity. My Vu: Thank you, Andreas. Yes. And we also received a lot of questions. I think some of the questions already covered previously by other audience. So I will just read the question that is new on the topic that we haven't seen. So in 2025, Hoegh Auto actually charter-in a few vessels. How do we see that in 2026? Do we see more TCE opportunities to enter the fleet? Or are we comfortable with the current fleet? I think for you, Espen. Espen Stubberud: Yes. No, as we talked to, we took on some new business out of Asia at the end of 2024, and we've been supporting that new business volume with some charter-in activity. particularly after deliveries of the newbuilds, and we had 2 newbuilds delivered just before the summer, and we have very recently just had 2 more delivered. So we've been planning for that capacity to come in, and we've been supporting that volume growth this year with extra capacity. And I think as we talked to the imbalance, I think that will be stable from '25 to '26. We have now 2 more newbuilds coming in fully in operation in the first quarter. So that should reduce the charter-in activity. Having said that, we think we'll also use the capacity market opportunistically with short-term charters, typically between 3 months and 12 months to some level also in 2026. My Vu: Thank you, Espen. And I guess that bring us to the end of the Q&A session today. Thank you very much for tuning in, and we look forward to see you next time. Thank you.
Robert William Wilkinson: Good morning, everyone. I think we'll start. Welcome, everyone, to Hammerson's 2025 Full Year Results Presentation. I've met a number of you already over the last few weeks, but for those I haven't met, I'm Rob Wilkinson. I joined Hammerson as CEO in January of this year. I'm with Himanshu Raja, our CFO, of course, who's joining me for the presentation this morning. In terms of the actual presentation itself, I'd like to start with sharing with you a couple of my first impressions of the company since I joined, obviously, looking back at the achievements and results of 2025, our outlook for '26 and beyond, I'll pass then to Himanshu to comment on the financials in a bit more detail, before some closing remarks, and then obviously be delighted to take any questions at the end of the session. So if I start, since October of last year, I made it my priority to visit all 10 of our flagship destination assets to meet with the teams. And one thing that's very clear is that the extent of turnaround that's been achieved over the last 5 years is nothing short of remarkable. And credit should go to Rita-Rose and the team for what they've done over that period. It also clearly positions Hammerson now at a situation where we can now leverage our platform and assets as we go forward. But 3 things have really stood out for me about the company since I joined. The first is the quality of our unique portfolio of retail-led destinations across the U.K., France and Ireland. We are the leading pure-play company in those markets. And today, 98% of our destinations are rated A or better by Green Street. So a fantastic portfolio. We've also got a fantastic team. We have a first-class integrated platform, which is built on a management team that is best-in-class and passionate about driving the destinations that we manage across our portfolio. This sits alongside our data-led technology platform, which provides us with customer analytics, allowing us to drive excellence and continue to outperform the market, as you'll see later. And finally, the strength of the company financially and our access to equity and debt capital markets as obviously demonstrated last year with our equity and bond issues, which were very successful and were both heavily oversubscribed. So a lot has been done, but I can assure you there's plenty more to do, plenty more to come. But I do believe that Hammerson is extremely well placed now to embark on our next phase of growth. If I turn to the results themselves for a minute, they are undoubtedly a strong set of results and ahead of consensus. Our net rental income increased by 23% year-on-year to GBP 180 million, driven by in part the JV acquisitions we undertook last year alongside like-for-like rental growth of 3%. Our earnings have increased by 5% as we've gradually reinvested the proceeds of the sale of the interest in Value Retail. Those increased earnings have generated increased dividends, up 6% year-on-year, which is reflective of that growth, but also a sign of our confidence in the future. Our portfolio is up 33%, a little above GBP 3.5 billion, and that's been driven again by those JV acquisitions alongside capital growth of 4% in the year, which itself was driven by ERV growth and yield compression in the U.K. and Ireland. That's translated into a 6% growth in NTA to GBP 3.94 at the end of the year and a total accounting return of 11%, marking a return to positive territory for the company. So very strong results overall. As I look at our key priorities as I see them, well, put simply, is to continue doing what Hammerson has done very well for several years. We will continue to drive the returns of our existing assets and portfolio. We have a strong track record of repositioning our assets and creating significant value from that, alongside leveraging, as I mentioned, our technology platform to optimize our brand mix and also enhance the customer experience at our centers. All of that will help us to continue to increase rental tension across the portfolio. Second, we will continue to maximize both the value, but also the optionality of our strategic land, either developing it ourselves, in partnership or, in certain cases, recycling capital from assets in due course. Finally, we need to scale up, and it's not about growth for growth's sake. This is about focusing on accretive, disciplined acquisitions that are consistent with our strategy, but will allow us to enhance our operational efficiencies, therefore, driving earnings growth into the future. If I look a little bit at those priorities in more detail and what we've achieved, at an operational level, it's been a very strong year as well. Our occupancy has increased to 96%. In fact, 6 out of 10 of our destinations are now above 98% occupancy, and that's led us to a shift in mindset and strategy from leasing up the assets to rent up as we look to increase the rents across our centers. We've seen an increase in footfall. So we've added 3 million visitors during the year, up to 170 million visitors across 2025. This is in stark contrast to our national benchmarks. As you can see from the chart in the middle there, the yellow are our benchmarks. They're either flat or negative compared to the growth that we've achieved. All that translates into the important things for our retailers with sales of more than GBP 3 billion in 2025. And the statistic that I particularly like is what we call the new for old. So this is taking the former underutilized or vacant anchor space within our schemes, repositioning them into new concept. And across those, we've seen an increase in sales densities for our retailers of 40% compared to pre-COVID levels. If I shift to leasing, another year of very strong performance across the leasing front, a record level of new deals at over GBP 50 million signed during the year. As you can see, at substantially above, in fact, double digits above passing rent or ERV, leading to additional rent of around GBP 260 million to first break. We've had a number of firsts across our portfolio, either regionally or first within the portfolio for the likes of Sephora, Uniqlo, M&S and Lululemon. And pleasingly, we have more of those happening during 2026 as well. 2026 has started strongly on the leasing front as well. As you can see, our pipeline of around GBP 20 million is a very positive start for the year on the leasing front as well. Our final part of driving the performance of our destinations is repositioning. And clearly, 2025 was a very active year on that front as well. If I start with Cabot Circus on the left, the opening of the M&S store in November was incredibly strong. It increased footfall in the center on the day by 50%, 5-0 percent, and M&S themselves had record sales as well. We've invested in an overhaul of the car park, installing frictionless technology, which has driven, apologies for the pun, an increase in usage of just under a quarter, so up 25% on the year in the car park. And recently, a couple of weeks ago, we opened, in a grand ceremony, the Odeon Luxe at Cabot Circus, which is the only cinema in Bristol City Center, which will help obviously drive activity further and into the evening, which then obviously has a benefit for the F&B provision within the center. We've got further openings in the center this year with Uniqlo and Sephora to come. And we've just started the regeneration of Quakers Exchange and beginning the public realm works there as we speak. So a lot has been done, but still a lot going on and a lot to come within Cabot Circus itself. If I turn to the Oracle, we obviously introduced Hollywood Bowl and TK Maxx there last year. Hollywood Bowl had their best ever opening at the Oracle. And that obviously helped footfall up 9% in the second half of 2025. Our net rental income is up 10% on the scheme and more to flow through from the upsizing of Zara and Apple within the Oracle during this year. And as many of you know, we still have the Debenhams, the former Debenhams unit within the center, on which we have multiple options, both retail, but some of you may have seen that we also got outlined planning for the residential scheme at Reading Riverside earlier this month. So again, lots to do still at the Oracle. Finally, Les 3 Fontaines in France, the extension phase there, as you will recall, is fully pre-leased to Primark and Nike. And what's really pleasing is to see the kind of halo effect of that already as we've made further lettings to an Apple reseller and to Aroma-Zone adjacent to that scheme. So Cergy is now 90% occupied, which it never has been before. But we also expect that to increase. As that scheme opens and starts to trade from Q1 next year, we expect further leasing activity from that as those retailers have opened. If I move on to the pipeline and how we look to maximize the value and optionality, as I mentioned, you've seen this chart before. We've updated it since you last saw it. So on the left-hand side, you've obviously already heard about the Bullring and Dundrum repositionings. Worth noting that we continue to benefit from those repositionings even today. In pink, obviously, already mentioned the Oracle, Cabot, and Cergy a little bit further to the right. But also to mention the completion of The Ironworks at Dundrum, which completed in October, and we are obviously in the middle of leasing that up. We've got about 1/3 leased and very strong demand for what is very good product in a tight market. Looking at the recycling side of the equation, the box in blue in the middle, we completed the sale of our last interest in Leeds a couple of weeks ago, and that completes our exit from the Leeds market entirely. So we sold the last site for GBP 6 million, slightly above book. So we've realized a total of GBP 32 million in the last sort of 18 months or so from the complete exit of our interests in Leeds. And on the right-hand side, you have our longer-term development program. So where we're looking at master planning options, obviously, and that includes Birmingham with the Martineau Galleries that I mentioned already. And actually, the Birmingham estate is almost a perfect example of a way of describing how we look at our strategic land holdings. We are clearly right in the center of Birmingham and the iconic Bullring sits at its heart. That itself is now 98% occupied. And so we've got significant spillover into Grand Central. You can just see to the right, where we've got retailers taking space within that as demand spills over from the main center itself. At Grand Central, moving on to additional opportunities, we have our Drum project, which is a great example of projects within our schemes that are integral to them. We are currently working up a mixed-use office, retail, F&B and leisure scheme at the Drum, which we'll look to take forward in the months ahead. Another part, which is integral, is at the top of this image, Edgbaston Gardens, the car park, on which we have outlined planning for 700 residential units or 1,500 student or a combination of the above. And again, these 2, as I say, are integral to the scheme and provide synergies in terms of footfall. On the bottom left, a little further afield, you have Martineau Galleries, which is a very large office and residential dominated scheme. This is a much longer-term project on which we will look to maintain control of the master planning, to maintain control of the overall environment. But ultimately, we will look to maximize value and recycle capital in due course for that project. And coming back to increasing our scale, which obviously allows us to leverage our operational efficiencies and the platform that I've referred to already. It also helps us to increase diversification and liquidity and obviously deepen the relationships that we have with our retailers. In the last 15 months, we invested just under GBP 760 million in buying out 4 of our joint venture partners at a yield in excess of 7.5%. Those deals have been significantly accretive to earnings. And as I've mentioned, we've been able to execute them without adding any management resource, so very accretive from that standpoint as well. We will continue to target further accretive acquisitions, both internal and external, so long as they are accretive to earnings and they are consistent with our strategy of investing in retail-led destinations. And finally, if I turn to the outlook for '26 and beyond, we're expecting net rental income growth of 20% next year, driven by a full year effect of the JV acquisitions, of course, but also like-for-like rental growth of between 4% and 5%, earnings growth for the year of around 15%. It will be a touch less on the EPS because of the share issue last year, and Himanshu will comment on that. We have a clear line of sight as well to our earnings into 2027 as we benefit from the leasing activity that we've had in '24, '25 and beginning of '26, and also the Cergy 3 scheme coming on board. So again, a very positive outlook as we go forward for earnings into 2027. On that note, I'll hand over to Himanshu to comment on the financials. Himanshu Raja: Thanks, Rob. And good morning, and welcome to everyone this morning. As usual, let's just jump straight into the financials. As Rob said, another strong year of financial performance for us. Starting with the top line. Net rental income up 23% year-on-year and like-for-like growth of 3%, exactly in line with our guidance. And just unpeeling that a little bit, it was really pleasing to see the U.K. up 4%, and we had particularly strong performances both at Westquay and at the Oracle. The like-for-like in both France and in Ireland was around 2%, solid performances in our French operations and really strong performance in Dundrum, benefiting from the repositioning of 2 or 3 years ago, and also strong performance in Pavilions. Turning to the earnings line. EPRA earnings slightly above consensus at GBP 104 million, up 5%. And the key is that we saw really strong operational gearing come through with the EPRA cost ratio down nearly 4 percentage points to 35.9%. And finally, on the P&L, the IFRS profit of GBP 232 million is our first full year positive IFRS result since 2017. On the balance sheet, an increase of 33% in valuations driven by the acquisitions, yield compression as well as ERV growth, and then the beat on NTA up 6% to GBP 3.94, so I'm going to unpeel those in more detail. Credit metrics are robust. LTV of 39%. And remember, on net debt-to-EBITDA to annualize the effect of the acquisitions, which we've shown in today's release at 8.1x. So let's now turn to the earnings walk. Starting with the reported number of GBP 99 million last year. You remember, last year naturally included the contribution from Value Retail. It included the contribution from Union Square and also 2 months benefit from the acquisition of Westquay. Adjusting for those, for the like-for-like portfolio, the rebased earnings would be at GBP 76 million. And then starting from that, we saw GBP 1.4 million from the disposal of the noncore land in Leeds, like-for-like growth, the GBP 3.6 million uplift, and a GBP 35 million contribution from the acquisitions. The increase in net administration costs principally reflects inflation, but also the loss of management fees now that we own 4 of our U.K. assets, 4 of 5 U.K. assets at 100%. Net finance costs were up GBP 7 million. Really 2 moving parts there called out on the slide. The largest being the lower interest receivable of GBP 10 million as we redeployed cash into yielding acquisitions. And then the interest payable improved by GBP 3 million from the successful refinancings that we did in 2024. Turning then to the NTA. And remember, when you're looking at the NTA, the cancellation of 9 million shares from the share buyback, which we suspended at the half year as we deployed funds into the acquisition of Bullring and Grand Central, and the equity issuance, which is 48 million new shares from the equity raise. So the walk starts at GBP 3.70, earnings added GBP 0.20, as you can see on the slide. The GBP 120 million property revaluation adds a further GBP 0.23. Dividends, naturally an outflow of GBP 0.16, the GBP 82 million of dividends. And then you see the effects of both the share buyback and the equity issuance flowing through to deliver that GBP 3.94. And to valuations. As Rob said, just over GBP 3.5 billion of value today and a capital return -- and a total property return of 10%, capital return of 4%, and an income of 6%. And just going left to right, starting with the U.K., the U.K. was up 13%, benefiting from an average 21 bps yield compression. And we saw that coming through at Bullring, we saw that come through at the Oracle and at Cabot Circus, really underscoring the benefits of the repositioning. And it was pleasing to see ERVs up also 3% in the U.K. France total returns were 5%, really driven by income growth, while yields were stable. And Ireland posted a 12% total return with 20 bps inward yield compression and a 4.5% growth in ERV, really reflective of the fact that our Irish assets are 99% occupied. And finally, on developments, a 14% return, which includes the uplift from the discounts that we achieved on the land elements of our joint venture acquisitions. So just to close on this slide and to share with you our reflections on ERVs and yields. Whilst we saw ERVs up 3% in 2025, there is more to come as there's a lag here in values fully reflecting the leasing spreads coming through on ERVs. And to yield compression, you can see on the right-hand side of this chart, the range of yields today compared with where the peak yields were in 2016, 2017. And on the far right, you can see the 5-year swap rates. And whether you compare the yields today to those at peak, or to the spread to current swap rates, they continue to look elevated. And therefore, it was really pleasing to see the tightening of yields coming through in the U.K. and Ireland as the sector became much more attractive to that wider pool of investors. The balance sheet. We've been very disciplined in our capital allocation in 2025. We've seen strong support from both equity and debt markets. And during the year, we saw our credit ratings strengthened from both credit agencies. Our credit metrics remain robust and are fully aligned to maintaining a strong investment-grade credit rating. We are in a good place at this point in the cycle. Liquidity remained high at GBP 1 billion, and our refinancings in 2024 and in 2025 have largely addressed the upcoming maturities. And since the year-end, we've repaid a further GBP 104 million of debt from cash on balance sheet, and you'll see in the additional disclosure at the back, the resulting maturity chart. So moving to my last slide and more detailed guidance. We expect EPRA earnings growth of 15% to around GBP 120 million with EPS growth of around 10%, taking account of the equity issuance. In terms of the key line items, we are forecasting an acceleration in our like-for-like growth to 4% to 5% and total NRI growth of around 20%. Our flagships gross to net will be at around 80%, and we will maintain administration costs broadly flat through continued strong cost control, notwithstanding the loss of around GBP 1 million of annualized management fees following the JV acquisitions. It was pleasing to see our EPRA cost ratio come in around 4 percentage points. And as you look forward with the growth included for both '26 and 2027, we expect to see the EPRA cost ratio come down by 3 to 4 percentage points in each of 2026 and in 2027, such that in 2027, our EPRA cost ratio will be below 30%. Net finance costs will be about GBP 60 million from the lower cash balances after the acquisitions and falling rates, partly offset by the higher interest from the October 2025 bond issue. And then finally, to CapEx. We expect to spend around GBP 30 million to complete the repositioning at Cabot Circus, the Oracle and Cergy 3. And our ongoing asset management leasing CapEx, we guide to about GBP 34 million. Philosophically, we always seek to fund that from FFO after dividends, and we'll be in that position starting in 2027. And then finally, to the dividend. The dividend has increased this year with earnings. Our payout ratio remains 80% to 85%. And of course, with growing earnings, we grow dividends. With that, back to Rob. Robert William Wilkinson: Thanks, Himanshu. Just to conclude then, we will clearly remain focused on capitalizing on Hammerson's strengths. We will look to continue driving returns from the existing assets and portfolio. We'll look to scale up in order to really use the operational leverage that is inherent within our platform. All of that, alongside what you've heard from Himanshu, gives us great confidence in the future. And we've got, as I said, a very clear line of sight to our earnings growth in 2026, which is strong, but also into 2027. So I'm very excited about where we are in Hammerson's journey and as we embark on our next phase of growth. Thank you for listening, and I'm very happy to take any questions. Thank you. There's one here in the middle. Bjorn Zietsman: Bjorn Zietsman from Panmure Liberum. Himanshu, just a question on the earnings walk. So if we sort of strip out the VR disposal benefit and the NRI acquisitions, the adjusted EPS -- adjusted earnings number would have actually gone backwards. So I guess my question is, over the past 2 years, how much benefit has come from project repositioning or asset repositioning like the Bullring? And do you have to do more deals in the future to continue to drive earnings beyond FY '26? Himanshu Raja: What you've seen, Bjorn, is, if you reflect back on the repositionings being with Bullring and Dundrum, there's always a lag before that comes through. With the completion you now see at both Cabot and Oracle, which will complete and is fully funded in our guidance in 2026, that's where you now begin to see that acceleration coming through in the NRI. And that's across the board, not just in the U.K. We see it coming through from the lease-up at TDP, where it went through a 10-year anniversary cycle last year. You'll see it coming through on Cergy, and we continue to see that coming through. So largely, the repositioning have been complete, and we're now reaping the benefits of the investments we made, both in lease incentives and in CapEx now coming through. Thomas Musson: It's Tom Musson at Berenberg. Clearly, good results today. Can I just ask, in your November trading update, you talked about medium-term guidance of an 8% to 10% EPS growth CAGR. Today, you sort of mentioned to expect further growth in EPRA earnings in FY '27 and beyond. Just wondering if that 8% to 10% outlook in the medium term on earnings still holds? Himanshu Raja: Tom, that was based, if you recall, at the time following the disposal of Value Retail, so it was based off the 2024 rebased earnings, which was GBP 76 million shown on my slide on the like-for-like portfolio. So projected forward on a 5-year CAGR, that still holds. It was off that '24 base. Maxwell Nimmo: It's Max Nimmo here at Deutsche Numis. Just you're talking about scaling up, but it needs to be accretive. Just as you kind of look around the sort of your universe as it were, where do you see the kind of most accretion that you can find? Is it within the U.K. and extracting value from that strategic land? Or do you think actually maybe we go to further into Europe here where we can find higher yields and tighter financing? Just any views you have from that perspective. Robert William Wilkinson: Sure. I'll answer that to a degree, Max, and certainly come back later in the year with perhaps a little bit more precision. In short, today, across pretty much all the European markets, there is a spread between the yields at which you can acquire and the cost of debt. And of course, there's differential, as you mentioned, between U.K. and Europe. I see both of those as being attractive. But I think what will drive our acquisition strategy going forward is really about specific situations of assets that we like and where we can actually create further value through repositioning as we've demonstrated so far. So just the spread of markets themselves doesn't provide the answer to the question, you've got to look at the specifics of each opportunity. What I've said to the team so far is that having been through a period over the last 5 years where the company has had to do certain things to ensure that it continues, our focus now is we should be choosing what we do and where we do. And so we're spending some time looking at that, looking at the opportunity set across the markets in Europe. And as I said, we'll come back later in the year to give more commentary on that. Oliver Woodall: Oli Woodall from Kolytics. Just kind of following on from that, if an acquisition opportunity does present itself, what is your appetite given LTV has come up? And is that -- you're going to provide color later on the same? Robert William Wilkinson: No. I think, look, we'll be open to acquisition opportunities if and when they present themselves. We will not sort of necessarily wait. If the right opportunity presents itself, we will act. In terms of the second part of your question, which Himanshu may comment on as well, we're comfortable with where we are in terms of our balance sheet metrics. We've got our guardrails that we want to stick within. I think it's important to note, last year, obviously, we were able to demonstrate the ability to combine both equity and debt to fund acquisitions, and that's certainly we would look to do going forward. But there are other avenues as well of funding acquisitions that could be in partnership again, could be through recycling capital from some of the disposals. So I think we certainly will be open to acquisition from now, and we'll be looking to stay within the kind of metrics that we have today from a balance sheet standpoint. Himanshu Raja: I would add that the acquisitions that we've done in 2025 have been a net credit positive. From a credit agency perspective, you saw both credit ratings strengthen. And that was just a reflection that we now have rental-driven EBITDA streams, not joint venture distributions under our control. So you'll continue to see, as you run the numbers, that net debt-to-EBITDA strengthening as you go into 2026 and 2027. Oliver Woodall: Okay. That's clear. And then one more on the tenant health of -- well, across your portfolio. I don't know if you give an occupancy cost ratio number anymore, or if there's any color you can give how that's looking across the different geographies? Robert William Wilkinson: Sure. Do you want to comment on the OCR side? Himanshu Raja: Yes. Tenant health overall remains robust. The OCRs now across U.K., France and Ireland are in their mid-teens. And actually, rent to sales only now makes up about 10% of the OCR. Rates, where there's a lot of talk about rates, represent about 2% to 3%. And across our portfolio, with the 2026 revaluation, we'll actually see the multipliers come down. So on average, across the portfolio, we'll see an 8% to 10% benefit on rates coming through for occupiers. So it's more national insurance and other costs that the occupiers worry about rather than rent to sales or rates. Tom Berry: Tom Berry from Green Street. Just the French macro picture looks a little bit weaker at the moment and indexation expected to be on the lower side next year. How does that kind of play into your guidance for 2026? Robert William Wilkinson: Well, it's fully factored in, obviously, in terms of the outlook guidance that we provided. It's a market that has much lower volatility and has much lower cost of finance. And therefore, it's still a major contributor to our earnings today and going forward. But obviously, we'll keep a watching eye on what happens in France. Himanshu, anything else you want to add? Himanshu Raja: Yes. And I would just add that, that acceleration of the NRI growth of 4% to 5% equally applies to France. So indexation, as you say, really is pretty much 0 for 2026, but it's the benefit of the lease-up at TDP and the opportunities that Rob has already talked about at Cergy that really begin to come through on the '26 numbers. Robert William Wilkinson: Anyone else in the room? Okay. I don't know if there are any questions that have come through? Yes, I think so. Josh? Josh Warren: Nothing that we haven't already covered. So in the interest of time, Rob, if you'd like to draw a conclusion, I'll just remind everyone, we've obviously got a short turnaround, so please do move back to the drinks area. Robert William Wilkinson: Thank you, Josh. Look, again, just thank you for being here and for listening. Sorry. Josh Warren: Apologies. Apparently, we have some questions on the phone line. Operator: [Operator Instructions] We will take our first question from Veronique Meertens from Kempen. Veronique Meertens: Just 1 -- 2 questions. One, again, about those investment markets. I appreciate that you can't go into full detail, but just maybe from an overview perspective, do you see more opportunities arising or more discussions over the last few months? Or do you feel that investment markets are still a bit in a lockdown across your 3 different geographies? Robert William Wilkinson: Thanks, Veronique. The short answer is that we do anticipate further investment activity and growth during 2026. I think a number of potential sales have been headlined already, and we do expect those to come through during the course of 2026 in the U.K. I think in general as well, the environment for investment is likely to improve slightly in 2026 as interest rates potentially continue to come down gradually and investor sentiment across Europe has started to improve. So I think we'll see what's happened already a little bit in the U.K. start to spread into Europe as well. So in short, we expect there to be further investment activity, and we will certainly be looking at that. Veronique Meertens: Okay. Perfect. And then one other question. So you obviously have quite a positive outlook, both from improved top line and bottom line. So I'm just curious what would you say is the biggest challenge for Hammerson in 2026? Robert William Wilkinson: I think the biggest challenge actually are sort of factors that are somewhat outside of our control. So it's really coming back to particularly the U.K. macro picture, perhaps France as well and the impact that has on consumer. I think those are probably the potential headwind risks that we face more than anything that's sort of specific to our portfolio. So yes, overall consumer. Operator: Thank you. It appears there are no further questions. I'd now like to turn the conference back to Rob for any additional or closing remarks. Please go ahead, sir. Robert William Wilkinson: Okay. Well, no, just once again, thank you all for listening. As I said in summary, a very exciting time for Hammerson. So again, thank you for coming here for your questions and look forward to seeing you further. Thank you. Thanks all.
Delano Kadir: [Foreign Language] and a very good evening, everyone. Welcome to TM's Financial Year 2025 Analyst Briefing hosted by our Managing Director and Group CEO, Encik Amar Huzaimi, together with our Group CFO, Encik Ahmad Fairus. I'm Delano from TM's Investor Relations team. And if you are in our distribution list, you would have received a copy of our analyst briefing presentation by e-mail earlier. Slides are also available on our IR website under quarterly results and will be shown during this session. But before we begin, I would like to kindly remind everyone to keep your microphones muted. We will only open the floor for Q&A session after the presentation. Without further ado, I would like to hand over the briefing to Encik Amar. Over to you, Chief. Amar Bin Md Deris: Thanks, Delano. [Foreign Language] and a very good evening. Thank you, everyone, for making time to attend the briefing today. As usual, I will begin with our highlights before providing a brief overview of our overall 2025 financial year performance. Fairus will then elaborate on the operational and financial details, and I will be back at the end of the presentation with some concluding remarks before we proceed to the Q&A session. Let me begin with our recent highlights, including the latest updates on our products, collaborations as well as the award we received during the quarter. In the B2C segment, Unifi continued to strengthen its convergence leadership through enhanced Unifi UniVerse campaign and integrated digital experience with attractive connectivity, including mobile alongside enriched content and Smart Home offerings. The launch of our Unifi TV 2.0 in the second half of the year have seen encouraging adoption with 1 million Malaysians downloading the new apps in less than a month. Unifi Business continue to empower MSMEs with customizable and reliable digital solutions to grow their revenue and improve productivity. This execution was further recognized through PC.com Readers' Choice and Industry Choice Award received during the year, reflecting our strong customer and industry validation across Unifi and Unifi Business. In the B2B segment, TM One continued to drive digital transformation for government and enterprises. Our participation in MyCity Expo 2025 provides a platform for us to showcase our AI-powered city management with digital solution capabilities, enhancing visibility and engagement with key stakeholders. Last quarter, we were also entrusted by Bintulu Port Holdings through an MoU to support their long-term digitalization road map, reflecting confidence in TM's mission-critical solution for large-scale infrastructure operators. We are also named ASEAN Partner of the Year by Cisco, showcasing solid execution and growing traction across connectivity, cloud, data center and cybersecurity solutions. In the C2C segment, TM Global made solid progress in strengthening regional digital infrastructure and data center capabilities. The completion of our KVDC and IPDC Block 2 expansion has increased total power capacity, supporting growing hyperscalers' demand and AI-driven workloads. This execution has translated into differentiated product capabilities, including the scaling of GPU-as-a-Service, and our TM Nxera has recently secured 280 megawatts of power, paving the way for the upcoming hyperconnected AI-ready data center campus in Johor. TM Global industry leadership continues to be recognized with dual wins at the Asian Telecom Awards 2025, providing -- proving our capabilities in advancing digital infrastructure. Overall, momentum remains where we continue with steady progress in translating strategy into delivery as we advance our aspiration to become a digital powerhouse by 2030. Before I go into the numbers, let me start with the fundamentals. For year 2025, where the underlying business remains strong, we delivered strong revenue growth, maintained healthy cash flow generation and strengthened momentum across all customer segments, particularly in the second half of the year. As TM accelerates its transition towards a more digital and technology-driven business, we remain attentive to the evolving aspiration of our workforce. During the year, we received a significant number of voluntary separation requests from employees seeking early retirement or career transition. As a responsible employer, we have accommodated this request with a fair and attractive transition package. This is a win-win for both parties in the long run. Employees can comfortably transition to the next phase of their life while enabling TM to progressively align towards our future digitalization priorities. This underscores the group commitment in ensuring responsible workforce management and upholding the social pillar of our sustainability framework. This has resulted in moderated reported EBIT year-on-year. However, excluding this one-off impact, our underlying earnings remains resilient, supported by 8.9% quarter-on-quarter revenue growth, reflecting the strength of our core operations. With healthy cash flow generation, the Board declared a total dividend of RM 0.31 per share, comprising of RM 0.27 dividend and a special dividend of RM 0.04. Together with special dividend, total dividend payout stood at circa 70% of reported PATAMI, the highest payout ratio since we first revised our policy in 2018. We are confident of keeping this momentum to ensure continued commitment and value creation to the shareholders. CapEx for year 2025 is approximately RM 1.9 billion or 16.1% of our revenue. As we continue to support key growth initiatives, CapEx spending remains within guidance. Looking ahead, TM will continue to deliver sustainable dividend, maintain disciplined CapEx and further strengthening its balance sheet to support long-term earnings growth. With that, I will now hand over to Fairus to walk you through the financial and operational highlights in greater detail. Fairus? Ahmad Bin Rahim: Thank you, Chief. Let me walk you through the reported results and the adjustments for the quarter as well as the full year. 2025 was a demanding year. Against this backdrop, TM's revenue continued to strengthen, particularly in the second half, reflecting improved execution across our key segments. Reported EBIT and PATAMI reflect the impact of the voluntary separation request from employees undertaken during the quarter, foreign exchange movements as well as selected nonrecurring items. After adjusting all these one-off items, underlying EBIT and PATAMI showed a stronger operational momentum. As shown in the presentation, underlying EBIT increased by 3% year-on-year, while underlying PATAMI improved by 10% year-on-year. This illustrates the resilience of our core operations, while reported earnings reflect deliberate one-off optimization actions undertaken during the quarter. Overall, TM delivered resilient top line growth with revenue increasing 1.4% year-on-year. This represents a stronger uplift compared with the previous year. As mentioned earlier, the underlying business remains strong, as we continue to steer towards leaner profitability over the medium term. More importantly, than the full year number, the improvement in the second half momentum and the strong fourth quarter exit provide a better indication of the underlying trajectory heading into our financial year 2026. Let me share more details in the following page. B2C performance remained resilient, delivering 0.7% positive year-on-year while navigating an increasingly competitive retail environment. Fixed broadband subscriber rose to 3.23 million, representing 1.6% growth year-on-year and 0.7% quarter-on-quarter. Net addition has been stabilized in the second half of the year, supported by effective convergence offerings and ongoing enhancements to the customer experience. Within the Consumer segment, we continue to see strong demand driven by enhanced convergence solution, including smart home capabilities and enriched content offerings. Unifi Business segment remains positive as we continue to actively push end-to-end solutions for entrepreneurs, focusing on helping them to grow revenue, cost efficiency, including productivity. ARPU remained healthy at RM 137 per subscriber. This is driven by upgrades to higher value plans with devices playing a supporting role, contributing low single digit of -- which is contributing low single digit of total Unifi revenue. Convergence offering continued to show positive momentum with FMC penetration improved compared to a year ago. This signals broader household adoptions of integrated broadband mobile content offerings. Quad-Play and Triple-Play customers grew by 8% year-on-year, supporting higher monetization potential and improving loyalty among convergence households. Looking ahead, with rising FMC penetration, stronger device bundle traction and a stabilized subscriber net adds, Unifi remains well-positioned to deliver steady, high-quality growth and remain a key contributor to overall TM Group revenue. TM One delivered a stronger quarter with momentum improving 11% quarter-on-quarter, reinforcing execution discipline in the second half of the year. Recurring revenue remained solid, contributed by a deliberate shift towards longer-term contracts. This improves overall revenue visibility and mitigate seasonality. Connectivity continues to anchor the business while the new core, such as IT services, data center as well as cloud solutions, recorded a meaningful quarter-on-quarter uplift. This uplift was partly from data center co-location from banking sector alongside higher contribution from global digital travel agency. Together, this reflects the restrengthening of the enterprise-focused data center propositions. From the product mix perspective, there's also a shift in the direction. Cybersecurity and managed solutions are gaining traction as customers opt for longer-term service-based engagements. These deliver more stable recurring revenue and provide sustainable business model. On ESG-aligned initiative, TM One has secured several strategic collaborations. This includes expansion of the smart industrial park with NCT Group, which accelerates customer position as a digital-ready and energy-efficient ecosystem. In the fourth quarter, TM One also secured a smart port digitalization partnership with Bintulu Port Holdings Berhad, supporting its transition to a fully digital and sustainable port by 2030. Looking ahead, demand across cybersecurity, cloud, data center and smart solutions continues to grow, providing visibility into TM One's 2026 growth trajectory. The performance this quarter signals the early pace of structural transition with clearer execution priorities, refreshed leaderships and a more resilient portfolio. TM One enters the year on a more stable footing to support their long-term growth vision. On the C2C, C2C delivered another solid performance. Revenue is growing 14% against last quarter, supported by consistent domestic and international demand. Revenue remains predominantly recurring. This provides stable support to the group's overall results. Domestic growth continued to be driven by ongoing rollout of mobile fiber backhaul through the -- and rising demand of fiber port or our high-speed broadband access. This initiative support stable domestic revenue base while enhancing our network utilization. International performance is stronger, driven by rising demand for high-capacity dedicated cross-border and data center to data center connectivity. Our submarine cable investment readiness continues to scale, supported by diversified east-west routes, access to open cable landing stations, enabling greater connectivity and faster capacity monetization. Demand from growing AI workloads and data traffic continues to drive requirements for scalable digital infrastructure and wholesale connectivity expansion. On data center, we see there's an improvement or increase, and this is mainly due to completion of our IPDC and KVDC Block 2 expansion, which we have achieved more than 50% immediate take-up. On the partnership with Singtel, TM Nxera continues to make steady progress and remain on track to deliver the uplift enabled by energy efficient and sustainable data center design by second half of the year. Overall, TM Global continues to build momentum in supporting hyperscalers, domestic operators, underscoring the importance of TM in supporting Malaysia's digital economy by providing end-to-end wholesale connectivity. And this reinforce our ambition to become a digital powerhouse by 2030. Taking an alternate view of revenue by product, all product categories recorded quarter-on-quarter growth, reflecting stronger execution in the second half. For the full year 2025, overall revenue performance was supported mainly by data and others, which helped offset softness in voice and Internet product and services. Data revenue grew 6.2% year-on-year, supported by strong momentum in the fourth quarter, and the growth was mainly driven by higher demand for international as well as domestic data services, consistent with stronger C2C performance. This is largely driven by improved capacity availability -- improved by capacity availability. Other revenue strengthened 10% year-on-year, supported by solid quarter-on-quarter performance in fourth quarter 2025. This was driven mainly from contribution for our data center co-location in C2C, bundled service offering and continued growth in our education arm. As for Internet revenue, we see a decline -- slight decline year-on-year due to ongoing competitive pressures. Nonetheless, performance improved with positive quarter-on-quarter and modest increase compared to fourth quarter 2024, supported by our convergence campaign, indicating signs of stabilization. As expected, our traditional voice revenue continued its structural decline year-on-year following continued adoptions of OTT-based application. However, quarter-on-quarter growth in the fourth quarter in 2025 helped partially mitigate the annual decline. Turning into cost to revenue performance ratio. The full year 2025 cost to revenue profile reflects deliberate choices. We invested in defending B2C, business-to-consumer, momentum, including absorbing higher mobile access costs. At the same time, underlying operating costs remain well controlled. Direct costs rose to 14% year-on-year, mainly from incremental revenue to support growth in subscriber as well as mobile-related costs and international outpayment in line with C2C revenue growth. Cost movement in our ongoing support to drive contract renewal enhance customer and long-term stability. As for manpower costs, there is increased 8% year-on-year, reflecting the voluntary separation requests undertaken during the third quarter and fourth quarter. We ended the year with a mid-single-digit reduction in headcount, consistent with ongoing productivity actions. The increase also reflects differences in incentive offerings compared to the prior year. As for operational costs, we see a decline by 2% year-on-year, driven by multiple items, including some reversal from our impairment on trade receivable due to better collections and credit quality. Meanwhile, our depreciation and amortizations increased 3% year-on-year, in line with the planned capitalization -- asset capitalization as well as some one-off item. Overall, TM's structurally strong operations continue to support resilient margins in a competitive environment. Moving to the next slide on CapEx. As actually my MD mentioned, our total CapEx spend was RM 1.9 billion in 2025 or equivalent to 16% of total group revenue. And this is slightly within guidance. Of this, some 30%, 1/3 was allocated for our access network, 20% for network and the remaining for our support system. Overall, CapEx intensity remained comfortably within our guidance with a 21% year-on-year uplift. The higher spending reflects selective investment to support growth initiatives, and these include investment in digital infrastructure and connectivity as well as completion for our data center and submarine cable investment. We continue to exercise strong capital management discipline with clear allocation priorities. In 2025, less than 20% of the capital was invested in sustaining and protecting our core business, while majority was allocated to value-accretive growth opportunities. This approach ensures capital efficiency while positioning the group for future demand. Now, let us move to our cash flow and balance sheet position, which will be my final slide for today. I'm pleased to report for the full year ended December 2025, TM's Group cash and cash equivalents stood at RM 2.5 billion compared to RM 3 billion at the end financial year 2024. Free cash flow circa RM 1.6 billion, lower than last year, reflecting increase in capital investment spending during the year, coupled with a moderation of in operating cash flow and scheduled borrowing repayment during the year. Despite a year shaped by one-off item and heavy investment cycle, we continue to generate healthy operating cash flow, providing continued capacity to support both shareholders' distribution and future growth initiatives. ROIC, or return on invested capital, moderated primarily due to the impact of our voluntary separation request where costs recognized this year and temporarily reducing our reported EBIT. Even with this impact, our ROIC exceed our cost of capital, indicating ongoing value creation. Importantly, this is a nonrecurring item. Normalizing this, our ROIC actually improved compared to last year, reflecting continued value creation. As announced earlier by Encik Amar, the Board approved a total dividend of RM 0.31 per share, representing approximately 70% payout ratio to our reported PATAMI. This increase compared to the last year -- this is an increase compared to the last year. Overall, TM's group balance sheet remains strong, providing sufficient headroom for future investment and maintaining the dividend commitment. This positions the group to fund future growth while maintaining a balanced financial profile. That shall conclude my financial and operational highlights, and I'm returning back the session to my GCO and Chairman. Over to you, Chief. Amar Bin Md Deris: Thank you, Fairus. Now, let me provide a brief update on our ESG activities for the year. Sustainability remains a key pillar underpinning TM's long-term competitiveness. In 2025, we continue to strengthen our position through recognized governance standards, sustainability-driven innovation and community impact with improvements reflected in our ESG ratings and external recognitions. We improved our ESG ratings and recognized as the National Corporate Governance and Sustainability Awards, or NACGSA. TM ranked seventh among 847 listed companies nationwide and received Industry Excellence Award in telecommunications and media. The recognition reinforces the progress we are making on transparency, accountability and sustainability reporting, areas we will continue to build on. TM was also named as a 3-Star ESG Lister under the UNGCMYB ESG Select List 2025, recognized by the UN Global Compact Network Malaysia and Brunei. This award is based on demonstrated impact through 3 categories, namely ESG Trailblazer, ESG Breakthrough Innovation and Purposeful Partnership, which includes our smart urban forestry solutions. In addition, our Chief Corporate Officer was also awarded the Forward Faster Chief Sustainability Officer Award for large corporate early this year. This recognition reflects not only compliance, but the integration of sustainability into how we operate and grow the business. For full year 2025, the group delivered within the guidance provided to the market, reflecting disciplined execution across revenue, profitability and CapEx. Revenue grew by 1.4% year-on-year, a low single-digit increase while reported EBIT at RM 2 billion, with underlying performance exceeded the guidance. CapEx amounted to 16.1% of revenue, all in line with the guidance previously shared. So as we entered in the final year of defend and build phase under our PWR 2030, we are transitioning to the grow and replicate phase, marking the next phase of our transformation journey. Across the group, each business segment continues to advance its strategic priorities for sustainable growth and long-term value creation. In B2C, our suite of convergence services continue to strengthen through Quad-Play campaigns. This includes expanded smart home solutions, various device offerings and enhanced unified TV, driving deeper customer value per household. B2B momentum remains encouraging, driven by continued expansion of digital solution across ICT, cloud, data center, cybersecurity and smart services. We are also strengthening partnership across enterprise and public sectors in supporting Malaysia's digital transformation agenda. C2C continues to elevate Malaysia's position as a regional digital hub by expanding core digital infrastructure and services. This includes expansion of submarine cable system capacity, open cable landing station, AI-ready data centers and GPU-as-a-Service to meet the growing hyperscalers' demand. Leveraging our network of fiber, TM continues to provide mobile backhaul for the dual network 5G rollout, delivering seamless connectivity. Meanwhile, our data center development continued to enhance the group infrastructure readiness with TM Nxera progressing in line with the initial project timeline. The TM outlook for 2026 remains positive and is underpinned by disciplined execution of our strategic priorities. Now, let me provide an update on our 2026 guidance. For revenue, we are projecting a low single-digit increase from the previous year. EBIT for 2026 is expected to be at similar level to 2025. The CapEx percentage of 2026 is forecasted to be between 18% to 20% of revenue. This guidance underscore a balanced approach that supports long-term value creation while maintaining financial discipline. Overall, we are confident that we will achieve the 2026 market guidance, supported by continued growth and disciplined execution. With that, I thank you for your attention. We shall now move on to the Q&A session. Thank you. Delano Kadir: Thank you, Encik Amar and Encik Fairus. [Operator Instructions] First question comes from [ Fung ]. Go ahead, [ Fung ], and unmute yourself. Unknown Analyst: I have 3 main questions. Firstly, can you break down the RM 325 million in normalizing items for the fourth quarter? Second question on the depreciation and amortization. I see that the cost has risen quite a bit Q-on-Q going from the third quarter to the fourth quarter. And I think, Fairus, you mentioned just now during your presentation that there are some one-off items. So can you provide more color there as to what that is and how much was that one-off item? And then my third question is on the guidance. So I see that the EBIT guidance is flat for 2026 despite the fact that you're expecting some growth in revenue. Can you provide us some color as to why you are expecting flat EBIT? And can I also clarify whether the base for the guidance, right, is it the RM 2.47 billion underlying EBIT in FY '25? And also on guidance, guidance-wise, right, any guidance on dividend policy for 2026? Are we in the midst of reviewing the policy? Or are we expecting to keep it at 40% to 60%? Yes, those are my 3 main questions. Ahmad Bin Rahim: [ Fung ], thank you for the questions. So your first question is actually what are the breakdowns for the normalizing items in quarter 4. Basically, there are 2 items. One is our separation cost. The other one is the share of ForEx loss on our operations, and the amount for ForEx loss is circa RM 30 million for the quarter. I hope that clarifies for the first question. On the -- number two, on the depreciations and amortizations, you're right, I did mention there are some one-off items, and this is pretty much some of the cleanup for the assets as well as some review of our useful life. And otherwise, actually, it should be trending as usual, and we hope to see the similar trend back in 2026 -- the next quarter 2026. Yes, back in 2026. EBIT flat despite expecting growth in revenue. Amar Bin Md Deris: Thank you, [ Fung ]. Let me just take on the dividend policy. Would there be a review of policy? I will assure you, we will make announcement should there be any announcement on the change of policy on the dividend. But we have been stating, at least maintaining, our dividend thus far, and we will certainly make announcement should there be any change in the policy. On the EBIT flat, of course, there could be expectation of increase in cost as well. In that sense, we are maintaining our guidance as EBIT flat. Ahmad Bin Rahim: And then to address you, [ Fung ], whether the base guidance is actually on underlying or reported, typically, we will go unreported. We just want to be very clear, it will be a similar level of the reported. Yes. Unknown Analyst: Yes. I see. Okay. So if I can just follow up with some questions, right? So firstly, going back to the normalizing items. Okay. So I also note, right, that in the P&L that you have other gain of RM 92 million that was booked in the fourth quarter. So is this still related to fair value gains on the tech fund? That's question number one. And you also mentioned, I think, some copper sale gains in your notes. So how much was that in the fourth quarter? So that's the first question. And then, on the D&A, just to clarify again, right, what was the -- was there a one-off in the fourth quarter in terms of D&A? And just to clarify, the run rate going into 2026, right, should we be looking at the third quarter instead of the fourth quarter D&A? And then lastly, when it comes down to the EBIT guidance, Fairus, you mentioned that we are looking at the reported EBIT, which is only about RM 2 billion, I see from the slides. So from the underlying amount of RM 2.47 billion in 2025, you are expecting it to go down to RM 2 billion in 2026. Am I -- is it fair to think about it that way? And if so, why would that be the case? Yes, those are my follow-up questions. Ahmad Bin Rahim: Actually, quite a lot of questions. I'm trying to actually dissect again. I think I'll just quickly on some of the questions with regards to depreciation and amortization, you are right. There's -- as I mentioned earlier, there's actually one-off item. And as a base, we should be looking at quarter 3 as actually the baseline. Okay. And how much is -- did you ask how much is copper gain? Unknown Analyst: Yes, I asked about how much is the copper sale gain in the fourth quarter and also whether the RM 92 million in other gains, right, that you booked in 4Q, is that fair value gain on tech fund again? Ahmad Bin Rahim: All right. So just for clarity, for the other gains, if you see in our consolidated income segment of RM 92 million, it's referring to our fair value gain, right? So there's actually a spillover from quarter 3 to quarter 4, and that is actually the number, yes, explaining the movement for other gains. And as far as actually copper monetization, it will be actually reflected under our other operating income. Unknown Analyst: Got it. Okay. And the EBIT guidance, you were saying that you are looking at it being flat, but what you're comparing to is the reported EBIT of only about RM 2 billion. So from the underlying of RM 2.5 billion in 2025, you're expecting it to come down to about RM 2 billion in 2026? Ahmad Bin Rahim: Okay. I think let's provide some colors on the EBIT guidance. Of course, I think from actually benchmarking perspective, we are looking at the same. We are anticipating a similar trend of voluntary separation requests for the 2026, right? So -- and actually taking that into account with a similar request, and this is actually what we think from EBIT guidance perspective. Yes. Does that actually answer you? Unknown Analyst: Yes, it does, yes. Yes, clarifies a lot. Delano Kadir: So up next, we have Luis. Go ahead, Luis. Luis Hilado: I initially had 3 questions as well. The first is the normalized EBIT and PATAMI in the fourth quarter was down fair bit and seems to be because of direct costs, is this primarily equipment costs or it's the mobile access cost that you spoke about during the presentation? The second question I had is regarding Unifi. The blended ARPU, is that inclusive of device sales still? Or is there an actual ARPU uplift in terms of migration to higher-end plans? And the third question is, if you could give us an update on the status of the TM Nxera DC. I saw that you mentioned that you've secured 280 megawatts of power. Does that mean the DC's long-term target is to be 280 megawatts? And any progress on the first 64? Amar Bin Md Deris: Let me -- is that the only question, Luis? Thank you. Luis Hilado: Initially, yes. I can -- I will repeat... Amar Bin Md Deris: Thank you. Let me take on the TM Nxera DC on the 280 megawatts. Of course, it is anticipated to be completed by second half of the year, at least on the first phase, yes, not on a full scale. It's on the first phase yet, which is 64 megawatts, all right? Second half of the year, quarter 3, hopefully, yes. So on the Unifi blended ARPU, yes, it's inclusive of device. Yes. However, the take-up of higher plan also increased for the second half of the year. I'll pass to Fairus on the direct cost. Thank you. Ahmad Bin Rahim: Sorry, Luis, just actually to add, what my MD said, the blended ARPU is -- actually is a combination of actually our device, but it is also -- but the factor is actually driven by 2 things. One is actually the device as well as the higher take-up as higher packages prices. Nevertheless, our total revenue -- device revenue is a low single digit to total group revenue, just to give you the context. On the direct, I just wanted to recap. I think your question is why was it my EBIT went down and you think it is because of direct costs. Am I correct, the normalized EBIT? Luis Hilado: Normalized EBIT, correct, and PATAMI. Ahmad Bin Rahim: Yes. All right. So I'll break down on the normalized EBIT. Actually, the normalized EBIT is actually -- looks lower by 2 items. We have one-off items from depreciation and amortization, as I mentioned earlier, in the quarter 4. And secondly, there's actually -- just 1 second, there's a catch-up actually cost on a one-off staff benefit that actually flow in quarter 4 when it wasn't there in quarter 3. So this should be a one-off item. Again, the 2 is one-off item, and that will still be -- that will actually be normalized back in quarter 1 this year. And consequently, and when we're looking at actually the lower EBIT, it flows down to our PATAMI similarly, yes. Luis Hilado: Sorry, Fairus, just to clarify. So the D&A and the catch-up benefit is actually one-off, but in terms of the normalization, you didn't classify it as such. And that's why normalized EBIT is lower. Ahmad Bin Rahim: Yes. And so for the -- sorry, you are asking for the depreciation, right, Luis? Luis Hilado: Yes. And the catch-up benefit on the ForEx first. Ahmad Bin Rahim: Okay. Yes. For the D&A, it's actually basically a one-off, some was due to cleanup and review of our useful life. We expedite some of the asset, right? So that's actually one part. On the catch-up, so that is actually one-off item that was actually supposed to be -- that was actually flowing in quarter 4, yes. Luis Hilado: But it was not part of the normalization of the EBIT and the PATAMI. Ahmad Bin Rahim: Yes. That's correct. That's not part of the normalized, but that's the reason why the overall EBIT went down, correct. Luis Hilado: Yes. It's more of timing. Okay. Sorry, just to clarify on Nxera. The -- is there any prospective tenancy you've already -- you can let us know about? Is it primarily you fill the rate once you get the second half construction? Amar Bin Md Deris: Yes. The demand is encouraging. So we are now considering on the next phase of the buildup, if we are able to complete the transaction by at least the second half of the year. Delano Kadir: Prem, you are up next. Go ahead and unmute yourself. Prem Jearajasingam: I have a bunch of questions. Essentially, I just want to clarify with regards to your guidance and all these one-off items. First of all, this one-off staff cost benefit that showed up in the fourth quarter, it is unusual for the -- it is significant in the fourth quarter. You have not taken it out. But is this something that we see every year anyway? So it is not really one-off. Is that a fair comment on this staff benefits? I'm going to do it one by one. Ahmad Bin Rahim: Okay. So, Prem, it is a flow through in quarter 4. It should be normalized in actually the -- in 2026. Prem Jearajasingam: So it will not show up in 2026. Is that what you mean? Ahmad Bin Rahim: It will not show up in 2026. Yes. Prem Jearajasingam: Okay. Good. Secondly, the VSS costs by the sounds of it since you adjusted RM 325 million at the EBIT level and you -- I mean, as per the announcement, RM 30 million in ForEx losses realized. Therefore, VSS is potentially about RM 295 million. Are we expecting a similar number for 2026 or a bigger number for 2026? Amar Bin Md Deris: Prem, thank you for asking on the voluntary separation. These are requests, which we received from our employees. As you know, we're moving into the digitalization and our transformation, and we are very attentive to this aspiration of the employees. And based on the trend, hence, that's what we are predicting there could be a possible similar tick up. Hence, we are prepared to ensure that we are able to at least accommodate for some of them. Prem Jearajasingam: Okay. All right. Perfect. Now, am I right in thinking that when they use VSS, there is typically a payback period for that cost, and therefore, the actual VSS impact in the -- I mean, 1 year after, if you were to get a 2-year payback, then you'd assume half that VSS cost comes back in the form of a lower staff cost? Would that be a fair assumption? Amar Bin Md Deris: Yes. Yes. It is a fair assumption. Prem Jearajasingam: Yes. So, in 2026, having spent, let's call it, RM 300 million in 2025, we potentially get back about half of that in lower staff costs in 2026. Amar Bin Md Deris: Yes. Some of the benefit will flow through in the year 2026, but we expected a full payback with the circa of maybe 2 years. Prem Jearajasingam: Yes. Okay. Perfect. Now, with regards to -- there's -- also, as part of your announcement, there is this -- the post event where you are switching 5G network to U Mobile, and as a result, you forfeit something like RM 127 million in prepaid fees for 5G access, do we need to take further provisions for this in 2026? Or has that already been captured in our accounts already? Ahmad Bin Rahim: I think, Prem -- I think as we -- as we explicitly mentioned in our announcements, this unused prepaid capacity will need to be provisions in 2026. Prem Jearajasingam: So you will -- okay, so you will need to provide. And in your guidance for 2026, is this RM 127 million part of the adjusted EBIT or the underlying EBIT? Because it's all getting very confusing what we are taking -- putting in and taking out. So if your baseline EBIT guidance for 2026 is RM 2.0 billion, is that after taking into account this RM 127 million or not? Ahmad Bin Rahim: Yes, Prem. Prem Jearajasingam: So it's already captured. That RM 2.0 billion guidance includes what is essentially RM 300 million of VSS, RM 127 million of the 5G-related forfeits. Anything else that is one-off in nature that is being guided for in that 2026 guidance? Ahmad Bin Rahim: I think we discussed a bit on the separation. What we -- it is actually based on the guess. What we only have is actually current-year trend. So that get emulates and actually incorporated part of our 2026 guidance, yes. So yes, those are the items. Prem Jearajasingam: All right. I'll leave it there for now. Delano Kadir: Isaac, you are up next. Chee Chow: I have some questions just focused on the manpower cost itself. I think if I compare today's and I look at the trend for the past 10 years, the manpower cost as a part of the revenue has always been like hovering around 20% to 22%, while the number of staff strength have shrink quite -- very significantly compared to 10 years ago. So I was just trying to understand, I mean, like what happened? I mean, we are seeing more than 10,000 declines in the staff strength and yet manpower cost as part of revenue is still quite sticky at 20% to 22%. That's question number one. Number two is also related to manpower, but why don't we just take this first? Amar Bin Md Deris: Thank you for the question, Isaac. So one of the main reason is because of the -- even though we are able to optimize the manpower, but there will always be increase in salary on per annum basis and also recurring salary adjustment as and when the interval comes. So that kind of like push it up again one way or another. Chee Chow: All right. Number two is on the VSS expectations for 2026. Is there a reason why this -- okay, so do you approve all the applications for 2025 or there was some application that was not approved, that's why you expect it to come in, in 2026? I was just trying to understand, I mean, beyond '26, about '27, '28, what should we be looking at in terms of where do you want to go in terms of your staff counts and in terms of your manpower cost for that matter? Amar Bin Md Deris: Well, of course, we can see quite a rapid trend for 2025, but we -- but most of it is attributed to early retirement, so we could foresee it would taper down over the years for the early retirements, right? And that's where we expect it. At least, the trend will taper down. But since this year -- I mean, since last year, we noted that there's quite a request -- a significant request for separation, yes, for career transition, for early retirement. And for us, we take the liberty to approve all these requirements -- requests. And as I said earlier, we can foresee the trend to at least taper down, but -- that's what we are expecting perhaps the trend could be almost similar for this year, and we are prepared for that. Chee Chow: All right. Just I think one more question before I pass it to someone. So now that you are transitioning to the U Mobile, so has the transition -- so when is the transition supposed to start? And in terms of the annual savings, is there any numbers that we can share? Is that more the cost? Is that more of the efficiency, like on this one? Any guidance on that would be very helpful. Amar Bin Md Deris: So we have initiated the process by issuing the notice of termination. So -- since it's a process, it will be a gradual phasing out of our subscribers from DNB to U Mobile. So we anticipate it will be completed by end of the year, hopefully by quarter 4 this year, where it will be fully cut over if all is being delivered according to plan, yes. And with respect to the savings, yes, there will be, as per the disclosure in Bursa as well, we anticipate that there will be a saving in this near term with respect to the commercial. Chee Chow: So in terms of the unused amount, so by the end of the year, would it be lower than what it was shared? Or that was -- I mean, so the RM 121 million, as you continue to use it throughout this year, wouldn't that be lower by the end of the year? How should we look at that? Amar Bin Md Deris: No, not necessarily, Isaac, because the capacity can be carried over throughout the contract tenure. Delano Kadir: Up next, [ Paige ], go ahead and unmute yourself. Unknown Analyst: I apologize for kind of doubling down on this, but I want to talk further about the EBIT guidance. Can you give EBIT guidance on an underlying basis? Like how do I understand from the RM 2.4 billion into next year? And then, how do I think about it building on the adjustments for which I understand is the 5G versus the VSS? But like on an underlying basis, can we just get a clear number on that, please? Amar Bin Md Deris: We expect that it should be similar to the current guidance, Paige. Yes. Unknown Analyst: So to clarify, underlying EBIT guidance for next year would be in line with the RM 2.4 billion for this year. Is that correct? Ahmad Bin Rahim: Yes, for the underlying, correct. Unknown Analyst: And then you would expect that -- I mean, obviously, we're expecting some revenue growth. So we're just expecting cost growth in line with revenue growth. Is that? Ahmad Bin Rahim: Exactly. So there will be some growth in terms of our IT applications and some of the licensing as well, which we can see that the trend is rising in the market. Delano Kadir: And you're back again, Luis, for round 2. Go ahead. Luis Hilado: Yes. Just 2 housekeeping questions, please. Are we expecting copper sales again this year and going into the long term? Any guidance? And how much inventory you still have to sell? And second is on the -- just to nail down that the fair value gains on the tech fund, those are all done already so that we won't see that 2026 onwards. Amar Bin Md Deris: I believe you will not see the tech fund for 2026. That one I can confirm. But for the copper sales, as you know, we are ramping up the recovery of this copper to mitigate the case of cable theft as well. So it is in our best interest to speed it up, and we have started off this year. So you can expect the same trend for next year. Delano Kadir: Up next, we have Mun Chan. Go ahead and unmute yourself. Mun Chan: I just have 1 question. So actually, what's the main reason for you to switch from this DNB to U Mobile? Amar Bin Md Deris: Thank you for the question. I think for Telekom Malaysia per the announcement of the government of -- for the dual 5G network. So we have run through a process of acquiring what would be the most competitive in the tender process. So the outcome is what we have announced today. I hope that will clarify. Mun Chan: Sorry, just maybe just a follow-up. So does that mean that you should be enjoying better terms, I mean, under this U Mobile as compared to DNB? Amar Bin Md Deris: Yes. I mean, for example, as I mentioned earlier, in our disclosure as well, we expected to see some benefit within the near term with respect to the rates, yes. Delano Kadir: Up next, Kelly. Thanks for joining us from your -- even though you are on maternity leave. Go ahead, [ Kylie ]. Unknown Analyst: I just want to dive in deeper on the DNB access agreement. So is -- are you subject to other penalties or termination fees from the termination? And for your U Mobile agreement, is it based on actual usage? Is there a minimum capacity offtake or just based on traffic volumes? So that's all for now. I've got another set of questions later. I'll follow up after you answered this set. Amar Bin Md Deris: We are exercising our rights as per the access agreement on the -- our termination notice. So we don't foresee any penalty, as we are merely exercising our rights under the agreement. That's one. On -- what was the question on the paper usage traffic volume? Unknown Analyst: All right. Do you -- is TM subject to a minimum capacity offtake? The reason I asked because that was one of the terms under the DNB agreement. For U Mobile agreement, is it the same terms? Amar Bin Md Deris: As per any typical MOCN agreement, there will be a minimum capacity uptick, but the level will be different. Unknown Analyst: Okay. Just 1 more -- yes, just 1 more just on your submarine cable. For Asia Link Cable, should we expect material earnings contribution? And what services will you offer that will ride on this cable? Is it mainly managed wavelength or IRUs? Yes, what should we expect? Amar Bin Md Deris: So yes, there will be some contribution as one of the cable that we have invested in will be ready this year, which is ALC. The services will be -- there are many services, not only IRU. There are bandwidth services, IPL as well that we are selling on the international market. Unknown Analyst: Right. So can I just confirm that fiber sales for these international submarine cables are something that TM would not be prioritizing? Amar Bin Md Deris: Can you repeat the question again? Unknown Analyst: All right. So the main services that you will offer for your global -- for TM Global's customers would just be leased bandwidth. Amar Bin Md Deris: Yes. Our submarine cable on bandwidth leasing. Delano Kadir: Up next, Azim Faris. Azim Faris Bin Ab Rahim: Can I just get you to recap what is the normalizing item for the third quarter of 2025? Ahmad Bin Rahim: Azim, if I can just help to recap, actually, there are 2 items. One is actually our separation cost, and the other one is actually our ForEx. Yes. Azim Faris Bin Ab Rahim: I mean for the third quarter 2025, not the first quarter. Ahmad Bin Rahim: Yes, correct. Actually, it's the same, both items, third quarter. Yes. Azim Faris Bin Ab Rahim: Can I get the number, the amount? Ahmad Bin Rahim: Yes. Majority of the normalizing item in quarter 3 is actually coming our -- from our VSS, and I think they added actually with our ForEx loss in the quarter. Azim Faris Bin Ab Rahim: Next, my question is about the gain on the fair value, right, for your investment fund. May I know where is it showing up in the balance sheet? Because I see actually there's some decline in the investment fair value through P&L. Is that the line that we should look at? Ahmad Bin Rahim: Sorry, Azim, if I can just recap, you would like to clarify where is actually the -- where we derive the fair value in the balance sheet, right? Is that correct? Azim Faris Bin Ab Rahim: Yes. Amar Bin Md Deris: Because they are recognized in other gains in our income statement. And that you can see the fair value to -- from the balance sheet category, it will be part of our noncurrent asset and the investment at fair value through P&L, FVTPL. Thank you. Azim Faris Bin Ab Rahim: Because I think if you compare to the third quarter 2025, the amount is actually larger... Delano Kadir: Sorry, Azim, you are actually breaking up. Can you just repeat that question again? Azim Faris Bin Ab Rahim: Yes. I think I'm looking at the same line, which is the noncurrent asset, the investment at fair value, right? In the third quarter, the amount is, I think, RM 250 million, and this fourth quarter is RM 107 million, is actually declining. Am I seeing the right thing? Ahmad Bin Rahim: Sorry, Azim, I'm trying to actually -- hopefully, I can provide a better clarity because it's actually -- it is done over a period, right? So during the quarter, so we have actually revised up. Then when actually the disposal was completely done, then actually -- then there's -- hence, the reason why you cannot see the differences, yes. Azim Faris Bin Ab Rahim: So meaning there is some disposal on the investment in the fourth quarter, right? Is it? Ahmad Bin Rahim: Yes, correct. Azim Faris Bin Ab Rahim: Okay. May I know what is the value of that? Ahmad Bin Rahim: Sorry, say that again. Azim Faris Bin Ab Rahim: The value for the disposal. Ahmad Bin Rahim: We have not disclosed this, but -- because it's actually one off from actually one of our long-term technology fund, yes. Delano Kadir: Up next, we have Joe. Go ahead Joe and unmute yourself. Joe Liew: Can you hear me? Delano Kadir: Yes, loud and clear. Joe Liew: Yes. All right. Great. I have 3 questions from my end. First, I just want to reconcile your adjusted PATAMI with your adjusted EBIT in the fourth quarter of '25. So adjusted PATAMI is RM 363 million according to your slides, your adjusted EBIT is RM 541 million. I just want to know in between these 2, what are the items that you actually deduct from the EBIT? Because if I just deduct your interest and your tax, I wouldn't be able to get RM 363 million. So is there an additional item that you actually deducted to get the PATAMI, adjusted PATAMI? Amar Bin Md Deris: Thank you. Actually... Ahmad Bin Rahim: Thank you, Joe. So I think we have actually been mentioning, actually, on the -- for a couple of items. One is actually our VSS costs, and the other one is actually our ForEx. So taking down to ForEx, there are also ForEx on borrowings. And these are all net tax impact, yes. And only those 2 items, ForEx at operations and borrowings as well as actually the VSS net tax. Thank you. Joe Liew: Okay. So that will get me to the RM 541 million EBIT, right, adjusted EBIT, correct? So if I knock off my tax and I knock off my interest, I will be able to get about RM 400 -- no, slightly RM 430 million, not RM 363 million. So that's why the discrepancy there as stated above. Ahmad Bin Rahim: Sorry, I probably should actually -- we also actually normalized one-off gain from our technology fund actually at the PATAMI level. Thank you. Joe Liew: All right. But that would mean you deduct the gains from the technology fund twice, isn't it? Because the RM 541 million already excluded the gains from technology fund. Ahmad Bin Rahim: Gain is not actually recognized at EBIT, actually below the EBIT line. The gain from actually our -- yes. Thank you. Joe Liew: Okay. Okay. All right. The second question is in regards to gain. So I -- if -- maybe you have shared it earlier, but what was the full year DNB excess costs you paid for FY '25? Ahmad Bin Rahim: No, we have not actually declared any DNB excess cost. And -- yes. Joe Liew: All right. Okay. But then the last question for me would be -- last 2, CapEx guidance for the year. I think CapEx has raised from 16% to 18% to 20%. I just want to know where will the increase be coming from. Ahmad Bin Rahim: So our CapEx, we will remain actually committed to actually continue to expand our network capacity and reach. But bulk of the investment also will cover our submarine cable investment, yes. Joe Liew: This CapEx, does it include the TM Nxera CapEx? Or this... Ahmad Bin Rahim: We don't consolidate actually TM Nxera, yes. Yes. Delano Kadir: Do we have time for maybe one more question from anyone else? Okay. With that, thank you very much, everyone, for joining us today. And we will see you in the next quarter. Again, if you have any other questions, please feel free to drop myself or the IR team line. Thank you very much. Amar Bin Md Deris: Thank you. Thank you very much.
Beat Romer: Good morning, ladies and gentlemen. It's a great pleasure to welcome here to welcome you to our full year results conference here at the Hotel Widder in Zurich. Present from our side are our CEO, Andreas Muller; our CFO, Mads Joergensen; our Head of Investor Relations, Anna Engvall; and myself, Beat Romer, Head of Global Communications. Andreas and Mads will guide you through the key operational developments and also the financial performance of 2025, share our outlook for 2026 and provide you an update on the priorities of our Strategy 2030. Following the presentation, my colleague, Anna will moderate the Q&A session. We will first take questions here from the room and afterwards then from the participants in the webcast. Afterwards, you are warmly invited to join our lunch buffet here in the back or in the room adjacent. With that, I would like now to hand over to Andreas to begin the presentation. Thank you. Andreas Müller: Thank you, Beat. Also from my side, a warm welcome, and thank you for joining us this morning. Let's start on Slide 3, highlights of the year. 2025 was marked by the largest transformation in our corporate history. With the divestment of Casting Solutions, GF has become a pure-play Flow Solutions business, focused on the buildings industry and infrastructure end markets. I would like to thank the entire GF organization as well as external stakeholders for their support during this time of significant change. With a solid foundation in place, global footprint, broad offering and innovation capabilities, we are excited about the journey ahead of us, and we focus on executing Strategy 2030, establishing ourselves as the leader in Flow Solutions. Coming back to our 2025 results. Overall, our performance in Flow Solutions was solid given persistent geopolitical headwinds and a challenging macro environment. Infrastructure continued to demonstrate strong momentum. Industry, however, was impacted by muted demand in general as well as continued project delays for semiconductors. The European construction market remained mixed, while the U.S. market weakened in the second half. In addition, we faced adverse tariffs and currency effects impacting our industrial U.S. business. It is important for me to emphasize that we will -- that while we performed well in certain areas, our overall result did not fully met our expectations. As an organization, we are capable of achieving more. As such, we are swiftly moving forward with a new effectiveness and efficiency program called Fit for Growth, which will take out CHF 40 million this year, of which most will be secured already by end of Q1. Along with an expected recovery in key end markets in the second half of the year, we expect low single-digit organic sales growth and a comparable EBITDA margin of 14% to 16% in 2026, which corresponds to 10.5% to 12.5% at the EBIT level. Let's now take a look at some of the key metrics for 2025 on Slide 4. Sales for Flow Solutions came in at CHF 3 billion with 0.6% organic growth, more or less in line with guidance. Comparable EBIT margin for Flow Solutions was 10%, excluding items affecting comparability, which was slightly below our expectations. Including these items, the reported EBIT margin stood at 8.9%. The comparable EBITDA margin was 13.4%. The proposed dividend per share is CHF 1.35, in line with last year's level, subject to approval at the Annual Shareholders' Meeting in April. Moving on to Slide 5. With geopolitical issues escalating through 2025, we leveraged our global footprint and local-for-local presence, which limited but not eliminated our exposure to tariffs. We also benefited from diversification with certain markets and segments compensating for others. The Americas is nearly CHF 1 billion business today and grew 3.5% organically. Our Building Flow Solutions business outperformed an increasingly challenging construction market, and our industry business performed well. We continue to invest in our U.S. business and inaugurated a new 15,000 square meter facility in Shawnee, Oklahoma. By doubling our capacity, we are now in a position to better serve our customers in the important and growing natural gas sector. Europe was weaker, down over 2% organically with strong growth in infrastructure, partially offsetting weaker performance in industrial end markets and buildings. A key development last year for Building Flow Solutions was the start of the expansion of Hassfurt into a Central European warehouse. By streamlining our logistics setup, we will make distribution both more efficient and also faster for our customers. APAC performed well, driven by momentum in marine, chemical processing and various industrial segments, offsetting weakness in semiconductors. Building on our long-term presence in the region, Asia remains an important and attractive market. Last year, we opened our new customer experience center in Shanghai, bringing the GF experience to our customers, in particular, localized industrial solutions for the Chinese market. Moving on to Slide 6, which summarizes the many steps which have shaped our transformation. While progressing the Machining and Casting Solutions divestments, we also took important steps to enhance our Flow Solutions business with the acquisition of VAG, which brought mission-critical metal wealth technologies to GF. Going forward, GF is uniquely positioned to capitalize on its broad Flow Solutions expertise across industry, infrastructure and buildings. Moving on to Slide 7. The integration of Uponor, which was, of course, the initial catalyst of our transformation is also progressing well. We further reduced portfolio complexity in 2025, optimized our production footprint and began harvesting customer and channel synergies. For example, we strengthened our presence in the fast-growing MENAT region with an end-to-end portfolio of integrated Flow Solutions for large-scale projects across buildings, industry and infrastructure. We expanded into the U.S. renovation segment through a partnership with Home Depot. We also combined Uponor AquaPEX with GF's ChlorFIT to deliver complete domestic water solutions for commercial buildings in North America and as well launched the Uponor S-Press portfolio in Switzerland to address the attractive hot and cold water and heating applications. In total, we achieved run rate synergies of CHF 29 million in 2025, which compensated for multiple adverse cost impacts, including ForEx, utilization, wage inflation and therefore, allowed us to maintain last year's profitability level in Building Flow Solutions. Looking ahead, we remain on track to reach CHF 40 million to CHF 50 million by 2027. As mentioned in the beginning and shown on Slide 8, we have launched a new effectiveness and efficiency program in late 2025 called Fit for Growth to drive profitable growth. With this program, we will take out CHF 40 million of costs in 2026 by reducing noncustomer-facing roles and external expenses. We will also continue to optimize our production footprint and rightsize our corporate functions. In total, approximately 600 employees will be affected by the program. We started in Q4 last year and have made strong headway already. The majority of measures will be secured by the end of Q1. Importantly, Fit for Growth will allow us to continue to invest in our future, specifically our strategic priorities, which underpin Strategy 2030. We expect to reinvest a part of the achieved savings in our sales organizations to ensure effective and superior customer service. We also have started a net working capital initiative to enhance the performance of our net working capital. Let's move to Slide 9. With our transformation, sustainability has become even more closely linked to our business and strategy, and we remain fully committed to our ESG journey. I'm very proud to confirm that we successfully delivered on key targets of our 2025 sustainability framework. We expanded our portfolio of products with social and environmental benefits to reach our target of 77%. We also reduced Scope 1 and 2 CO2 equivalent emissions by 51% compared to our 2019 adjusted baseline and increased our number of carbon-neutral sites to 12, including Sissach and Seewis in Switzerland. Very important, we also reduced accidents by more than we have targeted. Moving on to Slide 10. Overall, Industry & Infrastructure Flow Solutions, I&I Flow Solutions grew sales by 1.9% organically, driven by the strong momentum in infrastructure in Europe as well as gas distribution in the U.S. Organic sales growth in H2 was 2.2%, up from 1.6% in H1. Demand in industry in the U.S., Middle East and Northeast Asia also remained solid. In Europe, geopolitical tensions weighed on our customer willingness to invest. Demand in certain end markets such as chemical processing and mining remained muted. Semiconductor-related sales landed below expectations at minus 16%, driven by persistent project delays, especially in the U.S., Europe and China. Looking to 2026, we see an improved outlook for semiconductors driven by AI-related infrastructure, high-performance computing and memory demand. We have secured key projects and are well positioned with advanced new technologies such as the SYGEF Ultra, where we are setting new purity and performance standards for ultrapure water systems. We also anticipate demand for data center cooling solutions to accelerate, albeit from a relatively low base. Sales tripled to around CHF 30 million in 2025. Comparable EBIT margins for I&I Flow Solutions declined to 10.9%, driven primarily by unfavorable product mix given lower semiconductor-related sales, ForEx, but also tariffs. The ForEx impact at EBIT level was clearly nearly CHF 19 million. Moving on to Slide 11. As we highlighted at our recent Capital Markets Day, liquid cooling for data center presents an attractive growth opportunity. With 7 pilot projects, more than 30 proof of concepts commissioned as well as more than 20 initiatives currently in advanced discussions, we are seeing encouraging signs of polymer-based solutions gaining traction in the market. We are particularly excited to be working with Rittal as the provider of a complete cooling piping infrastructure for Netmountains' new data center in Velbert, Germany, covering the facility water system, the technology cooling systems and room cooling. This is the first project where we have supplied the entire polymer-based cooling loop from chiller free cooler to the chip, including all components. Behind the products and systems, GF was also responsible for the entire design and engineering work as well as the prefabrication, which enabled fast project execution. We also brought a few of these products and the ones which haven't been with us at the Capital Market Day. We brought our new energy valve, which is a balancing valve, which controls the flow when it goes into the racks to ensure the most efficient removal of heat. We strongly believe that in the generations to come of data centers, the liquid as being water will take over glycol-based systems as we see them as per today. The polymer solutions offer multiple advantages, which I will not stress at this point of time. But looking up here, GF is also outside the building, which is the facility from the compressor to the cooling distribution units, the CDOs, which serve then the cooling liquids to the individual racks. And GF offers a comprehensive and complete solution in polymer, and we're going to see an advantage in water over glycol in the years to come. We will launch this energy valve, the balancing, the Delta T balancing in the months to come. Moving on to Slide 12. To support growth in broad range of industry and infrastructure applications, including liquid cooling, we have invested in our Seewis plant in Switzerland, the Canton Grisons. Following the upgrade, Seewis is a world-class facility for production of ball valves and actuators with high levels of automation and increased efficiency in all areas, ranging from production to logistics to energy use. Moving on to Slide 13. On the infrastructure side, we are capitalizing on strong market momentum by helping customers upgrade their water networks and minimize water loss. Together with VAG, we were uniquely positioned in the market as a one-stop shop solution provider. Our high-performance DMA Flowise chambers enable installation in 1 to 2 days instead of weeks. And with industrial like prefabrication, the high quality reduces water loss, improved pressure management and provides faster response through continuous network monitoring. Moving on to Slide 14. The acquisition of VAG made us uniquely positioned in the market as a one-stop shop solution provider. The integration after the closing in Q4 is well on track, and our plans are executed to drive commercial synergies. I think one of the great examples is this so-called DMA district metering area pressure control chamber. Such a chamber is being used 50 times for approximately 20,000 inhabitants. What does it do? It keeps the pressure in the network always constantly on the same level to ensure, first of all, that when you open the faucet, you are not getting splashed or you don't have any water at all. But it is much more important in terms of keeping the network well intact with a good thought through pressure management, you're going to reduce the exposure and the aging of a network by more than 75%. GF uniquely positions throughout the Uponor infrastructure integration, which produces this kind of special Weholite chambers. With our existing product portfolio of couples to multiple systems with a pressure retaining valve, which is only 1/3 in terms of complexity compared to conventional technologies, we offer a very easy-to-install solution. Such a chamber can be between CHF 30,000 and CHF 40,000. And as I said, on a 20,000 population city, you most likely would deploy some 50 of these chambers. The prefabrication makes it so unique due to the fact that you have a control quality within this chamber. Our teams join forces across Europe already today. We have focused with the VAG integration on a few countries. And we have done so far good progress already also here in Switzerland and the customer feedback to have a first-time one-stop solution when it comes to urban water infrastructure systems was well appreciated. Let's move on to Slide 15, Building Flow Solutions. The business declined by 2.7% organically. Adjusting for discontinued product lines, the organic decline was 1.8%. On a quick note, in Switzerland, we have been able to grow by around 5% in that market, also due to the fact that we have launched new products from the Uponor range into the Swiss market. Europe remained mixed during the year, down 2.1% organically. Adjusting for discontinued product lines, Germany held its ground amid a slow market recovery. Residential building permits were up 11% year-over-year in 2025 after several years of decline, indicating positive momentum in construction activity beginning towards the end of 2026. Switzerland, Benelux, Iberia, Poland and some of our key European markets were in positive territory. U.S. and Canada also proved resilient in a slowing market. Our collaboration with Home Depot to expand in the U.S. do-it-yourself market got off to a good start with our presence increasing to 30 stores on the West Coast. The comparable EBIT margin remained stable at 8.7%, supported by the value creation program. The currency effect at the EBIT level was minus CHF 6 million. With the measures implemented, we are confident that we have set the base to achieve our target margin. Moving on to Slide 16. As we increase our exposure to the renovation market, innovations such as Siccus 16 underfloor heating system play a key role. By 2030, nearly 16% of the EU's building stock will require renovation due to energy performance standards introduced by the EU. Our Siccus 16 underflow heating system enables energy-efficient comfortable heating as well as cooling with fast installation times. The system also combines seamlessly with our Smatrix AI wireless control system, which intelligently adjusts room temperature for maximum comfort and efficiency. Looking at Slide 17, Siccus 16 and Smatrix are compatible with both traditional systems and heat pumps, connected via pipes such as the next-generation GF Ecoflex VIP 2.0. With its superior thermal performance, flexibility and fast installation times, Ecoflex is a natural fit for every new heat pump installation and our offerings perfectly match the need for efficient heating and cooling. Driven a push towards energy security, decarbonization and affordability, heat pumps have overtaken over traditional energy sources and are expected to grow at a CAGR of 15% until 2030. Supported by this momentum, the Ecoflex range was one of our best-performing solutions in 2025. Allow me quickly to reflect on what will come along with the exchange of conventional thermal fossil systems in housing. A heat pump allows you simultaneously to make benefit of cooling. And this is something which is largely and highly appreciated by many of the households and being obviously also considered in new build. We offer not only refurbishment solutions, what you see here with ceiling cooling systems, which can nicely then be connected to heat pumps. We also offer systems which can go in new build, but also the smart control, which allows them to make best use of the heat pump, where we also have interfaces to control the heat pump through our Smatrix systems, especially when it should be used in combinations with cooling and not only heating. So we see -- we have set the ground with the solutions, not only Ecoflex, but also our indoor climate control systems, a good base to profit from this trend in the market. With this, I will now hand over to our CFO, Mads Joergensen, to go through our financial performance. Mads Joergensen: Thank you very much, Andreas. The transformation obviously has had quite an impact on our financial report. To provide transparency, we present our income statement in discontinued and continuing operations. The discontinued contains 12 months on Casting Solutions and 6 months of Machining Solutions until the closing of the sale, which was on the 30th of June 2025. We also have certain one-off effects from the divestments, including noncash book gains and losses, which I will elaborate on later. Starting on Slide 19. Here, we provide an overview of the net sales of the GF Group. Net sales were CHF 4.1 billion, down from CHF 4.8 billion, primarily driven by the deconsolidation of Machining Solutions, the foreign exchange effects. Organically, group sales were down 1.7%. Focusing on our Flow Solutions business. Industry & Infrastructure Flow Solutions was up 1.9% organically, and Building Flow Solutions was down 2.7% organically for the reasons Andreas mentioned earlier. And Casting Solutions consolidated for the full 12 months declined over 8% organically, driven by a continued weakness in the European automotive market. These movements are broken down on the bridge on the next slide. And looking on Slide 20. Sales were down CHF 74 million organically, driven by Building Flow Solutions, Casting Solutions and Machining Solutions. The foreign exchange effect had a negative impact of CHF 153 million. I'll come back with more detail in a bit. The consolidation of VAG from October 1 added sales of CHF 54 million and the deconsolidation of Machining Solutions lowered sales by CHF 492 million. Moving to the full income statement of the GF Group on Slide #21. As a reminder, continuing operations reflect our Flow Solutions business, although with certain one-off effects this year. Discontinued operations include Casting Solutions and Machining Solutions, as mentioned earlier. Gross value added of the group declined as a result of the sale of Machining Solutions. Continuing operations increased primarily driven by the book gain on the divestment of Machining Solutions of CHF 143 million. Personnel expenses declined for the group. For continuing operations, they increased slightly to CHF 841 million, driven mostly by new employees joining from VAG. The personnel cost ratio increased to over 28% from 27% in the prior year. Reported EBIT of the group was CHF 326 million and a margin of 7.9%. This includes impairment charges for Casting Solutions of CHF 83 million shown in discontinued operations. The net financial result amounted to minus CHF 136 million for the group, including additional value adjustments of CHF 83 million on the affiliated Casting Solutions business. Note that this CHF 83 million is in addition to the CHF 83 million mentioned just before, so that the total is CHF 166 million for 2025. Income taxes decreased slightly for the group. The corporate tax rate was temporarily elevated at around 40% as a result of the nonrecurring taxes and other one-off effects. It will likely remain elevated in 2026 due to the divestment-related effects before normalizing in 2027 at around 26%. Finally, net profit to GF shareholders declined to CHF 103 million, including all items affecting comparability. For the continuing business, the net profit increased to CHF 196 million, including the machining book gain. I'll elaborate more on the net profit in a moment. Looking at comparable EBIT on Slide 22. The margin declined to 7.6% for the group. As can be seen, this decline was driven by the lower profitability of I&I Flow Solutions, Casting Solutions and Machining Solutions. BFS remained stable at 8.7% despite a weaker top line, benefiting from synergies achieved via the value creation program and including SKU rationalization from plant closures that we did in Italy and Turkey as well as procurement savings. Slide 23. Overall, our core Flow Solutions grew 0.6% organically for the year and 1.2% organically in the second half. As mentioned earlier, the decline in Industry and Buildings was offset by strong growth in Infrastructure. The comparable EBITDA margin declined to 13.4%, while the comparable EBIT margin fell to 10%. This was due to the unfavorable product mix and due to lower semiconductor-related sales as well as adverse FX effects and tariffs. Slide 24, which provides details on the items affecting comparability. At the EBITDA level, these items include CHF 44 million of restructuring and other expenses. The purchase price allocation impact of CHF 3 million refers to the inventory step-up that we did on the VAG acquisition. The deconsolidation refers to the CHF 143 million book gain that we did on Machining Solutions and the total on EBITDA level is CHF 96 million. Including impairment charges of CHF 83 million relating to Casting Solutions and value adjustments of CHF 83 million, the total impact on net profit is minus CHF 71 million. And on the right-hand side, important note for 2026, the EBIT and EBITDA will be negatively impacted by a divestment-related CHF 180 million, mainly noncash loss from recycled currency translation effects, also CTA called and goodwill. This is also being communicated, but it affects the 2026 accounts. Let's now take a look -- closer look to the EBITDA bridge on Slide 25. Starting from 2024 with a comparable EBITDA of CHF 618 million. The organic impact was minus CHF 64 million and FX effect was minus CHF 34 million. The divestment of Machining Solutions and VAG acquisition led to CHF 53 million lower EBITDA contribution, resulting in a comparable EBITDA of CHF 467 million. Reported EBITDA was CHF 564 million. On Slide 26, yet again, we saw significant adverse currency effects in 2025. Almost all major currencies, particularly the U.S. dollar, developed negatively against the Swiss franc. The total effect on group sales was around CHF 153 million and an EBIT minus CHF 29 million. Given the significant one-off effects, we show an adjusted net profit on Slide 27. Adjusting for the book gain of Machining Solutions of CHF 143 million and the impairment charges and value adjustments relating to Casting Solutions in total CHF 166 million as well as one-off taxes and other effects, we arrive at an adjusted net profit of around CHF 147 million. Moving on to the asset side of the balance sheet on Slide #28. Our cash and cash equivalents decreased to CHF 569 million, reflecting free cash flow development and M&A activity during the year. Overall, total assets decreased to CHF 3.6 billion, down from CHF 4.3 billion, driven by the divestment of Machining Solutions. As for the liability and equity side of our balance sheet on Slide 29, our current liabilities decreased by more than CHF 600 million, driven by proceeds from the divestments and the total equity decreased to CHF 41 million. Now to the free cash flow on Slide #30. Reported EBITDA, which includes the book gain on Machining Solutions was CHF 564 million. Net working capital increased by CHF 86 million, driven by the increased inventory levels to improve service levels at I&I Flow Solutions. Please note that the net working capital will also be addressed as part of the Fit for Growth program through supply chain optimization and other measures. The interest paid decreased as a result of the repayment and the refinancing of the Uponor-related acquisition debt. Deducting the noncash Machining Solutions book gain, cash flow from operating activities declined to CHF 268 million. CapEx remained elevated, driven primarily by investments in Casting Solutions for production facilities in the U.S., of which approximately CHF 40 million has been repaid by the new owner. Excluding M&A, free cash flow declined to CHF 21 million. I would now like to highlight a few additional figures on Slide 31. Net debt was around CHF 1.7 billion at year-end, including approximately CHF 300 million cash proceeds from Casting Solutions and the building in Biel, it was CHF 1.4 billion. Net debt to EBITDA was 3x at year-end, in line with expectations. The equity ratio has decreased now to 1.1%. As already mentioned, the 40% tax rate was temporarily elevated in 2025 for the reasons explained before, and it should return to a normalized level of 26% in 2027. Now turning to my final slide, #32. The proposed dividend is CHF 1.35 per share, in line with last year's level. Now I'd like to hand back the word to our CEO. Andreas Müller: Thank you, Mads. Let's turn to Slide 34. After a challenging 2025, we saw a significant escalation of geopolitical tensions, we are seeing certain tentative signs of improvements in our end markets with momentum expected to accelerate in second half of the year. In the construction market, building permits have ticked up in markets such as Germany and the Nordics. In industry, we expect semiconductor-related sales to accelerate based on our growing project pipeline, while infrastructure is expected to remain strong on the back of aging water investments. Meanwhile, we have started the year with a streamlined corporate organization and lower cost structure based on already secured Fit for Growth metals. And we are fully committed to achieving the full CHF 40 million with the majority already secured by end of Q1. Overall, we expect organic sales growth in the low single digits and a comparable EBITDA margin of 14% to 16% for 2026. Before we wrap up, I would like to take a few minutes on Strategy 2030 and our key priorities for this year. Our vision or North Star is clear. We want to be the global market leader in Flow Solutions in our 3 business areas: Buildings, Industry and Infrastructure. Let's move to Slide 37. Strategy 2030 provides a path to get there. Based on our 4 strategic thrusts, we want to maximize our core business and grow with new applications and innovative solutions to drive growth and margin expansions towards our 2030 targets. In the near term, we intend to double down on certain key market opportunities, which offer accelerated growth. I would like to highlight 5 in particular. Importantly, these are not only new bets. We are in these businesses with the right solutions and sometimes even with significant sales already. Now we want to take them to the next level. With data center capital expenditures estimated to reach USD 1.7 trillion until 2030 and performance standards continuing to increase, we see a tipping point in the industry in favor of polymer solutions over the midterm. With our innovative and complete solutions, which are based on water as the ultimate coolant, we aim to grow this business to CHF 300 million in sales over the next 5 to 6 years. Based on current customer acceptance levels, we believe we are on the right track. Liquid cooling for HVDC high-voltage direct current converter stations for example, renewable energy, we offer unique capabilities, which our customer value. We are well positioned to further expand this portfolio and grow regionally to expand in this very attractive segment. Driven by multiple megatrends, including AI and digitalization in general, the global semiconductor market is set to reach USD 975 billion in sales in 2026, up 27% year-over-year. To capture this growth, we continue to innovate to set new purity and performance standards. In December, we launched SYGEF Ultra, our next-generation purity PEEK piping solutions for the efficient transport of hot ultrapure water, expanding the boundaries of purity. We alluded earlier to indoor climate and the potential we see given the rapid growth of heat pumps. With our superior solutions from the heat pump to climate management in the building, we are well positioned to benefit. Finally, on urban infrastructure, we can now offer a unique one-stop solution based on the combined offerings of GF, Uponor and VAG. We have received the first custom orders for pressure regulating chambers and see great potential in continuing to help customers upgrade their networks. It is important to acknowledge that water scarcity will only continue to become a more pressing topic over time. I firmly believe that GF can make a difference as a one-stop shop for urban water infrastructure with our cutting-edge technology and solutions. All in all, these growth opportunities, combined with our value creation and Fit for Growth programs are a feedstock of achieving Strategy 2030. With that, it's time to move on to our Q&A section. I will hand over to Anna to moderate the Q&A session. Anna Engvall: Thank you, Andreas, and good morning, everyone. We would now like to move on to the Q&A session. As Beat mentioned, we will first take questions from the room and then from the webcast. If you have a question please raise your hand and make sure to wait for the microphone so that people on the webcast can also hear you. I think we are first here in the right corner. Mr. Iffert, please go ahead. Joern Iffert: It's Jorn from UBS. Two questions, and I go back in the queue, please. The first one is on the cost saving program, the CHF 40 million and you are freeing up the 600 headcount. Is this also changing your processes and your structure? Or is it really pure headcount reduction and processes and structures including go-to-market strategies will remain unchanged. This is the first question. And the second question, just a technical one. On the net working capital program you have launched, what are you doing exactly? What do you expect is the contribution to the equity free cash flow? And then also in general, what do you see in terms of equity free cash flow generation in Flow Solutions in 2026 after maybe a more muted '25? Andreas Müller: Thank you very much, Mr. Iffert. I would like quickly to elaborate on our Fit for Growth program. The Fit for Growth program, as I said, is not only taking out headcounts or costs. So we're going to focus on OpEx, but also on our employees' cost. And it is a structural adjustment in a few areas, but it is also in a few areas an adjustment to a new volume and optimization of processes. We also will leverage obviously, new technologies to allow GF to become more efficient. So it's a largely efficiency increasing program. Mads Joergensen: In terms of net working capital, the increase in inventory was mainly to increase the service level of I&I Flow Solutions. To counter that, we have set a target of a reduction of inventory of 5% for the end of the year. The measures will be SKU rationalization. So product pruning, have to go back to the basics as well as supply chain optimization, which could involve some changes of the layout and how we do our warehousing and production day out. In terms of free cash flow guidance for 2026, we aim at CHF 175 million to CHF 200 million for the Flow Solutions business. Anna Engvall: Thank you, Mads. Next question here, if I saw correctly, go ahead, Mr. Fahrenholz. Tobias Fahrenholz: Yes. Tobias Fahrenholz from ODDO BHF. Speaking about the margin weakness in '25, the 10% adjusted, which you achieved versus 10.5% target at the lower end of the range. Can you provide a little bit more color on the reason for the deviation? So what has been the deviation impact of semi market currencies, tariffs? That would be my first one. Andreas Müller: Thank you very much. As we have alluded, we had a severe impact of the ForEx. So the currency effects have been quite substantial, but a minor effect of the tariffs. But overall, we had a mix change in terms of what we have sold. So the infrastructure business is attractive, but it is not as attractive as, for example, the semiconductor business. As you might have seen, the semiconductor business has been affected by minus 16% in the year under review, so was the industrial business subdued across Europe. So it's more or less a mix, which has largely affected also our profitability next to the currency effect and the tariffs. Tobias Fahrenholz: Okay. And looking ahead into '26 and your guidance, why is the range so wide? And would be the base assumption to reach the middle? Andreas Müller: The base assumption to reach the middle would be obviously the growth being at the upper range of our guidance. And I think we feel good in terms of executing on our Fit for Growth program, but also that certain end market subsegments need to develop favorably. Anna Engvall: Okay. Let's go to the middle of the room. Yes, please go ahead. Dominik Feldges: It's Dominik Feldges from Neue Zurcher Zeitung. 600 employees you've mentioned will have to -- that's a reduction of your workforce. Can you a bit elaborate a bit on where that is going to happen, especially how much the headquarter, I think you mentioned also corporate functions. I think how much it will be affected here, the workforce here in Switzerland. And then you've mentioned the construction market, I think, in the U.S., which is becoming increasingly challenging. What is happening there? And if you may allow one more question, tariffs. You've mentioned that there was an effect, a minor effect you said, but how much in terms of tariffs did you have to pay? And will you now try to reclaim these tariffs? Andreas Müller: Thank you very much, Mr. Feldges. The headcount reduction, which is broadly in line with the efficiency increase program is approximately 5% of the global workforce. It is more or less equally spread with a slight overweight across Europe. Switzerland will be also affected with approximately 10% of the addressed 600 people. And yes, you're absolutely right, we will also realign our central functions, but not only on the corporate central functions also on the divisional central functions. Coming to the U.S. construction market, I think, yes, we have seen a weakening towards the end of the year. We are confident that we will outperform the market, particular that we have -- we also outperformed the market in 2025 compared how the last quarter has been developed. I think we have been slightly negative, but only slightly organically negative in the U.S., clearly less than the overall market. We believe with our new solutions, I have mentioned the combination of AquaPEX and our ChlorFIT to allow also move into more commercial applications, but with the do-it-yourself market entrants to address the very important refurbishment market, which we haven't addressed in the years before, at least to this extent. Talking about the tariffs, as we mentioned, we had a minor effect, but it had an effect. So it was clearly above CHF 5 million. So it was a bit between CHF 5 million and CHF 10 million and how to reclaim, I think we are rather wait and see what is now the ultimate solution on the most current developments. We are obviously now will go for our rights, but we would first wait and see how the whole thing will actually turn out. Anna Engvall: Okay. Yes. Mr. Bamert, go ahead. Walter Bamert: You have given us the sales figures for Industry and Infrastructure separately. Can you also give us the adjusted EBIT figure? And will you continue to do that in the future? Mads Joergensen: For the split of Industry and Infrastructure. Walter Bamert: Yes. Mads Joergensen: For the reported figures, we have, let's say, a consolidation system that we have 2 divisions. The split is an approximation. We have set strategic targets, and we will continue to provide updates on how the separate businesses will go also on a profitability. We're not prepared for this meeting. Walter Bamert: Not at this meeting, but from half year figures. Mads Joergensen: We have also said. Walter Bamert: We can expect to get 3 divisions or you will also... Mads Joergensen: We do not provide 3 divisions. We provide 3 business areas. Walter Bamert: EBIT and top line. Mads Joergensen: Remember that these profitabilities are because of the way the accounting system is put together is an approximation. Walter Bamert: Okay. And you also split the building business between Europe and North America that will continue only on the top line? Or will also add a split of profitability there? Mads Joergensen: It's a good question. We have not decided fully on our segment reporting in the new setup. Walter Bamert: Not also regarding the top line reporting. Mads Joergensen: We have not decided yet. Walter Bamert: Okay. Yes. And then material cost, you should have some tailwind from the lower material prices. How does that translate over time into your profitability last year and this year and the future? Mads Joergensen: On the material cost, it's correct. We had seen some downward trends on a number of the resin prices about CHF 600 million of the Building Flow Solutions business as well as CHF 300 million of the I&I Flow Solutions business is linked to this lower material cost. So it's actually priced on a daily basis and therefore, also priced into the market, which means that we have followed partly also the decreasing material costs, which leads to, for instance, in BFS, there we were able to compensate a bit. But overall, the price effect overall for both BFS and I&I Flow Solutions has been very little in 2025. Anna Engvall: Okay. Next question. Yes, let's go here to the front. Alessandro Foletti: Alessandro Foletti, Octavian. Can I ask you a couple of questions? Maybe a quick one, if you can provide order -- organic growth for the order intake in the 2 Flow divisions. Andreas Müller: Mads? Mads Joergensen: The organic growth for the order intake in the 2 Flow -- for the whole year in -- for the Flow Solutions business. Overall, it was for I&I Flow Solutions, we're looking at an order intake growth of and not over the growth, so about 2% order intake for the full year. And for BFS, we had a decline in the order intake also in the area of 2.5% decline. Alessandro Foletti: Great. And then on the one-off cost or let's say, the Fit for Growth program. But I'm a little bit surprised you mentioned in the slide that it will cost you CHF 15 million. Oftentimes, when companies do this restructuring, the ratio is between cost and savings is more closer to 1:1. So maybe you can explain why you'll be able to do it with less money. Andreas Müller: I think our Fit for Growth program, as we have also alluded to, has stressed in the last year more on the portfolio optimization, which normally comes along with higher charges in terms of restructuring expenses when we have, for example, closed down our -- one of our Turkish operations and consolidated multiple places across Europe. That came along with higher restructuring costs, whereas the program to go is focusing, as I said, on OpEx, operational expenditures, but also on efficiency activities in our headcount functions. And yes, here, we talk about severance payments. Alessandro Foletti: Okay. And maybe last one. Can you give an indication on the expected leverage, net debt to EBITDA for '26? Andreas Müller: I think end of the year will be below 3, end of 2026. It will be below 3, yes. Alessandro Foletti: But that also means, for example, not around 2.5. Andreas Müller: No, we will be closer to 3. Anna Engvall: Great. Yes, let's go here. Ingo Stossel: Ingo Stossel from UBS. Regarding your M&A guidance to reach your midterm top line targets, do you have any update here? I think you probably need to buy quite a bit to get to the range which you have. And are there any gaps in your current portfolio which you see, especially in your focus areas? Andreas Müller: Our focus areas are very comprehensive solutions at this point of time, I have to say. I think when we talk gaps, we talk regional gaps. We have front-loaded our M&A activities with the acquisition of VAG already in the year 2025, which gave us the opportunity to combine our mission-critical wealth technology with our existing offering. So I think we are well on track in terms of our M&A pipeline. But nevertheless, talking about M&A, we will see more activities in the years beyond 2026 and not in the year 2026. Ingo Stossel: And to follow up on that, what would your leverage guidance look like after 2026 if -- you say you probably will buy something. Mads Joergensen: We have said that if we follow the plan completely, it would be at the end of 2030, our leverage will be below 1. But since we are planning on acquiring companies, we would estimate that we will be around 2 net debt EBITDA at the end of 2030. Anna Engvall: Great. Next question. Martin Flueckiger: Martin Flueckiger from Kepler Cheuvreux. I've got 2 questions, and I'll go back in line afterwards. First one is on, I think, Andreas' statement regarding the development in the semiconductor business. If I remember correctly, minus 16% organically was already the number for H1. Now you're saying, if I understood you correctly, that it's the same number for the full year. And yet again, if I remember correctly, at the half year stage, you guys were guiding for a rebound in the second half. So just wondering whether you could elaborate a little bit on what went wrong in the second half in semis and what exactly you're expecting for 2026? That's my first question. And then the second one is on your targeted reinvestment into the sales organization going forward. You were talking or in the press release, you're talking about CHF 40 million savings, if I understood correctly, in 2026. And part of that is going to be reinvested. So I was just wondering how much of that will be reinvested and what the net figure will be in terms of cost savings? Andreas Müller: I think 2 excellent questions, Martin. Thank you very much. I think, yes, that was something which we have not seen, and we have been quite optimistic when we have released mid-year results, then we have seen an increased project pipeline and also quite a nice order book on our semiconductor businesses. But we have seen that many of these projects can be pushed out of the year under review. So that was also for us, as I said, our results didn't live up to our expectations. That was one of the key drivers. So we have expected to be rather seeing a slight growth in the second half of the year, which we haven't seen. Going forward and outlook-wise, we believe that semiconductor could grow some 15% in the year to come. That's at least what we expect in that field. We see ourselves well positioned. We also have a couple of proof of concepts of the SYGEF ultrapure water system, which is giving the opportunity now also to move into the hot ultrapure water applications, which substantially drives down the rinsing time of installations. We are set in a couple of validation processes and homologation processes. So we believe we have set quite a new standard in that application. GF is an early mover when it comes to that industry. So we can't compare our business development with a VAT or INFICON. This is a bit of a different momentum when this kind of applications being stalled. So yes, in a nutshell, that was one of the disappointing factors in the year 2025. Reinvestment in our sales force, I have elaborated a bit on our new growth opportunities. As I have spoken, we have been nominated on a quite substantial order in Latin America for urban water infrastructure. That means for us that we also have to care to have the right sales force, the right technical expertise at the front, and we will invest, particularly in that one. But also when it comes to data center, this is a field where we have already employed a bit less than 40 people, but we will go and continue since we know that this is a different type of business. It's an OEM business versus a construction business. So the OEM business requires also some special attentions, let's call it this way. So we will also employ more people in that field, but also across Europe with our solutions and Building Flow Solutions, we see still, let me say, white spots when we look at the markets across Europe. So overall, we anticipate between CHF 5 million and CHF 10 million to be reinvested of this -- CHF 5 million to CHF 10 million to be reinvested in our sales force, but not only sales force but also customer-facing resources. Anna Engvall: Great. Please go ahead. Miro Zuzak: Miro Zuzak, JMS Invest. I have a couple of questions, if I may. The first one would be how much or how large or how big were the data center-related sales in 2025. Then the next question is a bit more a technical one. You mentioned the new valves here on stage. We also have introduced a couple of new products late 2025, including now covering the range even into the several blades, if I'm not mistaken. A couple of questions related to this. Firstly, in the entire change, there is still missing the cold plate part, so the very last part. Are you intending to close this gap at some point in time? And how through acquisitions? Secondly, can you please give some feedback about the initial response regarding the new products that you have introduced, how they are basically accepted by clients? Thirdly, maybe you can mention in which platforms that you are, I don't know, Vera Rubin, HP and so maybe of other clients which have already co-developed with you and how you are positioned? And lastly, the question about glycol versus pure water, maybe you can give some color there, how this is currently shifting towards pure water. And then lastly, you mentioned that the core business would be -- this business would become CHF 400 million to CHF 500 million in a couple of years, 3 to 4 years. How much of this additional growth comes from the new products that you've just introduced? And how much comes basically from the products that you already had in place last year? Andreas Müller: It's a lot of questions, and I should have brought my technology experts with me. But thanks a lot. First of all, the DC business in 2025 was approximately CHF 30 million, troubling from CHF 10 million to CHF 30 million, where our outlook for the year 2026 is approximately another growth in the magnitude of CHF 20 million. The new valve and in terms of -- so first of all, the feedback which we have received on the comprehensive solutions, what we have displayed now on multiple exhibitions was very positive. Nevertheless, the go-to-market is a slight different one than in our other businesses. So the so-called cooling processes is a very close business to the HVAC installation companies, but it's also an OEM business. That means you have different kind of contraction partners. As we all know, NVIDIA is specifying down to the concept to the horse to the quick connect, how a rack, which is serving their GPUs should be constructed. Talking obviously, to this kind of experts and homologation experts is not that easy. We have co-developed a lot of things together with big players such as Google, but also we are in touch with Algae. We are talking to AWS. So we have good inroads to that one because we have been already in hindsight in the facility water. We differentiate facility water, which is everything which goes out, let's call it a white room. So anything what is outside there, GF is well present already today. We also are now present in this kind of applications. For example, we have equipped a very well reputated data center facility of one of the big players in the Nordics with the storm water management, which is also then an application which nicely fits into the GF comprehensive offering. But coming back to facility water, going then into the technology area, that means the technology water, that is new for GF. Here, we are now with the first, as I have shown you, the Netmountain with Rittal being one of the big supporter and promoter of this kind of solutions. Algae was also a big promoter. We have multiple smaller developers, but we are also in the big ones. Next, cold plate. I have to say we have not looked into cold plate. We believe this is a technology which we're going to leave to the experts. We also believe that the cold plate technology might going to see some strong innovations in the years to come, which means that the cold plate will be replaced by a direct in the packaging cooling channel. So here also, we believe that liquid water, high-purity water will be superior over anything else because the purity of water is something which GF has played since decades. And so therefore, we can handle that one. The initial response, as I said, was very positive. I think the platforms I have mentioned, I just would like to correct, I said we strive for CHF 300 million in the strategy cycle, 2030 in terms of data center sales and new products, at least in the white room, a lot of our most recent presented innovations, whether it's being the balancing valve, energy valve or whether it's being the quick connect, what we have also here on display or the manifolds, which we provide, we assume in the white room, even 2/3 would be stemming from new products in the white room, in the white room, which is more or less most likely a 50-50 or a 60-40 split in terms of the entire installation. If you look at the entire large-scale hyperscaler, when we go from storm water, which would be a bit infrastructure applications to the facility water from the chillers to the CDUs and then the conveyance of the entire system and then it goes white room distribution here. I think this is obviously it would be quite attractive and appealing. Anna Engvall: Thank you, Andreas. Any further questions? Another one, Mr. Flueckiger. Martin Flueckiger: Yes. I'd just like to come back to your statement, Andreas, regarding the CHF 300 million targeted long term. If my memory serves me right, at the CMD, you guys were talking about CHF150 million to CHF 200 million. That's quite an increase. What's changed there? Andreas Müller: I think our market insights, also certain customer feedback and also the belief that water as a coolant is superior over glycol, makes us believe that in the second generation, you're going to see more polymer-based solutions. And we target it is still not that big. The total expected capital expenditures in regards to piping systems in the data center is approximately CHF 3 billion, at least that is the anticipation for the year 2030. So we're going to believe with our solutions, we are quite well positioned and also our discussions and our proof-of-concept installations with the positive feedback made us to believe that CHF 300 million is an achievable target. Anna Engvall: Yes. Dominik Feldges: Of course, it's not the focus today, but still you have sold now the -- also your -- the Casting business, the timing there. I mean is it -- was it -- I mean, could you not have waited for it? I mean, do you really have to -- I mean, is that not really unfortunate to sell it really at the bottom of the cycle? It seems you have had an impairment. I mean, why not being a bit more patient maybe like the Chinese who just wait and to put it maybe a bit provocatively? Andreas Müller: I think what is the right time of an acquisition or what is the right time of a divestment? I think that becomes quite a complex question. When we reflect a bit on how the business is being set up and embedded in the industry, we believe with the transformation, we have seen a lot of European suppliers, but also European OEMs strongly suffering from the developments. And we have seen that also in our call-offs and in our orders and order fulfillment rates even of the most recent order acquisitions, let me say, over the 3 and 5 years, as you may know, you acquire an order and you execute on this order in 3 to 5 years on these businesses. We have seen many of the platforms overpromising and underperforming of our OEMs, which also resulted obviously in severe headwinds on this entire group across Europe. Now let's talk a bit more China. China is a second pillar where GF has been strong with its Casting Solutions business, particularly with the automotive part of the Casting Solutions business. We have seen also a shift there in terms of which OEMs are the successful ones and how the supply base has changed, and has been less money being deployed in real estate as we have seen, let's say, some 10 years ago. Nowadays, a lot of venture capital flows into technologies and in manufacturing setups. We have seen a lot of new competitors growing over the last 2 to 5 years. Mads has presented the figures of the discontinued businesses, and he has also presented the figures of what has been achieved in our Casting Solutions business. If you take now a bit more than 3% EBIT margin and think about that we still keep a very profitable precision casting business, which serves the aerospace, commercial, but also the industrial gas turbine business, you can imagine that May profitability is far out of what has to be expected. If you ask me, I think it was one of the best possible moments in the last couple of years to get at least a decent strategic buyer attracted by our business where the combination with Nemak being one of the largest or the largest player in that field makes a very nice combination. We believe it's the right moment. And I think waiting wouldn't be the right recipe. You wouldn't have liked that. Mads Joergensen: And if I may complement, Andreas, in terms of timing, if you go back in 2019 was not a good year for automotive in China, 2020, COVID, 2021, supply chain, 2022, chip problems, et cetera, et cetera. What actually happened over that period is that the automotive industry changed fundamentally, and it's really in such a transformation at the moment that we were happy to be able to exit this business. We're very happy to be able to exit this business. Anna Engvall: Thank you, Mads. Any final question from the room? If not, then I will ask the operator if there are any questions from the webcast. Operator: So far, there are no questions from the webcast. Anna Engvall: Okay. In that case, then I will thank you for joining us this morning and invite you to join us for lunch in the room next door. Thank you very much. Andreas Müller: Thank you very much.
Félicie Burelle: Good morning, ladies and gentlemen. Welcome to this 2025 annual results presentation, and thank you for joining either here in Levallois or remotely. I am pleased and honored to do this presentation for the first time as Chief Executive Officer. And you might have seen in our press release this morning that the Board of Directors and the Chairman here present in the room have entrusted me with a great mission to lead our company into the next phase of development. As many of you know, we have been shaping our company over generation with very strong family and engaged values, long-term commitment, financial discipline and also a deep sense of ownership towards our stakeholders. And I'm pretty proud to be continuing this legacy in the years to come. So I'm focused and determined to keep on executing our strategy. And I'm particularly pleased to present to you today a solid -- very solid set of results, which I think are demonstrating the relevance of our strategy, the way to move forward and the resilience of our company. Besides that, we are actively positioning our company on the future mobility hot topics, and there are many electrification, digital, AI, competitiveness, you name it, a lot of challenges ahead, but a strong road map to go there. And I would like to do a special thanks to the Executive Committee of OPmobility, who is here in the room today and all of the OPmobility teams that are engaged in delivering this road map. So now I will walk you through the results alongside Olivier Dabi, our CFO; and Stephanie Laval, Investor Relationship and Financial Communication and also strategy planning. So you now have the same person helping me building the strategy and explaining needs to the market. Before jumping into the results, a bit of context on the market that you know is quite complex to apprehend today. More than ever, the regionalization and the pace of what is happening in between the region is growing and is diverging. We still have Asia representing 50% of the market and the North American market still strong in terms of demand with a sizable consumer market and Europe that is having its own challenges. In that context, we are actively pursuing the diversification of our footprint and of our customers. Again, 2025 has been a year with some challenges in terms of OEMs volumes and supply chain volatility, still the semiconductor, but other topics that somehow have impacted our customers. But again, we have shown resilience and flexibility and demonstrating our capacity to adapt to that and taking the measures necessary in terms of cost reduction to sustain this pace. 2025 definitely has been intense year in terms of geopolitical impact, starting with what happened on Liberation Day back in April. So impacting the strategy of our customer and the dynamics of the footprint. But we have leveraged our sizable footprint, 150 plants everywhere. And this is providing us the balance to really be close to the customer and mitigate the impact of what can happen at each region. Besides that, the pace of technology and innovation also is a different approach by region. We can see a lot of topic on AI, autonomous driving and robotization coming out of Asia and a lot around autonomous driving in the U.S. and we are getting closer with adapting our -- again, our organization to be able to better understand the customer dynamics and their needs, which has enabled us to make some great achievement for 2025. We took the commitment to improve all of our KPIs, and we did. We will come back to that, but we have reached all of our targets, which has enabled us to put in place still a very robust financial structure. Our net debt-to-EBITDA decreased from 1.7x to 1.4x. All of that demonstrating again the solidity of our business model. Strong acceleration. 2025 was definitely an intense year in terms of movement for the North American market. We have also initiated some strong initiatives for Asia, and I'll come back to that a bit later. So we are happy that 2/3 of our order intake for 2025 is targeting regions outside Europe, which doesn't mean that we don't want to consolidate Europe, but we want to focus on the countries, we're showing significant room for growth. And finally, we took the commitment for 2025 to be carbon neutral on Scope 1 and 2, which we have obtained and that including the lighting activities that we bought in 2022, which were not considered when we set up the target back in 2019. A bit of color on the activity by region. So you can see Europe still representing half of our revenues. And in a market that's slightly decreased, we have been happy to enjoy some growth, mainly in Western -- Eastern Europe countries, led by exterior and our module activity. North America represented 28% of our revenues. So if you look at globally, you can see that OPmobility decreased by 1.5%. But if you look at the reality by country, we grew 1.2% in the U.S.A., while decreasing in Mexico, Canada by almost 5%. Obviously, the trade tariff has had an impact on the Mexican market and slower ramp-up and some delays have led us to decrease in the region. Almost 20% of our sales from Asia and again, with a bit of a different dynamics in between China and Asia. We have grown in both regions, in China, slightly less than the market, but still enjoying some growth, mainly coming from YFPO, while the C-Power activity was stable. And a very solid growth in the rest of Asia with exterior in India, C-Power in Thailand and the module activity enjoying a very strong growth in Korea with JV SHB for electrification modules. It was also a year of strong launches, flawless launches, 144 launches. You can see here the split, almost 50 launches in Europe, 23 in Americas and 73 in Asia with some of the key launches highlighted. We can talk about this U.S. EV player, which we cannot mention for whom we are supplying big modules that have launched this year and that sustained the growth in the U.S.A., but also the Jeep Grand Wagoneer to whom we are supplying our exterior parts. In Europe, quite important, we are supplying the MMA -- platform for Mercedes. And you can see here, notably for the CLA in Germany, which was awarded Car of the Year, but also some key programs in the rest of Europe. And in Asia, you can see some of the players, the BYD, Kia, Maruti Suzuki, which are all customers that are, I would say, enjoying a strong push and growth now and in the years to come. Overall, coming back to this solid performance, I think this slide pretty much illustrated, again, the solidity of how we engage and we deliver, execute our strategy road map. So looking back on the 3 years, '23, '24, '25. So strong increase in operating margin, almost EUR 100 million plus of operating margin, strong increase in net result group share from EUR 163 million to EUR 185 million, and that with our capacity to absorb all of the impact on foreign exchange and cost of borrowing and nonrecurring costs, so impressive performance. And finally, free cash flow generation, which is definitely important and key for us with almost reaching EUR 300 million for 2025. So very solid performance, and I will let now Olivier get into the details of it. Olivier Dabi: Thank you, Félicie, and good morning, everyone. In 2025, OPmobility posted very strong results, very solid results, significantly improving versus 2024. This was achieved, thanks to a very strong operational performance in our plant as well as a strong grip on our cost and a decrease on our breakeven point. On this slide, you have a snapshot of all the main KPIs of the group, starting with economic revenues, which amounted to EUR 11.5 billion. It is a 1.7% increase on a like-for-like basis versus 2024. The EBITDA amounted to EUR 1.001 billion. This is an 8% increase versus 2024. I want to highlight that this is the first time since 2019 that the group is able to exceed EUR 1 billion in EBITDA. A substantial increase in operating margin amounting to EUR 490 million, up double digit versus '24. A strong net result, EUR 185 million, increasing by 9% versus '24. And as far as cash and debt are concerned, the group posted a free cash flow of EUR 297 million, up an impressive 20% versus '24. And in line with our strategy of deleveraging, the debt was reduced in '25 by EUR 167 million and amounted to EUR 1.4 billion. So all in all, our '25 metrics was achieved -- were achieved in line with the guidance that we gave last year and that we reiterated throughout the year. As Félicie highlighted, this is a testimony to the relevance of our strategy and the quality of its execution. Let's now look at each of these KPIs, starting by revenues. Revenues of EUR 11.5 billion, increasing by 1.7% on a like-for-like basis after taking into account EUR 300 million of negative ForEx with most currencies depreciating against the euro, mainly for OPmobility, the USD and to a lesser extent, the Korean won, the Argentinian peso and the Chinese yuan. There was no scope effect in 2025. Looking at the performance of each of the business segments, starting by exterior and lighting. Exterior & Lighting posted sales of EUR 5.3 billion, fairly stable versus 2024 with 2 different trends. Exterior continued to increase its sales despite having less SOPs, less tuning and development activity than the year before, while lighting continued to suffer from the poor order book of -- prior to the acquisition. I am pleased to say that in 2025, Lighting was able to secure additional orders and should be back on a growth track in subsequent years. Modules was the fastest-growing segment of OPmobility at EUR 3.6 billion of economic sales, posting an impressive close to 6% increase with sales in South Korea, as highlighted by Félicie, but in Europe as well. Finally, the Powertrain segment increased as well by 1.4% on a like-for-like basis at EUR 2.6 billion, with all its components increasing. C-Power continued to have a very strong leadership in the fuel systems, strong market position, increased volumes in all geography and benefiting as well from the slower electrification ramp-up and back to increase of hybrid volumes. Battery pack continue to build its business model, and it will be highlighted shortly that OP won a major order very recently, while hydrogen continued to build its order book and its portfolio. Let's now have a look on the impressive increase of operating margin, EUR 490 million, increasing by EUR 50 million in 2025, up 11.4%. That's a 60 basis points increase versus '24 at 4.2%. And as Félicie highlighted, over the past 2 years, the group has been able to increase its operating margin by 1 point and by close to EUR 100 million. Looking at the key success factors of such operating margin increase, all the historical activities posted strong profitability with excellent operational execution. A word on the cost control initiatives that we accelerated and intensified in Q2 after the tariff announcement, and I will highlight 2 specific initiatives. Our SG&A decreased in '25 by EUR 10 million. This is the second year in a row that the group is able to decrease its SG&A and fully absorb inflation, while we decreased our labor cost by 3%, amounting to 17% of revenues. In the plant activity, OPmobility put in place efficient flexibility in order to adapt to volatile volumes. Looking at each of the business segments, starting by Exterior and Lighting. Exterior & Lighting posted an operating margin of 5.4%. This is an increase of 10 basis points versus last year, with a trend similar to what we have seen in revenues, i.e., exterior posting very solid results, while lighting is impacted by a decrease of sales. Moving on to Modules. Modules operating margin amounted to 2.7% in '25, an increase of 50 basis points versus '24. I want to highlight that over the past 2 years, the operating margins of module went from 1.6% in '23 to 2.7% in '25, going close to Modules run rate. So module was able to grow, but to grow profitably, thanks to the quality of its order book, operational excellence and as well a strong focus on cost. Finally, Powertrain increased its operating margin by 30% at 5.5%. Our C-Power activity operating margin continued to be benchmarked and best-in-class, while to a lesser extent, the hydrogen business was also able to improve its results, thanks to a strong focus on cost reduction in order to adapt to the market. Let's now look at the bottom of the P&L with the net result. As I have stated, EBITDA amounted to more than EUR 1 billion back to its pre-COVID level, 9.8% of sales, almost 1 point increase compared to last year. Very solid increase in operating margin of EUR 50 million that was able to more than offset the increase in other operating income and expenses. Every year, the group invests 0.8%, 0.9% of its sales in competitiveness. And looking at the other operating income and expenses for the year, it mostly includes competitiveness action, reorganization, the merger of Exterior and Lighting business group, for instance, and a plant closure in Germany. Financial cost, the cost of debt of the group was down to 4% in 2025. The group was impacted by negative ForEx while our income tax amounted to EUR 79 million, our effective tax rate amounted to 35%. That's 1 point below 2024. As a result, the group was able to generate very solid net result group share of EUR 185 million, which represents 1.8% of sales. Let's now look at the free cash flow generation. Very strong free cash flow generation. This is a trademark of the group, close to EUR 300 million, up more than 20% versus '24, 2.9% of sales. Looking at the main components, our gross cash flow, i.e., the cash flow from operations increased by 60 basis points, close to EUR 50 million, mostly coming from the EBITDA. When we launched our cost-saving program in Q2, we also launched an initiative to preserve cash and set the objective of reducing the investments, '24 investment of EUR 0.5 billion by 5% to 10%, and we were able to decrease our investments by prioritizing by 11% at EUR 448 million. Our WCR remained fairly stable. 2024 was marked by an increase in our factoring programs, while they remain stable in 2025. After distribution of EUR 54 million of dividends to our shareholders and other items, mostly the leasing, our net debt at the end of '25 stood at EUR 1.4 billion, a deleveraging of EUR 167 million. Let's now move to the financial structure and the debt maturity schedule. I'll start by commenting the leverage. 2022 was the year in which the group completed significant acquisitions in lighting, in electrification, buying out the last 1/3 of what was then HBPO, close to more than EUR 900 million of enterprise value that was put on the table by the group. And as a result, our leverage increased to 1.9. As Félicie was stating, thanks to a strong financial discipline and cash flow generation at the end of '25, the group leverage stood at a reasonable 1.4x. Looking at the debt maturity over the past 2 years, I remind you that the group has raised EUR 1.1 billion in public bond and private placement in order to restructure and reshuffle its debt maturity schedule. And as you can see on the right top side of the graph, the group does not have any major debt maturity schedule before 2029 and will be able to absorb at constant perimeter, the maturities of '27 and '28 with its existing resources. One point on the bond issuance that we did in 2025, EUR 300 million oversubscribed 11x at a very competitive coupon of 4.3%. And finally, our liquidity remained extremely strong, EUR 2.5 billion, increasing by EUR 100 million, compared to '24 with EUR 600 million of cash and EUR 1.9 billion of credit lines with an average maturity of 4 years. I remind you that neither the debt nor the credit lines do carry any financial covenants in line with the group independence and discipline. Finally, with debt down and year after year, stronger equity, EUR 2.1 billion at the end of '25, logically, the gearing of the group reduced by 10 points at 66% and by 20 points, compared to the peak of 2022 after the acquisitions. So overall, in 2026, the group can count on a very solid financial structure, reduced debt to pursue its long-term growth objectives. That concludes my 2025 financial highlights. Félicie, Back to you. Félicie Burelle: Thank you, Olivier. So as you said, very sound and strong balance sheet, which will enable us to maneuver and develop for the years to come. We'll come back to that. But before that, Stephanie will talk to us about the achievement in terms of sustainability. Stéphanie Laval: Thank you, Félicie, and good morning, everyone. If you remember well, in 2021, we set a key ambition to be carbon neutral on Scope 1 and 2. In 2025, we are carbon neutral on Scope 1 and 2 at group level, meaning including our lighting activities we just acquired 3 years ago. So it's a great achievement by the group. How do we succeed in achieving this carbon neutrality? First, by reducing our energy consumption. We have improved our energy efficiency by plus 19%, compared to 2019, which is the year of reference. Second, we have increased the share of renewable energy with close to 40 sites that are equipped with solar panels and wind turbines. And we have bought some power purchasing agreement to reach that level. So we are very proud of this achievement in 2025. We have also achieved a strong momentum on our Scope 3 upstream and downstream. Our energy consumption on Scope 3 have reduced by 37%, compared to 2019, which is also the year of reference, which is totally in line with the objective we have by 2030 of reaching minus 30%. So we will continue, of course, to maintain our action on those -- that scope in order to maintain that level while the activity will continue to progress in the year to come. And at the end, we are still committed to reach and to be net zero in 2050. Moving to the ESG ratings and the significant progress we made in safety. You know that safety is really key in the company. OPmobility stands as among the best and the leaders in its industry, as you can see on the left of the slide, with for the third consecutive year, the A rating by the CDP Climate as well as the B rating for the CDP Water, which is really a remarkable achievement. The other ESG agencies also consider OPmobility as a leader in its industry with a B- compared to a C+ before with -- sorry, ESG rating. It is a prime status, which is only given to only 10% of the total companies. And we maintain our AA rating in MSCI. Looking at the right of the slide on safety, which is very key for the company. We -- so the FR2, which is the frequency rate -- the accident frequency rate we measure every year reached a record level at 0.43, totally and better than the target we had for this year at 0.5. What does it mean? It means that more than 80% of our sites published 0 accident in 2025. We are benchmark in the automotive industry. Félicie Burelle: And not only obviously, it is important for our people, but it's definitely also a level of performance -- that's why we are really very cautious and focusing on that KPI. Now moving to some strategic highlights, which I will explain with Stephanie, back to our strategy that is based on 4 pillars. I'll come back quickly. So first one, the technical -- technological leadership and diversification, which we engaged with those acquisitions already in 2022. And also, we launched at the beginning of 2025, the One4you integrated product, and I'll come back to that with some significant milestone that we have reached again in the year. The geographical diversification. I mentioned it earlier, 2/3 of our orders last year were to capture growth outside Europe, and we'll keep on doing that. 2025 was very much North American oriented and we'll push forward with Asia. And in terms of customer portfolio, the -- I would say, the market is pretty shaky in terms of dynamics, customer dynamics. We saw newcomers taking quite a big share of the growth and some others repositioning. So we are adapting to that new reality and making sure that we adapt our own customer portfolio to this dynamic. And finally, expanding beyond automotive, yes, historically, the passenger car market has been our home market. But we want -- we are pushing to expand beyond automotive that is, for sure, smaller in terms of volume, but where we believe we can grow faster in terms of value content. You know we have 2 big segments now in terms of product portfolio. The first one, which are the exterior solution. Back to my comments on the one for you, where we believe we can provide some more disruptive products and module to our customers depending on the level of integration. And as I said earlier, we launched that back early 2025, and we got 10 significant awards, which has been quite effective first year of rolling out this product offer. And we secured those programs in the 3 regions. You have -- we have one that is pretty important that we have secured with one of our historic European customer, which SOP will be in 2028, and that will enable us to mobilize our footprint in Spain and in Morocco on all the 3 products of bumpers, lighting and the integration of that. You know it brings weight saving. It increased our content per car. It provides the OEM the flexibility to come up with some more original and innovative design. And obviously, the integration of that enables us to be more efficient in terms of developing the product. So we will keep on pushing this product line, which we believe has strong potential. On the Powertrain, which is the other segment, we are capable of supplying all products, so fuel tank, battery pack and hydrogen. Fuel system, we keep on pushing our last month standing strategy, consolidating the market. We have 23% of the market and still aiming by 2030 to have 30%. And obviously, the slowdown of electrification will impact positively the length of the development of this activity. We are also benefiting from the increasing demand on the PHEV EREV segment, where we believe we can grow from 9% to 15% on this market. And we took 10% of our order intake for those solutions. Battery pack, we announced that last week, we have won a major award for a European OEM in the U.S., and we will supply 1 million units over the time -- lifetime of the contract. And this is a key milestone that is confirming the relevance of the acquisition that we've made in 2022 of ACTIA Power, which was more on the heavy-duty market, but now shifting to the passenger car. Finally, hydrogen, we have a pretty unique portfolio in terms of certified vessel, compared to what is available on the market. We have capacities in place. We are acknowledging the delay of the market and focusing -- refocusing all of the efforts on Asia, where the market is definitely shifting and where we have secured the new orders, but also to serve the European market from there. Stéphanie Laval: So moving to the second pillar, which is a geographical pillar. As previously mentioned, so starting with Europe, which is our main market today, we would like definitely to consolidate our leading position there. We can rely on a solid industrial footprint and the leadership of our historical businesses within this region. We would like, of course, thanks to this assets to accelerate with notably the Chinese OEM that are coming into Europe, and I will come back on that later on. So we are fully in line with that strategy. We are also -- we would like to rebalance, of course, our geographical footprint. That's the reason why we had in 2025, a strong focus on North America. I remind you that the U.S. is the first market for the group. It's been now 2 years. We have inaugurated a new headquarter gathering all the business groups in Troy. It was end of 2025. So it means that we are fully committed to accelerate in this region. Our ambition in the U.S. remain the same, meaning that we want to double the sales by 2030, with, of course, leveraging on our existing footprint, but also we will gain new, of course, awards supporting the OEMs that would like to expand in the U.S. in the context of the tariffs. Moving to Asia, where we have strong, of course, ambition and 2026 will be a year with a strong focus in Asia, starting with China. So China, today, we have a strong positioning, thanks to our YFPO, our JV with Yanfeng that belongs to the SAIC Group. It's a leading position in the exterior parts with YFPO equipping 1 car out of 5 in China with exterior parts, so meaning bumpers and tailgates. We want to, of course, go a little bit further. And that's the reason why we have announced end of 2025 that we have the ambition to expand the activities of YFPO to module and decorative lighting. It will, of course, let us grow in this market and accelerate our exposure to the Chinese OEM. Today, the Chinese OEM in China represent roughly 40% of our revenue and 2/3 of our order intake. So we are very well positioned to accelerate in China. Last but not least, I will make a focus on India. India, where the group operates for many years now, we have 5 operational plants. The last one we inaugurated end of 2025, which is quite unique in the market because it gathers the exterior activity as well as the C-Power activity. We have strong ambition there also to more than double the sales in India. And to help that, we have a sixth plant that is under construction for the C-Power in Kharkhoda. So you know we are expanding in all the markets, consolidating in Europe and have strong ambition both in America and in Asia. I was mentioning the expansion of the YFPO JV we had. So we announced end of 2025 that we will expand this JV. We can -- we expect to finalize the deal before the summer this year. So you will have the first impact in 2026, in H2 2026. So it will definitely strengthen our presence in China, where the group already have 10% of its revenue today, but it should increase in the coming years. Moving to the third pillar of our strategy, which is our portfolio and expansion of our portfolio in all our mobilities. So you can see on the slide the top 10 customers we have on the left. So you already known them, but we are expanding with them as well as with the winning customers that you can see in India, but also in China. And you know that the group is, of course, focusing on accelerating beyond automotive in railway, in self-driving, in off-road mobility. Just a quick focus on our expansion and supporting the Chinese OEM in their international expansion. You know that we have signed a contract with Chery to -- of course, to support them in their expansion, both in Spain and in Brazil. So it's clearly the intention of the group to be -- to work with the Chinese OEM in China, but also outside China. And you can see on the slide that we have signed other awards with other Chinese OEMs, both in Spain and in Malaysia. So we are definitely supporting them with the Chinese OEM in China and outside China. Félicie Burelle: Thank you, Stephanie. A quick update on some of the key priorities we have engaged and we -- that we are active on. We announced early Jan, the signature of MoU to potentially acquire the lighting activity of the Hyundai Mobis company. The MoU is in place. We are hoping to have a signing by mid of the year and potential closing of the transaction by end of the year. This move -- this transaction will be significant because it fits to our strategy. It's addressing 1 of the leading OEM, which today only represents 5% of our sales. It's in Asia, and it will accelerate the development of our lighting activity, which we never hide that we were first focusing on the organic growth, but also looking at some potential addition when it would make sense. And we believe here clearly, this deal would make sense to develop and grow our lighting business to the next level. We are also focusing on innovation. I won't come back on the CES. We are having many different type of initiative. And I think what is also important is that we are -- the AI, obviously, is a hot topic, and most importantly now with -- and shaking a lot of the financial markets, but we are looking at opportunities that we can embark either on processes or on products that can help us to either propose something different to the customer, which is the case of AIRY, which is a 3D printed carbon fiber battery pack that we are proposing and developing with the startups or -- and I'll come back to that, which is 1 of the key initiatives, how to be faster in terms of simulation, which is Neural Concept projects that is ongoing. And that makes a good transition with what will be key for us this year. It's improving again our competitiveness, but engaging in medium, long-term initiative to have a sustainable competitiveness. Here, you have 3 initiatives, among others, that we have. The first one, which is how to be more efficient in terms of development and R&D costs. We want to reduce our hours by 30%. And that goes, obviously by decreasing the hourly rate and expanding our footprint in best cost countries. We are also repositioning the organization on back -- some back-office topics like HR, digital NIS and finance. And we have today 5 hubs in best cost countries again. We are -- we have materialized 500 people so far, which is 2/3 of our ambition on this specific topic. And again, on the supply chain, we have launched a new tool that should help us to decrease our transportation cost by 10%. We have launched that in Mexico, and that should be rolled out throughout the group. We also have some other automation initiatives. We would like to have more JVs and improve the level of automation of our plants. All of that our transversal approach as we want to have benchmark practices that can be deployed throughout all BGs. So strong push on that for 2026. Based on the results of 2025, we will propose to the next general assembly in April '26, a dividend per share of EUR 0.45, which is -- EUR 0.49, sorry, which is -- which represents 37.7% in terms of payout, which is again an increase versus 2023. 2024 was an exceptional year, given there was a an interim dividend that was made. In terms of outlook and perspective, I mean I won't come back on all the strategy, but it remains the same. And we believe that we have the good model to be able to project ourselves again in improving all the KPIs for 2026 on the operating margin and the net result on the free cash flow and on the net debt. So I would conclude this presentation before taking your questions by saying again that we have a very solid and robust [ 2024 ] year with very strong financial metrics, again, accelerating on all the front of our strategy, and we believe we are well positioned to really address the challenges of the market. 2026 will be a transition year in many aspects. It's not going to be -- the market is projected to be flat, to be stable. But still, in that context, we believe we can deliver a solid performance again in 2026. Thank you very much and happy to take questions. First question. Thomas Besson: It's Thomas Besson with Kepler Cheuvreux. I have a lot of questions, as usual. I'll start with the easy one, financial questions. First, can you comment on the diverging trends for Powertrain and the Exterior & Lighting margin trend in H2. So Exterior & Lighting actually was strong and improving, Powertrain was weaker. Can you explain why the seasonality is this way for these 2 businesses and whether there was anything affecting them differently in the second half? Olivier Dabi: Thank you, Thomas, for the question. There was no significant deviation in profitability between H1 and H2, both Exterior and C-Power posted very solid profitability, both in H1 and H2. And in H1, we did EUR 260 million of operating margin. In H2, we did EUR 230 million operating margin with slightly lower sales in H2. Félicie Burelle: Usual seasonality. Olivier Dabi: There's no trend of having margin reduced any of the 2 businesses. Thomas Besson: Can you give us some indications about CapEx trends in '26? I mean you've cut CapEx by 11%. So a lot less in H2 than H1. Should we assume a CapEx ratio above 4.5% -- between 4.5% and 5% or an absolute level of CapEx that goes up a bit in '26 to prepare growth ahead or... Olivier Dabi: I'll continue on the financial questions. Like you said, '25, we reduced CapEx to 4.4% of sales. We have a capital allocation framework that we discussed already in which CapEx are around 5%. And this will be the level that we will reach in 2026, but we will still improve free cash flow. Thomas Besson: I'll move to more general question. I mean, I noticed that you refrained like last year to guide for higher revenues. And I'd like you to discuss, if possible, the organic revenue dynamic for the group in 2026, what we should expect by division, by region, by clients, at least a general qualitative comment. Could you, in particular, put a focus on what we should expect in the U.S. and India as you're aiming for very substantial growth to 2030? Is it something that starts in 2026 or that we should expect more in '27 and beyond? And then one specific project I'd like you to say something about even if I think it's difficult, it's the robotaxi project. I think it just started... Félicie Burelle: In 2 months. Thomas Besson: In 2 months, it's just starting. So remind us your exposure to that. I have one more after that? Félicie Burelle: On the revenues, 2026 will be stable versus 2025 in terms of sales. The market dynamic for 2026 is what it is stable with the big difference versus 2025 being the Chinese market that will be significantly down. Obviously, there are some different plus and minuses within each BG. But all in all, you should consider that sales will be stable. In terms of -- by the rebound and all of the -- I would say, the deployment of the order intake that we have embarked should more start impacting 2027. But we, obviously, within HBGs, namely the module activity will show some significant growth with topics like the robotaxi that will kick in, in 2 months' time. On that, there are a lot of different assumptions, obviously, some are more bullish than others. Our customer is pretty positive about the development of the sales and we are too. Anyway, we are engaged in such a relationship that we'll find ways to adapt. And we are showing flexibility obviously to adapt the change in volumes. But it's an important lever for them to grow in the years to come. Thomas Besson: And you're highly exposed to that product as well in terms of revenue per cap? Félicie Burelle: In the U.S., yes. Thomas Besson: Last question on lighting. So 2 aspects about this question. Can you give us an idea of the magnitude of the revenues in 2025 and how they developed organically and the level of operating loss in '25 versus '24 and whether we should expect this business to grow organically in '26 and reach breakeven in '26. The first part of that question on lighting. And the second part is about the business you're looking at. Can you share with us some details -- financial details about the Hyundai Mobis activities? You're talking about taking a controlling stake. Would that mean you'd have a JV with Hyundai Mobis? And can you just give us an idea of the magnitude of the financial implication for OP and whether this is something you can finance organically with the existing liquidity or the share count would not be affected by this transaction? Félicie Burelle: So on the lighting -- so on this project, so in terms of sales, it's EUR 1 billion plus. It's 5 plants, 2 in Korea, 1 in China 1 in Mexico and 1 in Czech Republic, which will be a good complementarity footprint with ours. It's a profitable business, so having a positive impact on our business. The JV consideration, obviously, it's still ongoing in terms of discussion, but it's an important step for us to develop and build the relationship with this customer because more than 90% of the sales of this business is with the Korean OEM. So it's, I would say, a positive approach on both sides to make sure that it's a secured transaction, given it's a carve-out that has to be operated by the seller. So it will be a majority stake, still to be defined how much. And given the size of the business and its financial profile, which unfortunately, I cannot detail, but we have the sufficient financial means to do this acquisition without a specific deployment of -- to be done. On the -- obviously, that together with our lighting business will make it a more sizable or global business. we would more than double our market share with that move. Today, the lighting activity is still suffering. You mentioned the low order intake from the past, but it's not only that, it's the market situation itself. So we are accumulating, I would say, both burdens. The level of sales is in 2025 lower than what we thought. But we have a lot of SOPs to come this year. So we should have a quite significant improvement in terms of profitability in 2026 that will accelerate in between H1 and H2. Thomas Besson: So breakeven in '26 is something credible for these activities organically? Félicie Burelle: Sorry? Thomas Besson: Breakeven for the existing lighting business should be achieved in '26? Félicie Burelle: We are on the path to improve significantly by the end of this year. Any other questions? Operator: [Operator Instructions] The next question comes from Michael Foundoukidis from ODDO BHF. Michael Foundoukidis: Michael Foundoukidis from ODDO BHF. Also a couple of questions. I will ask them one by one. So maybe the first one, you highlight in the press release that the full year 2025 margin performance was particularly notable in Q4. So could you explain us a bit in more detail what were the key one-offs versus structural drivers? And how much of that, let's say, Q4 run rate should we consider sustainable into 2026? That's the first question. Félicie Burelle: Maybe one point and then you can add. Obviously, a lot of -- we mentioned a lot of volatility throughout the year. And obviously, a lot of the topics that we are negotiating throughout the years in terms of compensation happens by the end of the year. So that's one of the reason of this impact in Q4. Olivier Dabi: Yes. I would say in H2, we did EUR 15 million more operating margin than in H2 2024 and it was a combination of indeed discussion with customers and cost-saving initiatives that we put in place. Michael Foundoukidis: Second question, when we look at your launches in 2025, Asia represented more than 50% of the group launches, so of course, it does not tell a clear picture in terms of implied volumes and revenues. But still, what does it mean for 2026 revenues in the region? Should we expect a significant acceleration in Asia and the region growing clearly above, let's say, the 20% threshold of group revenues? Félicie Burelle: The value per car in Asia is, in general, lower than in the rest of the world. But obviously, the growth will materialize and will start to impact, again, generally speaking, 2026 will be stable, and you should expect the rebound to come afterwards. Michael Foundoukidis: And maybe on North America, do you expect trends that we've seen in 2025 to continue into this year, namely outgoing outperformance in the U.S. alongside, let's say, weaker dynamics in Mexico and Canada. And more broadly, how do you see mobility in the context of potential OEM reshoring in the U.S.? And do you believe that your strategic footprint and industrial footprint, of course, would allow you to benefit and is sufficient in this respect? Félicie Burelle: So yes, we believe that we will continue to entertain a good growth in this market, which is why we are investing in we are projecting our sales to double in the region. And indeed, all of what is happening is impacting the strategy footprint of the customer. And that's the benefit of having a sizable footprint in the region is that we are able to size some of the new opportunities coming and to rebalance in between our plans should the OEM propose us to localize and need our support. So indeed. Michael Foundoukidis: Maybe a follow-up to Thomas' question on the Lighting segment and more generally about the lighting business overall. It seems more competitive than it has been historically with Chinese players also growing in that field, so what's your take on that, both in China and outside of China? And maybe from a product standpoint, do you think that the integrated offer that you again highlighted in the presentation is sufficient to differentiate you versus those peers? Félicie Burelle: Yes. The lighting business is a much more fragmented business versus the other activities that we have. But we believe that the footprint we have and the technology we have makes us more agile versus some of the big players that have -- that are more anchored in Europe and in more mature markets. So we can be more agile by delivering from this footprint. And obviously, with this transaction of Hyundai Mobis on the lighting activities that will definitely accelerate this evolution. So, yes, the technology itself is changing a lot. So finally, being a player entering now with a footprint that we can adapt and being more agile, I think it can make the difference, a difference per se on the product itself, the lighting, but also when it comes to the one for you, where we have very few players to be able to offer the integration of lighting in bigger parts, bigger modules. Michael Foundoukidis: And maybe a last question, a couple of follow-ups, more financials. First, on the revenues following your comment that state sales would be relatively stable this year. Is this organic reported, meaning that there's probably FX headwind. So just to be sure on what you meant by that? And second question, would you say that all divisions should again improve their margin performance in 2026 versus 2025. Félicie Burelle: So on the top line, yes, it's without -- as is scope as is, whatever the -- no foreign exchange nor perimeter. And sorry, the last question was -- the second question was? Improvement of all -- the performance of all BGs, yes. Michael Foundoukidis: Okay. And congrats again for this performance. Operator: The next question comes from Ross MacDonald from Citi. Ross MacDonald: It's Ross MacDonald at Citi. I think only few remaining questions from my side. On the financials, firstly, can you maybe talk about the tax rate in 2026? Should we expect that to be stable at 35%. Olivier Dabi: Yes. Tax rate should remain stable at 35% in '26. We aim to improve it a little bit, but it should stay within this ballpark. Ross MacDonald: Understood. And then secondly, on the free cash flow. Some of your peers in '25 benefited from some working capital release. Obviously, that hasn't been the case at OPmobility. But for 2026 free cash flow generation, you've touched on the investment spend. Obviously, the operating performance should be a small tailwind to free cash flow. But how should we think about working capital in 2026, should we expect no further benefits or tailwinds from working capital release this year? Olivier Dabi: As you say, we'll increase the investments. And since we plan to increase our free cash flow, it will be financed by both an increase in operations, i.e., the gross cash flow and an improvement in WCR, notably inventory management and payment terms on which we have a dedicated initiative. Ross MacDonald: That's clear. And then 2 slightly more strategic questions. Firstly, on the fuel tank market share, good to see that moving up by 23% now. I think it was 21% at the CMD in 2022. So obviously, at the current pace of share gains slightly below the 30% target, can you maybe talk around when these market share gains in C-Power will accelerate? Is that really quite back-end loaded in this decade or -- should we see that accelerate maybe in 2026? Stéphanie Laval: Yes. So yes, you're correct, Ross. The market share in C-Power has increased from 21% to 23% in 2025. We were in 22% last year. So it's -- we are really on track with the target we have of 30% by 2030. If you look at the mix, geographical mix, we'll continue to accelerate in North America, especially, so we'll have a different mix between regions. So it will also participate to the increase in the market share we have. And we consolidate in a market, where players -- some players are decreasing, even disappearing. So we are still consolidating our position in this market, and it will continue to reach the level of 30% of market share by 2030. Ross MacDonald: And then moving to the beyond automotive comments, quite interesting, a number of suppliers talking about looking beyond light vehicle production into some commercial vehicle, et cetera, end markets. Can you maybe speak to whether that opportunity is specific to 1 division or if there's a division within the group that lends itself best to growth beyond automotive? And really interesting if you can maybe give some midterm aspirations around revenue contribution from those activities? Félicie Burelle: Yes. Today, the beyond automotive only represent of our sales, and it's pretty much focused on what is linked to the electrification, i.e., the battery packs and H2 activity, who are addressing the heavy mobility with trucks, buses and small fleets, and that we will keep on growing. But we are also -- I mean when we think about beyond automotive, coming back to the question on the robotaxi, we do see a lot of movement on this market. and that we believe will grow in the future. There is 1 player with whom we are today engaged, but we are also in discussion with others. So we believe that should be part of what we call also the beyond automotive because the business model there will be pretty different from our conventional market, I would say. Ross MacDonald: Final question. I appreciate you can't give the numbers on the balance sheet impact from the M&A you announced recently with Hyundai Mobis. Can you maybe reassure investors just given that the last acquisition in lighting, obviously, you had some execution headaches around the order bank. How should we think about the order bank in that business? And would it be fair to assume that there should be much more stable instant contribution to revenues without that sort of decline that we saw with Varroc? Félicie Burelle: I mean the situation is totally -- it's not comparable. Back in the days, I mean, the first acquisition we've made clearly the situation in which the business was very different. It was a depressed business. Now what we are considering here is a very sizable business with 1 leading OEM. More than 90% of its sales engaged with that. And back to the JV topic, it's about how to further engage and set a stable relationship with that customer and also use that as a lever to grow beyond lighting with that customer. So those are very different -- 2 very different objects. Ross MacDonald: That's very clear. Maybe if I can sneak one quick final one in. Obviously, the dividend has come down, I understand why, given the very high starting point. With this M&A objective, how do you think about the dividend going forward? Is the objective to hold it at least at the current level going forward? Félicie Burelle: Sorry, can you repeat? The sound is not very good. Ross MacDonald: Apologies. It was just on the dividend. Obviously, given the balance sheet impacts from this deal, how should we think about the dividend going forward? Would your objective or mission be to try and defend this EUR 0.49 dividend in 2026. Félicie Burelle: I mean, irrespective of our strategy, we always have a policy of serving dividend to the shareholders. So that should remain the case. Operator: The next question comes from Jose Asumendi from JPMorgan. Jose Asumendi: Just a couple of questions, please. Can you talk about the opportunities to grow with Chinese OEMs in Europe, provide more content with new contracts or LatAm or any region that you consider appropriate to comment. Second, can you provide a bit more color regards to the lighting division? And where do you see the growth coming from in 2026. If you could just provide a bit more details by region or by customer. It looks like you've done the cost cutting necessary to reposition the business model, but growth is to drive the margins going forward? And then final one, are you expecting to benefit from growth in the U.S. And I'm particularly focused on Stellantis where production is going to be up quite sharply in Q1 and first half 2026. Do you have your strong content with Stellantis and And do you see that also as a benefit in the first half of the year? Félicie Burelle: So I think your first question was on the Chinese OEM outside China. Indeed, we are really leveraging the relationship and the footprint that we have in China to accompany them whenever they want in Europe. So we have a lot of interaction and also because China now is clearly on the innovation side, investing for China but for elsewhere. So we really focus on growing the relationship beyond our YFPO JV, also in the other product lines to be able to serve them elsewhere. Today, I think part of the challenge is that Europe has not yet defined its strategy in terms of the tariffs and the local content. So there are still some OEMs that are wondering whether they will invest. But logically, we should be there where they want to invest at some point. For sure, whether it will be Western Europe or Eastern Europe, we have the footprint right there to support them. On the lighting activity, as we commented, unfortunately, 2025 was a low point in terms of sales. But we've been now for 3 years in a row and again, we will have a sizable order intake in the lighting activity. So that order intake will start to materialize and the SOPs are ramping up this year. And back to your point of your question on Stellantis, we actually have quite strong activity with them in the lighting and in North America in general. And also on the different One4you topics that we discussed earlier. Operator: There are no more questions. I will now hand the conference back to the speakers for the closing comments. Félicie Burelle: Thank you very much for your time. It was a long session, but it was our pleasure to present to you those solid results and looking forward to the next meeting. Thank you.
Operator: Good afternoon, ladies and gentlemen, and welcome to Global Industrial's Fourth Quarter 2025 Earnings Call. At this time, I would like to turn the call over to Mike Smargiassi of The Plunkett Group. Please go ahead. Mike Smargiassi: Thank you, and welcome to the Global Industrial Fourth Quarter 2025 Earnings Call. Today's call will include formal remarks from Anesa Chaibi, Chief Executive Officer; and Tex Clark, Senior Vice President and Chief Financial Officer. Formal remarks will be followed by a question-and-answer session. Today's discussion may include forward-looking statements. It should be understood that actual results could differ materially from those projected due to a number of factors, including those described under the forward-looking statements caption and under Risk Factors in the company's annual report on Form 10-K and quarterly reports on Form 10-Q. I would like to remind everyone that the fourth quarter of 2025 closed on Saturday, January 3, 2026, representing 1 additional week in the quarter compared to the prior year. This added 4 working days to the quarter, which covered the period between the Christmas and New Year's holiday, typically our lowest sales week of any year. In addition, the first quarter of 2026 started on January 4 and will have a favorable comparison from the year ago period, which started on December 29 and included the impact of the New Year's holiday. The earnings release is available on the company's website and has been filed with the SEC on a Form 8-K. This call is the property of Global Industrial Company. I will now turn the call over to Anesa. Anesa Chaibi: Thank you, Mike. Good afternoon, everyone, and thank you for joining us. Today, I'm happy to share that 2025 was a year of significant progress for Global Industrial that included quite a bit of change to better position the company for organic growth. I'm very pleased with the way the team stepped up and embraced the changes and executed to deliver on our full year financial results. We ended the year with good momentum across the business as average daily sales grew 7.4% in the fourth quarter, driven by both volume and price improvements. We delivered strong margin performance, generated healthy cash flows and today announced an increase in the quarterly recurring dividend for the 11th consecutive year. In addition, during the quarter, Global Industrial repurchased approximately 326,000 shares at an aggregate purchase price of $9.3 million. For the full year, we delivered $1.38 billion in revenue, representing growth of 4.8%. Overall, we are very pleased with the results, and Tex will discuss the financial performance in detail. Most importantly, we made progress on strategic priorities that we believe will allow us to accelerate the pace of change to grow the top line profitably and scale the business in 2026 and beyond. In the past year, we began the transformation of our business model and outlined core objectives: first, to become a more customer-centric company; and second, to refine our go-to-market strategy, particularly in realigning our sales, marketing and merchandising teams to reframe our value proposition by industry vertical. We piloted a number of changes to refine our approach to better serve the needs of our customers and to deliver profitable growth. So what did we do? I'll start with customer centricity. Throughout 2025, we continue to reframe our approach to put our customers at the center of everything we do. By driving continuous improvement in damage reduction, quality and distribution optimization, we maintained high service levels for our customers. Retention rates across our managed account base were strong as we again prioritized the customer experience and expanded upon our e-procurement capabilities. We completed the planned rollout of Salesforce for our sales, marketing and customer service teams. Having a single unified view of the customer has enabled data-driven and faster decision-making, helping drive efficiencies and more personalized engagement with our customers. In the year ahead, we will build on these investments to move closer to the customer and further enhance the service we provide. Next, on how we reframed our go-to-market. As we look to be more intentional and focused in how we go to market, we completed a comprehensive analysis of our position and listened to feedback from customers. We challenged ourselves with tough questions and emerged with actionable next steps. Today, we have a clear understanding of our customers' needs and expectations. By incorporating their feedback, we tested and piloted targeted solutions and are now realigning Global Industrial's product assortment, strategic account focus and sales organization to deliver on our refined value propositions across multiple industry verticals. On the merchandising front, we are expanding the product assortment to ensure we are providing the right solutions and products that help customers solve their problems. This includes broadening national brand relationships to move into new product sets that we know our customers are looking for and that are complementary to what we offer today. This really is just a natural extension of what we do each and every day. Specifically, we are expanding our assortment to include maintenance, repair and operations as well as consumable products. These changes create a significant opportunity to grow our share of wallet and capture greater market share. While we are in the early stages of this effort, we have had success with our initial pilot programs and are encouraged and excited by the progress and the long-term potential. On our strategic account focus, during 2025, we deliberately shifted resources towards strategic enterprise accounts and GPOs. These relationships tend to carry higher average order values, stronger retention and greater lifetime profitability, and we successfully grew these accounts in 2025. As part of this effort, we launched account-based marketing programs targeting these customers. These results have been promising, and we have seen good momentum, sales penetration and growth. In parallel, we began to move away from nonrecurring, lower profit transactional web business. This has been the right decision as we look to better serve our customers and focus on profitable growth. This brings us to sales realignment. As we align the organization to become more customer-centric in 2025, we have changed our go-to-market approach as we entered 2026. Our inside sales team, which has strong expertise and a tenured employee base have been realigned into customer verticals. This specialization will allow us to serve customers more effectively while gaining a deeper understanding of their unique needs. These targeted defined verticals that we have prioritized include industrial, commercial, retail, public sector, health care, hospitality and multifamily. During the second half of 2025, we successfully piloted an outside sales approach, and we are now building out a dedicated team. The outside sales reps will be calling on a combination of existing accounts where we have identified significant opportunities to expand the relationship as well as new account acquisition. To enable and support these changes, we put in place a new, more targeted and intentional sales, marketing and merchandising approach. This should position us well to effectively capture greater share of wallet from existing accounts and identify new customers that we have not historically called upon. We are driving change that will help us grow and evolve the business. The team is embracing these changes. There is a positive energy throughout the company, and we are excited about where we are headed, building off the progress we have made in 2025. Now I will turn the call over to Tex. Thomas Clark: Thank you, Anesa. Fourth quarter revenue was $345.6 million, up 14.3% over Q4 of last year. On an average daily sales basis, sales grew 7.4%, double the rate of growth compared to the third quarter of 2025. U.S. revenue was up 14% and Canada revenue improved 19.7% on a local currency. This was Canada's third consecutive quarter of top line growth. And for the full year, Canada was up 9.2% in local currency. We recorded consistent growth throughout the quarter with gains across all sales channels. As we have seen for much of the year, performance continued to benefit from price capture, but in the fourth quarter, we also generated volume improvement. Order count growth remained strong among our largest and most strategic customers, while volume gains returned in our web business for the first time in 2025. As of today, we have seen momentum continue with sales currently pacing up through the first half of the quarter. We have a favorable fiscal calendar in the first quarter of 2026, which started on January 4, while the first week of Q1 2025 included the New Year's holiday. Outside of this timing benefit, we have seen continued revenue growth in the mid- to high single digits. Gross profit for the quarter was $119.1 million. Gross margin was 34.5%, up 70 basis points from the fourth quarter last year. We remain pleased with our margin performance. On a sequential basis, as expected and in line with historical performance, gross margin pulled back from the third quarter of 2025 and primarily reflects product mix and peak season freight surcharges, which we chose to not pass through to our customers. Management of our margin profile remains a key area of focus. As we move through the current cycle, our goal is to manage to price/cost neutral. We currently expect first quarter margins to show improvement on a sequential basis and be in line with prior year results. As a reminder, additional tariffs went into effect in early August, including the doubling of duties on steel and aluminum. We took a pricing action in early January 2026. Our goal is to mitigate tariff disruptions to our business and for customers, and we believe we are well positioned to do so. Our teams have done an excellent job diversifying country of origin exposure, and we continue to proactively manage price. Selling, general and administrative spending for the quarter was $99.5 million, an improvement of 20 basis points as a percentage of sales as compared to the fourth quarter last year. The increase in absolute dollars was largely due to the incremental salary and variable expenses due to the additional week in the fourth quarter. In addition, given the improved financial results, we recorded approximately $3 million in incremental expense associated with variable bonus and commission expenses as compared to last year. SG&A reflected strong general and discretionary cost control, including improved leverage within our marketing expenses. Operating income from continuing operations was $19.6 million, an increase of 35.2% in the fourth quarter and operating margin was 5.7%. Operating cash flow from continuing operations was $20 million in the quarter and $77.7 million for 2025. Total depreciation and amortization expense in the quarter was $1.9 million, including $0.8 million associated with the amortization of intangible assets. Capital expenditures were $0.8 million in the quarter and full year capital expenditures were $3.1 million. We expect 2026 capital expenditures in the range of $3 million to $4 million, which primarily reflects maintenance-related investments and equipment within our distribution network. Let me now turn to our balance sheet. As continues to be the case, we have a strong and liquid balance sheet with a current ratio of 2.2:1. As of December 31, we had $67.5 million in cash, no debt and approximately $120 million of excess availability under our credit facility. In the fourth quarter, we repurchased approximately 326,000 shares of stock. And year-to-date, we have repurchased an additional 14,400 shares for a total of $9.8 million. We currently have approximately 1 million shares available under our 2 million share buyback authorization. The stock repurchase is a disciplined way to return value to shareholders, and it highlights the Board's confidence in the long-term potential of the company as we continue to generate strong cash flows, maintain a healthy balance sheet and execute against our strategic plans. We continue to fund our quarterly dividend, and our Board of Directors declared a quarterly dividend of $0.28 per share of common stock, an increase of $0.02 per share. I will now turn it back to Anesa for closing remarks. Anesa Chaibi: Thank you, Tex. I'm proud of how the Global Industrial team executed in 2025. It was a year of change, starting with me joining the company and then with the overlay of the challenging tariff landscape. The team focused on what we could control and mitigated the risk of the things that were out of our control, all while adapting to a significant amount of change. We delivered strong performance and initiated a realignment of the organization for the future, one we believe will allow us to scale the business and accelerate our growth. We are entering 2026 from a position of strength, and we are pleased with our performance and excited about our growth strategy. The team will continue to learn, test and pivot as we look to improve and optimize our performance. I want to thank all of our associates for their hard work and dedication. The progress we made in 2025 is a direct reflection of their commitment to our customer success and to our company. Thank you for your interest in Global Industrial. Operator, please open the call for questions. Operator: [Operator Instructions] The first question comes from Anthony Lebiedzinski with Sidoti & Company. Anthony Lebiedzinski: Certainly nice to see the better-than-expected results here in the quarter. I know you said that there was both pricing and unit volume increases. Can you provide any additional color on those 2 topics? And wondering if you could also comment on how sales progressed throughout the quarter as we went from October through December? Thomas Clark: Yes, Anthony, thank you for the question. I think to answer your last question first, sales were pretty consistent throughout the quarter. We had a solid growth profile in each month in the quarter, and it was fairly consistent without a lot of volatility in the individual periods outside of what we talked about on the intro of this call with December having an additional week of sales. So that reflected higher absolute growth rates. But on an average daily basis, it was quite consistent within the period. In terms of your first question, pricing was still the majority of the growth rate, and it was up on an ADS basis mid-single digits with volume coming in at low single digits across the business in the quarter. Anthony Lebiedzinski: Got you. And then given the latest tariff announcements that we heard over the last few days, how should we think about the pricing environment and the impact, if any, on gross margins? Anesa Chaibi: Yes. Great question, Anthony. Thank you. It's very early days real time, and it's still moving around, not unlike when we had our first quarter call last year, where we knew that was potentially around the corner, and it actually took effect in April. So I would say the team has become more nimble. We've reframed countries of origin and redistributed where we source our materials, et cetera. So we're prepared for whatever or however this unfolds. But at this point, we've not changed anything fundamentally, and we will navigate our way through this as it starts to become more and more clear because as you're well aware, if you saw Friday, it was 10%, then there was implications or new headlines of 15%. So we're waiting -- we're watching and waiting and then we'll do not unlike how we executed last year to mitigate the risk as best we can. But at this point, I think we're in this with everyone else that's in the same space of just dealing with how this unfolds. So I think it's just simply a little too early to predict. Anthony Lebiedzinski: Got it. Yes. So then in terms of just your commentary earlier, and this is something that you also talked about on prior calls as well, pivoting away from transactional customers and focusing more on group buying organizations and enterprise customers. Can you share perhaps or give us some color as to how much of these larger customers, how much of these clients represent as a percentage of sales? And what's the typical kind of margin profile as we think about how this may impact your business going forward? Anesa Chaibi: Yes. I think I understand the question. I guess I'll do my best. I guess what I would say to you, the transactional customers were more episodical once and done, what have you, and we had the organization focused quite a bit of energy on that previously. And I would say what we've now done is realigned our sales teams to go and work on the accounts where we already have access to the account. It's the opportunity to gain greater share of wallet, further penetrate those accounts. The margin profile, I would say, is slightly higher, if not improved versus the area where we want to kind of migrate away from just once and done. I would say we had a lot of promotional activity last year online that what we want to do is balance that out so that it shifts and that we're chasing the right kind of profile of customer. But more importantly, what I would say we are doing now is leaning more into longer, sustainable, repeatable customers. versus more transactional as a whole. So I don't have a specific number, but I'll let -- I'll defer to Tex to chime in as well. Thomas Clark: Yes. Anthony, I'll just maybe supplement that just a bit. So I think specifically on the gross margin profile, it is going to be slightly lower, as you would imagine, with some larger customers. But when we look at the overall profitability of the customer, that's where we see it's actually going to be a more profitable overall long-term customer relationship given that you're building that relationship over time versus, again, a transactional once-and-done customer. Somebody comes once to your website then you're paying to acquire and they're having that one purchase, which all typically would have been in that low average order value range as well. So when we look at total customer contribution and profitability, this mix is going to be a benefit to the overall company margin profile going forward. In terms of ratio as a percent of sales, we haven't disclosed the individual breakouts of these segments. But again, there's going to be -- these GPOs and strategic customers are going to make up north of 20% of our volume today, but we still have a strong kind of mid-market and mid-market to large mix within our sales force as well -- or our customer base as well. Anthony Lebiedzinski: That's very helpful color. And best of luck. Anesa Chaibi: Thanks, Anthony. Thomas Clark: Thank you. Operator: The next question comes from Michael Francis with William Blair. Michael Francis: Good quarter. I wanted to start on the ADS. I just love to know how much of the growth was your own actions and share gains versus an improved market backdrop? Thomas Clark: Mike, yes, I mean, again, as reported, we're about 14% growth overall, 7.8% average daily sales. So when we think about what's going on in the market, I think the market actually performed a little better than some of us expected. We've seen things even continue to trend positively in the first quarter with things like the PMI expanding to about 50 in January. So there is market momentum. But I think when we look at our performance and we look at different break down customer penetration and order volume, we believe that we did take share in those areas by our actions. So we don't have a great view of exactly what that market grew in the period. But again, we do believe that we gained share through what our targeted actions were. Anesa Chaibi: Yes. And Michael, what I'll add is we also were very focused on improving our operational and fulfillment execution as well. And so that contributed to progress and having the right product at the right price to be able to capture the share. Michael Francis: That's good to hear. And then within that growth as well, is there any sort of recovery on the SMB side of things? Was the growth more on the enterprise side of things? Or was it kind of broad-based? Thomas Clark: Yes. So I think one thing I would add some color to that, Michael, was we did highlight that we saw some improvement in volume in our web business overall. So we actually had good marketing leverage and good web business. And the key was being very targeted in that web experience overall and making sure that our sales, merchandising and marketing teams were fully integrated in their efforts to go after the right customers. So that did drive some growth, and we had been facing some headwinds in some of that web business earlier in the year that did, I'll call it, fully anniversary by the time we exited Q3. So in Q4, we did return to growth in the web business. But again, we were very happy with the customer mix that we saw in the period. Anesa Chaibi: We also added to the assortment and the products that we took to market. So that also enabled us to pursue new customers or to further, as I said earlier, to Anthony's question, further penetrate and gain greater share of wallet of existing accounts that were already aligned with us. Michael Francis: All right. And then last one for me. I know SG&A was up substantially, and you called out the incremental compensation expense. Is there anything else to call out in there? And then the other half is as we think about 2026, how should we think about SG&A? Thomas Clark: Yes, Michael, absolutely. So again, the one key was clearly, as mentioned, we had the additional variable compensation expense in the quarter. And that's a combination of -- if we think about last year, we had a soft quarter in Q4 2024. So we actually were -- had a reduction of some of that variable comp, both on commission and bonuses. This year, you had the increase in costs. So that relative gap widened just on a relative comparison between Q4 last year. and Q4 this year. And just again, just from a pure absolute number of days period. So we had an extra week of compensation. So we had that extra 14th week in the quarter. So all variable costs and all compensation costs were increased in the fourth quarter simply because of we paid people for the last week of the year. So that's a kind of normal ordinary course. So we would expect really SG&A management and SG&A leverage continues to be an area of focus. So think about it as a percentage of sales, shooting for kind of neutral to improvements going into 2026. Operator: This concludes our question-and-answer session and today's conference call. Thank you for attending today's presentation. You may now disconnect.
Operator: Good morning, and thank you for standing by. Welcome to the BIC's 2025 Full Year Results Conference Call and Webcast. [Operator Instructions] Please be advised that today's call is being recorded. I would now like to hand the conference over to our first speaker today, Brice Paris. Please go ahead, sir. Brice Paris: Good morning, and welcome to BIC's Full Year 2025 Results Call. I'm Brice Paris, Vice President, Investor Relations. We're in Clichy today with our new management team, Rob Versloot, our CEO; and Gregory Lambertie, our CFO. This call is being recorded, and the replay will be available on our website with the presentation and press release. We will start with the usual results presentation, followed by a Q&A session. First, please take the time to read the disclaimer at the beginning of the presentation. With that, I give the floor to Rob. Rob Versloot: Thank you, Brice. Hello, everyone. I am pleased to be here with you today for our first full year earnings call together. And I'm joined by Gregory Lambertie, our new Chief Financial and Digital Officer. I will start with a brief overview of the key highlights from 2025. Gregory will then walk you through the consolidated results for the year. I'll then introduce my new leadership team and share our outlook for 2026. Highlighting the opportunities ahead before closing with a few concluding remarks. 2025 was a year marked by a volatile macroeconomic environment, softer consumer markets and geopolitical uncertainty. Against this backdrop, BIC faced many challenges in 2025. When I look back at my initial assessments of BIC's strength, and what we can build on for the new strategy, they are all clearly confirmed, the power of our brand, our deep distribution network and our excellence in manufacturing. The key takeaway for 2025 is that we delivered results in line with the expectations set when I became CEO. We achieved full year net sales of EUR 2.1 billion, down 0.9% at constant currency, an adjusted EBIT margin of 13.6% and a resilient free cash flow generation at EUR 222 million. Most importantly, we stabilized the business and achieved modest growth in the second half. Let me start by commenting on our main challenges in 2025. We faced significant headwinds in the U.S. across our 3 categories impacted by tough market trends. In the lighters, shavers and ball pen segments, markets were down mid-single digits in 2025. In Latin America, we faced serious challenges in Mexico. Net sales performance was impacted by big distribution losses and intense competition. We recently made leadership changes in Mexico with a clear objective to improve performance going forward. Finally, the very disappointing performances of our Skin Creative businesses, Rocketbook and Cello, weighed significantly on our growth and profitability in 2025. As I mentioned in Q3, it is my responsibility to act swiftly and rationally. As a result, we have taken decisive steps to streamline our portfolio, including the discontinuation of these underperforming activities. However, despite the numerous challenges we faced, we saw an improved performance in the second half of the year, particularly in the Middle East and Africa and in the U.S. Now let me highlight some key achievements for 2025. First, Tangle Teezer was integrated successfully, growing double digit in 2025 and contributing 4.1 points to the group's growth with accretive margins. This very strong performance reflects disciplined execution, strong collaboration across teams and the rapid alignment of Tangle Teezer with BIC's operating model. I will come back to this in more detail later. Second, we saw strong momentum from our value-added and recently launched products, all supported by impactful advertising campaigns. Products such as the 4-Color Smooth pens, the BIC Flex 5 and Soleil Glide shavers resonated well with consumers reinforcing the strength of our brands and our ability to drive mix through meaningful innovation. We also continued to make tangible progress on our ESG actions. We launched the Twin Lady razor, featuring a handle made from 87% recycled plastic and blades incorporating 70% recycled steel, reflecting our commitment to more sustainable product design without compromising performance. In addition, we achieved key milestones across 3 core ESG KPIs. 100% of cardboard packaging now comes from a certified recycled source. We reduced our Scope 1 greenhouse gas emissions by 47% compared to 2019. And lastly, we helped improve learning conditions of 245 million children across the globe, notably through the work of the BIC Foundation. I now want to tell you a bit more about our recent innovations and partnerships launched in 2025 and some planned for 2026. At the heart of these initiatives is a renewed focus on the power of our brand, which I strongly believe and see as essential to successfully execute our new strategy. In 2025, we launched the BIC Soleil 5 Glide, a new premium women's shaver supported by an impactful marketing campaign designed to modernize the category and strengthen brand engagement. Innovations like this one or like the BIC Soleil Escape are key to sustaining our leadership and driving mix within this segment. In 2026, we will further strengthen our shaver portfolio with the launch of the new BIC 5 Trim and Shave. This innovation combines a 5-blade shaver with an integrated precision trimmer, delivering superior performance and versatility at an accessible price point. In 2025, we executed highly successful partnerships with Netflix on Squid Game and Stranger Things across Europe and Latin America, leveraging a strong cultural moment to create distinctive collectible designs that resonated particularly well with younger adult consumers. For example, in Brazil, we partnered on a limited edition of the BIC 4 Colors and Stranger Things collaboration as one of Netflix's most successful global franchises, Stranger Things powered an activation that blended local pop culture with global entertainment, turning an everyday icon into a collectible. 2025 was also a year of major ramp-up for our first reloadable utility lighter, EZ Load. The product posted encouraging results, particularly in Europe, and our teams are working on expanding distribution further. EZ Load represents an important step in our efforts to combine innovation, sustainability and category premiumization. Lastly, in stationery, our iconic 4-Color pen once again delivered strong performance in 2025 with new additions such as the 4-Color Smooth contributing to growth. In January '26, we launched new BIC Cristal Figurines now available in our main markets. This great innovation combines the quality of a BIC Cristal with playful animal figurines and pastel colors to target a younger audience and encourage a collection trend. This launch allows us to access a growing consumer segment while leveraging one of our most iconic products. Finally, we also delivered several exciting innovations and partnership within Tangle Teezer, which I will cover more in the next slide. Moving on to Slide 6. Tangle Teezer delivered a very strong performance in its first year within BIC with double-digit net sales growth and margins accretive to the group. From a product perspective, The Ultimate Detangler hairbrush family drove strong growth in 2025 with consumers picking up the new premium Chrome and Matte collections. The Mini Ultimate range also proved to be a highly successful driver of incremental sales in impulse retail locations. And at the end of 2025, a limited edition collaboration with the popular SKIMS brand of Kim Kardashian further reinforced Tangle Teezer's appeal and was a clear commercial success. More recently, Tangle Teezer also partnered with the hairstylist of Grammy Awards winning artist, Olivia Dean, using the Ultimate Detangler for her red carpet look, authentically placing the brand at the center of a high-visibility global cultural moment. All these achievements helped consolidate Tangle Teezer's market leadership, securing the #1 position in the U.K. and growing market share in the U.S. to become the #3 detangling hair care brand. Finally, I am proud to see the continued progress in seamlessly integrating Tangle Teezer. And I'm very happy to share that in December 2025, we started to produce our first Tangle Teezer brushes in a BIC factory. Now before I give the floor to Gregory on the financials, let me go over our shareholder remuneration. In line with BIC's capital allocation policy, the Board of Directors will propose an ordinary dividend of EUR 2.40, representing a 50.6% payout ratio. In addition to this dividend, we are renewing our share buyback program in 2026 with a total consideration that can reach up to EUR 40 million. Our resilient free cash flow in 2025 enables us to continue delivering these returns to shareholders while reinvesting in the business to deliver on the strategic goals and new capital allocation policy that will be communicated later this year. With that, I will now hand it over to Gregory, who will present to you our 2025 consolidated financial results. Gregory Lambertie: Thank you, Rob. Good morning, everyone. Having joined the group in early January, I'm pleased to be here with you today for my first earnings call with BIC. I'll present to you our full year '25 consolidated results and then hand it back to Rob for the conclusion. Let's start with a general overview of our key financial figures. Full year net sales stood at EUR 2.1 billion in 2025, down 0.9% at constant currency and 4.7% on an organic basis. As mentioned earlier, we saw improved momentum in the second half after significant declines in the first half. Net sales in Q4 were EUR 495 million, up 1.1% at constant currencies. Excluding perimeter impacts from the acquisition of Tangle Teezer and the sale of Cello, net sales declined 2.3% in Q4. Full year adjusted EBIT was EUR 283 million, representing a 13.6% margin compared to 15.6% last year, mainly impacted by the decline in our revenues and partly offset by cost actions. Consequently, adjusted EPS was EUR 4.74 compared to EUR 6.15 in 2024. Lastly, free cash flow totaled EUR 222 million in '25, down EUR 49 million versus last year. Turning to Slide 10. Let's review the main building blocks of Q4 net sales evolution. In Q4, net sales were down 2.3% organically, mainly driven by the 2.2% decline in Flame for Life and in Human Expression by 1.7%, while Blade Excellence was up 1.6%. For the full year, net sales were down 4.7% organically, 0.9% at constant currency. Again, Human Expression and Flame for Life were the biggest negative drivers, declining minus 2% and minus 2.5%, respectively while Blade Excellence was down 0.2%. Turning to Slide 12. Let me walk you through the 2025 performance by division, starting with Human Expression. Net sales for the full year were EUR 736 million, down 5.6% organically. Constant currency performance was lower since discontinued businesses were a drag on growth. In North America, BIC's performance was significantly impacted by Skin Creative and Rocketbook. And as Rob mentioned earlier, we took decisive actions in Q4 with the discontinuation of these activities. In addition, the U.S. ball pen segment, where BIC is most exposed, declined mid-single digits in value. However, net sales for the core stationery business improved meaningfully in H2 versus H1 as we experienced a strong back-to-school sequence in Q3 in segments like mechanical pencils and correction. In Europe, following a very good 2024 driven by growth in flagship products such as the 4-Color Olympics, net sales were slightly down in 2025. Performance was resilient despite a challenging market, and it's worth noting the sequential improvement throughout the year, thanks to steady distribution gains and the success of recently launched 4-Color pens addition like the 4-Color Smooth. In Latin America, the decline was mainly driven by Brazil and even more by Mexico. In Mexico, in particular, we implemented managerial changes and are already seeing a stabilization. Lastly, in Middle East and Africa, net sales grew mid-single digits, driven by good commercial execution and solid back-to-school season in key countries like South Africa. Human Expression adjusted EBIT margin was 7.5% in 2025, flat versus last year. The impact of unfavorable currency fluctuations and higher raw material costs was offset by lower expense as well as favorable price and mix. Moving on to the performance of the Flame For Life division. Net sales were EUR 723 million in 2025, down 6.7%, both organically and at constant currencies. In North America, net sales were down significantly in the first half of the year and were impacted by deteriorating trading environment and lower consumption. Market trends, however, showed sequential improvement throughout the year. The U.S. pocket lighter market ended at minus 3.7% in value in 2025, and BIC managed to maintain its share in the [ lighter ] market. Our net sales were more significantly impacted in the convenience channel. In Europe, net sales were slightly down, impacted by soft performance in key countries like Italy and Germany. This more than offset distribution gains in the discounters channel and solid performance in the utilities lighters segment. In Latin America, we were impacted by challenging market trend with tough competition in Brazil and Mexico. In Mexico, in particular, performance was particularly poor in the traditional channel. As mentioned, this has been addressed through managerial changes. Finally, our net sales in Middle East and Africa grew double digits with strong commercial execution in Nigeria and distribution gains in Morocco. Flame For Life adjusted EBIT margin was 29.9% in 2025 compared to 33.3% last year. This decrease was mainly due to net sales decline and the negative impact of U.S. tariffs in H2. Turning to the next slide on Blade Excellence. Net sales totaled EUR 602 million, down 0.8% organically. As mentioned, Tangle Teezer performed very well, growing double digits and fueled by new products and distribution gains. In the U.S., our core shaver business declined mid-single digits, facing deteriorating market trends and high competition, particularly in the women's segment. However, we did a solid performance in the premium range and the new products such as BIC Flex 5 and the BIC Soleil Glide. In Europe, net sales declined slightly on a like-for-like basis as a result of softer performance in key countries such as Italy and Greece, and this more than offset strong commercial performance in Eastern Europe and the success of value-added products like BIC Soleil Escape. In Latin America, our trade-up strategy towards the multiblade segment continued to deliver positive results, particularly in Brazil. Lastly, in Middle East and Africa, net sales grew slightly, mainly driven by good Q4 performance in key markets like Morocco and Nigeria. Overall, Blade Excellence '25 adjusted EBIT margin was 15.9% compared to 18.5% in 2024, mainly due to tariffs and a very high comp in '24. Moving on to Page 15. Full year '25 adjusted EBIT margin was 13.6%, down 2% versus '24. Gross profit had a negative impact of 1.6 points, driven by high raw material and the negative impact of tariffs. This was particularly offset by continued manufacturing efficiencies and the positive contribution of Tangle Teezer. Brand support was relatively flat versus last year, and we had lower operating expenses, thanks to disciplined cost control. That said, as a percentage of net sales, operating expenses increased 0.3 points due to negative operating leverage. On Slide 16, let's review the key elements of our P&L. Adjusted EBIT stood at EUR 283 million, down EUR 60 million versus last year. Nonrecurring items amounted to EUR 127 million, mostly due to the sale of Cello and the discontinuation of our Skin Creative activities and Rocketbook announced in Q4. This included mainly EUR 104 million related to the discontinuation of Skin Creative and Rocketbook announced last December, EUR 11 million related to the negative impact of Cello's disposal and EUR 10 million related to the fair value adjustment on the Power Purchase Agreement in France and the Virtual Power Purchase agreement in Greece. As a result, income before tax was significantly down to EUR 139 million compared to EUR 298 million in 2024. Lastly, net income group share was EUR 86 million compared to EUR 212 million last year, while our adjusted net income group share was EUR 195 million compared to EUR 256 million last year. Our adjusted group EPS stood at EUR 4.74 compared to EUR 6.15 last year. On the next slide, you can see the main building blocks of free cash flow in 2025. Operating cash flow amounted to EUR 400 million, down EUR 71 million year-on-year, mainly due to the decrease in operating margin. Change in working capital was a positive contribution of EUR 7 million and income tax paid was EUR 90 million. CapEx were EUR 87 million, flat versus last year. As a result, in 2025, free cash flow was solid at EUR 222 million. Before giving the floor back to Rob, let me present our net cash position on Slide 18. On top of the free cash flow elements in 2025, we spent EUR 127 million in dividends and EUR 40 million in share buyback. This concludes our review of BIC's full year 2025 consolidated results. In summary, 2025 was a difficult year for BIC in most of our key regions, marked by continued inflation, consumer anxiety and tariff uncertainty in the U.S. Against this backdrop, the group continued to focus on free cash flow resilience through disciplined cost management and working capital improvements. Looking ahead, as we develop our strategic plan, we will continue to focus on protecting our cash, simplifying our organization to ensure we are fit for growth and well positioned to drive growth and profitability. With that, I give the floor back to Rob. Rob Versloot: Thank you, Gregory. 2025 was also a year of major changes in our governance structure. I just put in place a new leadership team, tighter and leaner with a clear objective of improving the business going forward. I strongly believe that BIC now has the right structure and leaders to execute and drive our next phase of growth. In addition to this, more, than half of BIC's Board of Directors was renewed last year and it is now fully equipped to support the implementation of our new strategy. These leadership and governance changes are essential to putting the business back on track. Let's now take a closer look at our 2026 outlook. Starting this year, BIC will now guide on organic net sales performance, a key KPI and priority for us going forward. It reflects the true underlying performance of our business, excluding the impacts from perimeter and foreign exchange. In this year of transition and as BIC's leadership team prepares its strategic plan, which will be presented later in the year, we anticipate under current assumptions, improving organic net sales trends in 2026, a slight expansion in adjusted EBIT margin and a stable free cash flow generation year-on-year. To conclude, 2026 is a transitional year as we are focused on improving and transforming our business as well as implementing the right structure and operating model. With the full support of the Board of Directors and my new leadership team, I strongly believe we are well positioned to prepare a clear plan of action and write the next chapter for BIC. I'm very optimistic that the decisive action we have taken so far are laying strong foundations for BIC to return to sustainable, profitable growth. I could not conclude this call without honoring the memory of Francois Bich, son of our founder, Marcel Bich, who sadly passed away this Monday. Throughout his career, Francois played a pivotal role in developing iconic safe lighters and transforming them into a global success through his visionary leadership from the acquisition of Flaminaire in 1971 to leading our lighter category until 2016 when he retired from his executive position. When I joined as CEO, I had the immense privilege of speaking with him. And I have to say that without Francois, BIC would undeniably not be the company we all know today. His legacy will continue to inspire us for the years to come. This concludes our presentation for today. We will now take your questions. Operator: [Operator Instructions] And we take our first question. And it comes from the line of Andre [indiscernible] from UBS. Unknown Analyst: Obviously condolences to the Bich family. I have a couple of questions. Firstly, on the 2026 outlook. Could you confirm that when you talk about an organic -- an improvement in organic trends, this does not necessarily mean you're going to return to growth in full year '26. And coupled with that, your margins will only increase up to 10 basis points because you talk about a small margin improvement. Coupled with this, where do you see the sharpest improvement coming within your divisions? And how much of that will be driven by Tangle Teezer? And secondly, obviously, Rob, Gregory, you've been with BIC for a few months now. What are your first impressions? And without giving too much ahead of the strategic update, any areas that strike you as most right for improvement? Rob Versloot: Andre, for your questions. I will start with your first question, which was about our guidance for 2026. I want to make it very clear. 2026 is a transitional year in which we aim to stabilize performance and laying the foundation for our new growth cycle. That would be our key priority for this year. I think your second question was related to the margin expansion. Look, I think what helps us in 2026 is the fact that we have exited underperforming businesses in Q4, namely Rocketbook, Cello and Skin Creative. We are also focusing on disciplined cost control. But on the other hand, we're also being hit partially by tariffs in the U.S. So the combination of all this makes us believe that we will be able to slightly expand our margin in 2026. It was related to my impressions of BIC. I would like to summarize that in 3 things. First of all, we have a wonderful brand, which is known in many places across the globe. So I think it's a fantastic brand platform. The other thing that has impressed me in my first month is the amazing manufacturing capabilities we have to produce super high-quality products at very cost competitive levels. And thirdly, we have a fantastic distribution footprint in many parts of the world. So I think this company has some really -- some key strengths and -- which will help us to revive growth going forward. Last point, if I get you right, Andre, was the Tangle Teezer performance. I can honestly tell you, we're super happy with Tangle Teezer. Also in 2025, our first year of full integration, we could notice that Tangle Teezer continues to grow at a fast pace, double-digit top line. It's margin accretive for our company. It has consolidated its #1 market share position in the U.K., and it's a fast-growing brand in the U.S., now reaching #3. So yes, all lights on green for Tangle Teezer and it also has been a key contributor to our growth in '25 with 4.1 points to the group's net sales performance. Operator: [Operator Instructions] And the next question comes from the line of Geoffrey d'Halluin from BNP Paribas. Geoffrey d'Halluin: I've got 2 questions, please. First one is related to the end of 2026. If you can share with us any thoughts on the trading trends you've seen in the first weeks of 2026, especially for the Flame For Life division in the U.S. That's my first question, please. And second question is related to the exit of businesses, so like Cello, Skin Creative business and Rocketbook. Could you share with us how much is it in terms of revenues, which is exited the company? And maybe also any thoughts regarding the profitability of this business? And on top of that, do you expect any additional one-off costs related to these disposals or business exiting? Rob Versloot: Geoff, thank you very much for your question. This is Rob speaking. I will answer the first part of your question, and then I will pass on to my colleague, Greg, to answer the second part. So your question was related to our expectations for Q1 and current trending. What I can tell you is that we expect a relatively flat organic growth for Q1. And what we are doing is we are taking actions to set ourselves up for real sustainable growth, amongst others, by rightsizing level of inventories at key distributors and wholesalers globally. Maybe more in particularly because I think you were also mentioning the Flame For Life. We expect a slight recovery in the U.S. despite the fact that macroeconomic environment continues to be uncertain with especially low-income consumers continuing to feel the pinch following the implementation of U.S. tariffs. We can also notice that we see some key customers continuing to optimize their level of inventory. So that's the U.S. Then in Mexico, where we, of course, in the recent days, we had a lot of unrest, where our primary concern is the health and safety of our employees. But concerning performance, we clearly expect a stabilization in Mexico. We had a very tough year last year. We took action, put new management in place, and we believe that we will be able to improve the performance in Mexico accordingly. Other regions, our expectation for now is more or less flat versus last year. This concludes my answer to your first question. I now pass on to Greg for your other question. Gregory Lambertie: Geoffrey, on your second question regarding disposals, I will not comment on the specific in terms of numbers, but the disposal of Cello and discontinuation of Rocketbook and Skin Creative will have a positive impact on organic growth and should be pretty -- organic growth in EBIT margin and should be pretty neutral between the disposal proceeds and the wind down cost in terms of free cash flow. Operator: [Operator Instructions] And now we're going to take our next question. And it comes from the line of Marie-Line Fort from Bernstein. Marie-Line Fort: Yes. I've got -- I would like to come back on 2 topics. The first one is about tariffs, the impact of the new tariff announcement? And what do you expect at this stage, even if it's not very clear? The second question is about the start of production of Tangle Teezer brushes. Could you tell us a bit more? Where is the production located? Is it a trial? What will be the ramp-up? And when do you see new synergies in terms of production and in terms of evolution in margin? Gregory Lambertie: Regarding tariffs, it's obviously too early to tell regarding the impact of the Supreme Court decision. It should persist -- and our view is that it should persist as we enter 2026 because raw material and local inventories were built at a higher cost that included those tariffs. So we'll now need to assess how the U.S. administration will react to this decision. Just to give you a sense of the numbers, in the current environment, the overall impact of tariffs for BIC as of -- for '25, '26 on an annual basis, the overall impact is EUR 31 million, of which EUR 13 million already impacted 2025. So we have EUR 18 million ahead of us, which we obviously try to offset through a number of levers, pricing, gross profit optimization, accelerating transformation of our supply chain and adjusting our manufacturing footprint and also disciplined cost management, which has to be one of our priorities as well. So that's that regarding the impact of tariffs. And on Tangle Teezer production? Rob Versloot: Yes, let me take that one, Greg. Marie-Line, I want to come back on your question related to Tangle Teezer. So we have started to produce the first brushes in our factory in Mexico by the end of last year. And we also have plans to produce the brushes in Tunisia in the course of 2026. So that integration is going well. Marie-Line Fort: And in terms of synergies, any kind of ideas of what could represent and at which or reason? Gregory Lambertie: Sorry, Marie-Line, we couldn't hear you very well. Can you repeat, please? Marie-Line Fort: Sorry. Just wanting to know if you can precise the synergies expected, not in terms of figures precisely, but in terms of calendar, at least? Gregory Lambertie: So it's pretty much limited in '26 and should be accretive going forward. Operator: Excuse me, Marie-Line, do you have any further questions? Marie-Line Fort: No, that's fine. Operator: Thank you so much. Dear speakers, there are no further questions for today. I would now like to hand the conference over to your speaker, Rob Versloot, for any closing remarks. Rob Versloot: Thank you. I'd like to thank you all for attending today's call. And looking forward to stay connected with you throughout the year. Thank you very much. Gregory Lambertie: Indeed, thank you for your attention. Bye-bye. Operator: This concludes today's conference call. Thank you for participating. You may now all disconnect. Have a nice day.